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HomeMy WebLinkAboutContract 1677 SOLAR POWER SERVICES AGREEMENT between City of Cathedral Solar, LLC A Delaware limited liability company ("Provider"), and Cathedral City, A Municipal Corporation("Customer") October 21St, 2016 (the "Effective Date") Borrego Form of California Power Purchase Agreement for On-Site Project,v.2016.04.06 Table of Contents 1 ARTICLE I DEFINITIONS 5 1.1 Definitions 5 2 ARTICLE II DELIVERY OF SOLAR SERVICES 10 2.1 Purchase Requirement 10 2.2 Performance Guaranty 10 3 ARTICLE III PRICE AND PAYMENT 11 3.1 Consideration 11 3.2 Method of Payment 12 3.3 Payment Disputes 12 3.4 Change in Law 12 4 ARTICLE IV CONSTRUCTION AND OPERATION 13 4.1 Development 13 4.2 Installation 13 4.3 Testing 13 4.4 Operations 14 4.5 Metering 15 4.6 Outages 15 4.7 Hazardous Materials 15 4.8 Customer Electricity 16 4.9 Easement Area Security 16 4.10 Limits on Obligation to Deliver 17 4.11 Back-up and Supplemental Electricity 17 4.12 Net Metering&Utility Credits 17 4.13 No Resale of Electricity 17 5 ARTICLE V TITLE TO SYSTEMS 18 5.1 Title to Systems 18 5.2 Ownership of Attributes 18 5.3 Omitted 5.4 Omitted 5.5 Risk of Loss; Exclusive Control 19 5.6 Provider Liens 19 5.7 Taxes and Assessments 19 5.8 Quiet Enjoyment 19 5.9 Insolation 20 5.10 Other Customer Activities 20 5.11 Customer Requested Shutdown 20 5.12 Provider Safety Shutdown 20 5.13 System Relocation 21 5.14 Interconnection Deactivated 21 5.15 Sale of Easement Area 21 2 6 ARTICLE VI TERM 22 6.1 Term 22 6.2 Early Termination by Provider 22 6.3 Omitted 6.4 Customer Purchase Option 22 6.5 Determination of Fair Market Value 23 7 ARTICLE VII REPRESENTATIONS AND WARRANTIES 23 7.1 Organization; Existence; Good Standing 23 7.2 Binding Obligation 23 7.3 No Litigation 24 7.4 Execution and Performance 24 7.5 Service Contract 24 7.6 Additional Representations of Customer 24 7.7 Additonal Representations of Provider 25 8 ARTICLE VIII DEFAULT AND FORCE MAJEURE 25 8.1 Provider Defaults 25 8.2 Customer Defaults 26 8.3 Force Majeure 27 8.4 Limitation on Liability 28 9 ARTICLE IX DISPUTE RESOLUTION 28 9.1 Resolution by Parties 28 10 ARTICLE X INSURANCE, CASUALTY AND CONDEMNATION 28 10.1 Provider's Insurance 28 10.2 Customer's Insurance 29 10.3 Generally 29 10.4 Casualty 29 10.5 Condemnation 30 11 ARTICLE XI ASSIGNMENT 30 11.1 Generally 30 11.2 Assignment by Customer 30 11.3 Assignment by Provider 30 11.4 Financing Accommodations Assignment to Financing Party 31 12 ARTICLE XII INDEMNIFICATION 33 12.1 Indemnification by Provider 33 12.2 Indemnification by Customer 33 12.3 Notice of Claims 33 12.4 Defense of Action 34 12.5 Survival of Provisions 34 13 ARTICLE XIII MISCELLANEOUS 34 3 13.1 Additional Documents 34 13.2 Confidentiality 34 13.3 Public Announcements 35 13.4 Integration; Attachments 35 13.5 Industry Standards 35 13.6 Amendments 35 13.7 Waiver 35 13.8 Cumulative Remedies 35 13.9 Survival 36 13.10 Governing Law; Jurisdiction; Forum 36 13.11 Waiver of Jury Trial 36 13.12 Severability 36 13.13 Headings 36 13.14 Relation of the Parties 37 13.15 Injunctive Relief 37 13.16 No Third-Party Beneficiaries 37 13.17 Counterparts 37 13.18 No Public Utility 37 13.19 No Recourse of Affiliates 38 13.20 Notices 38 13.21 Drafting Presumption 39 SCHEDULES 41 4 SOLAR POWER SERVICES AGREEMENT THIS SOLAR POWER SERVICES AGREEMENT (this "Agreement") is made effective as of October 21St, 2016 (the "Effective Date"), between/among City of Cathedral Solar, LLC, a Delaware limited liability company wholly owned and controlled by Borrego Solar Systems, Inc. ("Provider"), and City of Cathedral City, a California Municipal Corporation ("Customer"). Provider and Customer are sometimes referred to individually as a Party and collectively as the Parties. BACKGROUND WHEREAS, Customer owns, directly or indirectly, the Easement Area (as hereafter defined); WHEREAS, Provider has, or will have, an easement that provides access to the Easement Area; and WHEREAS, Customer desires that Provider install, maintain, own and operate at the Easement Area a solar photovoltaic system for the purpose of providing Solar Services (as hereafter defined)to Customer, and Provider is willing to undertake and to provide the same; NOW,THEREFORE,in consideration of good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged,the Parties agree as follows: Article I DEFINITIONS 1.1 Definitions In addition to other terms specifically defined elsewhere in this Agreement, where capitalized, the following words and phrases shall be defined as follows: "Actual Annual Production"means the Actual Production recorded by the Meter during a given Contract Year. "Actual Production" means for any period,the actual net electrical production, in kWh, of the System. "Adjusted Annual Production" has the meaning set forth in Section 2.2(b). "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such first Person. "Agreement" means this Solar Power Services Agreement, including the Schedules and Exhibits attached hereto. 5 "Applicable Law" means, with respect to any Person, any constitutional provision, law, statute, rule, regulation, ordinance, treaty, order, decree,judgment, decision, certificate, holding, injunction, registration, license, franchise, permit, authorization, guideline, Governmental Approval, consent or requirement of any Governmental Authority having jurisdiction over such Person or its property, enforceable at law or in equity, including the interpretation and administration thereof by such Governmental Authority. "Assignment" has the meaning set forth in Section 11.3. "Business Day" means any day other than Saturday, Sunday or any other day on which banking institutions in San Francisco, California are required or authorized by Applicable Law to be closed for business. "Buy Out Value"has the meaning set forth in Schedule 5. "Change in Law" means that, after the Effective Date, an Applicable Law is amended, modified, nullified, suspended, repealed, found unconstitutional or unlawful, or changed or affected in any material respect by any Applicable Law. Change in Law does not include changes in federal or state income tax laws. Change in Law does include material changes in the interpretation of an Applicable Law by any Governmental Authority. "Claim Notice"has the meaning set forth in Section 12.3. "Commercial Operation Date" means the date on which permission to operate the System is granted by the Local Electric Utility. "Contract Year"means each calendar twelve(12)month period during the term following the Commercial Operation Date. "Customer"has the meaning set forth in the preamble hereof. "Customer Default"has the meaning set forth in Section 8.2(a). "Customer Hazardous Materials" has the meaning set forth in Section 4.7(a). "Delivery Point" means the point of delivery of the Solar Services, which shall be at the Meter. "Dispute" has the meaning set forth in Section 9.1. "Early Termination Date"has the meaning set forth in Section 6.1. "Early Termination Fee" shall mean the sum of(a)the applicable amount specified for the applicable Contract Year on Schedule 4(a)or Schedule 4(b), as the case may be, and(b)the costs, if any, of dismantling, packing, removing and transporting either the entire System or part of the System depending on Customer's election, and restoring the Easement Area to its original condition, ordinary wear and tear excepted. 6 "Easement Agreement" means the Solar Power Easement Agreement, substantially in the form of the Form of Easement attached hereto as Schedule 6, entered into, or to be entered into, between Provider and Customer on or about the date hereof, which grants Provider the right to develop, erect, construct, install, replace, repair, relocate, remove, maintain, operate, and use the System on the Easement Area. "Easement Area"means that certain area of real property shown on the sketch plan attached to the Easement Agreement as Exhibit A. "Effective Date" has the meaning set forth in the preamble hereof. "Environmental Attributes" means all products of the System other than electricity, including but not limited to carbon trading credits, renewable energy credits or certificates, emissions reduction credits, investment credits, tax credits, emissions allowances, green tags, tradable renewable credits and Green-e®products. "Environmental Law" means all laws of any Governmental Authority having jurisdiction over any real property addressing pollution or protection of the environment and all amendments to such laws and all regulations implementing any of the foregoing. "Estimated Annual Production" has the meaning set forth in Schedule 7. "Expiration Date"has the meaning set forth in Section 6.1. "Fair Market Value" means the price that would be paid in an arm's length, free market transaction, in cash, between an informed, willing seller and an informed, willing buyer (who is neither a lessee in possession nor a used equipment or scrap dealer), neither of whom is under compulsion to complete the transaction, taking into account, among other things, the age and performance of the System and advances in solar technology and the commercial benefits that Provider may be able to derive from the System,provided that installed equipment shall be valued on an installed basis and costs of removal from a current location shall not be a deduction from the valuation. "Financing Party" means any third-party entity providing debt or equity financing to Provider with respect to a System, including any investor pursuant to a sale/leaseback transaction. "Force Majeure Event" has the meaning set forth in Section 8.3. "Governmental Approval" means any approval, consent, franchise, permit, certificate, resolution, concession, license or authorization issued by or on behalf of any applicable Governmental Authority. "Governmental Authority" means any federal, state, regional, county, town, city or municipal government, whether domestic or foreign, or any department, agency, bureau, or other administrative, regulatory or judicial body of any such government including, without limitation, any governmental or quasi-governmental entity "Guaranteed Production"means,during the Guaranteed Production Period,that the Actual 7 Annual Production in a Contract Year shall be equal to or greater than ninety percent(90%)of the Estimated Annual Production for the Contract Year in question, as adjusted for any Guaranteed Production Adjustment Causes. "Guaranteed Production Adjustment Causes" means an adjustment to the Actual Annual Production of the System resulting from any of the following: (a) System failure, damage or downtime attributable to third parties; (b) general utility outage or any failure of any electrical grid; (c) unauthorized or unexpected usage of the Easement Area, or buildings at or near the Easement Area, which may affect building permits, site permits and related requirements for the operation of the System, or that impact insolation striking the System; (d) a Force Majeure Event; (e) acts or omissions of Customer or the Local Electric Utility; (f) failure by any manufacturer of any component of the System to timely honor its warranty obligations or provide the replacement component; (g)soiling conditions exceeding standard soiling conditions;or(h)variations between Standard Insolation Conditions and the actual Insolation at the Easement Area in any applicable Contract Year. "Guaranteed Production Period"has the meaning set forth in Section 2.2(a). "Hazardous Materials"means any pollutant,contaminant,hazardous substance,hazardous waste, medical waste, special waste, toxic substance, petroleum or petroleum-derived substance, waste or additive, asbestos, polychlorinated biphenyl (PCB), radioactive material, or other compound, element or substance in any form (including products) regulated, restricted or addressed by or under any Applicable Law. "Indemnified Party" has the meaning set forth in Section 12.3. "Indemnifying Party" has the meaning set forth in Section 12.3. "Initial Term" has the meaning set forth in Section 6.1. "Insolation" means the amount of kWhs per square meter falling on a particular location, as published by the National Renewable Energy Laboratory. "Interconnection Point"has the meaning set forth in Section 5.5. "kWh Rate"means the relevant rate for the System set forth in Schedule 3. "Liens" has the meaning set forth in Section 5.6. "Local Electric Utility" means the local electric distribution system providing interconnection services for the System or electric service to Customer at the Easement Area. "Lost Provider Revenues" means, for any period during which the System is not in operation or prevented from delivering energy to the Delivery Point as required in or as set forth in Sections 5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 5.14 or 5.15 of this Agreement, an amount equal to the sum of: (a) payments that Customer would have made to Provider hereunder for electric energy that would have been produced by the System during such period(based upon historical production data or, if such data in not available or is insufficient, as otherwise reasonably calculated by an 8 independent third party with experience calculating energy delivery and revenue loss); and (b) revenues from Environmental Attributes, and Tax Attributes that Provider would have received with respect to electric energy that would have been produced by the System during such period. "Meter" has the meaning set forth in Section 4.5. "NEM"has the meaning set forth in Section 7.7. "Option Price" has the meaning set forth in Section 6.4. "Party" or "Parties" means Provider or Customer. "Performance Guarantee Rate"means,for the purpose of the calculations in Section 2.2(b), (a)the applicable dollar per kWh rate charged by the Local Electric Utility for electric service to the Easement Area as specified in Schedule 8, minus (ii) the kWh Rate for energy provided by Provider pursuant to this Agreement in the first Contract Year;provided, however,that when this formula results in a negative number, the Performance Guarantee Rate shall equal zero ($0.00). "Person"means an individual,partnership,corporation,limited liability company,business trust,joint stock company, trust,unincorporated association,joint venture, firm or other entity, or a Governmental Authority. "Provider" has the meaning set forth in the preamble hereof. "Provider Default"has the meaning set forth in Section 8.1(a). "Provider Hazardous Materials" has the meaning set forth in Section 4.7(c). "Public Records Act" has the meaning set forth in Section 13.2. "Purchase Option" has the meaning set forth in Section 6.4. "Purchase Option Date" shall mean each of the seventh (7th), tenth (10th), and fifteenth (15th) anniversary of the "Commercial Operation Date". "Quarterly Period" means the period beginning on the first day of each of January, April, July and October of each year during the Term. "Rebates" shall mean any and all rebates, incentives, payments, credits or other funding offered for the development of photovoltaic systems by utility, Governmental Authority or other Person. "Renewal Term"has the meaning set forth in Section 6.1. "Solar Services" means the supply of on-site net electrical output in kWh(AC) from the System to Customer. "Solar Services Payment" has the meaning set forth in Section 3.1. 