HomeMy WebLinkAboutPR 22901: AGREEMENT WITH PALNG COMMON FACILITIES COMPANY, LLC P.R. No. 22901
11/04/22 ht
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE
A LEASE AGREEMENT BETWEEN THE CITY OF PORT ARTHUR AND
PALNG COMMON FACILITIES COMPANY, LLC, A DELAWARE
LIMITED LIABILITY COMPANY FOR APPROXIMATELY 14.270
ACRES OF PRIMARILY SUBMERGED LAND LOCATED IN THE
SABINE NECHES WATERWAY SITUATED IN THE CITY OF PORT
ARTHUR SURVEY,ABSTRACT NO.954,JEFFERSON COUNTY,TEXAS
WHEREAS, pursuant to Resolution No. 19-245, the City Council entered into an
Industrial District Agreement with Port Arthur LNG, LLC and its subsidiary, PALNG Common
Facilities Company, Co., c/o Sempra Energy(herein referred to collectively as"PALNG"),for the
proposed construction of a natural gas liquefaction facility known as the Port Arthur LNG project
in the City's Extraterritorial Jurisdiction (ETJ)/Industrial District near Taylor's Bayou, the
Intracoastal Waterway, State Hwy 87, Keith Lake and Sabine Neches Waterway; and
WHEREAS, PALNG wishes to lease approximately 14.27 acres of primarily submerged
land in the Sabine Neches Waterway owned in fee title by the City of Port Arthur for use in the
development, construction, use, maintenance and operation of the liquified natural gas facility,
(i.e., a turning basin); and
WHEREAS,the proposed lease provides for an initial term of thirty(30)years with Lessee
having the right and option to extend for six (6) additional five (5) year periods as set forth in the
terms and conditions; and
WHERES, it is deemed in public's interest that the City enter into a lease agreement with
PALNG for said land in accordance with Chapter 253 of the Texas Local Government Code.
NOW THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PORT ARTHUR:
Section 1. That the facts and opinions in the preamble are true and correct.
Section 2. That the City Council hereby authorizes the City Manager to enter into a
Lease Agreement between the City of Port Arthur and PALNG Common Facilities Company,
LLC, in substantially the same form as attached hereto as Exhibit "A".
Section 3. That a copy of the caption of this Resolution shall be spread upon the
Minutes of the City Council.
READ,ADOPTED,AND APPROVED,this day of , 2022 AD, at
a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES:
Mayor:
Councilmembers:
NOES:
Thurman Bill Bartie, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROVED AS TO FORM:
Valecia R. Tizeno, City Attorney
APPROVED FOR ADMINISTRATION:
Ronald Burton, City Manager
LEASE AGREEMENT
BETWEEN
PALNG COMMON FACILITIES COMPANY,LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AND
CITY OF PORT ARTHUR
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LEASE AGREEMENT
THIS LEASE AGREEMENT(hereafter "Agreement"), is dated as of , 2022
(the"Effective Date"),and is entered into by and between City of Port Arthur,a Home Rule municipality
of the State of Texas(hereafter"Lessor"), whose address is 444 4th Street, Port Arthur, TX 77641-1089,
and between PALNG Common Facilities Company, LLC, a Delaware limited liability company
(hereafter"Lessee"),whose address is 488 8th Avenue,HQ09N1,San Diego,CA 92101-7123.Lessor and
Lessee are sometimes individually referred to as a"Party"and collectively as the"Parties".
RECITALS
WHEREAS, Lessor holds fee title to that certain real property comprised of approximately 14.27
acres of primarily submerged land located in Jefferson County, Texas, as further described on Exhibit A
attached hereto ("Property"). As used herein, the term "Property" shall include all privileges and rights
appurtenant to the real property,including,without limitation,all minerals,oil,gas and other hydrocarbon
substances in, on or under the real property, all development rights, entitlements, air rights, water rights,
easements,improvements and rights of way pertaining thereto.
WHEREAS,Lessee wishes to lease from Lessor and Lessor desires to lease to Lessee the Property
for Lessee's use in its development of a liquified natural gas facility on and in the vicinity of the Property
("LNG Project");
WHEREAS, Lessor has undergone the proper procedures and obtained approval to enter into this
Lease Agreement,and
NOW, THEREFORE, in consideration of the above recitals and the mutual promises set forth
below, and other good and valuable consideration, the adequacy and receipt of which is hereby
acknowledged,Lessor and Lessee agree as follows:
AGREEMENT
1) Leased Premises. Lessor hereby leases to Lessee an exclusive leasehold interest for
Lessee's continuous use and possession of the Property for the development,construction,maintenance and
operation of the LNG Project,and for any purpose incidental thereto, including but not limited to the right
to enter the Property for purposes of inspection,conducting a survey,environmental assessments, and any
other tests, inspections, or examinations that Lessee desires in regard to the engineering and planning for
the use of the Property as an LNG Project,and the right to develop,construct,install,operate and maintain
improvements upon the Property ("Improvements"), and the right (but not the obligation) to dredge
portions of the Property to a depth of forty-five(45)feet and maintain the Property at said depth.
