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$2,843,166.36 CITY OF FOUNTAIN VALLEY

(ORANGE COlJNTY, CALIFORNIA) 2017 LEASR/PURCHASE AGREll:MENT

(NEW CLEAN RENEWABLE ENERGY BONDS)

I, Rick Miller, hereby certify that I am the City Clerk, of the City of Fountain Valley (the "City"), a general Jaw eity duly organized and validly existing under the Constitution and laws of the State of California, and that as such I am authorized to execute thi~ Certificate on behalf of the City,

I hereby forther certify that the attached resolution is a full, true and correct copy of Resolution No. 9581, adopted at a mcoting of the City Council of the City held on January 17, 2017 (the "Resolution"), at which meeting all of the members of the City Council of the City had due notice and at which a quorum was present and acting throughout.

I hereby further certify that I have carefully compared the same with the original resolution as so adopted at said meeting and entered in the minutes of the City Council ofthe City on file and of record and certify that it is a full, true and correct copy of said Resolution; and that said Resolution has not been amended, modified or rescinded since the date of adoption and is now in full force and effect.

Attached hereto is a complete and correct copy of the minutes of the meeting of the City Council of the City duly called and held on January 17, 2017, at which said Resolution was adopted.

IN WlTNESS WHEREOF, I have hereunto set my hand this 2nd day of February 2017.

CITY Of FOUNTAIN VALLEY

DOCSOC/l 7967 l 4/024538-0009

r

l

RESOLUTION NO. 9581

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FOUNTAIN VALLEY, CALIFORNIA MAKING REQUIRED FINDINGS AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATING TO THE FINANCING OF SOLAR IMPROVEMENTS AT CITY BUILDINGS, AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH

WHEREAS, the City of Fountain Valley (!he "City") is a municipal corporation and a general law city that is duly organized and existing under and pursuant to the Constitution and laws of the State of California (the "State"); and

WHEREAS, the City desires to take certain actions that are described herein to finance the acquisition,. construction and installation of various capital improvements, including the acquisition, installation and equipping of .certain solar systems, photovoltaic power generating systems and related improvements on and to certain City buildings and other facilities (collectively, the "Project") through a lease/leaseback transaction with the Fountain Valley Public Financing Authority (the "Authority''); and

WHEREAS, the City is a member of the Authority, and the Project is located entirely within the boundaries of the City; and

WHEREAS, the City desires to finance the Project through such a lease/leaseback transaction; and

WHEREAS, in connection with such financing of the Project, there have been presented to this City Council: (i) a form of Site Lease (the "Site Lease"} by and between the City and the Authority; (ii) a form of Lease/Purchase Agreement (the "Lease Agreement") by and between the Authority and the City; and (iii) a form of Direct Purchase Agreement (the "Purchase Contract") by and among HASI OBS OP A LLC ("Hannon Armstrong"), as purchaser, the City and the Authority; and

WHEREAS, the City desires to designate the aggregate principal component of base rental payments under the Lease Agreement for purposes of Section 54C(a)(3) of the Internal Revenue Code of 1986, as amended (the "Code") as a •new clean renewable energy bond" within the meaning of Section 54C(a) of the Code; and

WHEREAS, the City desires to receive direct cash subsidy payments from the United States Department of Treasury as provided by Section 6431 of the Code witli respect to the Lease Agreement and, in that connection, to irrevocably elect to have Section 6431 (f) of the Code apply to the Lease Agreement; and

WHEREAS, the Project will provide a public benefit by reducing City utility costs and improving air quality in the region; and

WHEREAS, in order to facilitate the financing of the Project: (i) the City will lease to the Authority the real property and improvements comprising the City's Fire Station No. 1,

1

located at 17737 Bushard Street, Fountain Valley, California 92708, pursuant ta the Site Lease, subject to adjustment as described in Section 2 below (the "Leased Real Property'); and (ii) the Authority will lease the Leased Real Property back ta the City pursuant to the Lease Agreement; and

WHEREAS, under the Lease Agreement, the City will make Lease Payments (as such term is defined in the Lease Agreement) for the right to use the Leased Real Property; and

WHEREAS, under an Assignment Agreement by and between the Authority and Hannon Armstrong, the Authority has assigned to Hannon Armstrong the right to receive Lease Payments from the City under the Lease Agreement; and

WHEREAS, there are now on file with the City Clerk copies of the Site Lease, the Lease Agreement, the Purchase Contract and a Placement Agreement (the "Placement Agreement") by and between the City and Raymond James & Associates, Inc., the City's placement agent (the "Placement Agent''); and

WHEREAS, the City has held a public hearing on the date hereof pursuant to Government Code Section 6586.5, following publication of notice not less than five days prior to the hearing, concerning the financing of the Project, and the City has determined that the financing of the Project with the assistance of the Authority will result in significant public benefits; and

WHEREAS, all acts, conditions and things that are required by the Constitution and laws of the Stale to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing that is authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided;

NOW, THEREFORE, the City Council of the City of Fountain Valley does hereby resolve as follows:

SECTION 1. The City Council hereby specifically finds and declares that each of the statements, findings and determinations of the City in the recitals that are set forth above and in the preambles of the documents that are approved hereby are true and correct, and that the implementation of the financing program for the Project will result in significant public benefits for the residents of the City of the type described in Government Code Section 6586(a) and (d).

SECTION 2. The form of the Lease Agreement by and between the City and the Authority presented to this meeting and on file with the City Clerk (the "Clerk") is hereby approved. Each of the Mayor of the City (the "Mayor"), the City Manager of the City (the "City Manager") and the Director of Finance of the City (the "Director of Finance") or their designees (collectively, the "Authorized Officers"), acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority the Lease Agreement in substantially said fom1, with such changes, Insertions and omissions therein as the Authorized Officer or Officers executing the same may require or approve, such approval

to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers; provided, however, that the aggregate amount of the principal components of the Lease Payments shall not exceed $3,000,000, the scheduled interest components (exclusive of default or taxable rates) of the Lease Payments shall accrue al a rate not to exceed 4.44% per annum and the final scheduled Lease Payment shall .not be more than 20 years from the commencement of the Lease Agreement (subject lo extension as provided in the Lease Agreement). The Leased Real Property shall be subject to substitution and release for Project-financed assets or other assets in accordance with the Lease Agreement, and the Lease Agreement. and the Site Lease may provide for the lease/leaseback of all or part of the Project. In the event that it is determined by the Mayor, the City Manager, the Director of Finance, or their designees, that there are limitations or restrictions on the ability of the City to lease or sublease any portion of the Leased Real Property as contemplated by the Lease Agreement, the Mayor, the City Manager, the Director of Finance, or their designees, may designate other or additional real property of the City to be leased or subleased pursuant to the Lease Agreement, with such designation to be conclusively evidenced by the execution and delivery of the Lease Agreement by one or more of the Authorized Officers.

SECTION 3. The form of the Site Lease by and between the Authority and the City presented to this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, far and in the name and on behalf of the City, to execute and deliver to the Authority a Site Lease in substantially said form, with such changes therein as the Authorized Officer or Officers executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of such Authorized Officers.

SECTION 4. The form of the Placement Agreement by and between the City and the Placement Agent presented to this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Placement Agreement in substantially said form, with such .changes therein as the Authorized Officer or Officers executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers.

SECTION 5. The form of the Purchase Contract by and among the City, the Authority and Hannon Armstrong presented to this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Purchase Contract in substantially said form, with such changes therein as the Authorized Officer or Officers executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers.

SECTION 6. The City hereby designates the Lease Agreement for purposes of Section 54C(a)(3) of the Code as a "new clean renewable energy bond" within the meaning of Section 54C(a) of the Code. The City hereby irrevocably elects to have Section 6431 (f) of the Code apply to the Lease Agreement.

SECTION 7. The Clerk and such person or persons as may have been designated by the Clerk to act on the Clerk's behalf are hereby authorized and directed to attest the

signature of the Authorized Officers designated herein to execute any documents that are described herein, and to affix and attest the seal of the City, as may be required or appropriate in connection with !he execution and delivery of the Site Lease, the Lease, the Placement Agreement and the Purchase Contract.

SECTION 8. The Authorized Officers are each hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which each may deem necessary or advisable (including agreements to retain the services of Stradling Yocca Carlson & Rauth, a Professional Corporation, as Bond Counsel, and Urban Futures Inc., as Financial Advisor, and in such case the Authorized Officers shall include the City Attorney, to assist the City with the financing and the payment of costs of issuance approved by the Director of Finance or the designee thereof, and including a Filing Agent Agreement with a trustee bank to apply annually for direct cash subsidy payments from the United States Department of Treasury as provided by Section 6431 of the Code) in order to consummate the financing of the Project and otherwise to carry out, give effect lo and comply with the terms and intent of this Resolution, the Site Lease, the Lease, the Placement Agreement and the Purchase Contract. Such actions heretofore taken by such officers or designees are hereby ratified, confirmed and approved.

SECTION 9. This Resolution shall take effect immediately.

PASSED, APPROVED and ADOPTED this 17th day of January, 2017, by tile following vote:

AYES: NOES: ABSENT: ABSTAIN:

Brothers, Mccurdy, Nagel, Vo, Collins None None None

A~

Rick Miller, City Clerk

Bond Attorney

$2,843,166.36 CITY OF FOUNTAIN VALLEY

(ORANGE COUNTY, CALIFORNIA) 2017 LEASE/PURCHASE AGREEMENT

(NEW CLEAN RENEWABLE ENERGY BONDS)

I, Rick Miller, hereby certify that I am the City Clerk, of the City of Fountain Valley (the "City"), a general law city duly organized and validly existing under the Constitution and laws of the State of California, and that as such I am authorized to execute this Certificate on behalf of the City.

I hereby further certify that the attached resolution is a full, true and correct copy of Resolution No. 9581, adopted at a meeting of the City Council of the City held on January 17, 2017 (the "Resolution"), at which meeting all of the members of the City Council of the City had due notice and at which a quorum was present and acting throughout.

I hereby further ce1iify that I have carefully compared the same with the original resolution as so adopted at said meeting and entered in the minutes of the City Council of the City on file and of record and certify that it is a full, true and correct copy of said Resolution; and that said Resolution has not been amended, modified or rescinded since the date of adoption and is now in full force and effect.

Attached hereto is a complete and correct copy of the minutes of the meeting of the City Council of the City duly called and held on January 17, 2017, at which said Resolution was adopted.

IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of February 2017.

DOCSOC/l 796714/024538-0009

CITY OF FOUNTAIN VALLEY

By: _______,,,_____'12------=-· i~/JjJL __ Rick Miller City Clerk

[

RESOLUTION NO. 9581

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FOUNTAIN VALLEY, CALIFORNIA MAKING REQUIRED FINDINGS AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATING TO THE FINANCING OF SOLAR IMPROVEMENTS AT CITY BUILDINGS, AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH

WHEREAS, the City of Fountain Valley (the "City") is a municipal corporation and a general law city that is duly organized and existing under and pursuant to the Constitution and laws of the State of California (the "State"); and

WHEREAS, the City desires to take certain actions that are described herein to finance the acquisition,. construction and installation of various capital improvements, including the acquisition, installation and equipping of certain solar systems, photovoltaic power generating systems and related improvements on and to certain City buildings and other facilities (collectively, the "Project") through a lease/leaseback transaction with the Fountain Valley Public Financing Authority (the "Authority"); and

WHEREAS, the City is a member of the Authority, and the Project is located entirely within the boundaries of the City; and

WHEREAS, the City desires to finance the Project through such a lease/leaseback transaction; and

WHEREAS, in connection wlth such financing of the Project, there have been presented to this City Council: (i) a form of Site Lease (the "Site Lease") by and between the City and the Authority; (ii) a form of Lease/Purchase Agreement (the "Lease Agreement") by and between the Authority and the City; and (iii) a form of Direct Purchase Agreement (the "Purchase Contract") by and among HAS! OBS OP A LLC ("Hannon Armstrong"), as purchaser, the City and the Authority; and

WHEREAS, the City desires to designate the aggregate principal component of base rental payments under the Lease Agreement for purposes of Section 54C(a)(3) of the Internal Revenue Code of 1986, as amended (the "Code") as a "new clean renewable energy bond" within the meaning of Section 54C(a) of the Code; and

WHEREAS, the City desires to receive direct cash subsidy payments from the United States Department of Treasury as provided by Section 6431 of the Code with respect to the Lease Agreement and, in that connection, to irrevocably elect to have Section 6431 (f) of the Code apply to the Lease Agreement; and

WHEREAS, the Project will provide a public benefit by reducing City utility costs and improving air quality in the region; and

WHEREAS, in order to facilitate the financing of the Project: (i) the City will lease to the Authority the real property and improvements comprising the City's Fire Station No. 1,

1

located at 17737 Bushard Street, Fountain Valley, California 92708, pursuant to the Site Lease, subject to adjustment as described in Section 2 below {the "Leased Real Property"); and (ii) the Authority will lease the Leased Real Property back to the City pursuant to the Lease Agreement; and

WHEREAS, under the Lease Agreement, the City will make Lease Payments (as such term is defined in the Lease Agreement) for the right to use the Leased Real Property; and

WHEREAS, under an Assignment Agreement by and between the Authority and Hannon Armstrong, the Authority has assigned to Hannon Armstrong the right to receive Lease Payments from the City under the Lease Agreement; and

WHEREAS, there are now on file with the City Clerk copies of the Site Lease, the Lease Agreement, the Purchase Contract and a Placement Agreement (the "Placement Agreement") by and between the City and Raymond James & Associates, Inc., the City's placement agent (the "Placement Agent"); and

WHEREAS, the City has held a public hearing on the date hereof pursuant to Government Code Section 6586.5, following publication of notice not less than five days prior to the hearing, concerning the financing of the Project, and the City has determined that the financing of the Project with the assistance of the Authority will result in significant public benefits; and

WHEREAS, all acts, conditions and things that are required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing that is authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided;

NOW, THEREFORE, the City Council of the City of Fountain Valley does hereby resolve as follows:

SECTION 1. The City Council hereby specifically finds and declares that each of the statements, findings and determinations of the City in the recitals that are set forth above and in the preambles of the documents that are approved hereby are true and correct, and that the implementation of the financing program for the Project will result in significant public benefits for the residents of the City of the type described in Government Code Section 6586(a) and (d).

SECTION 2. The form of the Lease Agreement by and between the City and the Authority presented to this meeting and on file with the City Clerk (the "Clerk") is hereby approved. Each of the Mayor of the City (the "Mayor"), the City Manager of the City (the "City Manager") and the Director of Finance of the City (the "Director of Finance") or their designees (collectively, the "Authorii;ed Officers"), acting alorye, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority the Lease Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer or Officers executing the same may require or approve, such approval

to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers; provided, however, that the aggregate amount of the principal components of the Lease Payments shall not exceed $3,000,000, the scheduled interest components (exclusive of default or taxable rates) of the Lease Payments shall accrue at a rate not to exceed 4.44% per annum and the final scheduled Lease Payment shall .not be more than 20 years from the commencement of the Lease Agreement (subject to extension as provided in the Lease Agreement). The Leased Real Property shall be subject to substitution and release for Project-financed assets or other assets in accordance with the Lease Agreement, and the Lease Agreement. and the Site Lease may provide for the lease/leaseback of all or part of the Project In the event that it is determined by the Mayor, the City Manager, the Director of Finance, or their designees, that there are limitations or restrictions on the ability of the City to lease or sublease any portion of the Leased Real Property as contemplated by the Lease Agreement, the Mayor, the City Manager, the Director of Finance, or their designees, may designate other or additional real property of the City to be leased or subleased pursuant to the Lease Agreement, with such designation to be conclusively evidenced by the execution and delivery of the Lease Agreement by one or more of the Authorized Officers.

SECTION 3. The form of the Site Lease by and between the Authority and the City presented to this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority a Site Lease in substantially said form, with such changes therein as the Authorized Officer or Officers executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of such Authorized Officers.

SECTION 4. The form of the Placement Agreement by and between the City and the Placement Agent presented to this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Placement Agreement in substantially said form, with such .changes therein as the Authorized Officer or Officers executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers.

SECTION 5. The form of the Purchase Contract by and among the City, the Authority and Hannon Armstrong presented to this meeting and on file with the Clerk is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Purchase Contract in substantially said form, with such changes therein as the Authorized Officer or Officers executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers.

SECTION 6. The City hereby designates the Lease Agreement for purposes of Section 54C(a)(3) of the Code as a "new clean renewable energy bond" within the meaning of Section 54C(a) of the Code. The City hereby irrevocably elects to have Section 6431 (f) of the Code apply to the Lease Agreement.

SECTION 7. The Clerk and such person or persons as may have been designated by the Clerk to act on the Clerk's behalf are hereby authorized and directed to attest the

signature of the Authorized Officers designated herein to execute any documents that are described herein, and to affix and attest the seal of the City, as may be required or appropriate in connection with the execution and delivery of the Site Lease, the Lease, the Placement Agreement and the Purchase Contract.

SECTION 8. The Authorized Officers are each hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which each may deem necessary or advisable (including agreements to retain the services of Stradling Yocca Carlson & Rauth, a Professional Corporation, as Bond Counsel, and Urban Futures Inc., as Financial Advisor, and in such case the Authorized Officers shall include the City Attorney, to assist the City with the financing and the payment of costs of issuance approved by the Director of Finance or the designee thereof, and including a Filing Agent Agreement with a trustee bank to apply annually for direct cash subsidy payments from the United States Department of Treasury as provided by Section 6431 of the Code) in order to consummate the financing of the Project and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, the Site Lease, the Lease, the Placement Agreement and the Purchase Contract. Such actions heretofore taken by such officers or designees are hereby ratified, confirmed and approved.

SECTION 9. This Resolution shall take effect immediately.

PASSED, APPROVED and ADOPTED this 17th day of January, 2017, by the following vote:

AYES: NOES: ABSENT: ABSTAIN:

Brothers, Mccurdy, Nagel, Vo, Collins None None None

A~

Rick Miller, City Clerk

Bond Attorney

DIRECT PURCHASE AGREEMENT

Fountain Valley Public Financing Authority 10200 Slater Avenue Fountain Valley, California 92708

City of Fountain Valley 10200 Slater Avenue Fountain Valley, California 92708

Ladies and Gentlemen,

January 19, 2017

Execution Version

HASI OBS OP A LLC, as purchaser (the "Purchaser"), offers to enter into this Direct Purchase Agreement (this "Agreement") with the Fountain Valley Public Financing Authority (the "Authority") and the City of Fountain Valley, California (the "City"), which, upon acceptance of this offer by the Authority and the City, will be binding upon the Purchaser, the Authority and the City. This offer is made subject to written acceptance by the Authority and the City on or before 5:00 p.rn., Pacific time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Purchaser upon written notice delivered to the Authority and the City at any time prior to such acceptance. Upon acceptance by the Authority and the City, this Agreement will serve as a binding, written contract and tax credit rate and maturity date determination pursuant to Section 54A(b )(3) of the Internal Revenue Code of 1986, as amended (the "Code"), for the Authority and the Lease Agreement (hereinafter defined).

1. Execution and Delivery of Transaction Documents. Upon the terms and conditions hereof and upon the basis of the representations, warranties and covenants set forth in this Agreement, the Authority hereby agrees to enter into (i) a Site Lease dated as of February 1, 2017 (hereinafter defined) ( the "Site Lease") between the City and the Authority under which the City shall lease to the Authority the real property consisting of the land together with all buildings, facilities and other improvements located thereon comprising the City's Fire Station No. 1 (the "Leased Property") and (ii) a Lease/Purchase Agreement dated as of February 1, 2017 (the "Lease Agreement") between the Authority and the City under which the Authority shall lease to the City the Leased Property. The Purchaser hereby agrees to purchase from the Authority the Authority's right, title and interest in the Leased Property and the Lease Agreement, including its right to receive the Lease Payments due under the Lease Agreement and the Authority hereby agrees to sell to the Purchaser all (but not less than all) of such interests at a purchase price of $2,843,166.36 (the "Purchase Price") as more particularly set forth in the Assignment Agreement dated as of February 1, 2017 (the "Assignment Agreement") between the Authority and the Purchaser. For purposes of this Agreement, the lease payment obligations of the City under the Lease Agreement are sometimes referred to herein as the "Lease Payments," and the instrument evidencing such obligations is the Lease Agreement. The Lease Agreement shall possess principal and interest components and mature as set forth in Exhibit A attached hereto. In addition, the tax credit rate and the amortization term, each as set forth in Exhibit A, are the applicable credit rate and maximum permitted term to maturity as listed on the date hereof on the Treasury's website: www.treasurydirect.gov, and a printout of the website from the date hereof is attached to this Agreement as Exhibit B. The Transaction Documents (hereinafter defined) shall otherwise be described in the resolutions of the Authority and the City authorizing their execution and delivery (respectively, the "Authority Resolution" and the "City Resolution"), and shall be issued pursuant to the Constitution and laws of the State of California (the

WCSR 38263771 v5

"State"), the Authority Resolution and the City Resolution. Pursuant to the Lease Agreement, the City will designate the Lease Agreement as a "new clean renewable energy bond" within the meaning of Section 54C(a) of the Code.

The delivery and payment for the Lease Agreement and other actions contemplated hereby to take place at the time thereof are sometimes referred to herein as the "Closing." This Agreement, the Site Lease, Lease Agreement and Assignment Agreement are referred to collectively herein as the ''Transaction Documents.''

The proceeds of the Lease Agreement will be used to pay all or a portion of the cost of acquiring certain photovoltaic (solar cell) electric generating devices to be acquired and installed by the City at certain City facilities (the "Project").

2. Representations and Warranties of the Purchaser. The Purchaser is purchasing the Lease Agreement for its own account and not with a view to distribute or participate the Lease Agreement, provided that in the course of managing its portfolio of municipal obligations the Purchaser may resell its interest in the Site Lease and the Lease Agreement (including but not limited to assignments of Lease Payments thereunder) in whole and not in part, subject to the terms and conditions of the Lease Agreement, and any assignment shall not be effective until the assignee shall have delivered to the City an executed letter of representations in substantially the form set forth in the Lease Agreement.