9 "Standard Insolation Conditions" means the aggregate solar irradiation for the Easement Area set forth in the National Renewable Energy Laboratory's TMY3 dataset in any applicable Contract Year. "Stated Rate" means a rate per annum equal to the lesser of(a) the current 12-month U.S. Dollar LIBOR interest rate plus six percent(6%) or(b)the maximum rate allowed by Applicable Law. "System"means an integrated carport structure assembly of photovoltaic panels, structural steel, inverters, converters, metering, lighting fixtures, disconnects, combiners, switches, wiring devices and wiring and interconnections with the Local Electric Utility, as more specifically described in Schedule 2. "Tax Attributes"means the investment tax credits(including any grants or payments in lieu thereof) and any other tax deductions or benefits under the Internal Revenue Code or Applicable Law available as a result of the ownership and operation of the System or the output generated by the System (including, without limitation, tax credits, any grants or payments in lieu thereof and accelerated and/or bonus depreciation). "Term" has the meaning set forth in Section 6.1. "True-Up Period"means the expiration of Contract Years 3, 6 and 10 during the Term. Article II DELIVERY OF SOLAR SERVICES 2.1 Purchase Requirement (a) Throughout the Term,Customer agrees to purchase one hundred percent(100%)of the Solar Services at the kWh Rate,whether or not Customer is able to use all such Solar Services. Notwithstanding the previous sentence, during any Contract Year Customer shall have no obligation to purchase any Solar Services in excess of one hundred and twenty percent (120%) of the Estimated Annual Production for such Contract Year. (b) Customer acknowledges and agrees that the purchase of the Solar Services hereunder is an energy purchase only,and does not include any additional attributes associated with such energy or with ownership of the System, including Environmental Attributes, Tax Attributes and Rebates, title to which shall rest solely with Provider. 2.2 Performance Guaranty (a) Provider shall guarantee the Guaranteed Production of the System during the first ten (10) Contract Years of the Initial Term (the "Guaranteed Production Period"). 10 equal (b) During the Guaranteed Production Period, within ninety(90) days following each True-Up Period, the Parties shall compare the total Actual Annual Production (AAP) from the System for such immediately preceding True-Up Period, as adjusted for Guaranteed Production Adjustment Causes (the "Adjusted Annual Production") with the total Guaranteed Production (GP) for that same True-Up Period, as specified in Schedule 7. To the extent that total Adjusted Annual Production for the applicable True-Up Period is less than the total Guaranteed Production for that same True-Up Period during the Guaranteed Production Period, then Provider shall credit Customer with a dollar amount equal to the product of(i) the Performance Guarantee Rate (PGR), set forth in Schedule 8, multiplied by (ii) the difference in kWh between the total Guaranteed Production for such True-Up Period minus the total Adjusted Annual Production for such True-Up Period. If the total Adjusted Annual Production in any True-Up Period exceeds the total Guaranteed Production for such True-Up Period, any excess may be applied by Provider prospectively to other True-Up Periods; provided, that any excess remaining at the end of the Guaranteed Production Period (GPP) may be applied retroactively by Provider to any shortfall in Guaranteed Production previously credited by Provider during the Guaranteed Production Period. In the event Provider applies such excess retroactively, Customer shall reimburse Provider for any credits given by Provider in previous True-Up Periods. Any excess in Adjusted Annual Production which remains unused at the end of the Guaranteed Production Period shall inure to the benefit of Customer and no payment shall be due from Customer to Provider in connection therewith. Calculating True-Up Payment: AAP-GP=kWh production excess or shortfall (adjusted for excess during GPP) If a shortfall then: Shortfall kWh x PGR=True-up Payment Article III PRICE AND PAYMENT 3.1 Consideration (a) Throughout the Term, Customer shall pay to Provider a quarterly payment (the "Solar Services Payment") for the Solar Services delivered to Customer from the System during each"Quarterly Period". (b) For any such Quarterly Period, the Solar Services Payment shall be equal to the sum of: (i) the product of the Actual Production and relevant kWh Rate,as specified in 11 Schedule 3,plus (ii) any Lost Provider Revenues due pursuant to the terms of this Agreement, plus (iii) any payments received by Customer but owed to Provider pursuant to Section 5.2 hereof. (c) Provider shall invoice Customer on a calendar quarter basis following each Quarterly Period. The first invoice shall include any production that occurred prior to the initial invoice date, including any test energy as provided in Section 4.3 below. The last invoice shall include production only through the Expiration Date. Customer shall pay any Solar Services Payment invoice within thirty(30) days of receipt thereof. 3,2 Method of Payment Customer shall make all payments under this Agreement by electronic funds transfer to the account designated by Provider. All payments that are not paid when due shall bear interest accruing from the date becoming past due until paid in full at a rate equal to the Stated Rate. 3.3 Payment Disputes (a) If Customer objects to all or a portion of an invoice, it shall, on or before the date payment is due,provide a written itemized statement of its objections setting forth in reasonable detail the basis for its objections. If Customer objects to only a portion of an invoice, Customer shall pay the undisputed amount of such invoice on the date payment is due. (b) If Customer does not object prior to the date a payment is due, it shall be obligated to pay the full payment amount without prejudice to its right to subsequently dispute such amount;provided,however,that Customer may not object to any invoice more than twelve (12) months after the date on which such invoice was provided to Customer. (c) Payment disputes shall be resolved pursuant to Section 9.1. 3,4 Change in Law If there is any Change in Law subsequent to the Effective Date that results in an increase in Provider's costs to provide the Solar Services, Provider shall promptly submit to the Customer a written notice setting forth (a) the citation of the Change in Law and (b) the manner in which such Change in Law increases Provider's costs to provide the Solar Services. Any increase in Provider's costs due to a Change in Law shall be verified by a mutually acceptable third party with experience in calculating energy costs and expenses. If the mutually acceptable third party verifies the increase in Provider's costs due to the applicable Change in Law,then within thirty(30)days of such verification, the Parties shall meet and attempt in good faith to negotiate amendments to this Agreement as are reasonably necessary to preserve the economic value of this Agreement to 12 Provider. If such increased costs are material and the Parties are unable to agree upon such amendments within thirty(30)days after initiating such negotiations, then: (i) Provider shall have the right to either continue performing under this Agreement in accordance with the terms and conditions hereof or,subject to subsection(ii)below, to terminate this Agreement without further liability by either Party to the other Party under this Agreement(including any liability of Customer for payment of the Early Termination Fee). (ii) If Provider elects to terminate the Agreement, it shall promptly notify Customer in writing. Within thirty (30) days of receipt of such notice from Provider, if Customer is able to properly exercise its Purchase Option pursuant to Section 6.4 and if Customer elects to do so,then Customer shall notify Provider in writing and Customer's election to exercise its Purchase Option shall control and take precedence over Provider's election to terminate under this Section 3.4. Article IV CONSTRUCTION AND OPERATION 4.1 Development Customer consents to the design, construction, installation, maintenance and periodic alteration and replacement of System by Provider on the Easement Area, as further described in Schedule 2, including without limitation solar panels,mounting substrates or supports,wiring and connections,power inverters, service equipment,metering equipment and utility interconnections. Customer shall provide Provider with available electric and structural plans of the Easement Area, and otherwise assist and cooperate with Provider on a timely basis to obtain all permits, approvals (including Local Electric Utility approvals and interconnection and metering arrangements) and authorizations required to install, interconnect, operate and maintain the System. Local Electric Utility approval and interconnection costs are the responsibility of Provider. 4.2 Installation Provider shall cause each System to be designed, engineered, installed and constructed substantially in accordance with the terms of this Agreement and Applicable Law (including all applicable local permitting requirements). Provider will provide at least ten(10)days prior written notice to Customer of the commencement of any preparation work on the Easement Area. 4.3 Testing; Construction Documents (a) Provider shall conduct such testing of each System as may be required by the Local Electric Utility and Applicable Law. Provider shall notify Customer and provide copies of the results of any such testing, and the date that each System achieves its Commercial Operation Date. Customer will purchase all test energy under the 13 terms of this Agreement whether such test energy is produced before or after the Commercial Operation Date. (b) Provider shall provide Customer with copies of the following construction documents within thirty(30)days of the Commercial Operation Date:Geotechnical Report, Environmental Site Assessment, and 100% Design Set. 4.4 Operations The System shall be owned,operated,maintained and repaired by or for Provider at its sole cost and expense, and in a manner consistent with Applicable Law and good industry practices. Throughout the Term, Customer shall properly maintain, pay for and provide access to the necessary phone, computer, or other communication lines necessary to permit Provider to record the electrical output of the System. Provider and Customer shall each designate personnel and establish procedures such that each Party may provide timely notice of any emergency conditions that might reasonably be expected to affect the other Party's property. For routine and emergency repairs, the Parties shall contact the persons set forth below: For Customer: City of Cathedral City ATTN: Tami Scott or Facilities Dept 68700 Avenida Lalo Guerrero Cathedral City, CA 92234 760-770-0354 tscott@cathedralcity.gov For Provider: City of Cathedral Solar, LLC do Borrego Solar Systems, Inc. Attention: CFO 360 22°a Street, Suite 600 Oakland, California 94612 With copy to: Borrego Solar Systems, Inc. Attention: General Counsel 14 360 22nd Street, Suite 600 Oakland, California 94612 Email: legalnotices @borregosolar.com 4.5 Metering Provider shall install,own and maintain a revenue-grade kilowatt-hour meter("Meter")on the Easement Area for the measurement of Actual Production provided to Customer from the System on a continuous basis. Provider shall test the Meter in compliance with the manufacturer's recommendations. Once per calendar year, Customer shall have the right to audit all such Meter data upon reasonable notice, and any such audit shall be at Customer's sole cost. Customer shall have a right of access to the Meter at reasonable times and with reasonable prior notice for the purpose of verifying readings and calibrations. If testing of the Meter pursuant to the foregoing indicates that the Meter is in error by more than two percent (2%), then Provider shall promptly repair or replace the Meter. Provider shall make a corresponding adjustment to the records of the amount of Actual Production based on such test results for(a)the actual period of time when such error caused inaccurate meter recordings, if such period can be determined to the mutual satisfaction of the Parties, or (b) if the actual period cannot be so determine, then an estimated period equal to one-half(1/2) of the period from the later of(i) the date of the last previous test confirming accurate metering or(ii) the date the Meter was placed into service. 4.6 Outages Provider shall be entitled to suspend delivery of Actual Production to the Easement Area for the purpose of testing,maintaining,replacing and/or repairing the System,and such suspension of service shall not constitute a breach of this Agreement; provided that Provider shall use commercially reasonable efforts to minimize any interruption in service to Customer. Customer acknowledges and agrees that Provider shall not have any obligation to reimburse Customer for costs of purchasing energy that would have been produced by the System but for such suspension; provided, however, that if the suspension of delivery of Actual Production is caused by the negligence or willful misconduct of Provider,then Provider shall reimburse Customer for costs of purchasing energy that would have been produced by the System during such suspension. 4.7 Hazardous Materials (a) Customer Hazardous Materials. Provider shall not be responsible for any Hazardous Materials encountered at the Easement Area,which were not introduced to the Easement Area by Provider ("Customer Hazardous Materials"). Customer shall indemnify and hold harmless Provider from any costs or expenses(including reasonable attorneys' fees) incurred by Provider due to the presence of Customer Hazardous Materials on the Easement Area. Upon encountering any materials that Provider suspects may constitute Customer Hazardous Materials, Provider may suspend work in the affected area until such materials are properly remediated by Customer as provided below, and any such suspension shall act to toll day for day 15 any deadline applicable to Provider hereunder. (b) Customer Remediation. Customer may opt to remediate the Customer Hazardous Materials in compliance with Applicable Law so that the System may be installed on the Easement Area, or determine that it is not economically justifiable or is otherwise impractical to remediate the Customer Hazardous Materials, in which case (i) this Agreement shall terminate effective as of the delivery of such notice without any further liability of the Parties to each other with respect to the System except as provided in this Section, and (ii) Customer shall reimburse Provider for all expenses reasonably incurred by Provider in the design and installation of the System prior to the discovery of the Customer Hazardous Materials and in demobilizing and decommissioning the System after the discovery of the Customer Hazardous Materials. (c) Provider Hazardous Materials. Notwithstanding anything herein to the contrary, Customer is not responsible for any Hazardous Materials introduced to the Easement Area by Provider ("Provider Hazardous Materials"). Provider shall indemnify and hold harmless Customer from any costs or expenses (including but not limited to costs and expenses of remediation and reasonable attorneys' fees) incurred by Customer due to the presence of Provider Hazardous Materials on the Easement Area. Upon encountering any materials that Customer suspects may constitute Provider Hazardous Materials, Customer may suspend any and all payments to Provider until such materials are properly remediated by Provider, and any such suspension shall act to toll day for day any deadline applicable to Customer hereunder. 