Attachment_2_-_Lease_(Draft).pdf

DEPARTMENT OF THE AIR FORCE

GROUND LEASE

SOLAR POWER PROJECT

ON

VANDENBERG AIR FORCE BASE,

IN

SANTA BARBARA COUNTY, CALIFORNIA

Dated as of [__________]

TABLE OF CONTENTS

Recitals

1. Grant of Lease 2

2. Additional Interests Granted to Lessee 2

3. Lease Term 3

4. Lessee’s Representations and Warranties 3

5. Condition of the Leased Premises 4

6. Rent 5

7. Use of Project 9

8. Lessee’s Demolition (Existing Improvements), Construction and Modification of Improvements 10

9. Lessee’s Operation and Maintenance of the Project 14

10. Utilities and Other Services 15

11. Taxes 16

12. Records and Reports 16

13. Lessee’s Obligations upon Lease Termination 18

14. Environmental Matters 21

15. Compliance with Laws Generally 29

16. General Access and Inspection 29

17. Waiver and Indemnity 29

18. Lessee’s Insurance 31

19. Damage or Destruction 34

20. Default, Remedies and Termination 35

21. Notices 38

Ground Lease Page i BASENAME AFB

22. Assignment 39

23. Liens and Mortgages 41

24. Disputes 44

25. Installation and Mission Security and Safety 44

26. Government Representatives 45

27. Amendments 45

28. Transfer of Leased Premises by Government 45

29. General Provisions 46

30. Index of Definitions and Acronyms 49

Ground Lease Page ii BASENAME AFB

List of Exhibits

Exhibit A – Description and Map of Leased Land

Exhibit B – [To be omitted?]

Exhibit C – Existing Third Party Interests

Exhibit D – List of Environmental Documents

Exhibit E – Rent Rate Schedule

Exhibit F – Operating Agreement

Exhibit G1 – [Final] [Preliminary] Site Plan

Exhibit G2 – [Demolition and/or Relocation Plan] [To be omitted?]

Exhibit G3 – Construction Management Plan

Exhibit G4 – Environmental Management Plan

Exhibit G5 – Historic/Cultural/Archeological Preservation Plan [Is there a MOA/PA/ICRMP?]

Exhibit G6 – [Biological and/or Natural Resource Management/Mitigation Plan - To be omitted]

Exhibit H – [Utility Facilities – To be omitted]

Exhibit I – Emergency Services Plan

Exhibit J – Form of the Memorandum of Lease

Ground Lease Page iii BASENAME AFB

DEPARTMENT OF THE AIR FORCE

GROUND LEASE

ON

VANDENBERG AIR FORCE BASE, CALIFORNIA

THIS GROUND LEASE (“Lease”) is made effective as of [month][day], [year], (the “Effective Date”), by and between THE UNITED STATES OF AMERICA, acting by and through THE SECRETARY OF THE AIR FORCE (the “Secretary” or the “Government”) and [name of Lessee], a [state of organization/type of entity], (the “Lessee”). The Government and Lessee may sometimes be referred to jointly as the “Parties,” and each separately may be referred to as a “Party.”

RECITALS

R-1 The Secretary, under the authority of 10 U.S.C. § 2667 (the “Enabling Statute”), has determined:

(i) that the Leased Premises (hereinafter defined) are under the control of the Secretary;

(ii) that the Leased Premises are not for the time needed for public use;

(iii) that the Leased Premises are not excess property as defined by 40 U.S.C.

§ 102(e) based on the following:

(a) all of the Leased Premises are essential to future mission flexibility, operational changes, equipment changes, and for potential expansion of the current operations/activities or new, as well as relocating, operational unit bed down;

(b) with encroachment problems impacting Air Force facilities nationwide, the Government’s continued ownership of the Leased Premises provides an essential buffer zone against uncontrolled incompatible uses that may otherwise be approved by local community or private interests if the Leased Premises were declared excess and transferred;

(c) the Leased Premises [and/or the point of interconnection] are located within the boundaries of the Vandenberg AFB (the “Installation”) but outside of the perimeter security fence and manned security gate[, therefore, the site is freely and fully accessible from public right-of-ways without implicating installation security procedures;]

(d) the Leased Premises will be used solely for the construction and operation of a solar power production facility that will supply electricity directly to the Installation, and therefore, supports the military mission by enhancing energy security and furthering Department of Defense’s (“DoD”) renewable energy production and procurement goals;

Ground Lease Page 1 of 56 BASENAME AFB

(iv) that the consideration established in Section 6 is not less than the fair market value of the Lessee’s leasehold interest;

(v) that a lease of the Leased Premises is advantageous to the United States; and

(vi) that a lease of the Leased Premises for the term established in Section 3 will promote the national defense or be in the public interest.

R-2 The Secretary has further determined that omitting a provision to permit the Secretary to unilaterally revoke this Lease at any time will promote the national defense or be in the public interest.