3. Representations and Warranties of the Authority. The Authority makes the following representations and warranties to the Purchaser, all of which shall survive the delivery of the Transaction Documents:

(a) The Authority is and will be at the date of Closing duly organized and validly existing with the powers and authority of a joint exercise of powers entity under the laws of the State of California;

(b) The Authority has, and will have at the date of Closing, full legal right, power and authority to: (i) execute and deliver this Agreement, the Site Lease, the Lease Agreement and the Assignment Agreement ( collectively, the "Authority Documents"); and (ii) carry out and consummate the transactions contemplated by the Authority Resolution and the Authority Documents;

(c) By all necessary official action, the Authority has duly authorized the execution and delivery of the Authority Documents pursuant to the Resolution and California law and approved the adoption or execution and delivery of, and the performance by the Authority of the obligations on its part in connection with the delivery of the Lease Agreement contained in the Lease Agreement and the other Authority Documents and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties thereto, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable upon the Authority in accordance with their respective terms, except insofar as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights and remedies of creditors and to the extent enforcement may also be subject to the exercise of judicial discretion and the laws of equity in appropriate cases;

(d) The Authority has complied, and will at the Closing be in compliance in all respects, with the obligations on its part to be performed on or prior to the Closing under the Authority Documents, the Authority Resolution and applicable California law;

2

(e) The Authority is not in breach of or default (nor is it aware of any breach or default) under any applicable constitutional provision, law, or administrative regulation of the State or the United States or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the Authority is a party, or which relates to the Leased Property, or to which any of the Authority's properties or assets are otherwise subject, and no event has occurred and is continuing that with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and the execution and delivery of the Authority Documents, and compliance with the provisions on the Authority's part contained therein, will not conflict with or constitute a breach of or default under the Authority's by-laws or any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the Authority, or which relates to the Leased Property or to which any of the Authority's properties or assets are otherwise subject, nor will any such execution, delivery, adoption, or compliance result in the creation or imposition of any lien, charge, or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or the Leased Property or under the terms of any such law, regulation or instrument, except as provided by the Authority Documents and the Authority Resolution;

(f) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter have been duly obtained that are required for the due authorization by or that would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Authority of, its obligations in connection with the execution and delivery of the Authority Documents and the sale of the Lease Agreement pursuant to this Agreement and the Assignment Agreement, except for purposes of the Lease Agreement, the filing of Form 8038-TC with the Internal Revenue Service (or the filing of such other forms as may be prescribed by the Internal Revenue Service); provided, however, any such form shall be filed (or caused to be filed) by the Authority or the City promptly after Closing as to ensure the qualification of the Lease Agreement as a "new clean renewable energy bond" within the meaning of Section 54C of the Code;

(g) As of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the Authority, threatened against the Authority, affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Authority, or contesting or affecting as to the Authority the validity or enforceability of the Authority Documents or the Authority Resolution in any respect relating to authorization of the Authority Documents, or contesting the powers of the Authority or any authority for the execution or delivery of the Lease Agreement, or in any way questioning the formation or existence of the Authority, or in any manner contesting the qualification of the Lease Agreement as a "new clean renewable energy bond" within the meaning of Section 54C of the Code; and

(h) Between the date of this Agreement and the date of Closing, the Authority will not have issued any bonds or notes or incurred ( or consented to the issuance of) any other obligations for borrowed money payable from the Lease Payments.

4. Representations and Warranties of the City. The City makes the following representations and warranties to the Purchaser, all of which shall survive the delivery of the Transaction Documents:

(a) The City is and will be at the date of Closing duly organized and validly existing with the powers and authority of a municipal corporation and general law city under the laws of the State of California;

3

(b) The City has, and will have at the date of Closing, full legal right, power and authority to: (i) execute and deliver this Agreement, the Site Lease and the Lease Agreement (collectively, the "City Documents"); and (ii) carry out and consummate the transactions contemplated by the City Resolution and the City Documents;

(c) By all necessary official action, the City has duly authorized the execution and delivery of the City Documents pursuant to the City Resolution and California law and approved the adoption or execution and delivery of, and the performance by the City of the obligations on its part in connection with the delivery of the Lease Agreement contained in the Lease Agreement and the other City Documents and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties thereto, the City Documents will constitute the legally valid and binding obligations of the City enforceable upon the City in accordance with their respective terms, except insofar as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights and remedies of creditors and to the extent enforcement may also be subject to the exercise of judicial discretion and the laws of equity in appropriate cases;

( d) The City has complied, and will at the Closing be in compliance in all respects, with the obligations on its part to be performed on or prior to the Closing under the City Documents, the City Resolution and applicable California law;

(e) The City is not in breach of or default (nor is it aware of any breach or default) under any applicable constitutional provision, law, or administrative regulation of the State or the United States or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the City is a party, or which relates to the Leased Property, or to which any of the City's properties or assets are otherwise subject, and no event has occurred and is continuing that with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and the execution and delivery of the City Documents, and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a breach of or default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the City, or which relates to the Leased Property or to which any of the City's properties or assets are otherwise subject, nor will any such execution, delivery, adoption, or compliance result in the creation or imposition of any lien, charge, or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or the Leased Property or under the terms of any such law, regulation or instrument, except as provided by the City Documents and the City Resolution;

(f) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter have been duly obtained that are required for the due authorization by or that would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the City of, its obligations in connection with the execution and delivery of the City Documents and the sale of the Lease Agreement pursuant to this Agreement and the Assignment Agreement, except for purposes of the Lease Agreement, the filing of Form 8038-TC with the Internal Revenue Service (or the filing of such other forms as may be prescribed by the Internal Revenue Service); provided, however, any such form shall be filed (or caused to be filed) by the Authority or the City promptly after Closing as to ensure the qualification of the Lease Agreement as a "new clean renewable energy bond" within the meaning of Section 54C of the Code;

(g) As of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the City, threatened against the City, affecting or seeking to prohibit, restrain or enjoin the

4

sale, execution or delivery of the City, or contesting or affecting as to the City the validity or enforceability of the City Documents or the City Resolution in any respect relating to authorization of the City Documents, or contesting the powers of the City or any authority for the execution or delivery of the Lease Agreement, or in any way questioning the formation or existence of the City, or in any manner contesting the qualification of the Lease Agreement as a "new clean renewable energy bond" within the meaning of Section 54C of the Code;

(h) Between the date of this Agreement and the date of Closing, the City will not have issued any bonds or notes or incurred ( or consented to the issuance of) any other obligations for borrowed money payable from the Lease Payments; and

(i) The City acknowledges that its payment obligations under the Lease Agreement shall not be affected by the federal government's payment of the subsidy payments made available to the City under Section 6431 of the Code, and that the City does not currently owe or have any liability to the federal government which could offset the City's claim to the subsidy payments under Section 6431 of the Code.

5. Payment and Delivery. On February 2, 20 I 7, or on such other date as the parties mutually agree upon in writing, the Transaction Documents will be delivered by the Authority and the City to the Purchaser. On or before the date of Closing, the Transaction Documents and such other documents referenced herein, shall be delivered at the offices of Stradling Yocca Carlson & Rauth, P.C. ("Bond Counsel"), at 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, and to the Purchaser at its address in Section 11 hereof. Upon delivery of the Transaction Documents, the Purchaser shall pay to the Authority the Purchase Price by depositing the Purchase Price with the City for application in accordance with the Lease Agreement.

6. Conditions of Closing for the Purchaser. The Purchaser has entered into this Agreement in reliance upon the representations and warranties of the Authority and the City contained herein and to be contained in the documents and instruments to be delivered at Closing, and upon the performance by the Authority and the City of their obligations hereunder, both as of the date hereof and as of the date of Closing. Accordingly, the Purchaser's obligation under this Agreement to purchase and pay for the Lease Agreement shall be subject to the performance by the Authority and the City of their obligations to be performed hereunder at or prior to the date of Closing, and shall also be subject to the following conditions:

(a) At the time of Closing (i) the representations and warranties of the Authority and the City contained herein shall be true, complete and correct with the same effect as if made on the date of Closing, (ii) the Transaction Documents shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to by the Purchaser and (iii) the Authority and the City shall have duly adopted and there shall be in full force and effect such resolutions as in the opinion of Bond Counsel shall be necessary in connection with the transactions contemplated hereby, and such resolutions shall not have been amended, modified or supplemented.

(b) The Purchaser shall have the right to terminate its obligations under this Agreement to execute and deliver the Assignment Agreement and pay for the Lease Agreement by notifying the Authority and the City of its election to do so if, after the execution hereof and on or prior to the date of Closing:

(i) legislation shall have been introduced in, proposed, actively considered or enacted by the Congress of the United States or the State's legislature, legislation shall have been adopted by, or favorably reported for passage by committee to either house of the United

5

States Congress or of the State's legislature or legislation pending in the Congress of the United States or the State's legislature shall have been amended, or a decision shall have been rendered by a court of the United States or the State, including the Tax Court of the United States, or a ruling shall have been made or a regulation shall have been proposed or made or a press release, official statement or other form of notice shall have been issued by the Treasury Department of the United States or the Internal Revenue Service or other federal or state authority, with respect to interest or subsidy payments on obligations of the general character of the Lease Agreement, which may have the purpose or effect, directly or indirectly, of affecting the tax status of the Authority or the City, their property or income, any of its securities or, in the reasonable opinion of the Purchaser, affects materially and adversely the market price generally of obligations of the general character of the Lease Agreement or the ability of the City to be eligible for the subsidy payments therefor;

(ii) any legislation, resolution, rule or regulation shall have been enacted or proposed or actively considered for enactment by any government body, department or agency of the State, or any decision by any court of competent jurisdiction within the State shall have been rendered that in the reasonable opinion of the Purchaser affects materially and adversely the market price generally of obligations of the general character of the Lease Agreement or the ability of the City to be eligible for the subsidy payments therefor;

(iii) the United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or other unforeseen national or international calamity or any conflict involving the armed forces of the United States shall have occurred, escalated or accelerated to such an extent as, in the reasonable opinion of the Purchaser, affects materially and adversely the market price generally of obligations of the general character of the Lease Agreement or the ability of the City to be eligible for the subsidy payments therefor;

(iv) there shall have occurred and be in force a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by authorities of the United States, the State or New York State, or any devaluation of the dollar shall have been proposed or effected by any governmental authority of the United States;

(v) there shall have occurred any material adverse change in the affairs of the City that, in the reasonable judgment of the Purchaser, materially and adversely affects the price for the Lease Agreement, the market price generally of obligations of the general character of the Lease Agreement, or the ability of the City to be eligible for the subsidy payments therefor;

(vi) a decision of any federal or state court or a ruling or regulation (final, temporary or proposed) of the Securities and Exchange Commission or other governmental agency shall have been made or issued that would make the Lease Agreement or any securities of the City or the Authority or any similar body of the type contemplated herein subject to the registration requirements of the Securities Act; or

(vii) the withdrawal or downgrading of any rating of the City's or the Authority's outstanding indebtedness or of the City or the Authority by a national rating agency.

(c) Prior to the date of Closing, the Purchaser shall have received fully-executed originals of the following documents in form and substance satisfactory to the Purchaser and Womble Carlyle Sandridge & Rice, LLP, counsel to the Purchaser ("Purchaser's Counsel"):

6

(i) opinions of counsel to the Authority and the City dated as of the date of Closing and addressed to the Purchaser;

(ii) a certificate, dated the date of Closing, signed by an authorized officer of the Authority to the effect that: (A) the representations of the Authority contained in the Authority Documents are true as of the date of Closing; (B) the Authority has performed all obligations to be performed under the Authority Resolution and the Authority Documents as of the date of Closing; and (C) no material liabilities have been incurred by the Authority other than in the ordinary course of business that have not been disclosed to the Authority;

(iii) a certificate, dated the date of Closing, signed by an authorized officer of the City to the effect that: (A) the representations of the City contained in the City Documents are true as of the date of Closing; (B) the City has performed all obligations to be performed under the City Resolution and the City Documents as of the date of Closing; and (C) no material liabilities have been incurred by the City other than in the ordinary course of business that have not been disclosed to the City;

(iv) a copy of the Authority Resolution, certified by the Secretary or other appropriate official of the Authority, authorizing the Authority to execute and deliver the Lease Agreement and the other Authority Documents;

(v) a copy of the City Resolution, certified by the City Clerk or other appropriate official of the City, authorizing the City to execute and deliver the Lease Agreement and the other City Documents;

( vi) incumbency certificates of the members of the governing bodies of the Authority and the City with respect to the Authority Resolution and the City Resolution, respectively;

(vii) the Transaction Documents;

(viii) Internal Revenue Service Form 8038-TC for the Lease Agreement;

(ix) a non-arbitrage and tax law compliance certificate in form satisfactory to Bond Counsel, dated the date of Closing;

(x) evidence of rental interruption insurance, naming Purchaser and its successor and assigns as loss payee, in an amount at least equal to the maximum Lease Payments corning due and payable during any 24 month period during the term of the Lease Agreement;

(xi) evidence of casualty insurance naming, the Purchaser and its successors and assigns as loss payee, insuring the Leased Property as required by the Lease Agreement;

(xii) a title insurance policy on the Leased Property in a form acceptable to the Purchaser; and

(xiii) such additional certificates, legal opinions, proceedings, instruments or other documents as the Purchaser, Purchaser's Counsel or Bond Counsel may reasonably request.

All representations, warranties and agreements of the Authority and the City set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Purchaser or any person controlling the Purchaser and (ii) acceptance of and payment

7

for the Lease Agreement by the Purchaser. For all purposes of this Agreement, a default shall not be deemed to be continuing if it has been cured, waived or otherwise remedied.

7. Payment of Fees and Expenses.

(a) The Purchaser shall be under no obligation to pay, and the City shall pay, all expenses incident to the performance of the Authority's and the City's obligations hereunder including, but not limited to: (i) the fees and disbursements of Bond Counsel and Raymond James & Associates, Inc., as placement agent; and (ii) the fees and disbursements of any other counsel, engineers, accountants, and other experts, consultants or advisors retained by the Authority and the City. The Purchaser shall pay all fees and expenses of Purchaser's Counsel.

(b) The fees and expenses described in paragraph (a) above shall be paid by the City whether or not the Lease Agreement is executed and delivered, unless the Purchaser is in default in its obligation to purchase hereunder. All fees and expenses described in this Section 7, to the extent they are identifiable and billed, shall be paid on the date of Closing, and the remainder shall be paid promptly upon receipt of statements therefor. The obligations of the City under this Section 7 shall survive the issuance and final scheduled Lease Payment of the Lease Agreement and any termination of this Agreement.

(c) Whether or not the Lease Agreement is executed and delivered by the City and the Authority, the Purchaser shall be under no obligation to pay any costs or expenses incident to the performance of the obligations of the City hereunder.

8. Qualification Under State Securities Laws. Because the Lease Agreement will not be offered for sale under the Blue Sky or other securities laws and regulations, the City is not required to furnish such information, execute such instruments and take such other action in cooperation with the Purchaser to qualify the Lease Agreement for offer and sale under the Blue Sky or other securities laws and regulations or provide for the continuance of such qualification. In addition, the City will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of any state.

9. No Advisory or Fiduciary Relationship. In connection with all aspects of the transactions contemplated by this Agreement (including in connection with any amendment, waiver or other modification hereof or of any other Transaction Document), each of the Authority and the City acknowledges and agrees, that: (a) (i) it has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, (ii) it is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Transaction Documents, (iii) the Purchaser is not acting as a municipal advisor or financial advisor to the Authority or the City, and (iv) the Purchaser has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act to the Authority or the City with respect to the transactions contemplated hereby and the discussions, undertakings and procedures leading thereto; (b) (i) the Purchaser is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Authority or the City and (ii) the Purchaser has no obligation to the Authority or the City with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Transaction Documents; and ( c) the Purchaser may be engaged in a broad range of transactions that involve interests that differ from those of the Authority and the City, and the Purchaser has no obligation to disclose any of such interests to the Authority and the City. To the fullest extent permitted by law, each of the Authority and the City hereby waives and releases any claims that it may have against the Purchaser with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.

8

10. Parties in Interest. This Agreement is made solely for the benefit of the Purchaser and its subsidiaries and affiliates. the Authority and the City. and their respective successors and assigns. and no other person. partnership or corporation shall acquire or have any right under or by virtue of this Agreement.

11. Absence of Liability. No recourse shall be had by the Purchaser for any claims based on this Agreement or otherwise against any member. officer or agent of the Authority or the City in his or her individual capacity. all claims. if any. being waived and released by the Purchaser.

12. Counterparts. This Agreement may be executed in several counterparts. each of which shall be an original and all of which shall constitute but one and the same instrument.

13. Notices. Any notice or other communication to be given under this Agreement may be given by delivering the same in writing by registered or certified mail to the following addresses:

If to the Authority:

If to the City:

If to the Purchaser:

Fountain Valley Public Financing Authority 10200 Slater Avenue Fountain Valley. California 92708 Attention: Executive Director

City of Fountain Valley 10200 Slater Avenue Fountain Valley. California 92708 Attention: City Manager

HASI OBS OP A LLC 1906 Towne Centre Boulevard. Suite 370 Annapolis. Maryland 21401 Attention: Legal Department

14. Governing Law. This Agreement shall be governed by. and construed in accordance with. the laws of the State of California.

[Signature Page Follows]

9

DocuSign Envelope ID: CCCA9451-947F-4F51-B28B-F2E6B4B09CFE

This Agreement shall become effective upon the execution of the acceptance and approval hereof as of the date first written above by a duly authorized representative of the Authority and the City and shall be valid and enforceable as of the time of such acceptance.

Very truly yours,

HASI OBS OP A LLC

Accepted:

FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY

By: ------------------David Cain Treasurer

CITY OF FOUNTAIN VALLEY

By: --------------------

David Cain Director of Finance

[Signature Page to Direct Purchase Agreement]

This Agreement shall become effuctive upon execution of the acceptance and approval hereof as of the date first written above by a duly authorized representative of the Authority and the City and shall be valid and enforceable as of the time of such acceptance.

Accepted:

Very truly yours,

HASI OBS OP A LLC

By:------------Jeffrey W. Eckel President

FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY

David Cain Trcasmer

CITY OF F'OUNTAIN VALLEY

David Cain Director of Finance

[ Signature Page to Direct Purchase Agreement]

EXHIBIT A

1. Principal Amount: $2,843,166.36

2. Amortization Term: 19.58 years

3. Maturity Date: September I, 2036

4. Interest Rate: 4.44%

5. Maximum Permitted Term: 32 years

6. Tax Credit Rate*: 4.47%

*For purposes of determining the subsidy payment under Section 643 l(f) of the Code, this tax credit rate shall be used.

7. Prepayment:

a. Optional Prepayment. The City may prepay the unpaid principal components of the Lease Payments in whole or in part, on any Lease Payment Date on or after March I, 2024, by paying a prepayment price equal to I 00% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date.

b. Loss of Subsidy. In the event that a Change in Law (as hereafter defined) occurs, on the day specified in the City's notice to the Authority of its exercise of the prepayment option provided under this subsection (b ), the City shall have the option to prepay all, or less than all, of the aggregate principal components of Lease Payments then unpaid from and after any Change in Law upon payment in full to the Authority of the sum of 100% of the aggregate principal components of the Lease Payment to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. "Change in Law" means legislation enacted by the Congress of the United States of America or a ruling, regulation or statement issued by the United States Department of the Treasury or the Internal Revenue Service, the effect of which (I) repeals, revokes or reduces the City's applicable cash subsidy payments from the United States Department of the Treasury under Section 54A or 6431 of the Tax Code (as currently in effect) with respect to the Lease Agreement or (II) imposes one or more new substantive conditions on the receipt by the City of such applicable cash subsidy payments under such Sections (as currently in effect) and such conditions are unacceptable to the City; provided, however, that a Change in Law shall not occur as a result of (I) reductions in subsidy payments due to automatic budgetary reductions imposed by the Congress of the United States of America related to deficit reduction measures, (II) the City's failure or inability for reasons within its control to receive or delay to receive all or any portion of any subsidy payment from the United States Department of the Treasury, or (III) the City's failure to comply with applicable laws and regulations to obtain payment of any subsidy payment from the United States Department of the Treasury, including without limitation any offset against any subsidy payment as a result of other liabilities of the City to the United State Department of the Treasury.

c. Mandatory Prepayment - Casualty or Condemnation. The City shall prepay the unpaid principal components of the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds to be used for such purpose under the Lease Agreement, by paying a

A-1

prepayment price equal to I 00% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date.

d. Mandatory Prepayment- Expenditure Period. In the event and to the extent that the City fails to expend all the proceeds of the Lease Agreement within the period ending 3 years after the date of the Closing or such later date if extended by the IRS (the "Expenditure Period"), the Lease Agreement will be subject to extraordinary prepayment on any date which is not more than 90 days following the Expenditure Period, at a redemption price equal to IOI% of the principal amount of principal amount to be repaid, plus accrued interest to the date of prepayment.

