RES 17-720 - Authorizng funding of NMTC TransactionRESOLUTION NO. 17 -720
A RESOLUTION of the City of Federal Way, Washington,
authorizing the funding of a New Markets Tax Credits financing
transaction to provide funds for the completion of construction of the
City of Federal Way Performing Arts and Event Center.
WHEREAS, the City of Federal Way, a Washington municipal corporation (the "City ")
has been engaged in the development of the property located at 31510 Pete von Reichbauer Way
South, Federal Way, WA 98063 (the "Property ") for use as a performing arts and event facility
(collectively, the "Project ");
WHEREAS, FW PAEC QALICB, a Washington nonprofit corporation (the
"Corporation "), has been organized to facilitate financing a portion of the costs of developing
the Project using federal New Markets Tax Credits (the "NMTCs ") and is intended to operate as
a "qualified active low income community business" pursuant to Section 45D of the Internal
Revenue Code of 1986, as amended (the "Code ");
WHEREAS, in connection with the NMTC financing of the Project, the City will make a
loan in the aggregate principal amount of $6,239,600 (the "Leverage Loan ") to COCRF Investor
77, LLC, a Delaware limited liability company ( "Investment Fund"), and an in -kind
contribution in the currently estimated amount of $8,736,831 to the Corporation;
WHEREAS, Investment Fund will use the proceeds of the Leverage Loan and the
proceeds of the equity investment of the sole member of the Investment Fund, Capital One,
National Association, a national banking association ( "Investor "), in the Investment Fund to
make a qualified equity investment (the "QEI") in Clearinghouse NMTC (Sub 46), LLC, a
California limited liability company ( "Lender ");
WHEREAS, Lender will make certain loans of a portion of the proceeds of the QEI in the
aggregate principal amount of $9,310,000 (the "QLICI Loan ") to the Corporation;
WHEREAS, on the date of the closing of the Project financing (the "Closing Date "), the
City will lease the Property to the Corporation pursuant to that certain Ground Lease by and
between the City and the Corporation (the "Ground Lease ");
Resolution No. 17 -720 Page 1 of 6
WHEREAS, the Corporation's obligations under the QLICI Loan will be secured by that
certain Leasehold Deed of Trust, Security Agreement and Fixture Filing on the Property, as well
as an Assignment of Rents and Leases, both dated as of the Effective Date, both executed by the
Corporation, as grantor, in favor of the Lender, as beneficiary (together with all modifications,
amendments, restatements and replacements thereof, respectively, the "Leasehold Deed of
Trust" and "Assignment of Rents "), encumbering the Project;
WHEREAS, on the Closing Date, the Corporation shall sublease the Property back to the
City pursuant to that certain Sublease Agreement by and between the Corporation and the City
(the "Sublease ");
WHEREAS, on the Closing Date, the Corporation shall reimburse the City for costs
expended in connection with the Project pursuant to that certain Reimbursement, Assignment,
and Assumption Agreement by and between the Corporation and the City (the "Reimbursement
Agreement "), and shall certify as to such incurred costs pursuant to that certain Reimbursement
Certification and Compliance Agreement by and between the Corporation and the City (the
"Reimbursement Certification and Compliance Agreement ");
WHEREAS, in connection with the borrowing of the QLICI Loan, legal counsel for the
Corporation is required to issue certain legal opinions (the "Opinions "), and the Corporation and
the City shall make certain certifications for purposes of reliance thereon in the form of one or
more Opinion Certificates (the "Opinion Certificates "); and
WHEREAS, drafts of the documents listed in Exhibit A attached to this Resolution to be
executed in connection with foregoing, along with certain other ancillary memoranda, documents
and certificates related thereto, including, but not limited to, the Reimbursement Agreement, the
Reimbursement Certification and Compliance Agreement, and that certain QALICB
Indemnification Agreement, by and among the Corporation, the City, and Investor (herein
collectively referred to as the "Financing Documents ") have been presented to, considered and
approved by the City Council of the City of Federal Way (the "Council").
NOW, THEREFORE, BE IT RESOLVED, as follows:
1. Resolved, that the Council does hereby approve, authorize, ratify and confirm
(a) the execution and delivery by the City of the Financing Documents to which the City is a
Resolution No. 17 -720 Page 2 of 6
party, substantially in the form presented to the Council with such changes as the Authorized
Representative (defined below) may deem necessary or appropriate, and (b) the consummation
of all the transactions described in the recitals to this resolution and contemplated by the
Financing Documents.
2. Resolved, that the City shall be, and hereby is, authorized to undertake and
perform all of its obligations under the Financing Documents to which it is a party, and all such
other agreements, documents, instruments and authorizations, as may be necessary or appropriate
for the Corporation to obtain the QLICI Loan.
3. Resolved, that the City shall be, and hereby is, authorized to take any and all other
actions, and to enter into, execute and deliver any such documents, as may be necessary or
appropriate in connection with the Project, and to perform its obligations under such documents.
4. Resolved, that the Mayor of the City, in his capacity as the authorized
representative of the City (the "Authorized Representative "), acting alone, is hereby authorized
and directed to execute and deliver the Financing Documents to which the City will be a party in
substantially the form presented to the City Council, with such changes or additions thereto, or
deletions therefrom, as such Authorized Representative shall approve, which shall be
conclusively evidenced by his execution of such instruments.
5. Resolved, that the Mayor of the City, acting alone, is hereby authorized to enter
into such other agreements and to take all such other actions as may be necessary or required of
the City in connection with the QLICI Loan and the other agreements described in the foregoing
resolutions and any and all such other documents on the terms and conditions set forth in the
forms thereof provided to the City Council or upon such other or additional terms as the City
Council shall deem appropriate.
6. Resolved, that the Mayor of the City is hereby authorized to enter into such other
agreements and to take all such other actions as may be necessary or required of the City in
connection with the Financing Documents and to consummate the transactions contemplated by
the Financing Documents.
7. Severability. If any section, sentence, clause or phrase of this resolution should be
held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or
Resolution No. 17 -720 Page 3 of 6
unconstitutionality shall not affect the validity or constitutionality of any other section, sentence,
clause or phrase of this resolution.
8. Corrections. The City Clerk and the codifiers of this resolution are authorized to
make necessary corrections to this resolution including, but not limited to, the correction of
scrivener /clerical errors, references, resolution numbering, section/subsection numbers and any
references thereto.
9. Ratification. Any act consistent with the authority and prior to the effective date
of this resolution is hereby ratified and affirmed.
10. Effective Date. This resolution shall be effective immediately upon passage by the
Federal Way City Council.
[Remainder of Page Intentionally Left Blank]
Resolution No. 17 -720 Page 4 of6
RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON this 16th day of May, 2017.
ATTEST:
CITY 0 FEDE
JI ' RE L, MAYOR
L WAY:
<,r
CO RTN , CMC, CITY CLERK
AP ' OVED AS TO FORM:
C)Z. Uk_
J. RYAN CALL, CITY ATTORNEY
FILED WITH THE CITY CLERK: 05/10/2017
PASSED BY THE CITY COUNCIL: 05/16/2017
RESOLUTION NO.: 17 -720
Resolution No. 17 -720 Page 5 of 6
EXHIBIT A
FINANCING DOCUMENTS
1. Fund Loan Agreement by and between City and Investment Fund;
2. Fund Pledge Agreement by and between City and Investment Fund;
3. Environmental and Hazardous Substances Indemnity Agreement executed by
Corporation and City in favor of Lender;
4. Completion and Repayment Guaranty by City in favor of Lender;
5. QALICB Indemnification Agreement by and among Corporation, City and Investor;
6. Reimbursement, Assignment and Assumption Agreement;
7. Ground Lease;
8. First Amendment to Ground Lease by and between Corporation and City;
9. Memorandum of Ground Lease by and between Corporation and City;
10. Amended and Restated Memorandum of Ground Lease by and between Corporation and
City;
11. Sublease;
12. First Amendment to Sublease Agreement by and between Corporation and City;
13. Memorandum of Sublease by and between Corporation and City;
14. Amended and Restated Memorandum of Sublease by and between Corporation and City
15. Reimbursement Agreement;
16. Reimbursement Certification and Compliance Agreement;
17. Investment Fund Put /Call Agreement by and between City and Investor;
18. Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion —
Lower Tier Covered Transactions executed by City;
19. Flow of Funds Closing Memorandum; and
20. Opinion Certificates.
Resolution No. 17 -720 Page 6 of 6
JD Draft 5/1/17
FUND LOAN AGREEMENT
THIS FUND LOAN AGREEMENT (this "Agreement "), dated as of [ ], 2017 (the
"Effective Date "), is entered into by and between CITY OF FEDERAL WAY, a Washington municipal
corporation ( "Lender "), and COCRF INVESTOR 77, LLC, a Delaware limited liability company
( "Borrower ").
RECITALS
A. Borrower has requested that Lender provide a loan (the "Loa; in the original principal
amount of $[6,239,600].
B. Concurrently with the execution of this Agreement, Borrower is executing and delivering
to Lender that certain Fund Promissory Note for the original pr`cipal amount of the Loan (as the same
may be amended, assigned, restated, modified, or supplemented from time to time the "Note "). The Note
evidences the Loan.
C. Concurrently with the execution of this Agreement, Lender and Borrower are entering
into that certain Fund Pledge Agreement (as the same may amended, `'assigned, restat d, modified, or
supplemented from time to time, the "Pled e ® eement"). Th dge Agreement secures the payment
and performance of Borrower's obligation rder this Agreement.
D. On the Effective Date, Capital One; National Association, a national banking association
(together with its successors .and assigns, "Investor "), is making a capital contribution in the amount of
$[3,260,400] in Borrower pursuant to the terms and conditions set forth in the Borrower OA (as such term
is defined below).
E. On the Effective Date, ®® rower will use the proceeds of the Loan and Investor's equity
investment solely for the purposes set fo in Article IX of the Borrower OA.
F. Clearinghouse NMTC (Sub 46), LLC, a California limited liability company ( "CDE "), is
a "qualified community, development entity" formed for the purpose of serving or providing investment
capital for low- income communities or low- income persons (as such terms are defined for the purposes of
Section 45D of the Internal Revenue Code of 1986 (as amended from time to time, the "Code ")).
On the Lffective Date, CDE will use substantially all of the proceeds of the CDE
Investmeit (as such term is defined in the Borrower OA) to make loans to FW PAEC QALICB, Inc., a
Washington nonprofit corporation ( "Project Borrower "), in the aggregate original principal amount of
$[9,310,000] (collectively, the "Project Loans "). The Project Loans will be evidenced by certain QLICI
loan promissory notes dated as of the Effective Date (collectively, as the same may be amended, assigned,
restated, modified, or supplemented from time to time, the "Project Notes ").
H. Project Borrower will use the proceeds of the Project Loans in accordance with the terms
of the Project Loan Agreement (as such term is defined below).
I. Lender has agreed to make the Loan to Borrower upon and subject to all of the terms,
conditions, covenants and agreements of this Agreement.
Resolution No. 17 -720 Exhibit Al
NOW, THEREFORE, in consideration of the mutual promises and agreements hereinafter
contained and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. LOAN TERMS.
Section 1.1 Definitions. All capitalized terms listed in the introductory paragraph and
Recitals to this Agreement have the meanings assigned to them therein, and all capitalized terms not
otherwise expressly defined herein have the meanings assigned to them in the Borrower OA. In addition,
the following terms have the following meanings in this Agreement:
(a) "Anti- Terrorism Laws" means all laws relating to or money laundering,
including, without limitation, the Executive Order and the Bank S as amended by the USA
Patriot Act.
(b) "Borrower OA" means that certain First Amended and Resta ting Statement of
Borrower, dated as of the Effective Date, by Investor as the sole member, as the o '" . be amended,
assigned, restated, modified, or supplemented from time to time in accordance th *� �`;�d with this
Agreement.
(c) "Borrower Organizational Documents" means any and all articles and/or certificates of
formation, the Borrower OA, written consents, resolutions, and any other documents, including any
amendments thereto, that govern the actions of Borrower and any of its members, managers, or principals,
as the same may be amended, modified, extended, or restated from time to time in accordance therewith
and with this Agreement.
(d) "Business Day" has`the meaning set forth in the Note.
(e) "CDE Interest" has the meaning set forth in the Pledge Agreement.
(f) "CDE OA" means that certain Amended and Restated Operating Agreement of CDE,
dated as of the Effective Date, by and between Borrower, as investor and Class A member, Clearinghouse
Community Devel'opnentFinancial Institution, a California corporation, as manager, and Clearinghouse
NMTC, LLC, a Delaware limited liability company, as Class B Member, and together with Class A
Member, the "Members ", as the same may be amended, assigned, restated, modified, or supplemented
from time to time in accordance therewith and with this Agreement.
"Event of Default" means any of those events set forth in Section 5.1.
(h) "Executive Order" means Executive Order No. 13224 on Terrorist Financing, effective
September 23, 2001, including the Annex thereto, as amended from time to time.
(i) "Financial Projections" means the financial projections dated on or about the Effective
Date, compiled and certified by Novogradac & Company LLP in connection with the transactions
contemplated by the Borrower OA and the CDE OA, including, without limitation, the Project Loans.
(j) "Forbearance Termination Date" has the meaning set forth in Section 5.3(a).
(k) "GAAP" means generally accepted accounting principles in the United States of America
applied on a basis consistent with the accounting practices applied in the financial statements of
Borrower, except for any change in accounting practices to the extent that, due to a promulgation of the
2
Resolution No. 17 -720 Exhibit A 1
Financial Accounting Standards Board changing or implementing any new accounting standard, Borrower
either (i) is required to implement such change, or (ii) for future periods will be required to and for the
current period may in accordance with generally accepted accounting principles implement such change,
for its financial statements to be in conformity with generally accepted accounting principles (any such
change is hereinafter referred to as a "Required GAAP Change "); provided, that Borrower will fully
disclose in such financial statements any such Required GAAP Change and the effects of the Required
GAAP Change on Borrower's income, retained earnings or other accounts, as applicable.
(1) "Governmental Authority" means any, federal, state, local, municipal, or other
governmental or quasi governmental authority or self regulatory organization of any nature (including any
agency, authority, branch, department, board, commission, court, tribunal or other entity, instrumentality
or body politic exercising governmental or quasi governmental powers) o exercising, or entitled or
purporting to exercise, any administrative, executive, judicial, le islative, enforcement, regulatory or
taxing authority or power.
(m) "Laws" means, collectively, all federal, state and local laws, statutes, codes, ordinances,
orders, rules and regulations, including judicial opinions or precedential authority, in the applicable
jurisdiction.
(n) "Lien Enforcement Action" means (i) any action to foreclose on, take possession of, sell
or otherwise realize (judicially or non -judici ) upon the Pledged Collateral or any rights or privileges
attendant thereto (including, without limitation, by set -off), (ii) any action to assert ownership rights with
respect to the Pledged Collateral or any rights or privileges attendant to the Pledged Collateral or arising
under the CDE OA, including without limitation, voting, consent or management rights, (iii) any action
(judicially or non judicially) to dissolve or liquidate Borrower, and /or (iv) the commencement of any
legal proceedings to facilitate any of the actions described in clauses (i), (ii) or (iii) herein.
(o) "Loan Documents" mans, collectively, the Note, Pledge Agreement, this Agreement,
and all other documents that e‘ idence �ecure, and, ° • the Loan, as the same may be amended,
assigned, restated, modified, or suppleme i ed from ti • me.
(p)
"Maturity Date" has the meaning set forth in the Note.
(q) "NMTC Program Requirements" means, collectively, the provisions of Section 45D of
the Code, the Treasury Regulations and Guidance, and the Allocation Agreement (as such term is defined
in the CDF, OA).
(r) "OFAC" means the Office of Foreign Asset Control of the U.S. Treasury Department and
shall be deemed to include any successor agency thereof.
(s) "Pledged Collateral" has the meaning set forth in the Pledge Agreement.
(t) "Prohibited Person" means any of the following:
(i) a Person that is listed in the Annex to, or is otherwise subject to the provisions of
the Executive Order;
(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is
listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order;
3
Resolution No. 17 -720 Exhibit A 1
(iii) a Person whom Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti- Terrorism Law;
(iv) a Person who or that commits, threatens, or conspires to commit or supports
"terrorism," as defined in the Executive Order; or
(v) a Person that is named as a "specially designated national and blocked person"
on the most current list published by OFAC at its official web site or any replacement website or
other replacement official publication of such list.
(u) "Project Loan Agreement" means that certain Loan Agreement; :dated as of the Effective
Date, by and between CDE, as lender, and Project Borrower, as borrower, as the same may be amended,
assigned, restated, modified, or supplemented from time to time.
(v) "Project Loan Documents" means, collectively, the Project Notes, the Project Loan
Agreement, mortgages or deeds of trust, security agreeme pledge agreements, guaranties, and other
instruments, documents, and agreements between Probe ower and CDE that evidence, govern, and
secure the Project Loans, as the same may be amende +, : °assigned, restated, modified, or supplemented
from time to time.
(w) "Put/Call Agreement" means that certain Investment Fund Put/Call Agreement, dated as
of the Effective Date, by and between Investor and Lender, as the � may be amended, assigned,
restated, modified, or supplemented from time to time
(x) "Put" has the meaning set forth in the Put /Call Agreement.
(y) "Put Option
the meaning set fort>irin the Put/Call Agreement.
(z) "Put P e. g set forth in tfi e Put/Call Agreement.
(aa) " QALICB NMTC Indemnity" means that certain QALICB Indemnification Agreement,
dated as of the Effective Date, by and among Project Borrower and Lender (as the "Indemnitors"
thereunder) and Investor, as the sane may amended, assigned, restated, modified, or supplemented
from time to time.
(bb) "Recapture Event. means a recapture, loss, or disallowance of any new markets tax
credits (as provided in Section 45D of the Code) attributable to the applicable "qualified equity
investment" (within the meaning of Section 45D(c) of the Code) made by Borrower in CDE.
(cc) "Treasury Regulations and Guidance" means and includes any Treasury Regulations and
any guidance, rule, or procedure published by the CDFI Fund, as amended from time to time, including
without limitation the Community Development Entity Certification Application for CDE and the New
Markets Tax Credit Allocation Application pursuant to which the Allocation was awarded.
(dd) "USA Patriot Act" means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107 -56, 115
Stat. 272 (2001), as amended from time to time.
(ee) "I" means the lawful currency of the United States.
4
Resolution No. 17 -720 Exhibit Al
Section 1.2 Accounting Terms. All accounting terms not specifically defined herein will be
construed in accordance with GAAP.
Section 1.3 Computation of Time. In this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word "from" means "from and including" and the
word "to" means "to but excluding."
Section 1.4 Loan Amount. On the basis of the representations, warranties, and covenants of
Borrower contained herein and subject to the terms and conditions set forth herein and in the other Loan
Documents, on the Effective Date, Lender agrees to lend to Borrower, and orrower agrees to borrow
from Lender, the Loan, which will be disbursed in full on the Effective Date.
Section 1.5 Loan Disbursement. Following the sate ac ion of all applicable conditions
precedent set forth in Section 3, Lender will fully disburse th oan as set forth in Section 1.4 to
Borrower. The Loan is evidenced by the Note and the other 1 o f . Documents and secured by the Pledged
Collateral.
Section 1.6 Interest Rate. Section 4 of the Note mc•rporated herein by reference and
made a part hereof.
Section 1.7 Payment Terms.
(a) The outstanding principal amount and accrued interes ��ae Note shall be due and
payable in accordance with Section 5(a) of the Note, which r orporaterein by reference and made
a part hereof.
(b) Until the Forbearance Termination Date, Borrower shall only be obligated to pay
amounts due and payable from time t time under the Loan from funds received by Borrower from
operations in the priority forth in Sec on 6.2 of the Borrower OA; provided, to the extent Borrower is
unable to make any payment hereunder, such amoun se added to the outstanding principal amount
and will accrue (with interest) until such time as suf lent funds are available (at which time such
payments shall be due) (provided such accrual shall not result in any extension of the Maturity Date).
(c) All sums payable. by Borrower hereunder or pursuant to the Note or the other Loan
Documents will be paid in full without setoff or counterclaim by reason of any claim Borrower may have
against Lender; provided, any amoun ' ed by Lender to Investor pursuant to the QALICB NMTC
Indemnity will he unless otherwise paid by Indemnitors thereunder in accordance with the terms thereof,
(i) set off 'against amounts payable hereunder or pursuant to the Note or the other Loan Documents, (ii)
retained by Borrower (for distribution to Investor as a member of Borrower), and (iii) treated as paid to
Lender in satisfaction of an equivalent amount due and payable under the Loan Documents. Borrower
shall notify Lender promptly after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application. Investor is an intended third party
beneficiary of this Section 1.7(c).
Section 1.8 Maturity. The entire outstanding principal balance under the Note plus all
accrued and unpaid interest thereon will be due and payable on the Maturity Date of the Note.
Section 1.9 Non - Recourse Loan. In the event of any breach by Borrower hereunder or under
any other Loan Document, the liability of Borrower will be limited to the Pledged Collateral, and
Borrower will have no personal liability for any obligation hereunder. Notwithstanding anything to the
contrary in this Agreement or any other Loan Document, no member or manager of Borrower or its
5
Resolution No. 17 -720 Exhibit A I
shareholders, affiliates, members, managers, partners, officers, directors, employees, or any successors,
transferees or assigns thereof, will have any personal liability for any obligation hereunder.
Section 1.10 Loan as Indebtedness. Lender and Borrower shall treat the Loan as
indebtedness for all purposes, and shall not take any positions contrary to such treatment.
Section 2. REPRESENTATION AND WARRANTIES OF BORROWER. To induce Lender to
enter into this Agreement, and to make the Loan to Borrower, Borrower represents and warrants to
Lender, as of the Effective Date, as follows:
Section 2.1 Organizational Status; Authorizations. Borrower is duly formed, validly
existing and in good standing as a limited liability company under the laws of the State of Delaware, with
full power and authority to consummate the transactions contemplated hereby. Borrower has full power
and authority to execute, deliver and perform all of the Loan Documents, and such execution, delivery
and performance have been duly authorized by all requisite a tion on the part of Borrower. Borrower is
hto the transactions contemplated by
and sign and grant liens and security
e other Loan Documents and
ly enforceable obligations of
duly authorized to (a) acquire and own the CDE Interest,
the Loan Documents, Borrower OA, and CDE OA, and
interests as contemplated by the Loan Documents. Thi
the provisions contained herein and therein are and will be
Borrower in accordance with their terms.
Section 2.2 No Actions. There' are no actions, sui
knowledge of Borrower, threatened agar " t or affectin Borrow
Authority, and, to Borrower's knowledge, it . "s not in defaut „ ith respe
eedings pending or, to the
or by a Governmental
any order, writ, injunction,
could have a material adverse
Documents.
decree or demand of any court or any Governmental Authority, which
impact on Borrower or involvin he validity or enforceability of the Loam
Section 2.3 f consumrriatlo Hof the transactions hereby contemplated and
performance of this Agi t then ''will not re ult in any brea °h of, or constitute a default under, any deed to
secure debt, mortgage, deed of trust, indenture, security agreement, lease, bank loan or credit agreement,
contract, articles of organization, operating agreement, joint venture agreement, partnership agreement or
other instruments to which Borrower is a party or by which Borrower may be bound.
Settion 2.4
Annti- Terrorism Laws. Borrower represents and warrants to Lender that:
(a) Iorrower is not in violation of any Anti- Terrorism Law;
(b) No action. proceeding, investigation, charge, claim, report, or notice has been filed,
commenced, or threatened against Borrower alleging any violation of any Anti- Terrorism Law; and
,may.
(c) Borrower has no knowledge or notice of any fact, event, circumstance, situation, or
condition which could reasonably be expected to result in:
(i) any action, proceeding, investigation, charge, claim, report, or notice being filed,
commenced, or threatened against it alleging any violation of, or failure to comply with, any
Anti - Terrorism Law; or
(ii) the imposition of any civil or criminal penalty against Borrower for any failure to
so comply.
6
Resolution No. 17 -720 Exhibit Al
Section 2.5 Prohibited Person. Borrower is not a Prohibited Person, and has provided
Lender with sufficient information (including names, addresses and, where applicable, jurisdiction of
formation or organization) to reasonably permit Lender to verify the foregoing representation. Borrower
does not:
(a) conduct any business or engage in making or receiving any contribution of funds, goods,
or services to or for the benefit of any Prohibited Person;
(b) deal in, or otherwise engage in any transaction relating to, any property or interests in
property blocked under the Executive Order; or
(c) engage in or conspire to engage in any transaction
purpose of evading or avoiding, or attempts to violate, any of th
Terrorism Law.
Section 2.6
and clear of all liens, claims, charges and encumbrances
security interests created by the Loan Documents.
Ownershi
of Pro
s or avoids, or has the
s set forth in any Anti-
e • No Lien
er owns t
pe or nature, tee;
ed Collateral, free
r the liens and
Section 2.7 Conditions Precedent. As of the Effective Date, each of the conditions
precedent set forth in Section 3 has been either (a) satisfied by Borrower or (b) hereby waived by Lender.
Section 2.8 No Approvals. No authorization, approval, consent or license of any party,
governmental regulatory body or authority not already obtained is required for the valid and lawful
execution and delivery of this Agreement and the other Loan Documents or the assumption of the
obligations of Borrower represented hereby and thereb
Section 2.9 Investor is a national banking association and is currently the sole
member of Borrower. Investor's current principal place of business is located at 201 St. Charles Avenue,
29th Floor, New Orleans, Louisiana 70170
Section 2.10 Compliance with La '" Borrower, to the best of its knowledge, has complied in
all material respects with all Laws that are applicable to Borrower, such compliance to include, without
limitation, paying, before the same become delinquent, all taxes, assessments and governmental charges
imposed upon it or upon its property (other than those the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which adequate reserves have been
provided in accordance with GAAP).
Section 3. VONDITIONSPRECEDENT TO LENDER'S OBLIGATION TO MAKE THE
LOAN. Lende will not be obligated to make the Loan hereunder unless the following conditions
precedent have been satisfied (and the funding of the Loan by Lender will constitute Lender's
acknowledgement of the satisfaction of all such conditions precedent):
Section 3.1 Loan Documents. Lender has received each of the Loan Documents executed
by Borrower.
Section 3.2 Governing Instruments. Lender has received from Borrower a copy of each of
the Borrower Organizational Documents, including the certificate of formation of Borrower, the
Borrower OA, and such other documents, instruments, agreements and certificates as Lender reasonably
requested with respect to Borrower.
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Resolution No. 17 -720 Exhibit Al
Section 3.3 Financial Projections. Lender has received and approved the Financial
Projections based upon income and expense numbers acceptable to Lender.
Section 3.4 No Default or Event of Default. There is (a) no default or Event of Default
under this Agreement or any of the other Loan Documents and (b) no event which with notice or the
passage of time, or both, would constitute a default or Event of Default under this Agreement or any of
the other Loan Documents has occurred or is in existence.
Section 3.5 Project Loan Documents. CDE and Project Borrower have executed and
delivered all of the Project Loan Documents, and all conditions to the ±ding of the Project Loans
thereunder have been satisfied (or waived in writing by CDE).
Section 4. COVENANTS OF BORROWER. Borrower (in adds on to and not in derogation of its
covenants contained in any of the other Loan Documents) covenants and auces, from the Effective Date
and for so long as the Loan or any portion thereof is outstandi
Section 4.1 Prohibition of Transfers. Bo
CDE Interest or any portion thereof in any way. Borro
security interests and encumbrances other than those crea
assign, convey, contribute, pledge, hypothecate, encumber, o
voluntarily or involuntarily, all or any portion of the CDE Intere
action) that may result in any charge, lien, or impairment of the
CDE OA, by agreement with any Person; or by operation of law.
anything else to the contrary in this Agreement or any other Loan Document,, orrower shall be entitled to
exercise any right it may have to redeem the CDE Interest or to elect to dissolve or terminate CDE in
accordance with the CDE OA prsvided that, as a result thereof, Borrower will hold the Project Loans and
Project Loan Documents.
1 not convey or further encumber the
E Interest free and clear of all
ocuments and will not sell,
ransfer in any manner, whether
e any action (or fail to take any
terest, whether pursuant to the
otwi; >tanding the foregoing or
Section 4.2 induct a ess. Borrowed will maintain in full force and effect (a) its
organizational existence, (b) all I c e ps s, bonds, fran es, leases, patents, contracts and other rights
necessary to the conduct of its business. Borrower wl ercise good faith in all activities relating to the
conduct of the business of 13orrower,'and Borrower will take no action with respect to the business and
property of orrower which is not reasonably related to the achievement of the purpose of Borrower as
set forth he Borrower OA.
Section 4.3 Amendment of CDE OA. Borrower will not cause or permit any material
modificai amendment waver or termination of the CDE OA to occur without the prior written
consent o ' rider, if such m cation amendment, waiver or termination would (a) impair Borrower's
authority to rant a security interest in the Pledged Collateral to secure the Loan, (b) unilaterally cause the
redemption of the CDE Interest after the Forbearance Termination Date (provided, this Section 4.3(b)
shall not impair the rights of Borrower to cause a redemption of Borrower's membership interest in CDE
or to liquidate CDE in accordance with the CDE OA provided that Borrower will hold the Project Loans
and Project Loan Documents as a result thereof), (c) preclude or otherwise limit CDE from distributing
proceeds of the Project Loans to Borrower, (d) modify in any way Borrower's right of redemption,
(e) impair Lender's security interest in the Pledged Collateral securing the Loan, (f) modify in any way
any provision of the CDE OA governing the timing of any payments or distributions to be made to
Borrower, or (g) otherwise impair Borrower's ability to satisfy its payment obligations hereunder;
provided, however, that in no event will Lender's consent be required if Borrower believes in good faith
that any such modification, amendment, waiver or termination is necessary to maintain compliance with
NMTC Program Requirements or to avoid a Recapture Event.
8
Resolution No. 17 -720 Exhibit Al
Section 4.4 Amendment of Borrower Organizational Documents. Borrower will not
cause or permit any material modification, amendment, waiver or termination of any Borrower
Organizational Documents to occur without the prior written consent of Lender, if such modification,
amendment, waiver or termination would (a) preclude Borrower from using payoff proceeds of the
Project Loans to pay amounts due and owing under the Loan, except if an Event of Default (as such term
is defined in the Project Loan Agreement) has occurred and is continuing, (b) impair Lender's security
interest in the Pledged Collateral securing the Loan, (c) impair Lender's rights and remedies under the
Loan Documents, or (d) otherwise impair Borrower's ability to satisfy its payment obligations hereunder;
provided, however, that in no event will Lender's consent be required if Borrower believes in good faith
that any such modification, amendment, waiver or termination is necessary ;t+t maintain compliance with
NMTC Program Requirements or to avoid a Recapture Event.
Section 4.5 Other Indebtedness. Borrower will not incur any indebtedness other than the
Loan to be made pursuant to this Agreement as evidenced by the Note, loans made by any member of
Borrower pursuant to the terms of the Borrower OA, and trade payables and administrative costs incurred
by Borrower in the ordinary course of business.
Section 4.6 Inspection. Lender, or any P ed by Lender, will have the right,
from time to time hereafter upon 5 Business Days prior wow ���tt�e'.orrower, to call °'at Borrower's
place or places of business (or any other place where the Ple eral or any information relating
thereto is kept or located) during reasonable business hours and .ndrance or delay by Borrower,
so that Lender may, at Lender's own expense, (a) inspect audit, c ake copies of and extracts
from Borrower's books, records, journals, orders, receipt; correspo nd other data relating to
Borrower's business or to any transactions between the pa hereto . � regardless of whether such
items or data are maintained in accordance with Borrower's standard "operating procedures or pursuant to
this Agreement; (b) verify such matters concerning the Pledged„ Collateral as Lender may consider
reasonable under the circumstances, and (c) discuss the affairs, fin ces and business of Borrower with
any officers, employees or directors of Borrower. Within 10 Business Days of request therefor, Borrower
will deliver to Lender, at Lender's own expense, any instruments necessary to obtain records from any
Person maintaining the same i
Section 4.7 Anti - Terrorism Laws.
(a) Borrower covenants and agrees with Lender that Borrower will not: (1) conduct any
business or engage in making or receiving any contribution of funds, goods, or services to or for the
benefit of any Prohibited Person; (ii) deal in, or otherwise engage in any transaction relating to, any
property or interests in property \blocked pursuant to the Executive Order or any other Anti - Terrorism
Law; or (iii) engage in, or conspire to engage in, any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti - Terrorism
Law.
(b) Befor changes in the direct or indirect ownership of Borrower to a Person other than
Investor or an Affiliate thereof, Borrower will give a written notice to Lender: (i) advising Lender in
reasonable detail as to the proposed ownership change and (ii) reaffirming that the representations and
warranties herein contained will remain true and correct notwithstanding such change in ownership.
(c) Borrower agrees to deliver to Lender promptly (but in any event within 10 Business Days
of Lender's written request) any certification or other evidence requested from time to time by Lender in
its reasonable discretion, confirming Borrower's compliance with the foregoing covenants.
Section 4.8 Single Purpose Entity Provisions.
9
Resolution No. 17 -720 Exhibit Al
(a) Borrower's sole business purposes are those listed in Section 3.1 of the Borrower OA,
including but not limited to: (i) acquiring and holding the CDE Interest, (ii) exercising its rights and
powers and perform its duties and obligations under the CDE OA, (iii) entering into and performing its
duties and obligations under the Loan Documents and the CDE OA, and (iv) undertaking activities
incidental to the foregoing.
(b) Borrower (i) will conduct business only in its own name, (ii) will not engage in any
business or have any assets unrelated to the foregoing purpose, (iii) will not have any indebtedness other
than as permitted by this Agreement, (iv) will have its own separate accounts (with no commingling of
assets), (v) will hold itself out as being an entity separate and apart fro i any other Person, (vi) will
observe limited liability company formalities independent of any other P rson and (vii) will not change
its name, or form of entity, unless Borrower has obtained the prior e ® °bnsent of Lender to such
change, and has taken all actions necessary or requested by Le ' ®° � or amend any financing
statement or continuation statement to assure perfection and ' erfection of security
interests under the Loan Documents.
Section 4.9 Use of Loan Proceeds. The
purposes set forth in Article IX of the Borrower OA, w
a part hereof.
solely for the
e and made
Section 4.10 Records. Borrower will keep and main actory and complete records of
the Pledged Collateral, including but not limited to the record of all ns received.
Section 4.11 No Default or Event of Default. No default :I'nvent of Default under this
Agreement or any of the other Loan Documents, and no event which with notice or the passage of time,
or both, would constitute a default or Event of Default under this Agreement or any of the other Loan
Documents has occurred or is stence at the time of execution of this Agreement.
Section 4.12 Notice.` If Borrower shall receive, any of the following: notice of any actions,
suits or proceedings brought against it prior to full payment of the Note (other than actions, suits, or
proceedings that are covered by Borrower's commercial general liability insurance and which the insurer
has agreed to defend), then Borrower shall provide Lender with a copy of such notice within 10 calendar
days of Borrower's receipt thereof.
Section 5. EVENTS OF DEFAULT AND REMEDIES.