R-3 The Parties intend to execute a contract (the “Renewable Energy Supply Agreement (RESA)”) whereby the Lessee plans, designs, finances, constructs, manages, maintains, and operates a commercial scale solar power production facility on the Installation (the “Renewable Energy Generation System” or “REGS”); interconnects the REGS with, or constructs facilities for interconnecting the REGS with, [the Installation’s electrical distribution system][the Utility Distribution Company’s (“UDC”) distribution system]; sells power [and Environmental Attributes of that power (i.e., Renewable Energy Credits)] to the Government;

and removes its improvements and restores the land at the end of the Lease (collectively, the “Project”). [The Lessee has the electric utility Certificate of Convenience and Necessity, and utility franchise for [____________] AFB and the immediate vicinity in accordance with State of ____________ law.]

R-4 The Government will purchase all of the solar energy generated by this Project on the Leased Premises; the Government desires to execute this Lease solely to enable the Lessee to construct and operate the REGS for the delivery of electricity to the Installation and thereby satisfy its obligations pursuant to the RESA between the Parties. This Lease supports and is ancillary to the RESA.

LEASE AGREEMENT

1. Grant of Lease.

1.1. Leased Premises. The Government hereby leases to Lessee, and Lessee leases from the Government, the real property described in Exhibit A hereto (the “Leased Land”), consisting of [_____] (xx) parcel[s] of land under the administrative control of the [_____________ AFB] and those existing improvements located on the Leased Land, if any, described in Exhibit B hereto (the “Existing Improvements”). The term “Leased Premises” means both the Leased Land and Existing Improvements, if any. The term “Lessee Improvements” means any structures, facilities (e.g., REGS, transmission, interconnection), landscaping, infrastructure, or other improvements the Lessee constructs or places on the Leased Premises or in connection with its use of the Leased Premises in accordance with the terms of this Lease, including demolition of, renovation/modification of Existing Improvements, if any.

Ground Lease Page 2 of 56 BASENAME AFB

1.2. Delivery of Possession. The Government shall deliver possession of the Leased Premises to Lessee on the Effective Date.

1.3. Conditions Precedent. This Lease made as of the Effective Date; provided that the rights and obligations of the Parties under this Lease are conditioned upon the prior occurrence, or Lessee’s waiver, of the following (the date all such conditions are all satisfied or waived, the “Lease Commencement Date”): (a) execution of an agreement whereby the Government agrees to purchase electricity from the Lessee’s Project (i.e., the RESA); (b) execution of an EPC contract, or the equivalent, by the Lessee for the facilities required by the Project; (c) obtaining, or causing to be obtained, all non-Government “Approvals” deemed necessary by the Lessee to commence construction, produce and deliver power, as well as assume long-term management and operation of the Project.

1.4. Access to Leased Premises. The Leased Premises are accessible from a public right-of-way. During the Lease Term (hereinafter defined), Lessee and its agents, employees, contractors, and invitees shall be permitted to enter upon the Leased Premises via such public right-of-way and shall have the right to enter upon the Leased Premises at any reasonable times for the purposes of planning, designing, constructing, operating, and maintaining the Project.

Access to the Installation through one of the security gates is subject to the controls and restrictions specified in [Section 2.1 below] [the RESA]. The Government reserves the right to modify, eliminate, or temporarily close any streets, driveways, and walkways on the base;

however, subject to Section 25, the Government agrees that it will attempt to do so in a manner that does not unreasonably interfere with Lessee’s work on the Project.

1.5. Third Party Interests.

1.5.1. Lessee’s leasehold interest shall be subject to all existing ground or master leases, non-terminable easements, licenses, permits (if to federal entities) and other interests of third parties affecting the Leased Premises, whether of public record or not (collectively, “Third Party Property Interests”). A list of existing Third Party Property Interests maintained in the records of the Installation is attached as Exhibit C hereto.

1.5.2. Nothing in this Lease shall prevent the Government from creating additional third party easements, licenses, permits or other interests affecting the Leased Premises to meet its own or other public requirements. Any such future third party interests shall not unreasonably interfere with Lessee’s use of the Project.

2. Additional Interests Granted to Lessee.

2.1. Access to the Installation. During the Lease Term, Lessee and its agents, employees, contractors, and invitees shall be permitted to enter the Installation if necessary to conduct Project related business. The base main gate and security checkpoint shall be used by the Lessee’s personnel. One or more routes and/or restrictions on the use of specified streets during certain hours of the day (e.g., haul routes) may be designated from time to time on a non-exclusive basis by the Government. Lessee acknowledges that the Installation is an active, operating military base and that the Government retains the right to restrict or entirely eliminate access to the Installation by Lessee and its agents, employees, contractors and invitees due to the

Ground Lease Page 3 of 56 BASENAME AFB needs of national defense or because of inclement weather and natural disasters. Lessee further acknowledges that the Government retains the right to promulgate and enforce security regulations that may restrict or impose requirements on access to the Installation by Lessee and its agents, employees, contractors and invitees, including regulations delineating parameters for authorized entry to or exit from the Installation. The Government will not be liable for any damages or losses, direct or consequential, to Lessee or its agents, employees, contractors and invitees resulting from the exercise of its foregoing rights.