8. Scheduled Lease Payments, including principal and interest components, and related payment dates:

Total Subsidy Pmt. Payment Outstanding Principal Interest Lease Payment No. Date Balance* Portion Portion Payment Amount

2/2/2017 $2,843,166.36

1 9/1/2017 2,843,166.36 $73,287.35 $73,287.35 $51,647.78

2 3/1/2018 2,807,768.70 $35,397.66 63,118.29 98,515.95 44,481.34

3 9/1/2018 2,772,371.02 35,397.68 62,332.47 97,730.15 43,927.54

4 3/1/2019 2,721,664.18 50,706.84 61,546.64 112,253.48 43,373.74

5 9/1/2019 2,670,957.33 50,706.85 60,420.94 111,127.79 42,580.44

6 3/1/2020 2,617,682.78 53,274.55 59,295.25 112,569.80 41,787.13

7 9/1/2020 2,564,408.22 53,274.56 58,112.56 111,387.12 40,953.65

8 3/1/2021 2,508,478.00 55,930.22 56,929.86 112,860.08 40,120.17

9 9/1/2021 2,452,547.77 55,930.23 55,688.21 111,618.44 39,245.14

10 3/1/2022 2,393,871.25 58,676.52 54,446.56 113,123.08 38,370.11

11 9/1/2022 2,335,194.73 58,676.52 53,143.94 111,820.46 37,452.12

12 3/1/2023 2,273,678.55 61,516.18 51,841.32 113,357.50 36,534.12

13 9/1/2023 2,212,162.38 61,516.17 50,475.66 111,991.83 35,571.70

14 3/1/2024 2,147,710.39 64,451.99 49,110.00 113,561.99 34,609.28

15 9/1/2024 2,083,258.39 64,452.00 47,679.17 112,131.17 33,600.93

16 3/1/2025 2,015,771.52 67,486.87 46,248.34 113,735.21 32,592.58

17 9/1/2025 1,948,284.64 67,486.88 44,750.13 112,237.01 31,536.75

18 3/1/2026 1,877,660.85 70,623.79 43,251.92 113,875.71 30,480.91

19 9/1/2026 1,807,037.06 70,623.79 41,684.07 112,307.86 29,376.00

20 3/1/2027 1,733,171.27 73,865.79 40,116.22 113,982.01 28,271.09

21 9/1/2027 1,659,305.47 73,865.80 38,476.40 112,342.20 27,115.46

22 3/1/2028 1,582,089.43 77,216.04 36,836.58 114,052.62 25,959.83

23 9/1/2028 1,504,873.39 77,216.04 35,122.39 112,338.43 24,751.79

24 3/1/2029 1,424,195.63 80,677.76 33,408.19 114,085.95 23,543.74

25 9/1/2029 1,343,517.87 80,677.76 31,617.14 112,294.90 22,281.54

26 3/1/2030 1,259,263.59 84,254.28 29,826.10 114,080.38 21,019.34

27 9/1/2030 1,175,009.32 84,254.27 27,955.65 112,209.92 19,701.18

28 3/1/2031 1,087,060.31 87,949.01 26,085.21 114,034.22 18,383.02

A-2

Total Subsidy Pmt. Payment Outstanding Principal Interest Lease Payment No. Date Balance* Portion Portion Payment Amount

29 9/1/2031 999,111.30 87,949.01 24,132.74 112,081.75 17,007.06

30 3/1/2032 907,345.81 91,765.49 22,180.27 113,945.76 15,631.10

31 9/1/2032 815,580.33 91,765.48 20,143.08 111,908.56 14,195.43

32 3/1/2033 719,873.03 95,707.30 18,105.88 113,813.18 12,759.75

33 9/1/2033 624,165.71 95,707.32 15,981.18 111,688.50 11,262.41

34 3/1/2034 524,387.50 99,778.21 13,856.48 113,634.69 9,765.07

35 9/1/2034 424,609.29 99,778.21 11,641.40 111,419.61 8,204.04

36 3/1/2035 320,627.28 103,982.01 9,426.33 113,408.34 6,643.01

37 9/1/2035 216,645.27 103,982.01 7,117.93 111,099.94 5,016.21

38 3/1/2036 108,322.64 108,322.63 4,809.52 113,132.15 3,389.42

39 9/1/2036 (0.00) 108,322.64 2,404.76 110,727.40 1,694.71

Total $2,843,166.36 $1,482,606.13 $4,325,772.49 $1,044,836.63

* After payment of Lease Payment on corresponding payment date.

A-3

EXHIBITB

Treasury Direct Website - Qualified Tax Credit Bonds Rates Rate Table for January 19, 2017

( see attached)

B-1

Qualified Tax Credit Bond Rates

Tax Credit Bond Rates

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Page 1 of 1

1/26/2017

Execution Version

DIRECT PURCHASE AGREEMENT

January 19, 2017

Fountain Valley Public Financing Authority 10200 Slater Avenue Fountain Valley, California 92708 City of Fountain Valley 10200 Slater Avenue Fountain Valley, California 92708 Ladies and Gentlemen,

HASI OBS OP A LLC, as purchaser (the “Purchaser”), offers to enter into this Direct Purchase Agreement (this “Agreement”) with the Fountain Valley Public Financing Authority (the “Authority”) and the City of Fountain Valley, California (the “City”), which, upon acceptance of this offer by the Authority and the City, will be binding upon the Purchaser, the Authority and the City. This offer is made subject to written acceptance by the Authority and the City on or before 5:00 p.m., Pacific time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Purchaser upon written notice delivered to the Authority and the City at any time prior to such acceptance. Upon acceptance by the Authority and the City, this Agreement will serve as a binding, written contract and tax credit rate and maturity date determination pursuant to Section 54A(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), for the Authority and the Lease Agreement (hereinafter defined).

1. Execution and Delivery of Transaction Documents. Upon the terms and conditions hereof and upon the basis of the representations, warranties and covenants set forth in this Agreement, the Authority hereby agrees to enter into (i) a Site Lease dated as of February 1, 2017 (hereinafter defined) (the “Site Lease”) between the City and the Authority under which the City shall lease to the Authority the real property consisting of the land together with all buildings, facilities and other improvements located thereon comprising the City’s Fire Station No. 1 (the “Leased Property”) and (ii) a Lease/Purchase Agreement dated as of February 1, 2017 (the “Lease Agreement”) between the Authority and the City under which the Authority shall lease to the City the Leased Property. The Purchaser hereby agrees to purchase from the Authority the Authority’s right, title and interest in the Leased Property and the Lease Agreement, including its right to receive the Lease Payments due under the Lease Agreement and the Authority hereby agrees to sell to the Purchaser all (but not less than all) of such interests at a purchase price of $2,843,166.36 (the “Purchase Price”) as more particularly set forth in the Assignment Agreement dated as of February 1, 2017 (the “Assignment Agreement”) between the Authority and the Purchaser. For purposes of this Agreement, the lease payment obligations of the City under the Lease Agreement are sometimes referred to herein as the “Lease Payments,” and the instrument evidencing such obligations is the Lease Agreement. The Lease Agreement shall possess principal and interest components and mature as set forth in Exhibit A attached hereto. In addition, the tax credit rate and the amortization term, each as set forth in Exhibit A, are the applicable credit rate and maximum permitted term to maturity as listed on the date hereof on the Treasury’s website: www.treasurydirect.gov, and a printout of the website from the date hereof is attached to this Agreement as Exhibit B. The Transaction Documents (hereinafter defined) shall otherwise be described in the resolutions of the Authority and the City authorizing their execution and delivery (respectively, the “Authority Resolution” and the “City Resolution”), and shall be issued pursuant to the Constitution and laws of the State of California (the

WCSR 38263771v5

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“State”), the Authority Resolution and the City Resolution. Pursuant to the Lease Agreement, the City will designate the Lease Agreement as a “new clean renewable energy bond” within the meaning of Section 54C(a) of the Code.

The delivery and payment for the Lease Agreement and other actions contemplated hereby to take place at the time thereof are sometimes referred to herein as the “Closing.” This Agreement, the Site Lease, Lease Agreement and Assignment Agreement are referred to collectively herein as the “Transaction Documents.”

The proceeds of the Lease Agreement will be used to pay all or a portion of the cost of acquiring certain photovoltaic (solar cell) electric generating devices to be acquired and installed by the City at certain City facilities (the “Project”).

2. Representations and Warranties of the Purchaser. The Purchaser is purchasing the Lease Agreement for its own account and not with a view to distribute or participate the Lease Agreement, provided that in the course of managing its portfolio of municipal obligations the Purchaser may resell its interest in the Site Lease and the Lease Agreement (including but not limited to assignments of Lease Payments thereunder) in whole and not in part, subject to the terms and conditions of the Lease Agreement, and any assignment shall not be effective until the assignee shall have delivered to the City an executed letter of representations in substantially the form set forth in the Lease Agreement.

3. Representations and Warranties of the Authority. The Authority makes the following representations and warranties to the Purchaser, all of which shall survive the delivery of the Transaction Documents:

(a) The Authority is and will be at the date of Closing duly organized and validly existing with the powers and authority of a joint exercise of powers entity under the laws of the State of California;

(b) The Authority has, and will have at the date of Closing, full legal right, power and authority to: (i) execute and deliver this Agreement, the Site Lease, the Lease Agreement and the Assignment Agreement (collectively, the “Authority Documents”); and (ii) carry out and consummate the transactions contemplated by the Authority Resolution and the Authority Documents;

(c) By all necessary official action, the Authority has duly authorized the execution and delivery of the Authority Documents pursuant to the Resolution and California law and approved the adoption or execution and delivery of, and the performance by the Authority of the obligations on its part in connection with the delivery of the Lease Agreement contained in the Lease Agreement and the other Authority Documents and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties thereto, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable upon the Authority in accordance with their respective terms, except insofar as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights and remedies of creditors and to the extent enforcement may also be subject to the exercise of judicial discretion and the laws of equity in appropriate cases;

(d) The Authority has complied, and will at the Closing be in compliance in all respects, with the obligations on its part to be performed on or prior to the Closing under the Authority Documents, the Authority Resolution and applicable California law;

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(e) The Authority is not in breach of or default (nor is it aware of any breach or default) under any applicable constitutional provision, law, or administrative regulation of the State or the United States or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the Authority is a party, or which relates to the Leased Property, or to which any of the Authority’s properties or assets are otherwise subject, and no event has occurred and is continuing that with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and the execution and delivery of the Authority Documents, and compliance with the provisions on the Authority’s part contained therein, will not conflict with or constitute a breach of or default under the Authority’s by-laws or any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the Authority, or which relates to the Leased Property or to which any of the Authority’s properties or assets are otherwise subject, nor will any such execution, delivery, adoption, or compliance result in the creation or imposition of any lien, charge, or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or the Leased Property or under the terms of any such law, regulation or instrument, except as provided by the Authority Documents and the Authority Resolution;

(f) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter have been duly obtained that are required for the due authorization by or that would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Authority of, its obligations in connection with the execution and delivery of the Authority Documents and the sale of the Lease Agreement pursuant to this Agreement and the Assignment Agreement, except for purposes of the Lease Agreement, the filing of Form 8038-TC with the Internal Revenue Service (or the filing of such other forms as may be prescribed by the Internal Revenue Service); provided, however, any such form shall be filed (or caused to be filed) by the Authority or the City promptly after Closing as to ensure the qualification of the Lease Agreement as a “new clean renewable energy bond” within the meaning of Section 54C of the Code;

(g) As of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the Authority, threatened against the Authority, affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Authority, or contesting or affecting as to the Authority the validity or enforceability of the Authority Documents or the Authority Resolution in any respect relating to authorization of the Authority Documents, or contesting the powers of the Authority or any authority for the execution or delivery of the Lease Agreement, or in any way questioning the formation or existence of the Authority, or in any manner contesting the qualification of the Lease Agreement as a “new clean renewable energy bond” within the meaning of Section 54C of the Code; and

(h) Between the date of this Agreement and the date of Closing, the Authority will not have issued any bonds or notes or incurred (or consented to the issuance of) any other obligations for borrowed money payable from the Lease Payments.

4. Representations and Warranties of the City. The City makes the following representations and warranties to the Purchaser, all of which shall survive the delivery of the Transaction Documents:

(a) The City is and will be at the date of Closing duly organized and validly existing with the powers and authority of a municipal corporation and general law city under the laws of the State of California;

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(b) The City has, and will have at the date of Closing, full legal right, power and authority to: (i) execute and deliver this Agreement, the Site Lease and the Lease Agreement (collectively, the “City Documents”); and (ii) carry out and consummate the transactions contemplated by the City Resolution and the City Documents;

(c) By all necessary official action, the City has duly authorized the execution and delivery of the City Documents pursuant to the City Resolution and California law and approved the adoption or execution and delivery of, and the performance by the City of the obligations on its part in connection with the delivery of the Lease Agreement contained in the Lease Agreement and the other City Documents and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties thereto, the City Documents will constitute the legally valid and binding obligations of the City enforceable upon the City in accordance with their respective terms, except insofar as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights and remedies of creditors and to the extent enforcement may also be subject to the exercise of judicial discretion and the laws of equity in appropriate cases;

(d) The City has complied, and will at the Closing be in compliance in all respects, with the obligations on its part to be performed on or prior to the Closing under the City Documents, the City Resolution and applicable California law;

(e) The City is not in breach of or default (nor is it aware of any breach or default) under any applicable constitutional provision, law, or administrative regulation of the State or the United States or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the City is a party, or which relates to the Leased Property, or to which any of the City’s properties or assets are otherwise subject, and no event has occurred and is continuing that with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and the execution and delivery of the City Documents, and compliance with the provisions on the City’s part contained therein, will not conflict with or constitute a breach of or default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the City, or which relates to the Leased Property or to which any of the City’s properties or assets are otherwise subject, nor will any such execution, delivery, adoption, or compliance result in the creation or imposition of any lien, charge, or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or the Leased Property or under the terms of any such law, regulation or instrument, except as provided by the City Documents and the City Resolution;

(f) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter have been duly obtained that are required for the due authorization by or that would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the City of, its obligations in connection with the execution and delivery of the City Documents and the sale of the Lease Agreement pursuant to this Agreement and the Assignment Agreement, except for purposes of the Lease Agreement, the filing of Form 8038-TC with the Internal Revenue Service (or the filing of such other forms as may be prescribed by the Internal Revenue Service); provided, however, any such form shall be filed (or caused to be filed) by the Authority or the City promptly after Closing as to ensure the qualification of the Lease Agreement as a “new clean renewable energy bond” within the meaning of Section 54C of the Code;

(g) As of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the City, threatened against the City, affecting or seeking to prohibit, restrain or enjoin the

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sale, execution or delivery of the City, or contesting or affecting as to the City the validity or enforceability of the City Documents or the City Resolution in any respect relating to authorization of the City Documents, or contesting the powers of the City or any authority for the execution or delivery of the Lease Agreement, or in any way questioning the formation or existence of the City, or in any manner contesting the qualification of the Lease Agreement as a “new clean renewable energy bond” within the meaning of Section 54C of the Code;

(h) Between the date of this Agreement and the date of Closing, the City will not have issued any bonds or notes or incurred (or consented to the issuance of) any other obligations for borrowed money payable from the Lease Payments; and

(i) The City acknowledges that its payment obligations under the Lease Agreement shall not be affected by the federal government’s payment of the subsidy payments made available to the City under Section 6431 of the Code, and that the City does not currently owe or have any liability to the federal government which could offset the City’s claim to the subsidy payments under Section 6431 of the Code.

5. Payment and Delivery. On February 2, 2017, or on such other date as the parties mutually agree upon in writing, the Transaction Documents will be delivered by the Authority and the City to the Purchaser. On or before the date of Closing, the Transaction Documents and such other documents referenced herein, shall be delivered at the offices of Stradling Yocca Carlson & Rauth, P.C. (“Bond Counsel”), at 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, and to the Purchaser at its address in Section 11 hereof. Upon delivery of the Transaction Documents, the Purchaser shall pay to the Authority the Purchase Price by depositing the Purchase Price with the City for application in accordance with the Lease Agreement.

6. Conditions of Closing for the Purchaser. The Purchaser has entered into this Agreement in reliance upon the representations and warranties of the Authority and the City contained herein and to be contained in the documents and instruments to be delivered at Closing, and upon the performance by the Authority and the City of their obligations hereunder, both as of the date hereof and as of the date of Closing. Accordingly, the Purchaser’s obligation under this Agreement to purchase and pay for the Lease Agreement shall be subject to the performance by the Authority and the City of their obligations to be performed hereunder at or prior to the date of Closing, and shall also be subject to the following conditions:

(a) At the time of Closing (i) the representations and warranties of the Authority and the City contained herein shall be true, complete and correct with the same effect as if made on the date of Closing, (ii) the Transaction Documents shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to by the Purchaser and (iii) the Authority and the City shall have duly adopted and there shall be in full force and effect such resolutions as in the opinion of Bond Counsel shall be necessary in connection with the transactions contemplated hereby, and such resolutions shall not have been amended, modified or supplemented.

(b) The Purchaser shall have the right to terminate its obligations under this Agreement to execute and deliver the Assignment Agreement and pay for the Lease Agreement by notifying the Authority and the City of its election to do so if, after the execution hereof and on or prior to the date of Closing:

(i) legislation shall have been introduced in, proposed, actively considered or enacted by the Congress of the United States or the State’s legislature, legislation shall have been adopted by, or favorably reported for passage by committee to either house of the United

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States Congress or of the State’s legislature or legislation pending in the Congress of the United States or the State’s legislature shall have been amended, or a decision shall have been rendered by a court of the United States or the State, including the Tax Court of the United States, or a ruling shall have been made or a regulation shall have been proposed or made or a press release, official statement or other form of notice shall have been issued by the Treasury Department of the United States or the Internal Revenue Service or other federal or state authority, with respect to interest or subsidy payments on obligations of the general character of the Lease Agreement, which may have the purpose or effect, directly or indirectly, of affecting the tax status of the Authority or the City, their property or income, any of its securities or, in the reasonable opinion of the Purchaser, affects materially and adversely the market price generally of obligations of the general character of the Lease Agreement or the ability of the City to be eligible for the subsidy payments therefor;

(ii) any legislation, resolution, rule or regulation shall have been enacted or proposed or actively considered for enactment by any government body, department or agency of the State, or any decision by any court of competent jurisdiction within the State shall have been rendered that in the reasonable opinion of the Purchaser affects materially and adversely the market price generally of obligations of the general character of the Lease Agreement or the ability of the City to be eligible for the subsidy payments therefor;

(iii) the United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or other unforeseen national or international calamity or any conflict involving the armed forces of the United States shall have occurred, escalated or accelerated to such an extent as, in the reasonable opinion of the Purchaser, affects materially and adversely the market price generally of obligations of the general character of the Lease Agreement or the ability of the City to be eligible for the subsidy payments therefor;

(iv) there shall have occurred and be in force a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by authorities of the United States, the State or New York State, or any devaluation of the dollar shall have been proposed or effected by any governmental authority of the United States;

(v) there shall have occurred any material adverse change in the affairs of the City that, in the reasonable judgment of the Purchaser, materially and adversely affects the price for the Lease Agreement, the market price generally of obligations of the general character of the Lease Agreement, or the ability of the City to be eligible for the subsidy payments therefor;

(vi) a decision of any federal or state court or a ruling or regulation (final, temporary or proposed) of the Securities and Exchange Commission or other governmental agency shall have been made or issued that would make the Lease Agreement or any securities of the City or the Authority or any similar body of the type contemplated herein subject to the registration requirements of the Securities Act; or

(vii) the withdrawal or downgrading of any rating of the City’s or the Authority’s outstanding indebtedness or of the City or the Authority by a national rating agency.

(c) Prior to the date of Closing, the Purchaser shall have received fully-executed originals of the following documents in form and substance satisfactory to the Purchaser and Womble Carlyle Sandridge & Rice, LLP, counsel to the Purchaser (“Purchaser’s Counsel”):

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(i) opinions of counsel to the Authority and the City dated as of the date of Closing and addressed to the Purchaser;

(ii) a certificate, dated the date of Closing, signed by an authorized officer of the Authority to the effect that: (A) the representations of the Authority contained in the Authority Documents are true as of the date of Closing; (B) the Authority has performed all obligations to be performed under the Authority Resolution and the Authority Documents as of the date of Closing; and (C) no material liabilities have been incurred by the Authority other than in the ordinary course of business that have not been disclosed to the Authority;

(iii) a certificate, dated the date of Closing, signed by an authorized officer of the City to the effect that: (A) the representations of the City contained in the City Documents are true as of the date of Closing; (B) the City has performed all obligations to be performed under the City Resolution and the City Documents as of the date of Closing; and (C) no material liabilities have been incurred by the City other than in the ordinary course of business that have not been disclosed to the City;

(iv) a copy of the Authority Resolution, certified by the Secretary or other appropriate official of the Authority, authorizing the Authority to execute and deliver the Lease Agreement and the other Authority Documents;

(v) a copy of the City Resolution, certified by the City Clerk or other appropriate official of the City, authorizing the City to execute and deliver the Lease Agreement and the other City Documents;

(vi) incumbency certificates of the members of the governing bodies of the Authority and the City with respect to the Authority Resolution and the City Resolution, respectively;

(vii) the Transaction Documents;

(viii) Internal Revenue Service Form 8038-TC for the Lease Agreement;

(ix) a non-arbitrage and tax law compliance certificate in form satisfactory to Bond Counsel, dated the date of Closing;

(x) evidence of rental interruption insurance, naming Purchaser and its successor and assigns as loss payee, in an amount at least equal to the maximum Lease Payments coming due and payable during any 24 month period during the term of the Lease Agreement;

(xi) evidence of casualty insurance naming, the Purchaser and its successors and assigns as loss payee, insuring the Leased Property as required by the Lease Agreement;

(xii) a title insurance policy on the Leased Property in a form acceptable to the Purchaser; and

(xiii) such additional certificates, legal opinions, proceedings, instruments or other documents as the Purchaser, Purchaser’s Counsel or Bond Counsel may reasonably request.

All representations, warranties and agreements of the Authority and the City set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Purchaser or any person controlling the Purchaser and (ii) acceptance of and payment

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for the Lease Agreement by the Purchaser. For all purposes of this Agreement, a default shall not be deemed to be continuing if it has been cured, waived or otherwise remedied.

7. Payment of Fees and Expenses.

(a) The Purchaser shall be under no obligation to pay, and the City shall pay, all expenses incident to the performance of the Authority’s and the City’s obligations hereunder including, but not limited to: (i) the fees and disbursements of Bond Counsel and Raymond James & Associates, Inc., as placement agent; and (ii) the fees and disbursements of any other counsel, engineers, accountants, and other experts, consultants or advisors retained by the Authority and the City. The Purchaser shall pay all fees and expenses of Purchaser’s Counsel.

(b) The fees and expenses described in paragraph (a) above shall be paid by the City whether or not the Lease Agreement is executed and delivered, unless the Purchaser is in default in its obligation to purchase hereunder. All fees and expenses described in this Section 7, to the extent they are identifiable and billed, shall be paid on the date of Closing, and the remainder shall be paid promptly upon receipt of statements therefor. The obligations of the City under this Section 7 shall survive the issuance and final scheduled Lease Payment of the Lease Agreement and any termination of this Agreement.

(c) Whether or not the Lease Agreement is executed and delivered by the City and the Authority, the Purchaser shall be under no obligation to pay any costs or expenses incident to the performance of the obligations of the City hereunder.

8. Qualification Under State Securities Laws. Because the Lease Agreement will not be offered for sale under the Blue Sky or other securities laws and regulations, the City is not required to furnish such information, execute such instruments and take such other action in cooperation with the Purchaser to qualify the Lease Agreement for offer and sale under the Blue Sky or other securities laws and regulations or provide for the continuance of such qualification. In addition, the City will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of any state.

9. No Advisory or Fiduciary Relationship. In connection with all aspects of the transactions contemplated by this Agreement (including in connection with any amendment, waiver or other modification hereof or of any other Transaction Document), each of the Authority and the City acknowledges and agrees, that: (a) (i) it has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, (ii) it is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Transaction Documents, (iii) the Purchaser is not acting as a municipal advisor or financial advisor to the Authority or the City, and (iv) the Purchaser has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act to the Authority or the City with respect to the transactions contemplated hereby and the discussions, undertakings and procedures leading thereto; (b) (i) the Purchaser is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Authority or the City and (ii) the Purchaser has no obligation to the Authority or the City with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Transaction Documents; and (c) the Purchaser may be engaged in a broad range of transactions that involve interests that differ from those of the Authority and the City, and the Purchaser has no obligation to disclose any of such interests to the Authority and the City. To the fullest extent permitted by law, each of the Authority and the City hereby waives and releases any claims that it may have against the Purchaser with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.