2) Lease Term. This Lease shall be for a term of thirty (30) years, commencing as of the
Effective Date("Primary Term").Lessee shall have the option to extend the term of this Lease for six(6)
additional five (5)year periods (the "Extended Term") on the same terms and conditions as set forth in
this Lease.The Primary Term and any Extended Term thereto shall collectively be referred to as the"Lease
Term". If Lessee desires to exercise its renewal options, Lessee shall give notice in writing to Lessor at
least six (6) months before the expiration of the then current lease term of Lessee's intent to renew the
Lease for an additional term.
3) Rent. The Rent shall be Seven Hundred AND 00/100 DOLLARS ($700.00) per acre per
year, payable in advance in one annual installment, beginning March 1, 2023. The Rent shall be adjusted
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every five (5) years in accordance with the Consumer Price Index published by the Bureau of Labor
Statistics of the U.S. Department of Labor, or a successor or substitute index, beginning on the fifth(5th)
anniversary of the Effective Date, and shall continue to be adjusted every five (5) year(s) thereafter
throughout the Primary Term and all Extended Terms.
4) Intentionally Deleted.
5) Survey. Lessee, at its sole cost and expense, shall have the right to have the Property
surveyed by a duly licensed surveyor(the"Survey").The Survey shall be performed according to minimum
standards of the State of Texas and shall provide a certified,full legal description of the Property and state
the number of acres contained within the perimeter boundaries of the Property. Such Survey shall be
sufficient to cause the deletion of the standard survey exception from any Title Policy that may be obtained
in such form and address such matters as Lessee may require.
6) Quiet Enjoyment. Lessee shall have the quiet use and enjoyment of the Property in
accordance with and subject to the terms of this Agreement,without any interference of any kind by Lessor
or any person claiming through Lessor.
7) Cooperation. Lessor shall cooperate with Lessee, and Lessee's lenders and investors, to
obtain non-disturbance and subordination agreements from any person or entity with a lien,encumbrance,
mortgage, lease or other exception to Lessor's fee title to the Property to the extent necessary to eliminate
any actual or potential interference by any such lienholder with any rights granted to Lessee under this
Lease. Lessor shall also cooperate with Lessee to obtain and maintain any permits needed for the
Improvements(herein defined)and shall work with Lessee for any environmental impact reviews,studies,
approvals,analyses,convenient or prudent for the LNG Project.Lessor shall also provide Lessee with such
further assurances and shall execute any estoppel certificates, consents to assignments or additional
documents that may be reasonably necessary for recording purposes or requested by Lessee or any of its
lenders or investors without demanding additional compensation.
8) Maintenance of the Property. Lessee shall at its own cost, risk and expense perform and
pay all costs of maintenance and repairs necessary for maintaining the Property. Lessee shall have no
obligation to restore any of the surface of the Property either above or below the water line upon termination
of this Agreement.
9) Condition of Leased Property. LESSEE ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS EXPRESSLY PROVIDED IN THIS LEASE, THE PROPERTY IS ACCEPTED BY
LESSEE "AS IS, WHERE IS, WITH ALL FAULTS" WITHOUT ANY EXPRESS OR IMPLIED
WARRANTIES OR REPRESENTATIONS WHATSOEVER BEING MADE BY LESSOR AND THAT
LESSEE HAS RELIED SOLELY UPON ITS OWN INVESTIGATIONS AND INSPECTIONS OF THE
PROPERTY. Lessee further represents and warrants that except as expressly set forth in this Agreement,
neither Lessor nor any representative,employee or agent of Lessor have made any representation,warranty
or covenant whatsoever regarding the Property. Lessor does not warrant or represent that any covenant,
restriction,easement,zoning and other governmental laws or regulation in effect as of the date hereof permit
the use of the Property for the anticipated LNG Project and/or for uses incidental thereto.
10) Costs, Risks, and Expenses. Lessee shall pay all costs and assume all risks in doing work,
or carrying out operations, now or hereafter permitted or required under the terms and conditions of this
Agreement,except as may be otherwise specifically designated in written instructions given or agreements
made by proper authority under the terms and conditions of this Agreement.