2.2. Other Easements, Licenses or Permits. At Lessee’s request, the Government will grant, in accordance with statutory requirements (including, if applicable, the requirement that Government receive at least fair market value for the interest granted) easements, licenses or other interests benefitting the Leased Premises for utilities, interconnection, and/or other purposes (not including vehicular and pedestrian access) reasonably necessary for the Project for a term not to exceed the Lease Term; provided, however, any such easements, licenses or other interests shall not interfere with the Government’s mission and operations on any portion of the base outside of the Leased Premises.

2.3. Preservation of Insolation. The Government acknowledges and agrees that access to sunlight (“Insolation”) is essential to the value to the Lessee of this Lease. Accordingly, the Government shall take such actions as reasonably necessary and useful to prevent any unreasonable long-term interference with Insolation on and at or surrounding the Leased Premises, specifically in the air space above the Project’s solar energy panels. Without limiting the foregoing, to the extent permitted by law, and other applicable requirements, including, but not limited to, Air Force Regulations and Instructions (“AFRs” and “AFIs”), the Government shall not construct or permit to be constructed any structure on or around the Leased Premises that could materially and adversely affect Insolation levels or permit the growth of foliage that could materially and adversely affect Insolation levels. Nothing herein shall be so construed as to prohibit incidental overflight of the Leased Premises.

3. Lease Term. This Lease shall be for a term beginning at 12:01 a.m. on the Effective Date and of a duration of [number] (xx) years ending at 12:00 p.m., [month][day], [year] (the “Lease Expiration Date”), unless sooner terminated in accordance with the terms of this Lease. The “Lease Term” means period from the Effective Date through the Lease Expiration Date.

4. Lessee’s Representations and Warranties. Lessee represents and warrants to the Government as follows:

4.1. Organizational Matters; Enforceability. Lessee is a [type of entity], duly organized and validly existing under the laws of the State of California, and is in good standing and qualified to do business in California and in every other state in which its business requires such qualification. Lessee has full authority to own its properties and to carry on its business as now being conducted and as contemplated for the Project, and to enter into and perform this Lease.

Lessee has duly authorized, executed and delivered this Lease and it constitutes the legal obligation of Lessee, enforceable against Lessee under its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally, and subject to general equitable principles.

Ground Lease Page 4 of 56 BASENAME AFB

4.2. No Violations. Lessee’s execution, delivery, and performance of this Lease will not violate any provision of law, any court order or other government agency order, or any of the organizational or other governing documents of Lessee, or any agreement or other instrument to which Lessee is now a party or by which it or any of its properties or assets is bound, or be in conflict with or constitute a default (with due notice or the passage of time or both) under any of the foregoing, or, except as provided hereunder, create of any encumbrance on any of the property or assets of Lessee, except as permitted by this Lease or otherwise approved by the Government.

4.3. Proceedings and Agreements. No litigation or like proceeding is pending or, to Lessee’s knowledge, threatened against Lessee, its members or the Project that is reasonably likely to have a material adverse effect on the financial condition of Lessee, or the transactions contemplated by this Lease, or which could adversely affect the validity or enforceability of this Lease or the ability of Lessee to perform its obligations hereunder. Lessee is not currently in default under any agreement to which it is a party or to which it or any of its property is subject, which default could adversely affect the ability of Lessee to perform its obligations under this Lease.

4.4. No Insolvency. There is no completed, pending or, to Lessee’s knowledge, threatened bankruptcy, reorganization, receivership, insolvency or like proceeding, whether voluntary or involuntary, affecting Lessee.

4.5. No Events of Default. No event has occurred, and no condition exists, with respect to Lessee or the Project that would constitute an Event of Default (hereafter defined) under this Lease or, with the lapse of time, if not cured, or with the giving of notice, or both, would become an Event of Default under this Lease.

4.6. No Other Authorization. No authorization, consent, approval, order, registration, declaration, or withholding of objection on the part of, or filing of or with, any governmental authority not already obtained or made (or to the extent not yet obtained or made, Lessee has no reason to believe that such authorizations, consents, approvals, orders, registrations, or declarations will not be obtained or made in a timely fashion) is required for the execution and delivery or approval, as the case may be, of this Lease, or the performance of this Lease by Lessee.

5. Condition of the Leased Premises.

5.1. No Representations or Warranties by the Government.

5.1.1. Lessee agrees that it has entered into this Lease based on its own full investigation of all facts relating to, and conditions underlying, the Leased Premises and its development and use of the Leased Premises, including environmental conditions, and that it has solely relied on its own investigation.

5.1.2. Lessee agrees that the Leased Premises are leased in “as is, where is” condition, without any representation or warranty by the Government concerning their condition and without any obligation of the Government to make alterations, repairs or additions. Except as expressly set forth in Section 14, the Government shall not be liable to Lessee for any

Ground Lease Page 5 of 56 BASENAME AFB damages or losses, whether direct or consequential, incurred by Lessee because of the discovery of any latent or patent defect in the Leased Premises.