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10. Parties in Interest. This Agreement is made solely for the benefit of the Purchaser and its subsidiaries and affiliates, the Authority and the City, and their respective successors and assigns, and no other person, partnership or corporation shall acquire or have any right under or by virtue of this Agreement.

11. Absence of Liability. No recourse shall be had by the Purchaser for any claims based on this Agreement or otherwise against any member, officer or agent of the Authority or the City in his or her individual capacity, all claims, if any, being waived and released by the Purchaser.

12. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

13. Notices. Any notice or other communication to be given under this Agreement may be given by delivering the same in writing by registered or certified mail to the following addresses:

If to the Authority: If to the City:

Fountain Valley Public Financing Authority 10200 Slater Avenue Fountain Valley, California 92708 Attention: Executive Director City of Fountain Valley 10200 Slater Avenue Fountain Valley, California 92708 Attention: City Manager

If to the Purchaser: HASI OBS OP A LLC 1906 Towne Centre Boulevard, Suite 370 Annapolis, Maryland 21401 Attention: Legal Department

14. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California.

[Signature Page Follows]

[Signature Page to Direct Purchase Agreement]

This Agreement shall become effective upon the execution of the acceptance and approval hereof as of the date first written above by a duly authorized representative of the Authority and the City and shall be valid and enforceable as of the time of such acceptance.

Very truly yours, HASI OBS OP A LLC By: Jeffrey W. Eckel

President

Accepted: FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY By: David Cain Treasurer CITY OF FOUNTAIN VALLEY By: David Cain Director of Finance

DocuSign Envelope ID: CCCA9451-947F-4F51-B28B-F2E6B4B09CFE

~

DocuSigned by:

/114 9D68DF70C2BB4 78 ..

This Agreement shall become effective upon the execution of the acceptance and approval hereof as of the date first written above by a duly authorized representative of the Authority and the City and shall be valid and enforceable as of the time of such acceptance.

Accepted:

Very trnly yours,

HASI OBS OP A LLC

By:-----------­Jeffrey W. Eckel President

FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY

By ' . ~ ~ David Cain Treasurer

CITY OF FOUNTAIN VALLEY

~ ·9:; David Cain Director of Finance

[ Signature Page to Direct Purchase Agreement]

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EXHIBIT A

1. Principal Amount: $2,843,166.36

2. Amortization Term: 19.58 years

3. Maturity Date: September 1, 2036

4. Interest Rate: 4.44%

5. Maximum Permitted Term: 32 years

6. Tax Credit Rate*: 4.47%

*For purposes of determining the subsidy payment under Section 6431(f) of the Code, this tax credit rate shall be used.

7. Prepayment:

a. Optional Prepayment. The City may prepay the unpaid principal components of the Lease Payments in whole or in part, on any Lease Payment Date on or after March 1, 2024, by paying a prepayment price equal to 100% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date.

b. Loss of Subsidy. In the event that a Change in Law (as hereafter defined) occurs, on the day specified in the City’s notice to the Authority of its exercise of the prepayment option provided under this subsection (b), the City shall have the option to prepay all, or less than all, of the aggregate principal components of Lease Payments then unpaid from and after any Change in Law upon payment in full to the Authority of the sum of 100% of the aggregate principal components of the Lease Payment to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. “Change in Law” means legislation enacted by the Congress of the United States of America or a ruling, regulation or statement issued by the United States Department of the Treasury or the Internal Revenue Service, the effect of which (I) repeals, revokes or reduces the City’s applicable cash subsidy payments from the United States Department of the Treasury under Section 54A or 6431 of the Tax Code (as currently in effect) with respect to the Lease Agreement or (II) imposes one or more new substantive conditions on the receipt by the City of such applicable cash subsidy payments under such Sections (as currently in effect) and such conditions are unacceptable to the City; provided, however, that a Change in Law shall not occur as a result of (I) reductions in subsidy payments due to automatic budgetary reductions imposed by the Congress of the United States of America related to deficit reduction measures, (II) the City’s failure or inability for reasons within its control to receive or delay to receive all or any portion of any subsidy payment from the United States Department of the Treasury, or (III) the City’s failure to comply with applicable laws and regulations to obtain payment of any subsidy payment from the United States Department of the Treasury, including without limitation any offset against any subsidy payment as a result of other liabilities of the City to the United State Department of the Treasury.

c. Mandatory Prepayment – Casualty or Condemnation. The City shall prepay the unpaid principal components of the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds to be used for such purpose under the Lease Agreement, by paying a

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prepayment price equal to 100% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date.

d. Mandatory Prepayment – Expenditure Period. In the event and to the extent that the City fails to expend all the proceeds of the Lease Agreement within the period ending 3 years after the date of the Closing or such later date if extended by the IRS (the “Expenditure Period”), the Lease Agreement will be subject to extraordinary prepayment on any date which is not more than 90 days following the Expenditure Period, at a redemption price equal to 101% of the principal amount of principal amount to be repaid, plus accrued interest to the date of prepayment.

8. Scheduled Lease Payments, including principal and interest components, and related payment dates:

Pmt. No.

Payment Date

Outstanding Balance*

Principal Portion

Interest Portion

Total Lease

Payment

Subsidy Payment Amount

2/2/2017 $2,843,166.36

1 9/1/2017 2,843,166.36 - $73,287.35 $73,287.35 $51,647.78 2 3/1/2018 2,807,768.70 $35,397.66 63,118.29 98,515.95 44,481.34 3 9/1/2018 2,772,371.02 35,397.68 62,332.47 97,730.15 43,927.54 4 3/1/2019 2,721,664.18 50,706.84 61,546.64 112,253.48 43,373.74 5 9/1/2019 2,670,957.33 50,706.85 60,420.94 111,127.79 42,580.44 6 3/1/2020 2,617,682.78 53,274.55 59,295.25 112,569.80 41,787.13 7 9/1/2020 2,564,408.22 53,274.56 58,112.56 111,387.12 40,953.65 8 3/1/2021 2,508,478.00 55,930.22 56,929.86 112,860.08 40,120.17 9 9/1/2021 2,452,547.77 55,930.23 55,688.21 111,618.44 39,245.14 10 3/1/2022 2,393,871.25 58,676.52 54,446.56 113,123.08 38,370.11 11 9/1/2022 2,335,194.73 58,676.52 53,143.94 111,820.46 37,452.12 12 3/1/2023 2,273,678.55 61,516.18 51,841.32 113,357.50 36,534.12 13 9/1/2023 2,212,162.38 61,516.17 50,475.66 111,991.83 35,571.70 14 3/1/2024 2,147,710.39 64,451.99 49,110.00 113,561.99 34,609.28 15 9/1/2024 2,083,258.39 64,452.00 47,679.17 112,131.17 33,600.93 16 3/1/2025 2,015,771.52 67,486.87 46,248.34 113,735.21 32,592.58 17 9/1/2025 1,948,284.64 67,486.88 44,750.13 112,237.01 31,536.75 18 3/1/2026 1,877,660.85 70,623.79 43,251.92 113,875.71 30,480.91 19 9/1/2026 1,807,037.06 70,623.79 41,684.07 112,307.86 29,376.00 20 3/1/2027 1,733,171.27 73,865.79 40,116.22 113,982.01 28,271.09 21 9/1/2027 1,659,305.47 73,865.80 38,476.40 112,342.20 27,115.46 22 3/1/2028 1,582,089.43 77,216.04 36,836.58 114,052.62 25,959.83 23 9/1/2028 1,504,873.39 77,216.04 35,122.39 112,338.43 24,751.79 24 3/1/2029 1,424,195.63 80,677.76 33,408.19 114,085.95 23,543.74 25 9/1/2029 1,343,517.87 80,677.76 31,617.14 112,294.90 22,281.54 26 3/1/2030 1,259,263.59 84,254.28 29,826.10 114,080.38 21,019.34 27 9/1/2030 1,175,009.32 84,254.27 27,955.65 112,209.92 19,701.18 28 3/1/2031 1,087,060.31 87,949.01 26,085.21 114,034.22 18,383.02

A-3

Pmt. No.

Payment Date

Outstanding Balance*

Principal Portion

Interest Portion

Total Lease

Payment

Subsidy Payment Amount

29 9/1/2031 999,111.30 87,949.01 24,132.74 112,081.75 17,007.06 30 3/1/2032 907,345.81 91,765.49 22,180.27 113,945.76 15,631.10 31 9/1/2032 815,580.33 91,765.48 20,143.08 111,908.56 14,195.43 32 3/1/2033 719,873.03 95,707.30 18,105.88 113,813.18 12,759.75 33 9/1/2033 624,165.71 95,707.32 15,981.18 111,688.50 11,262.41 34 3/1/2034 524,387.50 99,778.21 13,856.48 113,634.69 9,765.07 35 9/1/2034 424,609.29 99,778.21 11,641.40 111,419.61 8,204.04 36 3/1/2035 320,627.28 103,982.01 9,426.33 113,408.34 6,643.01 37 9/1/2035 216,645.27 103,982.01 7,117.93 111,099.94 5,016.21 38 3/1/2036 108,322.64 108,322.63 4,809.52 113,132.15 3,389.42 39 9/1/2036 (0.00) 108,322.64 2,404.76 110,727.40 1,694.71

Total $2,843,166.36 $1,482,606.13 $4,325,772.49 $1,044,836.63

*After payment of Lease Payment on corresponding payment date.

B-1

EXHIBIT B

Treasury Direct Website ‒ Qualified Tax Credit Bonds Rates

Rate Table for January 19, 2017

(see attached)

CSV FORMAT XML FORMAT TXT FORMAT

Qualified Tax Credit Bond RatesImportant message:Please use the buttons and links we've provided on each page. Using your browser to navigate (including the back, forward, and refresh buttons) may produce inconsistent results.

Section 54A of the Internal Revenue Code (IRC) provides rules for the issuance and use of qualified tax credit bonds including new clean renewable energy bonds, qualified energy conservation bonds, qualified zone academy bonds, and qualified school construction bonds. For rates on clean renewable energy bonds issued under Section 54 of the IRC, check our CREB page.

QTCB Historical Rates from January 19, 2017 to January 19, 2017

Date Rate Maturity PSFY*

Jan 19, 2017 4.47% 32 years 2.23%

*Permitted Sinking Fund Yield - The maximum permitted yield for the sinking fund expected to be used to repay the issue under section 54A(d)(4)(C) of the IRC. The permitted sinking fund yield is equal to 110% of the long-term adjusted applicable federal rate (AFR), compounded semiannually. The permitted sinking fund yield is updated monthly.

Page 1 of 1Qualified Tax Credit Bond Rates

1/26/2017https://www.treasurydirect.gov/GA-SL/SLGS/selectQTCDate.htm

TreasuryDirect ..

,_______.I ,__I _ ___,I ,__I _ ___,

WCSR 38264710v4

LEASE/PURCHASE AGREEMENT

Dated as of February 1, 2017

between the

FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY, as Lessor

and the

CITY OF FOUNTAIN VALLEY, as Lessee

LEASE/PURCHASE AGREEMENT

This LEASE/PURCHASE AGREEMENT (this "Lease"), dated as of February 1, 2017, is between the FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY, a joint exercise of powers entity duly organized and existing under and by virtue of the laws of the State of California (the "Authority"), as lessor, and the CITY OF FOUNTAIN VALLEY, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"), as lessee.

BACKGROUND:

1. In order to finance the acquisition, construction and installation of solar photovoltaic systems at the sites identified on Appendix A attached hereto and made a part hereof ( collectively, the "Project"), the City has agreed to lease the real property consisting of the land together with all buildings, facilities and other improvements located thereon comprising the City's Fire Station No. 1, as such real property is described more fully in Appendix B attached hereto and made a part hereof (the "Leased Property"), to the Authority by entering into a Site Lease dated as of February 1, 2017 (the "Site Lease"), which has been recorded concurrently herewith;

2. The Authority has agreed to assist the City with such financing by entering into this Lease, pursuant to which the Authority will sublease the Leased Property back to the City and the City will be obligated to make lease payments to the Authority;

3. In order to raise the funds needed for the financing, the Authority has assigned certain of its rights under this Lease and the Site Lease, including the right to receive and enforce payment of the lease payments that are payable by the City hereunder, to HASI OBS OP A LLC, a Maryland limited liability company, under an Assignment Agreement dated as of February 1, 2017 (the "Assignment Agreement"), which has been recorded concurrently herewith; and

4. The City is authorized to enter into a lease-leaseback arrangement with the Authority to provide financing for the Project under the laws of the State of California.

AGREEMENT:

In consideration of the foregoing and the material covenants hereinafter contained, the City and the Authority formally covenant, agree and bind themselves as follows:

ARTICLE I

DEFINITIONS; RULES OF INTERPRETATION

Section 1.1. Definitions. All terms defined in this Section 1.1 have the meanings herein specified for all purposes of this Lease.

"Additional Payments" means any and all amounts payable by the City hereunder (other than Lease Payments).

"Applicable Environmental Laws'' means and shall include, but shall not be limited to, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 USC

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Sections 9601 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 USC Sections 6901 et seq.; the California Hazardous Waste Control Law ("HWCL"), California Health & Safety Code Sections 25100 et seq.; the Hazardous Substance Account Act ("HSAA"), California Health & Safety Code Sections 25300 et seq.; the Porter-Cologne Water Quality Control Act (the "Porter­Cologne Act"), California Water Code Sections 1300 et seq.; the Air Resources Act, California Health & Safety Code Sections 3900 et seq.; the Safe Drinking Water & Toxic Enforcement Aet, California Health & Safety Code Sections 25249.5 et seq.; and the regulations under each thereof; and any other local, state, and/or federal laws or regulations, whether currently in existence or hereafter enacted, that govern:

(a) the existence, cleanup, and/or remedy of contamination on property;

(b) the protection of the environment from spilled, deposited, or otherwise emplaced contamination;

( c) the control of hazardous wastes; or

( d) the use, generation, transp011, treatment, removal, or recovery of Hazardous Substances, including building materials.

"Assignee" means HASI OBS OP A LLC, as assignee of certain rights of the Authority hereunder, its successors and assigns.

"Assignment Agreemenf' means the Assignment Agreement dated as of February 1, 2017, between the Authority, as assignor, and the Assignee, as assignee, as originally executed or as thereafter amended under any duly authorized and executed amendments thereto.

"Authority" means the Fountain Valley Public Financing Authority, a joint exercise of powers entity organized under the laws of the State of California.

"Available Project Proceeds" means (a) the proceeds from the assignment and transfer of certain rights of the Authority under this Lease and the Site Lease to the Assignee pursuant to the Assignment Agreement, less (b) Costs of Issuance (not exceeding 2% of the proceeds of such assignment and transfer) plus (c) investment earnings on the difference between (a) - (b).

"Bond Counsel" means Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, or any other attorney or firm of attorneys nationally recognized for expertise in municipal finance matters including tax matters related thereto.

"Business Day" means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State of California.

"City" means the City of Fountain Valley, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California.

"Closing Date" means the date of execution and delivery of this Lease by the parties hereto, being February 2, 2017.

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"Costs of Issuance" means the costs incurred in connection with the execution and delivery of this Lease, the Site Lease and the Assignment Agreement, including counsel fees, fees and expenses of the placement agent, and similar costs, fees and expenses.

"Event of Default' means any of the events of default as defined in Section 8.1.

"Expenditure Period' means the "expenditure period" defined in Section 54A(d)(2)(B)(ii) of the Tax Code and consists of the period beginning on the Closing Date and ending on the later of the date which is three years after the Closing Date or such later date, if any, as permitted by the Internal Revenue Service in response to a request to extend the Expenditure Period.

"Facilities" means all buildings and other improvements at any time situated on the Leased Property.

"Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment. To the extent required by the Regulations, the term "investment" will include a hedge.

"Federal Securities" means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury), or obligations the timely payment of principal of and interest on which are directly guaranteed by the United States of America.

"Fiscal Year" means each twelve-month period during the Term of this Lease commencing on July 1 in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period.

"Hazardous Substance" means any substance that shall, at any time, be listed as "hazardous" or "toxic" in any Applicable Environmental Law or that has been or shall be determined at any time by any agency or court to be a hazardous or toxic substance regulated under Applicable Environmental Laws; and also means, without limitation, raw materials, building components, the products of any manufacturing, or other activities on the facilities, wastes, petroleum, and source, special nuclear, or by-product material as defined by the Atomic Energy Act of 1954, as amended (42 USC Sections 3011 et seq.).

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"Lease" means this Lease/Purchase Agreement dated as of February 1, 2017, between the Authority, as lessor, and the City, as lessee, as originally executed or as thereafter amended under any duly authorized and executed amendments hereto.

"Lease Payment'' means all payments required to be paid by the City under Section 4.4, including any prepayment thereof under Section 9.2 or 9.3.

"Lease Payment Date" means March 1 and September 1 in each year, commencing March 1, 2018, and continuing to and including the date on which the Lease Payments are paid in full.

"Lease Subsidy Payments" means, with respect to this Lease and the Lease Payments, the amounts which are payable by the Federal government under Section 6431 of the Tax Code, which the City has irrevocably elected to receive under Section 643 l(f)(3) of the Tax Code.

"Leased Property" means the real property which is more particularly described in Appendix B. From and after the date of any substitution of property under Section 4. 7 or release of property under Section 4.8, the term "Leased Property" means the real property which remains subject to this Lease following such substitution or release.

"Net Proceeds" means amounts derived from any policy of casualty insurance or title insurance with respect to the Leased Property, or the proceeds of any taking of the Leased Property or any portion thereof in eminent domain proceedings (including sale under threat of such proceedings), to the extent remaining after payment therefrom of all expenses incurred in the collection and administration thereof.

"Permitted Encumbrances" means, as of any time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under Section 5 .1 of this Lease; (b) the Site Lease, this Lease and the Assignment Agreement; ( c) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; ( d) the exceptions disclosed in the title insurance policy required by Section 5. 7 with respect to the Leased Property issued as of the Closing Date; and ( e) any easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record and which the City certifies in writing will not materially impair the use of the Leased Property for its intended purposes.

"Project'' means the acquisition, construction and installation of solar photovoltaic systems at the sites identified on Appendix A.

"Project Costs" means, with respect to the Project, all costs of the acquisition, construction and installation thereof which are paid from proceeds of this Lease and the Assignment Agreement, including but not limited to:

(a) all costs required to be paid to any person under the tenns of any agreement for or relating to the Project;

(b) obligations incurred for labor and materials in connection with the Project;

( c) the cost of performance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect in connection with the Project;

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( d) all costs of engineering, architectural services and other preliminary investigation expenses, including the actual out of pocket costs for site investigations, surveys, hazardous materials investigations, test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising construction, as well as for the performance of all other duties required by or consequent to the Project; and

( e) any sums required to reimburse the City for advances made for any of the above items or for any other costs incurred and for work done, including but not limited to administrative costs of the City, which are properly chargeable to the Project.

"Qualified Renewable Energy Facility Project" means capital expenditures incurred by the City within the meaning of Section 54C(d)(l) of the Tax Code for any qualified facility determined under Section 45(d) of the Tax Code (without regard to paragraphs (8) and (10) thereof), including (among others) solar energy facilities.

"Rental Period' means, for each Lease Payment Date, the period from the preceding March 1 or September 1 to (and including) such September 1 or March 1, respectively; provided that the first Rental Period begins on the Closing Date and ends on March 1, 2018.

"Site Lease" is defined in the preambles hereto.

"Tax Certificate" means that certain Tax Certificate dated the Closing Date concerning certain matters pertaining to the use and investment of proceeds of the Lease executed by the City and the Authority on the date of issuance thereof, including any and all exhibits attached thereto.

"Tax Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code.

"Term of this Lease" or "Term" means the time during which this Lease is in effect, as provided in Section 4 .3; provided that in no event shall the term of this Lease exceed the maximum term established by the Secretary of the Treasury that is applicable to this Lease.

Section 1.2. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate.

(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.

( c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Lease; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or subdivision hereof.

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ARTICLE II

COVENANTS, REPRESENTATIONS AND WARRANTIES

Section 2.1. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Authority as of the date of the execution and delivery of this Lease:

(a) Due Organization and Existence. The City is a municipal corporation and general law city organized and validly existing under and by virtue of the Constitution and laws of the State of California, has full legal right, power and authority under the laws of the State of California to enter into the Site Lease and this Lease and to carry out and consummate all transactions contemplated hereby, and by proper action the City has duly authorized the execution and delivery of the Site Lease and this Lease.

(b) Due Execution. The representatives of the City executing the Site Lease and this Lease have been fully authorized to execute the same pursuant to official action duly adopted by the City Council of the City.

(c) Valid, Binding and Enforceable Obligations. The Site Lease and this Lease have each been duly authorized, executed and delivered by the City and each constitutes the legal, valid and binding agreement of the City enforceable against the City in accordance with its terms.

( d) No Conflicts. The execution and delivery of the Site Lease and this Lease, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease and this Lease or the financial condition, assets, properties or operations of the City.

(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery by the City of the Site Lease and this Lease, or the consummation of any transaction therein or herein contemplated, except as have been obtained or made and as are in full force and effect, or except as would not materially adversely affect the transactions contemplated hereby.

(t) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated

7

by or the validity of the Site Lease or this Lease or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease or this Lease, or the financial condition, assets, properties or operations of the City.

(g) Essential Purpose. The Leased Property and the financing of the Project pursuant to this Lease and the Assignment Agreement are essential to the City's efficient and economic operation, serve an essential governmental function of the City and are in the best interests of the City and the City does not expect the need for the Leased Property and the Project to diminish during the term of this Lease Agreement.

(h) Budget. The obligations of the City under this Lease, including without limitation the obligation to make Lease Payments, are obligations payable from the City's general fund budget.

(i) Available Funds. The City has funds available for the payment of Lease Payments due during the current Fiscal Year and reasonably believes that sufficient funds can be obtained to make all Lease Payments and payments of other amounts required to be paid hereunder.

G) Allocation. The City has received allocation of a portion of the new clean renewable energy bond volume cap in the aggregate amount of $3,000,000 and documentation with respect to such allocation has been provided for inclusion in the transcript for this Lease. The City represents that the Project qualifies as a Qualified Renewable Energy Facility Project.

(k) Insured Value. The Leased Property has an insured real property replacement value of at least $5,389,684.

(1) The City is the fee owner of the Leased Property and has good and marketable title thereto, and there exists no mortgage, pledge, lien, security interest, charge or other encumbrance of any nature whatsoever on or with respect to the Leased Property other than Permitted Encumbrances.