Section 5.1 Events of Default. Each of the following will constitute an Event of Default
hereunder:
(a) If Borrower fails to make payment when due of any principal, interest or other payment
obligation under the Note, this Agreement or any of the other Loan Documents and such failure remains
more than 5 Business Days after notice of non - payment is given by Lender to Borrower; provided,
however, notwithstanding the foregoing or anything else to the contrary in the Note, this Agreement or the
other Loan Documents, it shall be an immediate Event of Default, without any prior notice, if either (i) a
scheduled interest or principal payment on the Note is not made within 5 calendar days after the date due
or (ii) the payment due on the Maturity Date under the Note is not made within 5 calendar days after the
date due;
(b) If Borrower fails to comply in any material respect with any non- monetary covenant
made by it hereunder or under the Pledge Agreement, or any of the other Loan Documents (other than a
failure which would be an Event of Default under another subparagraph of this Section 5.1) to Lender's
10
Resolution No. 17 -720 Exhibit Al
satisfaction within 30 calendar days after receipt of written notice of such default from Lender; provided,
however, that if such default is of a type that is susceptible to cure but cannot reasonably be cured within
such 30 calendar day period, such failure will not be an Event of Default if Borrower commences to cure
such default within such 30 calendar day period and thereafter diligently prosecutes such cure to
completion;
(c) If any representation or warranty of Borrower in this Agreement or in any of the other
Loan Documents is established to have been incorrect in any material respect when made; provided, that
if Borrower did not have actual knowledge that the representation or warranty was incorrect when made
and if the circumstances resulting in the inaccuracy of such representation or warranty are reasonably
susceptible to being corrected so as to make such representation or warranty correct within the cure period
applicable to covenant defaults under Section 5.1(b), Borrower will be enti d to cure the violation of
such representation or warranty within the cure period applicable una
u �ctto r :.1 b ;
(d) If any material default or event of default exis ode ny
than this Agreement, and such default or event of default continues beyond an
notice periods thereunder;
n Documents other
le grace, cure or
(e) If Borrower assigns this Agreement or any interest herein, any way o an as herein
permitted, or if the CDE Interest is conveyed, assigned, pledgEd or encumbered in any way other than as
herein permitted, without the prior written co of Lender, or Borrower engages in or causes or permits
any transfer prohibited under Section 4.1, proiufe./ wever, that it will 111 no event be an Event of
Default if Investor assigns or transfers all or any portion of its Interest (as such term is defined in the
Put/Call Agreement) in Borrower in accordance with the Put /Call \ Lreement or
(f) If Borrower makes a general assignment for the benefit of creditors; or if any proceeding
is instituted by Borrower seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency ( eorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a re, -iver, trustee, or similar official for it or for any substantial part
of its property; or if any proceeding is instituted a1�ainst Borrower seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief,
or composition of its debts under any la relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seekina,the entry of an ord ,•r relief or the appointment of a receiver, trustee, or similar
official for tt,or for any, substantial part nt ,bra .roperty and any such proceeding is not dismissed within 90
calendar daYi after the commencement. °uch proceeding; or if Borrower takes any action to authorize
any of the actions set forth in this Section 5.1(f).
Section 5.2 > , Remedies.
(a) Subject in all instances to Section 5.3, upon the occurrence of any Event of Default,
Lender, in addition to, all remedies conferred upon Lender by law and by the terms of the Loan
Documents or any other documents serving as security for Borrower's indebtedness, may accelerate
maturity of the Note, and demand payment of the principal sums due thereunder with interest, advances
and costs, and in default of said payment or any part thereof, may exercise the power of sale, if given and
available, and pursue any or all of its other rights and remedies under the Pledge Agreement and the other
Loan Documents.
(b) Subject in all instances to Section 5.3, upon the occurrence of any Event of Default,
Lender may seek to enforce the terms of the Note and this Agreement by declaratory judgment, specific
performance, or by way of injunction or equitable remedies.
11
Resolution No. 17 -720 Exhibit Al
(c) The remedies and rights of Lender hereunder are cumulative and not exclusive of any
other remedies of Lender under any other provision of this Agreement or under any other instrument or at
law or in equity. Lender is privileged and has the absolute right, subject in all instances to Section 5.3, to
resort to any one or more or all of said remedies, none to the exclusion of the others, concurrently or
successively, in such order as Lender may select. Any additional funds advanced in connection with
Lender's exercises of its remedies will be secured by the lien of the Pledge Agreement and will be
considered a part of the Loan as though initially included therein.
Section 5.3 Forbearance.
(a) Notwithstanding any provision of this Agreement, the Borrower OA, the CDE OA or any
other Loan Documents to the contrary, and regardless of the existence or occurrence of any circumstance
or event that would otherwise constitute a default or Event of Default by Borrower, Lender shall not be
entitled to (i) take any Lien Enforcement Action, (ii) exercise any other rights or remedies it may have
under the Pledge Agreement or other Loan Documents, including, but not limited to accelerating the
Loan, collecting rents or distributions, appointing (or seeking the appointment WO a receiver or exercising
any other rights or remedies thereunder, or (iii) commence, or join with ' any other creditor in
commencing, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings with
respect to Borrower, from the date hereof until the termination of the Put Option Period (the "Forbearance
Termination Date "), provided, however, if the Put is exercised in accordance with the Put/Call
Agreement, the Forbearance Termination Da I be the date the Put Price is paid in full to Investor in
accordance with the Put/Call Agreement. The provision of this Section 5.3(a) shall be construed as, and
shall operate as, a bar to any action, proceeding, or reme y= (judicial or otherwise) that would violate the
provisions of this Section 5.3(a). In the event that Lender shall threaten, initiate, or pursue any Lien
Enforcement Action or other action, proceeding, or remedy in violation of the provisions of this
Section 5.3(a), Lender agrees .. damages would constitute an inadequate remedy to Borrower on
account of such violation orrower shall be entitled it seek and obtain injunctive relief
prohibiting the same.
(b) On and after the Forbearance Termination Date, to the extent permitted under the Loan
Documents, Lender shall be free, in its sole and absolute discretion, after an Event of Default (or the
continuance of an Event of Default on and after the Forbearance Termination Date) to accelerate the
payment in hill of all orrower's obligations to Lender under the Loan Documents and to institute
proceedings to enforces;; ights_ and remedies under the Loan Documents and /or as provided by
apple able law. All o ,r ®orroer's obligations and liabilities to Lender hereunder (including, without
limit. , :grower's payment obligati and any documents, instruments or agreements pursuant to
which Borrower may, from time to time, grant to Lender as collateral security for Borrower's obligations
to Lender, shall survive the Forbearance Termination Date.
Section 5.4 Lender Assignment or Transfer. Lender may not assign or otherwise transfer
all or a portion of rights and /or obligations under the Loan Agreement or any other Loan Documents
(including, without limitation, all or any portion of the Loan) to any Person without the prior written
consent of Borrower (such consent in Borrower's sole and absolute discretion).
Section 6. MISCELLANEOUS. The following conditions shall be applicable throughout the term
of this Agreement:
Section 6.1 No Waiver. No course of dealing on the part of Lender or its officers,
employees, consultants or agents, nor any failure or delay by Lender with respect to exercising any of its
rights, powers or privileges under the Loan Documents will operate as a waiver thereof.
12
Resolution No. 17 -720 Exhibit A 1
Section 6.2 Notices. Any notice, request, demand, consent, approval, direction, agreement,
or other communication required or permitted hereunder shall be in writing and shall be validly given if
(a) sent by a nationally- recognized courier that obtains receipts, (b) delivered personally by a courier that
obtains receipts, (c) mailed by United States certified mail (with return receipt requested and postage
prepaid), or (d) sent by email (with a copy of such email and proof of transmission thereof sent via one of
the methods of delivery set forth in clauses (a), (b) or (c) hereof), addressed to the applicable party at the
address set forth on Schedule A. Each notice shall be effective upon being so sent, delivered, or mailed,
but the time period for response or action shall run from the date of receipt as shown on the delivery
receipt, or the date the facsimile or email was sent, as applicable. Refusal to accept delivery or the
inability to deliver because of a changed address for which no notice was given shall be deemed receipt.
Any party may periodically change its address for notice (including different or additional addresses for
copies) by giving the other party at least 10 calendar days' prior notice in accordance with the foregoing
provisions.
Section 6.3 Entire Agreement; No Oral Amendments. this Agreement (including without
limitation the Recitals and Schedule A, which are incorporated herein by reference and made a part
hereof), together with the other Loan Documents, constitutes the entire agreement between Lender and
Borrower (and any affiliates of Borrower) and supersedes all agreements previously made between the
parties relating to its subject matter. There are no other understandings > or agreements, between them
relating to such subject matter. Neither this Agreement nor any provision hereof (or of any of the other
Loan Documents) may be changed, waived, s s < _ed or terms ted orally but only by an instrument in
writing signed by the party against whom ,a ar jE sit i such change, waiver, discharge or termination is
sought.
Section 6.4 Additional Remedies. The rcmcdies herein provided shall be in addition to and
not in substitution for the rights and remedies which would otherwise be vested in Lender in any Loan
Document or at law or in equity, all o which rights and remedies are specifically reserved by Lender,
subject in all instances to Section e remedies herein provided or otherwise available to Lender
shall be cumulative and may he exerci oncurrently, subject in all instances to Section 5.3. The failure
to exercise any of the remedies herein p ided shall not constitute a waiver thereof, nor shall use of any
of the remedies hereby provided prevent the subsequent or concurrent resort to any other remedy or
remedies. It is intended that. subject in all instances to Section 5.3, all remedies herein provided for or
otherwise available to Lender shall continue and be available to Lender until all sums due it by reason of
this Agreement or any of the other Loan Documents have been paid to it in full.
Section 6.5 No Partnership, The relationship between Lender, on the one hand, and
Borrower, on the other, will be solely that of lender and borrower, and such relationship will not, under
any circumstances whatsoever, be construed to be a joint venture, joint adventure, or partnership.
Section 6.6 Usury Savings. Section 12 of the Note is incorporated herein by reference and
made a part hereof.
Section 6.7 Additional Documents. Borrower agrees upon demand to do any act or execute
any additional documents as may be reasonably required by Lender to secure the Note with the Pledged
Collateral or to confirm the liens of the Pledge Agreement. All of said documents shall be in form and
substance prepared by or acceptable to Lender.
Section 6.8 Binding Effect; Continuing Agreement. The terms, conditions, covenants,
agreement, powers, privileges, notices and authorizations herein contained shall extend to, be binding
upon and available to the heirs, executors, administrators, successors and, to the extent permitted
hereunder, the assigns of each of the respective parties hereto. Notwithstanding the foregoing, Borrower
13
Resolution No. 17 -720 Exhibit Al
shall not, without the prior written consent of Lender, assign or transfer this Agreement, whether
voluntarily or by operation of law. An assignment or transfer in violation of this provision shall be
invalid, of no force or effect and an Event of Default hereunder.
Section 6.9 Headings. The titles and headings of the Sections of this Agreement have been
inserted for convenience of reference only and are not intended to summarize or otherwise describe, or
limit, modify or expound upon the subject matter of such Sections.
Section 6.10 CHOICE OF LAW; WAIVER OF JURY TRIAL AND CERTAIN OTHER
RIGHTS; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.
(a) THE VALIDITY OF THE LOAN, THIS AGREEME T, OR ANY OF THE
OTHER LOAN DOCUMENTS, THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISINAEREUND : HEREUNDER OR
RELATED HERETO OR THERETO SHALL BE DETERMINED UNDE , ED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF "FHE STAT SHINGTON
WITHOUT GIVING EFFECT TO CONFLICT OR CHOICE OF LAW PRINCIPL
(b) TO THE FULLEST EXTENT PERMITTED BY APPLICABL
LAW, EACH
OF BORROWER AND LENDER (i) AGRE' T ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREE FALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS L TED IN COUNTY'. 1F KING, STATE OF
WASHINGTON, AND (ii) WAIVES ANY RIGHT IT MA NE TO ASSN RT THE DOCTRINE OF
FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING
IS BROUGHT IN ACCORDANCE WITH THIS SI: I ION 6.10.
(c) TO "I Hl I UL T EXTI N "I PERMITTED BY APPLICABLE LAW, EACH
OF BORROWER AND LENDER W S ANY RIG11T IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRE -,y, OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR 'HIE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED I IEREBY OR THEREBY (WI IETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). IT 1S \GREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS
OR P' OCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THI AGREEMENT OR TIIE'' OTHER LOAN DOCUMENTS. EACH PARTY (i) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (ii) ACKNOWLEDGES
THAT IT AND "II1E 0"1'11ER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.10.
(d) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH
OF BORROWER AND LENDER AGREES THAT ANY PROCESS OR NOTICE OF MOTION OR
OTHER APPLICATION TO ANY SUCH COURT IN CONNECTION WITH ANY ACTION OR
PROCEEDING MAY BE SERVED UPON SUCH PARTY BY REGISTERED OR CERTIFIED MAIL
TO OR BY PERSONAL SERVICE AT THE LAST KNOWN ADDRESS OF BORROWER OR
LENDER, AS APPLICABLE, WHETHER SUCH ADDRESS BE WITHIN OR OUTSIDE THE
JURISDICTION OF ANY SUCH COURT.
14
Resolution No. 17 -720
Exhibit A l
(e) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
LENDER SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST BORROWER,
ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR ANY OTHER AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY
AND /OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 6.11 (Intentionally Omitted'
Section 6.12 Enforcement Costs. In the event of any action at law or in equity to enforce the
provisions of this Agreement or the other Loan Documents or to secure relief or damages for the breach
of this Agreement or the other Loan Documents, the prevailing party shall be entitled to payment or
reimbursement, as applicable, of its costs, expenses and fees including with ®u limitation reasonable
attorneys', accountants', experts', and consultants' costs, expen slid fees, . • is and investigative
expenses prior to trial, at trial and on appeal) incurred in suc voce ings from revailing party.
Section 6.13 Duration of Agreement. Borrower's agreements, ob
representations and warranties hereunder shall remain in effect after the Loan is fully di
any amounts under the Note are outstanding.
covenants,
ed so long as
Section 6.14 Interpretation of Agreement. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa. The words "hereof',
"herein ", and "hereunder ", and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The words "including" or
"include" shall mean including or include by way of example and not limitation (regardless of whether
the words "without limitation" or wor of similar import are used in conjunction therewith), unless
otherwise expressly stated. 1?ach pa ,o this Agreement has been represented by counsel and has
participated in the drafting of this nnreement and the other Loan Documents; accordingly, any rule of
construction to the effect that the document is to be construed against a party that prepared or drafted a
document shall be inapplicable.
Section 6.15 SeverabilitN. It y provision of this Agreement or the application thereof to
any P n: or circumstance shall be invali Ilegal or unenforceable to any extent, that provision shall, if
possi e ' e construed as though more narrowly drawn, if a narrower construction would avoid such
invalidity, illegality, or unenforceability or, if that is not possible, such provision shall, to the extent of
such invalidity, illegality, or unenforceability, be severed, and the remainder of this Agreement and the
application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law.
Notwithstanding the foregoin 4the provisions of Section 5.3 shall be deemed integral to this Agreement
and shall not be severable from the remainder of this Agreement.
Section 6.16 Time of the Essence. Subject in all instances to Section 5.3, time shall be of the
essence with respect to all of Borrower's obligations under this Agreement and the other Loan
Documents.
Section 6.17 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier, facsimile machine, portable document format ( "PDF ") or other electronic
means shall be as effective as delivery of a manually executed counterpart of this Agreement. The
15
Resolution No. 17 -720 Exhibit Al
effectiveness of any such documents and signatures shall, subject to applicable laws, have the same force
and effect as manually signed originals and shall be binding on the parties. No party may raise the use of
a telecopier, facsimile machine, PDF or other electronic means, or the fact that any signature was
transmitted through the use of a telecopier, facsimile machine, PDF or other electronic means, as a
defense to the enforcement of this Agreement.
[REMAINDER OF PAGE BLANK; SIGNATURE PAGES TO FOLLOW.]
16
Resolution No. 17 -720 Exhibit Al
IN WITNESS WHEREOF, Borrower and Lender have caused this Fund Loan Agreement to be
duly executed as of the Effective Date.
BORROWER:
COCRF INVESTOR 77, LLC, a Delaware limited
liability company
By: Capital One, National Association, a national
banking association; o1e member
By:
Name: Douglas .1 Fields
Title: enior Vice Prey
SIGNATURE PAGE 1 OF 2
FUND LOAN AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
NAI -I 502609375v3
Resolution No. 17 -720
Exhibit Al
LENDER:
[COUNTERPART SIGNATURE PAGE TO FUND LOAN AGREEMENT]
CITY OF FEDERAL WAY, a Washington municipal
corporation
By:
Name:
Title:
SIGNATURE PAGE 2 OF 2
FUND LOAN AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
NAI- 1502609375v3
Resolution No. 17 -720
Exhibit Al
(1) If to Borrower:
With a copy to:
(2) If to Lender:
With a co
SCHEDULE A
Notice Addresses of Parties
COCRF Investor 77, LLC
c/o Capital One, National Association
Debt Capital Markets
Place St. Charles, Suite 2900
201 St. Charles Ave.
New Orleans, LA 70170
Attention: Spencer Gagnet
Email: spencer.gagnet @capitalone.com
Jones Day
100 High Street @ -,loor
Boston, MA 0
Attention: Jeffre , Gaul in, Esq.
Email: jgaulin @jon °:day.com
City of Federal Way
City Hall
33325 8th Ave. South
Federal Way, WA 98003
Attention: Ade Ariwoola, Finance Director
Email: ade.ariwoola@cityoffederalway.com
ler Snow.
01 California Street, Suite 5100
Denver, CO 80202
Attention: Alan Pasternack, Esq.
Ilan . pasternack @butlersnow.com
[RE DER OF PAGE BLANK]
SCHEDULE A
FUND LOAN AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
NAI- 1502609375v3
Resolution No. 17 -720
Exhibit Al
JD Draft 5/1/17
FUND PLEDGE AGREEMENT
THIS FUND PLEDGE AGREEMENT (this "Agreement "), dated as of [ ], 2017, is
entered into by and between CITY OF FEDERAL WAY, a Washington municipal corporation
( "Lender "), and COCRF INVESTOR 77, LLC, a Delaware limited liability company ( "Borrower ").
RECITALS
A. Borrower has requested that Lender provide a loan (the "Loan ") in the original principal
amount of $[6,239,600].
B. Concurrently with the execution of this Agreement, Lender and Borrower are entering
into that certain Fund Loan Agreement (as the same may be amended,, assi ed restated, modified, or
supplemented from time to time, the "Loan Agreement "), pu uant to whic rr agreed to make the
Loan.
C. Concurrently with the execution of this Agreement, Borrower is executing sand delivering
to Lender that certain Fund Promissory Note for the origina rincipal amount of the Loan (as the same
may be amended, assigned, restated, modified, or supplement d from time to time, the "Note "). The Note
evidences the Loan.
D. The proceeds of the Loan will be used sole for the purpo : set forth in Article IX of
the Borrower OA, which is incorporated herein by reference an made a part hereof.
below).
E. Borrower is the r-cord and beneficial owner of the CDE Interest (as such term is defined
F. As security for ihe pa t and performance of the Obligations (as such term is defined
below) of Borrower, Lender is requiring that Borrower execute and deliver this Agreement and grant the
security interests contemplated hereby.
NOW, THE
and to induce Lender
RE, in consideration of the promises and the covenants hereinafter contained,
the Loan und r the Loan Agreement, it is agreed as follows:
1. Definitions. All capitalized listed in the introductory paragraph and Recitals to this
Agreement have the meanings assigned to them therein, and all capitalized terms not otherwise expressly
defined herein have the meanings assigned to them in the Loan Agreement. In addition, the following
terms have the following meanings in this Agreement:
(a) "CD means Clearinghouse NMTC (Sub 46), LLC, a California limited liability
company.
(b) "CDE Interest" means Borrower's entire interest in CDE, including Borrower's share of
any dividends and distributions of the assets of CDE pursuant to the CDE OA and the Entity Act, and the
right to vote on, consent to, or otherwise participate in any decision or action of or by CDE granted to
Borrower pursuant to the CDE OA and the Entity Act.
(c) "CDE OA" means that certain Amended and Restated Operating Agreement of CDE,
dated as of the Effective Date, by and between Borrower, as investor member and Class A member,
Clearinghouse Community Development Financial Institution, a California corporation, as manager, and
NA1- 1502609640v3
Resolution No. 17 -720 Exhibit A2
Clearinghouse NMTC, LLC, a Delaware limited liability company, as Class B Member, and together with
Class A Member, the "Members ", as the same may be amended, assigned, restated, modified, or
supplemented in accordance therewith and with the Loan Agreement.
(d) "Entity Act" means the California Revised Uniform Limited Liability Company Act, as
may be amended or restated from time to time.
(e) "Investor" means Capital One, National Association, a national banking association.
(f) "Obligations" means all of the indebtedness and all other obligations of Borrower under
the Note and the other Loan Documents.
(g)
(h)
(i)
"Pledged Collateral" has the meaning set forth in Section 2.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"UCC" has the meaning set forth in Section 3(a).
2. Pledge. Subject to the provisions of Sections 6 and 7, Borrower hereby pledges to Lender and
grants to Lender, a first priority security interest in all of the following (collectively, the "Pledged
Collateral "):
(a) the CDE Interest and the certificates and other instruments or agreements representing or
evidencing the CDE Interest, and all dividends, distributions, cash. instruments, tax benefits, allocations
of taxable income and loss, and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the CDE Interest;
(b) all rights and privileges of Borrower with respect to the securities and other property
referred to in Section 2(a); and
(c) all distributions, profits, products, and proceeds, whether cash or noncash, of or from any
of the foregoing.
3. Collateral.
(a) Security for the Obligations. This Agreement secures, and the Pledged Collateral is
security, for, the prompt payment and performance of the Obligations. The security interest granted by
this Agreement is a continuing one and is irrevocable so long as any of the Obligations are outstanding or
Borrower shall have any obligations under the Note and shall terminate only in accordance with
Section 11. The parties agree that this Agreement shall constitute a "security agreement" under the
Uniform Commercial Code of Washington (as amended from time to time, the "UCC "), and as such, in
addition to the remedies provided herein, Lender shall have all remedies granted to it as a secured party
under the UCC, except to the extent such remedies are excluded, limited or otherwise restricted hereunder
or in the Loan Agreement, including, without limitation, Section 5.3 of the Loan Agreement.
(b) Delivery of Pledged Collateral. All certificates or other instruments representing or
evidencing the Pledged Collateral, if any, shall be delivered to Lender at such time as Lender shall
reasonably request, shall be accompanied by duly executed instruments of transfer or assignment in blank,
including a duly executed assignment in blank, substantially in the form attached hereto as Exhibit A, all
in form and substance reasonably satisfactory to Lender. Subject to Section 5.3 of the Loan Agreement,
Lender shall have the right, at any time after the occurrence and during the continuance of an Event of
NAI- 1502609640v3 2
Resolution No. 17 -720 Exhibit A2
Default, in its discretion and without notice to Borrower, to transfer to or to register in the name of
Lender, any or all of the Pledged Collateral.
4. Representations and Warranties. Borrower represents and warrants to Lender that as of the
Effective Date:
(a) Borrower is duly organized or formed, validly existing and in good standing under the
laws of the State of Delaware, has the legal power and authority to own its assets and to carry on its
business as now being and hereafter proposed to be conducted. Borrower is duly qualified and authorized
to do business in each jurisdiction in which it is legally required to do so.
(b) Borrower is the sole holder of record and the sole beneficial owner of the Pledged
Collateral, free and clear of any lien, charge or encumbrance thereon or affecting the title thereto, except
for any liens created by this Agreement.
(c) The CDE Interest consists of a 99.99% interest in all of the issued and outstanding equity
interests of CDE. The CDE Interest has been duly authorized and validly issued.
(d) Borrower has delivered to Lender a true and complete copy of the CDE OA and such
agreement is currently in full force and effect and has not been amended or modified except as disclosed
to Lender in writing.
(e) To the best of Borrower's knowledge, information or belief, (1) the CDE Interest has not
been issued or transferred in violation of the securities registration, securities disclosure or similar laws of
any jurisdiction to which such issuance or transfer may be subject and 1i) its execution, delivery and
performance of this Agreement and the pledge of the Pledged Collateral hereunder do not, directly or
indirectly, violate in any material respect or result in a violation of any such laws.
(f) Borrower has the right and requisite authority to pledge the Pledged Collateral to Lender,
as provided herein. The execution, delivery, and performance of this Agreement will not (i) result in any
violation of, be in conflict with, or constitute a default under (x) the CDE OA or (y) any agreement or
instrument or any judgment. decree, order, statute, rule, or governmental regulation applicable to
Borrower or (ii) result in the creation of any mortgage, lien, charge, or encumbrance on any of the
properties or assets of Borrower, except pursuant to this Agreement.
(g) None of the Pledged Collateral is, as of the Effective Date, margin stock, and Borrower
shall, promptly after learning thereof, notify CDE and Lender of any Pledged Collateral which is or
becomes margin stock and execute and deliver in favor of Lender any and all instruments, documents and
agreements (including, but not limited to Forms U -1) necessary to cause the pledge of such margin stock
to comply with all applicable laws, rules and regulations.
(h) Except as have already been obtained as of the Effective Date, no consent, approval,
authorization or other order of any Person and no consent, authorization, approval, or other action by, and
no notice to or filing with, any governmental departments, commissions, boards, bureaus, agencies or
other instrumentalities, domestic or foreign, is required to be made or obtained by Borrower either (1) for
the pledge of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by Borrower or (ii) for the exercise by Lender of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this
Agreement.
NAI- 1502609640v3 3
Resolution No. 17 -720 Exhibit A2
(i) The pledge of the Pledged Collateral to Lender pursuant to this Agreement will create a
valid lien on and a first priority security interest in the Pledged Collateral, and the proceeds thereof,
securing the payment of the Obligations.
(j) The Pledged Collateral is not certificated.
(k) This Agreement has been duly authorized, executed, and delivered by Borrower and
constitutes the legal, valid and binding obligation of Borrower enforceable in accordance with its terms.
(1) The only assets of Borrower are the Pledged Collateral and o
(m) Borrower has no indebtedness other than the Loan, an
for in Section 4.5 of the Loan Agreement.
(n) Investor, the sole member of Borrower as
investor" as such term is defined in Rule 501(a) of the Regu
and any additional member of Borrower and /or trans
Borrower OA, shall each be an "accredited investor'
Regulation D promulgated under the Securities Act.
er assets incidental thereto.
additionally be provided
of the Effective Date. is an "accredited
promulgated under: the Securities Act
nvestor, as may be epermitted in the
efined in Rule 501(a) of the
(o) The representations and warr �_-s set forth in
and delivery of this Agreement.
on 4 shall survive the execution
5. Covenants. Borrower covenants an
(a) Borrower will not sell, assign,
or to any of the Pledged Collateral ° or any di
thereto or grant a lien, charge, encumbrance or sec
(b) Borrower will, at its expense, pro
instruments and take all such action as Lender from
full of the Obligations:
ise encumber any of its rights in
ibutions or payments with respect
est on any thereof.
xecute, acknowledge and deliver all such
e to time may reasonably request in order to
ensure to Lender the benefits of the liens and security interests in and to the Pledged Collateral intended
to be created by this i \agreement, including the delivery of all certificates and other documentation,
evidencing any of the Pledged Collateral and the filing of any necessary Uniform Commercial Code
financing statements, which may be filed by Lender without the signature of- Borrower.
(c) Borrower will defend the title to the Pledged Collateral and the liens of Lender, for the
benefit of Lender against the claim of any Person and will maintain and preserve such liens until the
payment in full of the Obligations.
(d) Borrower will not allow the Pledged Collateral to become certificated without the prior
written consent of Lender,
(e) Borrower shall have no indebtedness other than the Loan, loans to CDE as contemplated
by the CDE OA, and trade payables incurred by Borrower in the ordinary course of business, and as may
additionally be provided for in Section 4.5 of the Loan Agreement.
(f) Subject to Section 5.3 of the Loan Agreement, at any time an uncured Event of Default
remains outstanding, Borrower hereby consents to Lender's or its designee's right to become and be
admitted as a member or partner, as applicable, of CDE and to receive distributions and allocations from
CDE, and to exercise voting, consent, waiver or ratification rights with respect to the CDE Interest
NA1- 1502609640v3 4
Resolution No. 17 -720 Exhibit A2
(subject to the terms of the CDE OA), upon the exercise of Lender's rights hereunder without further
action, approval or consent.
(g) Borrower shall not waive any right to, or consent to any failure by any managing member
or general partner, as applicable, of CDE to make, periodic distributions permitted under the CDE OA.
(h) Borrower will not consent to CDE opting into Article 8 of the Uniform Commercial Code
of CDE's state of organization without the prior written consent of Lender.
(i) Borrower will not consent to any amendment or restatement of the CDE OA unless such
amendment or restatement is permitted by Section 4.3 of the Loan Agreement.
6. Borrower's Rights. Until the later to occur of: (a) the date that notice of the occurrence and
continuance of an Event of Default is given by Lender to Borrower in accordance with Section 1 8(b) and
(b) the date on which Lender is entitled to exercise remedies under the Loan Documents in accordance
with Section 5.3 of the Loan Agreement:
(i) Borrower shall have the right, � tine to ti" e, to vot sent to, or
otherwise participate in any decision or action of • by CDE grant to Borro rsuant to the
CDE OA or the Entity Act for all purposes not inconsistent with the provisions o this Agreement
and the other Loan Documents, provided, however, that 110 vote shall be cast, and no consent shall
be given or action taken, which w• $ ve tl effect of (A) impairing in any material respect the
validity of Lender's security intere ri the Ple ecd- Collateral or Lender's rights under the Loan
Documents, (B) any change in the " thorized numberot shales or interests in CDE, the stated
capital or the authorized share capital'' of CDE or the issuance of any additional interests in CDE,
or (C) the alteration of the voting rights with respect;, to Borrower's interests in CDE; and
(ii) E se set forth in Ction 4.3 of the Loan Agreement, Lender shall
have no right toe c1" a r "" "ito vote on consent to, or otherwise participate in any decision
or action of or by CDE granted to Borrower pursuant to the CDE OA or the Entity Act.
7. Defaults and Remedies. Subject to Section 5.3 of the Loan Agreement, upon the occurrence and
continuance of an Event of Default, following written notice to Borrower, Lender is hereby authorized
and empowered to do any and all of the following in a commercially reasonable manner:
(a) transfer and register in its name or in the name of its nominee the whole or any part of the
Pledged Collateral:
(b) exchange certificates or instruments representing or evidencing any or all of the CDE
Interest for certificates or instruments of smaller or larger denominations;
(c) exercise the voting rights with respect to any or all of the CDE Interest;
(d) collect and receive all cash dividends and other distributions made with respect to any or
all of the CDE Interest; and
(e) sell in one or more sales after 10 calendar days' written notice is sent by Lender of the
time and place of any public sale or of the time after which a private sale is to take place (which notice
Borrower agrees is commercially reasonable), but without any previous notice or advertisement, the
whole or any part of the Pledged Collateral and to otherwise act with respect to the Pledged Collateral as
though Lender were the outright owner thereof; provided, however, Lender shall not have any duty to
NA1- 1502609640v3 5
Resolution No. 17 -720 Exhibit A2
exercise any such right of sale or to preserve the same and shall not be liable for any failure to do so or for
any delay in doing so.
8. Sale of Pledged Collateral.
(a) Any sale of the whole or any part of the Pledged Collateral in accordance with
Section 7(e) shall be made at a public or private sale at Lender's place of business, or at any public
building to be named in the notice of sale, either for cash or upon credit or for future delivery at such
price as Lender may deem fair and reasonable, and Lender may be the purchaser of the whole or any part
of the Pledged Collateral so sold and hold the same thereafter in its own right free from any claim of
Borrower or any right of redemption. Each sale shall be made to the highest bidder, but Lender reserves
the right to reject any and all bids at such sale which, in its discretion, it shall deem inadequate. Demands
of performance, notices of sale, advertisements and the presence of property at sale are hereby waived and
any sale hereunder may be conducted by an auctioneer or any officer or agent of Lender.
(b) If, at the original time or times appointed
Pledged Collateral, the highest bid, if there be but one s
Obligations, or if the Pledged Collateral be offered for
for the lot offered for sale would indicate to Lender, in its
the sales of the whole of the Pledged Collateral being suffici
may, on one or more occasions and in its disc
the time of sale, and no other notice of s
other notice being hereby waived; provide
shall be after 10 calendar days' notice to Bo
ale of the whole or any part of the
inadequate to discharge in full all the
of such sales, 'tie highest bid
likelihood otvthe proceeds of
arge all the Obligations, Lender
ales by public announcement at
s of sale need be given, any
after such postponement
postpone an
ent or pos
sale or
(c) In the event of a
after deducting all reasonab
disbursements) for care
proceeds of the sales t
sale of the
xpenses
lection,
►ction, ei
ledged Collateral, Lender shall,
(inc ding reasonable attorneys' fees and
'very or otherwise, apply the residue of the
hole or in part, of the Obligations.
(d) In the e at it becomes necess.k to comply with any federal or state law or
regulation or to make or file`` any registration thereunder in order for Lender to exercise any of its rights
hereunder, Arrower expressly agrees to do or cause to be done all acts and prepare and execute all
documents necessary to effect such compliance or registration, and to bear all reasonable costs in
conn � o therewith. Borrower agrees to indemnify and to hold Lender harmless from and against any
clai ! » 'ty caused bey' . ny omis,sii n or alleged omission to state a material fact required to be
stated, . ry to max e statements, in light of the circumstances in which they are made, not
misleadin .- a red in any registration or prospectus) or (ii) a failure to register or comply with any
such law or r ��T. , Vin; unless such failure is caused by Lender.
(e) If, any time when Lender shall determine to exercise its right to sell the whole or any
part of the Pledged Collateral, and such Pledged Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act, then Lender may, in its discretion
(subject only to the requirements of applicable law), sell such Pledged Collateral or part thereof by private
sale in such manner and under such circumstances as is commercially reasonable and shall not be required
to effect such registration or to cause the same to be effected; provided, however, that Lender agrees and
shall cause any purchaser of Pledged Collateral to agree that Borrower shall (x) not be liable to any
purchaser of Pledged Collateral for any action taken or omitted to be taken by Lender in connection with
the sale of Pledged Collateral, and (y) not be responsible in any manner to any purchaser of Pledged
Collateral for any statement, representation or warranty made by Lender in connection with the sale of
NA1- 1502609640v3 6
Resolution No. 17 -720 Exhibit A2
Pledged Collateral. Without limiting the generality of the foregoing, in any such event Lender in its
discretion may:
(i) in accordance with applicable securities laws, proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering such Pledged
Collateral or part thereof could be or shall have been filed under said Securities Act (or similar
statute);
(ii) approach and negotiate with a single possible purchaser to effect such sale; and
(iii) restrict such sale to a purchaser who will represent and agree that such purchaser
is purchasing for its own account, for investment and not with a view to the distribution or sale of
such Pledged Collateral or part thereof.
(f) In addition to a private sale as provided in Section 7(e) and this Section 8, if any of the
Pledged Collateral shall not be freely distributable to the public without registration under the Securities
-to Se tion 7 e and tlis> Section 8, then
me to be effected but, in its
ny sale hereunder (including
Act (or similar statute) at the time of any proposed sale
Lender shall not be required to effect such registrati
discretion (subject only to applicable requirements of law),
a sale at auction) be conducted subject to restrictions:
(i) as to the financia
purchase at any such sale;
n and abi any Person permitted to bid or
(ii) as to the content of
Pledged Collateral sold in such sale, inc
any certificates representing the
re transfer thereof;
(iii) as to the representations requir -d to be made by each Person bidding or
purchasing at such sale relating to that Person's access to financial information about any issuer
of the Pledged Collateral and such Person's intentions as to the holding of the Pledged Collateral
so sold for investment, for its own account, andnot with a view to the distribution thereof, and
to such other matters as Lender may, in its discretion, deem necessary or
that such sale (notwithstanding any failure so to register) may be effected in
e'Uniform Commercial Code and other laws affecting the enforcement of
ors' rights and the Securities Act and all applicable state securities laws.
orrower recognizes that Lender may be unable to effect a public sale of the whole or
g Y P
any part oft Pledged Collateral and may be compelled to resort to one or more private sales thereof
Borrower also acknowledges that any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale. Borrower agrees that such sale shall not be deemed to
have been made in a IC,, unreasonable manner because it was conducted as a private sale.
Lender shall be under nobligation to delay a sale of any of the Pledged Collateral for the period of time
necessary to permit the registrant to register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if Borrower would agree to do so.
(h) Borrower agrees, to the maximum extent permitted by applicable law, that following the
occurrence and during the continuance of an Event of Default, it will not at any time plead, claim or take
the benefit of any appraisal, valuation, stay, extension, moratorium or redemption law now or hereafter in
force in order to prevent or delay the enforcement of this Agreement, or the absolute sale of the whole or
any part of the Pledged Collateral or the possession thereof by any purchaser at any sale hereunder, and
NA1- 1502609640v3 7
Resolution No. 17 -720
Exhibit A2
Borrower waives the benefit of all such laws to the extent it lawfully may do so. No failure or delay or
forbearance under Section 5.3 of the Loan Agreement or otherwise on the part of Lender to exercise any
such right, power or remedy and no notice or demand which may be given to or made upon Lender with
respect to any such remedies shall operate as a waiver thereof, or limit or impair Lender's right to take
any action or to exercise any power or remedy hereunder, without notice or demand, or prejudice its
rights as against Borrower in any respect.
(i) Borrower further agrees that a breach of any of the covenants contained in this Section 8
will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in this Section 8 shall be
specifically enforceable against Borrower, and Borrower hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for a defense that Lender's
rights are subject to Section 5.3 of the Loan Agreement or that the Obligations are not then due and
payable in accordance with the agreements and instruments governing and evidencing the Obligations.