5.2. Environmental Baseline Survey. Lessee acknowledges receipt of the environmental baseline survey for the Leased Premises dated [date] (the “EBS”). The EBS sets forth those environmental conditions affecting the Leased Premises as of its effective date [add recertification date(s), if any], as determined from the records and analyses reflected therein. The EBS is not a representation or warranty by the Government regarding the environmental or physical conditions of the Leased Premises, and the Government shall have no liability in connection with the accuracy or completeness thereof. The Government will prepare a separate EBS for the Leased Premises after the expiration or earlier termination of this Lease (the “Closeout EBS”). The Government will use the Closeout EBS to determine whether Lessee has fulfilled its obligations to maintain and restore the Leased Premises under this Lease, including all obligations set forth in Sections 13 and 14. Lessee agrees that it has received and reviewed the items provided by the Government identified in Exhibit D (List of Environmental Documents).

6. Rent.

6.1. Amount. Rent for this Lease shall be paid in the form of in-kind consideration to the Government in the amount of $[_________] Dollars per month (the “Rent”). The obligation to pay Rent will commence on the first day of the month immediately following the month in which the Lease Commencement Date occurs and end on the last day of the month in which the Lease Expiration Date occurs. Rent payments are subject to an escalation (i.e., increase) every five (5) years that will be applied on the appropriate anniversary of the commencement of Rent payments (see Exhibit E, Rent Rate Schedule). Payment of in-kind consideration under this Section 6.1 shall be satisfied by way of a credit (i.e., direct offset) against monthly invoices presented by Lessee to the Government pursuant to the RESA. In the event that the Rent for any monthly billing period is greater than the total amount owed by the Government under the RESA for that monthly period, the excess portion of the credit, which cannot be used as an offset in that month, shall be carried forward and accumulated as a credit against future amounts owed by the Government pursuant to the RESA.

6.2. Conversion to Cash Rent. In the event of continuation of this Lease after the expiration or termination of the RESA, Rent for this Lease shall be paid as rent in the form of cash to the Government in an amount equal to the then current Rent as calculated as in-kind consideration in Section 6.1 above commencing in the month immediately following the month in which RESA terminates and ending in the month in which the Lease Expiration Date occurs.

Cash Rent under this Section 6.2 shall be subject to the same escalation as specified in Section 6.1, above. Cash Rent shall be due and payable on the first day of each month without prior notice or demand from the Government. Cash Rent unpaid for more than ten (10) Days after the date due shall be an Event of Default (hereinafter defined). All cash Rent due from the Lessee shall be paid in lawful money of the United States of America without deduction or offset (except as otherwise provided herein) to the Treasurer of the United States of America and forwarded directly to the Installation’s Point of Contact designated in Section 21 below, or such other official as the Government shall designate from time to time in writing, for deposit into the Special Treasury Account established under the provisions of 10 U.S.C. § 2667(e).

Ground Lease Page 6 of 56 BASENAME AFB

6.3. Supplemental Rent. All sums other than Rent that are payable by the Lessee to the Government, including all items of reimbursement for utilities or emergency services provided by the Government, shall be deemed supplemental rent (the “Supplemental Rent”). Any request by the Government to the Lessee for reimbursement under this Lease shall identify the expenses included in such reimbursement request. For the purposes of defining the Lessee’s obligations under this Lease, all payments required by Section 6.1, and all Supplemental Rent may sometimes be collectively referred to as “Rent.” Notwithstanding the use of the term “Rent” to include Supplemental Rent, no payment to the Government of a reimbursement constituting Supplemental Rent shall be considered to be the receipt by the Government of money compensation for the occupancy of the Leased Premises for purposes of the Enabling Statute or the Bankruptcy Code or for any other purpose.

6.4. Overdue Rent. If any installment of Rent is not paid within ten (10) business days after its due date, then such arrearage shall, consistent with the Debt Collection Act of 1982 (31 U.S.C. § 3717), (a) bear interest from the due date at the rate prescribed by the Secretary of the Treasury for amounts past due to the Federal government until paid in full; (b) include an administrative charge to cover the costs of processing and handling delinquent debts; and (c) include an assessment of an additional penalty charge on any portion of a debt that is more than ninety (90) Days past due.

6.5. FMV Determination. The Rent amount has been determined by the Government to be not less than the fair market value of the leased interest [and of any easement(s) required to allow interconnection].

7. Use of Project.

7.1. Permitted Uses. The sole purposes for which the Leased Premises may be used, in the absence of prior written approval of the Government for any other use, is to support and advance activities associated with the Project as described in Recital R-3.

7.2. Specific Prohibited Uses. Specifically, but without limitation, Lessee shall not use or permit the use of the Project for any of the following activities without the prior written approval of the Government in its sole discretion:

7.2.1. Any use that is unlawful or inherently dangerous or that constitutes waste, unreasonable annoyance, or a nuisance.

7.2.2. Activities involving the storage, treatment, transportation, disposal, or manufacture of Toxic or Hazardous Materials, except as specifically authorized by Section 14.

7.2.3. Activities that the Government determines adversely affect the security of the Installation or the health, safety, morals, welfare, morale, and discipline of the Armed Forces, such as the sale or use of drug abuse paraphernalia, illicit gambling, and prostitution.