4.8 Customer Electricity Throughout the Term, Customer shall make available to Provider, at no charge, electricity from the Local Electric Utility service at the Easement Area for the purposes of constructing, installing, repairing, maintaining and removing the System, and otherwise to meet parasitic load during System non-generation periods. 4.9 Easement Area Security Provider acknowledges that, as of the Effective Date,the Easement Area is an open access parking lot and that Customer possesses no security cameras and provides no security personnel at the Easement Area. Customer will advise Provider immediately upon observing any damage to the System. Upon request by Provider, such as Provider receiving data indicating irregularities or interruptions in the operation of the System,Customer shall, as quickly as reasonably practicable, send a person to observe the condition of the System and report back to Provider on such observations. Provider reserves the right, in its sole discretion and at its sole expense, to provide additional security for the System at the Easement Area. 16 4.10 Limits on Obligation to Deliver Except as expressly provided in Section 2.2 of this Agreement, Provider does not warrant or guarantee the amount of electric energy to be produced by the System for any hourly, daily, monthly,annual or other period.Customer acknowledges and agrees that Provider is not an electric utility or public service company and does not assume any obligations of an electric utility or public service company to supply Customers'electric requirements. Provider is not subject to rate review by any Governmental Authority. 4.11 Back-up and Supplemental Electricity Throughout the Term, Customer shall be responsible for obtaining and paying for all of its requirements for back-up energy or supplemental energy in excess of the amounts produced by the System. Provider shall have no obligation to obtain or pay for such back-up or supplemental energy. 4.12 Net Metering, Utility Credits and Rate Tariff Adjustment Subject to Section 2.1(a), at any time that electric production from the System is greater than Customer's requirements at such time,Customer shall nevertheless pay Provider for all of the electricity produced by the System at the rates and in the manner provided in this Agreement. (a) At Customer's request, Provider agrees to make initial arrangements so that electricity in excess of Customer's requirements may be delivered to the Local Electric Utility at the Interconnection Point, and Customer shall be permitted to retain any credits or payments from the Local Electric Utility that may be available under net metering or similar programs(excluding any such credits or payments to which Provider is entitled pursuant to this Agreement). Provider shall reasonably cooperate with Customer to facilitate Customer's receipt of payments or benefits under such net metering or similar programs and if Provider is deemed to be the owner of any such credits or payments under net metering or similar programs, Provider shall assign the same (or the proceeds thereof) to Customer. If Provider receives any payments in respect of such net metering or similar programs, it shall promptly pay them over to Customer to the extent such payment is permitted under Applicable Law. (b) At Customer's request,Provider shall inform Customer of the post solar rate switch option(s), and model such option(s), prior to and up to thirty (30) days after the Commercial Operation Date. Customer may take such action as it chooses to implement the recommended rate switch. Provider is in no way responsible for the implementation of any such rate switch, which is a matter between Customer and the Local Electric Utility. 4.13 No Resale of Electricity The energy purchased by Customer from Provider under this Agreement shall not be 17 resold, assigned or otherwise transferred to any other person without prior approval of the Provider, which approval shall not be unreasonably withheld, and Customer shall not take any action which would cause Customer or Provider to become an electric utility or public service company. For the avoidance of doubt, nothing in this Section 4.13 shall prevent Customer from entering into a net metering agreement at the Interconnection Point with the Local Electric Utility. Article V TITLE TO SYSTEMS 5.1 Title to Systems Provider shall retain title to and be the legal and beneficial owner of each System at all times. Absent further written election by Provider, each System shall (a) remain the personal property of Provider and shall not attach to or be deemed a part of, or fixture to, the Easement Area, and (b) at all times retain the legal status of personal property as defined under Article 9 of the applicable Uniform Commercial Code. Throughout the Term, Customer warrants and represents that it shall keep the System free from all Liens (other than those created by Provider or its creditors). Provider shall be entitled to, and is hereby authorized to, file one or more precautionary UCC Financing Statements or fixture filings, as applicable, in such jurisdictions as it deems appropriate with respect to the System in order to protect its title to and rights in the System. The Parties intend that neither Customer nor any party related to Customer shall acquire the right to operate the System or be deemed to operate the System for purposes of Section 7701 (e)(4)(A)(i) of the Internal Revenue Code, as amended, and the terms of this Agreement shall be construed consistently with the intention of the Parties. Customer shall provide timely notice of Provider's title and sole ownership of each System to all Persons that have, or may come to have, an interest in or lien upon the real property comprising the Easement Area. If Provider determines to treat any component of the System as real property, it will seek Customer's consent in writing along with the reasons therefore, and any required third party consents arising by reason of such characterization. Customer shall not unreasonably withhold its consent. Notwithstanding the foregoing,Financing Party may hold title to the System pursuant to a sale/leaseback transaction. 5.2 Ownership of Attributes As between the Parties, Provider shall retain the exclusive right to take or sell all Environmental Attributes and Tax Attributes. Customer shall provide reasonable assistance to Provider in preparing all documents necessary for Provider to receive such Environmental Attributes and Tax Attributes, and if is deemed to be the owner of any such Environmental Attributes or Tax Attributes,Customer shall assign the same(or the proceeds thereof)to Provider. Provider shall reimburse Customer for any actual out-of-pocket costs or expenses reasonably incurred in connection with such actions. If Customer receives any payments from the Local Electric Utility or any other third party for any Environmental Attributes or Tax Attributes arising from the provision of Solar Services to Customer hereunder, or arising from the ownership of the System, Customer shall promptly pay them over to Provider. 18 5.3 Omitted 5.4 Omitted 5.5 Risk of Loss; Exclusive Control As between the Parties,Provider will be deemed to be in exclusive control(and responsible for any property damage or injuries to persons caused thereby) of the Actual Production up to but excluding the point where each System is interconnected to Customer's electrical system (the "Interconnection Point")and Customer will be deemed to be in exclusive control (and responsible for any property damage or injuries to persons caused thereby) of the Actual Production at and from the Interconnection Point. Risk of loss related to Actual Production will transfer from Provider to Customer at the Interconnection Point. 5.6 Provider Liens Provider shall not cause, create, incur, assume or suffer to exist any mortgage,pledge, lien (including mechanics', labor or materialman's lien), charge, security interest, encumbrance or claim of any nature ("Liens") on or with respect to Customer's interests in the Easement Area or any interest therein other than the rights granted Provider hereunder. Provider will indemnify Customer for all claims, losses, damages, liabilities and expenses resulting from any liens filed against the Easement Area. Provider also shall pay promptly any taxes, charges or fees for which Provider is responsible pursuant to Section 5.7 before a fine or penalty may attach to the Easement Area. 5.7 Taxes and Assessments Provider will pay and be responsible for any sales or use tax imposed with respect to Provider's acquisition and installation of the System. Provider shall not be obligated for any taxes payable by or assessed against Customer based on or related to Customer's income or revenues. Provider shall pay and be responsible for any sales, use, excise,transfer and other similar taxes or assessments levied on the sale or deliveries of the Solar Services hereunder(regardless of whether such taxes or assessments are imposed on Provider or Customer), together with any interest, penalties or additions to tax payable with respect to such taxes or assessments. Customer shall cooperate with Provider to minimize the impact of any such taxes and assessments. Provider shall be liable for any real property taxes or assessments associated with the Easement Area caused solely as a result of the presence of the System on the Easement Area. 5.8 Quiet Enjoyment Throughout the Term, Customer covenants that Provider shall enjoy quiet and peaceful use,enjoyment and possession of the rights granted hereunder.Customer acknowledges and agrees that this Agreement, the Easement Agreement, and any easements and rights of way granted hereunder run with the Easement Area and survive any transfer of any portion of the Easement 19 Area. In furtherance of the foregoing, Customer shall cause any owner, tenant, purchaser, lessee, assignee, mortgagee, pledgee or other Person to whom a lien on the Easement Area has been granted to execute and deliver to Provider an acknowledgment and consent of and to the Provider's rights hereunder in a form reasonably satisfactory to Provider, including, without limitation, an acknowledgment of no interest in the System. Customer shall compensate Provider for any Lost Provider Revenues associated with any period in which Provider is denied quiet enjoyment or access in accordance with the provisions hereof. 5.9 Insolation Customer acknowledges that access to sunlight is essential to the value of the rights granted hereunder.Accordingly, Customer shall not voluntarily permit any interference with Insolation on and at the Easement Area. Customer will not construct or permit to be constructed any structure on the Easement Area that would adversely affect Insolation levels,or permit the growth of foliage that could adversely affect Insolation levels. Customer shall compensate Provider for any Lost Provider Revenues associated with any interference with Insolation attributable to Customer hereunder, provided Provider is able to measure and verify said adverse effects pursuant to acceptable industry standards. 5.10 Other Customer Activities If Customer determines to undertake activities on the Easement Area that require temporary displacement of any portion of the Easement Area,then it shall provide reasonable prior notice (not less than six (6) months) to Provider, and at Customer's expense, Provider shall disassemble, store and re-assemble the affected portions of the System at a time and in a manner reasonably calculated to accommodate such work. Storage of the System in accordance with the previous sentence shall be on the Easement Area in a location to be designated by Customer, but in the estimation of Provider reasonably suitable for storage of the component pieces of the System. Customer will pay Provider all Lost Provider Revenues with respect to the period of such shutdown. 5.11 Customer Requested Shutdown Customer from time to time may request Provider to temporarily stop operation of the System, such request to be reasonably related to Customer's activities in maintaining and improving the Easement Area; provided, however, that such requested shutdown does not result in Provider's failure to comply with the Applicable Laws. During any such shutdown period(but not including periods of Force Majeure), Customer will pay Provider all Lost Provider Revenues with respect to the period of such shutdown. Additionally, if any System shutdown is caused by the negligence or willful misconduct of Customer, Customer will pay Provider all Lost Provider Revenues with respect to the period of such shutdown. 5.12 Provider Safety Shutdown In addition to the right of Provider to shut down the System for maintenance or emergency 20 repairs as provided in Section 4.6, Provider may shutdown the System if in the exercise of its reasonable judgment, Provider believes the Easement Area conditions or activities of persons on the Easement Area which are not under the control of Provider, whether or not under the control of Customer, may interfere with the safe operation of the System. Provider shall give Customer notice of a shutdown immediately upon becoming aware of the potential for such conditions or activities. Provider and Customer shall cooperate and coordinate their respective efforts to restore Easement Area conditions so as to not interfere with the safe operation of the System and to reduce the duration of any shutdown. In the event of such a shutdown, and if said shutdown is caused by the negligence, willful misconduct or breach of this agreement by Customer, Customer shall be deemed to have shut down the System, and shall pay Provider all Lost Provider Revenues with respect to the period of the shutdown. If a shutdown pursuant to this Section 5.12 continues for one hundred and eighty (180) days or longer, and if said shutdown is caused by the negligence, willful misconduct or breach of this agreement by Customer, Provider may terminate this Agreement and require Customer to pay the Early Termination Fee. 5.13 System Relocation Customer may request to move the System to another location on the Easement Area or to another site owned by Customer, but any such relocation shall be subject to the approval of Provider in its sole discretion. In connection with such relocation, Customer shall execute an amendment to this Agreement reflecting the new location of the System but otherwise continuing all the terms and conditions of this Agreement for the remaining term of this Agreement.Customer shall also provide any consents or releases required by Provider in connection with the new location. Customer shall pay all costs associated with the removal and relocation of the System, including installation and testing costs and interconnection costs. In addition, Customer will pay Provider all Lost Provider Revenues with respect to any relocation period. 