(j) The rights and - remedies of Lender under this Agreement shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have In exercising ch rights and
remedies, Lender may be selective, and no failure or delay or 101 Ix. ran; under Sec •f the Loan
Agreement or otherwise by Lender in exercising any right shall operate a waiver '`' f nor shall any
single or partial exercise of any power or right preclude its other or further exercise or the exercise of any
other power or right.
(k) Following the Forbearance ermination Dat : upon the occurrence of an Event of Default
and during the continuation of such Even of Default, Borrower hereby irrevocably constitutes and
appoints Lender and any officer or agent thereof with full power of s stitution as Borrower's true and
lawful attorney -in -fact and as such, Lender is hereby authorized and pe itted to take, in its own name or
in the name of Borrower for itself and as a member of CD ` o the extent of the interests in the Pledged
Collateral), any action specified in t h i s Agreement to be taken by Lender.
9. Forbearance. Notwithstanding any provision in this Agreement to the contrary, the rights and
remedies of Lender are subject in all respect to the provisions of Section 5.3 of the Loan Agreement
(incorporated herein by reference and made a part hereof), and nothing in this Agreement shall be deemed
to authorize or empower Lender to take any action or exercise any right or remedy that is inconsistent
with such provisions.
10. r. No delay or forbearance under Section 53 of the Loan Agreement or otherwise on
Lender exercisin .ower of sale, lien, option or other right hereunder, and no notice or
demand which maybe give 5 0 `� made upon Borrower by Lender with respect to any power of sale, lien,
option or other right hereund all constitute a waiver thereof, or limit or impair Lender's right to take
any action or to exercise any power of sale, lien, option, or any other right hereunder, without notice or
demand, or prejudice Lender's rights as against Borrower in any respect.
1 1 . Termination. Subject to Section 14, this Agreement shall terminate and be of no further force or
effect at such time as the Obligations shall have been irrevocably paid and performed in full. Upon such
payment and performance in full of the Obligations, Lender shall deliver to Borrower the Pledged
Collateral (or any Project Loan Documents or other instruments received in connection with the
redemption of any or all of the CDE Interest or dissolution or termination of any or all of CDE, as
applicable) at the time subject to this Agreement and then in Lender's possession or control and all
instruments of assignment executed in connection therewith, free and clear of the liens hereof and, except
as otherwise provided herein, all of Borrower's obligations hereunder shall at such time terminate.
NAI- 1502609640v3 8
Resolution No. 17 -720
Exhibit A2
12. Lien Absolute. All rights of Lender hereunder, and the Obligations of Borrower hereunder, shall
be absolute and unconditional without regard to:
(a) any lack of validity or enforceability of the Loan Agreement, the Note, any other Loan
Document or any other agreement or instrument governing or evidencing any Obligations;
(b) any change in the time, manner or place of payment of, or in any other term of, all or any
part of the Obligations, or any other amendment or waiver of or any consent to any departure from the
Loan Agreement, the Note, any other Loan Document or any other agreement or instrument governing or
evidencing the Obligations;
(c) any exchange, release or non - perfection of any other collateral, or any release or
amendment or waiver of or consent to departure from any guaranty, for 'all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a defense available to, or a
discharge of, Borrower.
13. Release. Except as specifically provided for in any other Loan Document, Bor> wer hereby
waives notice of acceptance of this Agreement, and also presentment, demand, prote -' nd notice of
dishonor of all or any of the Obligations, and promptness in commencing suit against any party hereto or
liable hereon, and in giving any notice to or of making any claim or demand hereunder upon Borrower.
Borrower consents and agrees that Lender may at any time, or from time to time, in its discretion
exchange, release and /or surrender all or any of the Pledged Collateral and/or any other collateral for the
Loan, or any part thereof, by whomsoever deposited. which is now or may hereafter be held by Lender in
connection with all or any of the Obligations; all in such manner and upon such terms as Lender may
deem proper, and without notice to or further assent from Borrower, it being hereby agreed that Borrower
shall be and remain bound upon this Agreement, without regard to the value or condition of any of the
Pledged Collateral or other collateral for the Loan, and notwithstanding any such change, exchange,
settlement, compromise; surrender, release, renewal or extension, and notwithstanding also that the
Obligations may, at any time, exceed the aggregate principal amount thereof set forth in the Loan
Agreement, or any other agreement governing any Obligations. No act or omission of any kind on
Lender's part shall in any event affect or impair this Agreement.
14. Reinstatement. This Agreement shall remain in full force and effect and continue to be effective
or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any
part thereof, is pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any obligee of the Obligations, whether as a "voidable preference," "fraudulent
conveyance p or otherwise, all as though such payment or performance had not been made.
15. Non - Recourse. The provisions of this Agreement are expressly made subject to the limitations on
recourse set forth in Section 1.9 of the Loan Agreement, which are incorporated herein by reference.
16. Lender Liability. Neither Lender, nor any of its respective officers, members, managers,
directors, employees, agents or counsel shall be liable for any action lawfully taken or omitted to be taken
by it or them hereunder or in connection herewith, except for its or their own fraud, gross negligence, or
willful misconduct.
17. Lender Assignment or Transfer. Section 5.4 of the Loan Agreement is incorporated herein by
reference.
NAI- 1502609640v3 9
Resolution No. I7 -720 Exhibit A2
18. Miscellaneous. The following conditions shall be applicable throughout the term of this
Agreement:
(a) No Waiver. Section 6.1 of the Loan Agreement is incorporated herein by reference.
(b) Notices. Section 6.2 and Schedule A of the Loan Agreement are incorporated herein by
reference.
(c) Entire Agreement; No Oral Amendments. This Agreement and the exhibit attached
hereto, together with the other Loan Documents, constitutes the entire agree pent by and between Lender
and Borrower (and any Affiliates of Borrower) and supersedes all agreements previously made between
the parties relating to its subject matter. There are no other understandings o #agreements between them
relating to such subject matter. Neither this Agreement nor any provisio hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writin g e d by the party hagainst
whom enforcement of such change, waiver, discharge or terms ation is sought.
(d) No Partnership. Section 6.5 of the Loan 1 ° ement is incorporated he ein by reference.
(e) Binding Effect; Continuing Agreement. Section 6.8.of the Lo greement is
incorporated herein by reference
(f) Headings. Section 6.9 of the Loan Agreement is ated herein by reference.
(g) CHOICE OF LAW; WAIVER 01- JURY L A D t RTAIN OTHER RIGHTS;
SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. Section . 0 of the Loan Agreement is
incorporated herein by reference.
(h) Enforcement Costs. Section 6.12 of the Loan Agreement is incorporated herein by
reference.
(1)
reference.
Duration of Agrecinent. Section 6.13 of the Loan Agreement is incorporated herein by
Interpretation of Agreement Section 6.14 of the Loan Agreement is incorporated herein
Severability. If any provision of this Agreement or the application thereof to any Person
or circumstance shall be invalid, illegal or unenforceable to any extent, that provision shall, if possible, be
construed as though more narrowly drawn, if a narrower construction would avoid such invalidity,
illegality, or unenforceability or, if that is not possible, such provision shall, to the extent of such
invalidity, illegal t, or unenforceability, be severed, and the remainder of this Agreement and the
application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law.
Notwithstanding the foregoing, to the extent (i) Section 5.3 of the Loan Agreement is incorporated herein
by reference or (ii) any provision hereof is made subject to Section 5.3 of the Loan Agreement, such
provisions shall be deemed integral to this Agreement and shall not be severable from the remainder of
this Agreement.
(1) Time of the Essence. Subject to Section 5.3 of the Loan Agreement, time shall be of the
essence with respect to all or any of the Obligations.
(m)
Counterparts. Section 6.17 of the Loan Agreement is incorporated herein by reference.
NAI- 1502609640v3 10
Resolution No. 17 -720 Exhibit A2
[REMAINDER OF PAGE BLANK; SIGNATURE PAGES TO FOLLOW.]
NA1- 1502609640v3
11
Resolution No. 17 -720 Exhibit A2
IN WITNESS WHEREOF, Borrower and Lender have caused this Fund Pledge Agreement to be
duly executed as of the Effective Date.
BORROWER:
COCRF INVESTOR 77, LLC, a Delaware limited
liability company
By: Capital One, National Association, a national
banking associatio sole member
By:
Name: Douglas J. Fields
Title: Senior Vice President
SIGNATURE PAGE 1 OF 2
FUND PLEDGE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
NAI- 1502609640v3
Resolution No. 17 -720
Exhibit A2
LENDER:
[COUNTERPART SIGNATURE PAGE TO FUND PLEDGE AGREEMENT]
CITY OF FEDERAL WAY, a Washington municipal
corporation
By:
Name:
Title:
SIGNATURE PAGE 2 OF 2
FUND PLEDGE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
NAI -1 502609640v3
Resolution No. 17 -720
Exhibit A2
EXHIBIT A
FORM OF ASSIGNMENT
COCRF INVESTOR 77, LLC, a Delaware limited liability company ( "Assignor "), hereby assigns
to CITY OF FEDERAL WAY, a Washington municipal corporation ( "Assignee "), all of Assignor's
rights, title and interest in and to the investor member limited liability company interest in Clearinghouse
NMTC (Sub 46), LLC, a California limited liability company, and directs that all future distributions and
allocations of income or loss on account of such interest be paid or allocate • =- ssignee.
Assignee hereby accepts said interest subject to all terms, covenants'' and conditions of (i) that
certain Fund Loan Agreement, dated as of [ -I, 2017, by and between Assignor and Assignee
(as the same may be amended, assigned, restated, modified, or supplemented from/time to time, the "Loan
Agreement "), including but not limited to Section 5.3 thereof, incorporated herein by reference and made
a part hereof, and (ii) the CDE OA (as such term is define �� oo e Loan Agreement).
Dated: , 20
ASSIGNOR:
COCRF INVE LLC, a Delaware limited
liability company
By: Capital One, National Association, a national
banking association, its sole member
By:
Name:
Title:
Authorized Signatory)
ASSIG ,aF3`f' ��` `,_ �h , CITY OF FEDERAL WAY, a Washington municipal
corporation
EXHIBIT A
FUND PLEDGE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
NAM 502609640v3
Resolution No. 17 -720
By:
Name:
Title:
(Authorized Signatory)
Exhibit A2
ENVIRONMENTAL AND HAZARDOUS
SUBSTANCES INDEMNITY AGREEMENT
This Environmental and Hazardous Substances Indemnity Agreement (this "Indemnity
Agreement ") is executed and delivered as of June , 2017, by FW PAEC QALICB, INC., a
Washington nonprofit corporation ( "Borrower "), and CITY OF FEDERAL WAY, a
Washington municipal corporation ( "City") (each of Borrower and City, an "Indemnitor ", and
SE NMTC (SUB 46),
ors and assigns (the
together, "Indemnitors "), to and for the benefit of CLEARINGH
LLC, a California limited liability company, together with its s
"Lender ").
A. Pursuant to that certain Ground Leas
between City, as lessor, and Borrower, as lessee, B
interest in the real property (the "Land ") located a
Way, Washington 98003, where Borrower intends t
improvements (the "Improvements" an ogether with
particularly described in the Borrower's ecificati
ed as ofhe date hereof, by and
the • elder of a long-term leasehold
eichbaucr South, Federal
develop, and lease certain
d, the "Property"), as more
B. In furtherance of the abo
entered into that certain Loan Agreemed
time to time, "Loan A eem- ." whereby
principal amount of $9,3 ctively,
C. In co
Promissory Note (Lo
[$6,239,600] ( "Note A"
herewith i
"Notes ").
f, Borrower and Lender
or otherwise modified from
e certain loans in the aggregate
has executed and delivered (i) that certain
date herewith in the principal amount of
ssory Note (Loan B) to Lender of even date
( "Note B ") and, together with Note A, the
D. As a condition to m Loan, Lender requires that Indemnitors indemnify
and hold harmless Lender (and certain other parties as described below) upon the occurrence of
certain events.
E. Le
to make the Loan
lied on the statements and agreements contained herein in agreeing
AGREEMENTS:
In consideration of the Recitals set forth above and hereby incorporated herein, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Indemnitors hereby agree as follows:
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Federal Way Q],1CI Environmental Indemnity v.2
Loan #17W.A -1228
Resolution No. 17 -720
Exhibit A3
1. Definitions. Initially capitalized terms used and not otherwise defined herein
shall have the meanings respectively ascribed to them in the Loan Agreement.
2. Representations and Warranties. Indemnitors hereby represents and
warrants to Lender, to the best of Indemnitors' actual and current knowledge after reasonably
diligent search and inquiry: (i) except as set forth in any environmental assessment delivered to
Lender by or on behalf of Indemnitors and described in Exhibit A attached hereto (the
"Documents ") (a) the Project has been and is free from contamination by Hazardous Material in
violation of Environmental Laws, and (b) no release of any Hazardous;; terial has occurred on,
onto or about the Project in violation of Environmental Laws (or to xtent such release has
occurred to Indemnitors' actual, current knowledge, such release as been addressed in
accordance with applicable Environmental Laws; (ii) that, except as specifically disclosed in the
Documents, the Project currently complies, and will comp', based on its anticipated use, with all
Environmental Laws; (iii) that in connection with .a <, ership, operation, and use of the
Project, all necessary notices have been filed a ;t -,i. quire permits,.; licenses and other
authorizations have been obtained, including those :iq �� :* �.. ration, treatment, storage,
disposal or use of Hazardous Material; (iv) that there vestigation, written inquiry
or pending proceeding relating to the environmental con. -: h' or to events on or about, the
Project ( "Environmental Proceedings"), and (v) it has not re .a .� waived the liability of any
previous owner, lessee or operator of the Project or any o may be potentially
responsible for the presence of or remoN al of 1 lazardous the Project.
3. Covenants. Indemnitors shall:
(a) coin , and use all other persons on or occupying the Project to
comply, with all Environmen Laws;
(b)
not install, use, generate, manufacture, store, treat, release or dispose of,
nor Pe ° _the installation, use, generation, storage, treatment, release or disposal of,
Hazardous Material on, under or about the Project except for Hazardous Material used
in the construction, operation or use of the Project in compliance with all Environmental
I.,aws;
(c) within five (5) Business Days after becoming aware of the same, advise
Lender in writing of:
(i)
any and all Environmental Proceedings;
(ii) the presence of any Hazardous Material on, under or about the
Project of which Lender has not previously been advised in writing and which is
not otherwise permitted under Section 3(b) above;
(iii) any remedial action taken by, or on behalf of, Indemnitors in
response to any Hazardous Material on, under or about the Project or to any
Environmental Proceedings of which Lender has not previously been advised in
writing;
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Federal Way QLICI Environmental Indemnity v.2
],oan #17WA -1228
Resolution No. 17 -720
Exhibit A3
(iv) the discovery by either Indemnitor of the presence of any
Hazardous Material on, under or about any real property adjoining or in the
vicinity of the Project of which Lender has not previously been advised in
writing; and
(v) the discovery by either Indemnitor of any occurrence or condition
on any real property adjoining or in the vicinity of the Project that could cause
the Project or any part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use of the Project under nvironmental Laws;
(d) provide Lender with copies of all reports, analyses, notices, licenses,
approvals, orders, correspondences or other written terials in its possession or control
relating to the environmental condition of the Pro eal proper _ adjoining or in the
vicinity of the Project or Environmental gs prom owing receipt,
completion or delivery of such materials by emnitor,
(e) except for the Deed of Trust an ens, not cr- . < ' or permit to
continue in existence any lien (whe her or not su priority over the lien created
by the Deed of Trust) upon the ® imposed p any Environmental Laws;
and
(f) not change or alte
Project in a manner that will result
in question in such a level that w
Environmental Proceedings:
4. Right of Entry '. Disclos p Environmental Reports. Indemnitors
hereby grants to Lender, its a g employees, consultants and contractors, an irrevocable
y.
license and authorization to enter upon and inspect the Project at reasonable times and, prior to
an Event of Default upon reasonable advance written notice, to conduct such environmental
audits and tests, including, without limitation, subsurface testing, soils and groundwater testing,
and e r tests which may physically invade the Project, as Lender, in its reasonable discretion,
deter ;, is necessary or desirable. With respect to any and all audits, tests, or other
investtgaons, Lender shall consult with Indemnitors in advance of such tests. Lender agrees,
however, that it shall not conduct any such audits, unless (a) an Event of Default exists under
the Loan Documents, (b) Lender has reason to believe that such audit may disclose the presence
or release of Hazardous Material or (c) an environmental audit conducted by or on behalf of
Lender deems further testing necessary. Lender's notice shall include, in reasonable detail, a
description of (x) the factual basis for Lender's belief that such audit may disclose the presence
or release of Hazardous Material, and (y) the nature and scope of any audits or tests to be
performed; provided, however that no such notice is required if an Event of Default has
occurred. Indemnitors and their respective agents shall have the right to be present at all times
during such audit, test or other inspections, except after an Event of Default. Without limiting
the generality of the foregoing, Indemnitors agree that Lender shall have the right to appoint a
receiver to enforce this right to enter and inspect the Project to the extent such authority is
d commercial use of the
rdous Material on the Project
rease the potential liability for
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Federal Way QLICI Environmental indemnity v.2
Loan #17WA -1228
Resolution No. 17 -720
Exhibit A3
provided under applicable law. All reasonable out -of- pocket costs and expenses incurred by
Lender in connection with any inspection, audit or testing conducted in accordance with this
Section 4 shall be paid by Indemnitors. The results of all investigations and reports prepared by
Lender shall be and at all times remain the property of Lender and Lender shall make available
to Indemnitors upon request copies of all Environmental Reports (as defined below). Lender
hereby reserves the right, and Indemnitors hereby expressly authorize Lender to make available
to any party in connection with a sale of the Property by Lender if Lender has succeeded to the
ownership thereof (whether through foreclosure, conveyance in lieu ereof or otherwise) any
and all reports, whether prepared by Lender or prepared by Indemnitor nd provided to Lender
(collectively, the "Environmental Reports ") which Lender may have with respect to the Project.
Indemnitors consent to Lender notifying any party under such circumstances of the availability
of any or all of the Environmental Reports and the inform tion contained therein. Indemnitors
further agree that Lender may disclose such Environmental Re orts to any governmental agency
or authority if Lender reasonably believes it is required to dislose any matter contained therein
to such agency or authority; provided that Lender shall gb c Indemnitors at least forty -eight (48)
hours prior written notice before so doing unless disclosure to such agency or authority is
required earlier. Indemnitors acknowledge that Lender cannot control or otherwise assure the
truthfulness or accuracy of the Environmental Reports, and that the release of the
Environmental Reports, or any information' contained therein, to prospective bidders at any
foreclosure sale of the Property may have a rnaterial and adverse effeet upon the amount which
a party may bid at such sale. Indemmtors agree that Lender shall not have any liability
whatsoever as a result of delivering any or all of the 1 nvaronmental Reports or any information
contained therein to any • t.. rty, and Indemnitq 1° release and forever discharge
Lender from any and all claims, damages, or causes 0? action arising out of connected with or
incidental to the Environmental Reports or the delivery thereof other than those arising from
Lender's gross negligence or vv 111 ful misconduct.
5. Indemnitors' Remedial Work. Indemnitors shall promptly perform or with
respect to the corrective act Ions described in the Documents, if any, cause to be performed any
and all remedial work required by 1nvironmental Laws ( "Remedial Work ") in response to any
Environmental Proceedings 01 the presence, storage, use, disposal, transportation, discharge or
release of and Hazardous Material under or about any of the Project in accordance with
Environmental Laws; provided however, that Indemnitors shall perform or cause to be
performed such Remedial Work so as to minimize any impairment to Lender's security under
the Loan Documents.
All Remedial Work shall be conducted:
(a) in a diligent and timely fashion by licensed contractors acting under the
supervision of a consulting environmental engineer;
(b) pursuant to a detailed written plan for the Remedial Work approved by
any public or private agencies or persons with a legal or contractual right to such
approval;
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Federal Way QLICI Environmental Indemnity v.2
Loan #17WA -1228
Resolution No. 17 -720
Exhibit A3
(c) with such insurance coverage pertaining to liabilities arising out of the
Remedial Work as is then customarily and reasonably maintained with respect to such
activities; and
(d) only following receipt of any required permits, licenses or approvals.
The selection of the Remedial Work contractors and consulting environmental engineer,
the contracts entered into with such parties, any disclosures to or agreements with any public or
private agencies or parties relating to Remedial Work and the wri Ian for the Remedial
Work (and any changes thereto) shall each be subject to Lender' itten approval, which
shall not be unreasonably withheld or delayed. In addition, In shall submit to Lender,
promptly upon receipt or preparation, copies of any reports, studies, analyses,
correspondence, governmental comments or approvals ., "d removal or other Remedial
Work contracts and similar information prepared or recei *, • Indemnitors in connection with
any Remedial Work, or Hazardous Material relating to Project. All reasonable costs and
expenses of such Remedial Work shall be paid by Indeninitors,- including, without limitation, the
charges of the contractors conducting the Remedial Work, the charges of the env- ironmental
engineer consulting on such Remedial Work, any taxes or penalties assessed in connection with
the Remedial Work and Lender's reasonable o t -of- pocket costs incurred in connection with
monitoring or review of such Remedial Work. L
to join and participate in, as a party if it so elect
connection with any Environmental Proceedings,
shall have the right but not the obligation
roceedings or actions initiated in
(a) Indernnirors shall protect, indemnify, defend and hold harmless
Indemnified Parties (as dchnedbelow) and any' nominee or designee of any Indemnified
Party that acquires City's or Borrower's interest in the Property pursuant to any
foreclosure, deed in lieu of foreclosure, or other enforcement of Lender's remedies
under the Loan Documents, and all members, directors, officers, employees and agents
of all of the of ex er-ntioned indemnified parties, from and against any and all actual or
potential claim , ab ties, da sges (direct or indirect), losses, fines, penalties, judgments,
awards, and reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and cots and expenses of investigation) (collectively, "Expenses ") which
arise out of or relate, in any way to any breach of any representation, warranty or
covenant contained herein, or any Environmental Proceedings, or any use, handling,
production, transportation, disposal, release or storage of any Hazardous Material in,
under or on the Project, whether by either Indemnitor or any other person, including,
without limitation:
(i) all foreseeable and all unforeseeable Expenses arising out of:
a) Environmental Proceedings or the use, generation, storage,
discharge or disposal of Hazardous Material by either Indemnitor, any
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Federal Way QLICI Environmental Indemnity v.2
Loan #17WA -1228
Resolution No. 17 -720
Exhibit A3
prior owner or operator of the Project, or any person on or about the
Project;
b) any residual contamination affecting any natural resource or the
environment; or
c) any exercise by any Indemnified Party of any of its rights and
remedies hereunder; and
the costs of any required or necessary investigation, assessment,
testing, remediation, repair, cleanup, or detoxification of the Project and the
preparation of any closure or other required plans;
subject, however, to the limitation set forth at the end of Section 6(b) hereof.
sue. ..;
(b) Indemnitors' liability to the aforementioned indemnified parties shall arise
upon the earlier to occur of (1) the discovery of any IIaza)lous Material on, under or
about the Project, or (2) the institution of any Environmental Proceedings, and not upon
the realization of loss or damage, and Indemnitors shall pay to any applicable
Indemnified Party from time to time, immediately upon request, an amount equal to
such Expenses, as reasonably determined by such Indemnified Party. In addition, in the
event any Hazardous Material is removed, or caused to be removed from the Project by
either Indemnitor, any Indemnified Party or any other person, the number assigned by
the U.S. Environm , i - stection Agency to such 1nvironmental Proceedings or any
similar identification shall in no event be in the name of such Indemnified Party or
identify such Indemnified Patty as a generator, arranger or other designation. The
foregoing indemnity shall not include Expenses arising solely from Hazardous Material
which first exist on the Project following the date on which any Indemnified Party or any
nominee or designee of such Indemnified Party, shall take title to or possession of the
Property, whether bv- enforcement' of the Deed of Trust, deed -in -lieu thereof or
otherwise, or a recdv cr is appointed, or title to or possession of the Property is otherwise
transferred pursuant to the exercise of remedies under the Loan Documents, as a result
of which Indemnitors cease to have possession or control of the Property, and the
indemnification hereunder shall not cover Expenses resulting from the gross negligence
or willful misconduct of any such indemnified party.
(c) For purposes of this Agreement, "Indemnified Parties" shall mean
Lender, the successors and assigns of each Lender, and each of Lender's direct and
indirect members (including, without limitation, Clearinghouse Community
Development Financial Institution, a California corporation, and COCRF Investor 77,
LLC, a Delaware limited liability company), subsidiaries, and affiliates, and each of their
respective partners, members, shareholders, directors, officers, employees, and agents,
and any financial institution that is the successor or assign of Lender. "Indemnified
Party" shall mean any one of the Indemnified Parties.
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Federal Way QLICI Environmental Indemnity v.2
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Resolution No. 17 -720
Exhibit A3
7. Remedies Upon Default. In addition to any other rights or remedies
Indemnified Parties may have under this Indemnity Agreement, at law or in equity, in the event
that either Indemnitor shall fail to timely comply with any of the provisions hereof, or in the
event that any representation or warranty made herein proves to be false or misleading in any
material respect, then Lender may declare an Event of Default under the Loan Documents and
exercise any and all remedies provided for therein, and /or do or cause to be done whatever is
reasonably necessary to cause the Project to comply with all Environmental Laws and other
applicable laws, rules, regulations or orders and the cost thereof shall constitute an Expense
hereunder and shall become immediately due and payable without notice and with interest
thereon at the Default Rate until paid; provided that (i) Lender first deliver written notice to
Indemnitors, which notice specifically states that Indemnitors have failed to comply with the
provisions of this Indemnity Agreement; and (ii) Indemnitors have until` the later of thirty (30)
days after receipt of such notice or the lapse of the cure period, if any, permitted under any
applicable law, rule, regulation or order with which Inde , itors shall have fakd to comply;
provided, however, that if any such failure is susceptible to cure and cannot be reasonably cured
within said thirty (30) day period, then Indemnitors shall have an additional sixty (60)' day period
to cure such failure so long as Indemnitors commence such cute:. ithin the initial thirty (30) day
period and diligently and in good faith es such cure to completion within such resulting
ninety (90) day period from the date ce to Indemnitrs. Lender agrees that the
foregoing notice and cure rights shall esser cure rights as to such matters set
forth in the Loan Agreement or other L demnitors shall give to Lender and
its agents and employees access to the Pro of effecting such compliance and
hereby specifically grant to a license, � ®;� Lion of the applicable period as
described above, if any, r is nec ause the Project to so comply, including,
without limitation, t "�5 ct and e therefrom any Hazardous Material or
. � �s E � � -
otherwise comply w
tal Laws.
8. Obli
Indemnitor's ration to
"Environmental Obligations ".
the Loan Documents, the 1 nviro
be fully and ,personally liable for
t forth herein, including, without limitation,
reunder, are collectively referred to as, the
standing any term or provision contained herein or in
Obligations are unconditional. Each Indemnitor shall
Environmental Obligations hereunder, on a joint and
several basis, and such liability shall not be limited to the original principal amount of the Loan.
The Environmental Obligations shall survive the repayment of the Loan and any foreclosure,
deed -in -lieu of foreclosure or similar proceedings by or through which Lender or any of its
affiliates, nominees, successors or assigns or any other person bidding at a foreclosure sale may
obtain title to the Project or any portion thereof.
9. Waiver. No waiver of any provision of this Indemnity Agreement nor
consent to any departure by Indemnitors therefrom shall in any event be effective unless the
same shall be in writing and signed by Lender and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No notice to or
demand on Indemnitors, on its own, shall in any case entitle Indemnitors to any other or further
notice or demand in similar or other circumstances.
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Exhibit A3
10. Exercise of Remedies. No failure on the part of Indemnified Parties' to
exercise and no delay in exercising any right or remedy hereunder, at law or in equity, shall
operate as a waiver thereof. Indemnified Parties shall not be estopped to exercise any such right
or remedy at any future time because of any such failure or delay; nor shall any single or partial
exercise of any such right or remedy preclude any other or further exercise of such right or
remedy or the exercise of any other right or remedy.
11. Assignment. Lender may assign its interest under this Indemnity Agreement
to any successor to its interests in the Property or the Loan Documents. This Indemnity
Agreement may not be assigned or transferred, in whole or in part, byIndemnitors and any
purported assignment by Indemnitors of this Indemnity Agreement shall be void ab initio and
of no force or effect.
12. Counterparts. This Indemnity Agreement may be exuted in any number of
counterparts and by different parties in separate counterparts, ea of which when so executed
and delivered shall be deemed to be an original and all of suc erparts taken together shall
constitute but one and the same instrument.
13. Governing Law. This Indemnity Agreement shall be governed by, and shall
be construed in accordance with, the `'laws of the State of \\ ashington without regard to any
conflicts of laws principles.
14. Modifications.
only by an instrument in
and which is duly exec
15. Att
enforcement, terminati
damages for the breach o
attorneys' fees (including, but not
incurred in connection therewith"
This Indemnity Agreement may be amended or modified
ch by its express _ terms refers to this Indemnity Agreement
tors and con ted to in writing by Lender.
f Lender commences litigation for the interpretation,
xesctssion of this Indemnity Agreement, or for
ment, Lender shall be entitled to its reasonable
`n -house counsel fees) and court and other costs
16. Interpretation. This Indemnity Agreement has been negotiated by parties
knowledgeable in the matters contained herein, with the advice of counsel, is to be construed
and interpreted in absolute parity, and shall not be construed or interpreted against any party by
reason of such party's preparation of the initial or any subsequent draft of the Loan Documents
or this Indemnity : \greement.
17. Severability. If any term or provision of this Indemnity Agreement shall be
determined to be illegal or unenforceable, all other terms and provisions in this Indemnity
Agreement shall nevertheless remain effective and shall be enforced to the fullest extent
permitted by law.
18. Other Laws. Nothing in this Indemnity Agreement, and no exercise by
Lender of its rights or remedies under this Indemnity Agreement, shall impair, constitute a
waiver of, or in any way affect Lender's rights and remedies with respect to Indemnitors under
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Federal Way Q1JCI Environmental Indemnity v.2
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Resolution No. 17 -720
Exhibit A3
any Environmental Laws, including without limitation, contribution provisions or private right
of action provisions under such Environmental Laws.
19. [Intentionally Deleted].
20. Notices. Any notice, demand, request or other communication which any party
hereto may be required or may desire to give hereunder shall be in writing and shall be deemed
to have been properly given (a) if hand delivered, when delivered; (b) if mailed by United States
Certified Mail (postage prepaid, return receipt requested), three (3) Business Days after mailing
(c) if by Federal Express or other reliable overnight courier service, on the next Business Day
after delivered to such courier service or (d) if by facsimile or email to the applicable party at its
respective email address or facsimile number set forth below or at such other address or
facsimile number as such party hereafter may designs e as its address for communications
hereunder by notice so given. Such notices and co unications shall be deemed delivered
upon receipt (or refusal to accept delivery).
If to either Indemnitor:
with copy to:
City of Federal
33325 8th Ave. Sou
Federa y, WA 98
Attn: Ryan 'Call
Phone: 53) 835-2412
Fax:,
Email: Ryan.Call @cityoffcderalway.com
utler Snow LI,P
01 St. Charles Avenue
Suite 2700
New Orleans, LA 70170
ttn: Alan Pasternack
ne: (504) 299 -7757
: (504) 299 -7701
mail: Alan.Pasternack @butlersnow.com
If to Lende
Federal Way QLICI Environmental Indemnity v.2
Loan #17WA -1228
Resolution No. 17 -720
Clearinghouse NMTC (SUB 46), LLC
23861 El Toro Road
Suite 401
Lake Forest, CA 92630
Attn: Kristy 011endorff
Phone: (949) 525 -4980
Fax: (949) 859 -8534
Email: KristyO @clearinghousecdfi.com
-9
Exhibit A3
with copy to:
and a copy to:
Bergman and Allderdice
1200 Wilshire Blvd.
Suite 610
Los Angeles, CA 90017
Attn: Beth S. Bergman
Phone: (213) 736 -5101
Fax: (213) 947 -4371
Email: bbergman @b- alaw.com
COCRF Investor 77, LL
c/o Capital One Bank
201 St. Charles Avenue, 2 F
New Orleans, LA 70170
Attn: Dougl sFields
Phone: (504) M'3-2035
Email: douglas.ficlds @capitalone.com
!ones Day
100 High Street, 21st Floor
Boston, 1\1A 02110 -1781
Attn: Jeff (laulin
Phone: (617) 449-6932
Email: jgaulin @jonesdaycom
or at such other address as the party to be serve*'with notice may have furnished in writing to
the party seeking or desiring to serve notice as a place for the service of notice.
not li
2
The headings of each section herein are for convenience only and do
tents `of any provisions of this Indemnity Agreement.
Trial.
EA
PERMITTED
JURY IN ANY
OF OR RELATIN
R HEREBY WAIVES, TO THE FULLEST EXTENT
BLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
ROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
O THIS INDEMNITY AGREEMENT OR THE TRANSACTIONS
CONTEMPLA'1'FD HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH INDEMNITOR (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS INDEMNITY
- 10 -
Federal Way QLICI Environmental Indemnity v.2
Loan #17W1\ -1228
Resolution No. 17 -720
Exhibit A3
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
Federal Way QLICI Environmental Indemnity v.2
Loan #17WA -1228
Resolution No. 17 -720
Exhibit A3
IN WITNESS WHEREOF, Borrower and City have caused this Indemnity
Agreement to be executed as of the day and year first above written.
BORROWER and INDEMNITOR:
FW PAEC QALICB, INC., a Washington
nonprofit corporation
By
Name:
Title:
CITY and INDEMNITOR:
CITY OF FEDERAL WAY, a Washington
nuuiicipal corporation
BV:
Nan1C:
Title:
Signature Page
Federal Way QLICI Environmental Indemnity
Resolution No. 17 -720 Exhibit A3
EXHIBIT A
Documents
EXHIBIT A
Resolution No. 17 -720
Exhibit A3
COMPLETION AND REPAYMENT GUARANTY
THIS COMPLETION AND PAYMENT GUARANTY (this "Guaranty ")
made as of June _, 2017, by the City of Federal Way, a municipal corporation of the State of
Washington (the "Guarantor "), to and for the benefit of Clearinghouse NMTC (SUB 46), LLC,
a California limited liability company (together with its successors and assigns, the "Lender ").
WITNESSETH:
A. On or about the date hereof, FW PAEC `ALICB, Inc. a Washington
nonprofit corporation ( "Borrower "), and Lender entered into that certain Loan Agreement (as
amended, restated or otherwise modified from time to time, "Loan Agreement ") whereby
Lender agreed to make certain loans to Borrower in the aggregate principal amount of
[$9,310,000] (collectively, the "Loan "). Capitalized terms used but not defined herein shall have
the meaning given to them under the Loan Agreement.
B. Borrower is the owner of a long-term leasehold interest in the
Improvements and the Land located at 31510 Pete vonkeichbauer South, Federal Way,
Washington 98003, where Borrower has commenced construction and development of an
approximately 43,471 square foot community facility and performing arts center and related
facilities, known as the Federal Way Performing Arts and ' 1 bvcnt Center (PAEC) (the
"Improvements "), as more particularly described in the Borrower's Plans and Specifications
(the "Project ").
C. In connection with the 1,oan, Borrower has executed and delivered (i) that
certain Promissory Notc (Loan -1) to Lender, dated of even date herewith in the principal
amount of [$6,239,600] ( "Note A "), and (ii) that certain Promissory Note (Loan B) to Lender of
even date herewith in the principal amount of [$3,070,400] ( "Note B" and, together with Note
A and Notc B, the "Notes").