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11) Lessor's Representations, Covenants and Warranties. Lessor represents, warrants and
covenants to Lessee that:
a) To the best of Lessor's knowledge and belief,Lessor is the owner of the Property
and has full and absolute authority to lease the same as set forth herein,and no person or entity other than
Lessor has any right or option to lease the Property;
b) Lessor has complied with all applicable provisions of Chapter 253 of the Texas
Local Government Code prior to executing this Agreement;
c) Lessor has obtained authorization from the City Council by a Resolution to enter
into this Agreement;and such Resolution was adopted in accordance with the proper rules and procedures,
and in accordance with any requirements relating to public notice, public participation, and/or public
meetings;
d) To the best of Lessor's knowledge and belief, the Property is free, clear,
unrestricted and unencumbered, except for any matters affecting the Property which are recorded in the
land records of Jefferson County,Texas as of the Effective Date hereof;
e) There are no pending actions, suits, arbitrations, claims or proceedings, at law or
in equity, affecting all or any portion of the Property or involving Lessor or in which Lessor is a party by
reason of the ownership, use, operation or leasing of the Property, including, but not limited to,judicial,
municipal or administrative proceedings in eminent domain, unlawful detainer or tenant evictions,
collections, alleged building code, health and safety or zoning violations, employment discrimination or
unfair labor practices. The Lessor has no notice of the existence of any threatened or contemplated actions,
claims or proceedings relating to Lessor,the Property,or the operation thereof. The Lessor is not currently
involved in any material dispute with any authority, or in any dispute with any of the agents, employees,
brokers,representatives,or other independent contractors of Lessor relating to the use,operation,or leasing
of the Property.No unsatisfied judgments or decrees have been entered against Lessor which has affected
or might potentially affect the Property. Neither the Lessor nor the Property is operating under or subject
to any order, writ, injunction, decree, or judgment of any arbitrator or authority, other than land use
approvals.Neither the Lessor nor the Property is in default with respect to any order,writ,injunction,decree
or judgment of any arbitrator or authority;
f) There is no actual or threatened full or partial condemnation of the Property;
g) All bills and claims for labor performed or materials furnished to Lessor for the
benefit of the Property have been paid or will be paid in full prior to the execution of this Agreement,and
there are, and at the time of execution of the Lease Agreement there will be, no mechanic's liens or
materialmen's liens(whether or not perfected)on or affecting the Property;and
h) To the best of Lessor's knowledge and belief,the Property does not contain, and
there is not located on, in or under any part of any of the Property, any of the following:toxic substances,
toxic materials, hazardous waste, hazardous substances, pollutants, or contaminants as those terms are
defined in any federal, state or local law, statute, ordinance,rule,regulation, code, order, approval,policy
and authorization relating to health, safety or the environment; asbestos or asbestos-containing materials;
lead or lead-containing materials; oils; petroleum-derived compounds; pesticides or polychlorinated
biphenyls (all of which are hereafter collectively referred to as "Hazardous Materials"). No part of the
Property has been previously used by Optionor, or to the knowledge of Optionor, by any other person or
entity, for the storage, manufacture, transportation or disposal of Hazardous Materials. Lessor has not
received from any governmental body having authority any written complaint,order,citation or notice with
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regard to air emissions, water discharges, noise emissions and Hazardous Materials, if any, or any other
environmental,health or safety matters affecting the Property,or any part thereof.There are no underground
storage tanks of any nature located on the Property.
12) Lessee's Representations, Covenants and Warranties. Lessee represents, warrants and
covenants to Lessor that:
a) Lessee and its representative herein are authorized by Lessee's Articles of
Incorporation, Articles of Organization, Operating Agreement and/or other valid action of its board,
members or manager to enter into this Lease with Lessor.
13) Default. The following events shall constitute events of default (hereafter "Event of
Default"):
a) If Lessee shall fail duly and punctually to pay the Rent or to make any other
payment required when due to Lessor,and if such failure continues for a period of thirty(30)business days
after written notice of it has been provided to Lessee by Lessor; or
b) If Lessee shall be adjudged a bankrupt or insolvent by any court of competent
jurisdiction,or if a voluntary petition in bankruptcy or a petition for reorganization or arrangement shall be
filed by Lessee,or if a receiver of the property of Lessee shall be appointed; or
c) If Lessee becomes a corporation or other entity in dissolution or liquidation,
whether voluntary or as the result of any act or omission, or by operation of law or the order or decree of
any court having jurisdiction or for any other reason whatsoever;or
d) If, by or pursuant to or under authority of any legislative act,resolution or rule or
any order or decree of any court or government board, agency or office, a receiver, trustee or liquidator
shall take possession or control of all or substantially all of Lessee's property;or
e) If Lessee breaches or defaults in respect to any other covenants, conditions or
agreements contained herein and fails for a period of sixty(60)business days after receipt of written notice
to remedy such default, or, if remedying such default would reasonably require longer than sixty (60)
business days, fails to commence to remedy and to proceed thereafter with all reasonable diligence to the
remedying of such default.
14)Lessor Remedies. Subject to the Lender's cure rights set forth in Section 18 below, at the
occurrence of such Event of Default, Lessor in its sole discretion may exercise any or all of the following
options without further notice to Lessee:(i)to proceed for past due installments;or(ii)to cancel this Lease
immediately.
15)Liens. Lessee shall not permit any lien or privilege to remain of record when filed by any
person or company for claims arising in connection with any work or undertaking by Lessee or Lessee's
agents on the Property, and Lessee shall promptly discharge or cause to be discharged any such lien.
Additionally, Lessee may contest any such lien, but shall post a bond to remove any lien that is created
during the contested proceeding.
16) Lessee's Improvements.All Improvements that are constructed, installed or placed on the
Property by Lessee pursuant to this Lease shall be the sole property of Lessee and Lessor shall have no
ownership or other interest in any such Improvements on the Property. Throughout the Term,Lessee shall,
at its sole cost and expense,maintain Lessee's Improvements in good condition and repair, ordinary wear
and tear excepted.All Improvements constructed,installed or placed on the Property by Lessee pursuant to
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this Lease, including but not limited to sheet pile and armor rock, may be moved, removed, replaced,
repaired or refurbished by Lessee at any time.