5.14 Interconnection Deactivated If an interconnection with the Local Electric Utility becomes deactivated such that the System is no longer able to produce energy or deliver energy to the Local Electric Utility for reasons that are not: (a)a Force Majeure Event;or(b)caused by or related to any unexcused action or inaction of Provider, and if said deactivation is caused by the negligence,willful misconduct or breach of this Agreement by Customer, Customer will pay Provider any Lost Provider Revenues associated with the period of such deactivation; provided, however, that if any such interconnection deactivation is caused by the negligence or willful misconduct of Provider, then Provider shall reimburse Customer for costs of purchasing energy that would have been produced by the System during the period of such deactivation. 5.15 Sale of Easement Area In the event Customer transfers (by sale, lease or otherwise) all or a portion of its interest in the Easement Area, Customer shall remain primarily liable to Provider for the performance of the obligations of Customer hereunder notwithstanding such transfer. However, if no Customer Default has occurred and is continuing and the transferee is acceptable to Provider in its sole 21 discretion and the transferee executes agreements assuming this Agreement in form and substance satisfactory to Provider in its sole discretion, then Customer may be released from further obligations under this Agreement. Article VI TERM 6.1 Term The initial term of this Agreement shall commence on the Effective Date and shall continue to apply for a period ending on the first December 31 following the twenty-fifth(25th)anniversary of the Commercial Operation Date of the System located on such Easement Area (the "Initial Term"), unless terminated earlier pursuant to this Agreement. After the Initial Term, this Agreement may be renewed for up to two (2) successive five (5)-year terms (each, a "Renewal Term"), if either Party provides written notice to the other Party at least one hundred and twenty (120)days prior to the expiration of the Initial Term or the then-applicable Renewal Term,and the other Party agrees to the renewal within thirty(30) days of receipt of the notice. The Initial Term and all subsequent Renewal Terms, if any, are referred to collectively as the "Term." The date on which this Agreement terminates by reason of expiration of the Initial Term or of a Renewal Term, if applicable, is hereafter referred to as the "Expiration Date." Any other date on which this Agreement terminates is hereafter referred to as the "Early Termination Date". 6.2 Early Termination by Provider If a System has not begun to produce electricity, Provider may terminate this Agreement, immediately upon provision of written notice thereof to Customer. Provider will not have any liability for such termination, except that no such termination shall act to relieve Provider from any obligation hereunder regarding the removal of the System and the restoration of the Easement Area. 6.3 Omitted 6.4 Customer Purchase Option So long as a Customer Default shall not have occurred and be continuing, Provider grants to Customer an option to purchase the System (the "Purchase Option") as of the Expiration Date or any Purchase Option Date for a purchase price (the "Option Price") equal to the greatest of(a) the Fair Market Value of such System,but if Customer disagrees with Provider's determination of Fair Market Value, then as determined pursuant to Section 6.5; (b)the Schedule 5 Buy Out Value for the applicable Contract Year of the Purchase Option;and(c)the amount owed to any Financing Party upon termination pursuant to the applicable financing documents(including a sale/leaseback transaction). If Customer elects to exercise the Purchase Option, then, not less than one hundred eighty(180) days prior to the Expiration Date or Purchase Option Date, as applicable, Customer 22 shall provide written notice to Provider of Customer's intent to exercise the Purchase Option,which election shall be irrevocable. Following its receipt of Customer's notice, Provider shall determine and notify Customer of the Fair Market Value. In the event Customer disagrees with any determination of Fair Market Value (to the extent in excess of the Buy Out Value) it shall notify Provider in writing and the Parties shall determine the Fair Market Value in accordance with Section 6.5. Upon final determination of the Fair Market Value, but in any event on or before the Purchase Option Date, (i)the Parties shall promptly execute all documents necessary to(A)cause title to such System to pass to Customer, free and clear of any Liens, immediately subsequent to the Expiration Date or the Purchase Option Date(as applicable), and(B)assign any warranties for such System to Customer,and(ii)Customer shall pay the Option Price to Provider in immediately available funds. Customer shall also execute such documents reasonably necessary for Customer to accept, assume and perform all then-existing agreements relating to such System or the Solar Services, including but not limited to operations and maintenance agreements, and agreements for the sale of Environmental Attributes and/or Tax Attributes. 6.5 Determination of Fair Market Value If the Customer does not agree with Provider's determination of Fair Market Value pursuant to Section 6.4, then the Parties shall select a nationally recognized independent appraiser with experience and expertise in the solar photovoltaic industry. Such appraiser shall act reasonably and in good faith to determine Fair Market Value and shall set forth such determination in a written opinion delivered to the Parties within twenty (20) days of the initial request for appraisal. The valuation made by the appraiser shall be binding upon the Parties in the absence of fraud or manifest error. The costs of the appraisal shall be borne by the Parties equally. Article VII REPRESENTATIONS AND WARRANTIES Each Party represents and warrants to the other as of the Effective Date: 7.1 Organization; Existence; Good Standing Such Party is duly organized,validly existing and in good standing in the jurisdiction of its organization. Such Party has the full right and authority to enter into,execute, deliver and perform its obligations under this Agreement, and such Party has taken all requisite corporate,body politic or other action to approve the execution, delivery and performance of this Agreement. 7.2 Binding Obligation This Agreement constitutes its legal,valid and binding obligation enforceable against such Party in accordance with its terms,except as may be limited by applicable bankruptcy, insolvency, reorganization,moratorium, and other similar laws relating to creditors'rights generally. 23 7.3 No Litigation There is no litigation, action, proceeding or investigation pending or, to such Party's knowledge,threatened before any court or other Governmental Authority by, against, affecting or involving any of its business or assets that would affect its ability to carry out the transactions contemplated herein. 7.4 Execution and Performance Such Party's execution and performance of this Agreement and the transactions contemplated hereby do not constitute a breach of any term or provision of, or a default under, (a) any contract or agreement to which it or any of its Affiliates is a party or by which it or any of its Affiliates or its or their property is bound, (b) its organizational laws or documents, or (c) any Applicable Laws. To the knowledge of each Party, there are no commitments to third parties that may impair or otherwise adversely affect the performance of such Party under this Agreement, or the construction, installation or function of a System on the Easement Area. 7.5 Service Contract This Agreement is a service contract pursuant to Section 7701(e)(3)of the Internal Revenue Code. 7.6 Additional Representations of Customer (a) Electric Usage. Customer has provided to Provider complete and correct records of its electric usage at the Easement Area for the preceding three(3)years. (b) Financial Information.The financial statements Customer has provided to Provider present fairly in all material respects the financial condition and results of operations of Customer. (c) Title. The title to the Easement Area is not impaired by any outstanding contract, covenant, interest, lien, or mortgage in conflict with this Agreement. If Provider needs additional licenses to access the Easement Area not already provided under the Easement Agreement,then Customer has full authority to grant such licenses to Provider. (d) Customer as Governmental Entity. If Customer is a municipality or other governmental entity, (i) Customer covenants that, in the event any payment hereunder(including payment of the Early Termination Fee)is or becomes subject to any necessary appropriation,Customer shall use good faith efforts to appropriate necessary fund to satisfy such obligations, and not to discriminate between such obligations and its other obligations with respect to payments for necessary services, (ii) any failure of Customer to make payment as a result of any non- appropriation shall constitute a Customer Default,and(iii)Customer waives,to the fullest extent permitted by Applicable Law, any claim for sovereign immunity associated with any liability hereunder. 24 7.7 Additional Representations of Provider (a) As of the Effective Date,Provider is wholly owned and controlled by Borrego Solar Systems, Inc. (b) The System, as described in Schedule 2, meets the current guidelines for qualification for a Net Energy Metered ("NEM") system under the Southern California Edison NEM program. Article VIII DEFAULT AND FORCE MAJEURE 8.1 Provider Defaults (a) Provider Default Defined. The following events shall be defaults with respect to Provider(each, a "Provider Default"): (i) if Provider breaches any material term of this Agreement or the Easement Agreement and (A) if such breach can be cured within thirty(30) days after Customer's written notice of such breach and Provider fails to so cure, or(B) Provider otherwise fails to commence and diligently pursue and complete said cure within ninety(90)days; (ii) Provider admits in writing its inability to pay its debts generally as they become due; (iii) Provider files a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state, district or territory thereof; (iv) Provider makes an assignment for the benefit of creditors; (v) Provider consents to the appointment of a receiver of the whole or any substantial part of its assets; (vi) Provider has a petition in bankruptcy filed against it, and such petition is not dismissed within ninety(90)days after the filing thereof; (vii) a court of competent jurisdiction enters an order, judgment, or decree appointing a receiver of the whole or any substantial part of Provider's assets, and such order,judgment or decree is not vacated or set aside or stayed within ninety(90) days from the date of entry thereof; or (viii) under the provisions of any other law for the relief or aid of debtors,any court of competent jurisdiction shall assume custody or control of the whole or any 25 substantial part of Provider's assets and such custody or control is not terminated or stayed within ninety(90) days from the date of assumption of such custody or control. (b) Customer's Remedies. Subject to the provisions in Section 11.4 below,if a Provider Default described in Section 8.1 (a)has occurred and is continuing, Customer may terminate this Agreement immediately upon the expiration of the respective grace periods set forth in such provisions, exercise any other remedy it may have at law or equity or under this Agreement, and elect one of the following options: (i) If the Provider default occurs during the first five(5)Contract Years of this Agreement,then Customer may purchase either the entire System or part of the System by paying Provider or its designee the applicable Early Termination Fee as of the Early Termination Date, minus all direct and documented costs and damages incurred by Customer as a result of Provider's default; or (ii) If the Provider default occurs during the sixth (6th) Contract Year or later, then Customer may purchase either the entire System or part of the System by paying Provider or its designee the applicable Buy Out Amount as of the Early Termination Date, minus all direct and documented costs and damages incurred by Customer as a result of Provider's default; or (iii) Require Provider to remove the entire System from the Easement Area. (c) Actions to Prevent Injury. If any Provider Default creates an imminent risk of damage or injury to any Person or any Person's property, then, in addition to any other right or remedy that Customer may have, Customer may (but shall not be obligated to) take such action as Customer deems appropriate to prevent such damage or injury. 8.2 Customer Defaults (a) Customer Default Defined. The following events shall be defaults with respect to Customer(each, a "Customer Default"): (i) Customer fails to pay Provider any undisputed amount due Provider under this Agreement within five (5) Business Days from receipt of written notice from Provider of such past due amount; (ii) Customer breaches any material term of this Agreement, if(A) such breach can be cured within thirty(30)days after Provider's notice of such breach and Customer fails to so cure, or(B) Customer otherwise fails to commence and diligently pursue and complete said cure within ninety(90)days; or (iii) Customer admits in writing its inability to pay its debts generally as they become due; (iv) Customer files a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state, district or territory thereof; 26 (v) Customer makes an assignment for the benefit of creditors; (vi) Customer consents to the appointment of a receiver of the whole or any substantial part of its assets; (vii) Customer has a petition in bankruptcy filed against it,and such petition is not dismissed within ninety(90) days after the filing thereof; (viii) A court of competent jurisdiction enters an order, judgment, or decree appointing a receiver of the whole or any substantial part of Customer's assets,and such order,judgment or decree is not vacated or set aside or stayed within ninety(90)days from the date of entry thereof; (ix) Or under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the whole or any substantial part of Customer's assets and such custody or control is not terminated or stayed within ninety(90) days from the date of assumption of such custody or control. (b) Provider's Remedies. If a Customer Default described in Section 8.2(a) has occurred and is continuing,then in addition to(and not in lieu of)any other remedy it may have in law or equity, may do any or all of the following: (i) require Customer to pay to Provider the Early Termination Fee and/or (ii) remove any of the System from the Easement Area at Customer's expense and terminate this Agreement immediately. (c) Actions to Prevent Injury. if any Customer Default creates an imminent risk of damage or injury to any Person or any Person's property, then in any such case, in addition to any other right or remedy that Provider may have, Provider may (but shall not be obligated to)take such action as Provider deems appropriate to prevent such damage or injury. 