7.2.4. Partisan political activities.

7.2.5. Activities by persons or entities advocating the overthrow of the United States.

Ground Lease Page 7 of 56 BASENAME AFB

7.3. Primacy of Air Force Mission. The Lessee recognizes that Vandenberg AFB is an operating military base and that the Government’s military mission has priority and primacy over all other operations on Vandenberg AFB, including those conducted on premises out leased to others. The Lessee understands and accepts that the priority of conducting Government operations at Vandenberg AFB, including but not limited to normal base-related operations, the Vandenberg AFB IRP, Government overflight, surges, exercises, contingencies, inspections and other Air Force operations (collectively, the “Government Operations”) may at times require delay in, modification or other interruption of the Lessee’s activities, including its construction activities. The Government shall, whenever possible, provide advance notice of Government Operations that may impact Lessee’s activities and shall coordinate such operations so that any disruption to Lessee’s activities is minimized.

7.3.1. The Lessee hereby agrees that in case of any conflict between Government Operations and Lessee’s activities, as determined by the Commander in the Commander’s sole and absolute discretion, the Lessee will, if the Commander so directs, delay, modify or otherwise interrupt its activities on the Leased Land to accommodate Government Operations.

7.3.2. The Lessee also understands and accepts that its activities on the Leased Land may, from time to time, be hampered by temporary restrictions on access, such as identity checks and auto searches by the Air Force. The Lessee understands that the Air Force strictly enforces Federal laws and Air Force regulations concerning controlled substances (drugs).

7.3.3. Except as set forth in the RESA, the Lessee agrees that the Government shall not be liable or responsible under this Lease for any lost time or any costs incurred by the Lessee due to any disruption of its activities on the Leased Premises, regardless of frequency or duration of any such interruptions, including disruptions of its commercial activities, or for any delays in entry, temporary loss of access, barring of individual employees from the base under Federal laws authorizing such actions, limitation or withdrawal of an employee's on-base driving privileges, or any other security action (collectively, the "Security Actions") that may cause employees to be late to or unavailable at their work stations, or delay arrival of parts and supplies. The Lessee hereby expressly waives any claims or suits against the Government under this Lease caused by or arising out of the priority of conducting Government Operations, including any Security Actions.

7.4. Operating Agreement. A companion Operating Agreement to this Lease, attached hereto as Exhibit F, sets forth detailed procedures and requirements to be followed by the Lessee in its use of the Leased Premises, as well as management and operation of the Project in accordance with the terms of this Lease and Applicable Laws. Such Operating Agreement may include and incorporate: (a) operations work procedures; (b) capital reinvestment plans; (c) operations and maintenance plans, as well as any applicable procedure manuals. In the event of any conflict, inconsistency or question of controlling document between any provisions of the Operating Agreement and any provisions of this Lease, the provisions of this Lease shall control.

8. Lessee’s Demolition (Existing Improvements), Construction and Modification of Improvements.

Ground Lease Page 8 of 56 BASENAME AFB

8.1. Government’s Limited Interest. The Government’s sole and exclusive interest in and liability under this Lease are limited to that of Lessor of the Leased Land. The Lessee shall retain and hold legal title to and possession of the Lessee Improvements; provided that the Lessee may assign the Project as contemplated in Section 22. The Lessee Improvements constructed/installed as part of the Project shall be at all times during the Lease Term the property of the Lessee separate and apart from the Leasehold interest and all other real property rights.

8.2. Time to Construct. The Lessee shall complete construction/acceptance testing/ interconnection and have a fully operational REGS facility and approved interconnection for the REGS within [9] [12] [18] months of the Lease Commencement Date. Failure to do so will constitute a breach of this Lease by the Lessee.

8.3. [Project Site and Base Security. The REGS [and interconnection facility] shall be protected by a fence at least six (6) feet in height on all sides to prevent any unauthorized persons from entering on the site and tampering with the REGS and to protect persons against the danger of electric shock. For any portion of the Leased Premises immediately adjacent to the installation’s perimeter security fence, if any, the REGS design/layout and the fence design must allow for drivable access along the Vandenberg AFB perimeter fence line for security purposes.

Construction or erection of the fence shall be subject to the provisions of this Section 8 and all other applicable provisions of the Lease.]

8.4. Lessee’s Construction Obligation. Lessee shall plan, design, and construct the Lessee Improvements generally as depicted on the Final[Preliminary] Site Plan attached hereto and incorporated into this Lease as Exhibit G1 (the “Site Plan”). The Site Plan will reflect the general site layout depicting the REGS, any interconnection facility, all auxiliary infrastructure, any structures or other permanent improvements, and will include the specific design of the entire REGS, which shall be submitted as 60% and 90% conceptual drawings/designs (collectively, the “Design Plans”). A duly qualified professional engineer registered in the state of California shall prepare and sign all Design Plans.

8.5. Additional Lease Plans. Lessee shall perform all proposed demolition or modification of Existing Improvements and all new construction/installations (and as applicable operation and maintenance) of Lessee Improvements in accordance with the following plans, all of which are incorporated into this Lease:

8.5.1. Lessee shall perform all permitted demolition [or relocation] [or modification] of Existing Improvements in accordance with a Demolition and/or Relocation Plan attached hereto as Exhibit G2. [Should address any demolition activities, a schedule, proper disposal of Existing Improvements or portions thereof (if applicable), include specific planning for asbestos containing material (ACM) and lead-based paint (LBP) management/ disposals, management of soils with pesticides on-site; movement of perimeter fence or other features such as roads that the Lessee will relocate.]