17)Assignment. Lessee may assign, sublease, transfer or convey all or any portion of its
interests in this Lease without Lessor's consent provided that: (i)any such assignment or conveyance shall
not be for a period beyond the Term of this Lease; (ii)the assignee or transferee shall be subject to all of
the obligations,covenants and conditions applicable to the Lessee; (iii)Lessee shall be fully relieved from
liability as to the rights,title and interest and obligations so assigned.Nothing herein shall be construed to
be a limitation or prohibition of any type against Lessor's right or freedom to devise, convey,gift,assign,
transfer and/or sell Lessor's title to the Property,provided that Lessor provides written notice to Lessee,at
the address specified herein within fifteen (15) calendar days of any such devise, conveyance, gifting,
assignment,transfer and/or sale. Likewise, Lessee shall provide written notice to the Lessor at the address
specified in herein, within fifteen(15) calendar days of any assignment, sublease,transfer or conveyance
of all or any portion of its interest in this Lease provided that no such notice is required for assignments,
subleases, transfers or conveyance to entities which are affiliated with Lessee, or its ultimate parent
company,or to any entity which Lessee(or any of its affiliates)hold an equity interest.
18) Mortgage of the Leasehold Interest.
a) In the event the Lessee obtains financing in connection with construction and/or
operation of the LNG Project, Lessor hereby consents to Lessee granting a leasehold mortgage, security
agreement or other security interest in Lessee's leasehold interest as security for any such financing.Lessor
further agrees that any Lender ("Lender") who holds a mortgage or other security interest in Lessee's
leasehold interest may transfer, sell,or assign all or any portion of the Lender's rights in such mortgage or
security interests without consent of the Lessor.Lessor further agrees that to the extent that any of Lessee's
Improvements located on the Property is mortgaged, assigned or subject to a security interest in favor of
Lender or Lender's successors and/or assigns, then such Improvements shall not be considered Lessor's
property no matter how the Improvements are affixed to the Property or used by Lessee,and Lessor agrees
to recognize the rights of such Lender, its successors and/or assigns in the Property. Lessor hereby
subordinates to the rights of such Lender any lessor's lien or privilege with respect to any of Lessee's
property mortgaged,assigned or subject to a security interest in favor of Lender.
b) Notwithstanding any provision of this Agreement to the contrary,the Parties agree
that so long as there exists an unpaid mortgage, this Agreement shall not be modified or amended, and
Lessor shall not accept a surrender of the Property or any part thereof or a cancellation or release of this
Agreement from Lessee or any assignee prior to expiration of the Lease Term without the prior written
consent of the Lender. This provision is for the express benefit of and shall be enforceable by such Lender.
c) Lessor agrees that any Lender shall have the right to make any payment and to do
any other act or thing required to be performed by Lessee under this Lease, and any such payment, act or
thing performed by any Lender shall be effective to prevent a default under this Lease and any forfeiture of
any of Lessee's rights under this Lease as if done by Lessee itself.
d) Lessor shall provide each Lender with notice of any default by Lessee, provided
that Lessor has been provided notice of the Lender(including the address of the Lender).
e) Any such notice to a Lender shall be given in the same manner as provided
elsewhere herein.The giving of any notice of default or the failure to deliver a copy to the Lender shall not
create any liability on the part of Lessor; provided, however, Lessor shall not be entitled to exercise any
remedies against Lessee until the Lender Notice of Default has been properly provided to all Lenders and
all applicable cure periods following such notice have elapsed without cure of the specified default. If any
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notice shall be given of the default of Lessee and Lessee has failed to cure or commence to cure such default
within the cure periods provided herein,then Lessor shall notify all Lenders in the manner provided in this
Section 18 that Lessee has failed to cure such default and any Lender shall have sixty(60)days after said
additional notice to cure any such default or, if such default cannot be cured within sixty (60) days, to
diligently commence curing within such time and diligently pursue such cure to completion within a
reasonable time thereafter.
f) Lessor agrees that in the event Lessor shall have the right to terminate this
Agreement by reason of default by Lessee,or if Lender,its successors and/assigns,or any purchaser of the
Lessee's interest in this Agreement shall acquire Lessee's interest in the Agreement, whether by
foreclosure, assignment in lieu of foreclosure, or other proceedings, as of the date of such termination by
Lessor or acquisition by Lender, Lessor shall recognize Lender, its successor or assignee or the purchaser
of Lessee's interest in the Agreement as Lessee under the Agreement,for the remainder of the Lease Term
and any extensions upon the same terms, provisions, covenants, conditions, and agreements contained in
this Agreement.