8.3 Force Majeure A "Force Majeure Event" means any event which wholly or partly prevents or delays the performance of any obligation arising under this Agreement, but only if and to the extent(a) such event is not within the reasonable control, directly or indirectly, of the Party affected, (b) such event, despite the exercise of reasonable diligence, cannot be prevented, avoided or overcome by such Party, (c) the Party affected has taken all reasonable precautions and measures in order to avoid the effect of such event on such Party's ability to perform its obligations under this Agreement and to mitigate the consequences thereof;and(d)such event is not the direct or indirect result of a Party's negligence or the failure of such Party to perform any of its obligations under this Agreement or to comply with Applicable Law. Notwithstanding any other term hereof, no payment obligation of Customer under this Agreement may be excused or delayed as a result of a Force Majeure Event, unless such Force Majeure directly causes Customer to be unable to make payments due under this Agreement. A Party claiming a Force Majeure Event shall not be considered in breach of this Agreement or liable for any delay or failure to comply with the Agreement, if and to the extent that such delay or failure is attributable to the occurrence of such 27 Force Majeure Event; provided that the Party claiming relief shall immediately notify the other Party in writing of the existence of the Force Majeure Event, exercise all reasonable efforts necessary to minimize delay caused by such Force Majeure Event, and resume performance of its obligations hereunder as soon as practicable thereafter. 8.4 Limitation on Liability EXCEPT WITH RESPECT TO PAYMENT OF THE EARLY TERMINATION FEE OR IN CONNECTION WITH THIRD-PARTY INDEMNIFICATION CLAIMS,NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT. PROVIDER'S AGGREGATE LIABILITY TO CUSTOMER ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT SHALL BE LIMITED TO THAT PORTION OF THE SOLAR SERVICES PAYMENTS THAT CUSTOMER HAS PAID TO PROVIDER UNDER THIS AGREEMENT. Article IX DISPUTE RESOLUTION 9.1 Resolution by Parties In the event of any dispute, controversy or claim between the Parties arising out of or relating to this Agreement(collectively, a"Dispute"),the Parties shall attempt in the first instance to resolve such Dispute through friendly consultations between the Parties. If such consultations do not result in a resolution of the Dispute within thirty(30) days after notice of the Dispute has been delivered to either party,then such Dispute shall be referred to the senior management of the Parties for resolution. If the Dispute has not been resolved within thirty (30) days after such referral to the senior management of the Parties, then either Party may pursue all of its remedies available hereunder. The Parties agree to attempt to resolve all Disputes promptly, equitably and in a good faith manner. In the event a dispute hereunder is resolved pursuant to arbitration or judicial proceedings, the Party, whose petition does not prevail in such proceedings, shall reimburse all of the other Party's third party costs (including reasonable attorney's fees) incurred to prosecute or defend(as the case may be) such proceedings. Article X INSURANCE, CASUALTY AND CONDEMNATION 10.1 Provider's Insurance Provider shall maintain the following insurance coverages in full force and effect from the date that any preparatory installation activities begin at the Easement Area throughout the Term: (a) Workers' Compensation Insurance as may be from time to time required under Applicable Laws, and (b) Commercial General Liability Insurance with limits of not less than $2,000,000 general aggregate, $1,000,000 per occurrence, which insurance shall cover the following: (i) 28 premises and operations liability; (ii)contractual liability; (iii)products/completed operations; (iv) personal and advertising liability; (v) independent contractor liability and (vi) xcu (explosion, collapse and underground); and (c) Automobile Liability insurance covering owned, hired and non-owned vehicles,with a minimum liability of$1,000,000; and(d)Umbrella or Excess liability insurance with a limit of $2,000,000 per occurrence and a general aggregate of $2,000,000. Additionally,Provider shall carry commercially adequate property loss insurance on each System. Provider's liability insurance policies shall be written on an occurrence basis and shall include Customer as an additional insured on a primary basis to said policies. 10.2 Customer's Insurance Customer shall maintain the following insurance coverages in full force and effect from the date that any preparatory installation activities begin at the Easement Area throughout the Term: (a) Workers' Compensation Insurance as may be from time to time required under Applicable Laws, and (b) Commercial General Liability Insurance with limits of not less than $2,000,000 general aggregate, $1,000,000 per occurrence. Additionally, Customer shall carry commercially adequate property loss insurance for the Easement Area. Customer's liability insurance policies shall be written on an occurrence basis and shall include Provider as an additional insured on a primary basis to said policies. 10.3 Generally Upon each Party's request annually, each Party shall deliver to the other Party certificates of insurance evidencing such respective coverage referenced above, which shall specify that the other Party shall be given at least thirty(30)days'prior written notice by the applicable insurer in the event of any material modification, cancellation or termination of coverage. Such insurance shall be on an occurrence basis and shall be primary coverage without right of contribution from any insurance of the other Party and shall permit waivers of subrogation against the other Party. All insurance maintained hereunder shall be maintained with companies either rated no less than A- as to Policy Holder's Rating in the current edition of Best's Insurance Guide (or with an association of companies each of the members of which are so rated)or having a parent company's debt to policyholder surplus ratio of 1:1. Provider's insurer may be an Affiliate of Provider. 10.4 Casualty (a) If at any time during the Term any part of the Easement Area is so severely damaged by fire or other casualty that substantial alteration, reconstruction or restoration is required on the Easement Area, but the System is capable of producing Actual Production, then Customer shall take and pay for all of the Actual Production that the System is capable of producing. In such case, this Agreement shall remain in full force and effect, without change, for the remainder of the Term. (b) If at any time during the Term the System is so severely damaged by fire or other casualty that substantial alteration, reconstruction or restoration is required, then Provider shall have the right, but not the obligation, to reconstruct or restore the System and if Provider elects to do so then the Agreement shall remain in full force 29 and effect, without change, for the remainder of the Term. If Provider fails to provide notice of its intention to reconstruct or restore the System within ninety (90) days of any such casualty, this Agreement shall terminate and Provider shall remove the System from the Easement Area in accordance. 10.5 Condemnation If at any time during the Term, any part of the Easement Area or System is taken for any public or quasi-public use under Applicable Law, ordinance of or regulation by a Governmental Authority by condemnation or right of eminent domain, then each Party shall be entitled to separately pursue an award for its respective property interest appropriated as well as any damages suffered thereby, and each Party hereby waives any right to any award that may be prosecuted by the other Party. Article XI ASSIGNMENT 11.1 Generally This Agreement and the rights and obligations under this Agreement shall be binding upon and shall inure to the benefit of Provider and Customer and their respective successors and permitted assigns. Any purported assignment in violation of this Article XI shall be null and void ab initio. 11.2 Assignment by Customer Customer shall not assign its interests in this Agreement, nor any part thereof, without Provider's prior written consent,which consent shall not be unreasonably withheld. 11.3 Assignment by Provider Except as expressly provided herein, Provider shall not sell, transfer or assign this Agreement or any right, interest or obligation therein(collectively, an"Assignment"),without the prior written consent of Customer;provided, however, that, without the prior consent of(but with notice to) Customer, Provider may (a) make an Assignment to an Affiliate of Provider; and (b) collaterally assign or pledge its interests hereunder and/or in the System or any monies due under this Agreement, as described more fully below in Section 11.4. Otherwise,Provider may make an Assignment of Provider's rights and obligations hereunder only upon Customer 's prior consent; provided that Customer shall not unreasonably withhold, condition or delay its consent to an Assignment of Provider's rights and obligations hereunder if Customer has been provided with reasonable proof that the proposed assignee: (x) has comparable experience in operating and maintaining photovoltaic solar systems comparable to the System; and (y) has the financial capability to maintain the System and perform hereunder. If Provider sends Customer a written request for consent to Assignment, Customer shall have fifteen (15) business days from receipt 30 thereof to consider the factors set forth in subsections(x)and(y)above,and to respond to Provider. Customer's response shall be in writing, and shall either provide consent to the requested Assignment or document the reasons why Customer is withholding its consent. In the event Customer fails to respond to Provider within the fifteen (15) business day time period, then Customer shall be deemed to have consented to the Assignment. Further, Customer agrees that the City Manager is hereby authorized to approve Assignments under this Agreement when he or she has reasonably determined that the proposed assignee satisfies the criteria set forth in subsections(x)and(y) above. A direct assignee of Provider's obligations hereunder shall assume in writing, in form and content reasonably satisfactory to Customer, the due performance of all Provider's obligations under this Agreement. Customer will provide such confirmations, releases and novations as are reasonably requested by Provider in connection with any such assignment. 11.4 Financing Accommodations Assignment to Financing Party Provider may mortgage, pledge, grant security interests, assign, or otherwise encumber its interests in this Agreement to any persons providing financing for the System. Customer acknowledges that Provider may obtain construction financing for the System from a third party and that Provider may either obtain term financing secured by the System or sell or assign the System to a Financing Party or may arrange other fmancing accommodations from one or more financial institutions and may from time to time refinance, or exercise purchase options under, such transactions. Customer acknowledges that in connection with such transactions Provider may secure Provider's obligations by, among other collateral, an assignment of this Agreement and a first security interest in the System. In order to facilitate such necessary sale, conveyance, or financing and with respect to any Financing Party, Customer agrees as follows: (a) Consent to Collateral Assignment. Customer hereby consents to both of the sale of the System to a Financing Party and the collateral assignment to the Financing of the Provider's right,title and interest in and to this Agreement. (b) Rights of Financing Party. Notwithstanding any contrary term of this Agreement: (i) Step-In Rights.The Financing Party,as owner of the System,or as collateral assignee of this Agreement, shall be entitled to exercise, in the place and stead of Provider, any and all rights and remedies of Provider under this Agreement in accordance with the terms of this Agreement. The Financing Party shall also be entitled to exercise all rights and remedies of owners or secured parties, respectively, generally with respect to this Agreement and the System; (ii) Opportunity to Cure Default. The Financing Party shall have the right, but not the obligation, to pay all sums due under this Agreement and to perform any other act, duty or obligation required of Provider thereunder or cause to be cured any default of Provider thereunder in the time and manner provided by the terms of this Agreement. Nothing herein requires the Financing Party to cure any default of Provider under this Agreement or to perform any act, duty or obligation of Provider under this Agreement (unless the Financing Party has succeeded to Provider's interests under this Agreement),but Customer hereby gives it the option to do so; 31 (iii) Exercise of Remedies. Upon the exercise of remedies, including any sale of the System by the Financing Party,whether by judicial proceeding or under any power of sale contained therein, or any conveyance from Provider to the Financing Party (or any assignee of the Financing Party as defined below) in lieu thereof, the Financing Party shall give notice to Customer of the transfer or assignment of this Agreement. Any such exercise of remedies shall not constitute a default under this Agreement; (iv) Cure of Bankruptcy Rejection. Upon any rejection or other termination of this Agreement pursuant to any process undertaken with respect to Provider under the United States Bankruptcy Code, at the request of Financing Party made within ninety (90) days of such termination or rejection, Customer shall enter into a new agreement with Financing Party or its assignee having substantially the same terms and conditions as this Agreement. (c) Right to Cure. (i) Cure Period. Customer will not exercise any right to terminate or suspend this Agreement unless it shall have given the Financing Party prior written notice of its intent to terminate or suspend this Agreement, as required by this Agreement, specifying the condition giving rise to such right, and the Financing Party shall not have caused to be cured the condition giving rise to the right of termination or suspension within thirty (30) days after such notice or (if longer) the periods provided for in this Agreement; provided that if such Provider default reasonably cannot be cured by the Financing Party within such period and the Financing Party commences and continuously pursues cure of such default within such period, such period for cure will be extended for a reasonable period of time under the circumstances,such period not to exceed an additional ninety(90)days.The Parties' respective obligations will otherwise remain in effect during any cure period. (i i) Continuation of Agreement.If the Financing Party or its assignee(including any purchaser or transferee), pursuant to an exercise of remedies by the Financing Patty, shall acquire title to or control of Provider's assets and shall,within the time periods described in Section 11.4(c)(i)above,cure all defaults under this Agreement existing as of the date of such change in title or control in the manner required by this Agreement and which are capable of cure by a third person or entity, then such person shall no longer be in default under this Agreement, and this Agreement shall continue in full force and effect. (d) Financing Party a Third Party Beneficiary.Customer agrees and acknowledges that Financing Party is a third party beneficiary of the provisions of this Section 11.4. (e) Entry to Consent to Assignment. Customer agrees to (i) execute any consents to assignment or acknowledgements and(ii)provide such opinions of counsel as may be reasonably requested by Provider and/or Financing Party in connection with such financing or sale of the System. 