Section 2.2. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the City as of the date of the execution and delivery of this Lease:

(a) Due Organization and Existence. The Authority is a joint exercise of powers entity duly organized and existing under the laws of the State of California, has full legal right, power and authority to enter into the Site Lease, this Lease and the Assignment Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the Authority has duly authorized the execution and delivery of the Site Lease, this Lease and the Assignment Agreement.

(b) Due Execution. The representatives of the Authority executing the Site Lease, this Lease and the Assignment Agreement are fully authorized to execute the same under official action taken by the Board of Directors of the Authority.

8

(c) Valid, Binding and Enforceable Obligations. The Site Lease, this Lease and the Assignment Agreement have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms.

( d) No Conflicts. The execution and delivery of the Site Lease, this Lease and the Assignment Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease, this Lease or the Assignment Agreement or the financial condition, assets, properties or operations of the Authority.

(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery by the Authority of the Site Lease, this Lease or the Assignment Agreement, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect, or except as would not materially adversely affect the transactions contemplated hereby.

(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Site Lease, this Lease or the Assignment Agreement, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease, this Lease or the Assignment Agreement or the financial condition, assets, properties or operations of the Authority.

ARTICLE III

DEPOSIT AND APPLICATION OF FUNDS

Section 3.1. Deposit of and Application of Funds. As provided in the Assignment Agreement, the proceeds therefrom in the amount of $2,843,166.36 will be deposited in an account specified in writing by the City and applied to pay the Project Costs and Costs of Issuance as provided herein.

9

Section 3.2. Appointment of City as Agent of Authority. The Authority hereby appoints the City as its agent to carry out all phases of the Project under and in accordance with the provisions hereof. The City hereby accepts its appointment as agent of the Authority and assumes all rights, liabilities, duties and responsibilities of the Authority regarding the Project. The City, as agent of the Authority hereunder, will enter into, administer and enforce all purchase orders, energy services contracts or other contracts relating to the Project. All contracts for, and all work relating to, the Project are subject to all applicable provisions of law relating to the acquisition, construction, improvement, and equipping of like facilities, equipment and property by the City.

Section 3.3. Acquisition, Construction and Installation of the Project. As agent of the Authority, the City hereby agrees with due diligence to supervise and provide for, or cause to be supervised and provided for, the acquisition, construction and installation of the Project in accordance with the plans and specifications, purchase orders, construction contracts, energy services contracts and other documents relating thereto and approved by the City under all applicable requirements of law.

Section 3.4. Payment of Project Costs; Mandatory Prepayment from Unspent Project Proceeds. Proceeds of this Lease and the Assignment Agreement on deposit with the City may be expended for the payment of Project Costs to and including the earlier of (i) the date on which the City determines that the Project is completed and accepted by the City for all purposes of this Lease or (ii) the 90th day following the later of February 1, 2020 or, if the City has obtained an extension for the expenditure of proceeds in accordance with Section 54A( d)(2) of the Tax Code, the close of such extended period. All remaining proceeds as of the earlier of such dates shall be applied by the City to prepay the unpaid principal component of Lease Payments in whole or in part on the terms and conditions (including prepayment price) as provided in this Section 3.4 and in Section 9.3(b).

(a) In connection with any prepayment pursuant to subsection (a) of this Section 3.4 and Section 9.3(b), the City shall pay any prepayment premium and the interest portion of Lease Payments accrued to the prepayment date on such principal portion to be prepaid from funds legally available to the City for that purpose, but not from Available Project Proceeds.

ARTICLE IV

LEASE OF LEASED PROPERTY; LEASE PAYMENTS

Section 4.1. Lease of Leased Property by Authority to City. For and in consideration of the application by the Authority of funds in accordance with Section 3.1, the City has leased the Leased Property to the Authority under the Site Lease. For and in consideration of the Lease Payments to be made by the City hereunder, the Authority hereby leases the Leased Property to the City and the City hereby leases the Leased Property from the Authority, pursuant to this Lease upon the terms and provisions hereof.

Section 4.2. [Reserved].

Section 4.3. Term. The Term of this Lease commences on the Closing Date and ends on the date on which all of the Lease Payments have been paid in full. In the event the obligation of the City to pay Lease Payments is abated for any period under Section 6.3, the term of this Lease shall extend until such time as all Lease Payments set forth on Appendix C hereto have been paid in full, provided that the term of this Lease shall not extend more than ten years following the last Lease

10

Payment Date shown on Appendix C; and provided further, however, that in no event shall any such extension result in the Lease Term exceeding the maximum term established by the Secretary of the Treasury that is applicable to this Lease.

Section 4.4. Lease Payments; Lease Subsidy Payments.

(a) Obligation to Pay. Subject to the provisions of Section 6.3 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Appendix C attached hereto (including any supplements thereto) and by this reference incorporated herein, to be due and payable in immediately available funds on each of the respective Lease Payment Dates specified in Appendix C. The Lease Payments payable in any Rental Period with respect to the Leased Property shall be for the use of the Leased Property during such Rental Period. The interest components of the Lease Payments have been calculated based on an interest rate of 4.44% per annum, on the basis of a 360 day year of twelve 30 day months. The City's obligation to pay Lease Payments in accordance with this Section 4.4(a), subject to the provisions of Section 6.3, shall be absolute and unconditional in all events without diminution, deduction, set-off or defense for any reason, including (without limitation) the failure or inability (for whatever reason) of the City to receive ( or delay in receipt of) all or any portion of the Lease Subsidy Payments, the availability to the City of energy from sources other than the Project, the availability of any energy savings attributable to the Project, or the nonpayment of any amounts payable by any vendor pursuant to any vendor agreement related to the Project. Over and above the Lease Payments, the City shall pay Additional Payments when the same shall become due.

(b) Effect of Prepayment. If the City prepays all Lease Payments in full under Section 9.2 or 9.3, the City's obligations under this Section will thereupon cease and terminate. If the City prepays the Lease Payments in part but not in whole under Section 9.3, the principal components of the remaining Lease Payments will be reduced in inverse order of maturity as provided in Section 9 .3( c) and the interest component of each remaining Lease Payment will be reduced on a pro rata basis.

(c) Rate on Overdue Payments. If the City fails to make any of the payments required in this Section 4.4, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment, at the rate of 7.44 % per annum.

(d) Fair Rental Value. The Lease Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and will be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy, and the continued quiet use and enjoyment, of the Leased Property during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments are not in excess of the fair rental value of the Leased Property. In making this determination, consideration has been given to the estimated fair market value of the Leased Property, the replacement costs of the Leased Property, the costs of financing the deposit required to be made under Section 3.1, other obligations of the City and the Authority under this Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.

(e) Source of Payments; Budget and Appropriation. The Lease Payments are payable from any source of legally available funds of the City, subject to the provisions of Sections

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6.3 and 9.1. The City covenants to take such action as may be necessary to include all Lease Payments in each of its annual budgets during the Term of this Lease and to make the necessary annual appropriations for all such Lease Payments. The covenants on the part of the City herein contained constitute duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the City.

(t) Filing of Forms To Receive Lease Subsidy Payments. The City will, within the 30-day period beginning on the date that is 90 days before the next Lease Payment Date, file, or cause to be filed, Form 8038-CP or any successor form designated by the federal government, requesting payment of the Lease Subsidy Payments with respect to the interest component of the next Lease Payment.

Section 4.5. Quiet Enjoyment. Throughout the Term of this Lease, the Authority will provide the City with quiet use and enjoyment of the Leased Property and the City will peaceably and quietly have and hold and enjoy the Leased Property, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease. The Authority will, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the right to inspect the Leased Property as provided in Section 7.2.

Section 4.6. Title. At all times during the Term of this Lease, the Authority shall hold leasehold title to the Leased Property, including all additions which comprise fixtures, repairs, replacements or modifications thereto, subject to Permitted Encumbrances and subject to the provisions of Section 7.2.

Upon the termination of this Lease (other than under Section 8.2(b) hereof), all right, title and interest of the Authority in and to the Leased Property shall be transferred to and vested in the City. Upon the payment in full of all Lease Payments allocable to the Leased Property, or upon the deposit by the City of security for such Lease Payments as provided in Section 9 .1, all right, title and interest of the Authority in and to the Leased Property shall be transferred to and vested in the City. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title.

Section 4. 7. Substitution of Property. With the prior written consent of the Assignee, the City may substitute other land, facilities or improvements (the "Substitute Property") for the Leased Property or any portion thereof (the "Former Property"), by providing the Assignee with a supplement to this Lease substantially in the form attached as Appendix D hereto, provided that the City has satisfied all of the following requirements, which are hereby declared to be conditions precedent to such substitution:

(a) The City has certified to the Authority and the Assignee that no Event of Default has occurred and is continuing.

(b) The City has filed with the Authority and the Assignee, and caused to be recorded in the Office of the Orange County Registrar-Recorder, sufficient memorialization of an amended Appendix B to this Lease which adds thereto a description of such Substitute Property and

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deletes therefrom the description of such Former Property (together with corresponding supplements to the Site Lease and Assignment Agreement in form and substance satisfactory to the Assignee).

( c) The City has obtained a CL TA policy of title insurance insuring the City's leasehold estate hereunder in the Substitute Property, in an amount at least equal to the aggregate unpaid principal components of the Lease Payments and naming the Assignee as an additional insured.

( d) The City has certified in writing to the Authority and the Assignee that such Substitute Property is essential to the City's efficient and economic operation, serves an essential governmental function of the City and constitutes property which the City is permitted to lease under the laws of the State of California.

(e) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made herein. No event giving rise to an abatement of Lease Payments has occurred or is continuing with respect to the Substitute Property.

(f) The City has certified in writing to the Authority and the Assignee that the estimated value and the estimated fair rental value of the Substitute Property are at least equal to the aggregate principal amount of the outstanding Lease Payments and the annual Lease Payments, respectively, and that the useful life of the Substitute Property extends to or beyond March 1, 2036; and, if requested by the Assignee, the City has delivered to the Assignee valuations prepared or confirmed by an independent third party, which might include, without limitation, an appraisal or a valuation by an insurance company.

(g) The Assignee has received assurances to its satisfaction that the Substitute Property is in compliance with Applicable Environmental Laws.

If at any time the Facilities are damaged or destroyed by earthquake or other uninsured casualty for which rental interruption insurance is not available, or if the use by the City of the Leased Property is unavailable due to Applicable Environmental Laws or the presence of a Hazardous Substance and rental interruption insurance is not available, the City shall, promptly after the occurrence of such event, substitute property for the Facilities under this Section 4.7; provided, however, that nothing in this paragraph shall supersede the provisions of Article VI.

Upon written consent of the Assignee and the satisfaction of all conditions precedent to any substitution under this Section 4.7, the Term of this Lease will thereupon end as to the Former Property and commence as to the Substitute Property. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement ofrecord against the Former Property.

If for any reason the City is unable to so substitute real property for the Leased Property with an estimated value and an estimated fair rental value at least equal to the remaining Lease Payments hereunder, the City shall use its best efforts to obtain other financing in an amount necessary to prepay the principal component of the Lease Payments not supported by the fair rental value of the substituted property, if any.

In the event the City is unable to implement the actions described above in this Section 4.7, the City and the Authority hereby agree that the obligations evidenced by this Lease shall be the

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senior encumbrance on the Leased Property and any future encumbrance, including without limitation any lease, mortgage, deed of trust or security interest, shall be subordinate to this Lease and there shall be no payments in any Rental Period on the obligations evidenced or secured thereby until all of the scheduled Lease Payments set forth on Appendix C hereto for such Rental Period have been paid in full.

Section 4.8. Release of Property. With the prior written consent of the Assignee, the City may release any portion of the Leased Property from this Lease (the "Released Property") provided that the City has satisfied all of the following requirements, which are hereby declared to be conditions precedent to such release:

(a) The City has certified to the Authority and the Assignee that no Event of Default has occurred and is continuing.

(b) The City has filed with the Authority and the Assignee, and caused to be recorded in the Office of the Orange County Registrar-Recorder, sufficient memorialization of an amendment hereof which removes the Released Property from this Lease.

( c) The City has certified in writing to the Authority and the Assignee that the value of the property which remains subject to this Lease following such release is at least equal to the aggregate unpaid principal components of the Lease Payments, and the fair rental value of the property which remains subject to this Lease following such release is at least equal to the Lease Payments thereafter coming due and payable hereunder. If requested by the Assignee, the City has delivered to the Assignee valuations prepared or confirmed by an independent third party, which might include, without limitation, an appraisal or a valuation by an insurance company.

Upon written consent of the Assignee and the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Released Property.

ARTICLEV

MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS

Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this Lease, as part of the consideration for the rental of the Leased Property, all improvement, repair and maintenance of the Leased Property are the sole responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Leased Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sub lessee thereof on the part of the City or any assignee. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Leased Property, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of this Lease.

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The City will pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Leased Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City is obligated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due.

The City may, at the City's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority shall notify the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Leased Property will be materially endangered or the Leased Property or any part thereof will be subject to loss or forfeiture, in which event the City will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority.

Section 5.2. Modification of Leased Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Leased Property or any portion thereof. All additions, modifications and improvements to the Leased Property will thereafter comprise part of the Leased Property and become subject to the provisions of this Lease. Such additions, modifications and improvements may not in any way damage the Leased Property, or cause the Leased Property to be used for purposes other than those authorized under the provisions of State and federal law; and the Leased Property, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other lien to be established or remain against the Leased Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City under this Section; provided that if any such lien is established and the City first notifies the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Leased Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City.

Section 5.3. Public Liability Insurance. The City shall maintain or cause to be maintained throughout the Term of this Lease a standard comprehensive general insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents, employees and assigns. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Such policy or policies must provide coverage of at least $1,000,000 per occurrence, $3,000,000 in aggregate and $5,000,000 excess liability and may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City will apply the

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proceeds of such liability insurance toward extinguishment or satisfaction of the liability with respect to which such proceeds have been paid.

Section 5. 4. Casualty Insurance; Flood Coverage.

(a) Requirement to Maintain Casualty Insurance. The City will procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, casualty insurance against loss or damage to the Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance. Said extended coverage insurance shall cover loss or damage by fire, explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, including earthquake coverage if such coverage is available at commercially reasonable cost from a reputable insurer in the reasonable determination of the City. Such insurance shall be in an amount at least equal to the greater of (i) the replacement value of the insured Facilities, or (ii) the aggregate unpaid principal components of the Lease Payments, and may be subject to such deductibles as the City deems adequate and prudent. The City shall set aside in a segregated account funds sufficient to cover such deductibles. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled msurance. The City will apply the Net Proceeds of such insurance as provided in Article VL

(b) Flood Insurance. If at any time and for so long as the Leased Property is located in a 100 year flood area as shown on a Flood Insurance Rate Map published by the Federal Emergency Management Agency, the policy or policies of casualty insurance provided under this Section 5.4 shall include insurance against loss or damage to the Facilities due to :flooding. If the City obtains an exception or waiver to the designation of the Facilities as being within a 100 year flood area from the Federal Emergency Management Agency, the City shall not be required to provide flood insurance as set forth in this subsection (b).

( c) Federal or State Disaster Aid. Should the Facilities be damaged or destroyed as a result of an event for which federal or State of California disaster aid is available, the Authority and/or the City shall promptly apply for disaster aid. Any disaster aid proceeds received shall be used to repair, reconstruct, restore or replace the damaged or destroyed portions of the Facilities or, at the option of the City and the Authority, to prepay the Lease Payments if permitted under the disaster aid program and the law.

(d) Self-Insurance. As an alternative to providing the insurance required by this Section, the City may provide a self insurance method or plan of protection if and to the extent such self insurance method or plan of protection (i) affords reasonable coverage for the risks required to be insured against, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State of California other than the City, and (ii) has been approved in writing by the Assignee. Before such other method or plan may be provided by the City, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of this Lease, there shall be filed with the Authority and the Assignee a ce1iificate of an actuary, insurance consultant or other qualified person (who may be an employee of the City), stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of this Section and, when effective, would afford reasonable coverage for the risks required to be insured against and is sufficiently funded to afford such coverage. There shall also be filed a certificate of the City setting forth the details of such substitute

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method or plan. In the event of loss covered by any such self insurance method, the liability of the City hereunder shall be limited to the amounts in the self insurance reserve fund or funds created under such method.

Section 5.5. Rental Interruption Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Leased Property and the improvements situated thereon as a result of any of the hazards covered in the insurance required by Section 5 .4, in an amount at least equal to the maximum Lease Payments coming due and payable during any future 24-month period. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. Such rental interruption or use and occupancy insurance shall not be self insured and the City acknowledges that this requirement may limit its ability to self insure under Section 5 .4. The City will apply the Net Proceeds of such insurance towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable.

Section 5.6. Worker's Compensation Insurance. If required by applicable California law, the City shall carry worker's compensation insurance covering all employees on, in, near or about the Leased Property and, upon request, shall furnish to the Authority certificates evidencing such coverage throughout the Term of this Lease.

Section 5. 7. Recordation Hereof; Title Insurance. On or before the Closing Date, the City shall, at its expense, (a) cause the Assignment Agreement, the Site Lease and this Lease, or a memorandum hereof or thereof, to be recorded in the office of the Orange County Registrar-Recorder with respect to the Leased Property, and (b) obtain a CLTA leasehold owner's title insurance policy insuring the Authority's interests in the estate established under the Site Lease in the Leased Property, subject only to Permitted Encumbrances, in an amount equal to the aggregate, original principal components of the Lease Payments. The City shall apply the Net Proceeds received under such title insurance policy to prepay Lease Payments under Section 9.3(a).

Section 5.8. Form of Policies. All insurance policies (or riders) required by this Article V shall be taken out and maintained with responsible insurance companies organized under the laws of one of the states of the United States and qualified to do business in the State of California, and shall contain a provision that the insurer shall not cancel or revise coverage thereunder without giving written notice to the insured parties at least ten days before the cancellation or revision becomes effective. Each insurance policy or rider required by Sections 5.3, 5.4 and 5.5 shall name the City and the Assignee as additional insured and loss payee and shall include a lender's loss payable endorsement for the benefit of the Assignee. Prior to the Closing Date, the City will deposit with the Assignee policies (and riders and endorsements, if applicable) evidencing any such insurance procured by it, or a certificate or certificates of the respective insurers stating that such insurance is in full force and effect. Before the expiration of any such policy (or rider), the City will furnish to the Assignee evidence that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V unless such insurance is no longer obtainable, in which event the City shall notify the Assignee of such fact.

Section 5.9. Installation of City's Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Leased Property. All such items shall remain

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the sole property of the City, in which the Authority has no interest, and may be modified or removed by the City at any time. The City must repair and restore any and all damage to the Leased Property resulting from the installation, modification or removal of any such items. Nothing in this Lease prevents the City from purchasing or leasing items to be installed under this Section under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest may attach to any part of the Leased Property.

Section 5.10. Liens. The City will not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Leased Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Authority do not materially and adversely affect the leasehold estate in the Leased Property hereunder and for which the Assignee approves in writing, which approval may not be unreasonably withheld. Except as expressly provided in this Article V, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.

Section 5.11. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as Additional Payments hereunder, with interest at the rate set forth in Section 4.4(c).

Section 5.12. Condemnation by City. The City shall not exercise the power of condemnation with respect to the Authority's or the Assignee's leasehold interest in the Leased Property so long as the Lease is valid and outstanding. If for any reason the foregoing covenant shall be held by a court of competent jurisdiction to be unenforceable and the City condemns the Authority's or the Assignee's leasehold interest in the Leased Property or if the City breaches such covenant, the City agrees that the value of the City's leasehold estate hereunder in the Leased Property shall be not less than the amount sufficient to prepay the aggregate Lease Payments.

ARTICLE VI

DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF PROCEEDS; ABATEMENT OF LEASE PAYMENTS

Section 6.1. Deposit of Net Proceeds. The Net Proceeds of any taking of the Leased Property or any portion thereof in eminent domain proceedings, and the Net Proceeds of any policy of insurance maintained under Section 5.4, shall be paid to the City or the Authority to be applied as hereinafter set forth in Section 6.2.

Section 6.2. Application of Net Proceeds. If the Leased Property is taken in eminent domain proceedings at any time during the Term of this Lease, or if the Leased Property is damaged due to an insured casualty which is covered by a policy of insurance or a program of self insurance maintained under Section 5.4, the City shall as soon as practicable after such event, with the prior written consent of the Assignee, apply the Net Proceeds resulting therefrom to one of the following:

(a) repair the Leased Property to full use;

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(b) replace the Leased Property, at the City's sole cost and expense, with property of equal or greater value to the Leased Property immediately prior to the time of such destruction or damage, such replacement Leased Property to be subject to the Assignee's reasonable approval, whereupon such replacement shall be -substituted in this Lease by appropriate endorsement;

(c) substitute additional property as provided in Section 4.7; or

(d) prepay the Lease Payments in accordance with Section 9.3(a).

The City will notify the Authority and the Assignee of which course of action it has elected to take within a reasonable time not to exceed 60 days after the occurrence of such eminent domain proceedings or such destruction or damage. Such repair, replacement, substitution or prepayment shall commence not later than 60 days after the occurrence of such taking, destruction or damage and be pursued diligently to completion. The Authority may (but is not required to) in its own name or in the City's name execute and deliver proofs of claim, receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy, and the City hereby grants to the Authority a power of attorney coupled with an interest to accomplish all or any of the foregoing.

Section 6. 3. Abatement Due to Damage or Destruction. The Lease Payments are subject to abatement during any period in which by reason of damage or destruction ( other than by eminent domain which is provided for in Section 6.4) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease will continue in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage and destruction. Notwithstanding the foregoing, the Lease Payments are not subject to abatement to the extent that rental interruption insurance proceeds are available to pay Lease Payments which would otherwise be abated under this Section 6.3, it being hereby declared that such amounts constitute special funds for the payment of the Lease Payments.

Section 6.4. Termination or Abatement Due to Eminent Domain. If the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease will cease with respect thereto as of the day possession is so taken. If less than all of the Leased Property is taken permanently, or if the Leased Property is taken temporarily, under the power of eminent domain, (a) this Lease will continue in full force and effect with respect thereto and will not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there will be a partial abatement of Lease Payments allocated thereto based upon whether such event has occurred with respect to the Leased Property, in an amount to be determined by the City such that the resulting "Lease Payments" represent fair consideration for the use and occupancy of the remaining usable portions of the affected Leased Property.