NOW, 'Ii- 1E1Z1'1FOR1 ,'a as an inducement to the Lender to make the Loan to the
Borrower, and for other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties do hereby agree as follows:
1.1
ARTICLE I
NATURE AND SCOPE OF GUARANTY
Guaranty of Obligation
The Guarantor hereby irrevocably and unconditionally guarantees to the Lender
and its successors and assigns the payment and performance of the Guaranteed Obligations (as
defined below) as and when the same shall be due and payable, whether by lapse of time, by
acceleration of maturity or otherwise. The Guarantor hereby irrevocably and unconditionally
covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
1
1.2 Definition of Guaranteed Obligations
As used herein, the term "Guaranteed Obligations" means, collectively, the
following:
(a) the payment of all sums due and owing under the Notes and all
extensions, renewals, replacements and amendments thereof, if any, prior to the
completion of a foreclosure sale under the Deed of Trust or the acceptance of a deed -in-
lieu thereof (the "Payment Obligations ");
(b) construction and completion of the Project (as such term is
defined in the Loan Agreement) within the time periods required in, and in accordance
with the terms and conditions of, the Loan Agreement and this Guaranty (the
"Construction Obligations "); and
(c) any loss, damage, cost, expense, liability, claim or other obligation
incurred by the Lender (including reasonable attorneys' fees and costs reasonably
incurred) arising out of or in connection with the following:
(i) fraud or material misrepresentation by the Borrower or any
of the principals, officers or members of Borrower or any Guarantor in
connection with the Loan Doc u tents;
(ii) the gross negligence or willful misconduct with respect to
the Project of the Borrower or any Guarantor or any of its members, officers or
shareholders, or any of any of the Borrower's employees;
(iii) physical waste on 'the Property or Project by the Borrower
or any Guarantor or any of its members, officers or shareholders or by any of the
Bower's employees;
(iv) the material breach of any representation, warranty,
covenant or indemnification provision in (A) that certain Environmental and
I Iazardous Substances Indemnity Agreement of even date herewith given by any
Guarantor and Borrower to the Lender (the "Environmental Indemnity ") or
(B) in the Deed of Trust concerning environmental laws, hazardous substances or
asbestos;
(v) the failure of the Borrower to comply with the
requirements of the Loan Documents to maintain its status as a single purpose
entity;
(vi) the removal or disposal of any portion of the Project after
an Event of Default (as defined in the Deed of Trust) by the Borrower or any
Guarantor or any of its employees, members, officers or shareholders.
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
2
(vii) failure by the Borrower to maintain insurance to pay or
bond any valid taxes, assessments, mechanic's liens, materialmen's liens,
brokerage fees and commissions or other obligations which could create liens on
any portion of the Project which would be superior to the lien or security interest
of the Deed of Trust or the Loan Documents;
(viii) the distribution to any Guarantor or the Borrower or any
affiliated entity of any sales proceeds or rental income prior to repayment in full
of all sums owing to the Lender under the Loan Agree nt;
(ix) the misapplication or conversf o ®` the Borrower or any
Guarantor or any of its members, officers or shareholders or of any of the
Borrower's employees of (i) any insurance proceeds paid reason of any loss,
damage or destruction to the Project, (u) anv awards or other amounts received in
connection with the condemnation of ;Al or a portion oject, (iii) any
Rents (as defined in the Deed of Trust) following" an Event lt, (iv) any
Rents paid more than one month in advance, and (vi) any Loan �'',= ds;
(x) any books and records, or security deposits and /or down
payments collected with respect to the Project which are not delivered to the
Lender upon a foreclosure of the Project or action in lieu thereof, except to the
extent any such security deposits and /or dovv11 payments were applied in
accordance with the terms and conditions of any of the Leases (as defined in the
Deed of Trust) or purchase contracts, or Option (as defined in the Loan
Agreement) if applicable, prior to the occurrence of the Event of Default that
gave rise to such foreclosure or action in lieu thereof; and
Notwithstanding anything to the contrary in any of the Loan Documents, (i) the
Lender shall not be deemed to have waived any right which the Lender may have under Section
506(a), 506(b), 1111(b) or any other provisions of the United States Bankruptcy Code to file a
claim for any and all sums due under the Loan Agreement (collectively, the "Debt ") or to
require that all collateral shall continifP to secure all of the Debt owing to the Lender in
accordance with the Lari Documents, and the Guarantor shall be liable for the full amount of
the Debt '(with no limits on liability for any individual Guarantor) in the event that (A) the
Borrower fails to obtain the Lender's prior written consent to any subordinate financing
encumbering the Property; (B) the Borrower fails to obtain the Lender's prior written consent to
any assignment, transfer, or conveyance of the Property or the Project or any interest therein as
required by the Deed of 'Trust; (C) if any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by,
consented to, or acquiesced in by, the Borrower or if any proceeding for the dissolution or
liquidation of the Borrower shall be instituted by the Borrower or any Guarantor; or (D) the
Borrower or any party having a direct or indirect ownership interest in the Borrower or any
party acting through, under or on behalf of any of the foregoing has acted in a manner so as to
impede or delay, for a period in excess of ten (10) days in the aggregate, the Lender's rights to
exercise remedies under the Deed of Trust, this Guaranty or any of the other Loan Documents
(including, without limitation, raising defenses, offsets or counterclaims with respect to the
Federal Way QLIC1 Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
3
Lender exercising such remedies, which defenses, offsets and /or counterclaims are not
adjudicated to be correct by final order of a court of competent jurisdiction). Notwithstanding
the foregoing, no Guarantor shall have liability under the preceding subclause (D) as the result
of acts taken by another Guarantor (i.e., in the case of the Borrower impedance or delay,
Guarantor will become liable for the full amount of the Loan, but in the case of any Guarantor
impedance or delay only that Guarantor who is impeding or delaying will become liable for the
full amount of the Debt).
1.3 Completion of Project by Guarantor.
Guarantor irrevocably and unconditionally agrees that if for any reason (a)
Borrower fails to diligently proceed with or complete construction of the Project in the manner
and within the time limits set forth in the Loan Agreement, (b) Borrower ^ s to pay all costs of
construction of the Project in the manner and within the time limits orth in the Loan
Agreement, (c) Borrower's right to receive further disbursements or a nder the Loan
Agreement terminates prior to the completion of the Project, or (d) I,ende ssession of
the Property and the Project prior to the completion of the Project the resu sa. y Event of
Default under the Loan Agreement, then, in any such event, an upon dema d by Lender,
Guarantor shall diligently complete the Project in accordance with the terms of the Loan
Agreement at Guarantor's sole cost and expense, subject to the right to use Loan proceeds as
provided in paragraph 1.4 below. In' addition, Guarantor shall dcfe d, indemnify and hold
Lender harmless from and against all claims, demands, causes of action, liabilities, losses, costs
and expenses (including, without limitation, costs of suit and reasonable attorneys' fees) arising
from or in connection with any such event; provided, however, that nothing in this guaranty,
with the exception only of (i) `'`Guarantor's obligat o s under Paragraph 1.2(a) above, (ii)
Guarantor's obligation' to deposit additional funds with Lender under Paragraph 1.4 below and,
and (iii) Guarantor's obligation to reimburse Lender under Paragraph 1.5 below, shall be
construed to constitute a guaranty of repayment of any proceeds of the Loan or of payment of
interest on the Loan. This Guaranty is not secured by the Deed of Trust (as defined in the Loan
Agreement) and shall not be deemed to be secured by any security instrument unless such
security instrument expressly recites that it secures this Guaranty.
1.4 Di Disbursemetiff Loan Proceeds.
If an 1 cnt of Default occurs, and Lender makes demand upon Guarantor
pursuant to paragraph 1.3 above to complete the construction of the Project, then Lender shall,
upon written request by Guarantor and the written consent of Borrower, disburse to Guarantor,
for the account of Borrower, in accordance with the Loan Agreement the balance of the Loan
allocated to construction costs and other expenses reasonably necessary to complete
construction of the Project in accordance with the Budget, provided that: (a) Guarantor has
cured or to the satisfaction of the Lender in the Lender's sole discretion commenced the cure of
all defaults in the performance or discharge of Borrower's obligations or liabilities which are
guaranteed under this Guaranty (other than Borrower's cessation of construction which gave
rise to the demand upon Guarantor under this Guaranty), including without limitation payment
to Lender of any Payment Obligations that are owing but not paid; (b) Guarantor satisfies the
requirements set forth in the Loan Agreement for the disbursement of such proceeds of the
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
4
Loan (including the curing of any defaults or Events of Default, which cure Lender shall accept
from Guarantor); (c) Lender has obtained the proper title insurance endorsement (including, if
required by Lender, monthly policy date - downs) confirming its continuing first -lien priority as to
all such advances to Guarantor as more fully set forth in the Loan Agreement; (d) such funds
have not been set -aside in connection with any completion assurance or set -aside letter; and (e)
such funds are not subject to any stop notice or other legal impairment. In addition, Lender
will, so long as Guarantor is performing its obligations under this Guaranty, upon written
request by Guarantor and the written consent of Borrower, continue to disburse to or for the
account of Borrower, interest accruing under the Loan from any remaining undisbursed sums (if
any) in the Reserve Account established per the Loan Agreement, provided that all conditions to
such disbursement under the Loan Agreement shall have been satisfied. Guarantor shall also be
obligated to deposit with Lender such additional funds in th lnanner contemplated by the Loan
Agreement in the event that Lender shall have determin e ' "onablejudgment, that the
undisbursed Loan proceeds allocated to actual cons
'through completion, all costs related to the design a
with the Loan Agreement. Such funds shall be de
time period provided in the Loan Agreement.
1.5 Remedies of Lender
costs are not sufficient to pay,
ction of the Project in accordance
tor with bender, within the
V.
If Guarantor fails to perform its obligations hereunder in fifteen (15) days of
notice of such failure by Lender, then Lender may, in its sole and absolute discretion and
without any obligation to do so, (a) elect to complete construction of the Project with such
changes to the General Construction Contract and the Plans and Specifications as Lender
reasonably deems necessary), or (b) from time to time and without first requiring performance
on the part of Borrower, or being required to exhaust or proceed against any or all security held
by Lender or any Lender, enforce performance by Guarantor of any obligation on the part of
Guarantor to be performed hereunder, by action at law or in equity or both; and in the event of
either (a) or (b) above, 1.ender shall immediately be entitled to recover from Guarantor all losses,
costs, damages, liabilities and expenses (including all expenditures made by Lender to complete
construction of the Project, and attorneys' fees and costs) sustained or incurred by Lender as a
result of Guarantor's failure to perform its obligations hereunder, together with interest thereon
at Lender's option at either the Interest Rate or the Default Rate.
1.6 Guaranteed Obligations Not Reduced by Offset
The Guaranteed Obligations and the liabilities and obligations of the Guarantor
to the Lender hereunder, shall not be reduced, discharged or released because or by reason of
any existing or future offset, claim or defense of the Borrower or any other party, against the
Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense
arises in connection with the Guaranteed Obligations (or the transactions creating the
Guaranteed Obligations) or otherwise. To the fullest extent permitted by law, Guarantor waives
any defenses or benefits that may be derived from or afforded by law which limit the liability of
any Guarantor or exonerate guarantors or sureties.
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
5
1.7 Payment by the Guarantor
If all or any part of the Guaranteed Obligations shall not be punctually paid when
due, whether at demand, maturity, acceleration or otherwise and following notice and expiration
of any applicable cure period as provided in the Loan Agreement, the Guarantor shall,
immediately upon demand by the Lender, and without presentment, protest, notice of protest,
notice of non - payment, notice of intention to accelerate the maturity, notice of acceleration of
the maturity, or any other notice whatsoever, pay in lawful money of the United States of
America, the amount due on the Guaranteed Obligations to the Lend r at the Lender's address
as set forth herein. Such demand(s) may be made at any time coincid with or after the time
for payment of all or part of the Guaranteed Obligations, and may be ` ade from time to time
with respect to the same or different items of Guaranteed Obligations. Such demand shall be
deemed made, given and received in accordance with the notice provisions hereof.
1.8 No Duty To Pursue Others
It shall not be necessary for the Lender (and the Guarantor hereby waives any
rights which the Guarantor may have to require the Lender); in order to enforce the obligations
of the Guarantor hereunder, first to (i) institute suit or exhaust its remedies against the Borrower
or others liable on the Loan or the Guaranteed Obligations or any other person, (ii) enforce the
Lender's rights against any collateral which shall ever have been give " o secure the Loan, (iii)
enforce the Lender's rights against any other guarantors of the G uaran' eed Obligations, (iv) join
the Borrower or any others liable on the Guaranteed Obligations in any action seeking to
enforce this Guaranty, (v) exhaust any remedies available to the Lender against any collateral
which shall ever have been given to secure the Loan, or (vi) resort to any other means of
obtaining payment of the Guaranteed Obligations e Lender shall not be required to mitigate
damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.
1.9 Waivers
The Guarantor 'agrees to the provisions of the Loan Documents, and hereby
waive notice of (i) any loans or advances made by the Lender to the Borrower, (ii) acceptance of
this Guaranty, (iii) any amendment or extension of the Notes, the Deed of Trust or of any other
Loan Documents, (iv) the execution and delivery by the Borrower and the Lender of any other
loan or loan agreement or of the Borrower's execution and delivery of any promissory notes or
other documents arising under the Loan Documents or in connection with the Property or the
Project, (v) the occurrence of any breach by the Borrower or an Event of Default, (vi) the
Lender's transfer or disposition of the Guaranteed Obligations, or any part thereof, (vii) sale or
foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the
Guaranteed Obligations, (viii) protest, proof of non - payment or default by the Borrower, or (ix)
any other action at any time taken or omitted by the Lender, and, generally, all demands and
notices of every kind in connection with this Guaranty, the Loan Documents, any documents or
agreements evidencing, securing or relating to any of the Guaranteed Obligations and the
obligations hereby guaranteed.
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
6
1.10 Payment of Expenses
Notwithstanding anything to the contrary contained herein, including, but not
limited to Section 1.2(a) hereof, in the event that any Guarantor should breach or fail to timely
perform any provisions of this Guaranty, the Guarantor shall, immediately upon demand by the
Lender, pay the Lender all costs and expenses (including court costs and reasonable attorneys'
fees) incurred by the Lender in the enforcement hereof or the preservation of the Lender's
rights hereunder. The covenant contained in this Section shall survive the payment and
performance of the Guaranteed Obligations.
1.11 Effect of Bankruptcy
In the event that, pursuant to any insolvent
receivership or other debtor relief law, or any judgment, order o
Lender must rescind or restore any payment, or any part thereof, rec
satisfaction of the Guaranteed Obligations, as sets; forth herein, any prior
from the terms of this Guaranty given to any Guarantor by the Le'der shall
and this Guaranty shall remain in full force and effect. It is the intention of the
the Guarantor that Guarantor's obligati°
Guarantor's performance of such obligati°
tcy, reorganization,
thereunder, the
the Lender in
r discharge
out effect,
orrower and
ereunder shall, not be discharged except by the
en only to the extent of such performance.
1.12 Waiver of Subrogation, Reimbursement and Contribution
Notwithstanding anything to the contrary contained in this Guaranty, until such
time as the Guaranteed Obligatiofis are satisfied, the Guarantor hereby unconditionally and
irrevocably waives, releases and abrogates anvr and <11 rights they may now or hereafter have
under any agreement, at law or in equity (including, without limitation, any law subrogating any
Guarantor to the rights of the Lender), to assert any claim against or seek contribution,
indemnification or any other Form of reimbursement from the Borrower or any other party
liable for payment of any or all of the Guaranteed Obligations for any payment made by the
Guarantor under o "" ' connection with this Guaranty or otherwise. Until such time as the
Guaranteed Obliga.a:s have been satisfied, Guarantor agrees it will not exercise (a) any rights
which Guarantor either may acquire by way of subrogation under this Guaranty or any other
guaranty, by any payment made hereunder or otherwise, (b) any right of contribution any
Guarantor may have against apy other Guarantor of the Guaranteed Obligations, (c) any right to
enforce any remedy which Guarantor now has or may hereafter have against the Borrower or (d)
any benefit of, and any right to participate in, any security now or hereafter held by the Lender.
Guarantor further agrees that, to the extent the waiver of its rights of subrogation
and contribution as set forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation the Guarantor may have against the Borrower
or against any collateral or security, and any rights of contribution the Guarantor may have
against any other guarantor, shall be junior and subordinate to any rights the Lender may have in
any such collateral or security, and to any right the Lender may have against such other
guarantor. The Lender may use, sell or dispose of any item of collateral or security as it sees fit
without regard to any subrogation rights the Guarantor may have, and upon any such
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
7
disposition or sale any rights of subrogation the Guarantor may have shall terminate. If any
amount shall be paid to a Guarantor on account of such subrogation rights any time when all
the Debt shall not have been paid in full, such amount shall be held in trust for and shall
forthwith be paid over to the Lender to be credited and applied against the Debt, whether
matured or unmatured, in accordance with the terms of the Loan Agreement or any applicable
Loan Document.
1.13 Borrower
The term "Borrower" as used herein shall incl
corporation, association, partnership (general or limited), joint v
or organization formed as a result of any merger, reorganiz
bequest of the Borrower or any interest in the Borrower.
ARTICLE I
EVENTS AND CIRCUMSTA
OR DISCHARGING GUARANT
y new or successor
st or other individual
transfer, devise, gift or
The Guarantor hereby consents . d
that the Guarantor's obligations under
reduced or adversely affected by any o
statutory or other rights (including with
might otherwise have as a rests of or in co
agrees o eac
all not bere
UCIN
ATIONS
f the following, and agree
eased, diminished, impaired,
common law, equitable,
notice) which the Guarantor
e following:
2.1
Any r
or any part of the Guar
the other Loan umen
between,the Borrower and
Obligations or any failure o the
2.2 Adjustment
increase,
cation, alteration or rearrangement of all
Agreement, the Notes, the Deed of Trust,
ment, instrument, contract or understanding
o »any other parties, pertaining to the Guaranteed
notify any Guarantor of any such action.
Any adjustment, indulgence, forbearance or compromise that might be granted or
given by the Lender to the Borrower or any Guarantor.
2.3 Condition of the Borrower or the Guarantor
The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of the Borrower, any Guarantor or any other party at any
time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of
the Borrower or any Guarantor, or any sale, lease or transfer of any or all of the assets of the
Borrower or any Guarantor, or any changes in the shareholders, partners or members of the
Borrower or any Guarantor; or any reorganization of the Borrower or any Guarantor.
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
8
2.4 Invalidity of Guaranteed Obligations
The invalidity, illegality or unenforceability of all or any part of the Guaranteed
Obligations, or any document or agreement executed in connection with the Guaranteed
Obligations, for any reason whatsoever, including without limitation the fact that (i) the
Guaranteed Obligations, or any part thereof, exceeds the amount permitted by law, (ii) the act of
creating the Guaranteed Obligations or any part thereof is ultra wires, (iii) the officers or
representatives executing the Notes, the Deed of Trust, the Loan Agreement or the other Loan
Documents or otherwise creating the Guaranteed Obligations acted in excess of its authority,
(iv) the Guaranteed Obligations violate applicable usury laws, . (1) the. Borrower has valid
defenses, claims or offsets (whether at law, in equity or by agreement) which render the
Guaranteed Obligations wholly or partially uncollectible from the Bohower, (vi) the creation,
performance or repayment of the Guaranteed Obligations (or the execution, delivery and
performance of any document or instrument representing part of the Guaranteed Obligations or
executed in connection with the Guaranteed Obligations, or given to secure the repayment of
the Guaranteed Obligations) is illegal, uncollectible or unenfotce,ble, or (vii) the Notes, the
Deed of Trust, the Loan Agreement or any of the other Loan Doc ents have been forged or
otherwise are irregular or not genuine or authentic, it being a eed that the Guarantor shall
remain liable hereon regardless of whether the Borrower or any of "`'er person be found not liable
on the Guaranteed Obligations or any part thereof for any reason.
2.5 Release of Obligors
Any full or partial release of the liability of'.th Borrower on the Guaranteed
Obligations, or any part thereof, or of any co- guarantors, or any other person or entity now or
hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay,
perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it
being recognized, acknowledgcd and agreed by Guarantor that the Guarantor may be required
to pay the Guaranteed Obligations in full without assistance or support of any other party, and
Guarantor ha m stbeen induced to enter into this Guaranty on the basis of a contemplation,
belief, underst or agreement that other parties will be liable to pay or perform the
Guaranteed Obligations, or that the Lender will look to other parties to pay or perform the
Guaranteed Obligations. Atv
26 Other Collateral
e `ta'n, +r accepting of any other security, collateral or guaranty, other
g, p g Y � ty�
assurance of payment, for all or any part of the Guaranteed Obligations.
2.7 Release of Collateral
Any release, surrender, exchange, subordination, deterioration, waste, loss or
impairment (including without limitation negligent, willful, unreasonable or unjustifiable
impairment) of any collateral, property or security at any time existing in connection with, or
assuring or securing payment of all or any part of the Guaranteed Obligations.
2.8 Care and Diligence
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720
9
Exhibit A4
The failure of the Lender or any other party to exercise diligence or reasonable
care in the preservation, protection, enforcement, sale or other handling or treatment of all or
any part of such collateral, property or security, including but not limited to any neglect, delay,
omission, failure or refusal of the Lender (other than in the instance of intentional misconduct
or gross negligence) (i) to take or prosecute any action for the collection of any of the
Guaranteed Obligations or (ii) to foreclose, or initiate any action to foreclose, or, once
commenced, prosecute to completion any action to foreclose upon any security therefor, or
(iii) to take or prosecute any action in connection with any instrument or agreement evidencing
or securing all or any part of the Guaranteed Obligations.
2.9 Unenforceability
The fact that any collateral, security, security interest or lien contemplated or
intended to be given, created or granted as security for the repayment of the Guaranteed
Obligations, or any part thereof, shall not be properl �� ed or created* or shall prove to be
unenforceable or subordinate to any other security t' =st or lien, it being recognized and
agreed by the Guarantor that the Guarantor is not �en entering °into this Guaranty in reliance on, or
in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of
the collateral for the Guaranteed Obligations.
2.10 Offset
The Loan, the Guaranteed Obligations and the liabilities and obligations of the
Guarantor to the Lender her der shall not be reduced, discharged or released because of or
by reason of any existing ht of offset, elaim or defense of the Borrower against the
Lender, or any other party, or ga1nst payment of the Guaranteed Obligations, whether such
right of offset, claim or defense arisen in connection with the Guaranteed Obligations (or the
transactions creating t the Guaranteed Obligations) or otherwise.
2.11;Merger
The reorganization, merges or consolidation of the Borrower into or with any
other corporation or entity.
2.12 Preference
Any payment by the Borrower to the Lender is held to constitute a preference
under bankruptcy laws, or for any reason the Lender is required to refund such payment or pay
such amount to the Borrower or someone else.
2.13 Tax Benefits
Notwithstanding anything else contained in this Guaranty, the Loan Agreement,
or in any other Loan Document, any claims against Borrower or Guarantors related to tax
benefits derived by Capital One in connection with the Property shall be governed by the
Indemnification Agreement (QALICB), executed and delivered by Borrower for the benefit of
Capital One, and dated the date hereof.
Federal Way Q1,1C1 Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
10
2.14 Other Actions Taken or Omitted
Any other action taken or omitted to taken with respect to the Loan
Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not
such action or omission prejudices Guarantor or increases the likelihood that Guarantor will be
required to pay the Guaranteed Obligations pursuant to the terms hereof, it is the unambiguous
and unequivocal intention of the Guarantor that the Guarantor shall be obligated to pay the
Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action,
or omission whatsoever, whether contemplated or uncontempla - and whether or not
otherwise or particularly described herein, which obligation shall b =` ` d satisfied only upon
the full and final payment and satisfaction of the Guaranteed 0
ARTICLE III
REPRESENTATIONS AN
To induce the Lender to enter into the Loan Docum$cits and pr
the Borrower, Guarantor represents and warrants to the Lender a to himself as ows:
the Loan to
3.1 Benefit
The Guarantor is an affiliate o
® is th- er of a direct or indirect
interest in the Borrower, and has received, or v f re or indirect benefit from the
making of this Guaranty with respect to the Guarantee ns.
3.2 Fatniliarity an Reliane
The Guarantor is familiar with, and. has independently reviewed books and
records regarding, the financial condition of the Borrower and is familiar with the value of any
and all collateral intended to be created as security for the payment of the Letter of Credit or
Guaranteed Obligations; hovy-ev cr, the Guarantor is not relying on such financial condition or
the collateral as am inducement to enter into this Guaranty.
3.3 No Representation By the Lender
Neither the Lender nor any other party has made any representation, warranty or
statement to the Guarantor in order to induce the Guarantor to execute this Guaranty.
3.4 Guarantor's Financial Condition
As of the date hereof, and after giving effect to this Guaranty and the contingent
obligation evidenced hereby, the Guarantor is, and will be, solvent, and has and will have assets
which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts,
and has and will have property and assets sufficient to satisfy and repay its obligations and
liabilities.
3.5 Financial Statements
Federal Way Q1.1C1 Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
11
The most recent financial statements heretofore delivered by the Guarantor to
the Lender are true and correct in all material respects and have been prepared in accordance
with generally accepted accounting practice and fairly present the respective financial conditions
of the Guarantor as of the respective date thereof; and no material adverse change has occurred
in the financial conditions reflected therein since the respective dates thereof.
3.6 Legality
The execution, delivery and performance by the Guarantor of this Guaranty and
the consummation of the transactions contemplated hereunder do not, and will not, contravene
or conflict with any law, statute or regulation whatsoever to which the Guarantor is subject or
constitute a default (or an event which with notice or lapse of time or both would constitute a
default) under, or result in the breach of, any indenture, First Mortgage, charge, lien, or any
contract, agreement or other instrument to which the Guarantor is a party or which may be
applicable to the Guarantor. This Guaranty is a legal and binding obligation of the Guarantor
and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or
other laws of general application relating to the enforcement of creditors' rights.
3.7 Survival
All representations and warranties m by the Guarantor herein shall survive the
execution hereof.
ICLE IV
SUBORDINATION OF CERTAIN INDEBTEDNESS
4.1 Subordination of All Guarantor Claims
\s used herein, the term "Guarantor Claims" shall mean all debts and liabilities
of the Borrovacr to any Guarantor, yvhethcr such debts and liabilities now exist or are hereafter
incurred of arise, or vyhethcr the obligations of the Borrower thereon be direct, contingent,
primary, secondary, several, joint and several, or otherwise, and irrespective of whether such
debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective
of the person or persons in whose favor such debts or liabilities may, at their inception, have
been, or may hereafter be created, or the manner in which they have been or may hereafter be
acquired by any Guarantor. The Guarantor Claims shall include without limitation all rights and
claims of any Guarantor against the Borrower (arising as a result of subrogation or otherwise) as
a result of such Guarantor's payment of all or a portion of the Guaranteed Obligations. Upon
the occurrence of an Event of Default or the occurrence of an event which would, with the
giving of notice or the passage of time, or both, constitute an Event of Default, the Guarantor
shall not receive or collect, directly or indirectly, from the Borrower or any other party any
amount upon the Guarantor Claims.
4.2 Claims in Bankruptcy
Federal Way QLICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
12
In the event of receivership, bankruptcy, reorganization, arrangement, debtor's
relief, or other insolvency proceedings involving Guarantor as debtor, the Lender shall have the
right to prove its claim in any such proceeding so as to establish its rights hereunder and receive
directly from the receiver, trustee or other court custodian dividends and payments which would
otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such dividends and
payments to the Lender. Should the Lender receive, for application upon the Guaranteed
Obligations, any such dividend or payment which is otherwise payable to Guarantor, and which,
as between the Borrower and any Guarantor, shall constitute a credit upon the Guarantor
Claims, then upon payment to the Lender in full of the Guaranteed bligations, the Guarantor
shall become subrogated to the rights of the Lender to the exten that such payments to the
Lender on the Guarantor Claims have contributed toward the liquidation of the Guaranteed
Obligations, and such subrogation shall be with respect to �� .ro.ortion of the Guaranteed
Obligations which would have been unpaid if the L . ® ived dividends or
1ka„
payments upon the Guarantor Claims.
4.3 Payments Held in Trust
In the event that, notwithstanding any
Guarantor should receive any funds, payment, claim or di
Guaranty, the Guarantor agree to hold: trust for e Lender
ontrary in this Guaranty, any
which is prohibited by this
t equal to the amount of
it shall have absolutely
distributions so received
venants promptly to pay the
all funds, payments, claims or distributi i s so rece
no dominion over the amount of such funds pa
except to pay them promptly to the Lender, and th
same to the Lender.
4.4 Lien ubordinate
The Guarantor agrees that any liens, " curity interests, judgment liens, charges or
other encumbrances upon the Borrower's assets securing payment of the Guarantor Claims shall
be and remain inferior ands ..tdinate to any liens, security interests, judgment liens, charges or
other encumbrances upon the Borrower's assets securing payment of the Guaranteed
Ob . tions, regardless of whether such encumbrances in favor of any Guarantor or the Lender
prese tly exist or are hereafe r created or attach. Without the prior written consent of the
Lender, ,�` antor shall ': =ot (i) exercise or enforce any creditor's right it may have against
the Borrower," or (n) forcclo e, repossess, sequester or otherwise take steps or institute any
action or proceedings (judicial or otherwise, including without limitation the commencement of,
or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any liens, deeds of trust, security interests, collateral rights, judgments or
other encumbrances on assets of the Borrower held by any Guarantor.
ARTICLE V
MISCELLANEOUS
5.1 Waiver
Federal Way QL1C1 Completion & Repayment Guaranty v.2
Resolution No. 17 -720
13
Exhibit A4
No failure to exercise, and no delay in exercising, on the part of the Lender, any
right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right. The rights of
the Lender hereunder shall be in addition to all other rights provided by law. No modification
or waiver of any provision of this Guaranty, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond the particular case
and purpose involved. No notice or demand given in any case shall constitute a waiver of the
right to take other action in the same, similar or other instances without such notice or demand.
5.2 Notices
Any notice, demand, statement, request or consent made hereunder shall be in
writing and shall be deemed to be received by the addressee on the third day following the day
such notice is deposited with the United States Postal Service first class certified mail, return
receipt requested, addressed to the address, as set forth below, of the party to whom such notice
is to be given, or to such other addressee as either party shall in lily manner designate in writing.
The addresses of the parties hereto are as follows:
If to Guarantor:
If to Lender:
Ci r . -: of Federal Wa
South
9800
cityo ffederalway. com
Clearing MTC (SUB 46), LLC
61 El "fig Road, Suite 401
t, CA 92630
isty 011endorff
hone: (949) 525 -4980
x: (949) 859 -8534
mail: KristyO @clearinghousecdfi.com
If to Investor:
Bergman and Allderdice
1200 Wilshire Blvd, Suite 610
Los Angeles, CA 90017
Attention: Beth S. Bergman, Esq.
Phone: (213) 736 -5101
Fax: (213) 947 -4371
Email: bbergman @b- alaw.com
COCRF Investor 77, LLC
c/o Capital One, National Association
201 St. Charles Ave., 29th Floor
New Orleans, LA 70170
Federal Way Q1.ICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
14
and a copy to:
5.3 Governing Law
Attention: Spencer Gagnet
Email: spencer.gagnet @capitalone.com
Jones Day
100 High Street, 21st Floor
Boston, MA 02110
Attention: Jeffrey D. Gaulin, Esq.
Email: jgaulin @jonesday.com
This Guaranty shall be governed by and construed in accordance with the laws of
the State of Washington and the applicable laws of the United States of Ame. ca.
5.4 Invalid Provisions
If any provision of this Guaranty is If to be illegal, invalid, enforceable
under present or future laws effective during the term of this Guaranty, such provision shall be
fully severable and this Guaranty shall b ; ' s strued and enforced as if such illegal, invalid or
unenforceable provision had never art of this uaranty, and the remaining
provisions of this Guaranty shall rem d a s 11 not be affected by the
illegal, invalid or unenforceable provision or its severance from this Guaranty, unless such
continued effectiveness of this Guaranty, as m • g . ed, would be contrary to the basic
understandings and intents e parties as e herein.
5.5
This Guaranty, ma N- amended only by an instrument in writing executed by the
party or an authorized representative of the party against whom such amendment is sought to be
enforced, , :: event, not without the prior written consent of the Lender.
Bound.
This Gua shall be binding upon and inure to the benefit of the parties hereto
and their resl)cctiv c successors, assigns and legal representatives; provided, however, that the
Guarantor may not, without the prior written consent of the Lender, assign any of its rights,
powers, duties or obligations hereunder.
5.7 Headings
Section headings are for convenience of reference only and shall in no way affect
the interpretation of this Guaranty.
5.8 Recitals
Federal Way QL1C1 Completion & Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
15
The recital and introductory paragraphs hereof are a part hereof, form a basis for
this Guaranty and shall be considered prima facie evidence of the facts and documents referred
to therein.
5.9 Counterparts
To facilitate execution, this Guaranty may be executed in as many counterparts as
may be convenient or required. It shall not be necessary that the signature of, or on behalf of,
each party, or that the signature of all persons required to bind any party, appear on each
counterpart. All counterparts shall collectively constitute a single instrument. It shall not be
necessary in making proof of this Guaranty to produce or account for more than a single
counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.
Any signature page to any counterpart may be detached from suc counterpart without
impairing the legal effect of the signatures thereon and ""tlierea e''af't, ched to another
counterpart identical thereto except having attached toy „it additional signa a es.
5.10 Rights and Remedies
If any Guarantor becomes liable
the Lender, by endorsement or otherwis0
be in any manner impaired or affected;
cumulative of any and all other rights tha
Lender may proceed against one or mor
Lender determines in its sol discretion.
hereunder or under an , =trument,
concurrent or subseque y othettn
for any in
than under tl
Lathe rights o
ess owing by the Borrower to
aranty, such liability shall not
'ender hereunder shall be
er have ° g'!inst the Guarantor. The
or from time to time as the
ender of any right or remedy
equity, shall not preclude the
.aw
Loan A
5.11
efu
ETerms
or in
r remedy.
term of
erein shall have the meaning as specified in the
erwise specifically defined herein.
5.12 Entifty
IS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT
OF THE GUARANTOR AND THE LENDER WITH RESPECT TO
GUARANTOR''Sy GUARANTY OF THE GUARANTEED OBLIGATIONS AND,
EXCEPT WITH - RESPECT TO GUARANTOR'S OBLIGATIONS UNDER THE
ENVIRONMENTAL INDEMNITY, SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY THE
GUARANTOR AND THE LENDER AS A FINAL AND COMPLETE EXPRESSION
OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING
BETWEEN THE GUARANTOR AND THE LENDER, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
Federal Way (].ICI Completion & Repayment Guaranty v2
Resolution No. 17 -720
16
Exhibit A4
DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL
BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF
THIS GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE GUARANTOR AND THE LENDER.
5.13 Waiver of Right To Trial By Jury
THE GUARANTOR HEREBY AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, ANI) ,WAIVES ANY RIGHT
TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANYSUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE
LOAN AGREEMENT, THE NOTES, THE DEED OF TRUST, OR THE OTHER
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLA IMF OR; OTHER ACTION
ARISING IN CONNECTION THEREWITH. THIS ° WAIVERIz OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY THE
GUARANTOR, AND IS INTENDED TO ENCOMPAS _ INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE IGHT TO ATRIAL BY
JURY WOULD OTHERWISE ACCRUE. THE ENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE O HIS WAIVER BYTH GUARANTOR.
5.14 Future Financial
Guarantor c
the end of the calendar y
certified public acco
such other financial
of any such request.
is and agrees:`
clued financi
?lice with=
Lender s
rovi
Lender (i) within 120 days of
ements and tax returns each prepared by a
enerally accepted accounting practice and (ii)
reasonably request within twenty (20) days
ertain Circumstances
is rights pursuant to this Guaranty continue with respect to amounts
previ o` aid to Lender tin account- of any obligations of Borrower under the Loan Agreement
and/or `w 'I oan Documents which are thereafter restored or returned by Lender, whether in
a bankrupt prep r anizationsolvency, receivership or similar proceeding of Borrower or for
sA.
any other reason, all as though such amounts had not been paid to Lender and Guarantor's
liability under this Guaranty (and all its terms and provisions) shall be reinstated and revived,
notwithstanding any surrender or cancellation of this Guaranty. Lender, in its sole discretion,
may determine whether any amount paid to it must be restored or returned.
5.16 Termination
This Guaranty shall automatically terminate without any further act of the
undersigned or Lender of any nature whatsoever being required upon the satisfaction and
payment in full of the Loan and the Guaranteed Obligations.
Federal Way (],ICI Completion & Repayment Guaranty v.2
Resolution No. 17 -720
17
Exhibit A4
[SIGNATURE PAGE FOLLOWS]
Federal Way QL1C1 Completion Sr Repayment Guaranty v.2
Resolution No. 17 -720 Exhibit A4
18
EXECUTED as of the day and year first above written.
