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Home My WebLink About4A OCR1/ City Council & Financing Authority Staff Report DATE: November 12, 2020 UNFINISHED BUSINESS SUBJECT: APPROVAL OF THE 2020 REFUNDING LEASE OF THE 2013 LEASE FINANCING AGREEMENT WITH CAPITAL ONE PUBLIC FUNDING RELATED TO THE 2013 CITYWIDE ENERGY MANAGEMENT PROJECT FROM: David H. Ready, City Manager BY: Marcus L. Fuller, Assistant City Manager SUMMARY On June 19, 2013, the City and its Financing Authority jointly approved and entered into a Lease Financing Agreement (originally with Green Campus Partners, LLC, and assigned to Capital One Public Funding) to finance the $18.5 million cost of the Citywide Energy Management Project, (the "2013 Lease"). The 2013 Lease matures in 2034 with an average interest rate of 4.06%. The City and the Financing Authority can refinance the 2013 Lease at this time with a proposal presented by Capital One Public Funding, LLC, with lower interest rates saving approximately $1.49 million over the remaining term of 13½ years. On October 22, 2020, Staff presented the City Council with this proposal to refinance the 2013 Lease, and the City Council authorized the City Manager to accept the terms offered by Capital One Public Funding. This item will complete the actions necessary to approve the refinancing of the 2013 Lease to be considered the 2020 Refunding Lease. RECOMMENDATION: 1) Acting as the City Council, adopt Resolution No. __ , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, A PROJECT LEASE ASSIGNMENT, AN EQUIPMENT LEASE ASSIGNMENT, AND AN ESCROW AGREEMENT WITH RESPECT TO REFINANCING THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT SALE PURCHASE AND LEASING OF CERTAIN EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES; AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND DOCUMENTS REQUIRED ' "'";":i.,,/4 ~ '0 4!1 . I._,,-; f'II a __ .....,[J....__ 2City Council/Financing Authority November 12, 2020 --Page 2 Approval of 2020 Refunding Lease IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER . ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION;" and 2) Acting as the Financing Authority Board, adopt Resolution No. __ , "A RESOLUTION OF THE BOARD OF THE CITY OF PALM SPRINGS FINANCING AUTHORITY, CALIFORNIA, AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, A PROJECT LEASE ASSIGNMENT, AN EQUIPMENT LEASE ASSIGNMENT, AND AN ESCROW AGREEMENT WITH RESPECT TO REFINANCING THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT SALE PURCHASE AND LEASING OF CERTAIN EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES; AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION." BUSINESS PRINCIPAL DISCLOSURE: The lease agreement to refinance the 2013 Lease will be assigned to Capital One Public Funding LLC. Capital One Public Funding LLC is a corporation and wholly-owned subsidiary of Capital on·e, National Association, which is a wholly-owned subsidiary of Capital One Financial Corporation, a Delaware Corporation. Capital One Financial Corporation is a diversified financial services holding company with banking and non-banking subsidiaries, offering a broad array of financial products and services to consumers, small businesses and commercial clients. According to financial information from March 2020, the largest shareholder of Capital One Financial Corporation stock is an investor management fund, Dodge & Cox, with just under 9% of the company, followed by mutual fund operator The Vanguard Group Inc., with a reported 7.82% ownership. No individual owns 5% or more of Capital One Financial Corporation stock. BACKGROUND: On June 19, 2013, the City and its Financing Authority jointly approved and entered into a Lease Financing Agreement (originally with Green Campus Partners, LLC) to finance the $18.5 million cost of the Citywide Energy Management Project, (the "2013 Lease"). A copy of the related staff report is included as Attachment 1 . The Citywide Energy Management Project was substantially completed in 2016, and the financing structure has been implemented with annual debt service payments incorporated into the City's budget for the 2013 Lease. The 2020-2021 Fiscal Year budget includes an annual debt service payment of $1,441,434 for the 2013 Lease 3City Council/Financing Authority November 12, 2020 --Page 3 Approval of 2020 Refunding Lease Leases and Lease Revenue Bonds The method that cities in California usually employ to issue long-term debt for General Fund purposes is to enter into a long-term lease agreement. The lease payments are subject to annual appropriation and the lease payments are then used to secure bonds. This method of issuing long-term debt does not require voter approval. However, the assets subject to the lease need to provide enough value for the lease payments being made. Typically, if a lease payment is missed, the only remedy available to bond holders is for the bond trustee to "re-let" the property to another party and obtain lease payments from another source. There is no mortgage or deed of trust on the leased property and the trustee cannot foreclose on the property. Due to the governmental purpose of the property leased, a court may not allow the re-leasing of such property to another party, and there are very few instances in which this has actually occurred. Bond holders are familiar with this limitation. In the case of the 2013 Lease, the City has leased to its Financing Authority the James 0. Jessie Desert Highland Unity Center and the new cooling tower constructed at the Municipal Co-Generation Plant at City Hall. On October 22, 2020, Staff presented to City Council a proposal from Capital One Public Funding, LLC, ("Capital One"), to reduce the interest rates and refinance the existing 2013 Lease. At that time, City Council approved the proposal, authorized the City Manager to execute a Term Sheet, and to proceed with the refinancing proposal. STAFF ANALYSIS: Capital One has offered to amend the 2013 Lease to change the earliest call date to December 1, 2020 with no premium, which would allow the City to refinance the 2013 Lease on a tax-exempt basis. Capital One makes this concession only if the City enters into a new lease with them on similar terms as the existing lease to refinance the outstanding balance, but with a lower interest rate. The rate Capital One was offering was an average 2.96% interest rate, compared to the existing average rate of 4.06%. Recently, Capital One agreed to reduce the interest rate further, now at an average rate of 2.91 %. Executing a new Lease Agreement with Capital One will reduce the annual debt service payments by an average of 7.1 % ($1.49 million) over the remaining term of the 2013 Lease of 13½ years. The further interest rate reduction of 0.05% offered by Capital One since Staff's presentation of their original proposal on October 22, 2020, will generate additional savings of $56,000 over the term of the refinancing proposal. 4City Council/Financing Authority November 12, 2020 --Page 4 Approval of 2020 Refunding Lease The final refinancing savings are shown in the following table. 6/30/2021 $ 604,000 $ 565,000 $ 39,000 6/30/2022 1,254,000 1,174,000 80,000 6/30/2023 1,299,000 1,216,000 83,000 6/30/2024 1,343,000 1,257,000 86,000 6/30/2025 1,390,000 1,301,000 89,000 6/30/2026 1,440,000 1,348,000 92,000 6/30/2027 1,494,000 1,398,000 96,000 6/30/2028 1,549,000 1,450,000 99,000 6/30/2029 1,607,000 1,503,000 104,000 6/30/2030 1,662,000 1,529,000 133,000 6/30/2031 1,724,000 1,586,000 138,000 6/30/2032 1,789,000 1,646,000 143,000 6/30/2033 1,857,000 1,708,000 149,000 6/30/2034 1,928,000 1,773,000 155,000 $ 20,940,000 $ 19,454,000 $ 1,486,000 % Payment Reduction 7.1% 6.5% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.5% 8.0% 8.0% 8.0% 8.0% 8.0% Without the amendment proposed by Capital One to change the early redemption and enter into a new lease with them, there is no potential for savings by refinancing the 2013 Lease with a traditional bond issue at this time. The 2013 Lease The 2013 Lease was entered into to finance the $18.5 million Citywide Energy Management Project (the "ECM Project"). The ECM Project had 3 components: (1) City-wide Lighting and Irrigation Upgrades; (2) the decommissioning of the Sunrise Cogeneration Plant and (3) the replacement of the Muni Co-Generation Plant at City Hall. The 2013 Lease was intended to be repaid from the energy savings realized from the more energy-efficient equipment installed. This is through avoidance of higher utility costs over time as utility rates increased and the City's water/power consumption increased. The ECM Project did achieve lower water/power consumption, and with utility rate increases enacted since 2013, the City has ·avoided much higher utility costs that would have been incurred in the absence of the ECM Project. The 2013 Lease is comprised of an Equipment Lease maturing May 1, 2029 and a Project Lease maturing August 1, 2033. The individual leases were secured by leases of different assets which, combined, provided sufficient value to support lease payments for the entire ECM Project. The Equipment Lease was secured by a lease of the new cooling tower at 5City Council/Financing Authority Novem~er 12, 2020 --Page 5 Approval of 2020 Refunding Lease the Municipal Co-Generation Plant with the 2013 Lease, and the Project Lease was secured by a lease of the James 0. Jessie Desert Highland Unity Center. The 2020 Refunding Lease will also be comprised of an Equipment Lease and a Project Lease, each secured by a lease of these same assets. The 2020 Refunding Lease Approvals Approval of the 2020 Refunding Lease requires that the City and Financing Authority each adopt resolutions approving the forms of certain documents, and authorizing the execution of these documents by the City Manager and Financing Authority Executive Director. The City Council resolution establishes the following parameters for the 2020 Refunding Lease Agreement: (1) the par amount of the agreement cannot exceed $16,000,000, (2) the interest rate on the 2020 Equipment Lease cannot exceed 2.25% and (3) the interest rate on the 2020 Project Lease cannot exceed 3.05%. The maturity of each lease will be the same as the existing leases. The City Council resolution and the Financing Authority resolutions also approve the form of the following documents: • A Site and Facility Lease between the Financing Authority and the City; • A Lease Agreement between the Financing Authority and the City; • An Equipment Schedule, relating to the 2020 Equipment Lease terms (Exhibit A to Lease Agreement); • A Project Schedule, relating to the 2020 Project Lease terms (Exhibit B to Lease Agreement); • An Escrow Agreement among the Financing Authority, the City and U.S. Bank, N.A.; and • Assignment Agreements for the Equipment Lease and the Project Lease to Capital One Public Funding, LLC, as Assignee. ENVIRONMENTAL IMPACT: Pursuant to the California Environmental Quality Act (CEQA), this item is categorically exempt under CEQA, in that it can be seen with certainty that there is no possibility that this action will have any effect on the environment. FISCAL IMPACT: The 2020 Refunding Lease of the 2013 Lease will save approximately $1.49 million in debt service payments over the next 13½ years. 6·' < City Council/Financing Authority November12,2020-Page6 Approval of 2020 Refunding Lease Certain professional fees and refinancing costs are incurred in preparing for and implementing the 2020 Refunding Lease. The savings of $1.49 million includes these costs, identified as follows: Bond Counsel Financial Advisor Expenses Escrow Bank CDIAC Fees Marcus L. Ful er, M.P.A, P.E., P.L.S. Assistant City Manager David H. Ready, Esq., PhD. City Manager Attachments: 1. June 19, 2013 Council Staff Report 2. City Resolution 3. Authority Resolution 4. Site and Facility Lease 5. Lease Agreement 6. Escrow Agreement $25,000 25,000 1,500 600 4,000 $56,100 Finance Director City Attorney 7. Assignment Agreement for Equipment Lease 8. Assignment Agreement for Project Lease 7ATTACHMENT 1 8DATE: SUBJECT: FROM: BY: City CounciVFinancing Authority Staff Report June 19, 2013 PUBLIC HEARING CITY COUNCIL AND FINANCING AUTHORITY APPROVAL OF CITYWIDE ENERGY PROJECT FINANCING AND RELATED AGREEMENTS AND DOCUMENTS AND MAKING CERTAIN FINDINGS PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 4217.13. David H. Ready, City Manager/Executive Director Suzanne Harrell, Financial Advisor SUMMARY In March 2013, the City Council authorized staff to prepare documentation for financing the following Citywide Energy Conservation Measures: (1) City-wide lighting and irrigation upgrades; (2) the decommissioning of the Sunrise Cogeneration Plant and (3) the upgrade of the Municipal Cogeneration Plant central plant. The City's proposed method of providing the public financing for such project costs is through a lease of certain property and equipment to the City of Palm Springs Financing Authority (Authority). Approval of the financing requires that both the City and the Authority adopt resolutions after the City Council conducts a public hearing and makes certain findings. If approved, the resolutions would authorize (1) entering into a lease agreement for the financing of the Project in a principal amount not-to-exceed $18.5 million on certain terms and conditions and (2) execution of various documents in connection with the financing by the City Manager and Executive Director. RECOMMENDATION: 1) Open the Public Hearing and accept public testimony. Acting as the City Council: 2) Adopt Resolution No. __ "A RESOLUTION OF THE CllY COUNCIL OF THE CllY OF PALM SPRINGS, CALIFORNIA, APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, AN ESCROW AGREEMENT AND A PLACEMENT AGENT AGREEMENT WITH RESPECT TO THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT SALE PURCHASE AND LEASING OF EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES; APPROVING AND ITEM NO. _\._b __ 9City Council/Financing Authority June 19, 2013-Page 2 of 7 Energy Conservation Measures Financing AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND DOCUMENTS REQUIRED IN CONNECTION THEREWITH; RATIFYING FINDINGS PURSUANT TO SECTION 4217.13 OF THE CALIFORNIA GOVERNMENT CODE WITH RESPECT TO SUCH ENERGY CONSERVATION FACILITIES; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION." Acting as the Financing Authority Board: 3) Adopt Resolution No. __ "A RESOLUTION OF THE GOVERNING BODY OF THE CITY OF PALM SPRINGS FINANCING AUTHORITY, CALIFORNIA, APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, AN ASSIGNMENT AGREEMENT FOR PROJECT LEASE AND AN ASSIGNMENT AGREEMENT FOR EQUIPMENT LEASE WITH RESPECT TO THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT SALE PURCHASE AND LEASING BY THE CITY OF PALM SPRINGS, CALIFORNIA OF EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES; AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION.11 STAFF ANALYSIS: Financing the Energy Conservation Measures Project has three components: ( 1) City-wide Lighting and Irrigation Upgrades; (2) the decommissioning of the Sunrise Cogeneration Plant and (3) the replacement of the Muni Cogeneration Plant central plant. The cost of producing energy at the Muni Plant is shared between th~ General Fund and the Airport, since the Airport uses approximately 50% of the energy generated by the Muni Plant, and the Airport will share in this cost component of the financing. The financing is intended to be repaid from the savings that the City should realize from the more energy-efficient equipment being installed, so that there is no overall net cost to the City. The annual payments on the financing are expected to be roughly equivalent to the reduction in energy costs each year. The table of the following page provides an example of how this offset in costs and savings works. In 2013-14, $3.441 million is budgeted for energy costs (gas, water, electricity) and another $1.257 million for cogeneration fund O&M, for a total energy budget of $4.698 million. This amount is allocated across various General Fund departments and functions and the Airport. After the Project is installed, amounts budgeted for energy costs are expected to be reduced in Fiscal Year 2016 by $783,000 and amounts budgeted for O&M costs are expected to be reduced in Fiscal Year 2016 by another $268,000, for a total cost reduction in these budget line items of $1,051,000. This budget reduction will be offset by a lease payment of $1,018,000 to be allocated among General Fund departments and the Airport. 02 10City Council/Financing Authority June 19, 2013-Page 3 of 7 Energy Conservation Measures Financing 2013-14 Budgeted Energy Costs plus Cogeneration Fund Operations Reduction in Energy Costs/O&M (FY 2016) Net Energy Costs New Lease Payments (FY 2016) 2015-16 Total New Budget for Energy Change from Current Budget General Fund Functions* $3,063,000 (816,000} 2,247,000 7331000 $2,980,000 $ 83,000 Airport Total $1,635,000 $4,698,000 (235,000} (1,0511000} 1,400,000 3,647,000 2851000 1,0181000 $1,685,000 $4,665,000 $ (50,000) $ 33,000 * Includes General Fund, Public Art, Parking, Fleet and Facilities Maintenance Funds City staff has been working with Chevron Energy Solutions Company (Chevron) on estimating the cost of the Project as well as the annual energy savings and the dollar amount of those savings. A third party review determined that the savings of electricity and natural gas and implementation cost estimates for both the Muni and Sunrise plants appear reasonable. The energy cost savings were projected by Chevron by applying an annual 4% inflation factor to existing energy costs per Kwh, per therm for gas or per ccf for water. The long-term projected dollar savings would decrease if the cumulative impact of actual rate increases is higher than 4% each year, making the program more expensive. However, the cumulative effect of a 4% annual increase translates to an overall 119% increase in energy costs by the end of the program (Year 20). Given those factQrs, the projection of energy savings in dollars seems reasonable over the life of the program, but might not be achieved in any particular year. Financing Structure The City received two proposals for financing the Project. The first was from Green Campus Partners LLC (Green Campus), and the second was from Crews and Associates. The Green Campus proposal was for 20 years (18 operating years plus two years for implementation of the program). The Crews and Associates proposal was for 22 years. Staff recommends the City Council accept the Green Campus financing proposal. The extra two years of financing provided under the other proposal did not provide enough cashflow to make a difference in the overall financing costs. Because the final payment on the Green Campus financing is scheduled for July 1, 2033 --which can be recovered in the operating year 2033-34 -the financing with Green Campus is effectively payable over 21 fiscal years. The City has financed many public improvements using lease revenue bonds issued by the Authority, most recently for the Downtown Revitalization Project. Staff is 03 11City Council/Financing Authority June 19, 2013-Page 4 of 7 Energy Conservation Measures Financing recommending that lease financing be used as the method for funding this Project as well. To secure the lease payments that will ultimately provide for the repayment of the financing, the City will enter into a Site and Facility Lease with the Authority. Under the Site and Facility Lease, the City will lease the James 0. Jessie Highland Unity Center to the Authority. The City and the Authority will also enter into a Lease Agreement. Under the Lease Agreement, the Authority will leaseback the Unity Center to the City, as well as lease the new cogeneration plant equipment. Instead of issuing bonds secured by these lease payments (as the City has done in the past), the Authority will assign its rights to receive the lease payments to Green Campus, in return for which Green Campus will provide funding for the Project. It is likely that Green Campus will ultimately assign their interest in the lease payments to a bank or other finance company. The Project costs are summarized below: Component Lighting/Irrigation Muni Plant Sunrise Plant Cost 4,439,058 9,389,909 3.678.876 17,507,842 Rebates (82,407) (24,181) (18,114) (124,702) CIP Balance (80,000) {20,000) (340.000) (440,000) Net Cost 4,276,651 9,345,728 3,320.762 16,943,140 The City has $440,000 in the Capital Projects Fund ·that had been budgeted for certain Muni Plant repairs that will be applied to reduce the cost of the Project. Also, since there are no savings until the Project is installed, lease payments due during the first 21 months will be funded from the net proceeds of the financing. The breakdown of the total amount to be borrowed is as follows: Prepaid Lease Payments Cost of Issuance Project Fund $ 1,237,000 190,000 16,943.140 $18,403,140 It is anticipated that the Lease Agreement will be executed in July 2013 and be paid over a term of 20 years at an effective rate of 4 % . The one-time costs to issue the bonds are estimated at $190,000 for fixed costs of bond counsel, title insurance, placement agent fees and other miscellaneous costs. The City is proposing to enter into an agreement with Chevron that will include an energy savings verification function for a period of 5 years. The Sustainability Fund will contribute to the cost of the verification, estimated at $716,500 over the 5 year period. 04 12City Council/Financing Authority June 19, 2013 -Page 5 of 7 Energy Conservation Measure~ Financing Findings Because the financing is being authorized under Government Code Section 4217, the City is required to hold a public hearing and make certain findings. Section 4217.13 requires that the City Council finds that funds for the repayment of the financing or the cost of design, construction, and operation of the energy conservation facility, or both, as required by the energy services contract with Chevron, are projected to be available from funding that otherwise would have been used for purchase of electrical, thermal, or other energy required by the City in the absence of the energy conservation facility. Staff has prepared the table below, which shows that the available funding from energy cost savings are projected to be sufficient to provide funding for the Project, in support of the City Council's finding under Section 4217.13. The verification costs to be funded by the Sustainability Fund are not included in the table. FYE June Energy and Lease Net Savings 30 O&M Savings Payments 2014 $ . $ . $ -2015 472,195 (280,000) 192,195 2016 1,051,413 (1,018,113) 33,300 2017 1,087,611 (1,053,650) 33,961 2018 1,125,183 (1,090,602) 34,581 2019 1,164,053 (1,128,884) 35,169 2020 1,204,406 (1,168,704) 35,703 2021 1,245,381 (1,209,879) 35,502 2022 1,287,036 (1,251,699) 35,337 2023 1,330,355 (1,295,368) 34,987 2024 1,374,743 (1,340,223) 34,520 2025 1,420,928 (1,387,074) 33,854 2026 1,469,634 (1,436,725) 32,909 2027 1,521,594 (1,489,990) 31,604 2028 1,576,224 (1,545,109) 31,115 2029 1,632,945 (1,602,551) 30,394 2030 1,691,838 (1,662,406) 29,433 2031 1,752,990 (1,724,768) 28,221 2032 1,816,486 (1,789,735) 26,751 2033 1,882,420 (1,857,408) 25,011 2034 1,950,884 (1,927,893) 22,991 $28,058,317 $(27,260, 780) $797,537 05 13City Council/Financing Authority June 19, 2013-Page 6 of 7 Energy Conservation Measures Financing Authorizing Resolutions As discussed above, in order to obligate the City to pay the Authority an amount equal to the lease payments, the City will lease certain property and facilities to the Authority pursuant to a Site and Facilities Lease, and the Authority will lease ~he property and facilities, plus additional cogeneration plant equipment back to the City pursuant to a Lease Agreement. This lease will secure the City's lease payments used by the Authority. The Authority will assign the lease payments to the Green Campus pursuant to an Assignment Agreement. The Project Fund moneys will be held during construction under an Escrow Agreement with a trustee, to be requisitioned by the City upon receipt of invoices for Project Costs. The value of the property to be leased under the Lease Agreement must equal at least $18.5 million, equivalent to the amount of financing. To achieve this value, the assets to be leased are the James 0. Jessie Highland Unity Center and surrounding property, together with the new cooling tower to be installed at the Muni Plant. In order to authorize the delivery of the Lease Agreement, the City Council and the Authority Board have been presented with resolutions for their consideration. The City Council resolution approves the form of the following documents in connection with the financing: • A Site and Facilities Lease between the City and the Authority; • A Lease Agreement between the City and the Authority; • An Assignment Agreement (Equipment Lease) between the Authority and Green Campus; • An Assignment Agreement (Project Lease) between the Authority and Green Campus; • An Escrow Agreement between the City, Green Campus and Deutsche Bank Trust Company Americas; and • A Placement Agent Agreement between the City and Green Campus. The Authority Board resolution approves the form of the following documents: • A Site and Facilities Lease between the City and the Authority; • A Lease Agreement between the City and the Authority; • An Assignment Agreement (Equipment Lease) between the Authority and Green Campus; and • An Assignment Agreement (Project Lease) between the Authority and Green Campus. Both resolutions authorize the execution of the various agreements by the City Manager and Authority Executive Director, within certain parameters. These parameters are: (1) the financing cannot exceed $18,500,000 and (2) the effective interest rate for the financing must not exceed 4%. 06 14City Council/Financing Authority June 19, 2013-Page 7 of 7 Energy Conservation Measures Financing FISCAL IMPACT: The financing is intended to be repaid from the savings that the City should realize from the more energy-efficient equipment being installed, so that there is no overall net cost to the City. The annual payments on the financing are expected to be roughly equivalent to the reduction in energy costs each year. Suzanne Harrell, Financial Advisor Attachments: Resolutions Site and Facilities Lease Lease Agreement David H. Ready, City Assignment Agreement {Equipment Lease) Assignment Agreement (Project Lease) Escrow Agreement Placement Agent Agreement 07 15ATTACHMENT 2 16RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, A PROJECT LEASE ASSIGNMENT, AN EQUIPMENT LEASE ASSIGNMENT AND AN ESCROW AGREEMENT WITH RESPECT TO REFINANCING THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT SALE PURCHASE AND LEASING OF CERTAIN EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES; AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION WHEREAS, the City of Palm Springs, California (the "City"), a municipal corporation and charter city duly organized and existing under the laws of the State of California, is authorized by the laws of the State of California to acquire, install, finance, installment sale purchase and lease equipment that constitutes energy conservation facilities and to enter into facility financing contracts and facility ground leases with respect thereto; and WHEREAS, the City has previously financed pursuant to a Lease Agreement, dated as of July 1, 2013 (the "Prior Lease") (a) the acquisition and installation of certain lighting, mechanical, utility, water and other energy conservation measures on and to certain of the City's public buildings and other facilities (the "Project") and (b) the demolition and replacement of the City's existing Municipal Central Plant cogeneration system with a new 1 .1 MW cogeneration plant, mechanical and electrical systems and upgrades and related improvements (the "Equipment"); and WHEREAS, the City has the opportunity to refinance the Prior Lease, and in that regard, the City proposes to enter into that certain Site and Facility Lease (the "Site Lease"), the Lease Agreement (the "Lease Agreement"), the Equipment Schedule to and incorporating the terms of the Lease Agreement (collectively with the Lease Agreement, the "Equipment Lease") and the Project Schedule to and incorporating the terms of the Lease Agreement ( collectively with the Lease Agreement, the "Project Lease"), each with the City of Palm Springs Financing Authority (the "Authority"), and a certain Escrow Agreement (the "Escrow Agreement") among the Authority, the City and U.S. Bank, N.A., and certain assignments for the Project to Capital One Public Funding, LLC, as Project Lease Assignee, and for the Equipment to Capital One Public Funding, LLC, as Equipment Lease Assignee (together, the "Assignments"), the forms of each of which has been presented to the City Council of the City at this meeting; and 55575.70003\33361758.3 17Resolution No. Page2 WHEREAS, in order to obtain funds to refinance the Project, the City has agreed to lease certain real property to the Authority pursuant to the Site Lease, and the Authority has agreed to lease such real property back to the City pursuant to the Project Lease, in consideration for the payment of lease payments as provided by the Project Lease;and WHEREAS, in order to obtain funds to refinance the acquisition and installation of the Equipment, the City has agreed to lease the Equipment from the Authority, and the Authority has agreed to arrange for and lease the Equipment to the City, in consideration for the payment of lease payments as provided by the Equipment Lease; and WHEREAS, the City is authorized pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the "Bond Law"), to refund existing obligations of the City; and WHEREAS, the City Council of the City determines for the best interest of the City and for the efficient and effective administration thereof to enter into the Site Lease, the Lease Agreement, the Project Lease, the Equipment Lease, the Escrow Agreement, and the Assignments, and the documentation related to the refinancing of the Project and the Equipment upon the terms and conditions therein provided; WHEREAS, Section 5852.1 of the California Government Code requires that the Board obtain from an underwriter, financial advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the Lease Agreement, good faith estimates of (a) the true interest cost of the Lease Agreement, (b) the sum of all fees and charges paid to third parties with respect to the Lease Agreement, (c) the amount of proceeds of the Lease Agreement expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Lease Agreement, and (d) the sum total of all debt service payments on the Lease Agreement calculated to the final maturity of the Lease Agreement, plus the fees and charges paid to third parties not paid with the proceeds of the Lease Agreement; WHEREAS, in compliance with Section 5852.1 of the California Government Code, the Council has obtained from Harrell & Company Advisors, LLC, the City's municipal advisor (the "Municipal Advisor'') the required good faith estimates and such estimates are disclosed and set forth in Exhibit A attached hereto; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. Defined Terms. Capitalized terms that are used, but not defined, in this Resolution shall have the same meaning as when such terms are used in the preambles to this Resolution. 