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ARTICLE VII

OTHER COVENANTS OF THE CITY

Section 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORTION THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY PORTION OF THE LEASED PROPERTY OR A DEALER THEREIN AND THAT THE CITY LEASES THE LEASED PROPERTY AS-IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no event is the Authority liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease for the existence, furnishing, functioning or use of the Leased Property by the City.

Section 7.2. Access to the Leased Property. The City agrees that the Authority, and the Authority's successors or assigns, has the right at all reasonable times, following at least 48 hours written notice provided to the City, to enter upon and to examine and inspect the Leased Property or any part thereof. The City further agrees that the Authority, and the Authority's successors or assigns, shall have such rights of access to the Leased Property or any component thereof, following at least 48 hours written notice provided to the City, as may be reasonably necessary to cause the proper maintenance of the Leased Property if the City fails to perform its obligations hereunder. Neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.

Section 7.3. Release and Indemnification Covenants. The City hereby agrees to indemnify the Authority, the Assignee and their respective directors, officers, employees, agents, successors and assigns against all claims, losses and damages, including legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or from any work or thing done on the Leased Property by the City, (b) any breach or default on the part of the City in the performance of any of its obligations under this Lease, ( c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Property, ( d) any intentional misconduct or negligence of any sublessee of the City with respect to the Leased Property, ( e) the acquisition, construction, improvement and equipping of the Leased Property, (f) the use, presence, storage, disposal or clean-up of any Hazardous Substances or toxic wastes on the Leased Property or (g) the failure to comply with any Applicable Environmental Laws. No indemnification is made under this Section or elsewhere in this Lease for willful misconduct or gross negligence under this Lease by the Authority, the Assignee or their respective officers, agents, employees, successors or assigns.

Section 7.4. Assignment by the Authority. The Authority's rights under this Lease, including the right to receive and enforce payment of the Lease Payments to be made by the City hereunder, have been assigned to the Assignee under the Assignment Agreement. The City hereby consents to such assignment. The Authority hereby directs the City, and the City hereby agrees, to pay to the Assignee all payments payable by the City under Section 4.4 and all amounts payable by the City under Article IX. Whenever in this Lease any reference is made to the Authority and such reference concerns rights which the Authority has assigned to the Assignee, such reference shall be deemed to refer to the Assignee.

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The Authority and the Assignee may make additional assignments of their interests herein, but no such assignment will be effective as against the City unless and until the Authority or the Assignee has filed with the City written notice thereof. The City shall pay all Lease Payments hereunder under the written direction of the Authority or the assignee named in the most recent assignment or notice of assignment filed with the City. During the Term of this Lease, the City will keep a complete and accurate record of all such notices of assignment.

The Authority hereby acknowledges and agrees that (i) the interests assigned to the Assignee in the Assignment Agreement may only be assigned in whole and not in part, and (ii) any assignment shall not be effective until the Assignee shall have delivered to the City an executed letter of representations in substantially the form set forth in Appendix E hereto.

Section 7.5. Assignment and Subleasing by the City. This Lease may not be assigned by the City. With the prior written consent of the Assignee, the City may sublease the Leased Property, or any portion thereof, subject to all of the following conditions:

(a) This Lease and the obligation of the City to make Lease Payments hereunder shall remain obligations of the City.

(b) The City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Assignee a true and complete copy of such sublease.

(c) Any sublease shall be expressly subject and subordinate to this Lease.

(d) No such sublease by the City may cause the Leased Property to be used for a purpose other than an essential government function and as may be authorized under the provisions of the laws of the State of California.

Section 7. 6. Amendment Hereof This Lease may be amended with the prior written consent of the Assignee.

Section 7. 7. follows:

Tax Covenants. At all times during the Lease Term, the City covenants as

(a) Qualified Renewable Energy Facility Project. The City shall assure that all of the Available Project Proceeds will be used for a Qualified Renewable Energy Facility or purposes in accordance with section 54C(a)(l) of the Tax Code.

(b) Qualified Issuer. The City shall maintain its status as a state or local governmental body as required by Section 54C(a)(2) of the Tax Code.

(c) Designation of Lease as New Clean Renewable Energy Bonds. The City hereby designates this Lease as New Clean Renewable Energy Bonds for purposes of section 54C(a)(3) of the Tax Code.

(d) Three Year Expenditure of Proceeds on Project. The City reasonably expects to expend all of the Available Project Proceeds for a Qualified Renewable Energy Facility purpose with respect to the Project within the Expenditure Period. To the extent that less than I 00 percent (100%) of the Available Project Proceeds are expended for a Qualified Renewable Energy Facility purpose by the end of the Expenditure Period, all nonqualified bonds (as determined under

21

Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period all in accordance with the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code and as required by Sections 3 .4 and 9 .3(b ).

(e) Binding Commitment to Spend Available Project Proceeds. The City reasonably expects that, within 6 months of the Closing Date, it will enter into a binding commitment with a third party to spend at least ten percent (10%) of the Available Project Proceeds for a Qualified Renewable Energy Facility purpose with respect to the Project.

(f) Financing Capital Expenditures, No Working Capital. All Available Project Proceeds of this Lease will be spent on capital expenditures with a reasonably expected economic life of one year or more.

(g) Limitation on Issuance Costs. No proceeds of this Lease and investment earnings thereon, in an amount in excess of two percent (2%) of the proceeds of the sale of this Lease, will be used to pay costs of issuing of this Lease. If the fees of the original purchaser are retained as a discount on the purchase of this Lease, such retention shall be deemed to be an expenditure of proceeds of this Lease for said fees.

(h) Allocation of New Clean Renewable Energy Bond Volume Cap. The City has received allocations of a portion of the national New Clean Renewable Energy Bond volume cap.

(i) No Arbitrage. The City shall not take, or permit or suffer to be taken by any person or otherwise, any action with respect to the proceeds of this Lease which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of this Lease would have caused this Lease to be "arbitrage bonds" within the meaning of section 148 of the Tax Code as modified by Section 54A(d)(4) of the Tax Code, including the Treasury Regulations with respect thereto.

G) Rebate Compliance. The City shall take any and all actions necessary to assure compliance with Section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to this Lease. For purposes of this paragraph, investments of Available Project Proceeds during the Expenditure Period are deemed to comply with the requirements and limitations of Section 148 of the Tax Code.

(k) Limitation on Reserve Fund,. No fund the proceeds of which are pledged to, or are reasonably expected to be used directly or indirectly to pay, the principal or interest components of this Lease or are reserved or otherwise set aside such that there is a reasonable assurance that such amounts will be available to pay the principal or interest components of this Lease will be funded with respect to this Lease except as follows: (i) the fund is funded at a rate not more rapid than equal annual installments, (ii) such fund is funded in a manner reasonably expected to result in an amount not greater than an amount necessary to repay the issue, and (iii) the yield on the fund is not greater than the rate determined under 54A(d)(5)(B) of the Tax Code.

(1) Acquisition, Disposition and Valuation of Investments. Except as otherwise provided in following sentence, the City covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Lease, or otherwise containing proceeds of this Lease shall be acquired, disposed of, and valued (as of the date that valuation is required by the Tax Code) at Fair Market Value. Investments in funds or accounts ( or portions thereof) that are subject to a yield

22

restriction under applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) and investments in a reserve fund shall be valued at their present value (within the meaning of section 148 of the Tax Code).

(m) Prohibition on Financial Conflicts of Interest. The City hereby covenants and agrees to comply with all State of California ("State") and local law requirements governing conflicts of interest as such requirements may relate, directly or indirectly, to this Lease. The City hereby covenants and agrees to comply with any conflict of interest rules prescribed by the IRS or United States Department of the Treasury governing the appropriate Member of Congress, Federal, State, and local officials, and their spouses as such rules may apply to this Lease.

(n) Davis-Bacon Act Requirements. The City hereby covenants and agrees to comply with the wage rate requirements of Title 40, Subtitle II, Part A, Chapter 3 t Subchapter IV of the United States Code as such requirements relate to the proceeds of this Lease.

(o) Direct Pay Election. The City hereby irrevocably elects to treat the Lease as "Specified Tax Credit Bonds" within the meaning of Section 643l(f) of the Tax Code such that the City will be eligible to receive direct payment by the federal government of a refundable credit equal to the lesser of the interest payable on the Lease or 70% of the tax credit rate applicable to this Lease.

(p) Maintenance of Qualification for Lease Subsidy Payments. The City shall take all actions necessary to assure that this Lease remains New Clean Renewable Energy Bonds under Section 54C(a) of the Code and specified tax credit bonds eligible for the Lease Subsidy Payments under Section 6431 of the Code. Notwithstanding any provisions of this Section, if the City shall provide to the Authority an opinion of Bond Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required in order for the Lease to be treated specified tax credit bonds under Section 6431(±)(3) of the Code and New Clean Renewable Energy Bonds under Section 54C of the Code, the Authority may conclusively rely on such opinion in complying with the requirements of this Section, and the covenants hereunder shall be deemed to be modified to that extent.

The City shall comply with the instructions and requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full of the Lease Payments.

Section 7. 8. Environmental Covenants.

(a) Compliance with Laws; No Hazardous Substances. The City will comply with all Applicable Environmental Laws with respect to the Leased Property and will not use, store, generate, treat, transport, or dispose of any Hazardous Substance thereon or in a manner that would cause any Hazardous Substance to later flow, migrate, leak, leach, or otherwise come to rest on or in the Leased Property.

(b) In connection with its covenants provided in this Section 7.8, the City shall specifically comply with all requirements of the Asbestos Hazard Emergency Response Act (referred to as "AHERA" and constituting an Applicable Environmental Law); and performing re-inspections of Asbestos Containing Materials (as hereafter defined) at the Leased Property every three years. The City shall maintain all Asbestos Containing Materials in an intact and undamaged state and perform any demolition, renovation or other activities in accordance with all Applicable

23

Environmental Laws. As used herein, (i) the term "Asbestos Containing Materials" means material in friable fom1 containing more than one percent (I%) of the asbestiform varieties of chrysotile (serpentine), crocidolite (ricbeckite ), amosite ( cummington-itegrinerite ), anthophyllite, tremolite and antinolite; and (ii) the term "Asbestos Management Plan" means that written plan for the Leased Property relating to monitoring and maintaining all Asbestos Containing Materials used or located on the Leased Property in accordance with the Asbestos Hazard Emergency Response Act (AHERA).

( c) Notification of Assignee. The City will transmit copies of all notices, orders, or statements received from any governmental entity concerning violations or asserted violations of Applicable Environmental Laws with respect to the Leased Property and any operations conducted thereon or any conditions existing thereon to the Assignee, and the City will notify the Assignee in writing immediately of any release, discharge, spill, or deposit of any Hazardous Substances that has occurred or is occurring that in any way affects or threatens to affect the Leased Property, or the people, structures, or other property thereon, provided that no such notifications shall create any liability or obligation on the part of the Assignee.

( d) Access for Inspection. The City shall permit the Assignee, its agents, or any experts designated by the Assignee to have full access to the Leased Property during reasonable business hours for purposes of such independent investigation of compliance with all Applicable Environmental Laws, provided that the Assignee has no obligation to do so, or any liability for any failure to do so, or any liability should it do so.

Section 7.9. Financial Statements; Budgets. Within 270 days following the end of each Fiscal Year of the City during the Term of this Lease, the City shall provide the Assignee with a copy of its audited financial statements for such Fiscal Year accompanied by an unqualified opinion of the City's independent certified public accountant or auditor. Such audited financial statements shall include a balance sheet, a statement of revenues, expenses and changes in fund balances for budget and actual, a statement of cash flows, notes, schedules and any attachments to the financial statements and such other financial information as the Assignee shall reasonably request. Upon Assignee's request, the City will provide the Assignee with a copy of its annual budget and any interim updates or modifications to such budget.

ARTICLEVID

EVENTS OF DEFAULT AND REMEDIES

Section 8.1. Events of Default Defined. Any one or more of the following events constitutes an Event of Default hereunder:

(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein or to maintain insurance as specified in Article V.

(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in the preceding clause (a) of this Section and other than a failure by the City to perform any covenant contained in Section 7.7 that does not materially adversely affect the Authority and its interests, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Assignee. However, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30 day period, the Authority

24

and the Assignee shall not unreasonably withhold their consent to an extension of such time (for a period not to exceed 60 days) if corrective action is instituted by the City within such 30 day period and diligently pursued until the default is corrected.

(c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.

( d) Any representation, warranty or certification made by the City hereunder or in connection herewith shall have been incorrect or misleading when made.

( e) Any default occurs under any other agreement for borrowing money or receiving credit under which the City may be obligated as borrower, if such default consists of (i) the failure to pay any amount when due under such agreement or (ii) the failure to perform any other obligation thereunder and such failure gives the holder of such agreement the right to accelerate the amounts payable thereunder.

Section 8.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under this Lease; provided, however, that notwithstanding anything herein to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; provided, that no termination of this Lease shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise any one or more of the following remedies:

(a) Enforcement of Payments Without Termination. If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained, and the Authority may take whatever action at law or in equity that may appear necessary or desirable to collect each Lease Payment as it becomes due hereunder. The City shall reimburse the Authority for any deficiency arising out of the re-leasing or sale of the Leased Property, or, if the Authority is unable to re-lease or sell the Leased Property, then for the full amount of all Lease Payments to the end of the Term of this Lease, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Leased Property or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to enter upon and re-lease the Leased Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Leased Property, to place such property in storage or other suitable place located in Orange County, California for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by

25

any such entry upon and re-leasing of the Leased Property and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Authority to re-lease the Leased Property in the event of such re-entry without effecting a surrender of this Lease, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease irrespective of the term for which such re­leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof The City agrees to surrender and quit possession of the Leased Property upon demand of the Authority for the purpose of enabling the Leased Property to be re-let under this paragraph, and the City further waives the right to any rental obtained by the Authority in excess of the Lease Payments and hereby conveys and releases such excess to the Authority as compensation to the Authority for its services in re-leasing the Leased Property.

(b) Termination of Lease. If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease and re-lease all or any portion of the Leased Property. If the Authority terminates this Lease at its option and in the manner hereinafter provided due to a default by the City (and notwithstanding any re-entry upon the Leased Property by the Authority in any manner whatsoever or the re-leasing of the Leased Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments and Additional Payments. Any surplus received by the Authority from such re­leasing shall be applied by the Authority to Lease Payments due under this Lease. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease. The City covenants and agrees that no surrender of the Leased Property, or of the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice.

( c) Proceedings at Law or In Equity. If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder.

( d) Remedies under the Site Lease. If an Event of Default occurs and continues hereunder, the Authority may exercise its rights under the Site Lease.

Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof: but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII

26

it shall not be necessary to give any notice, other than such notice as may be required in this Article VIII or by law.

Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. If either party to this Lease defaults under any of the provisions hereof and the nondefaulting party should employ attorneys (including in-house legal counsel) or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys (including allocable costs and expenses of in-house legal counsel, if any) and such other expenses so incurred by the non defaulting party.

Section 8.5. No Additional Waiver Implied by One Waiver. If any agreement contained in this Lease is breached by either party and thereafter waived by the other party, such waiver is limited to the particular breach so waived and will not be deemed to waive any other breach hereunder.

Section 8.6. Assignee to Exercise Rights. Such rights and remedies as are given to the Authority under this Article VIII have been assigned by the Authority to the Assignee, to which assignment the City hereby consents. Such rights and remedies shall be exercised solely by the Assignee.

ARTICLE IX

PREPAYMENT OF LEASE PAYMENTS

Section 9.1. Security Deposit. Notwithstanding any other provision of this Lease, the City may on any date secure the payment of the Lease Payments in whole or in part by depositing with a trustee, escrow agent or other fiduciary selected by the City and acceptable to the Assignee an amount of cash, which shall be held in a segregated trust or escrow fund under a trust or escrow agreement that is in form and content acceptable to the Assignee, which cash so held is either (a) sufficient to pay such Lease Payments without reinvestment, including the principal and interest components thereof, in accordance with the Schedule of Lease Payments set forth in Appendix C, or (b) invested in whole or in part in noncallable Federal Securities in such amount as will, in the opinion of an independent certified public accountant (which opinion must be in form and substance, and with such an accountant, acceptable to the Assignee and addressed and delivered to the Assignee), together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient, without reinvestment of any earning or income on such amounts, to pay such Lease Payments, when due under Section 4.4 or when due on any optional prepayment date under Section 9.2(a) as the City instructs at the time of said deposit. If the City posts a security deposit under this Section with respect to all unpaid Lease Payments, and notwithstanding the provisions of Section 4.3, (a) the Term of this Lease will continue, (b) all obligations of the City under this Lease, and all security provided by this Lease for said obligations, will thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be made, all of the Lease Payments from such security deposit and its obligation provided in the next succeeding paragraph, and (c) the Authority's leasehold interest in the Leased Property will terminate on the date of said deposit automatically and without further action by the City or the Authority. The City hereby grants a first priority security interest in and lien on said security deposit and all proceeds thereof in favor of the Assignee. Said security deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with the provisions of this Lease.

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Notwithstanding anything in this Section 9.1 or otherwise in this Lease to the contrary, if the amount held in such security deposit shall at any time be insufficient (for whatever reason) to pay Lease Payments when due in full as provided in clause (a) or (b), as applicable, of the first paragraph of this Section 9.1, the City shall immediately pay to the Assignee on the applicable due date or due dates the amount of any such shortfall from funds legally available for such purpose.

Section 9.2. Optional Prepayment; Extraordinmy Optional Prepayment Upon Change in Law. (a) The City may prepay the unpaid principal components of the Lease Payments in whole or in part, on any Lease Payment Date on or after March 1, 2024, by paying a prepayment price equal to 100% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date.

(b) In the event that a Change in Law (as hereafter defined) occurs, on the day specified in the City's notice to the Authority of its exercise of the prepayment option provided under this subsection (b ), the City shall have the option to prepay all, or less than all, of the aggregate principal components of Lease Payments then unpaid from and after any Change in Law upon payment in full to the Authority of the sum of 100% of the aggregate principal components of the Lease Payment to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. "Change in Law" means legislation enacted by the Congress of the United States of America or a ruling, regulation or statement issued by the United States Department of the Treasury or the Internal Revenue Service, the effect of which (I) repeals, revokes or reduces the Lease Subsidy Payments from the United States Depa1iment of the Treasury under Section 54A or 6431 of the Tax Code (as currently in effect) with respect to this Lease or (II) imposes one or more new substantive conditions on the receipt by the City of such Lease Subsidy Payments under such Sections (as currently in effect) and such conditions are unacceptable to the City; provided, however, that a Change in Law shall not occur as a result of (I) reductions in Lease Subsidy Payments due to automatic budgetary reductions imposed by the Congress of the United States of America related to deficit reduction measures, (II) the City's failure or inability for reasons within its control to receive or delay to receive all or any portion of any Lease Subsidy Payment from the United States Department of the Treasury, or (III) the City's failure to comply with applicable laws and regulations to obtain payment of any Lease Subsidy Payment from the United States Department of the Treasury, including without limitation any offset against any Lease Subsidy Payment as a result of other liabilities of the City to the United States Depaiiment of the Treasury.

( c) The City shall give the Authority notice of its intention to exercise its option to prepay the Lease Payments under this Section 9.2 not less than 30 days in advance of the intended prepayment date.

Section 9.3. Extraordinary Mandatory Prepayment From Certain Sources Under Certain Circumstances. (a) The City shall prepay the unpaid principal components of the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds to be used for such purpose under Section 6.2, by paying a prepayment price equal to 100% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. The City shall give the Authority notice of prepayment of Lease Payments under this Section 9.3(a) not less than 30 days in advance of such prepayment date.

(b) The City shall prepay the unpaid principal components of the Lease Payments in whole or in part on any date, from and to the extent of any amounts to be used for such purpose under Section 3 .4, by paying a prepayment price equal to 101 % of the aggregate principal

28

components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. The City shall give the Authority notice of prepayment of Lease Payments under this Section 9.3(b) not less than 30 days in advance of such prepayment date.

( c) Prepayment in part of the unpaid principal components of Lease Payments as provided in this Section 9.3 shall be applied to reduce the principal components of Lease Payments in inverse order of the Lease Payment Dates.

ARTICLEX

MISCELLANEOUS

Section JO.I. Notices. Any notice, request, complaint, demand or other communication under this Lease shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or ( c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City and the Assignee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.

If to the City:

Ifto the Authority:

Ifto the Assignee:

City of Fountain Valley 10200 Slater A venue Fountain Valley, California 92708 Attention: City Manager Fax: (714) 593-4494

Fountain Valley Public Financing Authority 10200 Slater A venue Fountain Valley, California 92708 Attention: Executive Director Fax: (714) 593-4494

HASI OBS OP A LLC 1906 Towne Centre Boulevard, Suite 370 Annapolis, Maryland 21401' Attention: Legal Department Fax: (410) 571-6199

Section 10.2. Binding Effect. This Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns.

Section 10.3. Severability. If any provision of this Lease is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.

Section 10.4. Net-net-net Lease. This Lease is a "net-net-net lease" and the City hereby agrees that the Lease Payments are an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.

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Section 10.5. Further Assurances and Corrective Instruments. The Authority and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease. The City further agrees to provide such information and cooperate with the Assignee as reasonably requested by the Assignee, including, without limitation, furnishing budget and financial statements, verification of required insurance coverage, the value of the Leased Property, the status of the Project, and providing assistance with requests from rating agencies for private rating analysis; provided that such assistance shall not be inconsistent with the provisions of this Agreement and applicable law.

Section 10.6. Execution in Counterparts. This Lease may be executed in several counterparts, each of which is an original and all of which constitutes one and the same instrument.

Section 10. 7. Applicable Law. This Lease is governed by and construed in accordance with the laws of the State of California.

Section 10.8. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease.

Section 10.9. No Merger. It is the express intention of the Authority and the City that this Lease and the obligations of the parties hereunder are separate and distinct from the Site Lease and the obligations of the parties thereunder, and that during the term of the Site Lease and this Lease no merger of title or interest may occur or be deemed to occur as a result of the respective positions of the Authority and the City thereunder and hereunder.

Section 10.10. Third Party Beneficiary. The Assignee is made a party beneficiary hereunder with all rights of a third party beneficiary.

Section 10.11. Assignee as Provider of Financing Only. The Assignee is financing the acquisition of the Project. The Assignee has not been in the chain of title of the Project, does not operate, control or have possession of the Leased Property or the Project and has no control over the work performed by any vendor with respect to the Leased Property or the Project. The Assignee has no obligation with respect to the installation, operation, use, storage and maintenance of the Leased Property or the Project or any other obligations of the parties under this Agreement or the Site Lease.

(SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Authority and the City have caused this Lease/Purchase Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written.

FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY, as Lessor

-Gb By:-----------­

David Cain Treasurer

CITY OF FOUNATAlN VALLEY, as Lessee

By: David Cain Director of Finance

[Signature Page to Lease/Purchase Agreement]

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA ) ) ss.

COUNTY OF ORANGE )

On ) - J..Jo ~ :>o 17 before me, ~ .be L[ {'-, L.' ~. (~_j ' Notary Public,

personally appeared · I, d , " , who proved to me on the basis of satisfactory evidence to be ' ~rson(~ whose names(~ ·- ar-e-su cribed to the within instrument and acknowle~ to me tha(l©'srrefi:he,r executed the same i her/thei:r authorized capacity(tei)', and that by~tne-i:r signature(~on the instrument the perso~, or the entity upon behalf of which the person(-st acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal

REBECCA L. LEIFKES Notary Public • California

Orange County f Commission # 2162678 :!:

My Comm. Expires Sep 11, 2020

Site Center at Founder's Village Field Services Building Recreation Center Police Station

APPENDIXA

PROJECT SITES

Address 17969 Bushard Street 17300 Mount Hermnann Street 16400 Brookhurst Street 10200 Slater Avenue

Total

A-1

Solar System Size (kW-de) System Cost

117.5 $523,323 104.4 $469,741 339.3 $1,238,024

156.96 $491,821 861.76 $2,722,908

APPENDIXB

DESCRIPTION OF THE LEASED PROPERTY

The land and improvements thereon comprising the City's Fire Station No. 1, located at 17737 Bushard Street, Fountain Valley, California, in the City of Fountain Valley, County of Orange, State of California, and which has the following legal description:

PARCEL A:

THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, RECORDS OF SAID ORANGE COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT THE SOUTHEAST CORNER OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 30; THENCE ALONG THE EAST LINE OF SAID NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30, NORTH 0° 17' 55" WEST 143.53 FEET; THENCE SOUTH 88° 33' 21" WEST 178.40 FEET; THENCE SOUTH 1° 26' 39n EAST 143.50 FEET TO THE SOUTH LINE OF SAID NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30; THENCE ALONG SAID SOUTH LINE NORTH 88° 33' 21" EAST 175.52 FEET TO THE POINT OF BEGINNING.

PARCELB:

THE EASTERLY 175.51 FEET OF THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF TRACT NO. 4764, AS SHOWN ON A MAP RECORDED IN BOOK 175, PAGES 13 AND 14 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY, ALSO BEING A POINT IN THE NORTH LINE OF SAID SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30; THENCE EASTERLY ALONG SAID NORTH LINE OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30 491.68 FEET TO THE EAST LINE OF SAID SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30; HENCE SOUTH 0° 17' 55" EAST ALONG SAID EAST LINE A DISTANCE OF 15.63 FEET TO THE NORTHEAST CORNER OF THE LAND SHOWN ON RECORD OF SURVEY RECORDED IN BOOK 48, PAGE 43, RECORDS OF SAID COUNTY; THENCE SOUTH 87° 08' 35" WEST ALONG THE NORTH LINE OF SAID RECORD OF SURVEY 492.07 FEET, MORE OR LESS, TO THE EAST LINE OF SAID TRACT NO. 4764; THENCE NORTH 0° 17' 55" WEST ALONG SAID EAST LINE 27.76 FEET TO THE POINT OF BEGINNING.

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Pmt. Payment No. Date

2/2/2017

1 9/1/2017

2 3/1/2018

3 9/1/2018

4 3/1/2019

5 9/1/2019

6 3/1/2020

7 9/1/2020

8 3/1/2021

9 9/1/2021

10 3/1/2022

11 9/1/2022

12 3/1/2023

13 9/1/2023

14 3/1/2024

15 9/1/2024

16 3/1/2025

17 9/1/2025

18 3/1/2026

19 9/1/2026

20 3/1/2027

21 9/1/2027

22 3/1/2028

23 9/1/2028

24 3/1/2029

25 9/1/2029

26 3/1/2030

27 9/1/2030

28 3/1/2031

29 9/1/2031

30 3/1/2032

31 9/1/2032

32 3/1/2033

APPENDIXC

SCHEDULE OF LEASE PAYMENTS

Outstanding Principal Interest Balance* Portion Portion

$2,843,166.36

2,843,166.36 $73,287.35

2,807,768.70 $35,397.66 63,118.29

2,772,371.02 35,397.68 62,332.47

2,721,664.18 50,706.84 61,546.64

2,670,957.33 50,706.85 60,420.94

2,617,682.78 53,274.55 59,295.25

2,564,408.22 53,274.56 58,112.56

2,508,478.00 55,930.22 56,929.86

2,452,547.77 55,930.23 55,688.21

2,393,871.25 58,676.52 54,446.56

2,335,194.73 58,676.52 53,143.94

2,273,678.55 61,516.18 51,841.32

2,212,162.38 61,516.17 50,475.66

2,147,710.39 64,451.99 49,110.00

2,083,258.39 64,452.00 47,679.17

2,015,771.52 67,486.87 46,248.34

1,948,284.64 67,486.88 44,750.13

1,877,660.85 70,623.79 43,251.92

1,807,037.06 70,623.79 41,684.07

1,733, 171.27 73,865.79 40, I 16.22

1,659,305.47 73,865.80 38,476.40

1,582,089.43 77,216.04 36,836.58

1,504,873.39 77,216.04 35,122.39

1,424,195.63 80,677.76 33,408.19

1,343,517.87 80,677.76 31,617.14

1,259,263.59 84,254.28 29,826.10

1,175,009.32 84,254.27 27,955.65

1,087,060.31 87,949.01 26,085.21

999,111.30 87,949.01 24,132.74

907,345.81 91,765.49 22,180.27

815,580.33 91,765.48 20,143.08

719,873.03 95,707.30 18,105.88

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Total Lease Subsidy Lease Payment

Paiment Amount

$73,287.35 $51,647.78

98,515.95 44,481.34

97,730.15 43,927.54

112,253.48 43,373.74

111,127.79 42,580.44

112,569.80 41,787.13

111,387.12 40,953.65

112,860.08 40,120.17

111,618.44 39,245.14

113,123.08 38,370.11

111,820.46 37,452.12

113,357.50 36,534.12

111,991.83 35,571.70

113,561.99 34,609.28

112,131.17 33,600.93

113,735.21 32,592.58

112,237.01 31,536.75

113,875.71 30,480.91

112,307.86 29,376.00

113,982.01 28,271.09

I 12,342.20 27,115.46

114,052.62 25,959.83

112,338.43 24,751.79

114,085.95 23,543.74

112,294.90 22,281.54

114,080.38 21,019.34

112,209.92 19,701.18

114,034.22 18,383.02

112,081.75 17,007.06

113,945.76 15,631.10

111,908.56 14,195.43

113,813.18 12,759.75

Total Lease Subsidy Pmt. Payment Outstanding Principal Interest Lease Payment No. Date Balance* Portion Portion Parment Amount 33 9/1/2033 624,165.71 95,707.32 15,981.18 111,688.50 11,262.41

34 3/1/2034 524,387.50 99,778.21 13,856.48 113,634.69 9,765.07 35 9/1/2034 424,609.29 99,778.21 11,641.40 111,419.61 8,204.04 36 3/1/2035 320,627.28 103,982.01 9,426.33 113,408.34 6,643.01 37 9/1/2035 216,645.27 103,982.01 7,117.93 111,099.94 5,016.21

38 3/1/2036 108,322.64 108,322.63 4,809.52 113,132.15 3,389.42

39 9/1/2036 (0.002 108,322.64 2,404.76 110,727.40 1,694.71

Total $2,843,166.36 $1,482,606.13 $4,325,772.49 $1,044,836.63

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APPENDIXD

LEASE SUPPLEMENT FORM

There is hereby subjected to the terms of that certain Lease/Purchase Agreement, dated as of February 1, 2017, by and between the Fountain Valley Public Financing Authority (the "Lessor"), and the City of Fountain Valley (the "City") the following items which shall comprise a portion of the Property, as defined therein:

Description of Substituted Property

[Insert Description]

Cost

I, the City Representative, hereby certify that:

(1) the fair rental value and the useful life of the above-described portion of the Property at least equals the fair rental value and the useful life of the portion of the Property for which it was substituted;

(2) the above-described portion of the Property will be used by the City for authorized public purposes and can be leased under the provisions of the Lease;

(3) the above-described portion of the Property is currently owned by the City; and

(4) the above-described portion of the Property will be acquired, constructed or improved no later than the date on which the portion of the Property for which it was substituted would have been acquired, constructed or improved.

I, the City Representative, hereby certify that the portion of the Property being acquired, constructed or improved will be owned by the Lessor free and clear of all liens or claims of others, except for the lien of the Lease and the rights of the City under the Lease, and that the Lessor will not encumber title to the substituted portion of the Property while the Lease remains outstanding.

CITY OF FOUNTAIN VALLEY

By: [signature] Authorized Representative

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APPENDIXE

FORM OF ASSIGNEE LETTER OF REPRESENTATIONS

City of Fountain Valley 100 Slater A venue Fountain Valley, California 92708

[Initial Purchaser Only]: [Raymond James & Associates, Inc. One Embarcadero Center, Suite 650 San Francisco, CA 94111]

Re: Assignment of Lease/Purchase Agreement dated as of February 1, 2017, between the Fountain Valley Public Financing Authority and the City of Fountain Valley

Dear Sir/Madam:

The rights of the Fountain Valley Public Financing Authority (the "Authority") under the Site Lease dated as of February 1, 2017, between the City of Fountain Valley (the "City") and the Authority, and the Lease/Purchase Agreement dated as of February 1, 2017 (the "Lease"), between the Authority and the City, [ originally assigned to ____________ ,] including the right to receive the Lease Payments, Additional Payments and prepayments described in the Lease (collectively, the "Assigned Property"), are being assigned to the undersigned (the "Assignee"). The Lease requires assignees of the Authority's rights under the Lease to complete, execute, and deliver to the City a letter of representations (a "Letter of Representations"), in substantially the form hereof, upon or prior to taking ownership or control of the Assigned Property. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Lease.

The Assignee hereby certifies, represents, warrants, acknowledges and covenants to the City as follows:

(1) The Assignee is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated or formed and is authorized to accept the assignment of the Assigned Property.

(2) The Assignee (MARK APPROPRIATELY):

[__] is a "qualified institutional buyer" ( a "Qualified Institutional Buyer") within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended (the "Securities Act"), or

is an "accredited investor" as described in Section 501(a)(l), (2), (3) or (7) of Regulation D promulgated under the Securities Act (an "Institutional Accredited Investor").

(3) The Assignee has sufficient knowledge and experience in financial and business matters, including the acquisition and ownership of municipal obligations similar to the Assigned Property, to be capable of evaluating the merits and risks of its

E-1

accepting the assignment of and retaining ownership of the Assigned Property. The Assignee is able to bear the economic risks of such a financial transaction.

(4) The Assignee recognizes that the ownership of the Assigned Property involves significant risks, that there is no established market for the Assigned Property, that none is likely to develop, and, accordingly, that the Assignee must bear the economic risk ofretaining ownership of the Assigned Property for an indefinite period of time.

(5) The Assignee understands and acknowledges that, under the provisions of the Lease, the Assigned Property may be held in whole only and is subject to the transfer limitations described herein, in the Lease, and in the Assignment Agreement.

(6) The Assignee understands and agrees that it may transfer the Assigned Property in whole, and not simply a portion thereof, only to an institution that (a) is either (i) a Qualified Institutional Buyer that is purchasing such Assigned Property for not more than one account, for its own account and not with a view to distributing such Assigned Prope1iy, or (ii) an Institutional Accredited Investor that is purchasing such Assigned Property for not more than one account, for its own account and not with a view to distributing such Assigned Property, and (b) only if such Qualified Institutional Buyer or Institutional Accredited Investor delivers to the City a completed and duly executed Letter of Representations substantially in the form hereof, and (c) otherwise complies in all respects with the provisions of the Lease and the Assignment Agreement regarding such transfer.

(7) The Assignee is not relying upon the City or its affiliates, agents, or employees for advice as to the merits and risks of acquiring the Assigned Property. The Assignee has sought such accounting, legal, and tax advice as it has considered necessary to make an informed decision concerning its acquisition of the Assigned Property.

(8) The Assignee has conducted its own independent examination of, and has had an opportunity to ask questions and receive answers concerning, the City, the Assigned Property and the security therefor, and the transactions and documents related to or contemplated by the foregoing.

(9) The Assignee has been furnished with, or given aeeess to, all documents and information that the Assignee has requested regarding the City, the Property, the Assigned Property and the security therefor, and the transactions and documents related to or contemplated by the foregoing, and all matters related thereto.

(10) The Assignee understands and agrees that the offering and sale of the Assigned Property to the initial purchaser were exempt from Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, pursuant to Section ( d) of said Rule and that no offering document or prospectus was delivered by the City in connection with such offering and sale.

(11) The person executing this letter on behalf of the Assignee is duly authorized to do so on the Assignee's behalf.

E-2

[Initial Purchaser Only]:

[(12) The Assignee is not purchasing the Assigned Property for more than one account, is purchasing the Assigned Property for its own account, and is not purchasing the Assigned Property with a view to distributing, transferring or reselling the Assigned Property. The Assignee intends to hold and book the Assigned Property as a loan in its loan portfolio.

(13) The Assignee is a lender that regularly extends credit by acquiring loans in the form of state and local government obligations such as the Lease in the normal course of its business.]

IN WITNESS WHEREOF, the Assignee has executed this Letter of Representations as of the date set forth below.

Dated : ____ , 20_ Firm Name:

By:

Name:

Title:

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CERTIFICATE OF ACCEPTANCE OF LEASE/PURCHASE AGREEMENT

This is to certify that the interest in real property conveyed by the Lease/Purchase Agreement, dated as of February 1, 2017, between Fountain Valley Public Financing Authority, as lessor, and the City of Fountain Valley, as lessee (the "City"), is hereby accepted by the undersigned officer on behalf of the City pursuant to the authority conferred by duly adopted resolutions of the City Council of the City, and the City consents to recordation thereof by its duly authorized officer.

Dated: January 26, 2017

CITY OF FOUNTAIN VALLEY, as Lessee

~

By:-----------­David Cain Director of Finance

WCSR 38264710v4

LEASE/PURCHASE AGREEMENT

Dated as of February 1, 2017

between the

FOUNTAIN VALLEY PUBLIC FlNANClNG AUTHORITY, as Lessor

and the

CITY OF FOUNTAIN VALLEY, as Lessee

LEASE/PURCHASE AGREEMENT

This LEASE/PURCHASE AGREEMENT (this "Lease"), dated as of February I, 2017, is between the FOUNTAIN VALLEY PUBLIC FINANCING AUTHORITY, a joint exercise of powers entity duly organized and existing under and by virtue of the laws of the State of California (the "Authority"), as lessor, and the CITY OF FOUNTAIN VALLEY, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"), as lessee.

BACKGROUND:

1. In order to finance the acquisition, construction and installation of solar photovoltaic systems at the sites identified on Appendix A attached hereto and made a part hereof ( collectively, the "Project"), the City has agreed to lease the real property consisting of the land together with all buildings, facilities and other improvements located thereon comprising the City's Fire Station No. I, as such real property is described more fully in Appendix B attached hereto and made a part hereof (the "Leased Property"), to the Authority by entering into a Site Lease dated as of February 1, 2017 (the "Site Lease"), which has been recorded concurrently herewith;

2. The Authority has agreed to assist the City with such financing by entering into this Lease, pursuant to which the Authority will sublease the Leased Property back to the City and the City will be obligated to make lease payments to the Authority;

3. In order to raise the funds needed for the financing, the Authority has assigned certain of its rights under this Lease and the Site Lease, including the right to receive and enforce payment of the lease payments that are payable by the City hereunder, to HASl OBS OP A LLC, a Maryland limited liability company, under an Assignment Agreement dated as of February I, 2017 (the "Assignment Agreement"), which has been recorded concurrently herewith; and

4. The City is authorized to enter into a lease-leaseback arrangement with the Authority to provide financing for the Project under the laws of the State of California.

AGREEMENT:

In consideration of the foregoing and the material covenants hereinafter contained, the City and the Authority formally covenant, agree and bind themselves as follows:

ARTICLE I

DEFINITIONS; RULES OF INTERPRETATION

Section I.I. Definitions. All terms defined in this Section 1.1 have the meanings herein specified for all purposes of this Lease.

"Additional Payments" means any and all amounts payable by the City hereunder ( other than Lease Payments).

"Applicable Environmental Laws" means and shall include, but shall not be limited to, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA "), 42 USC

2

Sections 9601 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 USC Sections 6901 et seq.; the California Hazardous Waste Control Law ("HWCL"), California Health & Safety Code Sections 25100 ct seq.; the Hazardous Substance Account Act ("HSAA"), California Health & Safety Code Sections 25300 et seq.; the Porter-Cologne Water Quality Control Act (the "Portcr­Colognc Act"), California Water Code Sections 1300 et seq.; the Air Resources Act, California Health & Safety Code Sections 3900 et seq.; the Safe Drinking Water & Toxic Enforcement Act, California Health & Safety Code Sections 25249.5 et seq.; and the regulations under each thereof; and any other local, state, and/or federal laws or regulations, whether currently in existence or hereafter enacted, that govern:

(a) the existence, cleanup, and/or remedy of contamination on property;

(b) the protection of the environment from spilled, deposited, or otherwise emplaced contamination;

(c) the control of hazardous wastes; or

(d) the use, generation, transpo1t, treatment, removal, or recovery of Hazardous Substances, including building materials.

"Assignee" means IIASI OBS OP A LLC, as assignee of certain rights of the Authority hereunder, its successors and assigns.

"Assignment Agreemenf' means the Assignment Agreement dated as of February I, 2017, between the Authority, as assignor, and the Assignee, as assignee, as originally executed or as thereafter amended under any duly authorized and executed amendments thereto.

"Authority" means the Fountain Valley Public Financing Authority, a joint exercise of powers entity organized under the laws of the State of California.

"Available Project Proceeds" means (a) the proceeds from the assignment and transfer of certain rights of the Authority under this Lease and the Site Lease to the Assignee pursuant to the Assignment Agreement, less (b) Costs of Issuance (not exceeding 2% of the proceeds of such assignment and transfer) plus ( c) investment earnings on the difference between (a) - (b ).

"Bond Counsel" means Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, or any other attorney or finn of attorneys nationally recognized for expertise in municipal finance matters including tax matters related thereto.

"Business Day" means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State of California.

"City" means the City of Fountain Valley, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California.

"Closing Date" means the date of execution and delivery of this Lease by the parties hereto, being February 2, 2017.

3

"Costs of I~suance" means the costs incurred in connection with the execution and delivery of this Lease, the Site Lease and the Assignment Agreement, including counsel fees, fees and expenses of the placement agent, and similar costs, fees and expenses.

"Event ofD~fault" means any of the events of default as defined in Section 8.1.

"Expenditure Period' means the "expenditure period" defined in Section 54A(d)(2)(B)(ii) of the Tax Code and consists of the period beginning on the Closing Date and ending on the later of the date which is three years after the Closing Date or such later date, if any, as permitted by the Internal Revenue Service in response to a request to extend the Expenditure Period.

"Facilities" means all buildings and other improvements at any time situated on the Leased Property.

"Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Sccurity--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment. To the extent required by the Regulations, the term "investment" will include a hedge.

"Federal Securities" means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury), or obligations the timely payment of principal of and interest on which arc directly guaranteed by the United States of America.

"Fiscal Year" means each twelve-month period during the Tenn of this Lease conunencing on July 1 in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period.

"Hazardous Substance" means any substance that shall, at any time, be listed as "hazardous" or "toxic" in any Applicable Environmental Law or that has been or shall be determined at any time by any agency or court to be a ha;,:ardous or toxic substance regulated under Applicable Environmental Laws; and also means, without limitation, raw materials, building components, the products of any manufacturing, or other activities on the facilities, wastes, petroleum, and source, special nuclear, or by-product material as defined by the Atomic Energy Act of 1954, as amended (42 USC Sections 3011 et seq.).

4

"Lease" means this Lease/Purchase Agreement dated as of February I, 2017, between the Authority, as lessor, and the City, as lessee, as originally executed or as thereafter amended under any duly authorized and executed amendments hereto.

"Lease Payment" means all payments required to be paid by the City under Section 4.4, including any prepayment thereof under Section 9.2 or 9.3.

"Lease Payment Date" means March I and September I in each year, commencing March I, 2018, and continuing to and including the date on which the Lease Payments are paid in full.

"Lease Subsidy Payments" means, with respect to this Lease and the Lease Payments, the amounts which arc payable by the Federal government under Section 6431 of the Tax Code, which the City has irrevocably elected to receive under Section 6431 (t)(3) of the Tax Code.

"Leased Property" means the real property which is more particularly described in Appendix B. From and after the date of any substitution of property under Section 4.7 or release of property under Section 4.8, the term "Leased Property" means the real property which remains subject to this Lease following such substitution or release.

"Net Proceed~" means amounts derived from any policy of casualty insurance or title insurance with respect to the Leased Property, or the proceeds of any taking of the Leased Property or any portion thereof in eminent domain proceedings (including sale under threat of such proceedings), to the extent remaining after payment therefrom of all expenses incurred in the collection and administration thereof:

"Permitted Encumbrances" means, as of any time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under Section 5.1 of this Lease; (b) the Site Lease, this Lease and the Assignment Agreement; (c) any right or claim of any mechanic, laborer, matcrialman, supplier or vendor not filed or perfected in the manner prescribed by law; (d) the exceptions disclosed in the title insurance policy required by Section 5.7 with respect to the Leased Property issued as of the Closing Date; and (e) any easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record and which the City certifies in writing will not materially impair the use of the Leased Property for its intended purposes.

"Project" means the acquisition, construction and installation of solar photovoltaic systems at the sites identified on Appendix A.

"Proiect Costs" means, with respect to the Project, all costs of the acquisition, construction and installation thereof which are paid from proceeds of this Lease and the Assignment Agreement, including but not limited to:

(a) all costs required to be paid to any person under the tenns of any agreement for or relating to the Project;

(b) obligations incmTcd for labor and materials in connection with the Project;

( c) the cost of perfo1mance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect in connection with the Project;

5

(d) all costs of engineering, architectural services and other preliminary investigation expenses, including the actual out of pocket costs for site investigations, surveys, hazardous materials investigations, test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising construction, as well as for the performance of all other duties required by or consequent to the Project; and

(e) any sums required to reimburse the City for advances made for any of the above items or for any other costs incurred and for work done, including but not limited to administrative costs of the City, which are properly chargeable to the Project.