GUARANTOR:
CITY OF FEDERAL WAY, a municipal
corporation of the State of Washington
Federal Way QLICI Completion & Repayment Guaranty
Resolution No. 17 -720 Exhibit A4
Signature Page
JD Draft 4/3/17
QALICB INDEMNIFICATION AGREEMENT
THIS QALICB INDEMNIFICATION AGREEMENT (this "Agreement ") is entered
into as of [ ], 2017 (the "Effective Date "), by and among [ ], a
Washington nonprofit corporation ( "Project Borrower "), CITY OF FEDERAL WAY, a
Washington municipal corporation ( "Sponsor ") (each of Sponsor and Project Borrower an
"Indemnitor" and collectively, "Indemnitors "), and CAPITAL ONE, NATIONAL
ASSOCIATION, a national banking association ( "Investor ").
Recitals
A. Investor is the sole member of COCRF Investor 77, LLC. a Delaware limited
liability company ( "Fund "), pursuant to the terms of that 'certain First Amended and Restated
Operating Statement of Fund dated as of the Effective Date° (as the `same may be amended,
assigned, restated, modified, or supplemented from time to time, the "Fund OA").
B. On the Effective Date, and in accordance with the Fund OA, Investor agreed to
make a $[3,260,400] equity contribution to Fund (the "Capital Contribution "), to be paid upon
Investor's execution of the Fund OA.
C. On the Effective Date, Fund has obtained a loan from Sponsor in the original
principal amount of $[6,239,600] (the "Fund Loan ").
D. On the Effective Date, Fund will use a portion of the proceeds of the Capital
Contribution and the Fund '1 oan to make an equity contribution in the amount of $9,500,000 (the
"Clearinghouse QEI ") in Clearinghouse NMt 46), LLC, a California limited liability
company ( "CDE ").
E. The Clearinghouse QC'I is intended to be a "qualified equity investment" (a
"QEI "), as such term is defined in Section 45D of the Internal Revenue Code of 1986 (as
amended from time to time, the "Code "), and the Treasury Regulations (as such term is as such
term is defined below).,
F. ; On the Effective Date, and in accordance with that certain Amended and Restated
Operating Agreement of CDE, dated as of the Effective Date (as the same may be amended,
assigned, restated, modified, or supplemented from time to time, the "CDE OA "), CDE will use
substantially all t the Clearinghouse QEI proceeds to make loans to Project Borrower in the
aggregate original principal amount of $[9,310,000] (collectively, the "Project Loans ").
G. Each of the Project Loans is intended to constitute a "qualified low- income
community investment" as such term is used in Section 45D of the Code (a "QLICI ").
H. The proceeds of the Project Loans will be used to finance the new construction
and development of a community facility and performing arts center located on certain property
at 31510 20th Avenue South, Federal Way, WA 98063 (the "Project "), as more fully described in
(i) that certain [Loan Agreement] [Loan and Security Agreement], dated as of the Effective Date
(as the same may be amended, assigned, restated, modified, or supplemented from time to time,
NA1 -1 502607240v2
Resolution No. 17 -720
Exhibit A5
the "Loan Agreement "), by and between Project Borrower, as borrower, and CDE, as lender, and
(ii) the other [Loan Documents] (as such term is defined in the Loan Agreement).
I. Investor made the Capital Contribution, and caused Fund to make the
Clearinghouse QEI in CDE based on the assumption that Investor will obtain New Markets Tax
Credits under Section 45D of the Code ( "Tax Credits ") in an aggregate amount equal to not less
than $[3,705,000] (i.e., 39% of the Designated QEI Amount (as such term is defined below)), as
more specifically set forth in the NMTC Assumption (as such term is defined below), beginning
on the date the Clearinghouse QEI was made in CDE.
J. Investor's assumption as set forth in the immediately preceding Recital is based in
part on the representations, warranties and covenants of rtPr'ect Borrower in the Loan
Agreement, pursuant to which the Project Loans were made
K. As a condition to Investor making the Capital Contribute ® vestor causing
Fund to make the Clearinghouse QEI, and as a condition to CD makin `� °i� ect Loans to
Project Borrower, Investor is requiring that Indemnitors execute `arid deliver eement to
provide assurances with respect to the matters described herein, including, witho k imitation, the
qualification of each of the Project Loans as a QLICI and the qualification of Project Borrower
as a "qualified active low- income community business," as such term is used in Section 45D of
the Code (a "QALICB ").
L. Project Borrower and Sponsor will benefit "directly and indirectly from CDE
making the Project Loans to Project Borrower.
NOW, THEREFORE, for and in considera on of the mutual promises of the parties
hereto, and other g e od and ` valuable consider " =the receipt and sufficiency of which are
hereby acknowledge • -- yndemnitors hereby coven :® agree as follows:
1.
Recitals t
not of
Agr
Agre
Defined T `s. All capitalized terms listed in the introductory paragraph and
.,.µ. _ t have the meanings assigned to them therein, and all capitalized terms
fined herein shall have the meanings assigned to them in the Loan
e following terms shall have the following meanings in this
(a) "Affiliate" means (i) with respect to a corporation, (A) any officer or
director thereof and any Person which is, directly or indirectly, the beneficial owner of more than
10% of any class of shares or other equity security of such corporation or (B) any Person or
Persons (individually or in the aggregate) which, directly or indirectly, controls or are controlled
by or is under common control with such corporation and (ii) with respect to a partnership,
venture or limited liability company, any (A) general partner or managing member of such
partnership, venture or limited liability company, (B) general partner or managing member of a
general partner or managing member of such partnership, venture or limited liability company,
(C) partnership with a common general partner or managing member of such partnership,
venture or limited liability company, or (D) coventurer thereof, and if any general partner,
managing member or coventurer is a corporation, any Person which is an Affiliate of such
corporation. For purposes of this definition, "controls" (which includes the correlative meanings
NA1 -1 502607240v2
Resolution No. 17 -720 Exhibit A5
2
of "controlled by" and "under common control with ") means effective power, directly or
indirectly, to direct or cause the direction of the management and policies of such Person.
Further, for purposes of this definition, Fund shall not be deemed to be an Affiliate of the CDE.
(b) "After -Tax Basis" means, with respect to any NMTC Recapture Amount,
the amount of such NMTC Recapture Amount supplemented by a further payment or payments
(the "Supplemented NMTC Recapture Amount ") so that, after deducting from such
Supplemented NMTC Recapture Amount the amount of all Taxes (net of any current credits,
deductions or other tax benefits arising from the payment by Investor of any amount, including
Taxes, for which the payment to be received is made) imposed on Investor by any Governmental
Authority or other taxing authority with respect to such NMTC Recapture Amount, the balance
of such payments shall be equal to the NMTC Recapture Amount; provided, however, for the
purposes of this definition, and for purposes of any payment to be made to Fund or Investor on
an After -Tax Basis, it shall be assumed that taxes are payable by Investor at the Applicable Tax
Rate.
(c) "Applicable Tax Rate" means the combined effective federal, state, and
local corporate income tax rate (assuming in each case the maximum applicable corporate rate)
in the jurisdiction(s) in which Investor is required to recognize the payments to be made by
Indemnitors pursuant to this Agreement.
(d) "Change in Law" means any amendment to the Code or Treasury
Regulations after the Effective Date.
(e) "Compliance Period" means, with respect to a QEI, the seven -year credit
period applicable to such QEI commencing on the first Credit Allowance Date with respect to
such QEI and ending on the last day prior to the seventh anniversary of said first Credit
Allowance Date.
(f) "Credit Allowance Date" means any "credit allowance date" (as such term
is defined in Section 45D(a)(3) of the Code) with respect to a QEI made in a CDE.
(g) "Designated QEI Amount" means $[9,500,000].
(h) "Entity" means any general partnership, limited partnership, limited
liability limited partnership, limited liability company, corporation, joint venture, trust, business
trust, cooperative, association, or public agency.
(i)
Agreement.
"Event of Default" has the meaning assigned to such term in the Loan
(j) "Financial Projections" means the financial projections, dated as of the
Effective Date and certified by Novogradac & Company LLP, issued in connection with the
investments and loan transactions described in the Recitals.
(k) "Governmental Authority" means any, federal, state, local, municipal, or
other governmental or quasi governmental authority or self regulatory organization of any nature
(including any agency, authority, branch, department, board, commission, court, tribunal or other
NAI- 1502607240v2
Resolution No. 17 -720 Exhibit A5
3
entity, instrumentality or body politic exercising governmental or quasi governmental powers)
exercising, or entitled or purporting to exercise, any administrative, executive, judicial,
legislative, enforcement, regulatory or taxing authority or power.
(1) "Investment Fund Put/Call Agreement" means that certain Investment
Fund Put/Call Agreement, dated as of the Effective Date, by and between Sponsor and Investor,
as the same may be amended, modified, extended, or restated from time to time.
thereof.
(m) "IRS" means the Internal Revenue Service or any successor agency
(n) "NMTC Assumption" has the meaning set forth in Section 2.
(o) "NMTC Payment Date" means the earliest to occur of the following:
(i) the date of issuance of a Schedule K -1 to Fund and /or Investor for
the applicable taxable year or years evidencing, indicating, or reflecting the
occurrence of a Specified NMTC Recapture Event;
(ii) the fiscal year end of the year following the applicable taxable year
or years for which a tax return evidencing, indicating, or reflecting the occurrence
of a Specified NMTC Recapture Event is filed;
(iii) the date on which Fund and /or Investor provides notice to
Indemnitors of its receipt of notice of (A) a determination by the IRS that a
Specified NMTC Recapture Event has occurred, or (B) the intention of the IRS to
assess a deficiency based on a Specified NMTC Recapture Event; or
(iv) the date on which Fund and/or Investor provides notice to
Indemnitors of its determination, made by Fund and /or Investor based upon
written advice from its tax counsel and/or its accountants, that a Specified NMTC
Recapture Event has occurred.
(p) "NMTC Recapture Amount" means an amount, on an After -Tax Basis,
equal to the sum of (i) the "credit recapture amount," as defined in Section 45D(g)(2) of the
Code, or the amount of Tax Credits recaptured, disallowed or lost, as the case may be, as the
result of a Specified NMTC Recapture Event, plus (ii) the amount of Tax Credits that would
have been allowed to Investor in the year in which any such recapture or disallowance or loss
occurs and in each subsequent year thereafter, plus (iii) any other interest or penalties assessed
by the IRS or any other Governmental Authority in connection therewith, plus (iv) Recapture
Costs.
(q) "Person" means any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such Person where the context so
requires; and, unless the context otherwise requires, the singular shall include the plural, and the
masculine gender shall include the feminine and the neuter and vice versa.
NAI- 1502607240v2
Resolution No. 17 -720 Exhibit A5
4
(r) "Prime Rate" means the reference rate for corporate loans announced from
time to time by large, money center banks and reported as the "Prime Rate" in The Wall Street
Journal, New York Edition, as such rate may change from time to time, or in the event such rate
ceases to be determined and reported in such publication, any comparable rate determined in
good faith by Investor.
(s) "Recapture Costs" means all fees and costs (including without limitation
reasonable attorneys', accountants', experts', and consultants' fees and expenses, court costs and
investigative expenses), damages or liability actually incurred by Fund and /or Investor in
connection with the occurrence of a Specified NMTC Recapture Event including, without
limitation, in connection with any tax audit, litigation or other proceeding challenging Investor's
entitlement to the Tax Credits as a result of any Specified NMTC Recapture Event.
(t) "Specified NMTC Recapture Event" means any recapture, loss or
disallowance of any Tax Credits to the extent attributable to the Clearinghouse' QEI:
(i) arising, directly or in i �t ®le or in om Project
Borrower failing to qualify as a QALIC
(ii) arising, directly or indirectly, or in part, from the Project
Loans failing to qualify as QLICIs (including, limitation, the failure of
Project Borrower or any tenant of the Project to c• �.r, � e a "qualified business"
within the meaning of Section 1.45 D- 1(d)(5) of the Tr asury Regulations);
(iii) 'arising. directly or indirectly, in' °whole or in part, from fraud,
material misrepresentation, gross negligence, or willful misconduct of any
Indemnitor' or any Affiliate thereof: or
(iv) arising, directly or indirectly, in whole or in part, from an Event of
Default or any other action or inaction within the control of any Indemnitor or any
ercof.
(u) "Tax" or "Taxes" means any and all liabilities, losses, expenses and costs
that are, or are in the nature of, taxes, fees or other governmental charges, including interest,
penalties, fines, and additions to tax imposed by any Governmental Authority.
(v) "Treasury Regulations" means any temporary or final regulations
promulgated under the Code.
2. Tax Assumptions. Indemnitors acknowledge that, by virtue of the fact that
Fund's Clearinghouse QEI is intended to constitute a QEI, and assuming no recapture or
disallowance of the Tax Credits occurs, Investor (through its ownership of Fund) expects to
claim or be entitled to claim Tax Credits in an amount equal to (a) 5% of the Designated QEI
Amount on the first Credit Allowance Date and on each of the next two anniversary dates of the
Credit Allowance Date, and (b) 6% of the Designated QEI Amount on each of the next four
anniversary dates of the Credit Allowance Date (the "NMTC Assumption "), in an aggregate
amount over such period equal to not less than $[3,705,000] (i.e., 39% of the Designated QEI
Amount).
NAM 502607240v2
Resolution No. 17 -720 Exhibit A5
5
3. Indemnification for Specified NMTC Recapture Events.
(a) Indemnitors, jointly and severally, shall be obligated to pay the NMTC
Recapture Amount to Investor within 20 calendar days of receipt of notice from Investor of a
NMTC Payment Date. Investor shall provide Indemnitors along with such notice a written
calculation of the NMTC Recapture Amount together with a description of the Specified NMTC
Recapture Event.
(b) Investor shall use commercially reasonable efforts to provide Indemnitors
with prompt notice of any written inquiry from, investigation by, or dispute with the IRS or the
CDFI Fund in which such party has asserted that it is expressly challenging or disallowing any or
all Tax Credits claimed or claimable by Investor, such that the adverse resolution of such inquiry
from, investigation by, or dispute (or portion thereof) with,-- °` y such party would result in a
Specified NMTC Recapture Event; provided that no failure by Investor to give any such notice
shall relieve any Indemnitor from liability under this Agreement, be a defense of any Indemnitor
to this Indemnity, or result in any liability to ,Investor. Investor shall use commercially
reasonable efforts to keep Indemnitors reasonabl =informed of j' the progress of any related
proceedings which, if resolved adversely, would result in a Specified NMTC Recapture Event
(collectively, a "Recapture Dispute "), during the pendency of such Recapture Dispute, and keep
Indemnitors reasonably informed as to the progress of any proposed settlement of a Recapture
Dispute; provided that nothing contained herein shall preclude Investor from taking any action or
inaction in connection with such Recapture Dispute as Investor may deem necessary or advisable
in its sole discretion.
(c) In theevent that any amounts oiled under this Section 3 are paid when
due, Indemnitors shall have no liability to Invcstor a e r the date of such payment for any interest
or penalties assessed by the IRS or any other Governmental Authority with respect to such
amounts on account of any delay by Investor, Fun or any Affiliate of any of the foregoing in
advancing Indemnitors' payment to the IRS or other pplicable Governmental Authority.
(d) b anc
uying the Complie Period, if Project Borrower prepays or attempts to
prepay any portion of any Project Loan before such Project Loan is due, it will constitute a
breach of the terms of the Loan Agreerrient, and Indemnitors will be required to escrow, with
Investor, artampount equal to the NMTC Recapture Amount that could result from the breach by
Project Borro , as calculated by Investor consistent with the terms of this Agreement. If any
Tax Credits are actually recaptured, lost or disallowed, the escrowed funds will be paid to
Investor, plus,' on an After -Tax Basis, any additional interest or penalties assessed by the IRS or
any other Governmental Authority in connection therewith or Recapture Costs that result from
such recapture, loss or disallowance. If no Tax Credits are recaptured, lost or disallowed, 1 00%
of the escrowed funds, minus any fees and costs (including without limitation attorneys',
accountants', experts', and consultants' fees and expenses, court costs and investigative
expenses) incurred by Fund and /or Investor will be returned to Indemnitors promptly following
the reasonable determination by Investor that no Tax Credits remain subject to being recaptured,
lost or disallowed.
NA1- 1502607240v2
Resolution No. 17 -720
6
Exhibit A5
(e) Any amounts owed under this Section 3 that are not paid when due shall
bear interest at a rate equal to 2% over the Prime Rate in effect at the end of the preceding
calendar month, until paid in full.
4. Exculpation from Liability. Notwithstanding Section 3, Indemnitors shall have no
liability to Investor with respect to a Specified NMTC Recapture Event in the event that such
Specified NMTC Recapture Event occurred solely from (i) fraud, material misrepresentation,
gross negligence, or willful misconduct of Investor or Fund, or (ii) a Change in Law that
Indemnitors could not comply with after commercially reasonable efforts.
5. General.
(a) Indemnitors shall have the ability to request reasonable additional
documentation regarding any Specified NMTC Recapture EventNMTC Recapture Amount, or
any other claim for indemnity under this Agreement; provided, however, (i) none of Investor,
Fund or any Affiliate of any of the foregoing shall be obl ated to make available any
confidential information relating to their respectiv ederal or stale income , F" returns or any
issues relating thereto nor any computer program emp °oyed to calculate any such '9 ount and (ii)
any dispute as to the reasonableness of t documentation requested and /or provided shall not
limit or extinguish any Indemnitor's liab; . ®" r this Agreement.
(b) All payments
immediately available funds (unless the p
such payment) to the account of the recipie
all bye in U.S. dollars in
tructed by the recipient of
(c) This Agreement shall he bin g upon and shall inure to the benefit of,
and shall be enforceable by. the parties hereto and ® eir respective successors and permissible
assigns whether or not an express assignment to any .uch holder of rights under this Agreement
has been made. The term "Investor" shall includ any subsequent holder of the interest of
Investor as the sole member of Fund, and the term "Fund" shall include any subsequent holder of
the interest of Fund as the investor member of CDE. Each of Investor and Fund may assign such
interests, in whole or in part. without notice and without affecting any liability or obligation of
Indemnitors under this Agreement. Each of Investor and Fund may make available to any
assignee all credit and financial data with respect to any Indemnitor as may be lawfully in the
possession of or -Fund. Notwithstanding anything to the contrary herein, this Agreement shall
not inure to the benefit of any purchaser of Investor's interest as the sole member of Fund
pursuant to the Investment •und Put/Call Agreement.
(d) To the fullest extent permitted by applicable law, Indemnitors waive
(i) notice of the acceptance of this Agreement, the CDE OA, the Fund OA or any part thereof
and (ii) presentment, protest, notice, demand or action on delinquency in respect of this
Agreement, the CDE OA, the Fund OA or any part thereof, including any right to require
Investor, Fund or any Affiliate of any of the foregoing to sue any other Person obligated with
respect to this Agreement, the CDE OA, the Fund OA or any part thereof, or otherwise to
enforce payment thereof against any collateral securing Indemnitors' obligations or to collect
against any other Person who may be liable on account of any Specified NMTC Recapture
Event.
NAI- 1502607240v2
Resolution No. 17 -720 Exhibit A5
7
(e) No amendment or modification of this Agreement, and no approvals,
consents or waivers hereunder, shall be valid or binding unless in writing and executed by the
party to be bound.
(f) This Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof, and supersedes in their entirety any and all written or oral
agreements previously existing between the parties with respect to such subject matter.
(g) Should any one or more provisions of this Agreement be determined to be
illegal or unenforceable, all other provisions nevertheless shall be eff e.
(h) Indemnitors hereby agree that this Agreement, the indemnified amounts as
described in Section 3, and all other obligations indemnified hereby, shall remain in full force
and effect at all times hereinafter until paid and /or performed in full notwithstanding any action
or undertakings by or against any Indemnitor and /or any member of any Inderinitor or in any
proceeding in the United States Bankruptcy Court, ding, without limitation, *y proceeding
relating to valuation of collateral, election or imposition of recur or unsecured aim status
upon claims by Investor pursuant to any Chapter of the Bankruptcy Code or the Rules of
Bankruptcy Procedure as same may be app "cable from time to time.
(i) Each Indemnitor yenants, represents, an nts to and for the benefit
of Investor as follows:
(i) the execution. delivery and performance by it of this Agreement
does not contravene or conflict with any law, order, rule, regulation, writ,
injunction or decree now in effect of any Governmental Authority over it, or any
contractual rest( iction binding on or affecting it;
(ii) , it has all necessary power and authority to enter into and perform
this Agreement, and there are no facts or circumstances of which it is aware that
could in any way impair or prevent it from performing its obligations under this
Agreement;
(iii) any and all financial information with respect to it given by it or
any other Indemnitor to Investor fairly and accurately present its financial
condition and results of its operations as of the respective dates thereof and for the
respective dates indicated therein, and, since the respective dates thereof, there
has been no material adverse change in its financial condition or the results of its
operations; and
(iv) with the assistance of counsel of its choice, it has read and
reviewed this Agreement and such other documents as it and its counsel deemed
necessary or desirable to read.
(j) Project Borrower further covenants and agrees (i) to provide Investor,
within [ 180] calendar days of the end of each of its fiscal years, copies of audited financial
statements regarding its previous fiscal year, including a balance sheet, a statement of operations,
and a statement of cash flows and (ii) to promptly notify Investor of any change in its financial
NAI- 1502607240v2
Resolution No. 17 -720
8
Exhibit A5
condition that adversely and materially affects its ability to perform its obligations under this
Agreement.
(k) Sponsor further covenants and agrees (i) to provide Investor, within
[120] calendar days of the end of each of its fiscal years, copies of audited financial statements
regarding its previous fiscal year, including a balance sheet, a statement of operations, and a
statement of cash flows and (ii) to promptly notify Investor of any change in its financial
condition that adversely and materially affects its ability to perform its obligations under this
Agreement.
(1) Any notice, request, demand, consent, approval, direction, agreement, or
other communication required or permitted hereunder shall be in writing and shall be validly
ipts, (i-)R delivered personally
ified mail (with return receipt
copy of such email and proof of
set forth in clauses (i)- (ii) or (iii)
et forth on Schedule A to this
given if (i) sent by a nationally- recognized courier that obtai
by a courier that obtains receipts, (iii) mailed by United
requested and postage prepaid), or (iv) sent by emai
transmission thereof sent via one of the methods
hereof), addressed to the applicable party at the
Agreement. Each notice shall be effective upon being so sent, delivered, or mailed, but the time
period for response or action shall run from the date of receipt as shown on the delivery receipt,
or the date the email was sent, as applicable. Refusal to accept delivery or, to the fullest extent
permitted by applicable law, the inability ''to del iver ' because of a changed address for which no
notice was given shall be deemed recei s Any party may periodically change its address for
notice (including different or additional addresses for copies) by giving the other party at least 10
calendar days' prior notice inrcordance with the foregoing provisions.
(m) The' lability of Indemnitorsrnder this Agreement shall be joint and
several and shall be an absolute, direct immediate and unconditional indemnity of payment and
not of collectability. The obligations of Indemnitors hereunder are independent of the
v
obligations of any Affiliate or any other party may be initially or otherwise responsible for
performance or payment of the obligations her- `' der guaranteed, and, in the event of any default
hereunder, a separate action or actions may be brought and prosecuted against Indemnitors,
whether or not any Affiliate is joined therein or a separate action or actions are brought against
any hate.
(n) References in this Agreement to Sections are intended to refer to Sections
of this Agreement, unless otherwise specifically stated.
(o) The Recitals and Schedule identified in this Agreement are incorporated
herein by reference and made a part hereof.
(p) This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier, facsimile machine, portable document format ( "PDF ") or other
electronic means shall be as effective as delivery of a manually executed counterpart of this
Agreement. The effectiveness of any such documents and signatures shall, subject to applicable
laws, have the same force and effect as manually signed originals and shall be binding on the
NAI- 1502607240v2
Resolution No. 17 -720 Exhibit A5
9
parties. No party may raise the use of a telecopier, facsimile machine, PDF or other electronic
means, or the fact that any signature was transmitted through the use of a telecopier, facsimile
machine, PDF or other electronic means, as a defense to the enforcement of this Agreement.
6. CHOICE OF LAW; WAIVER OF JURY TRIAL AND CERTAIN OTHER
RIGHTS; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.
(a) THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE
PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
RELATED HERETO SHALL BE DETERMINED UNDER; GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON
WITHOUT GIVING EFFECT TO CONFLICT OR CHOICE OF LAW PRINCIPLES, AND TO
THE EXTENT RELEVANT IN APPLYING THE PROVISIONS OF SECTION 45D OF THE
CODE, THE CODE AND THE TREASURY REGULATIONS THEREUNDER.
(b) TO THE FULLEST EXTENT 'PERMITTED BY APPLICABLE LAW,
EACH PARTY (i) AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED. ND LITIGATED ONLY IN
THE STATE AND FEDERAL COURTS LOCATED IN TIE C IINTY OF KING, STATE OF
WASHINGTON AND (ii) WAIVES; ANY RIGHT IT MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCEVITH THIS SECTION 6.
(c) TO FULLEST EXTENT` PERMITTED BY APPLICABLE LAW,
EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDitkIG DIRECTLY OR 11)1 RE Q =LY ARISING OUT OF OR RELATING
TO THIS AGRE ENT' OR THE TRANSATTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). IT IS AGREED
AND UNDERSTOOD TPIrAT THIS WAIVER, CONSTITUTES A WAIVER OF TRIAL BY
JURY 00 ALL CLAIMS AGA!NS1' ALL PARTIES TO SUCH ACTIONS OR
PROC EDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THI AGREEMEN WA CH P,ws (i) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY HER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND
(ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.
(d) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
EACH PARTY AGREES THAT ANY PROCESS OR NOTICE OF MOTION OR OTHER
APPLICATION TO ANY SUCH COURT IN CONNECTION WITH ANY ACTION OR
PROCEEDING MAY BE SERVED UPON SUCH PARTY BY REGISTERED OR
CERTIFIED MAIL TO OR BY PERSONAL SERVICE AT THE LAST KNOWN ADDRESS
OF SUCH PARTY, WHETHER SUCH ADDRESS BE WITHIN OR OUTSIDE THE
JURISDICTION OF ANY SUCH COURT.
NAI- 1502607240v2
Resolution No. 17 -720
10
Exhibit A5
(e) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
INDEMNITORS SHALL NOT ASSERT, AND HEREBY WAIVE, ANY CLAIM AGAINST
INVESTOR AND INVESTOR'S AFFILIATES, ON ANY THEORY OF LIABILITY, FOR
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO
DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A
RESULT OF, THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY AND /OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
7. Enforcement Costs. In the event of any action at law or in equity to enforce the
provisions of this Agreement or to secure relief or damages for the breach' of this Agreement, the
prevailing party shall be entitled to payment or reimburselnent, as applicable, of its costs,
expenses and fees (including without limitation reasonable attorneys', accountants', experts', and
consultants' costs, expenses and fees, court costs and investigative expenses prior to trial, at trial
and on appeal) incurred in such proceedings from the non - prevailing party.
8. Termination of Indemnitors' Obli • ati Notwithstanding anything herein to the
contrary, the obligations of Indemnitors set forth em shall terminate 3() calendar days
following the last day on which Investor could be subject to liability for any loss, disallowance,
or recapture with respect to the lax redits that have been claimed with respect to the
Clearinghouse QEI, taking into account accounirny extensions of the statute imitations applicable to
Investor.
[REMAINDER OF PAGE BLANK; SIGNATURE PAGES TO FOLLOW.]
NAM 502607240v2
Resolution No. 17 -720 Exhibit A5
11
IN WITNESS WHEREOF, each party has caused this QALICB Indemnification
Agreement to be executed by its duly authorized officer as of the Effective Date.
PROJECT BORROWER:
[ I, a Washington
nonprofit corporation
SIGNATURE PAGE 1 OF 3
QALICB INDEMNIFICATION AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A5
[COUNTERPART SIGNATURE PAGE TO QALICB INDEMNIFICATION AGREEMENT]
SPONSOR:
CITY OF FEDERAL WAY, a Washington
municipal corporation
SIGNATURE PAGE 2 OF 3
QALICB INDEMNIFICATION AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A5
[COUNTERPART SIGNATURE PAGE TO QALICB INDEMNIFICATION AGREEMENT]
INVESTOR:
CAPITAL ONE, NATIONAL ASSOCIATION,
a national banking association
SIGNATURE PAGE 3 OF 3
QALICB INDEMNIFICATION AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A5
(1) If to Project Borrower:
With a copy to:
(2) If to Sponsor:
With a copy to:
SCHEDULE A
Notice Addresses of Parties
[ 1
33325 8th Ave. South
Federal Way, WA 98003
Attention: [
Email: [
1
Butler Snow, LLP
1801 California Street, guile 51
Denver, CO 80202
��sj`
Attention: Alan Paste k, k, Esq.
Email: alan.pasternack @butlersnow.
City of Federal Way
33325 8th Ave. South
Fed WA 98003
Em
Butle
1801 C Suite 5100
enver,
tention: Alan Pasternack, Esq.
all alan asternack @butlersnow.com
With a copy to:
ational Association
Debt Capital Markets
Place St. Charles, Suite 2900
201 St. Charles Ave.
New Orleans, LA 70170
Attention: Spencer Gagnet
Email: spencer.gagnet @capitalone.com
Jones Day
100 High Street, 21st Floor
Boston, MA 02110
Attention: Jeffrey D. Gaulin, Esq.
Email: jgaulin @jonesday.com
[REMAINDER OF PAGE BLANK]
SCHEDULE A
QALICB INDEMNIFICATION AGREEMENT ,
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A5
REIMBURSEMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS REIMBURSEMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement ") is by and between CITY OF FEDERAL WAY, a municipal corporation of the
State of Washington (the "Assignor "), and FW PAEC QALICB, INC., a Washington nonprofit
corporation (the "Assignee "), dated as of the _ day of , 2017.
RECITALS:
WHEREAS, Assignee has been formed to lease, construct, develop, and maintain certain
property located in Federal Way, Washington (the "Project "); a i d
WHEREAS, prior to formation of the Assignee, the Assignor entered into various
contracts and agreements, including without limitation those contracts and agreements described
on Exhibit A attached hereto, and incurred various liabilities, obligations, expenses and costs
(collectively, the "Contracts and Obligations ") relating to the development and construction of
the Project; and
WHEREAS, the Assignor desires
and all liabilities incurred or to be inc
n to the Assignee the Contracts and Obligations
tion therewith; and
WHEREAS, the Assignee desir
liabilities incurred or to be incurred in con
Contracts and Obligations and all
NOW, THEREFORE, in consideratio
good and valuable cons ideration, the receipt an
parties hereto agree as foil() \A, s:
utual promises contained herein and for
acy of which is hereby acknowledged, the
AGREEMENT:
Assignor hereby assigns to the Assignee all of its right, title and interest in
Contracts and Obligations. To the extent required by each of the Contracts
and Obligations, Assigns r shall obtain the consent of the other party or parties of
uch Contracts and Obligations, a form of which is attached hereto as Exhibit C.
le Assign o ereby represents and warrants to the Assignee that Assignor has
expended the sums set forth in Exhibit B with respect to the Contracts and
Obligations transferred and assigned hereunder on or prior to the date hereof (the
"Transfer Date "), and such sums in the amount of $ shall be reimbursed
by Assignee to Assignor on or about the date hereof; provided that, the Assignor
has provided the Assignee with satisfactory documentation that such expenditures
have accrued and been paid by Assignor under the applicable contracts.
Additionally, Assignor has incurred unpaid obligations under the Contracts and
Obligations in the amounts set forth in Exhibit B, which amounts will be paid by
Assignee directly to the applicable contractor or vendor as and when such
obligations become due under the Contracts and Obligations.
Resolution No. 17 -720 Exhibit A6
3. The Assignee hereby assumes and shall hereafter pay, perform and discharge as
and when due all liabilities, obligations and covenants with respect to or under the
Contracts and Obligations.
4. Assignor represents and warrants for the benefit of the Assignee that, to the
knowledge of the Assignor, as of the Transfer Date: (i) no default by any party
exists under any of the Contracts and Obligations; (ii) all Contracts and
Obligations are in full force and effect; (iii) Assignor is the sole owner of each of
the Contracts and Obligations; (iv) Assignor has not previously assigned,
encumbered or otherwise transferred its rights under anyof the Contracts and
Obligations; and (v) that it has provided accurate and complete copies of all
Contracts and Obligations, including all amen ents o odifications thereto to
Assignee.
5. Assignor agrees to indemnify, hold
against all debts, liabilities and
transactions entered into or other eve
respect to, and in accordance with, th
agrees to indemnify, hold rmless and
debts, liabilities and obligations` arising from
into or other events occurring after the Trans
accordance with the Contracts and Oblige
and de
ons ising
to the
d Obligati
nee from and
ness done,
Date with
s. Assignee
ssignor from and against all
done, transactions entered
with respect to and in
6. This Agreement shall bind the parties hereto an
successors'assig s, and shall inure to the
their respective succe rs and assigns.
7. This
of the St
the. United
t shall be governe
ashington, excep
of America.
eir respective representatives,
nefit of Assignee, Assignor and
d construes in accordance with the laws
the extent preempted by the federal laws of
entire agreement of the parties with respect to the subject matter
[Signatures appear on next page]
18455022_1
2
Resolution No. 17 -720 Exhibit A6
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date written above.
ASSIGNOR:
ASSIGNEE:
CITY OF FEDERAL WAY,
a municipal corporation of the State of Washington
FW PAEC QALICB, INC.,
a Washington nonprofit corporation
[Federal Way - Assignment of Contracts Signature Page]
Resolution No. 17 -720 Exhibit A6
EXHIBIT A
CONTRACTS AND OBLIGATIONS
Resolution No 17 -720
Exhibit A6
EXHIBIT B
SCHEDULE OF COSTS EXPENDED
Resolution No. 17 -720
Exhibit A6
EXHIBIT C
FORM OF CONSENT TO ASSIGNMENT
[INSERT CONSENTING ENTITY]'S CONSENT:
The undersigned hereby consents to the terms of the Assignment and Assumption
Agreement (the "Agreement ") between CITY OF FEDERAL WAY, a municipal corporation of
the State of Washington (the "Assignor "), and FW PAEC QALIG:, INC., a Washington
nonprofit corporation (the "Assignee "), and agrees that it will per all of its obligations,
covenants, conditions and arrangements under the Agreement for the benefit of Assignee and its
successors and assigns, so long as Assignee performs the duties and obligations assumed by it
under the Agreement.
For purposes of the Agreement, all notices, d
permitted to be given or served upon the undersig
properly given when hand delivered or, if mailed b
postage prepaid, return receipt requested (effective
follows:
r documents which are required or
sign shall be deemed to have been
gistered or certified mail,
thr + ¢.''`after mailing). addressed as
If to the undersigned:
eral Way
33325 : i Ave. South
Federal a . y, WA 98003 -6325
Attn: Ryan Call, City Attorney
IN WITNESS WHEREOF, the undersigned has executed this consent as of the day and
year first- above written.
36130963v1
Resolution No. 17 -720
By:
Name:
Title:
Exhibit A6
GROUND LEASE
THIS GROUND LEASE (this "Lease ") is entered into as of the [ ''z,1 day of
2017 (the "Effective Date "), by and between CITY OF FEDERAL WAY, a municipal
corporation of the State of Washington ( "Lessor "), and FW PAEC QALICB, INC., a
Washington nonprofit corporation ( "Lessee ").
BACKGROUND
Lessor owns that certain real property located at 31510 Pete onReichbauer Way South,
Federal Way, Washington 98003, legally described on Exhibit A attached to this Lease (the
"Real Property "). The Real Property together with any improvements now or hereafter
constructed or existing upon the Real Property (the "Improvements ") is collectively referred to in
this Lease as the "Property."
For and in consideration of the mutual promises, cod' ' d conditions set forth herein,
the parties agree as follows:
1. Lease. Lessor hereby leases
Property.
eases from Lessor, the
2. Term. This Lease a e effectiv ����A� �° te and shall expire at midnight
on that date which is ninety - nine s ') years + �� ffective Date (the "Expiration Date "),
unless the Lease is sooner terminate + accords th the terms of this Lease (the "Term ").
3. Rent. On the Effective Date, Lessee shall pay Lessor a payment in the amount of
and No /100 Dollars ($ .00), a de minimis amount of which
constitutes one -time capital rent and the remainder of which constitutes reimbursement for
certain predevelopment expense ::incurred prior to the date of this Lease by Lessor. Lessor
hereby acknowledgesthe receipt e ° : + .rent payment on the date of this Lease. No other rent
shall be due under this Lease.'