g) Upon acquiring the Lessee's interest in this Agreement pursuant to foreclosure,
assignment in lieu of foreclosure, or other proceedings, Lender, its successors and/or assigns, or any
purchaser of Lessee's interest in the Agreement,may sell and assign the Lessee's interest in the Agreement
without consent of the Lessor,on such terms and conditions and to such persons and organizations as Lender
shall see fit, and thereafter, Lender, its successors, assigns or such purchaser shall be relieved of any and
all obligations of the Lessee under this Agreement,provided that such assignee has agreed to be bound and
to abide by all of the terms, obligations and provisions of the Lessee under this Agreement. Within fifteen
(15) days written request of Lender, Lessor shall certify in writing(a)the validity and force and effect of
this Agreement;(b)the existence of any default under this Agreement; (c)any other reasonable matters as
are customarily requested in connection with estoppel certificates.
h) In the event this Lease is rejected by a trustee or a debtor-in-possession in any
bankruptcy or insolvency proceeding Lessor agrees, upon request by any Lender within sixty (60) days
after the rejection or termination,to execute and deliver to Lessee or Lender a new Lease for the Property
which: (i) shall be effective as of the date of the rejection or termination of this Lease; (ii) shall be for a
term equal to the remainder of the term of the Lease before giving effect to such rejection or termination;
and(iii)shall contain the same terms,covenants,agreements,provisions,conditions and limitations as are
contained in this Lease(except for any obligations or requirements which have been fulfilled by Lessee or
Lender prior to rejection or termination).Prior to the execution and delivery of any such new lease,Lessee
or Lender shall: (i)pay Lessor any amounts which are due to Lessor from Lessee; (ii)pay Lessor any and
all amounts which would have been due under this Lease but for the rejection or termination from the date
of the rejection or termination to the date of the new lease and(iii)agree in writing to perform or cause to
be performed all of the other covenants and agreements to be performed by Lessee under this Lease to the
extent Lessee failed to perform them prior to the execution and delivery of the new lease.
i) Neither the bankruptcy nor the insolvency of Lessee shall be grounds for
terminating this Lease as long as the Rent and all other monetary obligations of Lessee hereunder are paid
by a Lender in accordance with the terms of this Agreement.
j) If any Lender is prohibited by any process or injunction issued by,or by reason of
any action of,any court having jurisdiction over any bankruptcy,reorganization,insolvency or other debtor-
relief proceeding from commencing or prosecuting any cure of a default,then the times specified herein for
commencing or prosecuting such cure shall be extended for the period of such prohibition; provided,
however,that such Lender shall have fully cured, within the time specified herein, any failure to perform
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any monetary obligations of Lessee hereunder, and shall thereafter continue to perform such monetary
obligations when and as due hereunder.
k) Each Lender is and shall be an express third-party beneficiary of the provisions of
this Section 18 and shall be entitled to compel the performance of the obligations of Lessor under this
Agreement.
1) No payment made to Lessor by a Lender shall constitute an agreement that such
payment was, in fact, due under the terms of this Agreement; and a Lender having made any payment to
Lessor pursuant to Lessor's wrongful,improper or mistaken notice or demand shall be entitled to the return
of any such payment.
m) Provided that no material default in the performance of Lessee's obligations under
this Agreement shall have occurred and remain uncured after the expiration of all applicable notice and
cure periods,at Lessee's request,Lessor shall(a)amend this Agreement to include any provision that may
reasonably be requested by an existing or proposed Lender,or by any entity that is proposing to directly or
indirectly acquire any Project, and (b) shall execute such additional documents as may reasonably be
required to evidence such Lender's or other entity's rights hereunder; provided, however, that such
amendment shall not materially impair the rights of Lessor under this Agreement,or extend the Lease Term
beyond the period of time stated in Section 2. Further,Lessor shall,within ten(10)days after written notice
from Lessee or any existing or proposed Lender, execute and deliver thereto a certificate to the effect that
Lessor(a)recognizes a particular entity as a Lender under this Agreement and(b)will accord to such entity
all the rights and privileges of a Lender hereunder.
19) Lessee's Right to Terminate. Lessee shall have the right to terminate this Agreement as to
all or any part of the Property at any time,effective upon written notice to Lessor and each Lender,if any,
that holds an unpaid mortgage at such time; Lessee shall pay owner all amounts accrued under this
Agreement through the date of such termination. In no event shall Lessor have a right to seek damages
against Lessee with respect to this Agreement solely by reason of its termination excepting only the amounts
accrued through the date of such termination. In the event Lessee terminates this Agreement neither Lessor
nor Lessee shall have any further rights, liabilities or obligations under this Agreement except for any of
same that expressly survive termination of this Agreement.
20) Compliance with Laws,Rules,and Regulations.
a) Lessee shall not at any time during the Lease Term use or allow the use of the
Property for any purposes in violation of the laws, regulations or ordinances of the United States of
America,the State of Texas,City of Port Arthur,or Jefferson County,Texas whether such laws,regulations
or ordinances now exist or shall be enacted or issued during the Lease Term.
b) Lessee shall observe all laws and ordinances applicable to the installation,
maintenance and removal of any improvements on the Property and to take appropriate safeguards to
prevent loss,damage or injury to the Property or to any adjacent properties as a result of such installation,
maintenance or removal of such improvements.