8.5.2. The Construction Management Plan attached hereto as Exhibit G3. [The Construction Management Plan must include a construction schedule (identifying any phasing, quality control program, arrangements for Construction Consultant, trenching or other ground

Ground Lease Page 9 of 56 BASENAME AFB disturbing activities, plans for ingress and egress, including haul routes if any, disposition of demolition debris, lay down areas and other construction-related matters as necessary. The Construction Management Plan shall also identify any temporary structures or facilities needed during the construction phase of the project.]

8.5.3. The Environmental Management Plan attached hereto as Exhibit G4. [The Environmental Management Plan is to include the following as applicable: SWPPP, Spill Plan (covering prevention and response to spills), Soils Management Plan to include proper disposal of contaminated soils or other materials (if necessary), Erosion Control Plan, Pesticide/Herbicide Management Plan, etc. The Environmental Management Plan shall also address any other environmental matters of concern to the Government, including environmental permitting or mitigation requirements that have been required by the Final Environmental Assessment or by permitting authorities (if any). This plan should address the construction, operations, and restoration phases of the Project and may be attached to the Operating Agreement.]

8.5.4. [The Historic/Cultural/Archeological Preservation Plan attached hereto as Exhibit G5; may be attached to the Operating Agreement.]

8.5.5. Intentionally Omitted.

8.6. Construction Documents.

8.6.1. Lessee shall not construct any Lessee Improvements, including any structural modifications, alternations or additions to any Existing Improvements, except as described in and in compliance with the plans above (collectively, the “Construction Documents”), but only after Government review and comment (if any), on the plans submitted by the Lessee. The Government shall have fourteen (14) Days to review and comment on such Construction Documents. The Lessee shall not construct any temporary structure on the Leased Land needed during the construction phase of the Project except as provided in the Construction Management Plan. Lessee shall make no subsequent modifications, alterations, renovations or additions to the Project without the prior review and comment (if any) by the Government in accordance with this Section 8.6. The Government shall have fourteen (14) Days to review and comment on any proposed modifications, alterations, renovations or additions submitted by the Lessee.

8.6.2. Construction Documents and any changes thereto shall be prepared in accordance with the requirements of: (a) federal, State of California, and local development and building codes, standards, and regulations, as they may be amended, that would apply to non- Governmental construction or development activities within the municipality or county in which the installation is situated (the “Applicable Codes”), (b) electrical engineering industry standards, and (c) Applicable Laws (collectively, the “Design Criteria”).

8.6.3. After the Government’s review and written comment (if any) on any of the plans, such Construction Documents shall be incorporated into and made a part of this Lease.

8.6.4. If at any time Lessee proposes to change the Construction Documents previously reviewed by the Government, Lessee shall submit the proposed changes to the Government for review and written comment (if any).

Ground Lease Page 10 of 56 BASENAME AFB

8.7. Notice to Proceed.

8.7.1. Within six (6) weeks after the Government reviews and provides written comment (if any) on the Construction Documents, the Government will, subject to Lessee’s continued compliance with the Lease and the Government’s receipt of payment and performance bonds or irrevocable letter of credit in accordance with Section 8.9 of this Lease, issue written authorization for Lessee to proceed with the construction of the Lessee Improvements described in the Construction Documents (the “Notice to Proceed”). Lessee shall not undertake any demolition or construction work until it receives a Notice to Proceed.

8.7.2. Within thirty (30) Days after issuance of a Notice to Proceed, Lessee shall commence and diligently proceed with construction of the Lessee Improvements covered by such Notice to Proceed in a good and workmanlike manner and in accordance with the Lease as well as its Exhibits. Adherence to the approved construction schedule shall be subject to Excusable Delays.

8.8. Quality Control. Throughout the construction period, Lessee shall maintain an effective quality control program that will assure that the workmanship and materials used by any contractor, subcontractor or vendor satisfy the construction requirements of this Lease, including but not limited to the Design Plans and the Design Criteria (collectively, the “Construction Requirements”).

8.9. Payment and Performance Bonds or Other Protection.

8.9.1. Lessee shall provide to the Government one or more bonds obtained by the Lessee or proof that the Lessee’s general contractor (e.g., an EPC contractor) has bonds to ensure payment and performance of the obligations under the prime construction contract with respect to the construction covered by any Notice to Proceed. Each of the bonds must: (a) be issued by a Qualified Surety; (b) be in a form satisfactory to the Government and any Approved Mortgagee and run in favor of the Government and any Approved Mortgagee; (c) be in the amount of the total cost of constructing the portion of the Project covered by such Notice to Proceed, as such cost is stipulated in the construction contract between the Lessee and its general contractor; (d) guarantee the performance of the contract for the construction of such improvements in accordance with the Construction Requirements; and (e) provide that the Government and any Approved Mortgagee are dual obligees on such bonds as their interests may appear. A “Qualified Surety” is a corporate surety or insurer authorized to do business, and to issue bonds for construction payment and performance, in the state of California and possessing a rating of A/VIII or better in A.M. Best’s Insurance Reports.