55575.70003\33361758.3 18Resolution No. Page3 SECTION 2. Findings and Determinations. The City finds and determines that the above recitals are true and correct and that the fair rental value of the Project and the Equipment exceeds the present value of Lease Payments to-be made under the Lease Agreement. SECTION 3. Approval of Financing Agreements. The form, terms and provisions of the Site Lease, the Lease Agreement, the Project Lease, the Equipment Lease, the Escrow Agreement, and the Assignments (collectively, the "Financing Agreements") are hereby approved in substantially the forms presented at this meeting, with such insertions, omissions and changes as shall be approved by the Mayor, the City Manager or other authorized official of the City executing the same, the execution of such Financing Agreements being conclusive evidence of such approval. The Mayor and the City Manager are each hereby authorized and any such authorized official is hereby directed to execute, and the City Clerk of the City is hereby authorized and directed to attest, each of the Financing Agreements and to deliver each of the Financing Agreements to the respective parties thereto. The combined cost of the refinancing under the Project Lease and the Equipment Lease, respectively, shall not exceed $16,000,000 and shall represent interest at a rate not to exceed 3.05% per annum with respect to the Project Lease and 2.25% per annum with respect to the Equipment Lease. SECTION 4. Other Actions Authorized. The officers and employees of the City shall take all action necessary or reasonably required by the parties to the Financing Agreements to carry out, give effect to and consummate the transactions contemplated thereby (including any tax certificate and agreement, as contemplated in the Lease Agreement) and to take all action necessary in conformity therewith, including, without limitation, the execution and delivery of any closing and other documents required to be delivered in connection with the Financing Agreements. SECTION 5. No General Liability. Nothing contained in this Resolution, any of the Financing Agreements or any other instrument shall be construed with respect to the City as incurring a pecuniary liability or charge upon the general credit of the City or against its taxing power, nor shall the breach of any agreement contained in this Resolution, any of the Financing Agreements or any other instrument or document executed in connection therewith impose any pecuniary liability upon the City or any charge upon its general credit or against its taxing power, except to the extent that the lease payments under the Project Lease and the Equipment Lease are payable by the City as provided therein. SECTION 6. Appointment of Authorized City Representatives. The Mayor and the City Manager of the City are each hereby designated to act as authorized representatives of the City for purposes of the Financing Agreements until such time as the City Council of the City shall designate any other or different authorized representative for purposes of the Financing Agreements. SECTION 7. Severability. If any section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or 55575. 70003\33361758.3 19Resolution No. Page4 unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. SECTION 8. Repealer. All bylaws, orders and resolutions or parts thereof, inconsistent herewith, are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed as reviving any bylaw, order, resolution or ordinance or part thereof. SECTION 9. Effective Date. This Resolution shall be effective immediately upon its approval and adoption. ADOPTED this 12th day of November, 2020. ATTEST: Anthony J. Mejia, MMC City Clerk 55575. 70003\33361758.3 David H. Ready, City Manager 20Resolution No. Page 5 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS) CERTIFICATION I, ANTHONY J. MEJIA, City Clerk of the City of Palm Springs, hereby certify that Resolution No. ___ is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on November 12th, 2020, by the following vote: AYES: NOES: ABSENT: ABSTAIN: 55575.70003\33361758.3 Anthony J. Mejia, MMC City Clerk 21EXHIBIT A GOOD FAITH ESTIMATES The good faith estimates set forth herein are provided with respect to the Lease Agreement in accordance with California Government Code Section 5852.1 . Such good faith estimates have been provided to the City by the Municipal Advisor. Principal Amount. The Municipal Advisor has informed the City that, based on the City's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Lease Agreement to be sold is $15,853,500, (the "Estimated Principal Amount"). True Interest Cost of the Lease Agreement. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the true interest cost of the Lease Agreement, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Lease Agreement, is 2.92%. Finance Charge of the Lease Agreement. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the finance charge for the Lease Agreement, which means the sum of all fees and charges paid to third parties (or costs associated with the Lease Agreement), is $56,000. Amount of Proceeds to be Received. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the amount of proceeds expected to be received by the City for sale of the Lease Agreement, less the finance charge of the Lease Agreement, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Lease Agreement, is $15,797,500. Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Lease Agreement is sold, and based on market interest rates prevailing at the time of preparation of such estimate, their good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Lease Agreement, plus the finance charge for the Lease Agreement, as described above, not paid with the proceeds of the Lease Agreement, calculated to the final maturity of the Lease Agreement, is $19,453,000. The foregoing estimates constitute good faith estimates only as of November 12, 2020, and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the Lease Agreement issued and sold, the 55575. 70003\33361758.3 22Resolution No. Page? true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Lease Agreement being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Lease Agreement sold being different from the Estimated Principal Amount, (c) the actual amortization of the Lease Agreement being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Lease Agreement being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City's financing plan, or a combination of such factors. The actual date of sale of the Lease Agreement and the actual principal amount of the Lease Agreement sold will be determined by the City based on the timing of the need for proceeds of the Lease Agreement and other factors. The actual interest rates borne by the Lease Agreement will depend on market interest rates at the time of sale thereof. The actual amortization of the Lease Agreement will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic, national, international and other factors beyond the control of the City, or the Municipal Advisor. 55575. 70003\33361758.3 23ATTACHMENT 3 24RESOLUTION NO. A RESOLUTION OF THE BOARD OF THE CITY OF PALM SPRINGS FINANCING AUTHORITY, CALIFORNIA, AUTHORIZING THE EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE, A LEASE AGREEMENT, A PROJECT LEASE ASSIGNMENT, AN EQUIPMENT LEASE ASSIGNMENT AND AN ESCROW AGREEMENT WITH RESPECT TO REFINANCING THE ACQUISITION, INSTALLATION, FINANCING, INSTALLMENT SALE PURCHASE AND LEASING OF CERTAIN EQUIPMENT THAT CONSTITUTES ENERGY CONSERVATION FACILITIES; AUTHORIZING THE EXECUTION AND DELIVERY OF AGREEMENTS AND DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION WHEREAS, the City of Palm Springs Financing Authority(the "Authority"), a joint exercise of powers authority duly organized and existing under the laws of the State of California, is authorized by the laws of the State of California to assist the City of Palm Springs (the "City") acquire, install, finance, installment sale purchase and lease equipment that constitutes energy conservation facilities and to enter into facility financing contracts and facility ground leases with respect thereto; and WHEREAS, the City has previously financed pursuant to a Lease Agreement, dated as of July 1, 2013 (the "Prior Lease") (a) the acquisition and installation of certain lighting, mechanical, utility, water and other energy conservation measures on and to certain of the City's public buildings and other facilities (the "Project") and (b) the demolition and replacement of the City's existing Municipal Central Plant cogeneration system with a new 1.1 MW cogeneration plant, mechanical and electrical systems and upgrades and related improvements (the "Equipment"); and WHEREAS, the City has the opportunity to refinance the Prior Lease, and in that regard, the City proposes to enter into that certain Site and Facility Lease (the "Site Lease"), the Lease Agreement (the "Lease Agreement"), the Equipment Schedule to and incorporating the terms of the Lease Agreement (collectively with the Lease Agreement, the "Equipment Lease") and the Project Schedule to and incorporating the terms of the Lease Agreement (collectively with the Lease Agreement, the "Project Lease"), each with the Authority, and a certain Escrow Agreement (the "Escrow Agreement") among the Authority, the City and U.S. Bank National Association, and certain assignments for the Project to Capital One Public Funding, LLC, as Project Lease Assignee, and for the Equipment to Capital One Public Funding, LLC, as Equipment Lease Assignee (together, the "Assignments"), the forms of each of which has been presented to the Board of the Authority at this meeting; and 55575. 70003\33389248.2 25Resolution No. Page 2 WHEREAS, in order to obtain funds to refinance the Project, the City has agreed to lease certain real property to the Authority pursuant to the Site Lease, and the Authority has agreed to lease such real property back to the City pursuant to the Project Lease, in consideration for the payment of lease payments as provided by the Project Lease;and WHEREAS, in order to obtain funds to refinance the acquisition and installation of the Equipment, the City has agreed to lease the Equipment from the Authority, and the Authority has agreed to arrange for and lease the Equipment to the City, in consideration for the payment of lease payments as provided by the Equipment Lease; and WHEREAS, the City and the Authority are authorized pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the "Bond Law"), to refund existing obligations of the City and the Authority; and WHEREAS, the Board of the Authority determines for the best interest of the Authority and the City and for the efficient and effective administration thereof to enter into the Site Lease, the Lease Agreement, the Project Lease, the Equipment Lease, the Escrow Agreement, and the Assignments, and the documentation related to the refinancing of the Project and the Equipment upon the terms and conditions therein provided; NOW, THEREFORE, THE BOARD OF THE CITY OF PALM SPRINGS FINANCING AUTHORITY, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. Defined Terms. Capitalized terms that are used, but not defined, in this Resolution shall have the same meaning as when such terms are used in the preambles to this Resolution. SECTION 2. Findings and Determinations. The Board finds and determines that the above recitals are true and correct and that the fair rental value of the Project and the Equipment exceeds the present value of Lease Payments to be made under the Lease Agreement. SECTION 3. Approval of Financing Agreements. The form, terms and provisions of the Site Lease, the Lease Agreement, the Project Lease, the Equipment Lease, the Escrow Agreement, and the Assignments (collectively, the "Financing Agreements") are hereby approved in substantially the forms presented at this meeting, with such insertions, omissions and changes as shall be approved by the Chairperson, the Executive Director or other authorized official of the Authority executing the same, the execution of such Financing Agreements being conclusive evidence of such approval. The Chairperson and the Executive Director are each hereby authorized and any such authorized official is hereby directed to execute, and the Secretary to the Board is 55575. 70003\33389248.2 26Resolution No. Page 3 hereby authorized and directed to attest, each of the Financing Agreements and to deliver each of the Financing Agreements to the respective parties thereto. SECTION 4. Other Actions Authorized. The officers and employees of the Authority shall take all action necessary or reasonably required by the parties to the Financing Agreements to carry out, give effect to and consummate the transactions contemplated thereby (including any tax certificate and agreement, as contemplated in the Lease Agreement) and to take all action necessary in conformity therewith, including, without limitation, the execution and delivery of any closing and other documents required to be delivered in connection with the Financing Agreements. SECTION 5. No General Liability. Nothing contained in this Resolution, any of the Financing Agreements or any other instrument shall be construed with respect to the Authority as incurring a pecuniary liability or charge upon the general credit of the Authority or against its taxing power, nor shall the breach of any agreement contained in this Resolution, any of the Financing Agreements or any other instrument or document executed in connection therewith impose any pecuniary liability upon the Authority or any charge upon its general credit or against its taxing power, except to the extent that the lease payments under the Project Lease and the Equipment Lease are payable by the Authority as provided therein. SECTION 6. Appointment of Authorized Representatives. The Chairperson and the Executive Director of the Authority are each hereby designated to act as authorized representatives of the Authority for purposes of the Financing Agreements until such time as the Board of the Authority shall designate any other or different authorized representative for purposes of the Financing Agreements. SECTION 7. Severability. If any section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. SECTION 8. Repealer. All bylaws, orders and resolutions or parts thereof, inconsistent herewith, are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed as reviving any bylaw, order, resolution or ordinance or part thereof. SECTION 9. Effective Date. This Resolution shall be effective immediately upon its approval and adoption. 55575. 70003\33389248.2 27Resolution No. Page4 ADOPTED this 12th day of November, 2020. ATTEST: Anthony J. Mejia, MMC Secretary STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS) David H. Ready, Executive Director CERTIFICATION I, ANTHONY J. MEJIA, Secretary of the Board of the City of Palm Springs Financing Authority, hereby certify that Resolution No. ___ is a full, true and correct copy, and was duly adopted at a regular meeting of the Board of the City of Palm Springs Financing Authority on November 12th, 2020, by the following vote: AYES: NOES: ABSENT: ABSTAIN: 55575. 70003\33389248.2 Anthony J. Mejia, MMC Secretary 28ATTACHMENT 4 29To BE RECORDED AND WHEN RECORDED RETURN TO: Best Best & Krieger LLP 3390 University Avenue, 5th Floor Riverside, California 9250 I Attention: Kim Byrens THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. SITE AND FACILITY LEASE This SITE AND FACILITY LEASE (this "Site Lease"), dated for convenience as of December I, 2020, is between the CITY OF PALM SPRINGS, a municipal corporation and charter city duly organized and existing under the laws of the State of California, as lessor (the "City"), and the CITY OF PALM SPRINGS FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California, as lessee (the "Authority");. BACKGROUND: I. The City has previously financed (a) the acquisition and installation of certain lighting, mechanical, utility, water and other energy conservation measures on and to certain of the City's public buildings and other facilities (the "Project"), and (b) the demolition and replacement of the City's existing Municipal Central Plant cogeneration system with a new I. I MW cogeneration plant, mechanical and electrical systems and upgrades and related improvements (the "Equipment"). 2. The Authority has been organized for the purpose of acquiring, constructing and financing various public capital improvements, and by leasing certain public capital improvements, for the use, benefit and enjoyment of the public served by the City and is authorized to enter into financing and lease documents for that purpose. 3. In order to provide funds to refinance the Project and the Equipment, (a) the City has agreed to lease to the Authority the land and improvements at any time situated thereon which constitute the City's James 0. Jessie Desert Highland Unity Center, which is located at 480 W. Tram view Road, Palm Springs, California, 92262, and is more particularly described in Appendix A attached hereto and by this reference incorporated herein (such land and improvements being herein referred to as the "Leased Real Property"), under this Site Lease; (b) the Authority has agreed to lease the Leased Real Property back to the City under that certain Lease Agreement dated as of December I, 2020 (the "Agreement") between the Authority as lessor and the City as lessee, and the Project Schedule dated as of December I, 2020 and entered into by the Authority and the City pursuant thereto that incorporates by reference the terms of the Agreement ( collectively with such incorporated terms, the "Project Lease"), which Project Lease 55575.70003\33389455.2 30has been recorded concurrently herewith; and ( c) the Authority has agreed to lease the Equipment to the City under the Agreement and the Equipment Schedule dated as of December 1, 2020 and entered into by the Authority and the City pursuant thereto that incorporates by reference the terms of the Agreement ( collectively with such incorporated terms, the "Equipment Lease"). 4. The Authority has assigned certain of its rights in, to and under the Project Lease and its rights tinder this Site Lease to Capital One Public Funding, LLC and its successors and assigns (the '"Project Lease Assignee"), under an Assignment Agreement for Project Lease dated as of December 1, 2020 (the "Project Lease Assignment"), which has been recorded concurrently herewith. 5. The Authority has assigned certain of its rights in, to and under the Equipment Lease and its rights under this Site Lease to Capital One Public Funding, LLC and its successors and assigns (the "Equipment Lease Assignee") under an Assignment Agreement for Equipment Lease dated as of December 1, 2020 (the "Equipment Lease Assignment"), which has been recorded concurrently herewith. AGREEMENT: In consideration of the foregoing and the material covenants hereinafter contained, the City and the Authority formally covenant, agree and bind themselves as follows: Section I. Lease of Leased Real Property. The City hereby leases to the Authority, and the Authority hereby leases from the City, the Leased Real Property (as described in the Recitals hereto and more fully in Appendix A hereto), on the terms and conditions hereinafter set forth. Section 2. Term; Possession. The term of this Site Lease commences, and the Authority becomes entitled to possession of the Leased Real Property, as of the date of recordation hereof. This Site Lease ends, and the right of the Authority hereunder to possession of the Leased Real Property thereupon ceases, on the date on which all of the Project Lease Payments under the Project Lease (as defined in the Recitals hereto) and all of the Equipment Lease Payments under the Equipment Lease (as defined in the Recitals hereto) are paid in full, or provision is made for such payment in accordance with the terms thereof, and the Project Lease and the Equipment Lease have been discharged, but under any circumstances not later than August I, 2043. Section 3. Rental. The Authority will pay to the City as and for rental of the Leased Real Property hereunder, the amount of $1.00 to be paid on or before the date of execution and delivery hereof, the receipt of which by the City is hereby acknowledged. No other amounts of rental will be due and payable by the Authority for the use and occupancy of the Leased Real Property under this Site Lease. · Section 4. Refinancing the Project and the Egufoment; Sublease Back to the Authority. The purpose for which the City agrees to lease the Leased Real Property to the Authority hereunder is to enable the Authority to refinance the original acquisition and installation of the Project and the Equipment. The Authority hereby agrees to sublease the 55575.70003\33389455.2 -2- 31Leased Real Property back to the City under the Project Lease and to lease the Equipment to the City under the Equipment Lease. Section 5. Assignments and Subleases. Unless the City is in default under the Project Lease or the Equipment Lease, the Authority may not assign its rights under this Site Lease or sublet all or any portion of the Leased Real Property, except as provided in the Project Lease, the Equipment Lease, the Project Lease Assignment and the Equipment Lease Assignment, without the prior written consent of the City. Nothing in this Site Lease, the Agreement or the Leases (as defined in the Agreement) shall be deemed to cause a reversion under the instrument recorded April 2, 1981 as Instrument No. 81-58748, Official Records of the County Recorder of the County of Riverside, California, as more fully described in the Title Report (as defined in the Agreement). Section 6. Substitution or Release of Property. If the City exercises its option under Section 4.5 of the Project Lease and satisfies the conditions therein provided to substitute property for the Leased Real Property in whole or in part, such substitution shall also automatically operate to substitute property for the Leased Real Property which is leased hereunder. If the City exercises its option under Section 4.6 of the Project Lease and satisfies the conditions therein provided to release any portion of the Leased Real Property from the Project Lease, such release shall also automatically operate to release property hereunder. The description of the property which is leased under the Project Lease shall conform at all times to the description of the property which is leased hereunder. Section 7. Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Leased Real Property, or any portion thereof, at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof. Section 8. Termination. The Authority agrees, upon the termination of this Site Lease, to quit and surrender the Leased Real Property in the same good order and condition as the Leased Real Property was in at the time of commencement of the term hereof, reasonable wear and tear excepted, and agrees that all buildings, improvements and structures then existing upon the Leased Real Property will remain thereon and title thereto shall vest thereupon in the City for no additional consideration. Section 9. Default. If the Authority is in default in the performance of any obligation on its part to be performed under the terms of this Site Lease, which default continues for 30 days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site Lease and of the Project Lease or the Equipment Lease will be deemed to occur as a result thereof and this Site Lease may not be terminated by the City as a remedy for such default. Notwithstanding the foregoing, (i) so long as the Project Lease remains in effect, the City will continue to pay the Project Lease Payments to the Project Lease Assignee ( as defined in the Recitals hereto) and (ii) so long as the Equipment Lease remains in effect, the City will continue to pay the Equipment Lease Payments to the Equipment Lease Assignee (as defined in the Recitals hereto). 55575.70003\33389455.2 -3- 32In the event of the occurrence of an Event of Default under the Project Lease or an Event of Default under the Equipment Lease, the Authority may (i) exercise the remedies provided in the Project Lease and/or the Equipment Lease, (ii) use the Leased Real Property for any lawful purpose, subject to any applicable legal limitations or restrictions, and (iii) exercise all options provided herein. Section 10. Amendments. The Authority and the City may at any time amend or modify any of the provisions of this Site Lease, but only with the prior written consent of the Project Lease Assignee and the Equipment Lease Assignee. Section 11. Quiet Enioyment. The Authority at all times during the term of this Site Lease will peaceably and quietly have, hold and enjoy all of the Leased Real Property, subject to the provisions of the Project Lease, the Equipment Lease, the Project Lease Assignment and the Equipment Lease Assignment, and subject only to Permitted Encumbrances. Section 12. Waiver of Personal Liability. All liabilities under this Site Lease on the part of the Authority are solely corporate liabilities of the Authority as a joint powers authority, and the City hereby releases each and every member and officer of the Authority of and from any personal or individual liability under this Site Lease. No member or officer of the Authority or its governing board is at any time or under any circumstances individually or personally liable under this Site Lease for anything done or omitted to be done by the Authority hereunder. Section 13. Taxes. The City will pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Real Property and any improvements thereon. Section 14. Eminent Domain. If the whole or any part of the Leased Real Property, or any improvements thereon, are taken by eminent domain proceedings, the interest of the Authority will be the aggregate amount of the sum of the then unpaid principal components of the Project Lease Payments payable under the Project Lease plus the Equipment Lease Payments payable under the Equipment Lease and the balance of the award, if any, will be paid to the City. The City hereby waives any and all rights that it has or may hereafter have to acquire the interest of the Authority in and to the Leased Real Property through the eminent domain powers of the City. The City hereby agrees, to the extent permitted by law, that the compensation to be paid in any condemnation proceedings brought by or on behalf of the City with respect to the Leased Real Property or any improvement thereon shall be in an amount not less than the sum of (a) the total unpaid principal component of Project Lease Payments plus the interest component of Project Lease Payments accrued to the date of payment of all Project Lease Payments under the Project Lease plus (b) the total unpaid principal component of Equipment Lease Payments plus the interest component of Equipment Lease Payments accrued to the date of payment of all Equipment Lease Payments under the Equipment Lease. Section 15. Partial Invalidity. If any one or more of the terms, provisions, covenants or conditions of this Site Lease are to any extent declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this 55575.70003\33389455.2 -4- 33Site Lease will be affected thereby, and each provision of this Site Lease will be valid and enforceable to the fullest extent permitted by law. Section 16. Notices. Any notice, request, complaint, demand or other communication under this Site Lease must be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by telecopy, telex or other form of telecommunication, at its number set forth below. Notice will be effective either (a) upon transmission by telecopy, telex or other form of telecommunication, (b) 72 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The City, the Authority, the Project Lease Assignee and the Equipment Lease Assignee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder. lfto the Authority: City of Palm Springs Financing Authority 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 Attention: David H. Ready, Executive Director Phone: (760) 323-8350 If to the City: City of Palm Springs 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 Attention: David H. Ready, City Manager Phone: (760) 323-8350 lfto the Project Lease Assignee: Capital One Public Funding, LLC 275 Broadhollow Road, 4th Floor Melville, New York 11747 Attention: Jonathan A. Lewis Phone: (631) 531-2824 Ifto the Equipment Lease Assignee: Capital One Public Funding. LLC 1307 Walt Whitman Road, 3rd Floor Melville, New York 11747 Attention: Jonathan A. Lewis Phone: (631)531-2824 Section 17. Governing Law. This Site Lease is governed by the laws of the State of California. Section 18. Third Party Beneficiary. The Project Lease Assignee and the Equipment Lease Assignee are each hereby made a third party beneficiary hereunder with all rights of a third party beneficiary. Section 19. Binding Effect. This Site Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein. 55575.70003\33389455.2 -5- 34Section 20. Severability of Invalid Provisions. If any one or more of the provisions contained in this Site Lease are for any reason held to be invalid, illegal or unenforceable in any respect, then such provision or provisions will be deemed severable from the remaining provisions contained in this Site Lease and such invalidity, illegality or unenforceability will not affect any other provision of this Site Lease, and this Site Lease will be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority and the City each hereby declares that it would have entered into this Site Lease and each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Site Lease may be held illegal, invalid or unenforceable. Section 21. No Merger. Neither this Site Lease, the Project Lease nor any provisions hereof or thereof shall be construed to effect a merger of the title of the City to the Leased Real Property under this Site Lease and the City's leasehold interest therein under the Project Lease. Section 22. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site Lease. Section 23. Execution in Counterparts. This Site Lease may be executed in any number of counterparts, each of which is an original but all together constitute one and the same instrument. It is also agreed that separate counterparts of this Site Lease may be separately executed by the Authority and the City, all with the same force and effect as though the same counterpart had been executed by both the Authority and the City. Section 24. Defined Terms. All capitalized terms used herein and not otherwise defined herein (including in the Recitals hereto) have the respective meanings given those terms in the Project Lease. (Signature page follows) 55575.70003\33389455.2 -6- 35IN WITNESS WHEREOF, the City and the Authority have caused this Site and Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. ATTEST: Anthony J. Mejia, MMC City Clerk ATTEST: Anthony J. Mejia, MMC Secretary 55575. 70003\33389455 .2 CITY OF PALM SPRINGS, CALIFORNIA David H. Ready, City Manager CITY OF PALM SPRINGS FINANCING AUTHORITY David H. Ready, Executive Director -Signature Page-Site and Facility Lease S-1 36ALL-PURPOSE CERTIFICATE OF 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 _____ _ ) ) ) On _________ , before me, _____________ , a Notary Public, 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 PENAL TY 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) 55575.70003\33389455.2 37APPENDIX A DESCRIPTION OF THE LEASED REAL PROPERTY The Leased Real Property consists of the land located in the County of Riverside, State of California, which is described as follows, including all buildings, improvements and facilities at any time situated thereon at the following address, James 0. Jessie Desert Highland Unity Center, which is located at 480 W. Tramview Road, Palm Springs, California, 92262: LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of Riverside, and described as follows: The Southwest 1/4 of the Southwest 1/4, of the Northeast 1/4 of Section 34, Township 3 South, Range 4 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey, Records of Riverside County. The West 1/2 of the Southeast 1/4 of the Southwest 1/4 of the Northeast 1/4 of Section 34, Township 3 South, Range 4 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey, Records of Riverside County. The West 1/2 of the East 1/2 of Southeast 1/4, of the Southwest 1/4 of the Northeast 1/4, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey, Records of Riverside County. Except therefrom all mineral deposits, in the above described land, as reserved by the United States, in Patent recorded April 2, 1981 as Instrument No. 81-58748, of Official Records of said County. (End of Legal Description) 55575.70003\33389455.2 A-1 38ATTACHMENT 5 3955575.70003\3336 I 763.3 LEASE AGREEMENT Dated as of December I, 2020 Between CITY OF PALM SPRINGS FINANCING AUTHORITY, as lessor, and CITY OF PALM SPRINGS, CALIFORNIA, as lessee BBKDRAFT 40ARTICLE I Section 1.1 Section 1.2 ARTICLE II Section 2.1 Section 2.2 ARTICLE III Section 3.1 Section 3.2 ARTICLE IV Section 4.1 Section 4.2 Section 4.3 Section 4.4 Section 4.5 Section 4.6 Section 4.7 Section 4.8 ARTICLEV Section 5.1 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Section 5.9 Section 5.10 Section 5.11 Section 5.12 ARTICLE VI Section 6.1 Section 6.2 Section 6.3 Section 6.4 Section 6.5 55575.70003\33361763.3 DEFINITIONS; RULES OF INTERPRETATION .......................................................................... 2 Definitions ................................................................................................................... 2 Interpretation ................................................................................................................ 7 COVENANTS, REPRESENTATIONS AND WARRANTIES .......................................................... 7 Covenants, Representations and Warranties of the City .............................................. 7 Covenants, Representations and Warranties of the Authority ................................... 11 DEPOSIT AND APPLICATION OF FUNDS; ACQUISITION AND INST ALLA TI ON OF THE EQUIPMENT AND THE PROJECT ....................................................................... 13 Deposit and Application of Assignment Proceeds ..................................................... 13 Acquisition, Installation and Financing of the Project and the Equipment ........................................................................................................... 13 LEASE PAYMENTS; SUBSTITUTION AND RELEASE OF PROPERTY ...................................... 13 Lease of Leased Real Property and the Equipment ................................................... 13 Term ........................................................................................................................... 14 Lease Payments .......................................................................................................... 14 Title to the Leased Real Property; Title to and Security Interest in the Equipment and Funds ......................................................................................... 16 Substitution of Property ............................................................................................. 18 Release of Property .................................................................................................... 19 Quiet Enjoyment ........................................................................................................ 20 No Merger .................................................................................................................. 20 MAINTENANCE, TAXES, INSURANCE AND OTHER MATTERS ............................................ 20 Maintenance, Utilities, Taxes and Assessments with respect to the Leased Real Property .......................................................................................... 20 Modification of Leased Real Property ....................................................................... 21 Public Liability and Property Damage Insurance ...................................................... 21 Casualty Insurance ..................................................................................................... 22 Rental Interruption Insurance ..................................................................................... 22 Intentionally Omitted ................................................................................................. 22 Insurance Net Proceeds; Form of Policies ................................................................. 22 Installation of City's Personal Property ..................................................................... 23 Liens ........................................................................................................................... 23 Environmental Covenants .......................................................................................... 23 Taxes and Other Governmental Charges with respect to the Equipment; Use and Maintenance of the Equipment .......................................... 27 Advances .................................................................................................................... 28 DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS ...................... 28 Application of Net Proceeds ...................................................................................... 28 Termination or Abatement Due to Eminent Domain ................................................. 29 Abatement Due to Damage or Destruction ................................................................ 29 Insufficiency of Net Proceeds .................................................................................... 29 Actions in the Event of Uninsured Casualty .............................................................. 30 -i- 41ARTICLE VII Section 7.1 Section 7.2 Section 7.3 Section 7.4 Section 7.5 Section 7.6 Section 7.7 Section 7.8 ARTICLE VIII Section 8.1 Section 8.2 Section 8.3 Section 8.4 Section 8.5 Section 8.6 ARTICLE IX Section 9.1 Section 9.2 Section 9.3 ARTICLEX Section 10.1 Section 10.2 Section 10.3 Section 10.4 Section 10.5 Section 10.6 Section 10. 7 Section 10.8 Section 10.9 Section 10.10 OTHER COVENANTS .......................................................................................................... 30 Disclaimer of Warranties ........................................................................................... 30 Access to the Leased Real Property ........................................................................... 30 Risk of Loss; Release and Indemnification Covenants .............................................. 31 Assignment by the Authority ..................................................................................... 31 Assignment and Subleasing by the City .................................................................... 33 Amendment of Leases ................................................................................................ 34 Tax Covenants ........................................................................................................... 34 Financial Statements .................................................................................................. 34 EVENTS OF DEFAULT AND REMEDIES ............................................................................... 35 Events of Default Defined ......................................................................................... 35 Remedies on Default .................................................................................................. 35 No Remedy Exclusive ................................................................................................ 38 Agreement to Pay Attorneys' Fees and Expenses ...................................................... 38 No Additional Waiver Implied by One Waiver ......................................................... 38 Assignees to Exercise Rights ..................................................................................... 38 PREPAYMENT OF LEASE PAYMENTS ................................................................................. 39 Security Deposit ......................................................................................................... 39 Optional Prepayment ................................................................................................. 40 Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain ............................................................................................................... 40 MISCELLANEOUS ............................................................................................................... 41 Notices ....................................................................................................................... 41 Binding Effect ............................................................................................................ 41 Severability ................................................................................................................ 41 Net-net-net Lease ....................................................................................................... 42 Third Party Beneficiary .............................................................................................. 42 Further Assurances and Corrective Instruments ........................................................ 42 Execution in Counterparts .......................................................................................... 42 Applicable Law .......................................................................................................... 42 Authority and City Representatives ........................................................................... 42 Captions ..................................................................................................................... 42 EXHIBIT A EXHIBIT 8 Form of Equipment Schedule, including Equipment Lease Payment Schedule Form of Project Schedule, including Project Lease Payment Schedule and Description of Leased Real Property -11-55575.70003\33361763.3 42LEASE AGREEMENT This Lease Agreement (this "Agreement"), dated as of December 1, 2020, between the City of Palm Springs Financing Authority, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority"), as lessor, and the City of Palm Springs, a municipal corporation and charter city duly organized and existing under the laws of the State of California (the "City"), as lessee, WITNESSETH: WHEREAS, all capitalized terms used, but not defined, in these Recitals shall have the respective meanings set forth in Section 1.1 hereof; and WHEREAS, the City financed (a) the acquisition and installation of certain lighting, mechanical, utility, water and other energy conservation measures on and to certain of the City's public buildings and other facilities, and (b) the demolition and replacement of the City's existing Municipal Central Plant cogeneration system with a new 1.1 MW cogeneration plant, mechanical and electrical systems and upgrades and related improvements under the provisions of a Lease Agreement, dated as of July 1, 2013, between the City and the Authority, and assigned to Capital One Public Funding, LLC, as assignee (the "Assignee") under two separate Assignment Agreements, each dated as of July 1, 2013; and WHEREAS, the Authority has been organized for the purpose of acquiring, constructing and financing various public capital improvements, and by leasing certain public capital improvements, for the use, benefit and enjoyment of the public served by the City and is authorized to enter into financing and lease documents for that purpose; and WHEREAS, in order to refinance the Project and the Equipment, (a) the City has agreed to lease the Leased Real Property-to the Authority by entering into the Site Lease (which has been recorded concurrently with the Project Lease, the Equipment Lease, the Project Lease Assignment and the Equipment Lease Assignment), (b) the Authority will lease the Leased Real Property back to the City in consideration for the payment of Project Lease Payments as provided in the Project Lease; and ( c) the City has agreed to lease the Equipment from the Authority, and the Authority has agreed to arrange for and lease the Equipment to the City, in consideration for the payment of Equipment Lease Payments as provided in the Equipment Lease; and WHEREAS, in order to refinance the Project and the Equipment, the Authority has assigned and transferred (a) the Assigned Project Lease Rights to the initial Project Lease Assignee pursuant to the Project Lease Assignment, which has been recorded concurrently herewith; and (b) the Assigned Equipment Lease Rights to the initial Equipment Lease Assignee pursuant to the Equipment Lease Assignment, which has been recorded concurrently herewith; and Now, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants herein contained, the City and the Authority formally covenant, agree and bind themselves as follows: 55575.70003\3336 l 763.3 43ARTICLE I DEFINITIONS; RULES OF INTERPRETATION Section 1.1 Definitions. All terms defined in this Section 1.1 have the meanings herein specified for all purposes of this Agreement (including the Recitals hereto) and each Lease. "Aggregate Lease Payments" means, as of the date of determination, the sum of the principal amount of outstanding Equipment Lease Payments plus the principal amount of outstanding Project Lease Payments. "Agreement" means this Lease Agreement, dated as of December 1, 2020, between the Authority (as lessor) and the City (as lessee), as originally executed or as hereafter amended under any duly authorized and executed amendments hereto. ''Assigned Equipment Lease Rights" means all of the Authority's rights under the Equipment Lease as lessor of the Equipment (excepting only the Authority's rights under Sections 5 .10, 7 .3 and 8.4 of this Agreement), including, without limitation, its rights in a pro-rata portion of Proceeds of Collateral as provided for in Section 8.2 hereof, as more particularly described in the Equipment Lease Assignment, that are assigned and transferred by the Authority to the initial Equipment Lease Assignee pursuant to the Equipment Lease Assignment. ''Assigned Project Lease Rights" means all of the Authority's rights under the Project Lease as sublessor of the Leased Real Property (excepting only the Authority's rights under Sections 5.10, 7.3 and 8.4 of this Agreement) and as lessee of the Leased Real Property under the Site Lease, including, without limitation, its rights in a pro-rata portion of Proceeds of Collateral as provided for in Section 8.2 hereof, as more particularly described in the Project Lease Assignment, that are assigned and transferred by the Authority to the initial Project Lease Assignee pursuant to the Project Lease Assignment. "Assigned Rights" means either Assigned Equipment Lease Rights or Assigned Project Lease Rights, as applicable. "Assignee" means either the Equipment Lease Assignee or the Project Lease Assignee, as applicable. "Assignment" means each of, and "Assignments" means both of, the Equipment Lease Assignment and the Project Lease Assignment. "Assignment Proceeds" means the Equipment Lease Assignment Proceeds and the Project Lease Assignment Proceeds, collectively. "Authority" means the City of Palm Springs Financing Authority, a joint exercise of powers authority duly organized and existing under the laws of the State of California. "Business Day" means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State of California. 55575.70003\3336 l 763.3 -2- 44"City" means the City of Palm Springs, a municipal corporation and charter city duly organized and existing under the laws of the State of California. "Code" means the Internal Revenue Code of 1986, as amended. Each reference to a Section of the Code herein shall be deemed to include the United States Treasury Regulations proposed or in effect thereunder. "Default Rate" means a rate of interest equal to the lesser of (a) 8% per annum or (b) the maximum rate permitted by law. ''Delivery Costs" means the costs incurred in connection with the execution and delivery of this Agreement, the Site Lease, the Project Lease, the Equipment Lease, the Project Lease Assignment, the Equipment Lease Assignment, the financing of the Project and the financing of the acquisition and installation of the Equipment, including fees and expenses of the financial advisor, fees and expenses of the Special Counsel, , filing and recording costs and other similar fees and costs. "Equipment" means the equipment and other property cons1stmg of a 1.1 MW cogeneration plant, mechanical and electrical systems and upgrades and related improvements acquired and installed at the City's existing Municipal Central Plant with proceeds of the Prior Lease, and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to the Equipment Lease. Whenever reference is made in this Agreement or the Equipment Lease to Equipment, such reference shall be deemed to include all such replacements, repairs, restorations, modifications and improvements of or to such Equipment. "Equipment Lease" means the Equipment Schedule and the terms of this Agreement that are incorporated by reference into such Schedule, which shall constitute an independent lease transaction that is separate from the Project Lease. ''Equipment Lease Assignee" means (a) initially, Capital One Public Funding, LLC, a New York limited liability company, or its designee, as assignee of the Assigned Equipment Lease Rights pursuant to the Equipment Lease Assignment, and (b) any other entity to whom the Assigned Equipment Lease Rights ( or any interest therein) are assigned and transferred as provided in Section 7 .4. "Equipment Lease Assignee Pro Rata Portion" means a fraction, the numerator of which is the outstanding principal amount of Equipment Lease Payments and the denominator of which is the Aggregate Lease Payments. "Equipment Lease Assignment" means the Assignment Agreement for Equipment Lease dated December 1, 2020, between the Authority, as assignor, and the initial Equipment Lease Assignee, as assignee, as originally executed or as thereafter amended under any duly authorized and executed amendments thereto. "Equipment Lease Assignment Proceeds" means the amount of proceeds from the assignment and transfer of the Assigned Equipment Lease Rights in the aggregate amount of $4,414,982.00, which is to be applied as provided in Section 3.1 (a). 55575.70003\3336) 763.3 -3- 45"Equipment Lease Payment Date" means, with respect to the Equipment Lease Term, February 1, May 1, August 1 and November 1 in each year, commencing February 1, 2021, that occurs on or after the Lease Payment Commencement Date, on which the City is required to make an Equipment Lease Payment under the Equipment Lease as specified in the Equipment Lease Payment Schedule attached thereto. ''Equipment Lease Payments" means, with respect to the Equipment Lease, the basic rental payments payable by the City pursuant to the Equipment Lease on the Equipment Lease Payment Dates and in the amounts as specified in the Equipment Lease Payment Schedule, consisting of a principal component and an interest component as provided therein. "Equipment Lease Payment Schedule" means the Equipment Lease Payment Schedule attached as Attachment A-1 to the Equipment Schedule. "Equipment Lease Term" means the period that begins on the Funding Date and ends on the first Business Day after the last scheduled Equipment Lease Payment Date, subject to extension as provided in Section 3.03; provided that the Equipment Lease Term shall, in any event, terminate no later than May 1, 2039. "Equipment Schedule" means the Equipment Schedule substantially in the form of Exhibit A attached hereto together with the Equipment Lease Payment Schedule substantially in the form of Attachment A-1 attached thereto and the description of the Leased Real Property attached thereto as Attachment A-2. ''Escrow Agent" means U.S. Bank National Association, its successors and assigns, as holder of the final payment on the Prior Lease under the Escrow Agreement. "Escrow Agreement" means that certain Escrow Agreement dated as of December I, 2020, among the Escrow Agent, the City and the Authority relating to the final payment of the Prior Lease. "Event of Default" means any of the events of default as defined in Section 8.1. "Facility" means the buildings, facilities and other improvements located on the Site and consisting generally of the James 0. Jessie Desert Highland Unity Center, which is located at 480 W. Tramview Road, Palm Springs, California, 92262. · "Federal Securities" means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations the timely payment of principal of and interest on which are directly guaranteed by the United States of America. "Fiscal Year" means each twelve-month period during the Equipment Lease Term and the Project Lease Term commencing on July I in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period. "Funding Date" means December I, 2020, which is the date on which the Prior Lease is 55575.70003\33361763.3 -4- 46prepaid and the final payment under the Prior Lease Agreement is set aside under the Escrow Agreement. "Lease" means either of, and "Leases" means both of, the Equipment Lease and the Project Lease. "Lease Payments" means either Equipment Lease Payments or Project Lease Payments, as applicable. ''Lease Payment Commencement Date" shall have the meaning set forth m the Equipment Lease and the Project Lease, respectively. "Lease Payment Date" means either an Equipment Lease Payment Date or a Project Lease Payment Date, as applicable. "Leased Real Property" means the Site and the Facility, collectively. From and after the date of substitution of any property under Section 4.5 or release of any property under Section 4.6, the term "Leased Real Property" means the real property that remains subject to the Project Lease following such substitution or release. "Lease Servicer" for a Lease is defined in Section 7.4(b ). "Net Proceeds" means, with respect to either Lease, any eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers) or any insurance award under Section 5.4, paid with respect to the Leased Real Property or the Equipment, as the case may be, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. "Permitted Encumbrances" means, as of any time and only with respect to the Leased Real Property: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under Article V of this Agreement; (b) the Site Lease, the Project Lease, the Equipment Lease, the Project Lease Assignment and the Equipment Lease Assignment; ( c) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; ( d) the exceptions disclosed in the title insurance policy issued with respect to the Leased Real Property issued as of the funding date of the Prior Lease; and ( e) any easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record· and which the City certifies in writing to the Project Lease Assignee will not materially impair the use of the Leased Real Property for its intended purposes under the Site Lease, the Project Lease and the Equipment Lease. "Prior Lease" means the Lease Agreement dated as of July 1, 2013, between the City and the Authority "Proceeds of Collateral" shall have the meaning set forth in Section 8.2(i) hereof. "Project" means the acquisition and installation of certain lighting, mechanical, utility, water and other energy conservation measures on, in and to certain of the City's public buildings 55575.70003\33361763.3 -5- 47and other facilities with proceeds of the Prior Lease, not included in the Equipment Lease. ''Project Lease" means the Project Schedule and the terms of this Agreement that are incorporated by reference into such Schedule, which shall constitute an independent lease transaction that is separate from the Equipment Lease. "Project Lease Assignee" means (a) initially, Capital One Public Funding, LLC, a New York limited liability company, or its designee, as assignee of the Assigned Project Lease Rights pursuant to the Project Lease Assignment, and (b) any other entity to whom the Assigned Project Lease Rights ( or any interest therein) are assigned and transferred as provided in Section 7.4. "Project Lease Assignee Pro Rafa Portion" means a fraction, the numerator of which is the outstanding principal amount of Project Lease Payments and the denominator of which is the Aggregate Lease Payments. "Project Lease Assignment" means the Assignment Agreement for Project Lease dated as of December 1, 2020, between the Authority, as assignor, and the initial Project Lease Assignee, as assignee, as originally executed or as thereafter amended under any duly authorized and executed amendments thereto. "Project Lease Assignment Proceeds" means the amount of proceeds from the assignment and transfer of the Assigned Project Lease Rights in the aggregate amount of $11,438,558.00, which is to be applied as provided in Section 3.l(b). ''Project Lease Payment Date" means, with respect to the Project Lease Term, February 1, May 1, August I and November I in each year, commencing February I, 2021, that occurs on or after the Lease Payment Commencement Date, on which the City is required to make a Project Lease Payment under the Project Lease as specified in the Project Lease Payment Schedule attached thereto. "Project Lease Payments" means, with respect to the Project Lease, the basic rental payments payable by the City pursuant to the Project Lease on the Project Lease Payment Dates and in the amounts as specified in the Project Lease Payment Schedule, consisting of a principal component and an interest component as provided therein. "Project Lease Payment Schedule" means the Project Lease Payment Schedule attached as Attachment B-1 to the Project Schedule. ''Project Schedule" means the Project Schedule substantially in the form of Exhibit B attached hereto together with the Project Lease Payment Schedule substantially in the form of Attachment B-1 attached thereto and the description of the Leased Real Property attached thereto as Attachment B-2. "Project Lease Term " means the period that begins on the Funding Date and ends on the first Business Day after the last scheduled Project Lease Payment Date, subject to extension as provided in Section 3.03; provided that the Project Lease Term shall, in any event, terminate no later than August I, 2043. 55575.70003\33361763.3 -6- 48"Rental Period" means for each Lease Payment Date, the quarterly period from the first day after the next preceding Lease Payment Date to (and including) such succeeding Lease Payment Date; provided that the first Rental Period begins on the Funding Date and ends on February 1, 2021. "Securities Act" means the Securities Act of 1933, as amended. "Servicer" has the meaning set forth in the Project Lease Assignment. "Site" means that certain parcel of real property situated in the County of Riverside, State of California, more particularly described in Attachment B-2 attached to the Project Schedule and made a part thereof and in Attachment A-2 attached to the Equipment Schedule and made a part thereof. "Site Lease" means the Site and Facility Lease dated as of December 1, 2020, between the City as lessor and the Authority as lessee of the Leased Real Property, as originally executed or as hereafter amended under any duly authorized and executed amendments and supplements thereto. "Special Counsel" means (a) Best Best & Krieger LLP, or (b) any other attorney or firm of attorneys (acceptable to the Equipment Lease Assignee with respect to the Equipment Lease or the Project Lease Assignee with respect to the Project Lease) of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income of the owners thereof for federal income tax purposes. Section 1.2 Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof. ( c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. ARTICLE II COVENANTS, REPRESENTATIONS AND WARRANTIES Section 2.1 Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Authority as of the Funding Date: (a) Due Organization and Existence. The City is a municipal corporation and charter city duly organized and validly existing under its charter and the laws of the State 55575.70003\33361763.3 -7- 49of California, has full legal right, power and authority under the laws of the State of California to enter into this Agreement, the Leases, the Site Lease and the Escrow Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the City has duly authorized the execution and delivery of this Agreement, the Leases, the Site Lease and the Escrow Agreement. (b) Due Execution. The representatives of the City executing this Agreement, the Leases, the Site Lease and the Escrow Agreement have been fully authorized to execute the same under a resolution duly adopted by the City Council of the City. (c) Valid, Binding and Enforceable Obligations. This Agreement, the Leases, the Site Lease and the Escrow Agreement have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding agreements of the City enforceable against the City in accordance with their respective terms. (d) No Conflicts. The execution and delivery of this Agreement, the Leases, the Site Lease and the Escrow Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Agreement, the Leases, the Site Lease and the Escrow Agreement or the financial condition, assets, properties or operations of the City. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Agreement, the Leases, the Site Lease and the Escrow Agreement, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect. (t) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Agreement, either Lease, the Site Lease or the Escrow Agreement, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or 55575. 70003\33361763.3 -8- 50demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Agreement, either Lease, the Site Lease or the Escrow Agreement or the financial condition, assets, properties or operations of the City. (g) Essential Use. The Project, the Equipment and the Leased Real Property are essential to the proper, efficient and economic operation of the City and serve an essential governmental function of the City. (h) Sufficiency of Aggregate Lease Proceeds. The Aggregate Lease Proceeds are sufficient to pay, collectively, (i) all principal components of the lease payments due under the Prior Lease, and (ii) the costs of delivery in connection with this Lease Agreement. (i) Ownership of Real Estate where Equipment is Located; Negative Pledge. The City is the fee owner of the real estate where the Equipment is and will be acquired, installed and located, which is the land underlying the building referred to as the Municipal Central Plant (such land underlying the Municipal Central Plant is referred to as the "Equipment Real Property") and has good and marketable title thereto, and there exists no mortgage, pledge, lien, security interest, charge or other encumbrance of any nature whatsoever on or with respect to such Equipment Real Property. The City shall not create, incur, assume or permit to exist any mortgage, pledge, lien, security interest, charge or other encumbrance of any nature whatsoever on any of the Equipment Real Property or enter into any agreement to sell or assign or enter into any sale/leaseback arrangement of the Equipment Real Property. In no way will the prohibition on encumbering the Equipment Real Property extend to the rest of the real estate that comprises the City Hall property, of which the Equipment Real Property is located on a part (that being Assessor Parcel Number 502-150-005). The City may obtain a separate legal description of the Equipment Real Property, separate and apart from the legal description of the rest of Assessor Parcel Number 502-150-005 for the purposes of complying with the exclusion of the Equipment Real Property from any future mortgage, pledge, lien, security interest, charge or other encumbrance of any nature whatsoever on such of the real estate that is not underlying the Municipal Central Plant. G) No Prior Termination for Lack of Appropriation. No lease, rental agreement, lease-purchase agreement, payment agreement or contract for purchase to which the City has been a party at any time has been terminated by the City as a result of insufficient funds being appropriated in any Fiscal Year. No event has occurred which would constitute an event of default under any debt, revenue bond or obligation which the City has issued during the past ten years. (k) Insured Replacement Value. As of the Funding Date, the insured replacement value of the improvements on the Leased Real Property is [$2,637,770] and the estimated value of the underlying land comprising the Leased Real Property is [$10,481,625]. 55575.70003\3336 l 763.3 -9- 51(I) The City shall notify both the Project Lease Assignee and the Equipment Lease Assignee in writing as soon as possible after the City acquires knowledge of (i) the occurrence of any default with respect to any Debt of the City, setting forth the details of such default and any action which the City proposes to take with respect thereto, (ii) any change, suspension or withdrawal of the credit rating of the City or any of its Debt, and (iii) any pending litigation or governmental proceeding against the City or any other claim, judgment or event which could reasonably be expected to result in a judgment, claim, penalty or liability against the City in excess of $10,000,000. "Debt" of the City means at any date, without duplication, (a) all obligations of the City for borrowed money, (b) all obligations of the City evidenced by bonds, debentures, notes or other similar instruments and (c) all obligations of the City as lessee under capital leases. (m) Title to Leased Real Property; Encumbrances. The City is the owner in fee of the Leased Real Property. No lien or encumbrance on the Leased Real Property materially impairs the City's use of the Leased Real Property for the purposes for which it is, or may reasonably be expected to be, held. The Site Lease and this Agreement are the only leases that encumber the Leased Real Property. (n) Useful Lives of Equipment and Leased Real Property. The Equipment has a remaining useful life that extends to at least May 1, 2039. The buildings comprised by the Leased Real Property have a remaining useful life that extends to at least August 1, 2043. (o) Current Compliance. The City is in all material respects in compliance with all laws, regulations, ordinances, and orders of public authorities applicable to the Leased Real Property. (p) Flooding Risk. To the best of the City's knowledge, the Leased real Property is not located in a flood hazard area and has never been subject to material damage from flooding. (q) Financial Condition. The audited financial statements of the City for the year ended June 30, 2019, supplied to Capital One Public Funding, LLC (''COPF") (i) were prepared in accordance with generally accepted accounting principles, consistently applied, and (ii) fairly present the City's financial condition as of the date of the statements. There has been no material adverse change in the City's financial condition subsequent to June 30, 2019, except as disclosed to COPF. (r) Financial Obligation Disclosure. In connection with the City's compliance with any continuing disclosure undertakings ( each, a "Continuing Disclosure Agreement") entered into by the City pursuant to SEC Rule l 5c2 12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the "Rule"), the City believes it may be required to file with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system or its successor ("EMMA") notice of its incurrence of its obligations with respect to this Lease and related documents and notice of any accommodation, waiver, amendment, modification of terms or other similar events reflecting financial difficulties in connection with this Lease and related documents, in each case including a full copy thereof or a description of the material terms thereof ( each such posting, an "EMMA Posting"). The City· agrees that it shall not file or submit 55575.70003\33361763.3 -10- 52or permit the filing or submission of any EMMA Posting that includes the following information relating to COPF: unredacted sensitive or confidential information about COPF or its affiliates; address and account information of COPF or any affiliates; e mail addresses, telephone numbers, or fax numbers; or names and signatures of officers, employees and signatories of COPF or its affiliates. The City acknowledges and agrees that COPF and its affiliates are not responsible for the City's or any other entity's (including, but not limited to, any broker-dealer's) compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with the Rule, any Continuing Disclosure Agreement or any applicable securities or other laws, including but not limited to those relating to the Rule. (s) Role of COPF. The City acknowledges that: (1) COPF is acting solely for its own loan account and not as a fiduciary for the City or in the capacity of broker, dealer, municipal securities underwriter, placement agent, or municipal advisor; (2) COPF has not provided, and will not provide, financial, legal (including securities law), tax, accounting or other advice to or on behalf of the City (including to any financial advisor or placement agent engaged by the City) with respect to the structuring of the financing or the execution and delivery of this Agreement; (3) COPF has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934, as amended, to the City with respect to the transactions relating to the structuring of the financing or the execution and delivery of this Agreement and the discussions, undertakings, and procedures leading thereto; (4) each of the City and its financial advisor has sought and shall seek and obtain financial, legal (including securities law), tax, accounting and other advice (including as it relates to structure, timing, terms and similar matters) with respect to the lease financing transaction from its financial, legal, and other advisors (and not COPF or its affiliates) to the extent that the City, and its financial advisor desires to, should, or needs to obtain such advice; (5) COPF has expressed no view regarding the legal sufficiency of its representations for purposes of compliance with any legal requirements applicable to any other party, including but not limited to the City's financial advisor, or the correctness of any legal interpretation made by counsel to any other party, including but not limited to counsel to the City's financial advisor, with respect to any such matters; and (6) the transactions between the City and COPF are arm's-length, commercial transactions in which COPF is acting and has acted solely as a principal and for its own interest, and COPF has not made recommendations to the City with respect to the transactions relating to this Agreement. Section 2.2 Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the City as of the Funding Date: 55575.70003\33361763.3 -11- 53(a) Due Organization and Existence. The Authority is a joint exercise of powers authority duly organized and existing under the laws of the State of California, has full legal right, power and authority to enter into this Agreement, the Leases, the Site Lease, the Escrow Agreement and the Assignments and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action of its governing board the Authority has duly authorized the execution and delivery of this Agreement, the Leases, the Site Lease, the Escrow Agreement and the Assignments. (b) Due Execution. The representatives of the Authority executing this Agreement, the Leases, the Site Lease, the Escrow Agreement and the Assignments are fully authorized to execute the same under official action taken by the governing board of the Authority. (c) Valid, Binding and Enforceable Obligations. This Agreement, the Leases, the Site Lease, the Escrow Agreement and the Assignments have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms. (d) No Conflicts. The execution and delivery of this Agreement, the Leases, the Site Lease, the Escrow Agreement and the Assignments, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Agreement, the Leases, the Site Lease, the Escrow Agreement and the Assignments or the financial condition, assets, properties or operations of the Authority. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Agreement, either Lease, the Site Lease, the Escrow Agreement or either Assignment, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect. (t) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the 55575. 70003\33361763.3 -12- 54Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Agreement, either Lease, the Site Lease, the Escrow Agreement or either Assignment, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Agreement, either Lease, the Site Lease, the Escrow Agreement or either Assignment or the financial condition,' assets, properties or operations of the Authority. ARTICLE III DEPOSIT AND APPLICATION OF FUNDS; ACQUISITION AND INSTALLATION OF THE EQUIPMENT AND THE PROJECT Section 3.1 Deposit and Application of Assignment Proceeds. (a) Equipment Lease Assignment Proceeds in the amount of $4,414,982.00 shall be applied as follows: (i) $15,613.06 shall be used to pay Delivery Costs to the persons entitled thereto; (ii) $4,306,720.73 shall be applied to the prepayment of a portion of the Prior Lease on the Funding Date and (iii) $92,648.21 shall be deposited with the Escrow Agent for prepayment of a portion of the Prior Lease on February 1, 2021. (b) Project Lease Assignment Proceeds in the amount of $11,438,558.00 shall be applied as follows: (i) $40,450.56 shall be used to pay Delivery Costs to the persons entitled thereto; (ii) $11,342,741.13 shall be applied to the prepayment of a portion of the Prior Lease on the Funding Date and (iii) $55,366.31 shall be deposited with the Escrow Agent for prepayment of a portion of the Prior Lease on February 1, 2021. Section 3.2 Acquisition, Installation and Financing of the Project and the Equipment. (a) As agent of the Authority, the City has installed the Project and the Equipment under all applicable requirements of law and the Project and the Equipment are available for the City's use. No item of the Equipment will be moved or relocated from the location specified for it in the Equipment Schedule without the Authority's prior written consent, which consent shall not be unreasonably withheld. The Authority shall have the right at all reasonable times during regular business hours to enter into and upon the property where the Equipment is located for the · purpose of inspecting the Equipm_ent. ARTICLE IV LEASE PAYMENTS; SUBSTITUTION AND RELEASE OF PROPERTY Section 4.1 Lease of Leased Real Property and the Equipment. (a) For and in consideration of the application by the Authority of funds in accordance with Section 3.1 (b ), the City has leased the Leased Real Property to the Authority under the Site Lease. For and in consideration of the Project Lease Payments to be paid by the City under the Project Lease, the 55575.70003\3336 J 763.3 -13- 55Authority leases the Leased Real Property to the City, and the City leases the Leased Real Property from the Authority, upon the terms and conditions set forth in the Project Lease. (b) For and in consideration of the application by the Authority of funds in accordance with Section 3.l(a) and the beneficial use and enjoyment of the Equipment, the City leases from the Authority the Equipment. For and in consideration of the Equipment Lease Payments to be paid by the City under the Equipment Lease, the Authority leases the Equipment to the City, upon the terms and conditions set forth in the Equipment Lease. Section 4.2 Term. (a) The Equipment Lease Term commences on the Funding Date and ends on the date on which all of the Equipment Lease Payments have been paid in full. In the event that the obligation of the City to pay Equipment Lease Payments is abated for any period under Section 6.3, the Equipment Lease Term shall extend until such time as all Equipment Lease Payments have been paid in full; provided that the Equipment Lease Term shall, in any event, terminate no later than May 1, 2039. The provisions of this Section 4.2(a) are subject to the provisions of Section 6.2 relating to the taking in eminent domain of the Equipment or any portion thereof. (b) The Project Lease Term commences on the Funding Date and ends on the date on which all of the Project Lease Payments have been paid in full. In the event that the obligation of the City to pay Project Lease Payments is abated for any period under Section 6.3, the Project Lease Term shall extend until such time as all Project Lease Payments have been paid in full; provided that the Project Lease Term shall, in any event, terminate no later than August 1, 2043. The provisions of this Section 4.2(b) are subject to the provisions of Section 4.5 relating to the substitution of property, the provisions of Section 4.6 relating to the release of property and the provisions of Section 6.2 relating to the taking in eminent domain of the Leased Real Property or any portion thereof. ( c) The City may not terminate the Equipment Lease or the Project Lease as a remedy for a default by the Authority under either or both thereof. Section 4.3 Lease Payments. (a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, beginning on the applicable Lease Payment Commencement Date the · Lease Payments ( denominated into components of principal and interest) in the respective amounts for Equipment Lease Payments and Project Lease Payments specified in the Equipment Lease Payment Schedule and the Project Lease Payment Schedule, respectively, to be due and payable in immediately available funds on the Lease Payment Dates specified in the Equipment Lease Payment Schedule and the Project Lease Payment Schedule, as applicable. The Equipment Lease Payments payable in any Rental Period are for the beneficial use and enjoyment of the Equipment during such Rental Period, and the Project Lease Payments payable in any Rental Period are for the beneficial use and occupancy of the Leased Real Property during such Rental Period. The interest components of the Equipment Lease Payments have been calculated based on an interest rate of 2.25% per annum, on the basis of a 360-day year of twelve 30-day months. The interest components of the Project Lease Payments have been calculated based on an interest 55575.70003\3336 I 763.3 -14- 56rate of 3.05% per annum, on the basis of a 360-day year of twelve 30-day months. Lease Payments shall be made by wire or other form of electronic payment in accordance with written instructions provided by the respective Assignee or, with such Assignee's consent, by such other commercially reasonable method of payment. (b) Effect of Prepayment. If the City prepays all Equipment Lease Payments or Project Lease Payments in full under Section 9.2 or 9.3, the City's obligations under the Equipment Lease with respect to such Equipment Lease Payments or under the Project Lease with respect to such Project Lease Payments, as the case may be, will thereupon cease and terminate. If the City prepays the Equipment Lease Payments or the Project Lease Payments in part but not in whole under Section 9.3, the principal components of the remaining Equipment Lease Payments or Project Lease Payments, as the case may be, will be reduced in inverse order of Lease Payment Dates. (c) Rate on Overdue Payments. If the City fails to make any of the payments required in this Section 4.3, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon at the Default Rate from the date of default to the date of payment. (d) Fair Rental Value. The Equipment Lease Payments coming due and payable under the Equipment Lease during each Rental Period thereunder constitute the total rental for the Equipment for such Rental Period, and the City will pay the Equipment Lease Payments under the Equipment Lease in each Rental Period for and in consideration of the right of the beneficial use and enjoyment of, and the continued quiet use and enjoyment of, the Equipment during each Rental Period. The Project Lease Payments coming due and payable under the Project Lease during each Rental Period thereunder constitute the total rental for the Leased Real Property for such Rental Period, and the City will pay the Project Lease Payments under the Project Lease in each Rental Period for and in consideration of the right of the beneficial use and occupancy of, and the continued quiet use and occupancy of, the Leased Real Property during each Rental Period. The Authority and the City have agreed and determined that (i) the total Equipment Lease Payments are not in excess of the fair rental value of the Equipment, and (ii) the total Project Lease Payments are not in excess of the fair rental value of the Leased Real Property. In making that determination, consideration has been given to the estimated fair market value of the Leased Real Property as of the Funding Date, the replacement costs of the Equipment and the Leased Real Property, the costs of financing for the amounts to be deposited and applied pursuant to Section 3.1, other obligations of the City and the Authority under the Equipment Lease and the Project Lease, the uses and purposes which may be served by the Equipment and the Leased Real Property and the benefits therefrom that will accrue to the City and the general public. ( e) Source of Payments; Budget and Appropriation. The Lease Payments are payable from any source of legally available funds of the City. The City covenants to take such action as may be necessary to include all Lease Payments in each of its annual budgets during the Equipment Lease Term and the Project Lease Term and to make the necessary annual appropriations (including any supplemental appropriations) from any source of legally available funds of the City for all such Lease 55575.70003\3336 l 763.3 -15- 57Payments which become due and payable during the period covered by each such budget. The covenants on the part of the City contained herein are duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in each of the Leases agreed to be carried out and performed by the City. (t) Failure to Maintain Tax-Exemption. If an Assignee either (i) receives notice, in any form, from the Internal Revenue Service; or (ii) reasonably determines, based on an opinion of Special Counsel, in either case that such Assignee may not exclude the interest component of any Lease Payment from gross income of the owner thereof for federal income tax purposes due to the City's action or failure to take any action, then the City shall pay to the affected Assignee, within thirty (30) days after such Assignee notifies the City of such determination, the amount which, with respect to Lease Payments previously paid under the related Lease and taking into account all penalties, fines, interest and additions to tax (including all federal, state and local taxes imposed on the interest component of all Lease Payments under the related Lease due through the date of such event) that are imposed on Lease Payments as a result of the loss of the exclusion, will restore to the affected Assignee the same after-tax yield on the transaction evidenced by the related Lease (assuming tax at the highest marginal corporate tax rate) that it would have realized had the exclusion not been lost. Additionally, the City agrees that upon the occurrence of such an event, it shall thereafter pay additional rent on each succeeding Lease Payment Date under the related Lease in such amount as will maintain such after-tax yield to the affected Assignee. Section 4.4 Title to the Leased Real Property; Title to and Security Interest in the Equipment and Funds. (a) Title to the Leased Real Property. The City shall hold fee title to the Leased Real Property, subject to the Site Lease and other Permitted Encumbrances, including all additions which comprise fixtures, repairs, replacements or modifications thereto, and subject to the provisions of Section 5.2. At all times during the Project Lease Term, the Authority shall hold leasehold title to the Leased Real Property pursuant to the Site Lease and subject to the Project Lease. Upon the termination of the Project Lease and the Equipment Lease ( other than under Section 8.2(b) or Section 8.2(c), respectively), all right, title and interest of the Authority in and to the Leased Real Property shall be transferred to and vested in the City. Upon the payment in full of all Lease Payments under both Leases, or upon the deposit by the City of security for such Lease Payments as provided in Section 9.1, all right, title and interest of the Authority in and to the Leased Real Property shall thereupon vest in the City for no additional consideration. (b) Title to the Equipment. During the Equipment Lease Term, and so long as the City is not in default under Article VIII hereof, all right, title and interest in and to each item of the Equipment shall be vested in the City immediately upon its acceptance of each item of Equipment, subject to the terms and conditions of the Equipment Lease. The City shall at all times protect and defend, at its own cost and expense, its title in and to the Equipment from and against all claims, liens and legal processes of its creditors, and keep all Equipment free and clear 55575. 70003\33361763.3 -16- 58of all such claims, liens and processes. Upon the payment in full of all Lease Payments under both Leases, or upon the deposit by the City of security for such Lease Payments as provided in Section 9.1, the Authority shall release its security interest in and to the Equipment granted under this Section 4.4, as is and where is, without warranty of any kind other than as to the absence of liens created by or through the Authority, and shall execute and deliver to the City such documents as the City may reasonably request to evidence the release of the Authority's security interest in the Equipment granted under this Section 4.4. (c) Security Interest in Equipment and Funds. As additional security for the payment and performance as and when due of all of the City's obligations under both Leases, the City hereby grants to the Authority a first priority security interest constituting a first lien on the Equipment. The City authorizes the Authority to file (and the City agrees to execute, if applicable) such notices of assignment, chattel mortgages, financing statements and other documents, in form satisfactory to the Authority, which the Authority deems necessary or appropriate to establish and maintain the Authority's security interest in the Equipment, including such financing statements with respect to personal property and fixtures under Article 9 of the California Commercial Code and treating such Article 9 as applicable to entities such as the City. ( d) Treatment of Equipment as Personal Property. The City agrees that, as and to the extent permitted by law, the Equipment is deemed to be and will remain personal property, and will not be deemed to be affixed to or a part of the real estate on which it may be situated, notwithstanding that the Equipment or any part thereof may be or hereafter become in any manner physically affixed or attached to real estate or any building thereon. (e) Representations, Warranties and Covenants Regarding Use for Park Purposes and Related Matters. The City hereby represents and warrants that (i) since the City first acquired fee title to the Leased Real Property, the Leased Real Property has been used solely for the City's park purposes; (ii) the Leased Real Property is properly zoned for park purposes; (iii) the City is not in violation of covenants, conditions and restrictions (the "CC&Rs ") as set forth in instrument recorded April 2, 1981 as Instrument No. 81-58748, Official Records of the County Recorder of the County of Riverside, California, as more fully described as Exception 4 on Schedule B to Title Report issued by Stewart Title of California, Inc., as Serial Number O-2228-000437612 and dated as of July 29, 2013 (the ''Title Report"); and (iv) to the best of the City's knowledge, the City has not previously been, and is not now, aware of any claim or threat by the grantor under the CC&Rs that such grantor intends to exercise any right of reverter with respect to the Leased Real Property as contained in the CC&Rs or has any basis to make any such claim or threat. The City covenants and agrees that the City shall continue to use the Leased Real Property solely for the City's park purposes. The City further covenants and agrees that in the event any issue, claim or dispute arises with respect to access, zoning, subdivision, contiguity, boundaries or other matters relating to title of the Leased Real Property, including, without limitation, any exception disclosed in the Title Report ( each defined as a ''Property Dispute"), the City will take all steps necessary to promptly quiet and eliminate such Property Dispute and/or provide the Authority with adequate access to the Leased Real Property and ensure its fee title and interest is and remains free and clear of Property Disputes. (t) No Reversion. Nothing in the Site Lease, this Agreement or the Leases shall be 55575.70003\3336 l 763.3 -17- 59deemed to cause a reversion under the instrument recorded April 2, 1981 as Instrument No. 81-58748, Official Records of the County Recorder of the County of Riverside, California, as more fully described in the Title Report. Section 4.5 Substitution of Property. The City may, at any time after completion of the Project and from time to time thereafter, substitute other real property similar in nature and characteristics to the Leased Real Property (the "Substitute Property") for the Leased Real Property or any portion thereof (the "Former Property"), provided that the City must satisfy all of the following requirements which are hereby declared to be conditions precedent to such substitution: (a) The City has certified to the Authority and both Assignees that no Event of Default has occurred and is continuing. (b) The City has filed with the Authority and both Assignees, and caused to be recorded in the office of the Riverside County Recorder, sufficient memorialization of an amendment to the Project Lease which adds to Attachment B-2 thereto and Appendix A to the Site Lease to provide a description of such Substitute Property and delete therefrom the description of such Former Property. (c) The City has obtained a CL TA policy of title insurance, naming both the Servicer and the Project Lease Assignee as insured, which insures the Authority's leasehold estate in such Substitute Property under the Site Lease and the City"s leasehold interest in such Substitute Property under the Project Lease, subject only to Permitted Encumbrances, in an amount at least equal to the aggregate amount of the principal component of the outstanding Project Lease Payments. ( d) The City has certified in writing to the Authority and both Assignees that such Substitute Property (i) has an estimated value at least equal to the aggregate principal amount of outstanding Project Lease Payments, (ii) serves the public purposes of the City and constitutes property which the City is permitted to lease under the laws of the State of California, and (iii) has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City. ( e) The City has obtained the prior written consent of both Assignees, which consent shall not be unreasonably withheld. (t) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made herein. (g) The Assignees have received an opinion of Special Counsel to the effect that the substitution of the Leased Real Property will not constitute reissuance of any of the Lease Payments under the Leases for federal income tax purposes. (h) The Assignees have received an environmental survey or surveys with respect to the Substitute Property, and other documents that the Assignees may reasonably require; provided, however, that if the environmental studies have 55575.70003\3336 l 763.3 -18- 60recommended that remedial action be taken with respect to the Substitute Property so that it will be in compliance with applicable environmental laws, the Authority, at the direction of both Assignees, does not have an obligation or duty to accept the Substitute Property as Leased Real Property until such time as the remedial action has been completed and the Assignees have received assurances to their satisfaction that the Substitute Property is in compliance with applicable environmental laws. Upon the satisfaction of all such conditions precedent, the Project Lease Term will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property. The City is not entitled to any reduction, diminution, extension or other modification of the Project Lease Payments whatsoever as a result of such substitution. The Authority and the City will execute, deliver and cause to be recorded all documents required to discharge the Project Lease, the Site Lease, the Project Lease Assignment and the Equipment Lease Assignment against the Former Property, and to cause the Substitute Property to become subject to all of the terms and conditions of the Project Lease, the Site Lease, the Project Lease Assignment and the Equipment Lease Assignment. Section 4.6 Release of Property. (a) The City may, at any time and from time to time, release any portion of the Leased Real Property from the Project Lease and the Site Lease (the ''Released Property") provided that the City has satisfied all of the following requirements which are hereby declared to be conditions precedent to such release: (i) The City has certified to the Authority and the Assignees that no Event of Default has occurred and is continuing. (ii) The City has filed with the Authority and the Assignees, and caused to be recorded in the office of the Riverside County Recorder, sufficient memorialization of an amendment to the Project Lease and the Site Lease that removes the Released Property from the Project Lease and the Site Lease. (iii) The City has filed with the Authority and the Assignees an appraisal or other written documentation prepared by a mutually agreeable third party that establishes that the fair market value of the property which remains subject to the Project Lease and the Site Lease following such removal is at least equal to the aggregate outstanding principal amount of the Project Lease Payments, and the fair rental value of the property which remains subject to the Project Lease and the Site Lease following such removal is at least equal to the Project Lease Payments thereafter coming due and payable under the Project Lease. (iv) The Assignees have received an opinion of Special Counsel to the effect that the release of the Leased Real Property will not constitute a re issuance of any of the Lease Payments under the Leases for federal income tax purposes. (v) The City has obtained the prior written consent of both Assignees, which consent shall not be unreasonably withheld. Upon the satisfaction of all such conditions precedent, the Project Lease Term will 55575. 