21) Condemnation.If all or part of the Property is proposed to be taken as a result of any action
or proceeding in eminent domain,or is proposed to be transferred in lieu of condemnation to any authority
entitled to exercise the power of eminent domain(collectively, a"Taking"), Lessor shall provide Lessee
with reasonable advance notice of any impending proceeding or meeting related to such Taking and shall
not in the absence of Lessee settle with the Taking authority or agree on compensation for such Taking.
The Agreement shall terminate as to any portion of the Property so condemned or taken(except in the case
of a temporary Taking after the duration of which Lessee desires to continue the Agreement,and the Lease
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Term shall be extended, in such event, by the duration of such temporary Taking). Any award or other
compensation("Award")payable because of such Taking shall be paid as follows:
a) Lessor shall first be entitled to receive out of the Award the value of Lessor's fee
interest in the Property,valued as if no Improvements were on the Property;
b) Lessee shall next be entitled to receive out of the Award (i) the value of the
Improvements installed on the Property; (ii) any other compensation or benefits payable by law as a
consequence of the loss or interruption of Lessee's business and the other costs and expenses incurred by
Lessee as consequence of the Taking; and (C) the remaining present value of Lessee's interest in the
Property (determined at the time of the Taking), including the value of Lessee's interests under this
Agreement;
c) Lessor shall then be entitled to receive out of the Award, taking into account the
leasehold and easement estates created by this Agreement, the estimated amounts that would have been
paid by Lessor hereunder,and
d) Lessor shall be entitled to any remainder of the Award.
22)Notices. All notices required or permitted to be given pursuant to this Agreement shall be
in writing and sent to the Parties,either by personal delivery,by United States mail,postage pre-paid,sent
by registered or certified mail with return receipt requested or by commercial overnight courier,as follows:
LESSOR: City of Port Arthur
444 4th Street,
Port Arthur, TX 77641-1089
ATTN: City Manager
Copy to:
City of Port Arthur
444 4th Street,
Port Arthur,TX 77641-1089
ATTN: City Attorney
LESSEE: PALNG Common Facilities Company,LLC
1500 Post Oak Blvd., Suite 1000
Houston,TX 77056
ATTN: Senior Director-Operations
Copy to:
PALNG Common Facilities Company,LLC
1500 Post Oak Blvd., Suite 1000
Houston,TX 77056
ATTN: General Counsel
Notice of change of address shall be given in the same manner as prescribed above.Notice shall be effective
when received, but rejection or other refusal to accept or the inability to deliver because of a change in
address of which no notice was given shall be deemed to be receipt of the notice.
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23) Captions. The captions used in this Agreement are for convenience only and do not limit or
amplify the provisions hereof.
24) Legal Matters. This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Texas. Venue shall be proper in the county where the Property is located. If the Parties
are unable to resolve amicably any dispute arising out of or in connection with this Agreement,they agree
that such dispute shall be resolved in the state courts located in the county in which the Property is situated.
The Parties agree that any rule of construction to the effect that ambiguities are to be resolved in favor of
either Party shall not be employed in the interpretation of this Agreement and is waived. In any lawsuit
arising out of or in connection with this Agreement, a party that obtains a judgment from the court
substantially the same as the judgment sought therein shall be entitled to payment of its reasonable
attorneys' fees in connection with the action.
25) Successor and Assigns. The burdens of this Agreement and other rights contained in this
Agreement shall run with and against the Property and shall be a charge and burden thereon for the duration
of this Agreement and shall be binding upon and against Lessor and its successors, assigns, permittees,
licensees,lessees,employees and agents.
26) Counterparts. This Agreement may be executed with counterpart signature pages and in
duplicate originals, each of which shall be deemed an original, and all of which together shall constitute a
single instrument.
27) Memorandum. Lessor and Lessee shall execute in recordable form and Lessee shall then record
a memorandum of this Agreement in the form attached to this Agreement as Exhibit B. Lessor consents to
the recordation of the interest of an assignee in the Property. The memorandum will be recorded in
Jefferson County,Texas.
[signatures appear on following page]
10
Lessor and Lessee have caused this Agreement to be executed and delivered by their duly
authorized representatives as of the Effective Date.