8.9.2. As an alternative to payment and performance bonds, the Lessee may provide an irrevocable letter of credit in a form reasonably satisfactory to the Government. The amount of any irrevocable letter of credit shall be sufficient to cover removal/demolition costs of all the Lessee Improvements and restoration of the Leased Land to a level graded buildable area.

The Lessee obligations under any irrevocable letter of credit may terminate upon completion of initial construction of the Lessee’s Improvements.

Ground Lease Page 11 of 56 BASENAME AFB

8.10. Government’s Right to Inspect. The Government and its representatives, agents, and employees shall have access to the Leased Premises during construction or modification of Lessee Improvements to monitor, observe, make inquiries, take samples of materials for testing, as well as such other matters as the Government deems to be reasonably necessary for the Government to determine Lessee’s compliance with the Construction Requirements. Lessee agrees that any inspection activity is solely at the election of the Government and shall not relieve Lessee of its responsibility for completing the Lessee Improvements in accordance with the Construction Requirements. Moreover, failure of the Government to make any on-site inspections or conduct any testing shall not limit any of the Government’s rights under this Lease or the RESA. Lessee agrees that, except as set forth in this Section 8.10, no act or failure to act by the Government shall be deemed confirmation that Lessee Improvements shown in the Construction Documents reviewed by the Government comply with the Construction Requirements.

8.11. Pre-construction Conferences. Lessee, its general contractor and the Government shall attend pre-construction conferences to acquaint the Lessee, the Government, and the other participants with the Construction Documents including but not limited to the Construction Management Plan, and/or the Construction Requirements. Each pre-construction conference shall take place in accordance with the construction schedule included as part of the Construction Management Plan, and on such additional dates as the Government may reasonably require.

8.12. Completion of Construction. Upon completion of construction of the Lessee Improvements that are the subject of a Notice to Proceed, Lessee shall furnish to the Government the following, all satisfactory to the Government in its reasonable discretion:

8.12.1. an accurate copy of all permits and licenses, if any, that were required in connection with the work, including without limitation, any certificates of occupancy, and other applicable approvals from governmental authorities (the Lessee shall not accept issuance of any permit or license in connection with the Project which purports to impose on the Government any obligation or liability for any operations or activities covered by such permit or license without the prior written consent of the Government);

8.12.2. an as-built plat land survey (prepared, to the maximum extent practicable, in accordance with the standards of the American Land Title Association (“ALTA”) and the American Congress on Surveying and Mapping (“ACSM”)) of the Project detailing easements, the parcel boundaries and any encroachments to the boundaries, certified to Lessee, any Approved Mortgagees, and the Government;

8.12.3. a copy of (a) the Contracting Officer’s Completion Notice and (b) the final Construction Documents with the as-built Design Plans of the REGS and interconnection facilities signed and certified by the professional engineer that prepared such plans;

8.12.4. evidence, which may consist of Uniform Commercial Code (“UCC”) searches and a title insurance policy or an updated endorsement to an existing title insurance policy issued by a title insurance company reasonably acceptable to the Government, that the Project is free and clear of all liens (other than liens approved in accordance with Section 23 of

Ground Lease Page 12 of 56 BASENAME AFB this Lease) arising out of, or connected with, the construction, modification, or demolition of the Lessee Improvements; and

8.12.5. a certificate of Lessee confirming that Lessee is not in default under any provisions of this Lease.

8.13. Fixtures and Equipment. During the Lease Term, Lessee shall have the right, at its sole expense, to install its own machinery and equipment and to attach removable fixtures in or upon the Leased Premises as may be necessary for its use of the Project pursuant to this Lease.

Lessee shall have the right to remove such machinery, equipment, minor improvements, and removable fixtures at any time prior to the expiration or earlier termination of this Lease. If the Government terminates this Lease, Lessee shall have a reasonable time following the effective termination date, as determined by the Government, to remove such property.

9. Lessee’s Operation and Maintenance of the Project.

9.1. General Maintenance Obligation. Lessee, at no expense to the Government, shall at all times manage, operate, preserve, maintain, repair the REGS [and any interconnection] facility in a commercially reasonable manner, and so as not to endanger Government personnel, property of the Government, the public or obstruct travel on any roadway/walkway.

9.2. Utility Systems. Lessee, at no expense to the Government, shall operate and maintain the utility systems that it owns or leases within or connected to the Leased Premises, if any in a commercially reasonable manner. The Government assumes no responsibility for utility systems leased or owned by Lessee.

9.3. Access Infrastructure (Streets, Walkways and Parking Areas). Lessee, at no expense to the Government, shall maintain all access infrastructure such as streets, curbing, sidewalks, parking areas, private access drives, and associated drainage facilities within the Leased Premises in good condition and keeping them free of debris and obstructions of any kind.

[Lessee shall keep streets and common paved areas (including common sidewalks) free of ice and snow.]

10. Utilities and Other Services.

10.1. Utility Systems. The Government will provide electric, water, and waste water utility services. The Lessee is responsible for all hookups and shall return utility systems to their original condition on or before the Restoration Deadline (hereinafter defined). The Lessee shall provide meter(s) and backflow preventer(s). The Lessee shall use all utilities responsibly without undue waste. Lessee shall be responsible for the construction, maintenance and repair of all any other utility distribution or collection systems necessary to support the Project (e.g., natural gas distribution or storm water collection systems).