4. Operating Expenses. Lessee shall be responsible for the payment of all Operating
Expenses of the Propertycommencing on the Effective Date. To the extent feasible, all
Operating Expenses shall be' billed directly to and paid by Lessee. If Lessee fails to timely pay
any Operating Expense when it becomes due and payable, Lessor shall have the right, at its
option, to make such payment at the expense of Lessee as reasonably required. Any amount so
expended by Lessor shall be paid by Lessee promptly upon demand. With respect to those
Operating Expenses billed to or otherwise paid by Lessor, Lessee's payment of Operating
Expenses shall be due on the later of fifteen (15) days after receipt of an itemized statement
thereof from Lessor or thirty (30) days after the end of the calendar month. Lessor shall provide
Lessee with a written statement of the actual Operating Expenses billed to Lessor for each
calendar month, within fifteen (15) days after the end of the month. Lessor shall maintain
separate detailed records of the Operating Expenses billed to Lessor, and shall make these
available on a reasonable basis for examination by Lessee. Within sixty (60) days of the end of
Ground Lease
Resolution No. 17 -720
Page 1
Exhibit A7
each calendar year, Lessor shall provide to Lessee an annual itemized statement of Operating
Expenses billed to Lessor, with an explanation of any corrections to the quarterly statements for
the prior year, and the next payment to Lessor shall be adjusted to the extent necessary to take
into account any such corrections.
"Operating Expenses" as used in this Lease means:
(i)
All ordinary and special assessments and other governmental charges, that
are assessed upon all or any part of the Property, including any tax or
other levy on or measured by any rent collected by Lessor with respect to
the Property, and any expenses incurred by Lessor in contesting any of the
foregoing or the assessed valuation of all or any part of the Property.
(ii) All costs of utilities, including witlibut limitation, water, sewer, power,
garbage removal and recycling services.
(iii)
All premiums on policies of public liability, casualty, and property
damage insurance maintained by Lessor with respect to the Property.
(iv) All property taxes, if any, on the Property.
(v) All other expenses in connection with the operation, management,
maintenance, subleasing and upkeep of the Property.
5. Use.
(A) Permitted Use. The Property may be used and occupied by Lessee for any lawful
purpose, except that Lessee agrees that it will not use or permit the use of the Property, or
any part thereof, in any way which would violate any of the terms of this Lease, or the
certificate of occupancy for the Property, or the laws of the State of Washington, or any
directions, rut or regulations of the Health Officer, Fire Marshall, Building Inspector,
Lessor or officers of any public authority having jurisdiction over the Property.
(13)(Use Restrictions. In no event shall Lessee's use of the Property consist of operation
of any of the following prohibited activities or businesses: (i) any trade or business
consisting predominantly of the development or holding of intangibles for sale or license;
(ii) any trade or business the principal activity of which is farming within the meaning of
Section 20 32A(e)(5)(A) of the Internal Revenue Code of 1986 or corresponding
provisions of subsequent superceding federal law (the "Code "); (iii) any other trade,
business or activity, prohibited by any amendment to Section 45D of the Code and any
temporary, proposed or final regulations promulgated by the U.S. Treasury pursuant to
the Code, and any other guidance published by the Internal Revenue Service; or (iv) any
trade or business consisting of the operation of any private or commercial golf course,
country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility
used for gambling, or any store the principal business of which is the sale of alcoholic
beverages for consumption off premises or any trade or business consisting of the
operation of residential rental property, as defined in Section 168(e)(2)(A) of the Code.
Ground Lease
Resolution No. 17 -720
Page 2
Exhibit A7
Furthermore, in no event shall Lessee use the Property to provide dwelling units, or other
areas with sleeping accommodations, on other than a transitory basis.
(C) Hazardous Substances. Lessee shall not, without Lessor's prior written consent,
keep on or around the Property for use, disposal, transportation, treatment, storage or
sale, any substance designated as, or containing components designated as, hazardous,
dangerous, toxic or harmful (collectively, "Hazardous Substances ") and /or subject to
regulation by any federal, state or local law, regulation, statute or ordinance, except those
which are normally used day -to -day for standard residential, office, retail, commercial or
medical purposes and which shall be used in compliance wit 1 applicable laws and
regulations.
(D) Nuisance. Lessee shall not cause, maintain or ermit any nuisance on or about the
Property, nor commit or suffer any waste in or abo ' he Property.
6. Lessee's Maintenance and Repair.
(A) Maintenance and Repairs. Lessee shall operate, maintain and occupy the Property in
a good, neat, clean, sanitary condition, and in compliance with all applicable laws and
regulations. Lessee shall be obliga ed: -to maintain all Improvements in good condition,
ordinary wear and tear excepted. Lessor acknowledges that at the expiration of this
Lease, the Improvements may be expected, through ordinary wear and tear, to be at or
near the end of their useful lives. Lessor shall not be obli uatcd to perform any repairs or
maintenance on the Property except as expressly stated herein. Lessee shall promptly
perform or cause to be performed: (i) any required structural or exterior repairs and
maintenance; (ii) any repair or restoration to be performed under the terms hereof with
insurance pr eds; and (iii) or repairs of any damage to the Property caused by Lessee.
(B) No Waste. Lessee will permit no waste, damage or injury to the Property.
(C) Garr age. Lessee shall cause all garbage, recyclables and other debris emanating
from the Property to be removed to such reasonable locations and spaces as may be
e cified by Lessor from time to time during hours and subject to such reasonable
ontrols as may be established by Lessor from time to time.
(D) e's Failure. In the event Lessee fails to maintain or repair the Property as
requir herein, Lessor shall give Lessee notice of such failure. If Lessee fails to
commence the required maintenance or repair within ten (10) days of notice, or as soon
thereafter as any necessary permits and approvals can be obtained with reasonable
diligence, or fails to diligently prosecute the same to completion, then Lessor shall have
the right, at its option, to do such acts and expend such funds at the expense of Lessee as
reasonably required to perform such work. Any amount so expended by Lessor shall be
paid by Lessee promptly after demand. Lessor shall have no liability to Lessee for any
damage, inconvenience or interference with the use of the Property by Lessee as a result
of performing any such work.
(E) Systems. In addition to the above, Lessee shall perform and pay for any
maintenance of any systems or equipment serving the Property.
Ground Lease
Resolution No. 17 -720
Page 3
Exhibit A7
7. Alterations, Additions and Improvements.
(A) Upon completion of the Project, Lessee may construct additional Improvements and
make alterations to any of the Improvements, without the prior written approval of
Lessor. All Improvements undertaken by Lessee shall be at Lessee's sole expense, except
as otherwise expressly provided in this Lease, but shall become the property of Lessor,
remaining in and surrendered with the Property as a part thereof as of the Expiration Date
or earlier termination of this Lease. All work performed shall be done in a workmanlike
manner and in compliance with all applicable laws and ordinances. Lessee shall
indemnify and hold Lessor harmless from and against all damages, loss, liens or expenses
arising out of such work.
(B) Notwithstanding anything to the contrary set forth herein, it is the intent of Lessor
and Lessee that Lessee shall be the owner of the Improvements, as the same are
constructed, for Federal income tax purposes, and that Lessee shall have the benefits and
burdens of ownership of such Improvements. Lessor and Lessee shall treat Lessee as the
owner of the Improvements for Federal income ta\ puposes, and will not take any
positions contrary to such treatment or inconsistent with Lessee's owership of the
Improvements for Federal income t s urposes.
8. Indemnification; Insurance.
(A) Waiver. Lessor shall not be liable to Lessee an essy , as a material part of the
consideration to Lessor, hereby waives all claims against Lessor and assumes all risk of
damages for loss to any 'property or y injury 's an erson occurring on the Property
from any cause whatsoever.
(B) Lessee's Indemnification. Lessee shall indemnify and save Lessor, its officers,
r
agents, employees, contractors, licensees and invitees harmless from all loss, damage,
liability or expense ('including attorney's fees and other costs incurred in connection with
litigation or the defense of claims, whether claims involved litigation) resulting from any
actual or alleged injui to any person, or from any actual or alleged loss of or damage to
any property (including any and all contamination by any Hazardous Substances in, on or
under the Property whether or not caused by Lessee), arising out of Lessee's operation or
occupation of the Property or caused by or resulting from any act or omission of Lessee
or any licensee, assignee, sublessee or concessionaire, or of any officer, agent, employee,
guest, invitee or visitors of any such person or about the Property or from Lessee's breach
of its other obligations hereunder.The indemnification provided for in this Section 8(B)
shall survive any termination or expiration of this Lease. Lessee shall promptly notify
Lessor of casualties or accidents occurring in or about the Property.
(C) Lessor's Responsibility. The exculpation, release and indemnity provisions of
Sections 8(A) and 8(B) shall not apply to the extent the claims thereunder were caused by
Lessor's gross negligence or willful misconduct. However, in no event shall Lessor be
liable to Lessee for consequential damages.
Ground Lease
Resolution No. 17 -720
Page 4
Exhibit A7
(D) Liability Insurance. Lessee shall, at its own expense, maintain comprehensive
general liability insurance, with broad form endorsement, in effect with respect to the
Property with minimum limits of $1,000,000 per occurrence, $2,000,000 in the
aggregate, $5,000,000 umbrella, and a maximum deductible of $25,000. The insurance
carrier must have an AM Best's Rating of A -VII or better. Lessor shall be named as an
additional insured and shall, if requested by Lessor, be furnished with a copy of such
policy or policies of insurance which shall bear an endorsement that the same shall not be
canceled without thirty (30) days' prior notice to Lessor. If Lessee fails to maintain such
insurance, Lessor may do so at its discretion, and Lessee shaky; eimburse Lessor for the
a,
full expense incurred upon demand.
(E) Fire and Extended Coverage Insurance. Lessee s d keep in force at all
times during the term of this Lease, "special for overing all risks of
physical loss or damage to the Property, with liability is o than one hundred
percent (100 %) of the full replacement value thereof, uch poll ame Lessor as
an additional insured and each mortgagee a loss payee, under a mortgagee
endorsement. Such policy shall include, bu shall not be limited to, e for fire,
extended coverage, vandalism, malicious mischief and storm. Lessee sha also maintain
insurance covering its furniture, fixtures. equipment and inventory in any amount equal to
the full insurable value thereof, insuring against fire and risk covered by a standard
extended coverage endorsement o e roperty..
(F) Mortagee's Insurance Requirements. Notwithstanding the foregoing, Lessee shall
satisfy all insurance re!irements of any Approved Mortgagee which has a deed of trust
secured by this Le
9. Damage to
(A) Notice of Casualty. Lessee shall give prompt written notice to Lessor after the
occ s of any fire, earthquake, act of God or other casualty to or in connection with
or any Improvements or an y portion thereof (a "Casualty "). Upon the
Hof any Casualty, Lessee, promptly and with all due diligence, shall apply for
plicablensurance proceeds recoverable with respect to such Casualty, for the
benefit of Lessor, Lessee, and their respective mortgagees, as their. interests appear;
provided,`;, that Lessee shall be entitled to all of the proceeds of insurance payable with
respect to asualty affecting the Improvements. If the Improvements shall be damaged
by Casualty, then Lessee shall have the option, to be exercised within one hundred twenty
(120) days after such Casualty, to:
(i) repair or restore the Improvements as provided in this Section 9, or
(ii) with the written consent of each mortgagee of the Property, to terminate
this Lease by notice to Lessor, which termination shall be deemed to be
effective as of a date not less than thirty (30) days after the date such
notice is received by Lessor. If Lessee terminates this Lease pursuant to
this Section, Lessee shall, subject to the prior rights of any Approved
Mortgagee therein, apply the necessary portion of Lessee's insurance
Ground Lease
Resolution No. 17 -720
Page 5
Exhibit A7
proceeds to remove all debris from the Property and shall be entitled to
keep any remaining insurance proceeds.
(B) Restoration. In the event the Improvements can be restored, Lessor and Lessee shall
cooperate with one another to enable Lessee to restore or cause to be restored the
Improvements as expeditiously as possible.
(C) Termination. In the event Lessee shall determine that it is not economically practical
to restore the Improvements and /or the Property to substantially the same condition in
which they existed prior to the occurrence of such Casualty, then with the express written
consent of any mortgagee of the Property, Lessee may terminate this Lease as of a date
that is not less than thirty (30) days after Lessee provides notice to Lessor.
10. Real and Personal Property Taxes. Lessee shall pay, prior to delinquency, all real
property taxes payable with respect to the Property (if any). Lessee shall pay prior to delinquency
all personal property taxes payable, if any, with respect to all property of Lessee's located on the
Property. Lessee shall promptly upon request of Lessor provide satisfactory evidce of such
payment. "Personal property taxes" under this Sectio ` 0 includes all propertytaxes assessed
against the property of Lessee, whether assessed as real o? personal property.
11. Assignment or Lease. Lessee may assign or sublet the whole or any part of the Property
without the prior written consent of Lessor, but shall promptly give notice to Lessor of such
assignment or sublease; provided, however, that Lessor hereby consents to that certain Sublease
dated on or about the date hereof between Lessee, as sublessor, and Lessor, as sublessee. If
Lessee elects to so assign its interest in this Lease, the parties shall execute assignment and
consent documents reasonably acceptable to Lessor. 'In any event, Lessee shall remain liable
hereunder and shall not be released from its obli `` a hereunder.
12. Sale. In the event of any sale of the Property, or any assignment of this Lease by Lessor,
Lessor shall be relieved of all liability under this Lease arising out of any act, occurrence, or
omission,., occurring after sale or assignment, and the purchaser or assignee at such sale or
assignment or any subsequent sale or assignment of this Lease shall be deemed without any
further agreement to have assumed all of the obligations of Lessor under this Lease accruing
after the date of such sale or assignment.
4
13. Access. Lessee will ;,,,, ems.
a low Lessor access to the Property at all reasonable times for the
purpose of inspections and making repairs, additions or alterations to the Property as Lessor
elects to make, but this access shall not be construed as an agreement on the part of Lessor to
make any repairs, additions or alterations.
14. Eminent Domain.
(A) Condemnation. In the event that title to the entire Property shall be lawfully
condemned or taken in any manner for any public or quasi - public use or conveyed in lieu
of condemnation, this Lease shall automatically terminate as of the date possession is
required to be delivered to the condemnor. In the event that only a portion of the Property
is taken and the Property is thereby rendered unsuitable for the conduct of Lessee's
Ground Lease
Resolution No. 17 -720
Page 6
Exhibit A7
business, either party may terminate this Lease as of the date when possession of the
portion of the Property so taken is delivered to the condemning authority.
(B) Award. Any award for the taking of all or part of the Property under the power of
eminent domain, including payment made under threat of the exercise of such power,
shall be the property of (i) Lessor to the extent such award constitutes compensation for
diminution in value of this Lease or for the taking of the fee simple interest in the Real
Property, and (ii) Lessee to the extent such award constitutes compensation for the loss of
or damage to the Improvements, Lessee's trade fixtures and removable personal property
and for Lessee's relocation or moving expenses. Lessor shall not be liable to Lessee for
the loss of the use of all or any part of the Property taken by condemnation.
(C) Lessor Authority. Lessor shall have the exclusive authority to grant possession and
use to the condemning authority and to negotiate and settle all issues of just
compensation or, in the alternative, to conduct litigation concerning such issues, except
that Lessor shall not enter into any settlement of any separate award that may be made to
Lessee without Lessee's prior approval of such settlement, which approval shall not be
unreasonably withheld.
15. Default.
(A) Definition of Default. The occurrence of any one or more of the following events
shall constitute a material default and breach of the Lease ( "Default "):
(i)
(ii)
vacation or abandonment by Lessee of'all or any portion of the Property;
failure by Les
such failure sh
to make any payment required as and when due, where
continue after ten (10) days' written notice from Lessor;
(iii) failure by Lessor or Less to materially observe or perform any of the
covenants, conditions, or provisions of this Lease, other than the making
o any payme ue hereunder, where such failure shall continue after
ninety (90) days' written notice from Lessor or Lessee, as applicable,
except that, if the nature of such obligation is such that more than ninety
(90) days are required to cure such failure, Lessor or Lessee, as applicable
shall not be in default if such party commences such cure within ninety
(90) days after notice and thereafter completes such cure diligently and
within a reasonable time; and
(iv) any assignment, transfer, mortgage, encumbrance or other sublet of the
Property not otherwise permitted by this Lease without the prior written
consent from Lessor.
In no event shall a default by Lessor under this Lease give rise to any right of Lessee to
terminate this Lease.
Ground Lease
Resolution No. 17 -720
Page 7
Exhibit A7
(B) Lessee Notification. Lessee shall notify Lessor promptly of any Default by Lessee
(or event or occurrence which, with the passage of time, the giving of notice, or both,
would become a Default) that by its nature is not necessarily known to Lessor.
16. Remedies In Default.
(A) Lessor Remedies. Subject to Section 18 of this Lease, in the event of any Default by
Lessee, Lessor may, at any time without waiving or limiting any other right or remedy,
do any one or more of the following: (a) re -enter and take possession of the Property
without terminating this Lease, or (b) terminate this Lease. and (c) pursue any remedy
allowed by law or equity.
(B) Termination. In the event Lessor elects to terminate this Lease, Lessor shall be
additionally entitled to recover from Lessee the award by a court having jurisdiction
thereof of the amount by which the unpaid rent and other charges and adjustments called
for herein for the balance of the term after the time of such award exceeds the amount of
such loss for the same period that Lessee proves could be reasonably avoided.`
(C) No Termination. No re -entry or taking possession of the Property by Lessor pursuant
to this Section 16, or acceptance of Lessee's keys to or surrender of the Property shall be
construed as an election to terminate this Lease unless a written notice of such intention
is given to Lessee. Notwithstanding any reentry or termination, the liability of Lessee for
the rent shall continue for the balance of the Term until the Expiration Date, and Lessee
shall make good to Lessor any deficiency arising from reletting the Property at a lesser
rent than the Rent provided for in this Lease. Less& shall pay such deficiency each
month as the amount thereof is ascertained by Lessor.
(D) Lessee Remedies. in the event of Lessor default, Lessee shall be entitled to pursue
any remedy available to it under the law, provided however that Lessee shall look only to
Lessor's property in the Property for the satisfaction of Lessee's remedies for the
collection of a judgment or other judicial process requiring the payment of money by
fL`- essor in the event of any default by Lessor hereunder, and no other property or assets of
Lessor or any member of Lessor shall be subject to such enforcement procedure for the
satisfaction of Lessee's remedies under this Lease.
17. Surrender of Possession. Upon the Expiration Date, or other termination of the term,
Lessee shall promptly and peacefully surrender the Property to Lessor, in good condition and
repair, except for ordinary wear and tear. Trade fixtures, furnishings, and equipment installed by
Lessee shall be the property of Lessee, which Lessee shall remove from the Property if requested
by Lessor. Any damage caused by such removal shall be repaired by Lessee at its expense. Any
of Lessee's property not removed by Lessee on or prior to the Expiration Date shall be deemed
abandoned and may be removed and disposed of by Lessor without accountability to Lessee at
the sole cost and expense of Lessee (except if Lessor did not request such property to be
removed),If Lessor sells any of Lessee's property after the Expiration Date, Lessor may receive
and retain the proceeds of such sale as the property of Lessor.
Ground Lease
Resolution No. 17 -720
Page 8
Exhibit A7
18. Leasehold Financing
(A) Right to Encumber. Lessee shall have the right during the Term to encumber, all of
Lessee's right, title, and interest in the Property subject to the provisions of this Lease,
pursuant to that certain Leasehold Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing of even date herewith (the "Initial Approved
Mortgage'') entered into by Lessee for the benefit of Clearinghouse NMTC (Sub 46),
LLC, a California limited liability company, and its successors, participants and assigns
(the "Initial Approved Mortgagee "), and joined by Lessor for the purpose of subjecting
its interest in the Property to the lien thereof and (ii) any subsequent deeds of trust or
mortgages granted by Lessee to subsequent lenders thereto (each such lender and the
Initial Approved Mortgagee being an "Approved Mortgagee ") to secure any refinancing
or replacement of all or a portion of the Initial Approved Mortgage or other financing of
Lessee (collectively with such Initial Approved Mortgage, "Approved Mortgages ").
(B) Leasehold Mortgages. Lessor acknowledges and agrees that Lessee may enter into
the Approved Mortgages. The documentation evidencing the Initial Approved�Mortgages
and the loans secured thereby are in a form reasonably acceptable to Lessor and Lessee.
As used in this Section, the follow pg defined terms used herein shall have the meanings
specified below:
(i) "Leasehold Interest" means Lessee's interest in the Property pursuant to
this Lease.
(ii) "Lcasehol'
Lessee an
age or deed of trust granted by
n part by the Leasehold Interest.
.F
(C) Leaseho ortgage `� �� Assignme he making of a Leasehold Mortgage shall
not be deemed to constrtu =; �signment ®r transfer of this Lease or of the Leasehold
Interest, nor shall the Approved Mortgagee be deemed to be an assignee or transferee of
this Lease or of the Leasehold Interest so as to require the Approved Mortgagee to
assume the performance of any of the terms, covenants or conditions on the part of
Lessee to be performed her der. but the purchaser at any foreclosure of any Leasehold
Mortgage, or the assignee or ransferee under any assignment or transfer in lieu of the
foreclosure, or purchaser or transferee following exercise of a power of sale shall be
deemed to be an assignee or transferee within the meaning of this Section, and shall be
deemed to have agreed to perform all of the terms, covenants and conditions on the part
of Lessee to be performed hereunder from and after the date of such purchase and
assignment or transferee, but only for so long as such purchaser or assignee or transferee
is the owner of the Leasehold Interest.
(D) Rights of Approved Mortgagee. In connection with each Leasehold Mortgage,
Lessor agrees with and for the benefit of each Approved Mortgagee as follows:
(i) When delivering any notice, demand, election or other communication
(any of the same being referred below in this Section as a "notice ") to
Lessee with respect to this Lease or any exercise of any right to terminate
Ground Lease
Resolution No. 17 -720
Page 9
Exhibit A7
this Lease, Lessor will also deliver a copy of any such notice by registered
or certified mail to the Approved Mortgagee. Lessor acknowledges that it
has notice of the Initial Approved Mortgagee and that its address for
notices is set forth in Section 19(E) below.
(ii) Should Lessee default in respect of any of the provisions of this Lease, the
Approved Mortgagee shall have the right, but not the obligation, to cure
such default, and Lessor shall accept performance by or on behalf of the
Approved Mortgagee as though, and with the same effect as if, it had been
done or performed by Lessee. For such purpose, Lessor and Lessee hereby
authorize the Approved Mortgagee to enter upon the Property and to
exercise any of Lessee's rights and powers under this Lease, and subject to
the provisions of this Lease, under its Approved Mortgages. Upon
compliance with the foregoing, any notice of Lessor advising of any such
cured default shall be deemed rescinded and this Lease shall continue in
full force and effect.
(iii) If Lessor shall notify Lessee in writing that a default has occurred under
this Lease (hereinafter referred to as a "Default Notice "), a copy of such
written notice sent to Lessee to that effect shall be sent by Lessor to the
Initial Approved ortgagees and to any otherpproved Mortgagees of
which Lessor has teen provided the notice, and Lessor shall, subject to the
other applicable terms of this Section, take no action with respect to such
default or Event of Default (but as between Lessor and Lessee only,
Lessor shall " be permi ®a ercise all other remedies permitted under
this Lease other than to : . of this Lease) provided that:
a) 11 such default shall . default in observing or performing any
covenantor condition to be • .served or performed by Lessee hereunder,
the Approved Mortgagee shall remedy such default not later than sixty
(60) days after the receipt of such notice, provided that in a case of default
hick, although curable, cannot through the exercise of good faith efforts
e
be remedied by Approved Mortgagee, or the remedy of which cannot
be commenced, within such period of sixty (60) days by the Approved
Mortgagee, then the Approved Mortgagee shall have such additional
period as reasonably may be necessary to remedy such default with the
exercise of good faith efforts; or
Ground Lease
Resolution No. 17 -720
b) If such default shall be a default which can only be remedied by the
Approved Mortgagee upon obtaining possession of the Property and
access to the Property (and payment of rent, real property taxes or any
other sum of money due from Lessee or otherwise payable under this
Lease shall not fall into this category of default), the Approved Mortgagee
shall exercise good faith efforts to obtain possession through a receiver or
otherwise and shall remedy such default within forty -five (45) days after
obtaining such possession, provided that in the case of a default which,
although curable, cannot through the exercise of good faith efforts be
Page 10
Exhibit A7
remedied by the Approved Mortgagee, or the remedy of which cannot be
commenced by the Approved Mortgagee within such period of forty -five
(45) days, then the Approved Mortgagee shall have such additional period
as reasonably may be necessary to remedy such default with the exercise
of good faith efforts; or
c) If a default (excluding defaults which may be cured by the payment of
money) is of such a nature that it is impossible for the Approved
Mortgagee to remedy it even with the exercise I f good faith efforts, and
regardless of the amount of time provided for i .urpose, then any such
default shall be deemed waived by Less . e for the benefit of the
Approved Mortgagee; or
d) The Approved Mortgagee is procee g t +se the lien of its
Leasehold Mortgage or otherwise obtain title to t old Interest or
the Property.
(iv) Lessor's Consent shall not be required for the Approved 'gagee or any
nominee, assignee or other party designated by the Approved Mortgagee
to become the owner of the interest of Lessee hereunder upon the exercise
of any remedy provided for in an Approved rtgage. If an Approved
Mortgagee or any party designated by. an Approve d Mortgagee shall either
become the owner of the interest of Lessee hereunder upon the exercise of
any remedy provided for in an Approved Mortgage, then the Approved
Mortgagee or such person or other entity shall have the right to assign,
without Lessor's consent. to any other person such interest in this Lease
without Lessor's. consent at any time thereafter, provided such assignee
expressly assumes the obligaf s of Lessee hereunder.
(v), Lessor shall not, in the event of any action, whether voluntary or
otherwise, pending against Lessee or Lessor under the bankruptcy laws of
the United States or any state thereof, (x) surrender its estate, or any
portion thereof, nor terminate, cancel or acquiesce in the rejection of this
Lease; or (y) modify, change, supplement, alter or amend this Lease in any
respect., either orally or in writing. Notwithstanding the foregoing, Lessor
agrees that in the event of the rejection of this Lease by Lessor's trustee in
bankruptcy or otherwise pursuant to the Federal Bankruptcy Code or other
similar laws, Lessee's right to remain in possession of the Property
pursuant to Section 365 of the Federal Bankruptcy Code (or similar
provisions of such other similar laws) shall be fully transferable pursuant
to the terms of any Leasehold Mortgage.
(vi) No surrender (except a surrender upon the expiration of the term of this
Lease) by Lessee to Lessor of this Lease, or of the Property or any part
thereof, or of any interest therein, and no termination or cancellation of
this Lease, may occur except as expressly provided herein.
Ground Lease
Resolution No. 17 -720
Page 11
Exhibit A7
(vii) In the event that an Approved Mortgagee or its nominee succeeds to
Lessee's interest in this Lease, Lessor agrees to look solely to such interest
in the Lease and to the improvements upon the Property and to the profits
and proceeds thereof for the performance of the obligations of Lessee
hereunder, and shall never seek to recover against any other assets of the
Approved Mortgagee.
(viii) For the avoidance of doubt, each Approved Mortgagee is an express third
party beneficiary of this Section 18 and shall be entitled to enforce the
provisions hereof against Lessee and Lessor and their respective
successors and assigns.
(E) Requirements for Notice. Any notice or other communication which Lessor shall
desire or is required to give to or serve upon an Approved Mortgagee shall be in writing
and shall be served by registered or certified mail, addressed to an Approved Mortgagee
at its address as referenced in Section 19(E) below. or at such other address as shall be
designated from time to time by the Approved Mortgagee by notice in writing given to
Lessor by registered or certified mail. Any notice or other communication which the
Approved Mortgagee shall desire or is required to give to or serve upon Lessor shall be
deemed to have been given or served if sent by registered or certified mail addressed to
Lessor at Lessor's address as set forth in Section 19(E) below, or at such other address as
shall be designated from time to time by Lessor by notice in writing given to the
Approved Mortgagee by registered or certified mail. Any such notice or communication
shall be effective on the date such notice or communication is delivered to the party to
whom it is given.
(F) No Modification without Approved Mortgagee's Consent. Except as otherwise
provided herein, Lessor will not modify or amend or, except upon an Event of Default
(after affording the Approved Mortgagee the notice of and opportunity to cure such Event
of Default - as provided in this Section 18), cancel, surrender or terminate this Lease
without the consent of the Approved Mortgagees. Any such modification, amendment,
cancellation, surrender. or termination without the consent of the Approved Mortgagees
(if such consent shall be required) shall be void and of no force or effect.
19. General Provisions.
(A) Attorneys' Fees. In the event Lessor reasonably requires the services of any attorney
in connection with any Default or violation by Lessee of the terms of this Lease or the
exercise by Lessor of its remedies for any Default by Lessee under this Lease, or a
request by Lessee for Lessor's waiver of any terms of this Lease or extension of time to
perform or pay any obligation of Lessee under this Lease; Lessee shall promptly on
demand reimburse Lessor for its reasonable attorneys' fees incurred in such instance. In
the event of any litigation, arbitration or other proceeding (including proceedings in
bankruptcy and probate and on appeal) brought to enforce or interpret or otherwise
arising under this Lease, the substantially prevailing party therein shall be entitled to the
award of its reasonable attorneys' fees, witness fees, and court costs incurred therein and
in preparation therefor.
Ground Lease
Resolution No. 17 -720
Page 12
Exhibit A7
(B) Waiver of Subrogation. Lessee and Lessor each releases the other, and its
employees, agents, and representatives, from liability, and waives its entire right of
recovery against the other for loss or damage occurring in or about the Property to the
extent such loss or damages is covered under fire, casualty and all risk insurance policies,
including extended coverage endorsements, carried by the parties. Each party agrees that
each such insurance policy obtained by it with respect to the Property shall include a
waiver by the insurer of its subrogation rights for such losses and damages. The
foregoing mutual waivers shall be effective only so long as such waivers are available in
the State of Washington and do not invalidate the insurance co rage.
(C) Waiver. Neither the acceptance of rent nor any other act or omission of Lessor at any
time or times under the happening of any breach or default by Lessee hereunder, shall
operate as a waiver of any past or future violation, breach or failure to keep or perform
any covenant, agreement, term or condition her or to deprive Lessor of its right to
cancel or forfeit this Lease, or be construed so =`'any future time estop Lessor from
promptly exercising any option, right or r ' + hat iay have under any term or
provision of this Lease.
(D) Quiet Enjoyment. Upon fully complying wi ®an® omptly performing all other
terms, covenants and conditions required of it under the teems of this Lease, Lessee shall
have and quietly enjoy the Property during the term of this Lease.
(E) Notices. All notices required or permitted hereunder shall be in writing and may be
either delivered personally or mailed. If mailed, they shall be sent by postage prepaid or
certified or registered mail,; return receipt requested, or overnight mail to Lessor at its
address, or at Lessee at the Property, or to such other respective addresses as either party
hereto may hereaftqifrom time' to time designate in writing. Notices sent by mail shall be
deemed to have been given when properly mailed, and the postmark affixed (or other
evidence provided by overnight mail) shall be conclusive evidence of the date of mailing.
Either party may change its address for notices by notice to the other party.
Ground Lease
Resolution No. 17 -720
City of Federal Way
33325 8th Ave. South
Federal Way, WA 98003 -6325
Attn: Ryan Call, City Attorney
Ryan. Call @c ityoffederalway. com
FW PAEC QALICB, LLC
33325 8th Ave. South
Federal Way, WA 98003 -6325
Attn: Ryan Call, City Attorney
Ryan.Call @cityoffederalway.com
Page 13
Exhibit A7
With copies to:
The Initial Approved Mortgagees at
the addresses set forth in the Initial
Approved Mortgage
(F) Successors and Assigns. Subject to the provisions hereof pertaining to assignment
and subletting, the covenants and agreements of this Lease shall be binding on the
successors and assigns of the parties hereto.
(G) Subordination, Estoppel Certificates; Attornment. At a party's request, the other
party agrees to promptly execute and deliver such certificates as may be reasonably
required by an Approved Mortgagee or purchaser. Such certificates shall reflect that the
Lease is in full force and effect, the dates to which the rent and charges have been paid
and other Lease - related matters. Upon any foreclosure (or conveyance in lieu thereof)
and a demand by Lessor's successor, Lessee shall attorn to and recognize such successor
as Lessor under this Lease, such attornment shall be in a form as Lender may approve and
shall provide that Lessee shall not have the right of set off or defense to payment of rents for
any event or act that occurred prior to such successor obtaining title to Lessor's interest
except to the extent such event or act is continuing at the time such successor obtains such
title. Lessee also agrees to execute such further evidences of attornment as a lender may
from time to time request. The provisions of this Section 19(G) shall be self - operative and
no further agreement of Lessor, Lessee or lender shall be necessary. This Lease shall be
subordinate to any mortgage or deed of trust for the benefit of a mortgagee of Lessor.
(H) Force Majeure. If either party shall be prevented or delayed from punctually
performing any obligation or satisfying any condition under this Lease, other than the
payment of rent or other sums due hereunder, by any strike, lockout, labor dispute,
inability to obtain labor or materials or reasonable substitutes therefor, acts of God,
governmental restriction. regulation or control, enemy or hostile governmental action,
civil commotion, insurrection, sabotage, fire or other casualty, or any other condition
beyond the reasonable control of such party, then the time to perform such obligation or
satisfy such condition shall be extended by the delay cause by, such event. If either party
shall, as a result of any such event, be unable to exercise any right or option within any
time limit provided therefor in this Lease, such time limit shall be deemed extended for a
period equal to the duration of the delay caused by such event.
(I) Severability. "file invalidity, unenforceability, or waiver of any provision of this Lease
shall not affect or impair any other provision.
(J)Full Agreement. No provision of this Lease may be amended or added except as set
forth by an agreement in writing signed by the parties hereto or their respective
successors in interest, and having the written consent of each mortgagee of the Property.
[Signatures on following page.
Ground Lease
Resolution No. 17 -720
Page 14
Exhibit A7
SIGNATURE PAGE TO
GROUND LEASE
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and
year first above set forth.
LESSOR:
CITY OF FEDERAL WAY,
a municipal corporation of the State of Washington
By:
Name:
Title:
STATE OF WASHINGTON
COUNTY OF KING
On this _day of . 2017, be l b t e me, the undersigned Notary
Public, duly commissioned and sworn, personally appeared
commissioned
me known to be the individual(s) named herein,
and who executed the within and forep_oing in instrument, and acknowledged execution of the
said instrument to be the free and voluntary act and deed of said individual(s), for the uses and
purposes therein mentioned.
WITNESS my hand and official seal hereto affixed the day and year first above written.
NOTARY PUBLIC in and for
Washington State, residing at
My Commission Expires:
[Signatures continue on following page.]
Ground Lease
Resolution No. 17 -720
Signature Page
Exhibit A7
SIGNATURE PAGE TO
GROUND LEASE
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and
year first above set forth.
LESSEE:
FW PAEC QALICB, INC.,
a Washington nonprofit corporation
By:
Name:
Title:
STATE OF WASHINGTON )
COUNTY OF KINGQ )
On this _day of . 2017, before me, the undersigned Notary
Public, duly commissioned and sworn, personally appeared
to me known to be the individual(s) named herein,
and who executed the
said instrument to b
purposes therein men
oing in instrument, and acknowledged execution of the
e and`'voluntary act and deed of said individual(s), for the uses and
WI y hand and official seal hereto affixed the day and year first above written.
Ground Lease
Resolution No. 17 -720
NOTARY PUBLIC in and for
Washington State, residing at
My Commission Expires:
[End of signature pages.]
Signature Page
Exhibit A7
Exhibit A
Legal Description
Ground Lease
Resolution No. 17 -720
Exhibit A
Exhibit A7
First Amendment to Ground Lease by and Between Corporation and City
To be provided upon completion.
Resolution No. 17 -720 Exhibit A8
WHEN RECORDED, MAIL TO:
Butler Snow LLP
1801 California Street
Suite 5100
Denver, CO 80202
Attn: Alan Pasternack
Lessor
Lessee
MEMORANDUM OF GROUND L
Abbreviated Legal
Description
City of Federal Way,
a Washington municipal corporation
FW PAEC QALICB,
a Washington nonprofit corporation
See Exhibit A for complete Legal Description
iiiiwp
Assessor's Tax 092104 -9166
Parcel I.D. #:
Related Documents N/A
Memorandum of Ground Lease
Resolution No. 17 -720
Page 1
Exhibit A9
MEMORANDUM OF GROUND LEASE
THIS MEMORANDUM OF GROUND LEASE (this "Memorandum ") is executed as of
this I day of , 2017, by and between CITY OF FEDERAL WAY, a Washington
municipal corporation ( "Lessor "), and FW PAEC QALICB, a Washington nonprofit corporation
( "Lessee ").