LESSOR:
CITY OF PORT ARTHUR
By:
Name:
Title:
LESSEE:
PALNG COMMON FACILITIES COMPANY, LLC
a Delaware limited liability company
By:
Name:
Title:
11
EXHIBIT A
To Lease Agreement
Legal Description of the Property
The following described land located in Jefferson County. Texas. containing 14.27 acres. more or
less:
BEING a 14.270-Acre Lease Tract out of that certain City of Port Arthur called 1364-acre tract of land,
being more fully described as Tract 3 and recorded in Volume 1532,Page 115 of the Deed Records of
Jefferson County,Texas(D.R.J.C.T.). Said 14.270-Acre Lease Tract being situated in the City of Port
Arthur Survey,Abstract No.954,Jefferson County, Texas. Said 14.270-Acre Lease Tract being more
particularly described as follows:
COMMENCING at a 5/8 inch iron rod in concrete with a coordinate value of North: 13,897,943.99 East:
3,575,217.98 found at the intersection of the Northwest Right-of-Way of that certain TB Ellison Parkway
(Public Right-of-Way),with the Southwest Right-of-Way of that certain Pleasure Pier Blvd(Public
Right-of-Way),from which a Concrete Monument found having a coordinate value of orth:13,896,048.84
East: 3,573,932.13,being that same monument referred in TxDot drawing No. 13017 dated 8-21-84 titled
"Plans of Completed Right of Way Project ST.Highway 82",bears South 34 deg. 09 min.24 sec. West,a
distance of 2,290.20 feet,;
THENCE South 11 deg.33 min. 05 sec. West,over and across that certain City of Port Arthur called
3,230.7-acre tract of land,being more fully described as Tract 2 and recorded in Volume 1532,Page 115
of said Deed Records and said 1364-acre tract,a distance of 26,556.97 feet to a point for the most
Northeastern corner for the POINT OF BEGINNING with a coordinate value of North: 13,871,924.60
East: 3,569,899.75 and same being in the Southwest Right-of-Way line of that certain State Highway 82
(Public Right-of-Way);
THENCE South 20 deg.28 min.42 sec.East,continuing over and across said 1364-acre tract, same
being along and with the Southwest Right-of-Way line of said State Highway 82,a distance of 1,345.69
feet to a point for the angle corner of the herein described tract;
THENCE South 19 deg. 52 min. 05 sec.West,continuing over and across said 1364-acre tract,a distance
of 263.64 feet to a point for the most Southeast corner of the herein described tract;
THENCE South 69 deg.29 min. 16 sec.West,continuing over and across said 1364-acre tract,a distance
of 186.44 feet to a point for the Southwest corner of the herein described tract;
THENCE North 22 deg. 33 min.00 sec. West,along and with the West line of said 1364-acre tract, a
distance of 1,500.43 feet to a point for an angle corner of the herein described tract;
THENCE North 16 deg.43 min. 00 sec.East, along and with the West line of said 1364-acre tract,a
distance of 197.18 feet to a point for the Northwest corner of the herein described tract;
THENCE North 69 deg.29 min. 07 sec.East, over and across said 1364-acre tract,a distance of 249.40
feet to a point for the Northeast corner of the herein described tract;
THENCE South 63 deg.47 min. 55 sec.East,continuing over and across said 1364-acre tract,a distance
of 205.69 feet to the POINT OF BEGINNING,containing 14.270-Acres of land,more or less.
A-1
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Prepared by and after recording return to:
PALNG COMMON FACILITIES COMPANY,LLC
488 8TH AVENUE,HQ09N1,
SAN DIEGO,CA 92101-7123
ATTN:LEGAL DEPARTMENT
MEMORANDUM OF LEASE AGREEMENT
THE STATE OF TEXAS §
§ KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF JEFFERSON §
THIS MEMORANDUM OF LEASE AGREEMENT FOR LAND LEASE(this"Memorandum"),
is made, dated and effective as of , 2022 (the "Effective Date"), by and between
PALNG Common Facilities Company,LLC,a Delaware limited liability company,whose address is 488
8th Avenue,HQ09N1, San Diego,CA 92101-7123("Lessee"),and the City of Port Arthur,a Home Rule
municipality of the State of Texas, whose address is 444 4th Street, Port Arthur, TX 77641-1089
("Lessor"),with regards to the following:
1. Description of Property.Lessor and Lessee did enter into that certain Lease Agreement on
even date herewith(the "Agreement") which affects the real property comprised of approximately 14.27
acres of primarily submerged land owned by Lessor and located in Jefferson County, Texas, as further
described on Exhibit A("Property"),attached hereto and by this reference made a part hereof.Capitalized
terms used and not defined herein have the meaning given the same in the Agreement.
2. Grant of Rights.The Agreement grants Lessee an exclusive leasehold interest for Lessee's
continuous use and possession of the Property for the development, construction, use, maintenance and
operation of a liquified natural gas facility on and in the vicinity of the Property(the"LNG Project")and
for any purpose incidental thereto, including the right to construct, install, operate and maintain
Improvements upon the Property and the right(but not the obligation)to dredge portions of the Property to
a depth of forty-five(45)feet and maintain the Property at said depth.
3. Lease Term. The Agreement shall be for an initial term of thirty (30)years, commencing
as of the Effective Date("Primary Term")with Lessee having the right and option to extend the Primary
Term for six(6)additional five(5)year periods(the"Extended Term")on the terms and conditions as set
forth in the Agreement.
4. Rights of Mortgagees. Pursuant to the Agreement, any Lender of Lessee or Lessee's
assignees has certain rights regarding notice and right to cure any default of Lessee under the Agreement,
and the right to take possession of the Property, and to acquire the leasehold estate by foreclosure, as well
as other rights as set forth in the Agreement.
5. Assignment. Lessee's rights and obligations under the Agreement shall be assignable
without Lessor's prior written consent provided that such assignment is in furtherance of the provisions of
the development of the LNG Project contemplated by the Agreement.
1
6. Agreement Controls. This Memorandum does not supersede,modify,amend or otherwise
change the terms, conditions or covenants of the Agreement, and Lessor and Lessee executed and are
recording this Memorandum solely for the purpose of providing constructive notice of the Agreement and
Lessee's rights thereunder. The terms,conditions and covenants of the Agreement are incorporated in this
Memorandum by reference as though fully set forth herein.