32 Article XII INDEMNIFICATION 12.1 Indemnification by Provider Subject to Section 10.1, Provider shall fully indemnify, save harmless and defend Customer, its contractors, subcontractors, directors, officers, employees, agents and invitees from and against any and all costs, claims, and expenses incurred by Customer in connection with or arising from any claim by a third party for physical damage to or physical destruction of property, or death of or bodily injury to any Person, but only to the extent caused by(a) the negligence or willful misconduct of Provider or its agents or employees or others under Provider's control or(b) any work performed by Provider,its agents,servants,subcontractors or employees of the Easement Area or any premises or facilities, or part thereof, owned by Customer or(c) a Provider Default; provided, however, that Provider 's obligations pursuant to this Section 12.1 shall not extend to claims, demands, lawsuits or actions for liability to the extent attributable of Customer;provided further, however, that nothing in this Section is intended to modify the limitation of Provider's liability set forth in Section 8.4. This agreement to indemnify specifically includes full indemnity in the event of liability imposed against Customer solely by reason of statute, operation to the negligence or willful misconduct of law or otherwise. 12.2 Indemnification by Customer Subject to Section 10.2, Customer shall fully indemnify, save harmless and defend Provider, its contractors, subcontractors, shareholders, directors, officers, employees, agents, contractors and invitees and any Financing Party("Provider Indemnified Parties")from and against any and all costs, claims, and expenses incurred by Provider in connection with or arising from any claim by a third party for physical damage to or physical destruction of property, or death of or bodily injury to any Person, but only to the extent caused by (a) the negligence or willful misconduct of Customer or its agents or employees or others under Customer's control or (b) a Customer Default;provided, however, that Customer's obligations pursuant to this Section 12.2 shall not extend to claims,demands,lawsuits or actions for liability to the extent attributable to the negligence or willful misconduct of Provider; provided further, however, that nothing in this Section is intended to modify the limitation of Customer's liability set forth in Section 8.4. 12.3 Notice of Claims Any Party seeking indemnification hereunder(the "Indemnified Party")shall deliver to the other Party(the "Indemnifying Party")a notice describing the facts underlying its indemnification claim and the amount of such claim(each such notice a "Claim Notice"). Such Claim Notice shall be delivered promptly to the Indemnifying Party after the Indemnified Party receives notice that an action at law or a suit in equity has commenced;provided, however, that failure to deliver the Claim Notice as aforesaid shall not relieve the Indemnifying Party of its obligations under this Section, except to the extent that such Indemnifying Party has been prejudiced by such failure. 33 12.4 Defense of Action If requested by an Indemnified Party,the Indemnifying Party shall assume on behalf of the Indemnified Party, and conduct with due diligence and in good faith, the defense of such Indemnified Party with counsel reasonably satisfactory to the Indemnified Party; provided, however, that if the Indemnifying Party is a defendant in any such action and the Indemnified Party believes that there may be legal defenses available to it that are inconsistent with those available to the Indemnifying Party, the Indemnified Party shall have the right to select separate counsel to participate in its defense of such action at the Indemnifying Party's expense. If any claim, action, proceeding or investigation arises as to which the indemnity provided for in this Section applies, and the Indemnifying Party fails to assume the defense of such claim, action, proceeding or investigation after having been requested to do so by the Indemnified Party, then the Indemnified Party may, at the Indemnifying Party's expense, contest or, with the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, settle such claim, action, proceeding or investigation. All costs and expenses incurred by the Indemnified Party in connection with any such contest or settlement shall be paid upon demand by the Indemnifying Party. 12.5 Survival of Provisions The provisions of this Article 12 shall survive the expiration or termination of this Agreement. Article XIII MISCELLANEOUS 13.1 Additional Documents Upon the receipt of a written request from another Party, each Party shall execute such additional documents, instruments, estoppels, recording of easement rights, consents, confirmations and assurances, and take such additional actions as are reasonably necessary and desirable to carry out the term s and intent hereof.No Party shall unreasonably withhold condition or delay its compliance with any reasonable request made pursuant to this Section. 13.2 Confidentiality Provider acknowledges that Customer is a public agency and subject to the provisions and requirements of the California Public Records Act (the "Public Records Act"). As a result, all documents related to this Agreement shall be considered to be public records unless (a) they are stamped by Provider as being exempt from disclosure under the Public Records Act, and (b) Provider cites the applicable Public Records Act exemption (e.g., the document contains trade secret information). In the event of a records request pursuant to this Agreement, Customer will promptly notify Provider in writing and give Provider the opportunity to object to the production of such information by citing the applicable Public Records Act exemption. Provider agrees to 34 indemnify and defend Customer in the event Customer withholds the relevant information at Provider's insistence and the requesting party files suit to compel disclosure. 13.3 Public Announcements To avoid any conflicts regarding claims of solar or renewable energy use or production, Customer shall submit to Provider for prior written approval any public announcements,including without limitation, press releases, regarding the matters contemplated hereunder, the System or Customer's use of solar or renewable energy, such approval not to be unreasonably withheld. 13.4 Integration; Attachments This Agreement,together with the Schedules and any Exhibits attached hereto, constitutes the entire agreement and understanding between Provider and Customer with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof. 13.5 Industry Standards Except as otherwise set forth herein, for the purpose of this Agreement accepted standards of performance within the solar photovoltaic power generation industry in the relevant market shall be the measure of whether a Party's performance is reasonable and timely. Unless expressly defined herein, words having well-known technical or trade meanings shall be so construed. 13.6 Amendments This Agreement may only be amended, modified or supplemented by an instrument in writing executed by duly authorized representatives of Provider and Customer. 13.7 Waiver No waiver of any provision of this Agreement shall be effective unless set forth in writing signed by the Party granting such waiver, and any such waiver shall be effective only to the extent it is set forth in such writing. The failure of Provider or Customer to enforce any of the provisions of this Agreement, or the waiver thereof, shall not be construed as a general waiver or relinquishment on its part of any such provision in any other instance, or of any other provision in any instance. No single or partial exercise of any right under this Agreement shall preclude any other or further exercise thereof or the exercise of any other right; and no waiver of any breach of or default under any provision of this Agreement shall constitute or be construed as a waiver of any subsequent breach of or default under that or any other provision of this Agreement. 13.8 Cumulative Remedies Except as set forth herein,any right or remedy of Provider or Customer shall be cumulative and without prejudice to any other right or remedy, whether contained herein or not. 35 13.9 Survival The obligations hereunder that, by their sense and context, are intended to survive termination of this Agreement shall survive the expiration or termination of this Agreement to the extent necessary to give them full effect. 13,10 Governing Law; Jurisdiction; Forum This Agreement shall be governed by and construed in accordance with the domestic laws of the State of California without reference to any choice of law principles. Any legal action or proceeding with respect to or arising out of this Agreement shall be brought in or removed to the courts of the State of California and of the United States of America in and for the State of California. By execution and delivery of this Agreement,Provider and Customer accept,generally and unconditionally,the jurisdiction of the aforesaid courts. Provider and Customer hereby waive any right to stay or dismiss any action or proceeding under or in connection with this Agreement brought before the foregoing courts on the basis of forum non-conveniens. 13.11 Waiver of Jury Trial TO THE EXTENT ENFORCEABLE UNDER APPLICABLE LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PROVIDER TO ENTER INTO THIS AGREEMENT. 13.12 Severability Any term, covenant or condition in this Agreement that to any extent is invalid or unenforceable in any respect in any jurisdiction shall, as to such jurisdiction, be ineffective and severable from the rest of this Agreement to the extent of such invalidity or prohibition, without impairing or affecting in any way the validity of any other provision of this Agreement,or of such provision in other jurisdictions. The Parties shall use good faith effort is to replace any provision that is ineffective by operation of this Section with an effective provision that as closely as possible corresponds to the spirit and purpose of such ineffective provision. 13.13 Headings The headings in this Agreement are solely for convenience and ease of reference and shall have no effect in interpreting the meaning of any provision of this Agreement. 36 13.14 Relation of the Parties The relationship between Provider and Customer shall not be that of partners, agents or joint venturers for one another, and nothing contained in this Agreement shall be deemed to constitute a partnership or agency agreement between them for any purposes, including federal income tax purposes. Provider and Customer, in performing any of their obligations hereunder, shall be independent contractors or independent patties and shall discharge their contractual obligations at their own risk. 13.15 Injunctive Relief The Parties acknowledge and agree that any violation or breach of the provisions of this Agreement may result in irreparable injury to a Party for which a remedy at law may be inadequate. In addition to any relief at law that may be available to a non-breaching Party for such a violation or breach, and regardless of any other provision contained in this Agreement, such Party shall be entitled to seek injunctive and other equitable relief and shall not be required to post any bond in connection therewith. 13.16 No Third-Party Beneficiaries This Agreement is solely for the benefit of the Parties and their respective permitted successors and permitted assigns, and this Agreement shall not otherwise be deemed to confer upon or give to any other third party any remedy, claim, liability, reimbursement, cause of action or other right. 13.17 Counterparts This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which constitute but one agreement. Any counterpart may be delivered by facsimile transmission or by electronic communication in portable document format (.pdf) or tagged image format (.tif), and the Parties agree that their electronically transmitted signatures shall have the same effect as manually transmitted signatures. 13.18 No Public Utility Neither Party shall assert that Provider is an electric utility or public service company or similar entity that has a duty to provide service,is subject to rate regulation,or is otherwise subject to regulation by any Governmental Authority as a result of Provider's obligations or performance under this Agreement. if at any time as a result of any Change in Law, Provider would be subject to regulation as an electric utility or public service company (or its equivalent) by any Governmental Authority by virtue of this Agreement, Customer will use its best efforts to restructure this Agreement so that Provider will not be subject to such regulation(while preserving for both Parties the substantive economic benefits conferred hereunder). 37 13.19 No Recourse of Affiliates This Agreement is solely and exclusively between the Parties, and any obligations created herein on the part of either Party shall be the obligations solely of such Party.No Party shall have recourse to any parent, subsidiary,partner,member, affiliate, lender, director, officer or employee of the other Party for performance or non-performance of any obligation hereunder, unless such obligations were assumed in writing by the Person against whom recourse is sought. 