1. Lease. Lessor has leased the real property described in Exhibit A attached to this
Memorandum and by this reference incorporated herein (the "Premises ") on the terms and
conditions set forth in that certain Ground Lease effective as of the‘date hereof (the "Effective
Date "), by and between Lessor and Lessee (the "Ground Lease "). ' The Ground Lease shall
expire at midnight on that date which is ninety -nine (99) years from the Effective Date, unless
sooner terminated pursuant to the terms of the Ground Lease.
2. Definition of Terms. All capitalized terms not otherwise defined herein shall
have the same meaning as set forth in the (re d Lease.
3. Purpose of Memorandum. Ths Memorandum is prepared for purposes of
recordation only and does not set forth all of the terms and conditions set forth in the Ground
Lease. In the event there is any conflict between the terms and conditions of the Ground Lease
and this Memorandum, the Ground Lease shall control.
[Signature pages follows
Memorandum of Ground Lease
Resolution No. 17 -720
Page 2
Exhibit A9
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Ground Lease as of the day and year first above set forth.
LESSOR:
CITY OF FEDERAL WAY,
a Washington municipal corporation
By:
Name: Jim Ferrell
Its: Mayor
STATE OF WASHINGTON
COUNTY OF KING
On this _day of , 2017, before the undersigned Notary
Public, duly commissioned and sworn, personally appeared Jim Ferrell, to me known to be the
individual(s) named herein, and who executed the within and foregoing in instrument, and
acknowledged execution of the said instrument to be the free and voluntary act and deed of said
individual(s), for the uses and purposes therein mentioned.
WITNESS my hand and official seal hereto affixed the day and year first above written.
N(YTARY PUBLIC in and for
Washington State, residing at
Memorandum of Ground Lease
My Commission Expires:
ignature pages continue on following page]
Signature Page
Resolution No. 17 -720 Exhibit A9
IN WITNESS WHEREOF, the - parties hereto have executed this Memorandum of
Ground Lease as of the day and year first above set forth.
LESSEE:
FW PAEC QALICB,
a Washington nonprofit corporation
By:
Name: Ade Ariwoola
Its: President
STATE OF WASHINGTON
ss.
COUNTY OF KING
On this _day of , 2017, before me, the undersigned Notary
Public, duly commissioned and sworn, personally appeared Ade Ariwoola, to me known to be
the individual(s) named herein, and who executed the within and foregoing in instrument, and
acknowledged execution of the said instrument to be the flee and voluntary act and deed of said
individual(s), for the uses and purposes therein mentioned.
WITNESS my hand and official seal hereto affixed the day and year first above written.
ARY PUBLIC in and for
ington State, residing at
Memorandum of Ground Lease
My Commission Expires:
[End of signature pages]
Signature Page
Resolution No. 17 -720 Exhibit A9
36523706v1
EXHIBIT A
Legal Description
Memorandum of Ground Lease
Resolution No. 17 -720
Exhibit A
' Exhibit A9
Amended and Restated Memorandum of Ground Lease
by and between Corporation and City
To be provided upon completion.
Resolution No. 17 -720 Exhibit Al
SUBLEASE
THIS SUBLEASE (this "Sublease ") is entered into as of the { 1 day of f ], 2017
(the "Effective Date "), by and between FW PAEC QALICB, INC., a Washington nonprofit
corporation ( "Lessor "), and CITY OF FEDERAL WAY, a municipal corporation of the State
of Washington ( "Lessee ").
BACKGROUND
Lessor holds a leasehold interest in that certain real property located at 31510 Pete
vonReichbauer Way South, Federal Way, Washington 98003, legally.:gdescribed on Exhibit A
attached to this Sublease (the "Real Property "). The Real Property together with any
improvements now or hereafter constructed or exis �g:, u ;,on the Real Property (the
"Improvements ") is collectively referred to in this Suble "Property."
For and in consideration of the mutual promises, co d conditions set forth herein,
the parties agree as follows:
1. Sublease. Lessor hereby subleases to
the Property.
subleases from Lessor.
2. Term. This Sublease shall be effective on the Effective Date and shall expire at midnight
on that date which is thirty (30) years from the Effective Date (the "Expiration Date "), unless the
Sublease is sooner terminated in accordance with the terms of this Sublease (the "Term ").
3. Rent. Lessee agrees to pay base rent according to the table attached as Exhibit B to this
Sublease, which sets forth the annual amounts payable hereunder. Lessee shall pay rent in
advance on a quarterly basis equal to twenty -five percent (25 %) of the annual rent, on the first
(1st) day of each calendar quarter (i.e., each March 1, June 1, September 1, and December ])
commencing on [ J, without setoff, except that Operating Expenses shall be paid
pursuant to Section 4 of this Subleas
4. Operating Expenses. Lessee shall be responsible for the payment of all Operating
Expenses of the Property, commencing on the Effective Date. To the extent feasible, all
Operating Expenses shall be billed directly to and paid by Lessee. If Lessee fails to timely pay
any Operating Expense when it becomes due and payable, Lessor shall have the right, at its
option, to make such payment at the expense of Lessee as reasonably required. Any amount so
expended by Lessor shall be paid by Lessee promptly upon demand. With respect to those
Operating Expenses billed to or otherwise paid by Lessor, Lessee's payment of Operating
Expenses shall be due on the later of fifteen (15) days after receipt of an itemized statement
thereof from Lessor or thirty (30) days after the end of the calendar month. Lessor shall provide
Lessee with a written statement of the actual Operating Expenses billed to Lessor for each
calendar month within fifteen (15) days after the end of the month. Lessor shall maintain
separate detailed records of the Operating Expenses billed to Lessor and shall make these
available on a reasonable basis for examination by Lessee. Within sixty (60) days of the end of
Sublease Page 1
Resolution No. 17 -720 Exhibit A11
each calendar year, Lessor shall provide to Lessee an annual itemized statement of Operating
Expenses billed to Lessor, with an explanation of any corrections to the quarterly statements for
the prior year, and the next payment to Lessor shall be adjusted to the extent necessary to take
into account any such corrections.
"Operating Expenses" as used in this Sublease means:
(i)
All ordinary and special assessments and other governmental charges, that
are assessed upon all or any part of the Property, including any tax or
other levy on or measured by any rent collected by Lessor with respect to
the Property, and any expenses incurred by Lessor in contesting any of the
foregoing or the assessed valuation of all or any part of the Property.
(ii) All costs of utilities, including, w th itation, water, sewer, power,
garbage removal, and recycling
(iii) All premiums on policies ® c ®t >y, casualty, d property
damage insurance maintained b 1 t spect to the Property.
(iv) All property taxes ; on the Property.
(v) All other expen " n connection with t t peration, management,
maintenance, subleasing and upkeep of the Pro
5. Use.
(A) Permitted Use. The Property may be used and occupied by Lessee for any lawful
purpose, except that Lessee agrees that it will not use or permit the use of the Property, or
any part thereof, in any way which would violate any of the terms of this Sublease, or the
certificate of occupancy for the Property, or the laws of the State of Washington, or any
directions,' rules or regulations of the Health Officer, Fire Marshall, Building Inspector,
ssor, or officers of any public authority having jurisdiction over the Property.
se Restrictions. In no event shall Lessee's use of the Property consist of operation
of the following prohibited activities or businesses: (i) any trade or business
consisting predominantly of the development or holding of intangibles for sale or license;
(ii) any trade or business the principal activity of which is farming within the meaning of
Section 2032A(e)(5)(A) of the Internal Revenue Code of 1986 or corresponding
provisions of subsequent superceding federal law (the "Code "); (iii) any other trade,
business or activity, prohibited by any amendment to Section 45D of the Code and any
temporary, proposed or final regulations promulgated by the U.S. Treasury pursuant to
the Code, and any other guidance published by the Internal Revenue Service; or (iv) any
trade or business consisting of the operation of any private or commercial golf course,
country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility
used for gambling, or any store the principal business of which is the sale of alcoholic
beverages for consumption off premises or any trade or business consisting of the
operation of residential rental property, as defined in Section 168(e)(2)(A) of the Code.
Sublease
Resolution No. 17 -720
Page 2
Exhibit Al 1
Furthermore, in no event shall Lessee use the Property to provide dwelling units, or other
areas with sleeping accommodations, on other than a transitory basis.
(C) Hazardous Substances. Lessee shall not, without Lessor's prior written consent, keep
on or around the Property for use, disposal, transportation, treatment, storage, or sale, any
substance designated as, or containing components designated as, hazardous, dangerous,
toxic or harmful (collectively, "Hazardous Substances ") and /or subject to regulation by
any federal, state or local law, regulation, statute, or ordinance, except those which are
normally used day -to -day for standard residential, office, retaT. commercial or medical
purposes and which shall be used in compliance with all app � laws and regulations.
(D) Nuisance. Lessee shall not cause, maintain, or perm an nuisance on or about the
Property, nor commit or suffer any waste in or about the Property.
6. Lessee's Maintenance and Repair.
(A) Maintenance and Repairs. Lessee shall o p erate, maintain and occupy th p roperty in
a good, neat, clean, sanitary condition, and in compliance with all applica le laws and
regulations. Lessee shall be obligated to maintain all Improvements in good condition,
ordinary wear and tear excepted. Lessor shall not be obligated to perform any repairs or
maintenance on the Property except as expressly stated here' Lessee shall promptly
perform or cause to be performed: (i) any required structural or exterior repairs and
maintenance; (ii) any repair or restoration to be performed under the terms hereof with
insurance proceeds; and (iii) or repay of any damage to the Property caused by Lessee.
(B) No Waste. Lessee will "permit no waste, damage, or injury to the Property.
(C) Garbage. Lessee shall cause all garbage recyclables, and other debris emanating
from the Property to be removed to such sucggrEasonable locations and spaces as may be
specified by Lessor from time to time during hours and subject to such reasonable
conk ®s as may be established by Lessor from time to time.
(D) essee's Failure. In the event Lessee fails to maintain or repair the Property as
required herein. Lessor shall give Lessee notice of such failure. If Lessee fails to
commence the required maintenance or repair within ten (10) days of notice, or as soon
thereafter as any necessary permits and approvals can be obtained with reasonable
diligence, or fails to diligently prosecute the same to completion, then Lessor shall have
the right, at its option, to do such acts and expend such funds at the expense of Lessee as
reasonably required to perform such work. Any amount so expended by Lessor shall be
paid by Lessee promptly after demand. Lessor shall have no liability to Lessee for any
damage, inconvenience or interference with the use of the Property by Lessee as a result
of performing any such work.
(E) Systems. In addition to the above, Lessee shall perform and pay for any maintenance
of any systems or equipment serving the Property.
7. Alterations, Additions and Improvements. Upon completion of the Project, Lessee
shall make no alterations to the exterior of the building, any structural element of the Property, or
Sublease
Resolution No. 17 -720
Page 3
Exhibit Al 1
any mechanical system serving the building, without the prior written approval of Lessor. Any
such improvements undertaken by Lessee with Lessor's consent following the completion of the
Project shall be at Lessee's sole expense, except as otherwise expressly provided in this
Sublease, and shall become the property of Lessor, remaining in and surrendered with the
Property as a part thereof as of the Expiration Date or earlier termination of this Sublease. All
work performed shall be done in a workmanlike manner and in compliance with all applicable
laws and ordinances. Lessee shall indemnify and hold Lessor harmless from and against all
damages, loss, liens, or expenses arising out of such work.
8. Indemnification; Insurance.
(A) Waiver. Lessor shall not be liable to Lessee, and Lesse ; : as a material part of the
consideration to Lessor, hereby waives all claims against Lessor and assumes all risk of
damages for loss to any property or any injury to any person occurring on the Property
from any cause whatsoever.
(B) Lessee's Indemnification. Lessee shall indemnify and save Lessor, its officers,
agents, employees, contractors, licensees, and invitees harmless from all loss, damage,
liability, or expense (including attorney's fees and other costs incurred in connection with
r claims involved litigation) resulting from any
any actual or alleged loss of or damage to
ion by any Hazardous Substances in, on or
litigation or the defense of claims, whd
actual or alleged injury to any p rson,
any property (including any and 11 con
under the Property whether or not caused by Lessee), arising out of Lessee's operation or
occupation of the Property or caused by or resulting from any act or omission of Lessee
or any licensee, assignee, sublessee, or concessionaire, it of any officer, agent, employee,
guest, invitee. or visitors of any such pers�, or about the Property or from Lessee's
breach of its other obligations hereunder e indemnification provided for in this
Section 8(B) s survive any terminatio expiration of this Sublease. Lessee shall
promptly notify essor of casualties nor accidents occurring in or about the Property.
(C) Lessor's Responsibility. The exculpation, release, and indemnity provisions of
Sections 8(A) and (B) shall not apply to the extent the claims thereunder were caused by
Lessor's gross negligence or willful misconduct. However, in no event shall Lessor be
,liable to Lessee for consequential damages.
(D) Liability Insurance. Lessee shall, at its own expense, maintain comprehensive
general liability insurance, with broad form endorsement, in effect with respect to the
Property with minimum limits of $1,000,000 per occurrence, $2,000,000 in the
aggregate, $5,000,000 umbrella, and a maximum deductible of $25,000. The insurance
carrier must have an AM Best's Rating of A -VII or better. Lessor shall be named as an
additional insured and shall, if requested by Lessor, be furnished with a copy of such
policy or policies of insurance which shall bear an endorsement that the same shall not be
canceled without thirty (30) days' prior notice to Lessor. If Lessee fails to maintain such
insurance, Lessor may do so at its discretion, and Lessee shall reimburse Lessor for the
full expense incurred upon demand.
Sublease Page 4
Resolution No. 17 -720 Exhibit Al 1
(E) Fire and Extended Coverage Insurance. Lessee shall obtain and keep in force at all
times during the term of this Sublease "special form" insurance covering all risks of
physical loss or damage to the Property, with liability limits of not less than one hundred
percent (100 %) of the full replacement value thereof. Such policy shall name Lessor as
an additional insured and each mortgagee as a loss payee under a standard mortgagee
endorsement. Such policy shall include, but shall not be limited to, coverage for fire,
extended coverage, vandalism, malicious mischief and storm. Lessee shall also maintain
insurance covering its furniture, fixtures, equipment and inventory in any amount equal to
the full insurable value thereof, insuring against fire and ri covered by a standard
extended coverage endorsement on the Property.
(F) Mortagee's Insurance Requirements. Notwithstanding the foregoing, Lessee shall
obtain and keep in force at all times during the term of this Sublease, all insurance
coverages required by the Loan Documents (as defined in Section 19 below).
9. Damage to the Property.
(A) Notice of Casualty. Lessee shall give promp`written notice to Lessor after the
occurrence of any fire, earthquake, Act of God, or other casualty to or in connection with
the Property, or an Im rovemens` or any ortion there (a "Casualty"). Upon the
any p y p ( Y )• P
occurrence of any Casualty, Lessor and Lessee, promptly and wilt all due diligence, shall
apply for all applicable insurance proceeds recoverable with respect to such Casualty, for
the benefit of Lessor, Lessee, and any mortgagee, except that Lessor shall be entitled to
all of the proceeds of insurance payable with respect to a Casualty affecting the
Improvements.
(B) Restoration. In the event be Improvements can be restored, Lessor and Lessee shall
cooperate with one another to permit Lessor to restore the Property as expeditiously as
possible. If the Improvements shall be damaged by Casualty, and this Sublease is not
terminated pursuant to this Section 9, then Lessor shall repair or restore the
Improvements as provided in this Section 9, and Lessee shall continue to pay rent to
Lessor without abatement.
Termination. In the event Lessor shall determine that it is not economically practical
to restore the Improvements and /or the Property to substantially the same condition in
which theyexisted prior to the occurrence of such Casualty, then with the express written
consent of any mortgagee of the Property pursuant to the Loan Documents, Lessor may
terminate this Sublease as of a date that is not less than thirty (30) days after Lessor
provides notice to Lessee. In the event that this Sublease is terminated pursuant to this
Section 9, the insurance proceeds received as the result of such Casualty shall be
distributed to Lessor, subject to the rights of any mortgagee pursuant to the Loan
Documents.
(D) Subject to Loan Documents. The provisions of this Section 9 shall be subject to the
terms and conditions of the Loan Documents, including, without limitation, all provisions
governing the payment of insurance proceeds, the determination to repair or restore the
Property, and the release of funds for repair and restoration costs.
Sublease
Resolution No. 17 -720
Page 5
Exhibit Al 1
10. Real and Personal Property Taxes. Lessee shall pay, prior to delinquency, all real
property taxes payable with respect to the Property (if any). Lessee shall pay prior to delinquency
all personal property taxes payable, if any, with respect to all property of Lessee located on the
Property. Lessee shall promptly upon request of Lessor provide satisfactory evidence of such
payment. "Personal property taxes" under this Section 10 includes all property taxes assessed
against the property of Lessee, whether assessed as real or personal property.
11. Encumbrances by Lessee. Lessee shall not have any right, authority, or power to bind
Lessor, Lessor's assets, or any interest of Lessor in the Property, for any claim for labor or
material or for any other charge or expense, lien, or security interest in ed in connection with
the development, construction, or operation of the Property and Impr ments or any change,
alteration or addition thereto.
12. Assignment or Sublease. Lessee shall not assign, encumber, mortgage, pledge, further
sublet or transfer, directly or indirectly, voluntarily or by option of law, the whole or any part of
the Property (a "Transfer ") to any person or entity other than to Lender (as defined below)
without the prior written consent of Lessor, which Lessor may withhold in its sole discretion. If
Lessee elects to so assign its interest in this Sublease with Lessor's consent, the parties shall
execute assignment and consent documents acceptable to Lessor. Lessor's consent to such
assignment shall not be construed to permit any further assignment without Lessor's prior
written consent. Without limiting any other restrictions on assignment o subletting, Lessee shall
not in any event assign or sublet (or permit the assignment or sublettin of) all or any portion of
the premises to any party engaged in a use prohibited by Section 5(b) above. Any attempted
Transfer without Lessor's prix. tten consent shall be void.., ,
13. Sale. In the event of any sale of the Property, or any assignment of this Sublease by
Lessor, Lessor shall be relieved of all liability er this Sublease arising out of any act,
occurrence, or omission occurring after sale or assig ent, and the purchaser or assignee at such
sale or assignment or any subsequent sale or assignment of this Sublease shall be deemed
without any further agreement to have assumed all of the obligations of Lessor under this
Sublease accruing after the date of such sale or assignment.
Access. Lessee will allow Lessor access to the Property at all reasonable times for the
purpo e of inspections and making repairs, additions, or alterations to the Property as Lessor
elects to make, but this access shall not be construed as an agreement on the part of Lessor to
make any repairs, additions or alterations.
15. Eminent Domain.
(A) Condemnation. In the event that title to the entire Property shall be lawfully
condemned or taken in any manner for any public or quasi - public use or conveyed in lieu
of condemnation, this Sublease shall automatically terminate as of the date possession is
required to be delivered to the condemnor. In the event that only a portion of the Property
is taken and the Property is thereby rendered unsuitable for the conduct of Lessee's
business, either party may terminate this Sublease as of the date when possession of the
portion of the Property so taken is delivered to the condemning authority.
Sublease
Resolution No. 17 -720
Page 6
Exhibit Al 1
(B) Award. Any award for the taking of all or part of the Property under the power of
eminent domain, including payment made under threat of the exercise of such power,
shall be the property of Lessor, subject to the terms of the Ground Lease (as defined
below), as the case may be, whether made as compensation for diminution in value of the
leasehold or for the taking of the fee or as severance damages. Lessee shall only be
entitled to such compensation as may be separately awarded or recoverable by Lessee in
Lessee's own right for the loss of or damage to Improvements to the Property installed by
Lessee, for Lessee's trade fixtures and removable personal property and for Lessee's
relocation or moving expenses, but only so long as such award o Lessee does not reduce
Lessor's award. Lessor shall not be liable to Lessee for the the use of all or any
part of the Property taken by condemnation.
(C) Lessor Authority. As between Lessor and Lessee, Lessor shall have the exclusive
authority to grant possession and use to the condemning authority and to negotiate and
settle all issues of just compensation or in the °1ternative. to conduct litigation
concerning such issues, except that Lessor, shall not e e into any settlement of any
separate award that may be made to Lessee without L n 's prior approval of such
settlement, which approval shall not be unreasonably it r d.
(D) Subject to Loan Documents. The provisions of this Section 15 shall be subject to the
terms and conditions of the Loan Documents, including, withou`, imitation, all provisions
governing the payment of condemnation proceeds; the determi`' ation to repair or restore
the Property, and the release of funds for repair and restoration costs.
16. Default.
(A) Definition of Default. The occurrence of any one or more of the following events
shall constitute a material default and breach of the Sublease by Lessee ( "Default "):
(i)
vacation or abandonment of all or any portion of the Property;
(ii) fa Les
failure sh it continue
ake any payment required as and when due, where such
(10) days' written notice from Lessor;
(iii) failure by essee to materially observe or perform any of the covenants,
conditions, or provisions of this Sublease, other than the making of any payment,
where such failure shall continue after thirty (30) days' written notice from Lessor,
except that, if the nature of Lessee's obligation is such that more than thirty (30)
days are required to cure such failure, Lessee shall not be in default if Lessee
commences to cure such failure within thirty (30) days after Lessor's notice and
thereafter completes such cure diligently and within sixty (60) days after Lessor's
notice; provided, however, that any failure or breach with respect to Section 5(B) of
this Sublease or any other breach of a covenant or obligation under this Sublease that
results or could result in a NMTC Recapture Event (as defined in that certain Loan
Agreement between Lessor and Lender dated on or about the date hereof) shall
constitute an Event of Default immediately upon the occurrence thereof;
Sublease
Resolution No. 17 -720
Page 7
Exhibit Al 1
(iv) the making by Lessee of any general assignment or general arrangement for
the benefit of creditors;
(v) the filing by or against Lessee of a petition in bankruptcy, including
reorganization or arrangement, unless, in the case of a petition filed against Lessee,
the same is dismissed within one hundred twenty (120) days;
(vi) the appointment of a trustee or receiver to take possession of substantially all
of Lessee's assets located at the Property or of Lessee's interest in this Sublease
(vii) the seizure by any department of any governm - �- . y officer thereof of the
business or property of Lessee;
(viii) adjudication that Lessee is bankrupt; or
(ix) any prohibited assignment, transfer, mortgage, encum s ® other further
sublet of the Property without the prior'"written conse om Less
(B) Notification. Lessee shall notify Lessor promptly of any Default by Lessee (or event
or occurrence which, with the passage of time, the giving of notice, or both, would
become a Default) that, by its nature, is not necessarily Lin o ` ._o Lessor.
(C) Lessor Default. Lessor shall be in default if it fails to observe or perform any of the
covenants, conditions, or provisions of this Sublease, where such failure shall continue
after thirty (30) days' written notice from Lessee, except that, if the nature of Lessor's
obligation is such that more than thirty (30) days are required for performance, Lessor
shall not be in default if Lessor commences performance within thirty (30) days after
Lessee's no d thereafter completes such performance diligently and within a
reasonable time no event shall a default by Lessor under this Sublease give rise to any
right of Lessee to terminate this Sublease or withhold or offset the payment of rent. The
obligations of Lessee �to pay rent shall continue unaffected in all events unless suspended
or terminated '® ant to an express provision of this Sublease. Lessor shall notify
I- ,essee of an .. ult by Les o " der the Ground Lease or hereunder that by its nature is
not necessarily known to Less
17. Remedies In Default.
(A) Lessor Remedies. In the event of any Default by Lessee, Lessor may, at any time
without waiving or limiting any other right or remedy, do any one or more of the
following: (a) re-enter and take possession of the Property without terminating this
Sublease, or (b) terminate this Sublease, and (c) pursue any remedy allowed by law or
equity.
(i) Termination. In the event Lessor elects to terminate this Sublease, Lessor shall
be additionally entitled to recover from Lessee the award by a court having
jurisdiction thereof of the amount by which the unpaid rent and other charges and
adjustments called for herein for the balance of the term after the time of such award
Sublease
Resolution No. 17 -720
Page 8
Exhibit Al 1
exceeds the amount of such loss for the same period that Lessee proves could be
reasonably avoided.
(ii) No Termination. No re -entry or taking possession of the Property by Lessor
pursuant to this Section 17(A), or acceptance of Lessee's keys to or surrender of the
Property shall be construed as an election to terminate this Sublease unless a written
notice of such intention is given to Lessee. Notwithstanding any re -entry or
termination, the liability of Lessee for the rent shall continue for the balance of the
Term until the Expiration Date, and Lessee shall make good to Lessor any deficiency
arising from reletting the Property at a lesser rent than the Rent provided for in this
Sublease. Lessee shall pay such deficiency each month as the amount thereof is
ascertained by Lessor.
(B) Lessee Remedies. In the event of Lessor default, Lessee shall be entitled to pursue
any remedy available to it under the law, provided however that Lessee shall look only to
Lessor's property in the Property for the satisfaction of Lessee's rer& ies for the
collection of a judgment or other judicial process requiring the payment of money by
Lessor in the event of any default by Lessor hereunder, and no other property or assets of
Lessor or any member of Lessor shall be subject to such enforcement procedure for the
satisfaction of Lessee's remedies under this Sublease.
(C) Holder of Encumbrance's Right to Cure Default. Lessee agrees to give any holder
of any Encumbrance (as defined below) a copy of any notice of default by certified mail,
served upon Lessor. If Lessor shall have failed to cure such default within thirty (30)
days from the of te of such notice of default, then the holder of such
Encumbrance shal ve ° additional time as may be necessary to cure such default
(including the time necess ;o foreclose or otherwise terminate its Encumbrance, if
necessary to effect such cure), and the Sublease shall not be terminated so long as such
remedies are being diligently pursued.
18. Surrender of Possession. Upon the Expiration Date or other termination of the term,
Lessee shall promptly and peacefully surrender the Property to Lessor, in good condition and
repay; except for ordinary wear and tear. Trade fixtures, furnishings, and equipment installed by
Lessee shall be the property of Lessee, which Lessee shall remove from the Property. Any
damage caused by such removal shall be repaired by Lessee at its expense. Any of Lessee's
property not removed by Lessee on or prior to the Expiration Date shall be deemed abandoned
and may be removed and disposed of by Lessor without accountability to Lessee at the sole cost
and expense of Lessee. If Lessor sells any of Lessee's property, Lessor may receive and retain
the proceeds of such sale as the property of Lessor.
19. Lessor Financing. Lessee acknowledges that Lessor is obtaining certain financing from
Clearinghouse NMTC (Sub 46), LLC, a California limited liability company ( "Lender "),
which is secured by a leasehold deed of trust made by Lessor for the benefit of Lender, and that
Lessor has entered into certain other loan documents evidencing, governing, and securing such
financing dated as of the date hereof (as the same may be amended from time to time,
collectively, the "Loan Documents "). The proceeds of such financing will be used to finance the
Improvements on the Property to be used by Lessee, and that, accordingly, Lessee will benefit
Sublease Page 9
Resolution No. 17 -720 Exhibit All
from such financing. Lessee further acknowledges that the terms of the Loan Documents impose
covenants and obligations upon Lessor, the performance and observance of which will (in whole
or in part) be dependent on Lessee's actions and inactions as sublessee of the Property. Lessor
has provided to Lessee copies of such Loan Documents, and Lessee has reviewed and is familiar
with the provisions of such Loan Documents. Lessee hereby covenants and agrees that Lessee
shall not violate or cause a violation of any of the Loan Documents, and that Lessee shall
perform its obligations hereunder on a prompt and timely basis to enable Lessor to comply with
such Loan Documents. Any failure by Lessee to observe or comply with the foregoing
provisions that is not cured by (i) the end of any applicable cure period set forth in this Sublease,
or (ii) the applicable cure period afforded to Lessor under the provisions of the Loan Documents
(whichever is the shorter period) shall constitute a breach and default under this Sublease.
20. General Provisions.
(A) Attorneys' Fees. In the event Lessor reasonably r uires the services of any attorney
in connection with any Default or violation by Lessee of the terms of this Sublease or the
exercise by Lessor of its remedies for any Default by Lessee under this Sublease or a
request by Lessee for Lessor's waiver of any terms of this Sublease or extension of time
to perform or pay any obligation of Lessee under this Sublease, then Lessee shall
promptly on demand reimburse Lessor for its reasonable attorneys' fees incurred in such
instance. In the event of any litigation, arbitration. or other proceeding (including
proceedings in bankruptcy and probate and on appeal) brought to enforce or interpret or
otherwise arising under this Sublease, the substantially prevailing party therein shall be
entitled to the award of its reasonable attorneys' fees, witness fees, and court costs
incurred therein and in preparation therefor.
(B) Waiver of Subrogation. Lessee and Lessor each hereby releases the other, and its
employees, agents, and representatives, from` liability, and waives its entire right of
recovery against the other for loss or damage occurring in or about the Property to the
extent such loss or damages is covered under fire, casualty and all risk insurance policies,
including extended coverage endorsements, carried by the parties. Each party agrees that
each such insurance policy obtained by it with respect to the Property shall include a
waiter- by the insurer of its subrogation rights for such losses and damages. The
foregoing mutual waivers shall be effective only so long as such waivers are available in
the State of Washington and do not invalidate the insurance coverage.
(C) Waiver. Neither the acceptance of rent nor any other act or omission of Lessor at any
time or tim under the happening of any breach or default by Lessee hereunder shall
operate as a ai
v ver of any past or future violation, breach or failure to keep or perform
any covenant, agreement, term or condition hereof, or to deprive Lessor of its right to
cancel or forfeit this Sublease, or be construed so as to at any future time estop Lessor
from promptly exercising any option, right, or remedy that it may have under any term or
provision of this Sublease.
(D) Quiet Enjoyment. Upon fully complying with and promptly performing all other
terms, covenants and conditions required of it under the terms of this Sublease, Lessee
shall have and quietly enjoy the Property during the term of this Sublease.
Sublease
Resolution No. 17 -720
Page 10
Exhibit All
(E) Notices. All notices required or permitted hereunder shall be in writing and may be
either delivered personally or mailed. If mailed, they shall be sent by postage prepaid or
certified or registered mail, return receipt requested, or overnight mail to Lessor at its
address, or at Lessee at the Property, or to such other respective addresses as either party
hereto may hereafter from time to time designate in writing. Notices sent by mail shall be
deemed to have been given when properly mailed, and the postmark affixed (or other
evidence provided by overnight mail) shall be conclusive evidence of the date of mailing.
Either party may change its address for notices by notice to the other party.
If to Lessor:
FW PAEC QALICB, INC.
33325 8th Ave. South
Federal Way, WA 98003 -6325
Attn: Ryan Call, City Attorney
Ryan. Call @cityoffede nil way .com
If to Lessee: City of 1 edera l \ \- ay
33325 8th Ave. South
Federal Way. WA 98003 -6325
Attn: Ryan Call, City Attorney
Ryan.Call @cityoffederalway.com
(F) Encumbrance. Except as otherwise provided in writing. the Sublease is expressly
made subject and subordinate to any mortgage, deed of trust, ground lease, underlying
lease or like encumbrance affecting any part of the Property or any interest of Lessor
therein which is now existing ' or hereafter executed or recorded (each,
an "Encumbrance'"), including, without limitation, the leasehold deed of trust granted by
Lessor to Lender and any other Encumbrance executed and delivered in connection with
the Loan Documents.
(G) Successors and Assigns. Subject to the provisions hereof pertaining to assignment
and subletting, the covenants and agreements of this Sublease shall be binding on the
successors and assigns of the parties hereto.
(H) Subordination, Estoppel Certificates., Attornment. It is understood and agreed that
Lessor may mortgage or grant deeds of trust with respect to the Property. Upon Lessor's
request, Lessee agrees to promptly execute and deliver such certificates as may be
reasonably required by Lessor or any mortgagee, trust deed beneficiary, or purchaser.
Such certificates shall reflect that the Sublease is in full force and effect, the dates to
which the rent and charges have been paid and other Sublease - related matters. Upon any
foreclosure (or conveyance in lieu thereof) and a demand by Lessor's successor, Lessee
shall attorn to and recognize such successor as Lessor under this Sublease, such
attomment shall be in a form as lender, Lessor may approve and shall provide that Lessee
shall not have the right of set off or defense to payment of rents for any event or act that
occurred prior to such successor obtaining title to Lessor, as the case may be, interest except
to the extent such event or act is continuing at the time such successor obtains such title.
Lessee also agrees to execute such further evidences of attornment as lender may from time
Sublease Page 11
Resolution No. 17 -720 Exhibit A 1 1
to time request. The provisions of this Section 20(11) shall be self - operative and no further
agreement of Lessor, Lessee, or Lender shall be necessary.
(I) Force Majeure. If either party shall be prevented or delayed from punctually
performing any obligation or satisfying any condition under this Sublease, other than the
payment of rent or other sums due hereunder, by any strike, lockout, labor dispute,
inability to obtain labor or materials or reasonable substitutes therefor, acts of God,
governmental restriction, regulation or control, enemy or hostile governmental action,
civil commotion, insurrection, sabotage, fire or other casualty, or any other condition
beyond the reasonable control of such party, then the time to perform such obligation or
satisfy such condition shall be extended by the delay cause by, such event. If either party
shall, as a result of any such event, be unable to exercise any right or option within any
time limit provided therefor in this Sublease, such time limit shall be deemed extended
for a period equal to the duration of the delay caused by such event.
(J) Severability. The invalidity, unenforceability, or waiver of any ; provision of this
Sublease shall not affect or impair any other provision.
(K) Ground Lease, Conditions and Restrictions. Lessee's rights under this Sublease are
subject to that certain Ground Lease date as of the date hereof by and between Lessee,
as the ground lessor, and Lessor, as the'- ound lessee (the "Ground Lease ") and any
covenants, conditions, or restrictions now or hereaftcr recorded against the Property
and/or the real property on which the Property is located.
(L) Full Agreement. No provision of this Sublease may be amended or added except by
an agreement in writing signed by the parties hereto or their respective successors in
interest, and 4. wing the written consent of each mortgagee of the Property.
NC
[Signatures on following page.]
Sublease Page 12
Resolution No. 17 -720 Exhibit Al 1
SIGNATURE PAGE TO
OPERATING LEASE
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of the day and
year first above set forth.
LESSOR:
FW PAEC QALICB, INC.,
a Washington nonprofit corporation
By:
Name:
Title:
STATE OF WASHINGTON
COUNTY OF KING
On this _day of . 2017, before me, the undersigned Notary
and sworn, personally appeared
to me known to be the individual(s) named herein,
Public, duly commissioned
and who executed the within and foregoing in instrument, and acknowledged execution of the
said instrument to b e free and voluntary act and deed of said individual(s), for the uses and
purposes therein men oned.
WI
and official seal hereto affixed the day and year first above written.
NOTARY PUBLIC in and for
Washington State, residing at
My Commission Expires:
[Signatures continue on following page.]
Sublease Signature Page
Resolution No. 17 -720 Exhibit All
SIGNATURE PAGE TO
OPERATING LEASE
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of the day and
year first above set forth.
LESSEE:
CITY OF FEDERAL WAY,
a municipal corporation of the State of Washington
By:
Name:
Title:
STATE OF WASHINGTON
ss.'''
COUNTY OF KING
On this _day of 2017, before me, the undersigned Notary
Public, duly commissioned and sworn, personally appeared
to me known to be the individual(s) named herein,
and who executed the within and foregoing in instrument, and acknowledged execution of the
said instrument to be the free and voluntary act and deed of said individual(s), for the uses and
purposes therein mentioned.
WITNESS my hand and official seal hereto affixed the day and year first above written.
NOTARY PUBLIC in and for
Washington State, residing at
My Commission Expires:
[End of signature pages.]
Sublease Signature Page
Resolution No. 17 -720 Exhibit Al 1
Exhibit A
Legal Description
Sublease
Resolution No. 17 -720
Exhibit A
Exhibit All
Exhibit B
Annual Base Rent
Sublease
Resolution No. 17 -720
Exhibit B
Exhibit A 1 1
First Amendment to Sublease Agreement
by and between Corporation and City
To be provided upon completion.