70003\33361763.3 -19- 61thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Project Lease Payments whatsoever as a result of such release. The Authority and the City will execute, deliver and cause to be recorded all documents, if any, required to discharge the Project Lease and the Site Lease of record against the Released Property. Section 4.7 Quiet Enjoyment. (a) Throughout the Project Lease Term, the Authority will provide the City with quiet use and enjoyment of the Leased Real Property and the City will peaceably and quietly have and hold and enjoy the Leased Real Property, without suit, trouble or hindrance from the Authority, except as expressly set forth in the Project Lease. The Authority shall, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the right to inspect the Leased Real Property as provided in Section 7.2. (b) So long as the City is not in default under the Equipment Lease, neither the Authority nor any entity claiming by, through or under the Authority, shall interfere with the City's quiet use and enjoyment of the Equipment during the Equipment Lease Term. Section 4.8 No Merger. It is the express intention of the Authority and the City that the Project Lease and the obligations of the parties under the Project Lease are separate and distinct from the Site Lease and the obligations of the parties thereunder, and that during the term of the Site Lease and the Project Lease Term no merger of title or interest may occur or be deemed to occur as a result of the respective positions of the Authority and the City under the Site Lease and the Project Lease. ARTICLE V MAINTENANCE, TAXES, INSURANCE AND OTHER MATTERS Section 5.1 Maintenance, Utilities, Taxes and Assessments with respect to the Leased Real Property. Throughout the Project Lease Term, as part of the consideration for the rental of the Leased Real Property, and in order to ensure that the City maintain the Leased Real Property in proper working order so that it may be used for its intended purpose, all improvement, repair and maintenance of the Leased Real Property are the sole responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Leased Real Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and will pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Leased Real Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Project Lease Payments pursuant to the Project Lease, the Authority agrees to provide only the Leased Real Property, as more specifically set forth in the Project Lease. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933( 4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of the Project Lease. The City will also pay or cause to be paid all taxes and assessments of any type or nature, 55575.70003\3336 l 763.3 -20- 62if any, charged to the Authority or the City affecting the Leased Real Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City is obligated to pay only such installments as are required to be paid during the Project Lease Term as and when the same become due. The City may, at the City's expense anc;l in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority notifies the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Leased Real Property will be materially endangered or the Leased Real Property or any part thereof will be subject to loss or forfeiture, in which event the City will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Assignees. Section 5.2 Modification of Leased Real Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Leased Real Property or any portion thereof. All additions, modifications and improvements to the Leased Real Property will thereafter comprise part of the Leased Real Property and become subject to the provisions of the Project Lease. Such additions, modifications and improvements may not in any way damage the Leased Real Property, or cause the Leased Real Property to be used for purposes other than those authorized under the provisions of state and federal law; and the Leased Real Property, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other lien to be established or remain against the Leased Real Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City under this Section; provided.that if any such lien is established and the City first notifies the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Leased Real Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City. Section 5.3 Public Liability and Property Damage Insurance. The City shall maintain or cause to be maintained, throughout the Equipment Lease Term and the Project Lease Term, comprehensive general insurance in protection of the Authority, the City and their respective members, officers, agents and employees. Such insurance must provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Real Property and the Equipment. Such insurance must provide coverage of at least $1,000,000 per occurrence, $3,000,000 in aggregate and $5,000,000 excess liability and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be 55575.70003\3336 l 763.3 -21- 63maintained in whole or in part in the form of a program of self-insurance by the City, or in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City will apply the proceeds of such insurance toward extinguishment or satisfaction of the liability with respect to which the net proceeds are paid. Section 5.4 Casualty Insurance. The City shall procure and maintain, or cause to be procured and maintained, at all times throughout the Equipment Lease Term and the Project Lease Term, casualty insurance insuring the Facility and the Equipment against loss or damage by fire and all other risks covered by the standard extended coverage endorsement then in use in the State of California, and any other risks reasonably required by the Authority (except that in no event is casualty insurance required to provide coverage for earthquake risk so long as such insurance coverage is not, in the City's reasonable judgment, available on the open market from reputable insurance companies at a reasonable cost). Such insurance shall be in an amount at least equal to the greater of (a) the sum of the replacement value of the Facility plus the replacement value of the Equipment or (b) the aggregate unpaid principal components of Lease Payments under the Leases, and may be subject to such deductibles as the City deems adequate and prudent. In the event the City delivers Substitute Property pursuant to Section 4.5, such coverage shall also include flood insurance coverage if the City would normally procure and maintain flood insurance coverage for the Substitute Property and flood insurance coverage is available at reasonable cost from reputable insurers· in the reasonable judgment of the City. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City shall apply the Net Proceeds of such insurance as provided in Section 6.1. Section 5.5 Rental Interruption Insurance. The City shall procure and maintain, or cause to be procured and maintained, at all times throughout the Equipment Lease Term and the Project Lease Term, rental interruption or use and occupancy insurance to cover loss, total or partial, of the City's loss of beneficial use and enjoyment of the Facility or the Equipment or any substantial part of either thereof and caused by any and all perils insured under the casualty insurance required by Section 5.4, in an amount at least equal to the sum of the maximum Lease Payments under the Leases coming due and payable during any two consecutive Fiscal Years during the remaining Equipment Lease Term and Project Lease Term. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance, if any, will be credited towards the payment of the Lease Payments allocable to the insured affected portion of the Equipment and Leased Real Property as the same become due and payable. Section 5.6 Intentionally Omitted. Section 5.7 Insurance Net Proceeds; Form of Policies. All insurance policies (or riders) required by this Article V shall be taken out and maintained with responsible insurance companies organized under the laws of one of the states of the United States and qualified to do business in the State of California. Each policy of insurance required by Sections 5.3, 5.4 and 55575.70003\3336 l 763.3 -22- 645.5 shall name the Assignees as additional insureds and loss payees and shall include a lender's loss payable endorsement for the benefit of the Assignees. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Article V. To the extent possible, all such policies shall provide that the Assignees are given at least IO days' notice of each alteration or expiration of coverage, any intended cancellation thereof or reduction of the coverage provided thereby. Neither Assignee is responsible for the sufficiency, adequacy or amount of any insurance or self-insurance herein required and is fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. Before the expiration of any such policy (or rider), the City shall furnish to the Assignees evidence that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V unless such insurance is no longer obtainable, in which event the City shall notify the Assignees of such fact. Any insurance required hereunder that is to be maintained in whole or in part in the form of a program of self insurance by the City requires the prior written consent of the Assignees. Section 5.8 Installation of City's Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Leased Real Property. All such items will remain the sole property of the City, in which neither the Authority nor the Assignees have any interest, and may be modified or removed by the City at any time, provided that the City must repair and restore any and all damage to the Leased Real Property resulting from the installation, modification or removal of any such items. Nothing in either Lease prevents the City from purchasing or leasing items to be installed under this Section under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest attaches to any part of the Leased Real Property. Section 5.9 Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, deed of trust, security interest, pledge, lien, charge, encumbrance or claim on or with respect to the Leased Real Property (including the charge upon property purchased under conditional sales or other title retention agreements), other than Permitted Encumbrances. Except as expressly provided in this Article, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same will arise at any time. The City shall reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, deed of trust, security interest, pledge, lien, charge, encumbrance or claim. The City shall keep the Equipment free of all levies, liens and encumbrances except those created by the Equipment Lease and the Equipment Lease Assignment. Section 5.10 Environmental Covenants. (a) Neither the Assignees nor the Authority shall be obligated to monitor compliance of the Leased Real Property with applicable environmental or other laws. Neither the Assignees nor the Authority shall have any obligations or responsibility to foreclose or otherwise further involve itself with the Leased Real Property under any circumstance, including any instance where either the Authority or either Assignee is notified of any non-compliance of the Leased Real Property with applicable environmental or other laws. The City represents that the Leased Real Property is currently in full complia~ce 55575.70003\3336 l 763.3 -23- 65with all applicable federal, state and local environmental laws. The City represents that no environmental issues exist with respect to the Leased Real Property which impairs or adversely affects the City's beneficial use or quiet enjoyment of the Leased Real Property. It is expressly understood that neither the Assignees nor the Authority shall have the right or the obligation to monitor the City's compliance with environmental laws. The City hereby further represents and warrants to the Authority and each of the initial Assignees that, since the City acquired fee title to the Leased Real Property, the City, its officers, employees or agents have neither ever caused or permitted any hazardous, toxic or dangerous substance, waste, material or underground storage tanks that are regulated under any federal, State or local statute, ordinance, rule, regulation or other law in effect as of or prior to the Funding Date pertaining to environmental protection, contamination or clean-up ( "Existing Hazardous Substance") to be generated, placed, housed, located or disposed of on, under or in the Leased Real Property, nor ever used the Leased Real Property as a dump site, permanent or temporary storage site or transfer station for any Existing Hazardous Substance. The City hereby further represents and warrants to the Authority and each of the initial Assignees that the City, its officers, employees or agents shall neither ever cause or permit Hazardous Substances (as defined below) to be generated, placed, housed, located or disposed of on, under or in the Leased Real Property, nor ever use the Leased Real Property as a dump site, permanent or temporary storage site or transfer station for any Hazardous Substance. The City further represents, warrants and covenants to the Authority and each of the initial Assignees that it shall not allow any actual or alleged violation with respected to the Leased Real Property of any federal, state or locate statute, ordinance, rule regulation or other law pertaining to Hazardous Substances. The City shall comply with, and shall cause its tenants, subtenants, licensees, guests, invitees, contractors, employees and agents to comply with, all Environmental Regulations, and shall keep the Leased Real Property free and clear of any liens imposed pursuant thereto (provided, however, that any such liens, if not discharged, may be bonded). The City shall specifically comply with all requirements of the Asbestos Hazard Emergency Response Act (AHERA), including, as applicable, developing, maintaining and updating an Asbestos Management Plan and keeping a copy at the Leased Real Property; and performing re-inspections of Asbestos Containing Materials at the Leased Real Property as required by AHERA or as recommended by Infotox, Inc. or any other environmental services firm or contractor investigating asbestos at the Leased Real Property. The City shall maintain all Asbestos Containing Materials in an intact and undamaged state and perform any demolition, renovation or other activities in accordance with all applicable Environmental Regulations. Upon receipt of any notice from any individual, entity or governmental authority with regard to the presence of, or storage, transportation, disposal or use of Hazardous Substances or the pumping, spilling, leaking, disposing of, emptying, discharging or releasing (hereinafter collectively referred to as "Release") of Hazardous Substances on, from or beneath the Leased Real Property, the City shall give prompt written notice thereof to the Authority and the Assignees (and, in any event, prior to the expiration of any period in which to respond to such notice under any Environmental Regulation). (b) To the greatest extent permitted by law, the City agrees to hold harmless, indemnify and defend the Authority and each of the Assignees from and against any claim, demand, penalty, fee, lien, damage, loss expense or liability resulting from (i) any breach of the representations and warrar:ities made by it in this Section or any failure, for any reason to comply with environmental laws, rules and regulations, including reasonable attorneys' fees and costs of, or in preparation for, any trial or appellate review, (ii) any actual or alleged Hazardous Substance 55575.70003\3336 l 763.3 -24- 66contamination, including the clean-up of Hazardous Substances from the Leased Real Property or any other properties resulting from any activities on the Leased Real Property during the City's ownership, possession or control of the Leased Real Property which directly or indirectly result in the Leased Real Property or any other property being contaminated with Hazardous Substances, (iii) the presence of any Mold in or on the Leased Real Property or conditions conducive to Mold growth within the Leased Real Property and (iv) any alleged or actual violation of any Environmental Regulation. This indemnity shall survive the termination of the Leases and shall continue to inure to the benefit of the Authority notwithstanding any assignment of its other rights hereunder, as well as either Assignee of the Authority's rights hereunder; provided, however, that the obligations of the City under this Section are specifically limited to payment from such moneys of the City as are available at such time from the proceeds of insurance, self-insurance and legally available funds. ( c) The Authority acknowledges that so long as the City operates the Leased Real Property for purposes related to providing a public community center, de minimis amounts of a Hazardous Substance used in the ordinary course of the City"s operation of the Leased Real Property shall not violate the Leases or the Site Lease, so long as the City complies with all Environmental Regulations and all other federal, State or local statues, ordinances, rules, regulation or other laws applicable to the handling, use and disposal of such Hazardous Substances. (d) The City represents and warrants that the "Environmental Questionnaire" relating to the Leased Real Property, dated July 21, 2013, is true and correct in all material respects. The City represents and warrants that (i) any Hazardous Substances disclosed pursuant to the "Environmental Questionnaire" relating to the Leased Real Property, dated July 21, 2013, are in good condition and do not require remediation or abatement and (ii) the Leased Real Property does not contain any fungal or other biological contamination, infestation or growth known or believed to cause harm to human health. (e) With regard to any Hazardous Substances disclosed pursuant to the "Environmental Questionnaire" relating to the Leased Real Property, dated July 21, 2013, the City and the Authority hereby covenant to follow all applicable recommendations regarding such Hazardous Substances identified in (i) the letter/report prepared by Infotox, Inc. dated April 11, 2009 regarding "Environmental Management Services, James 0. Jessie Desert Highland Unity Center, Infotox, Inc. Project #092024", (ii) the letter/report prepared by Infotox, Inc. dated April 11, 2009 regarding "Commercial Structures Asbestos Survey, James 0. Jessie Desert Highland Unity Center, Infotox, Inc. Project #092024", and (iii) any subsequent AHERA or other asbestos related inspection reports ((i) through (iii), collectively referred to as "'asbestos survey reports''), including, without limitation, (I) ensuring that any future work at the Leased Real Property involving a disturbance of the asbestos containing floor tile mastic material must be performed by a licensed and registered asbestos removal contractor utilizing the asbestos removal procedures in 8 CCR 1529 (CAL/OSHA) and SCAQMD Rule 1403, (2) prior to the disturbance of building materials at the Leased Real Property not included in the asbestos survey report, materials must be collected and analyzed to determine asbestos content, (3) Infotox, Inc.'s recommendation that disturbance of asbestos containing materials be avoided to prevent exposure to airborne asbestos fibers, ( 4) that asbestos containing materials be removed from a structure prior to demolition or renovation activities that may disturb the materials per EPA 55575.70003\3336 l 763.3 -25- 67(NESHAP) and South Coast Air Quality Management District (SCAQMD) regulations and ( 4) that asbestos related work must be performed by California Licensed and Registered Asbestos Abatement Contractors. (f) The City agrees to maintain the Leased Real Property free of Mold of types or in conditions that have or reasonably could be expected to have an adverse effect on human health or the value of the Leased Real Property and to prevent conditions conducive to Mold growth, including without limitation, unreasonable moisture accumulation within the heating, ventilation and air conditioning system or in other Leased Real Property or water leaks. In the event that any Mold of types or conditions that have or reasonably could be expected to have an adverse effect on human health or the value of the Leased Real Property or conditions conducive to Mold growth are discovered on the Leased Real Property, City shall provide the Assignees prompt written notice thereof and City agrees that it shall promptly clean up and remove the Mold and complete the repairs necessary to eliminate the conditions that resulted in the Mold growth at City's sole cost and expense. City shall keep the Assignees fully informed with regard to the progress of the cleanup, removal and repairs and shall provide a summary report from a regionally-recognized expert on Mold reasonably satisfactory to the Assignees certifying to the Assignees that the Mold has been cleaned up and removed and the repairs necessary to eliminate the conditions that resulted in the Mold growth have been completed. The form and substance of such report shall be reasonably satisfactory to the Assignees. If City fails to meet any of the foregoing requirements in this Section 5.1 0(f) in a timely manner, the Assignees may (but shall not be obligated to) perform or cause to be performed the work necessary to complete the requirements, and City hereby grants to the Assignees and its consultants and agents access to the Leased Real Property to undertake the actions described in this Section 5.1 0(f). (g) As used herein: "Asbestos Containing Materials" shall mean material containing more than one percent (1 %) of the asbestiform varieties of (i) chrysotile (serpentine); (ii) crocidolite (ricbeckite ); (iii) amosite ( cummington-itegrinerite ); (iv) anthophyllite; (v) tremolite; and (vi) antinolite. "Asbestos Management Plan" shall mean that written plan for the Leased Real Property relating to monitoring and maintaining all Asbestos Containing Materials used or located on the Leased Real Property in accordance with the Asbestos Hazard Emergency Response Act (AHERA). "Environmental Regulations" shall mean all laws and regulations, now or hereafter in effect, with respect to Hazardous Substances, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as amended ( 42 U .S.C. Section 9601, et seq.) (together with the regulations promulgated thereunder, "CERCLA"), the Resource Conservation and Recovery Act, as amended ( 42 U .S.C. Section 6901, et seq.) (together with the regulations promulgated thereunder, "RCRA"), the Emergency Planning and Community Right-to-Know Act, as amended (42 U.S.C. Section 11001, et seq.) (together with the regulations promulgated thereunder, "Title III"), the Clean Water Act, as amended (33 U .S.C. Section 1251, et seq.) (together with the regulations promulgated thereunder, "CW A"), the Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.) (together with the regulations promulgated thereunder, "CAA"), the Toxic Substances Control Act, as amended (15 U .S.C. Section 2601, et seq.) (together with the regulations promulgated thereunder and the Asbestos 55575.70003\3336 J 763.3 -26- 68Hazard Emergency Response Act (AHERA)(a provision thereto ),,"TSCA"), the Occupational Safety and Health Act, as amended (29 U.S.C. Section 651 et seq.) (together with regulations promulgated thereunder, "OSHA") and any similar federal, state or local laws and regulations and any so-called local, state or federal "superfund" or "superlien" law. "Hazardous Substance" shall mean any hazardous, toxic or dangerous substance, waste, material or underground storage tanks (including, without limitation, flammable explosives, polychlorinated biphenyl compounds, heavy metals, chlorinated solvents, cyanide, radon, petroleum products, asbestos or any Asbestos Containing Materials, methane, radioactive materials, pollutants, hazardous materials, hazardous wastes, hazardous, toxic, or regulated substances or related materials, as characterized, regulated or defined in CERCLA, RCRA, CWA, CAA, TSCA, OSHA and Title III, and the regulations promulgated pursuant thereto) that are or may become regulated under any Environmental Regulations or other federal, State or local statute, ordinance, rule, regulation or other law now or hereafter in effect pertaining to environmental protection, contamination or clean-up. For purposes of this Section 5.10, all references to Hazardous Substance or Hazardous Substances shall be deemed to include references to Mold. "Mold" shall mean any fungus, mold, mildew, spores or any similar or related organisms and any mycotoxin, substance, compound, chemicals, mist, waste or vapor produced by any fungus, mold, mildew, spores or any similar or related organisms. Section 5.11 Taxes and Other Governmental Charges with respect to the Equipment; Use and Maintenance of the Equipment. (a) The City and the Authority contemplate that the Equipment will be used for a governmental or proprietary purpose of the City and that the Equipment will therefore be exempt from all property taxes. If the use, possession or acquisition of any Equipment is nevertheless determined to be subject to taxation, the City shall pay when due all taxes and governmental charges lawfully assessed or levied against or with respect to such Equipment. The City shall pay such taxes or charges as the same may become due; provided that, with respect to any such taxes or charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as accrue during the Equipment Lease Term. (b) The City shall not install, use, operate or maintain the Equipment ( or cause the Equipment to be installed, used, operated or maintained) improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by the Equipment Lease. The City shall provide all permits and licenses, if any, necessary for the installation and operation of the Equipment. The City shall pay all utility and other charges incurred in the use and maintenance of the Equipment. In addition, the City agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative, or judicial body; provided that the City may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the opinion of the Authority, adversely affect the interest of the Authority in and to the Equipment or its interest or rights under the Equipment Lease. ( c) The City shall maintain, preserve and keep the Equipment in good repair and working order, in a condition comparable to that recommended by the manufacturer. The 55575.70003\3336 l 763.3 -27- 69Authority shall have no responsibility to maintain, repair or make improvements or additions to the Equipment. In all cases during the Equipment Lease Term and prior to return of the Equipment to the Authority as provided in Section 8.2( c ), the City agrees to pay any costs necessary for the manufacturer to re-certify the Equipment as eligible for manufacturer"s maintenance upon the return of the Equipment as provided for in such Section. (d) The City shall not alter any item of Equipment or install any accessory, equipment or device on an item of Equipment if that would impair any applicable warranty, the originally intended function or the value of that Equipment. All repairs, parts, accessories, equipment and devices furnished, affixed to or installed on any Equipment, excluding temporary replacements, shall thereupon become subject to the security interest granted pursuant to Section 4.4. Section 5.12 Advances. If the City fails to perform any of its obligations under this Article V, the Authority may, but shall be under no obligation to, take any necessary action to cure the failure, including the advancement of money. All amounts so advanced by the Authority shall constitute additional rent for the Equipment Lease Term or Project Lease Term, as applicable, and the City covenants and agrees to pay such amounts so advanced by the Authority with interest thereon from the date advanced until paid at a rate equal to the Default Rate; provided, however, that any amount payable by the City pursuant to this Section 5.13 shall be payable solely from moneys appropriated for such purpose by the City Council of the City in its discretion, and failure to appropriate such moneys shall not constitute an Event of Default under either Lease. ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 6.1 Application of Net Proceeds. The Net Proceeds of any taking of the Leased Real Property or the Equipment or any portion of either thereof in eminent domain proceedings, and the Net Proceeds of any insurance award with respect to the Leased Real Property or the Equipment under Section 5.4, will be paid to the Authority to be applied as hereinafter set forth in this Section 6.1. If the Leased Real Property or the Equipment is taken in eminent domain proceedings at any time during the Equipment Lease Term or the Project Lease Term, or if the Leased Real Property or the Equipment is ~amaged or destroyed, the City shall as soon as practicable after such event, with the prior written consent of the Authority, apply the Net Proceeds resulting therefrom either to: (a) repair the Leased Real Property or the Equipment to full use, as applicable; or (b) replace the Leased Real Property or the Equipment, at the City's sole cost and expense, with property of equal or greater value to the Leased Real Property or the Equipment immediately prior to the time of such destruction or damage, such replacement Leased Real Property or Equipment to be subject to the Authority" s reasonable approval, whereupon such replacement shall be substituted in the Equipment Lease or the Project Lease, as applicable, by appropriate amendment. The City shall notify the Authority of which course of action it desires to take within 15 days after the occurrence of such destruction or damage. The Authority may (but is not required to) in its own name or in the City's name execute and deliver proofs of claim, receive all such moneys, endorse checks and other instruments representing payment of such 55575.70003\33361763.3 -28- 70moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy, and the City hereby grants to the Authority a power of attorney coupled with an interest to accomplish all or any of the foregoing. The Net Proceeds of all insurance payable with respect to the Leased Real Property and the Equipment shall be available to the City and shall be used to discharge the City's obligations under this Section. Section 6.2 Termination or Abatement Due to Eminent Domain. If the Equipment or the Leased Real Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Equipment Lease Term or the Project Lease Term, as applicable, will cease with respect thereto as of the day possession is so taken. If less than all of the Equipment or the Leased Real Property is taken permanently, or if the Equipment or the Leased Real Property is taken temporarily, under the power of eminent domain, (a) the Equipment Lease or the Project Lease, as applicable, will continue in full force and effect with respect thereto and will not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there will be a partial abatement of Equipment Lease Payments or Project Lease Payments, as the case may be, allocated thereto based upon whether such event has occurred with respect to the Equipment or the Project, in an amount to be determined by the City such that the resulting Equipment Lease Payments or Project Lease Payments, as the case may be, represent fair consideration for the use, occupancy and enjoyment of the remaining usable portions of the affected Equipment or affected Leased Real Property. Section 6.3 Abatement Due to Damage or Destruction. The amount of Equipment Lease Payments or Project Lease Payments will be abated during any period in which by reason of damage or destruction ( other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use, occupancy and enjoyment by the City of the Equipment or the Leased Real Property or any portion of either thereof. The amount of such abatement will be determined by the City such that the resulting Equipment Lease Payments or Project Lease Payments, as the case may be, based upon whether such damage or destruction occurs with respect to the Equipment or the Project, represent fair consideration for the use, occupancy and enjoyment of the portions of the affected Equipment or the affected Leased Real Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair, replacement or reconstruction. In the event of any such damage or destruction, the Equipment Lease or the Project Lease, as the case may be, will continue in full force and effect and the City waives any right to terminate the Equipment Lease or the Project Lease by virtue of any such damage and destruction. Notwithstanding the foregoing, there will be no abatement of Equipment Lease Payments or Project Lease Payments under this Section 6.3 to the extent that the proceeds of casualty insurance and rental interruption insurance are available to pay Equipment Lease Payments or Project Lease Payments, as the case may be, which would otherwise be abated under this Section 6.3, it being hereby declared that such proceeds and amounts constitute a special fund for the payment of such Lease Payments. Section 6.4 Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair or replacement referred to in Section 6.1, the City shall either (a) complete such repair or replacement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) pay or cause to be paid to the Authority the amount of the then applicable 55575. 70003\33361763.3 -29- 71prepayment price (including premium) under Section 9.3 with respect to the affected Equipment or Leased Real Property, as the case may be, and, upon such payment, the Equipment Lease Term or the Project Lease Term, as applicable, shall terminate and the Authority's security interest in the Equipment or lien on the Leased Real Property, as applicable, shall terminate as provided in Section 4.4; provided, however, that any amount payable by the City pursuant to this ~ection 6.4 shall be payable solely from moneys appropriated for such purpose by the City Council of the City in its discretion, and failure to appropriate such moneys shall not constitute an Event of Default under the affected Equipment Lease or Project Lease. The amount of the Net Proceeds, if any, remaining after completing such repair or replacement or after paying the prepayment price with respect to the affected Lease shall be retained by the City. If the City shall make any payments pursuant to this Section, the City shall not be entitled to any reimbursement therefor from the Authority nor shall the City be entitled to any diminution of the amounts payable under the affected Lease. Section 6.5 Actions in the Event of Uninsured Casualty. In the event of damage to or destruction of all or a portion of the Leased Real Property owing to earthquake or other uninsured casualty for which the proceeds ofrental interruption insurance are not available, if the fair rental value of the undamaged Leased Rental Property is less than the Lease Payments due during each fiscal year for the remainder of the term of this Agreement, at the request of the Assignees, the City shall promptly after the occurrence of such event substitute and add as additional Leased Real Property hereunder other real or personal property of the City that is unimpaired and unencumbered, such that the fair rental value of the undamaged Leased Real Property and the additional Leased Real Property is at least equal to the Lease Payments due during each fiscal year for the remainder of the term of this Agreement. ARTICLE VII OTHER COVENANTS Section 7.1 Disclaimer of Warranties. The Authority makes no agreement, warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City of the Equipment or the Leased Real Property or any portion of either thereof, or any other representation or warranty with respect to the Equipment or the Leased Real Property or any portion of either thereof. The City acknowledges that the Authority is not a manufacturer of any portion of the Equipment or the Leased Real Property or a dealer therein, that the City leases the Equipment and the Leased Real Property as-is, it being agreed that all of the aforementioned risks are to be borne by the City. In no event shall the Authority be liable for incidental, indirect, special or consequential damages, in connection with or arising out of either Lease for the existence, furnishing, functioning or the City's use of the Equipment or the Leased Real Property. Section 7.2 Access to the Leased Real Property. The City agrees that the Authority, and the Authority's successors or assigns, may at all reasonable times enter upon and to examine and inspect the Leased Real Property or any part thereof. The Authority and the Authority's successors and assigns have such rights of access to the Leased Real Property or any component thereof as may be reasonably necessary to cause the proper maintenance of the Leased Real 55575.70003\33361763.3 -30- 72Property in the event of failure by the City to perform its obligations under the Project Lease with respect to such Leased Real Property; provided, however, that neither the Authority nor any of its assigns have any obligation to cause such proper maintenance. Section 7.3 Risk of Loss; Release and Indemnification Covenants. Whether or not covered by insurance or self-insurance, the City hereby assumes all risk of loss of, or damage to and liability related to injury or damage to any persons or property arising from the Equipment or the Leased Real Property from any cause whatsoever, and no such loss of or damage to or liability arising from the Equipment or the Leased Real Property shall relieve the City of the obligation to make Lease Payments or to perform any other obligation under the Leases, except as otherwise provided in Sections 6.2 and 6.3. Whether or not covered by insurance or self-insurance, the City shall indemnify (to the fullest extent permitted by applicable law and subject to the appropriation of moneys sufficient for the purpose) the Authority and the respective Assignees, and their respective officers, agents, successors and assigns, against all liabilities, obligations, claims, losses and damages, including legal fees and expenses, arising out of any of the following: (a) the use, maintenance, condition or management of, or from any work or thing done on or in the Equipment or the Leased Real Property by the City, (b) any breach or default on the part of the City in the performance of any of its obligations under either Lease, ( c) any negligence, bad faith or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Equipment or the Leased Real Property, or ( d) any intentional misconduct or negligence of any sub lessee of the City with respect to the Equipment or the Leased Real Property. No indemnification is made under this Section or elsewhere in either Lease for willful misconduct or negligence under either Lease by the Authority or either Assignee, or their respective officers, agents, employees, successors or assigns. The provisions of this Section 7.3 shall continue in full force and effect notwithstanding the full payment of all obligations under the Leases or the termination of the Equipment Lease Term or the Project Lease Term for any reason. Section 7.4 Assignment by the Authority. (a) The Authority has assigned and transferred (i) the Assigned Equipment Lease Rights to the Equipment Lease Assignee pursuant to the Equipment Lease Assignment and (ii) the Assigned Project Lease Rights to the Project Lease Assignee pursuant to the Project Lease Assignment. The City hereby consents to each such assignment and transfer. The Authority hereby directs the City, and the City hereby agrees, to pay to the Equipment Lease Assignee all payments payable by the City pursuant to the Equipment Lease under Section 4.3 and all amounts payable by the City pursuant to the Equipment Lease under Article IX. Whenever in the Equipment Lease any reference is made to the Authority and such reference concerns any Assigned Equipment Lease Rights, such reference shall be deemed to refer to the Equipment Lease Assignee. The Authority hereby further directs 55575.70003\3336 l 763.3 -31- 73the City, and the City hereby agrees, to pay to the Project Lease Assignee all payments payable by the City pursuant to the Project Lease under Section 4.3 and all amounts payable by the City pursuant to the Project Lease under Article IX. Whenever in the Project Lease any reference is made to the Authority and such reference concerns any Assigned Project Lease Rights, such reference shall be deemed to refer to the Project Lease Assignee. Nothing in this Section 7.4 is intended, or shall be construed, to entitle the Equipment Lease Assignee (in such capacity) to assign or transfer any Assigned Project Lease Rights ( or any interest therein) or to entitle the Project Lease Assignee (in such capacity) to assign or transfer any Assigned Equipment Lease Rights ( or any interest therein). (b) The Assigned Equipment Lease Rights and the Assigned Project Lease Rights, and all proceeds therefrom, may be further assigned and reassigned in whole or in part to one or more assignees or subassignees by an Equipment Lease Assignee (but only with respect to Assigned Equipment Lease Rights) or a Project Lease Assignee (but only with respect to Assigned Project Lease Rights), without the necessity of obtaining the consent of the City; provided, that any such assignment, transfer or conveyance (i) shall be made only to an affiliate of the assignor or one or more banks, insurance companies or other financial institutions, and, if such assignment is made pursuant to a participation agreement, custodial, similar agreement under which multiple ownership interests in the agreement are created, it shall create a single entity, owner, or servicer to act on behalf of such participants with respect to the rights and remedies thereunder, (ii) shall not result in the creation of any interest in Assigned Equipment Lease Rights or Assigned Project Lease Rights in an aggregate principal component that is less than $100,000 and (iii) shall not require the City to make Lease Payments under either Lease, send notices or otherwise deal with respect to matters arising under the Equipment Lease or the Project Lease with or to more than one trustee, owner, servicer or other fiduciary or agent for a Lease (herein referred to with respect to each Lease as the "Lease Servicer"). Any trust agreement, participation agreement or custodial agreement under which multiple ownership interests in the Assigned Equipment Lease Rights or the Assigned Project Lease Rights are created shall provide the method by which the owners of such interests shall establish the rights and duties of a single Lease Servicer to act on their behalf with respect to such Assigned Rights, including with respect to the exercise of rights and remedies on behalf of such· owners upon the occurrence of an Event of Default under the Equipment Lease or the Project Lease, as the case may be. The Authority (including the initial Equipment Lease Assignee pursuant to the Equipment Lease Assignment and the initial Project Lease Assignee pursuant to the Project Lease Assignment) and the City hereby acknowledge and agree that the restrictions and limitations on transfer as provided in this Section 7.4 shall apply to the first and subsequent assignees and sub-assignees of any of the Assigned Rights (or any interest therein). 55575.70003\33361763.3 -32- 74(c) No assignment, transfer or conveyance permitted by this Section 7.4 that changes the Lease Servicer for a Lease or its payment instructions or mailing address shall be effective until the City shall have received a written notice of assignment that discloses the name, payment instructions and address of each such assignee; provided, that if such assignment is made to a bank or trust company as trustee or paying agent for owners of certificates of participation, trust certificates or partnership interests evidencing interests in the Assigned Equipment Lease Rights or the Assigned Project Lease Rights, it shall thereafter be sufficient that the City receives notice of the name, payment instructions and address of such bank or trust company that acts as the Lease Servicer for such Lease. During the Equipment Lease Term and the Project Lease Term, the City shall keep, or cause to be kept, a complete and accurate record of all such assignments in form necessary to comply with Section 149 of the Code. The City shall retain all such notices as a register of all Assignees for each Lease and shall make all payments to the Equipment Lease Assignee or the Project Lease Assignee, as the case may be, or the Lease Servicer for a Lease designated in such register. The City shall not have the right to, and shall not, assert against the initial Equipment Lease Assignee, the initial Project Lease Assignee or any subsequent Assignee any claim, counterclaim or other right that the City may have against the Authority. If an Equipment Lease Assignee or a Project Lease Assignee notifies the City of its intent to assign the related Assigned Rights ( or any interest therein) to a different Lease Servicer, the City agrees that it shall execute and deliver to the requesting Assignee a notice and acknowledgment of assignment in form reasonably required by such Assignee within five (5) Business Days after its receipt of such request. Section 7.5 Assignment and Subleasing by the City. (a) After the date of recordation of the Project Lease, the City may sublease the Leased Real Property, or any portion thereof, with the prior written consent of the Project Lease Assignee (which will not be unreasonably withheld), and subject to all of the following conditions: (i) The Project Lease and the obligation of the City to make Lease Payments thereunder shall remain obligations of the City. (ii) The City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Project Lease Assignee a true and complete copy of such sublease. (iii) Any sublease shall be expressly subject and subordinate to the Leases. (iv) No such sublease by the City may cause the Leased Real Property to be used for a purpose which is not authorized under the provisions of the laws of the State of California. (v) The City shall furnish the Authority and the Project Lease Assignee with a written opinion of Special Counsel to the effect that such sublease does not cause the interest components of any Lease Payments under the Project Lease to become includable in gross income for federal income tax purposes. (b) None of the City's right, title or interest in, to and under the Equipment Lease, any portion of the Equipment may be assigned, encumbered or subleased by the City for any 55575.70003\3336 l 763.3 -33- 75reason, and any purported assignment, encumbrance or sublease without the Authority's prior written consent shall be null and void. (c) None of the City's right, title or interest in, to and under the Project Lease, any portion of the Project may be assigned, encumbered or subleased by the City for any reason, and any purported assignment, encumbrance or sublease without the Authority's prior written consent shall be null and void. Section 7.6 Amendment of Leases. The Equipment Lease may be amended by the mutual consent of the City and the Authority, with the prior written consent of the Equipment Lease Assignee in its sole discretion. The Project Lease may be amended by the mutual consent of the City and the Authority, with the prior written consent of the Project Lease Assignee in its sole discretion. Prior to the effective date of any such amendment, and as a condition precedent to the effectiveness thereof, the City at its expense will obtain an opinion of Special Counsel to the effect that sue~ amendment will not adversely affect the exclusion from gross income of the interest component of any Lease Payments under the related Equipment Lease or Project Lease, as the case may be, for federal income tax purposes. Section 7.7 Tax Covenants. (a) Private Activity Bond Limitation. The City shall assure that proceeds of the Leases are not used so as to cause the interest components of Lease Payments to satisfy the private business tests of Section 141 (b) of the Code or the private loan financing test of Section 141 ( c) of the Code. (b) Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Lease Payments to be "federally guaranteed" within the meaning of Section l 49(b) of the Code. ( c) Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section l 48(t) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Lease Payments. (d) No Arbitrage. The City shall not take, or permit or suffer to be taken by either Assignee or otherwise, any action with respect to the proceeds of the Leases which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of execution of the Leases would have caused the Leases to be "arbitrage bonds" within the meaning of Section· 148 of the Code. Section 7.8 Financial Statements. The City shall annually provide the Assignee with current financial statements, budgets and proof of appropriation for the ensuing Fiscal Year, and such other financial information relating to the ability of the City to continue the Leases as may be requested by the Authority or an Assignee. 55575.70003\3336 l 763.3 -34- 76ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.1 Events of Default Defined. Each of the following events constitutes an Event of Default under the Equipment Lease and the Project Lease: (a) Failure by the City to pay any Lease Payment under a Lease or other payment required to be paid under a Lease at the time specified therein or to maintain insurance as specified in Article V. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed under a Lease, other than as referred to in the preceding subsection (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority. However, if the City notifies the Authority that in its reasonable opinion the failure stated in the notice can be corrected, but not within such 30 day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such 30 day period and thereafter diligently and in good faith cures such failure in a reasonable period of time, but not later than 60 days following the notice, unless the Assignees otherwise consent in writing. (c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted. ( d) Any representation or warranty made by the City in a Lease proves to have been false, incorrect, misleading, or breached in any material respect on the date when made. ( e) With respect to the Equipment Lease, the occurrence of an Event of Default under the Project Lease. (f) With respect to the Project Lease, the occurrence of an Event of Default under the Equipment Lease. Failure on the part of the City to make any payment, transfer or disbursement provided for in this Agreement to be paid from moneys in the City's general fund that are legally available and duly appropriated by the City Council of the City at its discretion and not at its obligation shall not be a default or Event of Default under this Agreement or the Escrow Agreement and no remedy is provided for any such failure. Section 8.2 Remedies on Default. Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted 55575.70003\3336 l 763.3 -35- 77under the Leases. Notwithstanding anything herein or in the Leases to the contrary, there is no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant under this Agreement and the Leases to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted under this Agreement and the Leases; provided, that no termination of either Lease will be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Notwithstanding anything in this Article VIII to the contrary, the remedies provided under this Section 8.2 may be exercised separately with respect to the Equipment Lease or the Project Lease upon the occurrence of an Event of Default under either such Lease or may be exercised with respect to both of the Leases as the respective Assignees may determine, unless otherwise required by applicable California law. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise each and every one of the following remedies: (a) Enforcement of Payments Without Termination. If the Authority does not elect to terminate the Project Lease or the Equipment Lease in the manner hereinafter provided for in subsection (b) or ( c) of this Section, the City agrees to remain liable for the payment of all Project Lease Payments and the performance of all conditions contained in the Project Lease and the payment of all Equipment Lease Payments and the performance of all conditions contained in the Equipment Lease, and the Authority may take whatever action at law or in equity may appear necessary or desirable, to collect each such Lease Payment as it becomes due under the Project Lease and the Equipment Lease, as applicable, subject, however, in any case to the provisions of Sections 6.2 and 6.3; provided, that in no event shall the City be liable in any Fiscal Year for any amount in excess of the related Lease Payments shown for such Fiscal Year in the Project Lease Payment Schedule or Equipment Lease Payment Schedule, as applicable. The City shall reimburse the Authority for any deficiency arising out of the re-leasing or sale of the Equipment or portion of thereof, or, if the Authority is unable to re-lease or sell the Equipment, then for the full amount of all Equipment Lease Payments to the end of the Equipment Lease Term (subject in any case to the provisions of Sections 6.2 and 6.3), but said Lease Payments and/or deficiency will be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments under the Equipment Lease notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Equipment or portion of either thereof or the exercise of any other remedy by the Authority. (b) Termination of Project Lease. If an Event of Default occurs and is continuing under the Project Lease, the Authority at its option may terminate the Project Lease. If the Authority terminates the Project Lease at its option and in the manner hereinafter provided on account of default by the City (and notwithstanding any re-entry upon the Leased Real Property by the Authority in any manner whatsoever), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Project Lease Payments. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer 55575.70003\33361763.3 -36- 78taken by the Authority will of itself operate to terminate the Project Lease, and no termination of the Project Lease on account of default by the City will be or become effective by operation of law, or otherwise, unless and until the Authority has given written notice to the City of the election on the part of the Authority to terminate the Project Lease. The City agrees that no surrender of the Leased Real Property, or of the remainder of the Project Lease Term or any termination of the Project Lease will be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. ( c) Termination of Equipment Lease. If an Event of Default occurs and is continuing under the Equipment Lease, the Authority at its option may terminate the Equipment Lease and may enter the premises where the Equipment is located and retake possession of the Equipment or require the City at the City's expense to promptly return any or all of the Equipment to the possession of the Authority at such place within the State of California as the Authority shall specify, and sell or lease such Equipment or, for the account of the City, sublease such Equipment, and the City hereby agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such removal, storage or reconditioning of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. ( d) Suit for Payment of Lease Payments. By action pursuant to the California Code of Civil Procedure, or as otherwise provided by law, obtain the issuance of a writ of mandamus enforcing, for each Fiscal Year seriatim during the entire balance of the remaining Equipment Lease Term or Project Lease Term, as applicable, subject in any case to the provisions of Sections 6.2 and 6.3, the duty of the City to appropriate and take all other administrative steps necessary for the payment of Lease Payments and other amounts due under the Equipment Lease or the Project Lease, as applicable. ( e) Proceedings at Law or In Equity. If an Event of Default occurs and, continues under the Equipment Lease or the Project Lease, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due thereunder or to enforce any other of its rights thereunder. (t) Remedies as Secured Party. If an Event of Default occurs and continues under the Equipment Lease, the Authority may take any and all actions to which it is entitled as a secured party with respect to the Equipment. (g) Remedies under the Site Lease. If an Event of Default occurs and continues under the Project Lease, the Authority may exercise its rights under the Site Lease. (h) Application of Proceeds of Collateral Upon Exercise of Remedies. All moneys received by the Authority pursuant to any right or remedy given or action taken under the provisions of this Section 8.2 together with all investment earnings thereon (collectively, the "Proceeds of Collateral") shall be applied as follows: 55575.70003\3336 l 763.3 -37- 79(i) First, to payment of the costs and expenses of the proceedings resulting in the collection of such proceeds and moneys and of the fees, expenses, liabilities and advances owing to or incurred or made by the Authority ( or either Assignee); (ii) Second, on a pro rata basis (A) in an amount equal to product of the Proceeds of Collateral after payment of amounts set forth in (i) above multiplied by the Equipment Lease Assignee Pro Rata Portion, for payment of Equipment Lease Payments due under the Equipment Lease and (B) in an amount equal to product of the Proc~eds of Collateral after payment of amounts set forth in (i) multiplied by the Project Lease Assignee Pro Rata Portion, for payment of Project Lease Payments due under the Project Lease; (iii) Third, after the payment in full of all Equipment Lease Payments due under the Equipment Lease and all Project Lease Payments due under the Project Lease, any remaining Proceeds of Collateral may be transferred to the City. Section 8.