13.20 Notices Unless otherwise provided in this Agreement, all notices and communications concerning this Agreement shall be in writing and addressed to the other Party as follows: If to Provider: Cathedral City Solar, LLC c/o Borrego Solar Systems, Inc. Attention: CFO 360 22nd Street, Suite 600 Oakland,California 94612 With a copy to: Borrego Solar Systems, Inc. Attention: General Counsel 360 22nd Street, Suite 600 Oakland, California 94612 Email: legalnotices@borregosolar.com If to Customer: City of Cathedral City ATTN: Tami Scott 68700 Avenida Lalo Guerrero Cathedral City, CA 92234 760-770-0354 tscott@cathedralcity.gov With a copy to: Burke, Williams, Sorensen, LLP ATTN: Eric Vail, City Attorney 1600 Iowa Avenue, Suite 250 38 Riverside, CA 92507-7426 951-788-0100 evail @bwslaw.com or at such other address as may be designated in writing to the other Party. Unless otherwise provided herein, any notice provided for in this Agreement shall be hand-delivered, or sent by(a) registered or certified U.S. Mail, postage prepaid, (b) commercial overnight delivery service, or (c)facsimile or email attachment,and shall be deemed delivered to the addressee or its office when received at the address for notice specified above when hand-delivered, or upon confirmation of sending when sent by facsimile or email(if sent during normal business hours or the next Business Day if sent at any other time),on the Business Day after being sent when sent by overnight delivery service(Saturdays, Sundays and legal holidays excluded), or five(5)Business Days after deposit in the mail when sent by U.S. Mail. Customer shall deliver to any Financing Party, concurrently with delivery thereof to Provider, a copy of each notice of default given by Customer under this Agreement, inclusive of a reasonable description of Provider Default, and no such notice shall be effective absent delivery to the Financing Party. Customer shall not mutually agree with Provider to terminate this Agreement without the written consent of the Financing Party. 13.21 Drafting Presumption. This Agreement has been and shall be construed to have been drafted by all Parties to it so that the rule of construing ambiguities against the drafter shall have no force or effect. [Signature pages follow] 39 IN WITNESS WHEREOF intending to be legally bound hereby,the Parties have executed this Solar Power Purchase Agreement as of the Effective Date. PROVIDER: CATHEDRAL CITY SOLAR,LLC By: 1115 Solar Development, LLC, its sole member and manager By: Borrego Solar Systems, Inc., its sole member and manager By: w 'rR Name: William Bush Title: Chief Financial Officer CUSTOMER: CITY OF CATHEDRAL CITY Name: Charles P. McClendon Title: City Manager SIGNATURE PAGE TO SOLAR POWER SERVICES AGREEMENT 40 SCHEDULES 41 1 Schedule 1 DESCRIPTION OF EASEMENT AREA The Easement Area is located at 68700 Avenida Lalo Guerrero, Cathedral City, CA 92234 42 Schedule 2—page 1 EASEMENT AREA AND SYSTEM Easement Area Details: The Easement Area is located at 68700 Ave Lalo Guerrero, Cathedral City, CA 92234. The solar carport systems will be located in the back parking lot adjacent to the parking garage. System Details: Estimated Solar System 462.5 kW DC Size: Estimated Year 1 875,041 kWh Production: Estimated Annual 0.7% Degradation: Estimated Commercial Operation Date: Third Quarter, 2017.1 System Includes: System components include: LG Solar 370 watt panels (or higher), steel carport structures, Sungrow inverter system, wire kits, and data monitoring system. Turnkey Design and • Title report and review, site visits, geotechnical Construction Scope analysis, system drawings, and engineering Includes: review and stamps. • Interconnection application and permitting. • Assistance with recommended rate switches. • Tree removal, landscaping and light pole removal as needed to complete construction. • Construction of all aspects of system. • System commissioning. 1 This date is just an estimate. The actual date will depend upon many factors,including the issuance of full notice to proceed from Customer,the interconnection application,incentive requirements and the permitting timeline. 43 Design Parameters: Carport system will be painted a color specified by the City. The carport system shall consist of standard L and T shaped structures, similar in design to the pictures on the following page. Provider will install carport canopy lighting foot candles, controls and glare control per Illuminating Engineering Society(IES) and corresponding Backup, Uplight and Glare(BUG) standards as well as any local City of Cathedral City outdoor public parking lighting requirements. Please refer to the design standard example for the general carport aesthetic. 44 HelioScope Design Overview 2016-07-15 SSS Cathedral (_ity- Cive ( enter, (,P7U0 Ave lain (-met i em, Cathedral City, CR 922?Y.1 A Design 6 Components Design 2016-07-15 555 Component Name Count DC Nameplate 462.5 kW Inverter SG3OKU(Sungrow) 2(60.0 kW) Inverter SG36KU(Sungrow) 2(72.0 kW) AC Nameplate(Load Ratio) 462.0 kW(100.1%) Inverter SG66KU-M BSSO1 June 2016(Sungrow Power Supply) 5(330.0 kW) Last Modified Ted Delgado(Today at 12:55 PM) Combiner 1 pole Combiner 9 Combiner 4 pole Combiner 1 9 Field Segments Combiner 5 pole Combiner 1 - - Z*".;a. Combiner 6 pole Combiner 2 •r a ,•, Combiner 8 pole Combiner 1 £ Combiner 9 pole Combiner 2 T, Combiner 10 pole Combiner 1 ~ ^„, Combiner 14 pole Combiner 1 a` Strings 12 AWG(Copper) 67(9,381.4 ft) �t r ?Ya ) p� Strings 14 AWG(Copper) 4(397.0 ft) . • Module LG370N2W-B3 B5501(LG Electronics) 1,250 HI Field Segments pr.. © Description Racking Orientation Tilt Azimuth Intrarow Spacing Frame Size Frames Modules Qi Field Segment 1 Fixed Tilt Vertical(Portrait) 7° 180° 0.0 ft 7x1 76 532 •Field Segment 2 Fixed Tilt Vertical(Portrait) 7° 180° 0.0 ft 7x1 28 196 Googlc •Field Segment 3 Fixed Tilt Vertical(Portrait) T 180° 0.0 ft 3x6 6 108 •Field Segment 4 Fixed Tilt Vertical(Portrait) T 180° 5.8 ft 3x6 5 90 •Field Segment 5 Fixed Tilt Vertical(Portrait) 7° 180° 0.0 ft 6x3 6 108 •Field Segment 7 Fixed Tilt Vertical(Portrait) T 180° 0.0 ft 3x3 16 144 Field Segment 8 Fixed Tilt Vertical(Portrait) 7° 180° 0.0 ft 3x6 4 72 c2a Wiring Zones Description Combiner Poles String Size Stringing Strategy Wiring Zone 16 19 Along Racking Wiring Zone 2 16 14 Along Racking Wiring Zone 3 8 18 Along Racking Wiring Zone 4 8 18 Along Racking Wiring Zone 5 8 18 Along Racking Wiring Zone 7 16 18 Along Racking Wiring Zone 8 16 18 Along Racking Wiring Zone 9 8 18 Along Racking HelioScope Design Overview , -....,-.., fa Detailed Layout - . i . . 4k • '-I-'' ':'`'. ;.c*Stif62I /'.4i:f'?.ti'4';'"1 I / ''._, ,_ .,..,,,,,t.,_, . ii,r. ..,. ,. 44—, -..fr--- I ''' '41 _ T, ., , .. .4.a. 4 ' -. -;- - :. -'2 . . , _.,., - ii'''._,-241:-"'-7,:-':•---..,, 7 •.4 :...-.-,.- -z,-----_,:z-, - ' ,'' 7'- ••,.,.,, I/ -,4.0,-,4.,,,,,; _ _.., .- 4o......... 4., A r..... L.Il Lai 14, _- . I_. .., - L.... .0 .4 ' / ' • • ,1 Pi.., _ • '',, - .1 l r gm , ' ; ... . I 44. ..6,‘• 41 a . .- • _ . ...0-P . , ■ , e .J. ,, .■ --,4-- --'.- - '1.: .■.. •'. .. ■ ■ AM■ . - --. / 1 HelioScope _ 1 z 1 ,,,1 ,, Schedule 2—page 3 DESIGN STANDARD EXAMPLES k �\ f� ¥6© s :/ 55\2 . . . . | # . , ° • - ! 3 1. A •� . �.�. ,. • . e y %w '2 : 45 Schedule 2—page 4 Construction Documents to be provided within 30 days of the Commercial Operation Date, and amended to this Schedule, in accordance with Section 4.03(b). 46 Schedule 3 kWh RATE The kWh Rate with respect to the System contemplated in the Agreement shall be in accordance with the following schedule: Contract Year PPA Rate($/kWh) 1 $.1486 2 $.1486 3 $.1486 4 $.1486 5 $.1486 6 $.1486 7 $.1486 8 $.1486 9 $.1486 10 $.1486 11 $.1486 12 $.1486 13 $.1486 14 $.1486 15 $.1486 16 $.1486 17 $.1486 18 $.1486 19 $.1486 20 $.1486 21 $.1486 22 $.1486 23 $.1486 24 $.1486 25 $.1486 47 Schedule 4a EARLY TERMINATION FEE COMPONENT (Carport Structure Removed) The Early Termination Fee with respect to a System under the Agreement shall include a lump sum payment calculated in accordance with the following schedule. Early Termination Occurs in Contract ETF Component Payment Year: 1 $1,824,477 2 $1,698,122 3 $1,571,206 4 $1,443,692 5 $1,315,542 6 $1,186,712 7 $1,161,355 8 $1,135,225 9 $1,108,268 10 $1,080,427 11 $1,051,642 12 $1,021,847 13 $990,972 14 $958,941 15 $925,672 16 $891,078 17 $855,064 18 $817,528 19 $778,360 20 $737,443 21 $694,649 22 $654,299 23 $612,234 24 $568,331 25 or after $522,459 Schedule 4b EARLY TERMINATION FEE COMPONENT (Carport Structure Remains) The Early Termination Fee with respect to a System under the Agreement shall include a lump sum payment calculated in accordance with the following schedule. Early Termination Occurs in Contract ETF Component Payment Year: 1 $2,024,477 2 $1,898,122 3 $1,771,206 4 $1,643,692 5 $1,515,542 6 $1,386,712 7 $1,361,355 8 $1,335,225 9 $1,308,268 10 $1,280,427 11 $1,251,642 12 $1,221,847 13 $1,190,972 14 $1,158,941 15 $1,125,672 16 $1,091,078 17 $1,055,064 18 $1,017,528 19 $978,360 20 $937,443 21 $894,649 22 $854,299 23 $812,234 24 $768,331 25 or after $722,459 Schedule 5 BUY OUT VALUE TABLE The BUY OUT VALUE table with respect to a System under the Agreement shall include a lump sum payment calculated in accordance with the following schedule. Buy Out Value Contract Year: Buyout Value 1 997,235 2 975,078 3 952,360 4 929,045 5 905,093 6 880,462 7 855,105 8 828,975 9 802,018 10 774,177 11 745,392 12 715,597 13 684,722 14 652,691 15 619,422 16 584,828 17 548,814 18 511,278 19 472,110 20 431,193 21 388,399 22 348,049 23 305,984 24 285,984 25 259,984 26 233,984 27 207,984 28 181,984 29 155,984 30 129,984 31 103,984 32 77,984 33 51,984 34 25,984 35 0 Schedule 6 FORM OF EASEMENT SOLAR POWER EASEMENT AGREEMENT THIS SOLAR POWER EASEMENT AGREEMENT (this "Easement Agreement') is made effective as of October 21St,2016(the"Effective Date"),between Cathedral City Solar,LLC, a Delaware limited liability company(together with its successors, assigns, and heirs, "Grantee"), and City of Cathedral City, a California Municipal Corporation ("Grantor"). BACKGROUND WHEREAS, Grantor owns that certain area of real property shown on the sketch plan attached hereto as Exhibit A(the "Easement Area"); WHEREAS, Grantor and Grantee executed that certain Solar Power Services Agreement dated October _, 2016 under which Grantee will install, maintain, own and operate a solar photovoltaic system (the "System") on the Easement Area for the purpose of providing Solar Services (as hereafter defined)to Grantor; and WHEREAS, to provide Grantee the ability to install and operate the System on the Easement Area and to access the System across or through the Easement Area and any surrounding or nearby lands or buildings owned or leased by Grantor,as may be reasonably required from time to time, Grantor and Grantee have agreed to enter into this Easement Agreement. NOW THEREFORE, for One Dollar and More($1.00 and more)paid by the Grantee, the receipt and sufficiency of which Grantor hereby acknowledges,the parties agree as follows: 1. Defined Terms. (a) "Grantee Parties" means Grantee, its employees and contractors, and their successors and assigns. (b) "Solar Services" means the supply of on-site net electrical output in kWh (AC) from the System. (c) "Term" means the term of this Easement Agreement and the easements and rights granted hereunder,which shall commence on the Effective Date and shall continue until the date on which the System is decommissioned and removed from the Easement Area. 2. Grant of Easement and Rights. Grantor hereby grants and conveys to Grantee (and the local utility, as applicable),with quitclaim covenants, the following non-exclusive easements and rights over, across, to, and through the Easement Area for the Term exercisable at all times on a 24-hours-a-day, 7-days-a-week basis by Grantee Parties, all of which such easements and rights shall run with the land for the duration of the Term: (a) The right to develop, erect, construct, install, replace, repair, relocate, remove, maintain,operate,and use,from time to time,the System,underground and above- ground electrical transmission and communications lines related to the operation of the System, electric transformers, telecommunications equipment, meteorological towers and weather/solar measurement equipment and related and reasonably necessary facilities and equipment; (b) The right to capture and to convert any or all of the solar resources on, near and above the Easement Area, and the right to cut and trim trees or shrubbery that may encroach upon the Easement Area; (c) The right to investigate the potential of solar energy conversion including, but not limited to, conducting environmental and paleontological studies, soil tests, and studies of solar intensity and other meteorological data and geological studies, and other studies as may be required in connection with permitting the System; (d) The right to develop, erect, construct, install, replace, repair, relocate, remove, maintain, operate, and use the following from time to time in connection with the System, as is reasonably necessary for the operation and maintenance of improvements on the Site and other properties used in connection with improvements: a line or lines of poles or towers, together with such wires and cables as from time to time are suspended from, and/or underground wires and cables, for the transmission of electrical energy and/or for communication purposes, and all necessary and proper anchors, support structures, foundations, footings, crossarms and other appliances and fixtures for use in connection with said towers,wires and cables; (e) The right of pedestrian and vehicular ingress, egress, and access over and across the Easement Area by means of roads and lanes thereon if existing, or otherwise by such roads, structure,route or routes as Grantee may construct or improve from time to time,said construction or improvement to be subject to the written consent of Grantor, which consent shall not be unreasonably withheld, conditioned or delayed; (0 The right of subjacent and lateral support to whatever is reasonably necessary for the operation and maintenance of improvements on Easement Area and other properties used in connection with improvements, including, without limitation, guy wires and supports; (g) The right to grade, level, fill, clear and replant ground; and to use on-site sand, gravel, caliche or other materials suitable for road cover solely to construct the System and related facilities on the Easement Area, all to the extent permitted by law; (h) The right to enter upon the Easement Area and to conduct Phase 1 and other environmental studies or audits of the Easement Area, including the air, soil, and water in and about the site, at reasonable times and upon reasonable notice; and (i) The right to undertake any other activities, whether accomplished by Grantee or Grantee Parties, that are reasonably necessary to accomplish any of the purposes or uses of this Easement Agreement. 