7. No Ownership. Lessor shall have no ownership, lien, security or other interest in any
Improvements installed on the Property, or any profits derived therefrom, and Lessee may remove any or
all Improvements at any time.
8. Successors and Assigns.The terms of this Memorandum and the Agreement are covenants
running with the land and inure to the benefit of, and are binding upon, the parties and their respective
permitted successors and assigns, including all subsequent optionors of all or any portion of the Property.
References to Lessor and Lessee include their respective successors and assigns. References to the
Agreement include any amendments thereto.
9. Counterparts. This Memorandum may be executed in counterparts,each of which shall be
deemed an original and all of which when taken together shall constitute one and the same document.
[signatures appear on following pages]
2
IN WITNESS WHEREOF, the Parties have executed this Memorandum to be effective as of the
date first written above.
LESSOR:
CITY OF PORT ARTHUR
By:
Name:
Title:
THE STATE OF TEXAS §
COUNTY OF JEFFERSON §
This instrument was acknowledged before me on , 2022 by
the of the City of Port Arthur,on behalf
of the City of Port Arthur.
[Seal]
Notary Public, State of Texas
My commission expires:
3
IN WITNESS WHEREOF,the Parties have executed this Memorandum to be effective as of the
date first written above.
LESSEE:
PALNG COMMON FACILITIES
COMPANY,LLC, a Delaware limited liability
company
By:
Name:
Title:
ACKNOWLEDGEMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
On before me,
(here Insert name and title of the officer),
personally appeared _ , who proved to me on the basis of
satisfactory evidence to be the person(s)whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that
by his/her/their signature(s)on the instrument the person(s),or the entity upon behalf of which the
person(s) acted,executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
4
EXHIBIT A
TO MEMORANDUM OF LEASE AGREEMENT
Legal Description of the Property
The following described land located in Jefferson County,Texas,containing 14.27 acres,more or
less:
BEING a 14.270-Acre Lease Tract out of that certain City of Port Arthur called 1364-acre tract of land,
being more fully described as Tract 3 and recorded in Volume 1532,Page 115 of the Deed Records of
Jefferson County,Texas(D.R.J.C.T.). Said 14.270-Acre Lease Tract being situated in the City of Port
Arthur Survey,Abstract No. 954,Jefferson County,Texas. Said 14.270-Acre Lease Tract being more
particularly described as follows:
COMMENCING at a 5/8 inch iron rod in concrete with a coordinate value of North: 13,897,943.99 East:
3,575,217.98 found at the intersection of the Northwest Right-of-Way of that certain TB Ellison Parkway
(Public Right-of-Way),with the Southwest Right-of-Way of that certain Pleasure Pier Blvd(Public
Right-of-Way),from which a Concrete Monument found having a coordinate value of orth:13,896,048.84
East: 3,573,932.13,being that same monument referred in TxDot drawing No. 13017 dated 8-21-84 titled
"Plans of Completed Right of Way Project ST.Highway 82",bears South 34 deg.09 min. 24 sec. West, a
distance of 2,290.20 feet,;
THENCE South 11 deg. 33 min. 05 sec.West, over and across that certain City of Port Arthur called
3,230.7-acre tract of land,being more fully described as Tract 2 and recorded in Volume 1532,Page 115
of said Deed Records and said 1364-acre tract,a distance of 26,556.97 feet to a point for the most
Northeastern corner for the POINT OF BEGINNING with a coordinate value of North: 13,871,924.60
East: 3,569,899.75 and same being in the Southwest Right-of-Way line of that certain State Highway 82
(Public Right-of-Way);
THENCE South 20 deg. 28 min. 42 sec.East,continuing over and across said 1364-acre tract, same
being along and with the Southwest Right-of-Way line of said State Highway 82,a distance of 1,345.69
feet to a point for the angle corner of the herein described tract;
THENCE South 19 deg. 52 min. 05 sec.West,continuing over and across said 1364-acre tract,a distance
of 263.64 feet to a point for the most Southeast corner of the herein described tract;
THENCE South 69 deg.29 min. 16 sec. West,continuing over and across said 1364-acre tract, a distance
of 186.44 feet to a point for the Southwest corner of the herein described tract;
THENCE North 22 deg. 33 min.00 sec.West, along and with the West line of said 1364-acre tract,a
distance of 1,500.43 feet to a point for an angle corner of the herein described tract;
THENCE North 16 deg.43 min. 00 sec.East, along and with the West line of said 1364-acre tract,a
distance of 197.18 feet to a point for the Northwest corner of the herein described tract;
THENCE North 69 deg.29 min. 07 sec.East,over and across said 1364-acre tract,a distance of 249.40
feet to a point for the Northeast corner of the herein described tract;
THENCE South 63 deg. 47 min. 55 sec.East,continuing over and across said 1364-acre tract,a distance
of 205.69 feet to the POINT OF BEGINNING,containing 14.270-Acres of land,more or less.
A-1