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy is cumulative and in addition to every other remedy given under the Leases or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default will impair any such right or power or will be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII it is not necessary to give any notice, other than such notice as may be required in this Article VIII or by law. Section 8.4 Agreement to Pay Attorneys' Fees and Expenses. If either party to this Agreement defaults under any of the provisions of the Leases and the non-defaulting party employs attorneys or incurs other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party contained in the Equipment Lease or the Project Lease, the defaulting party agrees that it will on demand therefor pay to the non-defaulting party the reasonable fees of such attorneys and such other expenses so incurred by the non-defaulting party. Section 8.5 No Additional Waiver Implied by One Waiver. If any agreement contained in either Lease is breached by either party and thereafter waived by the other party, such waiver will be limited to the particular breach so waived and will not constitute a waiver of any other breach thereunder. Section 8.6 Assignees to Exercise Rights. Such rights and remedies as are given to the Authority under this Article VIII with respect to the Equipment Lease have been assigned by the Authority to the Equipment Lease Assignee and with respect to the Project Lease have been assigned by the Authority to the Project Lease Assignee, to each of which assignment the City hereby consents. Such rights and remedies shall be exercised solely by the Equipment Lease Assignee with respect to the Assigned Equipment Lease Rights and solely by the Project Lease 55575.70003\33361763.3 -38- 80Assignee with respect to the Assigned Project Lease Rights, subject to the provisions of Section 8.2(i) hereof. ARTICLE IX PREPAYMENT OF LEASE PAYMENTS Section 9.1 Security Deposit. Notwithstanding any other provision of a Lease, the City may on any date secure the payment of the Equipment Lease Payments or the Project Lease Payments, as the case may be, in whole or in part by depositing with a trustee, escrow agent or other fiduciary selected by the City and acceptable to the Equipment Lease Assignee or the Project Lease Assignee (as the case may be) an amount of cash, which shall be held in a segregated trust or escrow fund under a trust or escrow agreement that is in form and content acceptable to such Assignee, which cash so held is either (a) sufficient to pay such Lease Payments, including the principal and interest components thereof, in accordance with the Equipment Lease Payment Schedule or the Project Lease Pc:1.yment Schedule, as applicable ( or on a prepayment date permitted by Section 9.2 hereof), or (b) invested in whole or in part in non-callable Federal Securities in such amount as will, in the opinion of an independent certified public accountant (which opinion must be in form and substance, and with such an accountant, acceptable to the affected Assignee and addressed and delivered to the affected Assignee), together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay such Equipment Lease Payments or Project Lease Payments, as applicable, when due under Section 4.3(a) as the City instructs at the time of said deposit; provided, however, that at or prior to the date on which any such security deposit is established, the City shall deliver to the affected Assignee an opinion of Special Counsel (in form and substance acceptable to the affected Assignee) to the effect that any such security deposit will not adversely affect the excludability of the interest component of Lease Payments under the related Lease from gross income of the owners thereof for federal income tax purposes. If the City posts a security deposit under this Section with respect to all unpaid Lease Payments under a Lease, and notwithstanding the provisions of Section 4.2, (i) the Equipment Lease Term or the Project Lease Term, as applicable, will continue, (ii) all obligations of the City under the related Lease, and all security provided by such Lease for said obligations, will thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be made, all of the Lease Payments under the affected Lease from such security deposit and its obligation provided in the next succeeding paragraph, and (iii) if such security deposit is made with respect to the Project Lease, the Authority's leasehold interest in the Leased Real Property will terminate on the date of said deposit automatically and without further action by the City or the Authority. Said security deposit constitutes a special fund for the payment of Lease Payments in accordance with the provisions of the Lease with respect to which such security deposit is made. Notwithstanding anything in this Section 9. I or otherwise in the affected Lease to the contrary, if the amount held in such security deposit shall at any time be insufficient (for whatever reason) to pay Lease Payments when due in full as provided in clause (a) or (b), as applicable, of the first paragraph of this Section 9.1, the City shall immediately pay to the 55575. 70003\33361763.3 -39- 81affected Assignee on the applicable due date or due dates the amount of any such shortfall from funds legally available for such purpose. Section 9.2 Optional Prepayment. The City may exercise its option to prepay the aggregate principal components of the Lease Payments under either or both Leases in whole, but not in part, on any Lease Payment Date as follows: (a) Project Lease -the Project Lease may be prepaid on any Lease Payment Date on or after August 1, 2028, by paying a prepayment price equal to the aggregate principal components of the Lease Payments to be prepaid, together with the principal and interest components of the Lease Payment required to be paid on such date, plus a prepayment premium as shown below: Prepayment Dates August 1, 2028 through May 1, 2029 August 1, 2029 through May I, 2030 August I, 2030 and thereafter Prepayment Premium 102% 101% 100% (b) Equipment Lease -the Equipment Lease may be prepaid on any Lease Payment Date on or after May 1, 2027 by paying a prepayment price equal to the aggregate principal components of the Lease Payments to be prepaid, together with the principal and interest components of the Lease Payment required to be paid on such date, plus a prepayment premium as show below: Prepayment Dates May I, 2027 through May 1, 2028 May 1, 2028 and thereafter Prepayment Premium 102% 101% The City shall give the Authority written notice of its intention to exercise its option to prepay Lease Payments under either or both of the Leases under this Section 9.2 not less than 30 days in advance of the intended prepayment date. Section 9 .3 Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City shall prepay the unpaid principal components of the Equipment Lease Payments or the Project Lease Payments, as applicable, in whole on any date or in part on any Lease Payment Date, from and to the extent of any Net Proceeds of insurance award or eminent domain award allocated to the Project or the Equipment based upon whether the event of damage, destruction or condemnation occurred with respect to the Project or the Equipment and to be applied for purposes of such prepayment under Article VI, by paying a prepayment price equal to 100% of the aggregate principal components of the Project Lease Payments or the Equipment Lease Payments, as applicable, to be prepaid, plus in each case accrued interest on such prepaid principal components to the prepayment date. The City shall give the Authority notice of prepayment of Lease Payments under the affected Lease pursuant to this Section 9 .3 not less than 30 days in advance of such prepayment date. Prepayment in part of the unpaid principal components of Lease Payments as provided in this Section 9.3 shall be applied to reduce the principal components of Lease Payments in inverse order of the Lease Payment Dates under the affected Lease. 55575.70003\3336 l 763.3 -40- 82ARTICLEX MISCELLANEOUS Section 10.1 Notices. Any notice, request, complaint, demand or other communication under this Agreement or the Leases may be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice is effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 72 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City, the Equipment Lease Assignee or the Project Lease Assignee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder. ff to the Authority: ff to the City: ff to the Project Lease Assignee: City of Palm Springs Financing Authority 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 Attention: David H. Ready Executive Director Phone: (760) 323-8350 City of Palm Springs 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 Attention: David H. Ready City Manager Phone: (760) 323-8350 Capital One Public Funding, LLC 1307 Walt Whitman Road, 3rd Floor Melville, New York 11747 Attention: Jonathan A. Lewis Phone: (631)531-2824 ff to the Equipment Lease Assignee: Capital One Public Funding, LLC 1307 Walt Whitman Road, 3rd Floor Melville, New York 11747 Attention: Jonathan A. Lewis Phone: (631) 531-2824 Section 10.2 Binding Effect. This Agreement and each Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns. Section 10.3 Severability. If any provision of this Agreement or a Lease is held invalid or unenforceable by any court of competent jurisdiction, such holding does not invalidate or render unenforceable any other provision hereof or thereof. 55575. 70003\33361763.3 -41- 83Section I 0.4 Net-net-net Lease. Each Lease is a "net-net-net lease" and the City hereby agrees that the Lease Payments under each Lease are an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever. Section 10.5 Third Party Beneficiary. The Equipment Lease Assignee is made a party beneficiary under this Agreement and the Equipment Lease with all rights of a third party beneficiary, and the Project Lease Assignee is made a party beneficiary under this Agreement and the Project Lease with all rights of a third party beneficiary. Section 10.6 Further Assurances and Corrective Instruments. The Authority and the City will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Equipment leased ( or intended so to be) under the Equipment Lease or the Leased Real Property leased ( or intended so to be) under the Project Lease or for carrying out the expressed intention of this Agreement or either Lease. Section 10.7 Execution in Counterparts. This Agreement, the Equipment Schedule and the Project Schedule may be executed in several counterparts, each of which will be an original and all of which will constitute but one and the same instrument. Section 10.8 Applicable Law. This Agreement and each Lease is governed by and construed in accordance with the laws of the State of California. Section I 0.9 Authority and City Representatives. Whenever under the provisions of this Agreement or either Lease the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request will be given for the Authority by an authorized officer, employee or other representative of the Authority designated and identified to the City (in form and substance acceptable to the City) for such purpose and for the City by an authorized official, employee or other representative of the City designated and identified to the Authority (in form and substance acceptable to the Authority) for such purpose, and any party hereto will be authorized to rely upon any such approval or request. Section 10.10 Captions. The captions or headings in this Agreement or either Lease are for c~:mvenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement or either Lease. 55575.70003\3336 I 763.3 -42- 84IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written. Attest: Attest: Anthony J. Mejia, MMC Secretary Anthony J. Mejia, MMC City Clerk 55575.70003\33361763.3 CITY OF PALM SPRINGS FINANCING AUTHORITY, as Lessor By ____________ _ David H. Ready Executive Director CITY OF PALM SPRINGS, CALIFORNIA, as Lessee By ____________ _ David H. Ready City Manager Signature Page to Lease Agreement 85EXHIBIT A FORM OF EQUIPMENT SCHEDULE TO BE RECORDED AND WHEN RECORDED RETURN TO: Best Best & Krieger LLP 3390 University A venue, 5th Floor Riverside, California 92501 Attention: Kim Byrens THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 1 1922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. Re: EQUIPMENT LEASE Lease Agreement Dated as of December 1, 2020 between City of Palm Springs Financing Authority, as lessor, and City of Palm Springs, California, as lessee 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above-referenced Lease Agreement (the "Agreement"). 2. Equipment. The following equipment and other property constitutes the Equipment hereby included under the Equipment Lease created under this Equipment Schedule entered into pursuant to the Agreement and to be acquired and installed at the City's Municipal Central Plant located at 205 North El Cielo, Palm Springs, California: (i) ECM: Ml-A -Central Plant Cogeneration Upgrade (Municipal)-one 1,137 kW GE Jenbacher (or equivalent) reciprocating cogeneration gen-set and other furnished accessories; one 450 ton Thermax absorption chiller ( or equivalent); one induced draft cooling tower; two primary hot water pumps; two primary chilled water pumps; three condenser water pumps and two process hot water pumps serving the jacket water circuit and the low temperature circuit; heat exchangers; boilers; centrifugal separator; SCR/Oxidation catalyst; urea tank; one continuous emissions monitoring system for engine generator; switchgear; automatic transfer switch; battery charger cabinets; two variable frequency drives for cooling towers fans; three variable frequency drives for chilled water site pumps; two variable frequency drives for hot water site pumps; and related equipment and improvements. A-1 55575.70003\3336 l 763.3 86(ii) ECM: M2-A -Energy Management System -Municipal -CHW and HHW coil 2-way control valves with associated piping at building air handling and multi-zone units; 2-position 3-way control valve with associated piping at building chillers; chiller minimum flow valve with associated piping for building chillers; VA V controllers to individual VA V boxes for existing systems. 3. Payment Schedule. (a) Lease Payment Commencement Date. The Lease Payment Commencement Date is December I, 2020, which is the date the City becomes obligated to commence payment of Equipment Lease Payments in accordance with the Equipment Lease Payment Schedule attached hereto as Attachment A-1. -(b) Equipment Lease Payments. The Equipment Lease Payments shall be in such amounts and payable on such dates as set forth in the Equipment Lease Payment Schedule attached to this Equipment Schedule as Attachment A-1. Equipment Lease Payments payable by the City shall commence on the Lease Payment Commencement. 4. Lease of the Equipment; Collateral Under Site Lease. For and in consideration of the application by the Authority of funds in accordance with Section 3.l(a) of the Agreement and the beneficial use and enjoyment of the Equipment as provided in the Equipment Lease, the City hereby leases from the Authority the Equipment. For and in consideration of the Equipment Lease Payments to be paid by the City under the Equipment Lease, the Authority hereby leases the Equipment to the City, upon the terms and conditions set forth in the Equipment Lease created hereunder. Pursuant to Section 8.2(i) of the Agreement, the Equipment Lease Payments are also secured by and payable on a pro-rata basis from proceeds arising from the Authority's right, title and interest in certain Leased Real Property described in Attachment A-2 attached hereto and the buildings, facilities and other improvements located on the Site that consist generally of the James 0. Jessie Desert Highland Unity Center. 5. Representations, Warranties and Covenants. The City hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Agreement are true and correct on the Funding Date. The City further represents and warrants that no material adverse change in the City"s financial condition has occurred since June 30, 2019 (i.e., the end date of its last audited annual financial statements), except as otherwise disclosed to the Assignee. 6. Incorporation of the Agreement by Reference. The terms and provisions of the Agreement ( other than to the extent that they relate solely to the Project Schedule or the Project therein described, but including in all cases Section 8.2(i) thereof) are hereby incorporated into this Equipment Schedule by reference and made a part hereof, and thereby create the separate Equipment Lease under the Agreement. A-2 55575.70003\33361763.3 877. Equipment Lease Assignment Proceeds. The Equipment Lease Assignment Proceeds equal $4,414,982.00 and shall be deposited and applied as provided in Section 3.1 (a) of the Agreement. 8. Equipment Lease Term. The Equipment Lease Term shall be the period set forth in Section 4.2(a) of the Agreement. A-3 55575.70003\33361763.3 88Dated as of December 1, 2020. LESSOR: CITY OF PALM SPRINGS FINANCING AUTHORITY By ______________ _ David H. Ready Executive Director Attest: By ___________ _ Anthony J. Mejia, MMC Secretary LESSEE: CITY OF PALM SPRINGS, CALIFORNIA By _____________ _ David H. Ready City Manager Attest: By __________ _ Anthony J. Mejia, MMC City Clerk Counterpart No. __ of_ manually executed and serially numbered counterparts. To the extent that this Equipment Lease constitutes chattel paper (as defined in the California Commercial Code), no security interest herein may be created through the transfer or possession of any Counterpart other than Counterpart No. I. Signature Page to Equipment Schedule 55575. 70003\33361763.3 89LEASE PAYMENT DATE 55575. 70003\33361763.3 ATTACHMENT A-1 TO EQUIPMENT SCHEDULE EQUIPMENT LEASE PAYMENT SCHEDULE LEASE PAYMENT INTEREST AMOUNT COMPONENT PRINCIPAL COMPONENT 90ATTACHMENT A-2 TO EQUIPMENT SCHEDULE DESCRIPTION OF SITE The Site consists of the land located in the County of Riverside, State of California, which is described as follows, including all buildings, improvements and facilities at any time situated thereon, at the following address James 0. Jessie Desert Highland Unity Center, 480 W. Tramview Road, Palm Springs, California, 92262: LEGAL DESCRIPTION Order No.: 01180-53409 Escrow No.: 01180-53409 The land referred to herein Is situated in the State of California. County of Riverside. a.nd described as follows: The Southwest 1/4 of the Southwest 1/4, of the Northeas11 /4 of Section 34, Township 3 South, Range 4 East, San Bernardino Base and Meridian. in the City of Palm Springs, County of Riverside, State of Califorma, as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey, Records of Riverside County. The West 112 of the Southeast 1/4 of the Southwest 114 of the Northeast 1/4 of Section 34, Township 3 South, Range 4 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California. as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey, Records of Riverside County. The West 1/2 of the East 1/2 of Southeast 1/4, of the Southwest 1/4 of the Northeast 1/4, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside. State of California, as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey, Records of Riverside County. Except therefrom all mineral deposits, in the above described land, as reserved by the United States, in Patent recorded April 2, 1981 as Instrument No. 81-58748, of Official Records of said County. (End of Legal Description) 55575.70003\3336 I 763.3 91ALL-PURPOSE CERTIFICATE OF 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, accurac , or validi of that document. STATE OF CALIFORNIA COUNTY OF --------) ) ) On _________ , before me, _____________ , a Notary Public, 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 _____________ _ 55575.70003\3336 I 763.3 ACKNOWLEDGDv!ENT TO EQUIPMENT SCHEDULE C !TY OF PAIM SP RINGS FINANCING A UIHORJTY. AS LESSOR CITY OF PALM SPRINGS. CALIFORNIA. AS LESSEE (Seal) 92EQUIPMENT LEASE RELATING TO LEASE AGREEMENT BETWEEN THE CITY OF PALM SPRINGS FINANCING AUTHORITY, AS LESSOR, AND CITY OF PALM SPRINGS, CALIFORNIA, AS LESSEE CERTIFICATE OF ACCEPTANCE This is to certify that the interest in real property conveyed by the Equipment Lease relating to that certain Lease Agreement, dated as of December 1, 2020, between the City of Palm Springs Financing Authority, as lessor, and the City of Palm Springs, California, as lessee (the "City"), is hereby accepted by the undersigned officer on behalf of the City pursuant to authority conferred by resolution of the City Council of the City adopted on November 12, 2020, and the City consents to recordation thereof by its duly authorized officer. Dated as of December 1, 2020. 55575. 70003\33361763.3 CITY OF PALM SPRINGS, CALIFORNIA By ____________ _ David H. Ready City Manager 93EXHIBIT B FORM OF PROJECT SCHEDULE TO BE RECORDED AND WHEN RECORDED RETURN TO: Best Best & Krieger LLP 3390 University Avenue, 5th Floor Riverside, California 9250 I Attention: Kim Byrens THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11922 OF THE CALIFORNIA REVENUE AND T AXA TI ON CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. Re: PROJECT LEASE Lease Agreement Dated as of December 1, 2020 between City of Palm Springs Financing Authority, as lessor, and City of Palm Springs, California, as lessee 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above-referenced Lease Agreement (the "Agreement"). 2. The Project. The project financed under the Project Lease created under this Project Schedule consists of certain lighting, mechanical, utility, water and other energy conservation measures on and to certain of the City's public buildings and other facilities. 3. Lease of Leased Real Property; Certain Collateral in Equipment. For and in consideration of the Project Lease Payments to be paid by the City under the Project Lease, the Authority hereby leases the Leased Real Property to the City, and the City hereby leases the Leased Real Property from the Authority, upon the terms and conditions set forth in the Project Lease created hereunder. The Leased Real Property consists of the Site described in Attachment B-2 attached hereto and the buildings, facilities and other improvements located on the Site that consist generally of the James 0. Jessie Desert Highland Unity Center. Pursuant to Section 8.2(i) of the Agreement, the Project Lease Payments are also secured by and payable on a pro-rata basis from proceeds arising from the Authority's right, title and interest in certain Equipment described in the Agreement and the Equipment Lease described therein. 8-1 55575.70003\3336 I 763.3 944. Project Lease Payment Schedule. (a) Lease Payment Commencement Date. The Lease Payment Commencement Date is the effective date of the Site Lease and the Project Lease created under this Project Schedule, which is the date the City becomes obligated to commence payment of Project Lease Payments in accordance with the Project Lease Payment Schedule attached hereto as Attachment A-1. (b) Project Lease Payments. The Project Lease Payments shall be in such amounts and payable on such dates as set forth in the Project Lease Payment Schedule attached to this Project Schedule as Attachment B-1. Project Lease Payments payable by the City shall commence on the Lease Payment Commencement Date. 5. Representations, Warranties and Covenants. The City hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Agreement are true and correct on the Funding Date. The City further represents and warrants that no material adverse change in the City's financial condition has occurred since June 30, 2019 (i.e., the end date of its last audited annual financial statements), except as otherwise disclosed to the Assignee. 6. Incorporation of the Agreement by Reference. The terms and provisions of the Agreement ( other than to the extent that they relate solely to the Equipment Schedule or the Equipment therein described, but including in all cases Section 8.2(i) thereof) are hereby incorporated into this Project Schedule by reference and made a part hereof, and thereby create the separate Project Lease under the Agreement. 7. Project Lease Assignment Proceeds. The Project Lease Assignment Proceeds equal $11,438,558.00 and shall be deposited and applied as provided in Section 3.1 (b) of the Agreement. 8. Project Lease Term. The Project Lease Term shall be the period set forth m Section 4.2(b) of the Agreement. 8-2 55575.70003\33361763.3 95Dated as of December I, 2020. LESSOR: CITY OF PALM SPRINGS FINANCING AUTHORITY By ___________ _ David H. Ready Executive Director Attest: By ______________ _ Anthony J. Mejia, MMC Secretary LESSEE: CITY OF PALM SPRINGS, CALIFORNIA By ____________ _ David H. Ready City Manager Attest: By __________ _ Anthony J. Mejia, MMC City Clerk Signature Page to Project Schedule 55575. 70003\33361763.3 96LEASE PAYMENT DATE 55575.70003\33361763.3 ATTACHMENT B-1 TO PROJECT SCHEDULE PROJECT LEASE PAYMENT SCHEDULE LEASE PAYMENT INTEREST AMOUNT COMPONENT PRINCIPAL COMPONENT 97ATTACHMENT B-2 TO PROJECT SCHEDULE DESCRIPTION OF SITE The Site consists of the land located in the County of Riverside, State of California, which is described as follows, including all buildings, improvements and facilities at any time situated thereon: LEGAL DESCRIPTION Order No.; 01180-53409 Escrow No.: 01180-53409 The land referred to herein is situated in the State of California, County of Riverside, and described as follows: The Southwest 1/4 of the Southwest 1/4, of the Northeast 1/4 of Section 34. Township 3 South. Range 4 East. San Bernardino Base and Meridian, in the City of Palm Springs. County of Riverside, State of California, as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey. Records of Riverside County. The West 1/2 of the Southeast 1/4 of the Southwest 1/4 of the Northeast 1/4 of Section 34, Township 3 South, Range 4 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California. as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey, Records of Riverside County. The West 1/2 of the East 1/2 of Southeast 1/4, of the Southwest 1/4 of the Northeast 1/4, San Bemardino Base and Meridian, in the City of Palm Springs, County of Riverside. State of California, as shown and delineated on Record of Survey, recorded in Book 56, Pages 29 through 32 of Records of Survey. Records of Riverside County. Except therefrom all mineral deposits, in the above described land, as reserved by the United States, in Patent recorded April 2, 1981 as Instrument No. 81~58748. of Official Records of said County. (End of Legal Description) 55575. 70003\33361763.3 98ALL-PURPOSE CERTIFICATE OF 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, accurac , or validi of that document. ST A TE OF CALIFORNIA COUNTY OF --------) ) ) On , before me, ---------______________ , a Notary Public, 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 PENAL TY 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 --------------55575.70003\33361763.3 ACKJI/OWLEDGDv!ENT TOP RO.IECT SCHEDULE CI7Y OF PALM SPRINGS FINANCING A UTHORJTY. AS LESSOR Cl1Y OF PAL!vf SPRINGS. CALIFORll/IA. AS LESSEE (Seal) 99PROJECT LEASE RELATING TO LEASE AGREEMENT BETWEEN THE CITY OF PALM SPRINGS FINANCING AUTHORITY, AS LESSOR, AND CITY OF PALM SPRINGS, CALIFORNIA, AS LESSEE CERTIFICATE OF ACCEPTANCE This is to certify that the interest in real property conveyed by the Project Lease relating to that certain Lease Agreement, dated as of December I, 2020, between the City of Palm Springs Financing Authority, as lessor, and the City of Palm Springs, California, as lessee (the "City"), is hereby accepted by the undersigned officer on behalf of the City pursuant to authority conferred by resolution of the City Council of the City adopted on November 12, 2020, and the City consents to recordation thereof by its d1:1ly authorized officer. Dated as of December I, 2020. 55575.70003\3336 l 763.3 CITY OF PALM SPRINGS, CALIFORNIA By ____________ _ David H. Ready City Manager 100ATTACHMENT 6 10155575.70003\33440044.2 ESCROW AGREEMENT by and among the CITY OF PALM SPRINGS, CITY OF PALM SPRINGS FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent Dated as of December 1, 2020 102ESCROW AGREEMENT This ESCROW AGREEMENT is dated as of the 1st day of December, 2020, by and among the CITY OF PALM SPRINGS, a charter city duly organized and existing by virtue of its charter and the laws of the State of California (the "City"), the CITY OF PALM SPRINGS FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority") and U.S. BANK NATIONAL ASSOCIATION, as escrow agent (the "Escrow Agent"); W I TN E S S E T H: WHEREAS, the City and the Authority have heretofore entered into an Lease Agreement, dated as of July 1, 2013 (the "Prior Agreement"); WHEREAS, the purchaser of the assignments of the Prior Agreement, Capital One Public Finance ("COPF''), has agreed to accept a prepayment of all Lease Payments on December 1, 2020, except for the Lease Payment due February 1, 2021, and the City wishes to provide for the deposit of the Lease Payment due on said date in order that the obligations of the City under the Prior Agreement shall cease and terminate with respect to the obligations so discharged, except the obligation of the City to pay or cause to be paid to COPF the amount of$ ___ due on February 1, 2021 (the "February Payment") and on deposit in the Escrow Fund established hereunder with respect to the obligations so discharged and thereafter such Lease Payments (as defined in the Prior Agreement) shall be released from the lien of the Prior Agreement; and WHEREAS, the City has determined that it is in the best interests of the City at this time to refinance the City's obligation to make the lease payments under the Prior Agreement and, as a result thereof, to prepay such remaining lease payments on said December 1, 2020, except for the February Payment; and WHEREAS, the City wishes to make such a deposit with the Escrow Agent and to enter into this Escrow Agreement for the purpose of providing the terms and conditions for the deposit and application of amounts so deposited; and WHEREAS, the Escrow Agent has full powers to act with respect to the irrevocable escrow created herein and to perform the duties and obligations to be undertaken pursuant to this Escrow Agreement. NOW, THEREFORE, in consideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows: Section 1. Appointment of Escrow Agent. The City and the Authority hereby appoint the Escrow Agent as escrow agent for all purposes of this Escrow Agreement and in accordance with the terms and provisions of this Escrow Agreement, and the Escrow Agent hereby accepts such appointment. Section 2. Establishment of Escrow Fund. There is hereby created by the City and the Authority with, and to be held by, the Escrow Agent, as security for the payment of the 55575.70003\33440044.2 103February Payment as hereinafter set forth, an irrevocable escrow to be maintained in trust by the Escrow Agent on behalf of the City and the Authority and for the benefit of COPF, said escrow to be designated the "Escrow Fund." All moneys deposited in the Escrow Fund shall be held as a special fund for the payment of the February Payment in accordance with the provisions of the Prior Agreement. If at any time the Escrow Agent shall receive actual knowledge that the moneys in the Escrow Fund will not be sufficient to make the February Payment, then the Escrow Agent shall notify the City of such fact and the City shall immediately cure such deficiency. The Escrow Agent shall not be liable for such deficiency. Section 3. Deposit into Escrow Fund; Investment of Amounts. The City shall cause to be deposited the amount of$ ______ in the Escrow Fund. The Escrow Agent shall hold all of the moneys deposited into the Escrow Fund m cash uninvested (the "Cash") and shall be used solely for purposes set forth herein. The Escrow Agent shall not be liable or responsible for any loss resulting from any reinvestment, if any, made pursuant to this Escrow Agreement and in full compliance with the provisions hereof. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Escrow Agent will furnish the City periodic cash transaction statements -which include detail for all investment transactions made by the Escrow Agent hereunder. The Escrow Agent shall have the right to accept and act upon instructions, including funds transfer instructions ("Instructions") given pursuant to this Escrow Agreement and delivered using Electronic Means ("Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys, issued by the Escrow Agent, or another method or system specified by the Escrow Agent as available for use in connection with its services hereunder); provided, however, that the City shall provide to the Escrow Agent an incumbency certificate listing officers with the authority to provide such Instructions ("Authorized Officers") and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Escrow Agent Instructions using Electronic Means and the Escrow Agent in its discretion elects to act upon such Instructions, the Escrow Agent's understanding of such Instructions shall be deemed controlling. The City unqerstands and agrees that the Escrow Agent cannot determine the identity of the actual sender of such Instructions and that the Escrow Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Escrow Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Escrow Agent and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The Escrow Agent shall not be liable for any losses, costs or expenses arising directly or 2 55575. 70003\33440044.2 104indirectly from the Escrow Agent's reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written Instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Escrow Agent, including without limitation the risk of the Escrow Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Escrow Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Escrow Agent immediately upon learning of any compromise or unauthorized use of the security procedures. Section 4. Instructions as to Application of Deposit. The City and the Authority hereby irrevocably direct and instruct the Escrow Agent to cause to be applied the Cash to pay the February Payment. Section 5. Compensation to Escrow Agent. The City shall pay the Escrow Agent full compensation for its duties under this Escrow Agreement, including out-of-pocket costs such as publication costs, prepayment or redemption expenses, legal fees and other costs and expenses relating hereto and, in addition, fees, costs and expenses relating to the purchase of any securities after the date hereof, pursuant to a separate agreement between the City and the Escrow Agent. Under no circumstances shall amounts deposited in the Escrow Fund be deemed to be available for said purposes. Section 6. Liabilities and Obligations of Escrow Agent. The Escrow Agent shall have no obligation to make any payment or disbursement of any type or incur any financial liability in the performance of its duties under this Escrow Agreement unless the City shall have deposited sufficient funds with the Escrow Agent to satisfy such obligation. The Escrow Agent may rely and shall be protected in acting upon the written instructions of the City or its agents relating to any matter or action as Escrow Agent under this Escrow Agreement. The Escrow Agent undertakes such duties as specifically set forth herein and no implied duties or obligations shall be read into this Escrow Agreement against the Escrow Agent. The City hereby assumes liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and hold harmless the Escrow Agent and its respective successors, assigns, agents, officers, directors, employees and servants from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, at any time, the Escrow Agent (whether or not also indemnified against by any other person under any other agreement or instrument) and in any way relating to or arising out of the execution and delivery of this Escrow Agreement, the establishment of the Escrow Fund, the retention of the moneys therein and any payment, transfer or other application of moneys or securities by the Escrow Agent in accordance with the provisions of this Escrow Agreement, or as may arise by reason of any act, omission or error of the Escrow Agent made in good faith in the conduct of its duties; provided, however, that the City shall not be required to indemnify the 3 55575. 70003\33440044 .2 105Escrow Agent against its own negligence or misconduct. The indemnities contained in this Section shall survive the termination of this Escrow Agreement and the earlier removal or resignation of the Escrow Agent. The Escrow Agent shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable for any special, indirect or consequential damages. Section 7. Amendment. This Escrow Agreement may not be modified or amended without the prior written consent of COPF. Section 8. Termination; Unclaimed Money. This Escrow Agreement shall terminate when the February Payment has been paid. Section 9. Severability. If any section, paragraph, sentence, clause or provision of this Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provision shall not affect any of the remaining provisions of this Escrow Agreement. Section 10. Execution in Several Counterparts. This Escrow Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts shall constitute but one and the same instrument. Section 11. Governing Law. This Escrow Agreement shall be governed by the laws of the State of California. (Signature page follows) 4 55575. 70003\33440044.2 106IN WITNESS WHEREOF, the Authority, the City and the Escrow Agent have each caused this Escrow Agreement to be executed by their duly authorized officers all as of the date first above written. 55575.70003\33440044.2 CITY OF PALM SPRINGS By: _____________ _ David H. Ready City Manager U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent By: _____________ _ Authorized Officer CITY OF PALM SPRINGS FINANCING AUTHORITY By: ----------------David H. Ready, Executive Director -Signature Page-Escrow Agreement S-1 107Section I. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section I 0. Section 11. 55575. 70003\33440044.2 TABLE OF CONTENTS Page Appointment of Escrow Agent .................................................................. 1 Establishment of Escrow Fund .................................................................. I Deposit into Escrow Fund; Investment of Amounts .................................. 2 Instructions as to Application of Deposit.. ................................................. 3 Compensation to Escrow Agent ................................................................. 3 Liabilities and Obligations of Escrow Agent.. ........................................... 3 Amendment ................................................................................................ 4 Termination; Unclaimed Money ................................................................ 4 Severability ................................................................................................ 4 Execution in Several Counterparts ............................................................. 4 Governing Law .......................................................................................... 4 -1- 108ATTACHMENT 7 109ASSIGNMENT AGREEMENT FOR EQUIPMENT LEASE This ASSIGNMENT AGREEMENT FOR EQUIPMENT LEASE (this "Equipment Lease Assignment") is made and entered into on December 1, 2020, by and between the CITY OF PALM SPRINGS FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority"), and Capital One Public Funding, LLC, a New York limited liability company, as assignee (the "Assignee")]. BACKGROUND: In the joint and mutual exercise of their powers, in consideration of the mutual covenants herein contained, and for other valuable consideration, the parties hereto recite and agree as follows: I. The City of Palm Springs, California (the ''City") has financed the demolition and replacement of the City's existing Municipal Central Plant cogeneration system with a new 1.1 MW cogeneration plant, mechanical and electrical systems and upgrades and related improvements (the "Equipment"). 2. In order to obtain funds to refinance the Equipment and to prepay a Lease Agreement dated as of July I, 2013 (the "Prior Lease"), the City has agreed to lease from the Authority and the Authority has agreed to arrange for and lease to the City the Equipment pursuant to that certain Equipment Schedule dated December I, 2020 to that certain Lease Agreement dated as of December I, 2020 (such Equipment Schedule and the terms of such Lease Agreement incorporated therein by reference being herein collectively referred to as the "Equipment Lease"). 3. Under the Equipment Lease, the City is obligated to pay quarterly lease payments (the "Equipment Lease Payments") in consideration of the lease by it of the Equipment thereunder. 4. The Authority wishes to assign its rights under the Equipment Lease, including but not limited to its right to receive and enforce the Equipment Lease Payments, to the Assignee for the purpose of providing the funds required for the financing of the Equipment. 5. Each of the parties has authority to enter into this Equipment Lease Assignment, and has taken all actions necessary to authorize its officers to execute it. AGREEMENT: In consideration of the material covenants contained in this Equipment Lease Assignment, the parties hereto hereby formally covenant, agree and bind themselves as follows: 55575.70003\3336 J 759.2 110Section 1. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the Assignee as of the date of this Equipment Lease Assignment: (a) Due Organization and Existence. The Authority is a joint exercise of powers authority duly organized and existing under the laws of the State of California, has full legal right, power and authority to enter into the Equipment Lease and this Equipment Lease Assignment and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the Authority has duly authorized the execution and delivery of the Equipment Lease and this Equipment Lease Assignment. (b) Due Execution. The representatives of the Authority executing the Equipment Lease and this Equipment Lease Assignment are fully authorized to-execute the same under official action taken by the governing board of the Authority. (c) Valid, Binding and Enforceable Obligations. The Equipment Lease and this Equipment Lease Assignment have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms. (d) No Conflicts. The execution and delivery of the Equipment Lease and this Equipment Lease Assignment, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Equipment Lease and this Equipment Lease Assignment or the financial condition, assets, properties or operations of the Authority. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of the Equipment Lease or this· Equipment Lease Assignment, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect. (t) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, 55575.70003\3336 l 759.2 -2- 111threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Equipment Lease or this Equipment Lease Assignment, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Equipment Lease or this Equipment Lease Assignment or the financial condition, assets, properties or operations of the Authority. (g) Marketable Title. Good and marketable title to the rights assigned hereunder has been duly vested in the Assignee free and clear of any liens, security interests, encumbrances or other claims other than the rights of the City under the Equipment Lease and the Authority has not assigned or transferred any of the rights assigned hereunder or any interest in the rights assigned hereunder to any party other than the Assignee. (h) Nonimpairment of Equipment Lease. The Authority agrees that it (1) does not have any right to amend, modify, compromise, release, terminate or permit prepayment of the Equipment Lease, and (2) shall not take any action that may impair the payment of Lease Payments or the validity or enforceability of the Equipment Lease. (i) Lease Payments. If the Authority receives any Equipment Payments, then the Authority shall receive such payments in trust for the Assignee and shall immediately deliver the same to the Assignee in the form received, duly endorsed by the Authority for deposit by the Assignee. 0) Further Assurances. The Authority shall execute and deliver to the Assignee such notices of assignment, UCC financing statements, assignments of financing statements and other documents, in form and substance reasonably satisfactory to the Assignee, and the Authority shall take such other actions, as the Assignee may reasonably request from time to time to evidence, perfect, maintain, and enforce the Assignee's rights in the rights assigned hereunder and/or to enforce or exercise the Assignee's rights or remedies under the Equipment Lease. The Assignee may, where permitted by law, file such UCC financing statements without the Authority's signature. Section 2. Assignment. The Authority hereby assigns to the Assignee all of the Authority·s rights under the Equipment Lease (excepting only the Authority's rights under Sections 7.3 and 8.4 of the Equipment Lease), including but not limited to: (a) the right to receive and collect all of the Equipment Lease Payments from the City under the Equipment Lease, (b) the right to receive and collect any proceeds of any insurance maintained thereunder with respect to the Equipment, and 55575. 70003\33361759.2 -3- 112( c) .the right to exercise such rights and remedies conferred on the Authority under the Equipment Lease as may be necessary or convenient (i) to enforce payment of the Equipment Lease Payments and any amounts required to be applied to the prepayment of the Equipment Lease Payments, or (ii) otherwise to protect the interests of the Assignee in the event of a default by the City under the Equipment Lease. The assignment made under this Section 2 is absolute and irrevocable, and without recourse to the Authority. Section 3. Acceptance. The Assignee hereby accepts the assignments made herein for the purpose of securing the payments due under the Equipment Lease to, and the rights under the Equipment Lease of, the Authority. The above assignment is not intended as a loan by the Assignee to the Authority. Accordingly, in the event of bankruptcy of the Authority, the assigned property shall not be part of the Authority's estate. However, if the above assignment is deemed to be a loan by the Assignee to the Authority, then the Authority shall be deemed to have granted to the Assignee, and hereby grants to the Assignee, a continuing first priority security interest in the assigned property and all proceeds thereof as collateral security for all obligations of the Authority hereunder and all obligations of the City under the Equipment Lease, and this Equipment Lease Assignment shall be deemed a security agreement with respect to such loan. Section 4. Consideration; Deposit of Funds. In consideration of the assignment to the Assignee of the Equipment Lease Payments and certain other rights of the Authority under Section 2, the Assignee hereby agrees to deposit or cause to be deposited on the Funding Date the amount of $ ______ with U.S. Bank National Association, for the purpose of prepaying a portion of the Prior Lease described as the "Project Lease" therein (the "Prior Project Lease"), and the amount of $ ____ to pay Delivery Costs under the Lease Agreement. Section 5. Execution in Counterparts. This Equipment Lease Assignment may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same agreement. It is also agreed that separate counterparts of this Equipment Lease Assignment may be separately executed by the Assignee and the Authority, both with the same force and effect as though the same counterpart had been executed by the Assignee and the Authority. Section 6. Defined Terms. All capitalized terms used in this Equipment Lease Assignment and not otherwise defined have the respective meanings given those terms in the Equipment Lease. Section 7. Binding Effect. This Equipment Lease Assignment inures to the benefit of and binds the Authority and the Assignee, and their respective successors and assigns, subject, however, to the limitations contained herein. 55575.70003\33361759.2 -4- 113Section 8. Governing Law. This Equipment Lease Assignment shall be construed in accordance with and governed by the Constitution and laws of the State of California. 55575.70003\33361759.2 -5- 114IN WITNESS WHEREOF, the parties have executed this Assignment Agreement for Equipment Lease by their officers thereunto duly authorized as of the day and year first written above. 55575.70003\3336 I 759.2 CITY OF PALM SPRINGS FINANCING AUTHORITY, as Assignor By ________________ _ Name: --------------Title: --------------CAPITAL ONE PUBLIC FUNDING, LLC, A NEW YORK LIMITED LIABILITY COMPANY, as Assignee By ____________ _ Name: --------------Title: -------------- 115ALL-PURPOSE CERTIFICATE OF 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 --------) ) ) On _________ , before me, ______________ , a Notary Public, 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 PENAL TY 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) ACKNOWLEDGf.MENT OF CITY OF PAI.1\tl SPRINGS FINANCING AUTHORITY 55575.70003\33361759.2 116ALL-PURPOSE CERTIFICATE OF 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 ------COUNTY OF --------) ) ) On , before me, ---------Public, personally appeared --------------, a Notary 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 PENAL TY OF PERJURY under the laws of the State of ____ _ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature _____________ _ (Seal) 55575.70003\3336 l 759.2 117ATTACHMENT 8 118TO BE RECORDED AND WHEN RECORDED RETURN TO: Best Best & Krieger LLP 3390 University A venue, 5th Floor Riverside, California 92501 Attention: Kim Byrens THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. ASSIGNMENT AGREEMENT FOR PROJECT LEASE This ASSIGNMENT AGREEMENT FOR PROJECT LEASE (this "Project Lease Assignment") is made and entered into on December I, 2020, by and between the CITY OF PALM SPRINGS FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority"), and Capital One Public Funding, LLC, a New York limited liability company, as assignee (the "Assignee")]. BACKGROUND: In the joint and mutual exercise of their powers, in consideration of the mutual covenants herein contained, and for other valuable consideration, the parties hereto recite and agree as follows: I. The City of Palm Springs, California (the "City") has previously financed the acquisition and installation of certain lighting, mechanical, utility, water and other energy conservation measures on and to certain of the City's public buildings and other facilities (the "Project"). 2. In order to refinance the Project and to prepay a Lease Agreement dated as of July I, 2013 (the "Prior Lease"), the City has agreed to lease to the Authority the land and buildings, facilities and other improvements thereon which constitute the City's James 0. Jessie Desert Highland Unity Center, which is located at 480 W. Tramview Road, Palm Springs, California 92262, and is more particularly described in Appendix A attached hereto and by this reference incorporated herein ( such land and buildings, facilities and other improvements thereon being herein referred to as the "Leased Real Property"), under a Site and Facility Lease dated as of December I, 2020 and recorded concurrently herewith, between the City as lessor and the Authority as lessee, and the Authority has agreed to lease the Leased Real Property back to the City pursuant to that certain Project Schedule dated December I, 2020 to that certain Lease Agreement dated as of December I, 2020 (such Project Schedule and the terms of such Lease Agreement incorporated therein by reference being herein collectively referred to as the ''Project Lease"), which Project Schedule has been recorded concurrently herewith, between the Authority as lessor and the City as lessee. 55575.70003\33361761.2 1193. Under the Project Lease, the City is obligated to pay quarterly lease payments (the "Project Lease Payments'') in consideration of the lease by it of the Leased Real Property thereunder. 4. The Authority wishes to assign its rights under the Site Lease under the Project Lease as sub lessor to the City of the Leased Real Property, including but not limited to its right to receive and enforce the Project Lease Payments, to the Assignee for the purpose of providing the funds required for the financing of the Project. 5. Each of the parties has authority to enter into this Project Lease Assignment, and has taken all actions necessary to authorize its officers to execute it. AGREEMENT: In consideration of the material covenants contained in this Project Lease Assignment, the parties hereto hereby formally covenant, agree and bind themselves as follows: Section 1. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the Assignee as of the date of this Project Lease Assignment: (a) Due Organization and Existence. The Authority is a joint exercise of powers authority duly organized and existing under the laws of the State of California, has full legal right, power and authority to enter into the Project Lease, the Site Lease and this Project Lease Assignment and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the Authority has duly authorized the execution and delivery of the Project Lease, the Site Lease and this Project Lease Assignment. (b) Due Execution. The representatives of the Authority executing the Project Lease, the Site Lease and this Project Lease Assignment are fully authorized to execute the same under official action taken by the governing board of the Authority. (c) Valid, Binding and Enforceable Obligations. The Project Lease, the Site Lease and this Project Lease Assignment have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms. (d) No Conflicts. The execution and delivery of the Project Lease, the Site Lease and this Project Lease Assignment, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise 55575.70003\33361761.2 -2- 120subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Project Lease, the Site Lease and this Project Lease Assignment or the financial condition, assets, properties or operations of the Authority. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of the Project Lease, the Site Lease or this Project Lease Assignment, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect. (t) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal. state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Project Lease, the Site Lease or this Project Lease Assignment, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Project Lease, the Site Lease or this Project Lease Assignment or the financial condition, assets, properties or operations of the Authority. (g) Marketable Title. Good and marketable title to the rights assigned hereunder has been duly vested in the Assignee free and clear of any liens, security interests, encumbrances or other claims other than the rights of the City under the Project Lease and the Authority has not assigned or transferred any of the rights assigned hereunder or any interest in the rights assigned hereunder to any party other than the Assignee. (h) Nonimpairment of Project Lease. The Authority agrees that it (I) does not have any right to amend, modify, compromise, release, terminate or permit prepayment of the Project Lease, and (2) shall not take any action that may impair the payment of Lease Payments or the validity or enforceability of the Project Lease. (i) Lease Payments. If the Authority receives any Equipment Payments, then the Authority shall receive such payments in trust for the Assignee and shall immediately deliver the same to the Assignee in the form received, duly endorsed by the Authority for deposit by the Assignee. 55575.70003\33361761.2 -3- 121G) Further Assurances. The Authority shall execute and deliver to the Assignee such notices of assignment, UCC financing statements, assignments of financing statements and other documents, in form and substance reasonably satisfactory to the Assignee, and the Authority shall take such other actions, as the Assignee may reasonably request from time to time to evidence, perfect, maintain, and enforce the Assignee's rights in the rights assigned hereunder and/or to enforce or exercise the Assignee's rights or remedies under the Project Lease. The Assignee may, where permitted by law, file such UCC financing statements without the Authority's signature. Section 2. Assignment. The Authority hereby assigns to the Assignee all of the Authority's rights under the Project Lease as sublessor of the Leased Real Property (excepting only the Authority's rights under Sections 5.10, 7.3 and 8.4 of the Project Lease) and as lessee of the Leased Real Property under the Site Lease, including but not limited to: (a) the right to receive and collect all of the Project Lease Payments from the City under the Project Lease, (b) the right to receive and collect any proceeds of any insurance maintained thereunder with respect to the Leased Real Property, or any eminent domain award (or proceeds of sale under threat of eminent domain) paid with respect to the Leased Real Property, and ( c) the right to exercise such rights and remedies conferred on the Authority under the Project Lease as may be necessary or convenient (i) to enforce payment of the Project Lease Payments and any amounts required to be applied to the prepayment of the Project Lease Payments, or (ii) otherwise to protect the interests of the Assignee in the event of a default by the City under the Project Lease. The assignment made under this Section 2 is absolute and irrevocable, and without recourse to the Authority. The above assignment is not intended as a loan by the Assignee to the Authority. Accordingly, in the event of bankruptcy of the Authority, the assigned property shall not be part of the Authority's estate. However, if the above assignment is deemed to be a loan by the Assignee to the Authority, then the Authority shall be deemed to have granted to the Assignee, and hereby grants to the Assignee, a continuing first priority security interest in the assigned property and all proceeds thereof as collateral security for all obligations of the Authority hereunder and all obligations of the City under the Equipment Lease, and this Equipment Lease Assignment shall be deemed a security agreement with respect to such loan. Section 3. Acceptance. The Assignee hereby accepts the assignments made herein for the purpose of securing the payments due under the Project Lease to, and the rights under the Project Lease of, the Authority. Section 4. Consideration; Deposit of Funds. In consideration of the assignment to the Assignee of the Project Lease Payments and certain other rights of the Authority under Section 2, 55575.70003\3336 I 761.2 -4- 122the Assignee hereby agrees to deposit or cause to be deposited on the Funding Date the amount of$ ______ with U.S. Bank National Association, for the purpose of prepaying a portion of the Prior Lease described as the "Project Lease" therein (the "Prior Project Lease"), and the amount of$ ___ to pay Delivery Costs under the Lease Agreement. Section 5. Execution in Counterparts. This Project Lease Assignment may be executed in any number of counterparts, each of which shall b~ deemed to be an original but all together shall constitute but one and the same agreement. It is also agreed that separate counterparts of this Project Lease Assignment may be separately executed by the Assignee and the Authority, both with the same force and effect as though the same counterpart had been executed by the Assignee and the Authority. Section 6. Defined Terms. All capitalized terms used in this Project Lease Assignment' and not otherwise defined have the respective meanings given those terms in the Project Lease. Section 7. Binding Effect. This Project Lease Assignment inures to the benefit of and binds the Authority and the Assignee, and their respective successors and assigns, subject, however, to the limitations contained herein. Section 8. Governing Law. This Project Lease Assignment shall be construed m accordance with and governed by the Constitution and laws of the State of California. IN WITNESS WHEREOF, the parties have executed this Assignment Agreement for Project Lease by their officers thereunto duly authorized as of the day and year first written above. 55575.70003\33361761.2 -5-CITY OF PALM SPRINGS FINANCING AUTHORITY, as Assignor By ____________ _ Name: --------------Title: --------------CAPITAL ONE PUBLIC FUNDING, LLC, A NEW YORK LIMITED LIABILITY COMPANY, as Assignee By ____________ _ Name: --------------Title: -------------- 123ALL-PURPOSE CERTIFICATE OF 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 _____ _ ) ) ) On _________ , before me, ______________ , a Notary Public, 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) ACKNOWLEDGEMENT OF CITY OF PA!.A1 SPIUNGS FINANCING AUTHORITY 55575.70003\33361761.2 124ALL-PURPOSE CERTIFICATE OF 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 --------COUNTY OF _____ _ ) ) ) On , before me, ---------Public, personally appeared _ _____________ , a Notary 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 _____ _ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature _____________ _ (Seal) 55575. 70003\33361761.2 125APPENDIX A DESCRIPTION OF THE LEASED REAL PROPERTY The Leased Real Property consists of the land located in the County of Riverside, State of California, which is described as follows, including all buildings, improvements and facilities at any time situated thereon: 55575.70003\3336 l 76 l .2