3. Use of Easement Area. (a) Grantee shall use the Easement Area for the sole purpose of (i) installing, constructing, operating, maintaining, repairing and removing the System, (ii) providing Solar Services, and(iii) all actions reasonably related thereto, and for no other purpose without the prior written consent of Grantor,which consent shall not be unreasonably withheld. (b) At all times during the Term, Grantee shall keep and maintain the System on the Easement Area in a first-class condition, in good order and repair, and in a safe and clean condition. (c) Grantee shall comply with all applicable statutes, ordinances and regulations relating to Grantee's use and occupancy of the Easement Area. If any license, permit or other governmental authorization is required for the lawful use or occupancy of the Easement Area,Grantee shall procure and maintain it throughout the Term. (d) Grantee shall utilize the rights granted hereunder in a manner that minimizes inconvenience to and interference with the use of Grantor's property by Grantor and its guests and invitees, tenants, licensees or other visitors to the extent commercially practical. 4. Ownership of System; Liens;Non-Disturbance. (a) Grantee shall retain title to and be the legal and beneficial owner of each System at all times. Absent further written election by Grantee, each System shall (i) remain the personal property of Grantee and shall not attach to or be deemed a part of, or fixture to,the Easement Area, and(ii)at all times retain the legal status of personal property as deemed under Article 9 of the applicable Uniform Commercial Code. (b) Throughout the Term,Grantor warrants and represents that it shall keep the System free from all liens (other than those created by Grantor or its creditors). Grantor shall be entitled to, and is hereby authorized to,file one or more precautionary UCC Financing Statements or fixture filings, as applicable, in such jurisdictions as it deems appropriate with respect to the System in order to protect its title to and rights in the System. The parties intend that neither Grantor nor any party related to Grantor shall acquire the right to operate the System or be deemed to operate the System for purposes of Section 7701 (e)(4)(A)(i) of the Internal Revenue Code, as amended,and the terms of this Easement Agreement shall be construed consistently with the intention of the parties. Grantor shall provide timely notice of Grantee's title and sole ownership of each System to all persons that have, or may come to have, an interest in or lien upon the real property comprising the Easement Area. (c) Grantor shall obtain a non-disturbance agreement in favor of Grantee from any third party who now has or may in the future obtain an interest in the Easement Area, including, without limitation, any lenders to Grantor, which non-disturbance agreement shall: (i) acknowledge and consent to the Grantee's rights to the Easement Area and the System under this Easement Agreement; (ii) acknowledge that the third party has no interest in the System and shall not gain any interest in the System by virtue of the parties' performance or breach of this Easement Agreement; (iii) acknowledge that the third party's interest in the Easement Area (if any) is subject to Grantee's interest under this Easement Agreement; (iv)waives any lien the third party may have in and to the System; and(v)agrees not to disturb Grantee's possession of the Easement Area. 5. Removal of System. Following the expiration of the Term, subject to the rights and obligations under the Solar Power Services Agreement, Grantee shall, at Grantee's expense, remove all of its tangible property comprising the System from the Easement Area on mutually convenient dates. The Easement Area shall be returned to its condition immediately prior to the installation of the System, except for System mounting pads or other support structures (which may be left in place with the written consent of Grantor) and ordinary wear and tear and without any obligation to replant trees or shrubs. If Grantee fails to remove or commence substantial efforts to remove the System by the agreed upon date,Grantor shall have the right, at its option,to remove the System to a public warehouse and restore the Easement Area to its original condition (other than ordinary wear and tear), all at Grantee's cost. 6. Representations and Warranties. (a) Grantor represents and warrants to Grantee that Grantor has full power and authority to execute and deliver this Easement Agreement and to grant the easements and rights granted hereunder. All persons having any ownership interest in the Easement Area are signing this Easement Agreement as Grantor. When signed by Grantor, this Easement Agreement constitutes a valid and binding agreement enforceable against Grantor in accordance with its terms. (b) Grantor represents and warrants that there are no mortgages, easements, leases, rights of way, liens, security interests,mechanic's liens or any other encumbrances encumbering all or any portion of the Easement Area that could interfere with Grantee's operations on the Easement Area. Grantor shall fully cooperate and assist Grantee in removing or limiting such interference, including, but not limited to, obtaining a subordination and non-disturbance agreement where Grantee deems it necessary,with terms and conditions reasonably requested by Grantee to protect its rights hereunder. 7. No Interference. Grantor covenants and agrees to and with Grantee not to erect or permit the location or erection of any building or other structures within the Easement Area or permit any trees or bushes to be planted within the Easement Area that might block or obstruct the System's access to sunlight or otherwise interfere with the System's utility infrastructure installed within the Easement Area. 8. Insurance. If and whenever any Grantee Parties are exercising the rights granted under this Easement Agreement they will carry commercial liability insurance. 9. Indemnification. (a) Grantee agrees to indemnify, defend and hold harmless the Grantor from and against any and all claims, damages, expenses, liabilities, and losses arising from or out of claims by third parties for injuries to any person and damage to or theft or misappropriation or loss of property occurring in or about the Easement Area arising from any omission, fault, negligence or other misconduct of Grantee in exercising the easement and rights granted hereunder, except to the extent caused by Grantor. Nothing herein shall be construed to impose on the Grantee any liability for indirect, consequential, punitive or other special damages. The provisions of this Section 8(a) survive the termination or expiration of this Easement Agreement. (b) Grantor agrees to indemnify, defend and hold harmless the Grantee from and against any and all claims, damages, expenses, liabilities, and losses arising from or out of claims by third parties for injuries to any person and damage to or theft or misappropriation or loss of property occurring in or about the Easement Area arising from any omission,fault,negligence or other misconduct of Grantor,except to the extent caused by Grantee. Nothing herein shall be construed to impose on the Grantor any liability for indirect, consequential, punitive or other special damages. The provisions of this Section 8(b)survive the termination or expiration of this Easement Agreement. 10. Assignment. This Easement Agreement shall be freely assignable by Grantee without the consent of Grantor. Any assignment shall not terminate the Easement Agreement. This Easement Agreement binds and inures to the benefit of the parties and their respective heirs, successors, and assigns. Grantor agrees to execute any consent,novation or other documentation that Grantee may request in connection with any assignment permitted by this Section 10, including without limitation entering into a consent and assignment agreement with Grantee's financing parties to facilitate financing of the System. An assignment by either party in accordance with this Section 10 shall relieve the assignor of its obligations hereunder, except with respect to undisputed payments due by the assignor as of the effective date of the assignment,which obligations shall be performed by assignor or assignee as a condition precedent to such assignment. 11. Legal Description. At Grantee's request or in order to satisfy requirements of any applicable law,the legal description of the Easement Area shall be prepared by a qualified surveyor or engineer, and Grantee shall execute and deliver to Grantor an amendment to this Easement Agreement setting forth the legal description. 12. Notices. Notices or other communication hereunder shall be in writing and shall be sent certified or registered mail, return receipt requested, or by national overnight courier company, or personal delivery to the address of Grantor or Grantee, or their successor's in title. Notices shall be deemed given upon delivery or refusal to accept delivery. 13. Subordination. Any mortgage,deed of trust,ground lease or other lease or property interest hereafter granted or entered into with respect to the Easement Area shall be subordinate and inferior to the easements,rights,benefits,and obligations created hereby,and the foreclosure under any such mortgage or deed of trust shall not extinguish or impair the easements, rights, benefits, and obligations created by this Easement Agreement. 14. Recording. Grantee may record a Memorandum of Easement Agreement, a copy of which is attached hereto as Exhibit B, in the real property records maintained by the county in which the area(s) specified in Exhibit A are located. 15. Miscellaneous. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to choice of law provisions. In case any one or more of the provisions contained in this Easement Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Easement Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. This Easement Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which, together, shall constitute one and the same instrument, constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes all previous communications between the parties concerning the subject matter hereof,whether written or oral. 16. Further Assurances. Each party,upon the request of the other party, shall sign(or cause to be signed) all further documents, do (or cause to be done) all further acts, and provide all assurances as may reasonably be necessary or desirable to give effect to the terms of this Easement Agreement. [Signature Page to Follow] IN WITNESS WHEREOF intending to be legally bound hereby,the parties have executed this Easement Agreement as of the Effective Date. GRANTEE: CATHEDRAL CITY SOLAR,LLC By: 1115 Solar Development, LLC, its sole member and manager By: Borrego Solar S ems, Inc., its sole member and manager By: WuiO Name: William Bush Title: Chief Financial Officer GRANTOR: CITY OF CATHEDRAL CITY B .: 0).A- 1 Name: Charles P. McClendon Title: City Manager EXHIBIT A EASEMENT AREA EXHIBIT B MEMORANDUM OF EASEMENT AGREEMENT MEMORANDUM OF EASEMENT AGREEMENT THIS MEMORANDUM OF EASEMENT AGREEMENT (the "Memorandum") is made effective as of ac , 2016 (the "Effective Date"), between/among Cathedral City Solar, LLC, a Delaware limited liability company ("Provider"), and the City of Cathedral City, a municipal corporation ("Customer"). Provider and Customer are sometimes referred to individually as a Party and collectively as the Parties. RECITALS Customer is the fee simple owner of a certain tract of land more particularly described in Schedule 1, which is attached hereto and hereby incorporated herein (the "Easement Area"), located in the County of Riverside, State of California; and Customer has entered into that certain Easement Agreement with Provider dated October 21 , 2016 (the "Agreement"), relating to the Easement Area, which Agreement shall commence on the Effective Date(as defined in the Agreement) and shall continue until the date on which the System (as defined below) is decommissioned and removed from the Easement Area, which Agreement includes the right of Provider to install, operate and maintain on the Easement Area an integrated carport structure assembly of photovoltaic panels, structural steel,inverters,converters,metering, lighting fixtures, disconnects, combiners, switches, wiring devices and wiring and interconnections with the local electric utility (the "System"); and The Agreement includes a grant of certain easements and other rights on and over portions of the Easement Area, including but not limited to a non-exclusive easement for the installation, operation and maintenance of the System on and over that portion of the Easement Area described on Schedule 1 attached hereto and hereby incorporated herein as well as an easement to receive unobstructed sunlight; and Customer and Provider desire to execute this Memorandum to give public record notice of the Agreement, Provider's easement and other rights in and to the Easement Area and Provider's ownership of the System and appurtenances thereto. NOTICE This Memorandum is hereby executed for the purpose of recording in the office of the County Recorder for Riverside County, California in order to give public record notice of: The Agreement and the terms and provisions set forth therein; The existence of all easements and other rights granted to Provider in the Agreement relating to the Easement Area; Provider's ownership of and exclusive title to the System and appurtenances thereto; and The prohibition on Customer or any person other than Provider granting or creating a lien or encumbrance on the System or any appurtenances thereto. The provisions of this Memorandum do not in any way change or affect the terms, covenants and conditions of the Agreement, all of which terms, covenants and conditions shall remain in full force and effect. [Signature page follows.] IN WITNESS WHEREOF, this Memorandum has been executed and delivered as of the day, month and year first above written. "PROVIDER" CATHEDRAL CITY SOLAR,LLC By: 1115 Solar Development, LLC Its: sole member By: Borrego Solar Systems, Inc. Its: sole member manager By: W A . Name: William Bush Its: CFO "CUSTOMER" CITY OF CATHEDRAL CITY By: Pk Name: Charles P. McClendon Its: City Manager SCHEDULE 1 DESCRIPTION OF EASEMENT AREA 64 Schedule 7 ESTIMATED ANNUAL PRODUCTION AND GUARANTEED PRODUCTION Estimated Guaranteed Guaranteed Contract Annual Production Production Year Production (/o)a (kWh) (kWh) 1 875,041 90% 787,537 2 868,915 90% 782,024 3 862,833 90% 776,550 4 856,793 90% 771,114 5 850,796 90% 765,716 6 844,840 90% 760,356 7 838,926 90% 755,034 8 833,054 90% 749,748 9 827,222 90% 744,500 10 821,432 90% 739,289 11 815,644 12 809,934 13 804,265 14 798,635 15 793,044 16 787,493 17 781,981 18 776,507 19 771,071 20 765,674 21 760,314 22 754,992 23 749,707 24 744,459 25 739,248 65 Schedule 8 Performance Guarantee Rate The following table provides a mutually agreed upon estimate of the future value of solar production for purposes of calculating the Performance Guarantee Credit. Performance Guarantee Rate per kWh 1 $0.137 2 $0.141 3 $0.146 4 $0.150 5 $0.154 6 $0.159 7 $0.164 8 $0.169 9 $0.174 10 $0.179 This table may be adjusted in future years, if agreed upon by both parties. 66