10.2. Payment for Utilities. Lessee shall pay for utility services required for the Project (see RESA RFP, Section C.23.7). The charges and the method of payment for each utility service furnished by anyone other than the Government will be determined by the appropriate supplier of the utility or service.

Ground Lease Page 13 of 56 BASENAME AFB

10.3. Sale of Utility Service by the Government.

10.3.1. The sale of any utility service to Lessee by the Government will be in accordance with 10 U.S.C. § 2686 and AFI 32-1061, “Providing Utilities to US Air Force Installations,” as the same may be amended, modified or superseded from time to time.

10.3.2. Lessee agrees to enter into a separate contract for each utility service at rates to be specified in each contract by the Government.

10.3.3. The Government does not warrant the continued provision, maintenance, or adequacy of any utility service it may furnish to the Project. The Government may elect in its sole and absolute discretion to cease furnishing any utility service to the Project, and shall provide written notice to Lessee at least one (1) year prior to its termination of such utilities. If the Government notifies Lessee of its intent to cease furnishing any of the utility services that are being provided on the Effective Date, the Government shall make reasonable efforts to assist Lessee in obtaining any necessary approvals, agreements, or permits for the provision of such utilities or services from sources other than the Government.

10.4. Emergency Services. The Government will provide first response, fire, and law enforcement services to the Project. And Lessee shall pay for any firefighting, fire protection, and police protection services furnished by the Government for the benefit of the Project during the Lease Term. Reimbursement for such services will be calculated as outlined in Exhibit I (Emergency Services Plan).

11. Taxes. Lessee shall pay to the proper taxing authority, when due and payable, all taxes, assessments, and similar charges that may be imposed on Lessee or the Project. Each Party shall have the right, but not the obligation, at its own expense to take such actions as may be necessary and appropriate (a) to contest the validity, applicability or amount thereof; (b) minimize such taxes, assessments or charges; or (c) assert any exemption which may be available with respect to taxes, assessments or charges imposed on the Project. If and to the extent the Leased Premises are made taxable by state or local governments under a subsequent Act of Congress, this Lease shall be renegotiated pursuant to 10 U.S.C. § 2667(f).

12. Records and Reports.

12.1. Lessee’s Books and Records.

12.1.1. At all times during the Lease Term and for three (3) years after the expiration or earlier termination of this Lease, Lessee shall maintain at its principal place of business or such other place as agreed to by the Parties, a complete and accurate set of Books and Records (hereinafter defined) of all business activities and operations conducted during at least the previous three (3) years in connection with performance under the RESA and this Lease.

12.1.2. The Lessee shall maintain a true and accurate set of “Books and Records,” which shall fully/completely reflect the financial condition, production/delivery data, physical condition (maintenance/repair), and operational status of the Project, together with all

Ground Lease Page 14 of 56 BASENAME AFB business licenses and permits required to be kept and maintained pursuant to the provisions of any applicable state or local law, regulation, or rule now or hereafter in effect.

12.1.3. All such Books and Records shall be kept at the Lessee’s principal office, or at the Leased Premises, or at such other place as the Government and the Lessee both agree upon in writing.

12.1.4. All financial statements shall be prepared based on generally accepted accounting principles (“GAAP”) or on the basis used for the Lessee’s federal income tax return.

If the financial statements are prepared on the tax basis, then the footnotes must include all disclosures required by GAAP. All financial statements must be audited. The auditor must be a certified public accounting firm that participates in the peer review program of the American Institute of Certified Public Accountants. Compiled or reviewed financial statements shall not meet the requirements of this Section 12.1.

12.2. Reporting.

12.2.1. The Lessee shall deliver to the Government, upon such schedule as the Government may reasonably establish from time to time or in a specific request, all information and supporting documentation which the Lessee has maintained and which the Government needs in order for the Government to file any report to the Department of the Air Force, the Department of Defense, or required to be submitted by the Government to any governmental or nongovernmental agency, or which the Government needs to assess the financial condition, performance, production/delivery data, physical condition, maintenance and operational status of the Project.

12.2.2. Such requested information shall: (a) be in such media, including electronic media, as the Government shall reasonably select as satisfactory, (b) be certified to the Government as true, complete, and accurate in all material respects by the Lessee, and (c) be taken from the Books and Records maintained by the Lessee as aforesaid.

12.2.3. Generally, the Lessee shall furnish Government-requested information within fourteen (14) Days after receipt of a request by the Government, or establish with the Government a mutually acceptable delivery date.

12.3. Government Right to Audit. At all times during the Lease Term and for three (3) years after the expiration or earlier termination of this Lease, the Government, the Comptroller General of the United States, the Auditor General of the U.S. Air Force, or any of its duly authorized representatives, shall have access to and the right to examine any directly pertinent records maintained Lessee in connection with performance under this Lease. The Government shall have the right to photocopies of same, at the sole expense of Lessee.

12.4. Default and Deficiency Notices.

12.4.1. Lessee shall provide the Government with copies of default or…