Resolution No. 17 -720 Exhibit Alt
WHEN RECORDED, MAIL TO:
Butler Snow LLP
1801 California Street
Suite 5100
Denver, CO 80202
Attn: Alan Pasternack
Lessor
a Washington nonprofit corporation
Lessee CITY OF FEDEktL WAY,
a> Washington municipal corporation
MEMORANDUM OF SUBLEAS
FW PAEC QALICB,
Abbreviated Legal
Description
Assessor's Tax
rcel I.D. #:
See Exhibit A for complete Legal Description
092104 -9166
Related 1 ocuments N/A
Memorandum of Sublease
Resolution No. 17 -720
Page 1
Exhibit Al 3
MEMORANDUM OF SUBLEASE
CHC- TACOMA
Resolution No. 17 -720
7.17.12 V2
Exhibit A13
MEMORANDUM OF SUBLEASE
THIS MEMORANDUM OF SUBLEASE (this "Memorandum ")
[ ] day of [ 1, 2017, by and between FW PAEC QALICB, a
corporation ( "Lessor "), and CITY OF FEDERAL WAY, a Washington
( "Lessee ").
1. Lease. Lessor has leased the real property descri
Memorandum and by this reference incorporated herein
conditions set forth in that certain Sublease Agreement
"Effective Date "), by and between Lessor and Lesse
expire at midnight on that date which is thirty (30) y
terminated pursuant to the terms of the Sublease.
is executed as of this
Washington nonprofit
municipal corporation
hibit A attached to this
s ") on the terms and
e date hereof (the
e Sublease shall
unless sooner
2. Definition of Terms. All capitalized to
have the same meaning as set forth in the - ase.
erwise defined herein shall
3. Purpose of Memorandu
recordation only and does not set forth a
In the event there is any conflict betwee
Memorandum, the Subleas control.
pared for purposes of
set forth in the Sublease.
'ons of the Sublease and this
nature p. e e Ilow]
Memorandum of Sublease
Resolution No. 17 -720
Page 3
Exhibit A13
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Sublease as of the day and year first above set forth.
LESSOR:
FW PAEC QALICB,
a Washington nonprofit corporation
By:
Name: Ade Ariwoola
Its: President
STATE OF WASHINGTON
ss.
COUNTY OF KING
On this _day of , 2017, before the undersigned Notary
Public, duly commissioned and sworn, personally appeared Ade- rwoola, to me known to be
the individual(s) named herein, and who executed the within any foregoing in instrument, and
acknowledged execution of the said instrument to be the lice and voluntary act and deed of said
individual(s), for the uses and purpos therein mentioned.
WITNESS my hand and official seal hereto affixed the day and year first above written.
Memorandum of Sublease
Resolution No. 17 -720
NO "l'ARY PUBLIC in and for
Washington State, residing at
My Commission Expires:
nature pages continue on following page]
Signature Page
Exhibit Ala
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Sublease as of the day and year first above set forth.
LESSEE:
CITY OF FEDERAL WAY,
a Washington municipal corporation
By:
Name: Jim Ferrell
Its: Mayor
STATE OF WASHINGTON
SS.
COUNTY OF KING
On this _day of , 2017, before me, the undersigned Notary
Public, duly commissioned and sworn, personally appeared Jim Ferrell, to me known to be the
individual(s) named herein, and who executed the within and foregoing in instrument, and
acknowledged execution of the said instrument to be the tree and voluntary act and deed of said
individual(s), for the uses and purposes, therein mentioned.
WITNESS my hand and official seal hereto affixed the day and year first above written.
Memorandum of Sublease
NARY PUBLIC in and for
Washington State, residing at
My Commission Expires:
[End of signature pages]
Signature Page
Resolution No. 17 -720 Exhibit A13
36523700v1
EXHIBIT A
Lezal Description
Memorandum of Sublease
Resolution No. 17 -720
Exhibit A
Exhibit A13
Amended and Restated Memorandum of Sublease
by and between Corporation and Ci.
To be provided upon c
Resolution No. 17 -720 Exhibit AI4
JD Draft 5/2/17
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
THIS REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT (this
"Agreement ") is made as of [ _], 2017 (the "Effective Date "), by and between FW PAEC
QALICB, INC., a Washington nonprofit corporation ( "FW PAEC "), and CITY OF FEDERAL WAY, a
Washington municipal corporation ( "Fund Lender ").
WHEREAS, on the Effective Date, Capital One, National Association, a national banking
association ( "Investor "), will make a capital contribution in COCRF Investor 77, LLC, a Delaware limited
liability company ( "Fund "), in exchange for 100% of Fund's membership interests;
WHEREAS, on the Effective Date, Fund will obtain one or more loans from Fund Lender in the
aggregate amount of $[6,239,600] (the "Fund Loan ");
WHEREAS, on the Effective Date, Fund will use the proceeds of Investor's capital contribution and
the Fund Loan to make a "qualified equity investment ", as such term is defined in Section 45D of the Internal
Revenue Code of 1986 (as amended from time to time, the "Code' ,and related treasury
thereunder (a "QEI "), in an amount equal to $9,500,000 in Clearinghouse NMTC (Sub 46), LLC, a California
limited liability company ( "Sub - CDE ");
WHEREAS, FW PAEC was formed for the purpose of developing and leasing certain improvements
for use as a community facility and performing arts center located on certain property at 31510 Pete
vonReichbauer Way South, Federal Way, WA 98063 (the "Project ");
WHEREAS, prior to the Effective Date, Fund Lender incurred various costs and expenses relating to
the Project in the aggregate a ntpof $[6,239,600], all as further detailed on Exhibit A attached hereto (the
"Reimbursed Costs "), and as evidenced`,_ the invoices and other documentation attached hereto as Exhibit
B;
WHEREAS, Fund Lender desires to be reimbursed for the Reimbursed Costs and FW PAEC has
agreed to reimburse Fund I.ender for the Reimbursed Costs;
WI3EI�AS, on the Effective Date, Sub -CDE is making certain loans to FW PAEC in the aggregate
original principal amount of $[9,310,000] (collectively, the "QLICI Loan "), each of which is intended to
constitute a "qualified low- income community investment ", as such term is used in Section 45D of the Code
and rela '. . easury regulations thereunder (a "QLICI "), a portion of the proceeds of which FW PAEC
intends to directly or indirectly, to reimburse Fund Lender for the Reimbursed Costs;
WHEREAS, the Allocation Agreement to which Sub -CDE is a party, the Compliance and
Monitoring Frequently_ Asked Questions issued by the CDFI Fund in January 2017 (the "January 2017
FAQ"), and related guidance issued by the CDFI Fund, impose certain restrictions on the use of QLICIs to
repay or refinance a debt or equity provider whose capital is used directly or indirectly to fund a QEI, or to
repay or refinance any Affiliate (as defined below) of such debt or equity provider, and provide guidance
regarding the collection of information in order to monitor such restrictions; and
WHEREAS, as a condition precedent to advancing the QLICI Loan, Sub -CDE requires that FW
PAEC and Fund Lender make certain representations and covenants regarding, among other things, the direct
and indirect sources of funds used to fund the QEI, the relationships among FW PAEC, Fund Lender and
certain of their Affiliates, and the Reimbursed Costs, to Sub -CDE and its direct and indirect members
NA1- 1502636565v2
Resolution No. 17 -720 Exhibit A15
(including, Clearinghouse Community Development Financial Institution, a California corporation
( "Allocatee "), Fund, and Investor).
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises of the parties hereto
and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
FW PAEC and Fund Lender certify to Sub -CDE, Allocatee, Fund, and Investor (collectively, the "Reliance
Parties ") as follows:
1. DEFINITIONS. All capitalized terms listed in the introductory paragraph and Recitals to this
Agreement have the meanings assigned to them therein, and all capitalized + s not otherwise expressly
defined herein have the meanings assigned to them in the Loan Agreement I,g ed below). In addition,
the following terms have the following meanings in this Agreement:
(a) "Affiliate" means, as to any Person, any other Per
under common Control with the first Person.
(b) "CDFI Fund" means the Community
United States Department of Treasury, or any successo
the new markets tax credit program.
s, is Controlled by, or is
nancial
ith overs
Fund of the
sibility for
(c) "Control," "Controlled" and "Controls" means:
(i) ownership, control, or power to vote more than 50% percent of the outstanding
shares of any class of Voting Securities (as such term is defined in the Allocation Agreement) of any
entity, directly or indirectly or acting through one or more other persons;
(ii) con
general partners, managin
entity; or
manner over the election of a majority of the directors, trustees,
agers (or individuals exercising similar functions) of any other
(iii) power to exercise, directly or indirectly, a controlling influence over the
management policies or investment decisions of another entity, as determined by the CDFI Fund.
(d) "Flow of Funds" means that certain [ 1, dated as of the Effective Date,
by and among Investor, Fund Lender, Fund, Sub -CDE, FW PAEC, and certain other parties thereto,
outlining the wire transfers necessary, among other things, to fund Investor's capital contribution to Fund,
the Fund Loan, the QEI, the QLICI Loan and the reimbursement to Fund Lender for the Reimbursed
Costs.
(e)
Agreement.
"Fund Loan Financing Sources" has the meaning set forth in Section 2(a) of this
(f) "Loan greement" means that certain Loan Agreement, dated as of the Effective Date,
by and between Sub -CDE and FW PAEC with respect to the QLICI Loan, as the same may be amended,
assigned, restated, modified, or supplemented from time to time.
(g) "Person" means any individual, any general partnership, limited partnership, limited
liability limited partnership, limited liability company, corporation, joint venture, trust, business trust,
cooperative, association, or public agency, and the heirs, executors, administrators, legal representatives,
successors, and assigns of such Person where the context so requires; and, unless the context otherwise
2
NAI- 1502636565v2
Resolution No. 17 -720
Exhibit A15
requires, the singular shall include the plural, and the masculine gender shall include the feminine and the
neuter and vice versa.
(h) "QEI Capital Source" has the meaning set forth in Section 3(a) of this Agreement.
2. REPRESENTATIONS AND WARRANTIES. To induce Sub -CDE to advance the proceeds of
the QLICI Loan and to permit such proceeds to be used by FW PAEC to reimburse Fund Lender for the
Reimbursed Costs, FW PAEC and Fund Lender represent and warrant as follows:
(a) All direct and indirect sources of financing for the Fund Loan
source, the "Fund Loan Financing Sources ") have been fully and accurate
Reliance Parties, and all agreements, arrangements and other relationship
and all Fund Loan Financing Sources have been fully and accurately
Parties.
ach such direct and indirect
sed and described to the
W PAEC, Fund Lender,
d described to the Reliance
(b) The Reimbursed Costs (i) were incurred no more than twenty -four (24) months prior to
the Effective Date, (ii) are actual documented expenditures for legitimate business purposes that occurred
during the normal course of operation, (iii) are similar in amount and scope when 4 compared to
expenditures by a similar entity for a similar project under similar circumstances, ,(iv) are directly
attributable to the "qualified business" (as such term is defin din Section 45D(d)(3) of the Code) of FW
PAEC, (v) are in amounts not greater than the amounts that would have been charged between
arms' - length parties, (vi) do not constitute "incurred operating costs" (as such term is used in the January
2017 FAQ) of FW PAEC or Fund Lender, and ,(vii) are reimbursements for the actual original cost incurred
(and not any accreted value) which are capital° izable in the basis of FW PA EC's property.
(c) The schedule attached hereto as Exhibit A fully and accurately identifies all Reimbursed
Costs, including (i) the party that incurred each such cost, (ii) Lhe parry to whom the payment was made and
whether such party is an Affiliate of FWD EC or Fun. der, (iii) the date such cost was incurred, (iv) the
nature of the payment, (v) the amount pai nd (vi) the da ch cost was paid.
(d) The materials attached hereto as Exhibit B, represent evidence that is true, accurate, and
complete in all respects of all Reimbursed Costs that will be repaid or refinanced on the Effective Date.
(e) The manner in which amounts are being paid or reimbursed at closing is fully and accurately
reflected on the Flow of Funds. "I "here are no agreements between or among FW PAEC, Fund Lender, or any
other Fund Loan Financing Sources regarding the use or application of any proceeds of the QLICI Loan,
other than those agreements which have been provided to the Reliance Parties as of the Effective Date.
3. COVENANTS. FW PAEC and Fund Lender covenant and agree, from the Effective Date and for
so long as the QLICI Loan is outstanding, as follows:
(a) Following the Effective Date, none of FW PAEC, Fund Lender, or any person that is related
to or an Affiliate of FW PAEC or Fund Lender, will cause or permit any portion of the QLICI Loan proceeds
to be used, in whole or in part, or directly or indirectly, to repay or refinance expenditures incurred by, or to
pay any fees or other compensation to, any debt or equity provider whose capital was used to fund a QEI
(each such debt or equity provider, a "QEI Capital Source "), or to repay or refinance expenditures incurred by
any Affiliate of a QEI Capital Source without the prior written consent of Sub -CDE. Without limiting the
foregoing, FW PAEC shall not enter into any agreement with any QEI Capital Source regarding the use or
application of any proceeds of the QLICI Loans (other than those agreements provided to Reliance Parties as
of the Effective Date) without the prior, written consent of Sub -CDE.
3
NAI- 1502636565v2
Resolution No. 17 -720 Exhibit Al5
(b) FW PAEC shall maintain records of its use of QLICI Loan proceeds sufficient to establish
and demonstrate that QLICI Loan proceeds have not been used in violation of Section 3(a) of this Agreement,
shall make such records available for inspection and copying by the Reliance Parties and/or the CDFI Fund
promptly upon request, and shall, pursuant to Exhibit C of the Loan Agreement certify annually on or before
[ ] of each year that FW PAEC is in full compliance with this Agreement.
4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the parties hereto, and their
heirs, successors, and assigns.
5. THIRD PARTY BENEFICIARIES. Allocatee, Investor and Fund shall each be a third party
beneficiary with respect to the representations, warranties and covenants of this Agreement and, therefore,
shall be entitled to enforce each such provision as if it were a direct party to this Agreement.
6. SEVERABILITY. If any provision of this Agreement or the application thereof to any Person or
circumstance shall be invalid, illegal or unenforceable to any extent, that provision shall, if possible, be
construed as though more narrowly drawn, if a narrower construction would avoid such invalidity, illegality,
or unenforceability or, if that is not possible, such provision shall, to the extent of such invalidity. illegality, or
unenforceability, be severed, and the remainder of this Agreement and the application thereof shall not be
affected and shall be enforceable to the fullest extent permitted by law.
7. NO CONTINUING WAIVER. The waiver by any party of any breach of this Agreement shall not
operate or be construed to be a waiver of 'subsequent breach; provided, no waiver by any party of any
breach of this Agreement shall be effective without the prior, written consent of Sub -CDE.
8. APPLICABLE LAW. THE VALIDITY OI THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT I I E R 1 OF, AND T H l: RIGHTS OF THE PARTIES
HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH THE LAWS 0,1 TI STATE OF STATE OF WASHINGTON GIVING EFFECT
TO CONFLICT OR CWOIC 1 01 LAW PRINCIPLES.
9. HEADINGS. The titles and headings of the Sections of this Agreement have been inserted for
convenience of reference only and are not intended to summarize or otherwise describe, or limit, modify
or expound upon the subject matter of such Sections.
.10. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original, but all of which shall together constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this Agreement by telecopier,
facsimile machine, portable document format ( "PDF ") or other electronic means shall be as effective as
delivery of a manually executed counterpart of this Agreement. The effectiveness of any such documents
and signatures shall, subject to applicable laws, have the same force and effect as manually signed originals
and shall be binding on the parties. No party may raise the use of a telecopier, facsimile machine, PDF or
other electronic means, or the fact that any signature was transmitted through the use of a telecopier, facsimile
machine, PDF or other electronic means, as a defense to the enforcement of this Agreement.
11. ENTIRE AGREEMENT; NO ORAL AMENDMENTS. This Agreement (including without
limitation the Recitals and the Exhibits attached hereto, which are incorporated herein by reference and
made a part hereof), constitutes the entire agreement between the parties and supersedes all agreements
previously made between the parties relating to its subject matter. There are no other understandings or
agreements among them relating to such subject matter. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by
4
NAI- 1502636565v2
Resolution No. 17 -720 Exhibit Al5
each of the parties hereto; provided, no such instrument shall be effective without the prior, written consent
of Sub -CDE.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
NAI- 1502636565v2
Resolution No. 17 -720
Exhibit A 1 5
IN WITNESS WHEREOF, the parties have caused this Reimbursement Certification and
Compliance Agreement to be duly executed as of the Effective Date.
COMPANY:
FW PAEC QALICB,
INC., a Washington nonprofit corporation
SIGNATURE PAGE 1 OF 2
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A15
[COUNTERPART SIGNATURE PAGE TO
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT]
LEVERAGE LENDER:
CITY OF FEDERAL WAY, a
Washington municipal corporation
SIGNATURE PAGE 2 OF 2
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A15
Payee and
Payor of Affiliate? Purpose of ' vo -i t or{
Cost Payee of (Yes or descripti� • raices
Cost No) Date Incurred pro - ,cue! , r tea,,, Amoun`P>td> Date paid '''ei:,!t,s::,o!::,tis.m.4:;::7,' :',:- ..
Fit9� - E i
Exhibit A 1
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Exhibit B
INVOICES FOR REIMBURSED COSTS
[SEE ATTACHED]
EXHIBIT B
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A15
JD Draft 5/2/17
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
THIS REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT (this
"Agreement ") is made as of f _], 2017 (the "Effective Date "), by and between FW PAEC
QALICB, INC., a Washington nonprofit corporation ( "FW PAEC "), and CITY OF FEDERAL WAY, a
Washington municipal corporation ( "Fund Lender ").
WHEREAS, on the Effective Date, Capital One, National Association, a national banking
association ( "Investor "), will make a capital contribution in COCRF Investor 77, LLC, a Delaware limited
liability company ( "Fund "), in exchange for 100% of Fund's membership interests;
WHEREAS, on the Effective Date, Fund will obtain one or more loans from Fund Lender in the
aggregate amount of $[6,239,600] (the "Fund Loan ");
WHEREAS, on the Effective Date, Fund will use the proceeds of Investor's capital contribution
and the Fund Loan to make a "qualified equity investment ", as such term is defined in Section 45D of the
Internal Revenue Code of 1986 (as amended from time to time, the "Code ") and related treasury regulations
thereunder (a "QEI "), in an amount equal to $9,500,000 in Clearinghouse NMTC (Sub 46), LLC, a
California limited liability company ( "Sub - CDE ");
WHEREAS, FW PAEC was formed for the purpose of developing and leasing certain
improvements for use as a community facility and performing arts center located on certain property at
31510 Pete vonReichbauer Way South, Federal Way, WA 98063 (the "Project ");
WHEREAS, prior to the Effective Date, Fund Lender incurred various costs and expenses relating
to the Project in the aggregate amount of $[6,239,600], all as further detailed on Exhibit A attached hereto
(the "Reimbursed Costs "), and as evidenced by the invoices and other documentation attached hereto as
Exhibit B;
WHEREAS, Fund Lender desires to be reimbursed for the Reimbursed Costs and FW PAEC has
agreed to reimburse Fund Lender for the Reimbursed Costs;
WHEREAS, on the Effective Date, Sub -CDE is making certain loans to FW PAEC in the aggregate
original principal amount of $[9,310,000] (collectively, the "QLICI Loan "), each of which is intended to
constitute a "qualified low- income community investment ", as such term is used in Section 45D of the Code
and related treasury regulations thereunder (a "QLICI "), a portion of the proceeds of which FW PAEC
intends to use, directly or indirectly, to reimburse Fund Lender for the Reimbursed Costs;
WHEREAS, the Allocation Agreement to which Sub -CDE is a party, the Compliance and
Monitoring Frequently Asked Questions issued by the CDFI Fund in January 2017 (the "January 2017
FAQ "), and related guidance issued by the CDFI Fund, impose certain restrictions on the use of QLICIs to
repay or refinance a debt or equity provider whose capital is used directly or indirectly to fund a QEI, or to
repay or refinance any Affiliate (as defined below) of such debt or equity provider, and provide guidance
regarding the collection of information in order to monitor such restrictions; and
WHEREAS, as a condition precedent to advancing the QLICI Loan, Sub -CDE requires that FW
PAEC and Fund Lender make certain representations and covenants regarding, among other things, the
direct and indirect sources of funds used to fund the QEI, the relationships among FW PAEC, Fund Lender
and certain of their Affiliates, and the Reimbursed Costs, to Sub -CDE and its direct and indirect members
NA1- 1502636565v2
Resolution No. 17 -720 Exhibit A16
(including, Clearinghouse Community Development Financial Institution, a California corporation
( "Allocatee "), Fund, and Investor).
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises of the parties
hereto and of other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, FW PAEC and Fund Lender certify to Sub -CDE, Allocatee, Fund, and Investor
(collectively, the "Reliance Parties ") as follows:
1. DEFINITIONS. All capitalized terms listed in the introductory paragraph and Recitals to this
Agreement have the meanings assigned to them therein, and all capitalized terms not otherwise expressly
defined herein have the meanings assigned to them in the Loan Agreement (as defined below). In addition,
the following terms have the following meanings in this Agreement:
(a) "Affiliate" means, as to any Person, any other Person that Controls, is Controlled by, or is
under common Control with the first Person.
(b) "CDFI Fund" means the Community Development Financial Institutions Fund of the
United States Department of Treasury, or any successor agency charged with oversight responsibility for
the new markets tax credit program.
(c) "Control," "Controlled" and "Controls" means:
(i) ownership, control, or power to vote more than 50% percent of the outstanding
shares of any class of Voting Securities (as such term is defined in the Allocation Agreement) of any
entity, directly or indirectly or acting through one or more other persons;
(ii) control in any manner over the election of a majority of the directors, trustees,
general partners, managing members, managers (or individuals exercising similar functions) of any other
entity; or
(iii) power to exercise, directly or indirectly, a controlling influence over the
management policies or investment decisions of another entity, as determined by the CDFI Fund.
(d) "Flow of Funds" means that certain [ -I, dated as of the Effective Date,
by and among Investor, Fund Lender, Fund, Sub -CDE, FW PAEC, and certain other parties thereto,
outlining the wire transfers necessary, among other things, to fund Investor's capital contribution to
Fund, the Fund Loan, the QEI, the QLICI Loan and the reimbursement to Fund Lender for the
Reimbursed Costs.
(e) "Fund Loan Financing Sources" has the meaning set forth in Section 2(a) of this
Agreement.
(0 "Loan Agreement" means that certain Loan Agreement, dated as of the Effective Date,
by and between Sub -CDE and FW PAEC with respect to the QLICI Loan, as the same may be amended,
assigned, restated, modified, or supplemented from time to time.
(g) "Person" means any individual, any general partnership, limited partnership, limited
liability limited partnership, limited liability company, corporation, joint venture, trust, business trust,
cooperative, association, or public agency, and the heirs, executors, administrators, legal representatives,
successors, and assigns of such Person where the context so requires; and, unless the context otherwise
2
NAI- 1502636565v2
Resolution No. 17 -720 Exhibit A16
requires, the singular shall include the plural, and the masculine gender shall include the feminine and the
neuter and vice versa.
(h) "QEI Capital Source" has the meaning set forth in Section 3(a) of this Agreement.
2. REPRESENTATIONS AND WARRANTIES. To induce Sub -CDE to advance the proceeds of
the QLICI Loan and to permit such proceeds to be used by FW PAEC to reimburse Fund Lender for the
Reimbursed Costs, FW PAEC and Fund Lender represent and warrant as follows:
(a) All direct and indirect sources of financing for the Fund Loan (each such direct and indirect
source, the "Fund Loan Financing Sources ") have been fully and accurately disclosed and described to the
Reliance Parties, and all agreements, arrangements and other relationships between FW PAEC, Fund
Lender, and all Fund Loan Financing Sources have been fully and accurately disclosed and described to the
Reliance Parties.
(b) The Reimbursed Costs (i) were incurred no more than twenty -four (24) months prior to
the Effective Date, (ii) are actual documented expenditures for legitimate business purposes that occurred
during the normal course of operation, (iii) are similar in amount and scope when compared to
expenditures by a similar entity for a similar project under similar circumstances, (iv) are directly
attributable to the "qualified business" (as such term is defined in Section 45D(d)(3) of the Code) of FW
PAEC, (v) are in amounts not greater than the amounts that would have been charged between
arms' - length parties, (vi) do not constitute "incurred operating costs" (as such term is used in the January
2017 FAQ) of FW PAEC or Fund Lender, and (vii) are reimbursements for the actual original cost
incurred (and not any accreted value) which are capitalizable in the basis of FW PAEC's property.
(c) The schedule attached hereto as Exhibit A fully and accurately identifies all Reimbursed
Costs, including (i) the party that incurred each such cost, (ii) the party to whom the payment was made and
whether such party is an Affiliate of FW PAEC or Fund Lender, (iii) the date such cost was incurred, (iv)
the nature of the payment, (v) the amount paid, and (vi) the date such cost was paid.
(d) The materials attached hereto as Exhibit B, represent evidence that is true, accurate, and
complete in all respects of all Reimbursed Costs that will be repaid or refinanced on the Effective Date.
(e) The manner in which amounts are being paid or reimbursed at closing is fully and
accurately reflected on the Flow of Funds. There are no agreements between or among FW PAEC, Fund
Lender, or any other Fund Loan Financing Sources regarding the use or application of any proceeds of the
QLICI Loan, other than those agreements which have been provided to the Reliance Parties as of the
Effective Date.
3. COVENANTS. FW PAEC and Fund Lender covenant and agree, from the Effective Date and for
so long as the QLICI Loan is outstanding, as follows:
(a) Following the Effective Date, none of FW PAEC, Fund Lender, or any person that is
related to or an Affiliate of FW PAEC or Fund Lender, will cause or permit any portion of the QLICI Loan
proceeds to be used, in whole or in part, or directly or indirectly, to repay or refinance expenditures incurred
by, or to pay any fees or other compensation to, any debt or equity provider whose capital was used to fund
a QEI (each such debt or equity provider, a "QEI Capital Source "), or to repay or refinance expenditures
incurred by any Affiliate of a QEI Capital Source without the prior written consent of Sub -CDE. Without
limiting the foregoing, FW PAEC shall not enter into any agreement with any QEI Capital Source regarding
3
NAI- 1502636565v2
Resolution No. 17 -720 Exhibit A16
the use or application of any proceeds of the QLICI Loans (other than those agreements provided to
Reliance Parties as of the Effective Date) without the prior, written consent of Sub -CDE.
(b) FW PAEC shall maintain records of its use of QLICI Loan proceeds sufficient to establish
and demonstrate that QLICI Loan proceeds have not been used in violation of Section 3(a) of this
Agreement, shall make such records available for inspection and copying by the Reliance Parties and/or the
CDFI Fund promptly upon request, and shall, pursuant to Exhibit C of the Loan Agreement certify annually
on or before [ 1 of each year that FW PAEC is in full compliance with this Agreement.
4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the parties hereto, and their
heirs, successors, and assigns.
5. THIRD PARTY BENEFICIARIES. Allocatee, Investor and Fund shall each be a third party
beneficiary with respect to the representations, warranties and covenants of this Agreement and, therefore,
shall be entitled to enforce each such provision as if it were a direct party to this Agreement.
6. SEVERABILITY. If any provision of this Agreement or the application thereof to any Person or
circumstance shall be invalid, illegal or unenforceable to any extent, that provision shall, if possible, be
construed as though more narrowly drawn, if a narrower construction would avoid such invalidity, illegality,
or unenforceability or, if that is not possible, such provision shall, to the extent of such invalidity, illegality,
or unenforceability, be severed, and the remainder of this Agreement and the application thereof shall not be
affected and shall be enforceable to the fullest extent permitted by law.
7. NO CONTINUING WAIVER. The waiver by any party of any breach of this Agreement shall not
operate or be construed to be a waiver of any subsequent breach; provided, no waiver by any party of any
breach of this Agreement shall be effective without the prior, written consent of Sub -CDE.
8. APPLICABLE LAW. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES
HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF STATE OF WASHINGTON WITHOUT GIVING EFFECT
TO CONFLICT OR CHOICE OF LAW PRINCIPLES.
9. HEADINGS. The titles and headings of the Sections of this Agreement have been inserted for
convenience of reference only and are not intended to summarize or otherwise describe, or limit, modify
or expound upon the subject matter of such Sections.
10. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which shall together constitute one and
the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by
telecopier, facsimile machine, portable document format ( "PDF ") or other electronic means shall be as
effective as delivery of a manually executed counterpart of this Agreement. The effectiveness of any such
documents and signatures shall, subject to applicable laws, have the same force and effect as manually
signed originals and shall be binding on the parties. No party may raise the use of a telecopier, facsimile
machine, PDF or other electronic means, or the fact that any signature was transmitted through the use of a
telecopier, facsimile machine, PDF or other electronic means, as a defense to the enforcement of this
Agreement.
4
NAI- 1502636565v2
Resolution No. 17 -720 Exhibit Al6
11. ENTIRE AGREEMENT; NO ORAL AMENDMENTS. This Agreement (including without
limitation the Recitals and the Exhibits attached hereto, which are incorporated herein by reference and
made a part hereof), constitutes the entire agreement between the parties and supersedes all agreements
previously made between the parties relating to its subject matter. There are no other understandings or
agreements among them relating to such subject matter. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by
each of the parties hereto; provided, no such instrument shall be effective without the prior, written consent
of Sub -CDE.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
NAI- 1502636565v2
Resolution No. 17 -720 Exhibit A16
IN WITNESS WHEREOF, the parties have caused this Reimbursement Certification and
Compliance Agreement to be duly executed as of the Effective Date.
COMPANY: FW PAEC QALICB, INC., a Washington nonprofit
corporation
By:
Name:
Title:
SIGNATURE PAGE 1 OF 2
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A16
[COUNTERPART SIGNATURE PAGE TO
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT]
LEVERAGE LENDER: CITY OF FEDERAL WAY, a Washington municipal
corporation
By:
Name:
Title:
SIGNATURE PAGE 2 OF 2
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A16
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SUMMARY OF REIMBURSED COSTS
EXHIBIT A
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Exhibit A 16
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Exhibit B
INVOICES FOR REIMBURSED COSTS
[SEE ATTACHED]
EXHIBIT B
REIMBURSEMENT CERTIFICATION AND COMPLIANCE AGREEMENT
(CONA/CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17-720
Exhibit AI6
Investment Fund Put /Call Agreement
by and between City and Investor
To be provided upon completion.
Resolution No. 17 -720 Exhibit Al7
JD Draft 5/10/17
CERTIFICATION REGARDING DEBARMENT, SUSPENSION,
INELIGIBILITY AND VOLUNTARY EXCLUSION
LOWER TIER COVERED TRANSACTIONS
Date: [ ], 2017
Instructions for Certification
A. By signing and submitting this proposal, the prospe
providing the certification set out below.
wer tier participant is
B. The certification in this clause is a material representation of fact upon which reliance
was placed when this transaction was entered into If it is later determined that the prospective lower tier
participant knowingly rendered an erroneous certification. in addition to other remedies available to the
Federal Government, the department or agency with which this transaction originated may pursue
available remedies, including suspension and /or debarment.
C. The prospective lower tier participant shall provide immediate written notice to the
person to whom this proposal is submitted if at any time the prospective lower tier participant learns that
its certification was erroneous when submitted or has become erroneous by reason of changed
circumstances.
D. The terms covered transaction, debarred, suspended. ineligible, lower tier covered
transactions, participant, person, primary covered transaction, principal, proposal, and voluntarily
excluded, as used in this clause, have the meaning set out in the Definitions and Coverage sections of
rules implementing Executive 0 49. The prospective lower tier participant may contact the
person to which this proposal is su � or assistance i =obtaining a copy of those regulations.
E. The prospective lo earticipant agrees by submitting this proposal that, should the
proposed covered transaction be entered into, it shall not knowingly enter into any lower tier covered
transaction with a person ki ho is proposed for debarment under 48 C.F.R. part 9, subpart 9.4, debarred,
suspended, declared ineligible. or voluntarily excluded from participation in this covered transaction,
unless authorized by the department or agency with which this transaction originated.
The prospective lower tier participant further agrees by submitting this proposal that it
will induct this clause titled "Certification Regarding Debarment, Suspension, Ineligibility and
Voluntary Exclusion Lower Tier Covered Transactions," without modification, in all lower tier covered
transactions and in all solicitations for lower tier covered transactions.
G. A participant in a covered transaction may rely upon a certification of a prospective
participant in a lower tier covered transaction that it is not proposed for debarment under 48 C.F.R. part 9,
subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded from covered transactions, unless it
knows that the certification is erroneous. A participant may decide the method and frequency by which it
determines the eligibility of its principals. Each participant may, but is not required to, check the List of
Parties excluded from Federal Procurement and Nonprocurement Programs.
H. Nothing contained in the foregoing shall be construed to require establishment of a
system of records in order to render in good faith the certification required by this clause. The knowledge
NA1- 1502700057v1
Resolution No. 17 -720
Exhibit A18
and information of a participant is not required to exceed that which is normally possessed by a prudent
person in the ordinary course of business dealings.
1. Except for transactions authorized under Paragraph E of these instructions, if a
participant in a covered transaction knowingly enters into a lower tier covered transaction with a person
who is proposed for debarment under 48 C.F.R. part 9, subpart 9.4, suspended, debarred, ineligible, or
voluntarily excluded from participation in this transaction, in addition to other remedies available to the
Federal Government, the department or agency with which this transaction originated may pursue
available remedies, including suspension and /or debarment.
CERTIFICATION REGARDING DEBARMENT, SUSPENSION,
INELIGIBILITY AND VOLUNTARY EXCLUSION
LOWER TIER COVERED TRANSACTIONS
1. The prospective lower tier participant certifies, by submission of this proposal, that
neither it nor its principals is presently debarred, suspended, proposed for debarment, declared ineligible,
or voluntarily excluded from participation in this transaction by any Federal department or agency.
2. Where the prospective lower tier participant is unable to certify to any of the statements
in this certification, such prospective participant shall attach an explanation to this proposal.
[REMAINDER AGE BLANK; SIGNATURE PAGE TO FOLLOW.]
2
NAM 502700057v1
Resolution No. 17 -720 Exhibit A18
IN WITNESS WHEREOF, the undersigned has caused this Certification Regarding Debarment,
Suspension, Ineligibility and Voluntary Exclusion to be duly executed as of the date first written above.
COCRF INVESTOR 77, LLC, a Delaware limited
liability company
By: Capital One, National Association, a national
banking association, its sole member
By:
J. Fields
e President
CAPITA
national ba
n
Dougl .Ij`I ds
entor Vice President
SIGNATURE PAGE — CAPITAL ONE, NATIONAL ASSOCIATION AND AFFILIATE
CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY EXCLUSION
(CAPITAL ONE /CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit Al8
IN WITNESS WHEREOF, the undersigned has caused this Certification Regarding Debarment,
Suspension, Ineligibility and Voluntary Exclusion to be duly executed as of the date first written above.
CITY OF FEDERAL WAY, a Washington municipal
corporation
By:
Name: Jim Ferrell
Title: Mayor
SIGNATURE PAGE — LEVERAGE LENDER
CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY EXCLUSION
(CAPITAL ONE /CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit Al8
IN WITNESS WHEREOF, the undersigned has caused this Certification Regarding Debarment,
Suspension, Ineligibility and Voluntary Exclusion to be duly executed as of the date first written above.
FW PAEC QALICB, a Washington nonprofit
corporation
By:
Name: Ade Ariwool
Title: President
SIGNATURE PAGE — QALICB
CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY EXCLUSION
(CAPITAL ONE /CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit A18
IN WITNESS WHEREOF, the undersigned has caused this Certification Regarding Debarment,
Suspension, Ineligibility and Voluntary Exclusion to be duly executed as of the date first written above.
CLEARINGHOUSE COMMUNITY DEVELOPMENT
FINANCIAL INSTITUTION, a California corporation
By:
Name: Douglas J.
Title: Presiden
CLEARINGHOUSE NMTC (SUB 46), LLC, a
California limited liability company
By: Clea
Institution,
Community Development Financial
a corporation, its manager
Dougla -t try
resident a d CEO
SIGNATURE PAGE — ALLOCATEE AND CDE
CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY EXCLUSION
(CAPITAL ONE /CLEARINGHOUSE /FEDERAL WAY PAEC)
Resolution No. 17 -720
Exhibit Al 8
Flow of Funds Closing Memorandum
To be provided upon completion.
Resolution No. 17 -720 Exhibit Al9
Opinion Certificates
To be provided upon completio
Resolution No. 17 -720
Exhibit A20