"Qualified Renewable Energy Facility Project" means capital expenditures incurred by the City within the meaning of Section 54C( d)(l) of the Tax Code for any qualified facility determined under Section 45(d) of the Tax Code (without regard to paragraphs (8) and (10) thereof), including ( among others) solar energy facilities.

"Rental Period' means, for each Lease Payment Date, the period from the preceding March 1 or September 1 to (and including) such September 1 or March 1, respectively; provided that the first Rental Period begins on the Closing Date and ends on March 1, 2018.

"Site Lease" is defined in the preambles hereto.

"Tax Certificate" means that certain Tax Certificate dated the Closing Date concerning certain matters pertaining to the use and investment of proceeds of the Lease executed by the City and the Authority on the date of issuance thereof, including any and all exhibits attached thereto.

"Tax Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code.

"Term of this Lease" or "Term" means the time during which this Lease is in effect, as provided in Section 4.3; provided that in no event shall the term of this Lease exceed the maximum term established by the Secretary of the Treasury that is applicable to this Lease.

Section 1.2. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate.

(b) Headings of articles and sections herein and the table of contents hereof arc solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.

( c) All references herein to "Articles," "Sections" and other subdivisions arc to the corresponding Articles, Sections or subdivisions of this Lease; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or subdivision hereof.

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ARTICLE II

COVENANTS, REPRESENTATIONS AND WARRANTIES

Section 2.1. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Authority as of the date of the execution and delivery of this Lease:

(a) Due Organization and Existence. The City is a municipal corporation and general law city organized and validly existing under and by virtue of the Constitution and laws of the State of California, has full legal right, power and authority under the laws of the State of California to enter into the Site Lease and this Lease and to carry out and consummate all transactions contemplated hereby, and by proper action the City has duly authorized the execution and delivery of the Site Lease and this Lease.

(b) Due Execution. The representatives of the City executing the Site Lease and this Lease have been fully authorized to execute the same pursuant to official action duly adopted by the City Council of the City.

(c) Valid, Binding and Enforceable Obligations. The Site Lease and this Lease have each been duly authorized, executed and delivered by the City and each constitutes the legal, valid and binding agreement of the City enforceable against the City in accordance with its tenns.

(d) No Conflicts. The execution and delivery of the Site Lease and this Lease, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease and this Lease or the financial condition, assets, properties or operations of the City.

( e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery by the City of the Site Lease and this Lease, or the consummation of any transaction therein or herein contemplated, except as have been obtained or made and as are in full force and effect, or except as would not materially adversely affect the transactions contemplated hereby.

(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated

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by or the validity of the Site Lease or this Lease or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease or this Lease, or the financial condition, assets, properties or operations of the City.

(g) Essential Purpose. The Leased Property and the financing of the Project pursuant to this Lease and the Assignment Agreement are essential to the City's efficient and economic operation, serve an essential governmental function of the City and are in the best interests of the City and the City does not expect the need for the Leased Property and the Project to diminish during the term of this Lease Agreement.

(h) Budget. The obligations of the City under this Lease, including without limitation the obligation to make Lease Payments, are obligations payable from the City's general fund budget.

(i) Available Funds. The City has funds available for the payment of Lease Payments due during the current Fiscal Year and reasonably believes that sufficient funds can be obtained to make all Lease Payments and payments of other amounts required to be paid hereunder.

(j) Allocation. The City has received allocation of a portion of the new clean renewable energy bond volume cap in the aggregate amount of $3,000,000 and documentation with respect to such allocation has been provided for inclusion in the transcript for this Lease. The City represents that the Project qualifies as a Qualified Renewable Energy Facility Project.

(k) Insured Value. The Leased Property has an insured real property replacement value of at least $5,389,684.

(I) The City is the fee owner of the Leased Properly and has good and marketable title thereto, and there exists no mortgage, pledge, lien, security interest, charge or other encumbrance of any nature whatsoever on or with respect to the Leased Property other than Permitted Encumbrances.

Section 2.2. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the City as of the date of the execution and delivery of this Lease:

(a) Due Organization and Existence. The Authority is a joint exercise of powers entity duly organized and existing under the laws of the State of California, has full legal right, power and authority to enter into the Site Lease, this Lease and the Assignment Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the Authority has duly authorized the execution and delivery of the Site Lease, this Lease and the Assignment Agreement.

(b) Due Execution. The representatives of the Authority executing the Site Lease, this Lease and the Assignment Agreement arc fully authorized to execute the same under official action taken by the Board of Directors of the Authority.

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(c) Valid, Binding and Enforceable Obligations. The Site Lease, this Lease and the Assignment Agreement have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms.

( d) No Conflicts. The execution and delivery of the Site Lease, this Lease and the Assignment Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease, this Lease or the Assignment Agreement or the financial condition, assets, properties or operations of the Authority.

(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery by the Authority of the Site Lease., this Lease or the Assignment Agreement, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect, or except as would not materially adversely affect the transactions contemplated hereby.

(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Site Lease, this Lease or the Assignment Agreement, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease, this Lease or the Assignment Agreement or the financial condition, assets, properties or operations of the Authority.

ARTICLE Ill

DEPOSIT AND APPLICATION OF FUNDS

Section 3.1. Deposit of and Application of Funds. As provided in the Assignment Agreement, the proceeds therefrom in the amount of $2,843,166.36 will be deposited in an account specified in writing by the City and applied to pay the Project Costs and Costs of Issuance as provided herein.

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Section 3.2. Appointment of City as Agent of Authority. The Authority hereby appoints the City as its agent to carry out all phases of the Project under and in accordance with the provisions hereof. The City hereby accepts its appointment as agent of the Authority and assumes all rights, liabilities, duties and responsibilities of the Authority regarding the Project. The City, as agent of the Authority hereunder, will enter into, administer and enforce all purchase orders, energy services contracts or other contracts relating to the Project. All contracts for, and all work relating to, the Project arc subject to all applicable provisions of law relating to the acquisition, construction, improvement, and equipping of like facilities, equipment and property by the City.

Section 3.3. Acquisition, Construction and Installation of the Project. As agent of the Authority, the City hereby agrees with due diligence to supervise and provide for, or cause to be supervised and provided for, the acquisition, construction and installation of the Project in accordance with the plans and specifications, purchase orders, construction contracts, energy services contracts and other documents relating thereto and approved by the City under all applicable requirements of law.

Section 3.4. Payment of Project Costs; Mandatory Prepayment Ji-om Unspent Project Proceeds. Proceeds of this Lease and the Assignment Agreement on deposit with the City may be expended for the payment of Project Costs to and including the earlier of (i) the date on which the City determines that the Project is completed and accepted by the City for all purposes of this Lease or (ii) the 90th day following the later of February I, 2020 or, if the City has obtained an extension for the expenditure of proceeds in accordance with Section 54A(d)(2) of the Tax Code, the close of such extended period. All remaining proceeds as of the earlier of such dates shall be applied by the City to prepay the unpaid principal component of Lease Payments in whole or in part on the tenns and conditions (including prepayment price) as provided in this Section 3.4 and in Section 9.3(b).

(a) In connection with any prepayment pursuant to subsection (a) of this Section 3.4 and Section 9.3(b), the City shall pay any prepayment premium and the interest portion of Lease Payments accrued to the prepayment date on such principal portion to be prepaid from funds legally available to the City for that purpose, but not from Available Project Proceeds.

ARTICLE IV

LEASE OF LEASED PROPERTY; LEASE PAYMENTS

Section 4.1. Lease of Leased Property hy Authority to City. For and in consideration of the application by the Authority of funds in accordance with Section 3. l, the City has leased the Leased Property to the Authority under the Site Lease. For and in consideration of the Lease Payments to be made by the City hereunder, the Authority hereby leases the Leased Property to the City and the City hereby leases the Leased Property from the Authority, pursuant to this Lease upon the terms and provisions hereof:

Section 4. 2. [Reserved].

Section 4.3. Term. The Term of this Lease commences on the Closing Date and ends on the date on which all of the Lease Payments have been paid in full. In the event the obligation of the City to pay Lease Payments is abated for any period under Section 6.3, the tenn of this Lease shall extend until such time as all Lease Payments set forth on Appendix C hereto have been paid in full, provided that the te1m of this Lease shall not extend more than ten years following the last Lease

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Payment Date shown on Appendix C; and provided further, however, that in no event shall any such extension result in the Lease Term exceeding the maximum term established by the Secretary of the Treasury that is applicable to this Lease.

Section 4.4. Lease Payments; Lease Subsidy Payments.

(a) Obligation to Pay. Subject to the provisions of Section 6.3 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Appendix C attached hereto (including any supplements thereto) and by this reference incorporated herein, to be due and payable in immediately available funds on each of the respective Lease Payment Dales specified in Appendix C. The Lease Payments payable in any Rental Period with respect to the Leased Property shall be for the use of the Leased Property during such Rental Period. The interest components of the Lease Payments have been calculated based on an interest rate of 4.44% per annum, on the basis of a 360 day year of twelve 30 day months. The City's obligation to pay Lease Payments in accordance with this Section 4.4(a), subject to the provisions of Section 6.3, shall be absolute and unconditional in all events without diminution, deduction, set-off or defense for any reason, including (without limitation) the failure or inability (for whatever reason) of the City to receive ( or delay in receipt of) all or any portion of the Lease Subsidy Payments, the availability to the City of energy from sources other than the Project, the availability of any energy savings attributable to the Project, or the nonpayment of any amounts payable by any vendor pursuant to any vendor agreement related to the Project. Over and above the Lease Payments, the City shall pay Additional Payments when the same shall become due.

(b) Effect of Prepayment. If the City prepays all Lease Payments in full under Section 9.2 or 9.3, the City's obligations under this Section will thereupon cease and terminate. If the City prepays the Lease Payments in part but not in whole under Section 9.3, the principal components of the remaining Lease Payments will be reduced in inverse order of maturity as provided in Section 9.3(c) and the interest component of each remaining Lease Payment will be reduced on a pro rata basis.

( c) Rate on Overdue Payments. If the City fails to make any of the payments required in this Section 4.4, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment, at the rate of 7.44% per annum.

(d) Fair Rental Value. The Lease Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and will be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy, and the continued quiet use and enjoyment, of the Leased Property during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments are not in excess of the fair rental value of the Leased Property. In making this dete1mination, consideration has been given to the estimated fair market value of the Leased Property, the replacement costs of the Leased Property, the costs of financing the deposit required to be made under Section 3.1, other obligations of the City and the Authority under this Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accme to the City and the general public.

(e) Source of Payments; Budget and Appropriation. The Lease Payments are payable from any source of legally available funds of the City, subject to the provisions of Sections

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6.3 and 9.1. The City covenants to take such action as may be necessary to include all Lease Payments in each of its annual budgets during the Term of this Lease and to make the necessary annual appropriations for all such Lease Payments. The covenants on the part of the City herein contained constitute duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the City.

(±) Filing of Forms To Receive Lease Subsidy Payments. The City will, within the 30-day period beginning on the date that is 90 days before the next Lease Payment Date, file, or cause to be filed, Form 8038-CP or any successor fonn designated by the federal government, requesting payment of the Lease Subsidy Payments with respect to the interest component of the next Lease Payment.

Section 4.5. Quiet Enjoyment. Throughout the Term of this Lease, the Authority will provide the City with quiet use and enjoyment of the Leased Property and the City will peaceably and quietly have and hold and enjoy the Leased Property, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease. The Authority will, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the rigbt to inspect the Leased Property as provided in Section 7 .2.

Section 4.6. Title. At all times during the Term of this Lease, the Authority shall hold leasehold title to the Leased Property, including all additions which comprise fixtures, repairs, replacements or modifications thereto, subject to Permitted Encumbrances and subject to the provisions of Section 7.2.

Upon the termination of this Lease (other than under Section 8.2(b) hereof), all rigbt, title and interest of the Authority in and to the Leased Property shall be transferred to and vested in the City. Upon the payment in full of all Lease Payments allocable to the Leased Property, or upon the deposit by the City of security for such Lease Payments as provided in Section 9.1, all right, title and interest of the Authority in and to the Leased Property shall be transferred to and vested in the City. The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer oftitle.

Section 4. 7. Substitution of Property. With the prior written consent of the Assignee, the City may substitute other land, facilities or improvements (the "Substitute Property") for the Leased Property or any portion thereof (the "Former Property"), by providing the Assignee with a supplement to this Lease substantially in the form attached as Appendix D hereto, provided that the City has satisfied all of the following requirements, which arc hereby declared to be conditions precedent to such substitution:

(a) The City has certified to the Authority and the Assignee that no Event of Default has occurred and is continuing.

(b) The City has filed with the Authority and the Assignee, and caused to be recorded in the Office of the Orange County Registrar-Recorder, sufficient memorialization of an amended Appendix B to this Lease which adds thereto a description of such Substitute Property and

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deletes therefrom the description of such Former Properly (together with corresponding supplements to the Site Lease and Assignment Agreement in form and substance satisfactory to the Assignee).

(c) The City has obtained a CLTA policy of title insurance insuring the City's leasehold estate hereunder in the Substitute Property, in an amount at least equal to the aggregate unpaid principal components of the Lease Payments and naming the Assignee as an additional insured.

( d) The City has certified in writing to the Authority and the Assignee that such Substitute Property is essential to the City's efficient and economic operation, serves an essential governmental function of the City and constitutes property which the City is permitted to lease under the laws of the State of California.

( e) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made herein. No event giving rise to an abatement of Lease Payments has occurred or is continuing with respect to the Substitute Property.

(f) The City has certified in writing to the Authority and the Assignee that the estimated value and the estimated fair rental value of the Substitute Property arc at least equal to the aggregate principal amount of the outstanding Lease Payments and the annual Lease Payments, respectively, and that the useful life of the Substitute Property extends to or beyond March l, 2036; and, if requested by the Assignee, the City has delivered to the Assignee valuations prepared or confirmed by an independent third party, which might include, without limitation, an appraisal or a valuation by an insurance company.

(g) The Assignee has received assurances to its satisfaction that the Substitute Properly is in compliance with Applicable Environmental Laws.

If at any time the Facilities are damaged or destroyed by earthquake or other uninsured casualty for which rental interruption insurance is not available, or if the use by the City of the Leased Property is unavailable due to Applicable Environmental Laws or the presence of a Hazardous Substance and rental interruption insurance is not available, the City shall, promptly after the occurrence of such event, substitute property for the Facilities under this Section 4.7; provided, however, that nothing in this paragraph shall supersede the provisions of Article VI.

Upon written consent of the Assignee and the satisfaction of all conditions precedent to any substitution under this Section 4.7, the Term of this Lease will thereupon end as to the Former Property and commence as to the Substitute Property. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Former Property.

If for any reason the City is unable to so substitute real property for the Leased Prope1ty with an estimated value and an estimated fair rental value at least equal to the remaining Lease Payments hereunder, the City shall use its best efforts to obtain other financing in an amount necessary to prepay the principal component of the Lease Payments not supported by the fair rental value of the substituted property, if any.

In the event the City is unable to implement the actions described above in this Section 4.7, the City and the Authority hereby agree that the obligations evidenced by this Lease shall be the

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senior encumbrance on the Leased Property and any future encumbrance, including without limitation any lease, mortgage, deed of trust or security interest, shall be subordinate to this Lease and there shall be no payments in any Rental Period on the obligations evidenced or secured thereby until all of the scheduled Lease Payments set forth on Appendix C hereto for such Rental Period have been paid in full.

Section 4.8. Release of Properly. With the prior written consent of the Assignee, the City may release any portion of the Leased Property from this Lease (the "Released Property") provided that the City has satisfied all of the following requirements, which arc hereby declared to be conditions precedent to such release:

(a) The City has certified to the Authority and the Assignee that no Event of Default has occurred and is continuing.

(b) The City has filed with the Authority and the Assignee, and caused to be recorded in the Office of the Orange County Registrar-Recorder, sufficient memorialization of an amendment hereof which removes the Released Property from this Lease.

( c) The City has certified in writing to the Authority and the Assignee that the value of the property which remains subject to this Lease following such release is at least equal to the aggregate unpaid principal components of the Lease Payments, and the fair rental value of the property which remains subject to this Lease following such release is at least equal to the Lease Payments thereafter coming due and payable hereunder. If requested by the Assignee, the City has delivered to the Assignee valuations prepared or confirmed by an independent third party, which might include, without limitation, an appraisal or a valuation by an insurance company.

Upon written consent of the Assignee and the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Released Property.

ARTICLEV

MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS

Section 5.I Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this Lease, as part of the consideration for the rental of the Leased Property, all improvement, repair and maintenance of the Leased Property are the sole responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Leased Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof on the part of the City or any assignee. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Leased Property, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933( 4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of this Lease.

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The City will pay or cause lo be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Leased Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City is obligated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due.

The City may, al the City's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority shall notify the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Leased Property will be materially endangered or the Leased Property or any part thereof will be subject to loss or forfeiture, in which event the City will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority.

Section 5.2. Modification of Leased Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Leased Property or any portion thereof. All additions, modifications and improvements to the Leased Property will thereafter comprise part of the Leased Property and become suliject to the provisions of this Lease. Such additions, modifications and improvements may not in any way damage the Leased Property, or cause the Leased Properly to be used for purposes other than those authorized under the provisions of State and federal law; and the Leased Prope11y, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other I ien to be established or remain against the Leased Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City under this Section; provided that if any such lien is established and the City first notifies the Authority of the City's intention to do so, the City may in good faith contest any lien filed or established against the Leased Prope11y, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and al the expense of the City.

Section 5.3. Public Liability Insurance. The City shall maintain or cause to be maintained throughout the Term of this Lease a standard comprehensive general insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents, employees and assigns. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Such policy or policies must provide coverage of at least $1,000,000 per occurrence, $3,000,000 in aggregate and $5,000,000 excess liability and may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as pal1 of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City will apply the

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proceeds of such liability insurance toward extinguishment or satisfaction of the liability with respect to which such proceeds have been paid.

Section 5.4. Casualty Insurance; Flood Coverage.

(a) Requirement to Maintain Casualty Insurance. The City will procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, casualty insurance against loss or damage to the Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance. Said extended coverage insurance shall cover loss or damage by fire, explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, including earthquake coverage if such coverage is available at commercially reasonable cost from a reputable insurer in the reasonable detc1mination of the City. Such insurance shall be in an amount at least equal to the greater of (i) the replacement value of the insured Facilities, or (ii) the aggregate unpaid principal components of the Lease Payments, and may be subject to such deductibles as the City deems adequate and prudent. The City shall set aside in a segregated account funds sufficient to cover such deductibles. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled msurance. The City will apply the Net Proceeds of such insurance as provided in Article VI.

(b) Flood Insurance. If at any time and for so long as the Leased Property is located in a I 00 year flood area as shown on a Flood Insurance Rate Map published by the Federal Emergency Management Agency, the policy or policies of casualty insurance provided under this Section 5.4 shall include insurance against loss or damage to the Facilities due to flooding. If the City obtains an exception or waiver to the designation of the Facilities as being within a I 00 year flood area from the Federal Emergency Management Agency, the City shall not be required to provide Hood insurance as set forth in this subsection (b ).

(c) Federal or State Disaster Aid. Should the Facilities be damaged or destroyed as a result of an event for which federal or State of California disaster aid is available, the Authority and/or the City shall promptly apply for disaster aid. Any disaster aid proceeds received shall be used to repair, reconstruct, restore or replace the damaged or destroyed portions of the Facilities or, at the option of the City and the Authority, to prepay the Lease Payments if permitted under the disaster aid program and the law.

(d) Self-Insurance. As an alternative to providing the insurance required by this Section, the City may provide a self insurance method or plan of protection if and to the extent such self insurance method or plan of protection (i) affords reasonable coverage for the risks required to be insured against, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State of California other than the City, and (ii) has been approved in writing by the Assignee. Before such other method or plan may be provided by the City, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of this Lease, there shall be filed with the Authority and the Assignee a certificate of an actuary, insurance consultant or other qualified person (who may be an employee of the City), stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of this Section and, when effective, would afford reasonable coverage for the risks required to be insured against and is sufficiently fonded to afford such coverage. There shall also be filed a certificate of the City setting forth the details of such substitute

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method or plan. In the event of loss covered by any such self insurance method, the liability of the City hereunder shall be limited to the amounts in the self insurance reserve fund or funds created under such method.

Section 5. 5. Rental Interruption Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Leased Property and the improvements situated thereon as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount at least equal to the maximum Lease Payments coming due and payable during any future 24-month period. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. Such rental interruption or use and occupancy insurance shall not be self insured and the City acknowledges that this requirement may limit its ability to self insure under Section 5 .4. The City will apply the Net Proceeds of such insurance towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable.

Section 5.6. Worker's Compensation Insurance. If required by applicable California law, the City shall carry worker's compensation insurance covering all employees on, in, near or about the Leased Property and, upon request, shall furnish to the Authority certificates evidencing such coverage throughout the Terrn of this Lease.

Section 5. 7. Recordation Hereof; Title Insurance. On or before the Closing Date, the City shall, at its expense, (a) cause the Assignment Agreement, the Site Lease and this Lease, or a memorandum hereof or thereof, to be recorded in the office of the Orange County Registrar-Recorder with respect to the Leased Property, and (b) obtain a CLTA leasehold owner's title insurance policy insuring the Authority's interests in the estate established under the Site Lease in the Leased Property, subject only to Permitted Encumbrances, in an amount equal to the aggregate, original principal components of the Lease Payments. The City shall apply the Net Proceeds received under such title insurance policy to prepay Lease Payments under Section 9.3(a).

Section 5.8. Form of Policies. All insurance policies (or riders) required by this Article V shall be taken out and maintained with responsible insurance companies organized under the laws of one of the states of the United States and qualified to do business in the State of California, and shall contain a provision that the insurer shall not cancel or revise coverage thereunder without giving written notice to the insured parties at least ten days before the cancellation or revision becomes effective. Each insurance policy or rider required by Sections 5.3, 5.4 and 5.5 shall name the City and the Assignee as additional insured and loss payee and shall include a lender's loss payable endorsement for the benefit of the Assignee. Prior to the Closing Date, the City will deposit with the Assignee policies (and riders and endorsements, if applicable) evidencing any such insurance procured by it, or a certificate or certificates of the respective insurers stating that such insurance is in full force and effect. Before the expiration of any such policy (or rider), the City will furnish to the Assignee evidence that the policy has been renewed or replaced by another policy confonning to the provisions of this Article V unless such insurance is no longer obtainable, in which event the City shall notify the Assignee of such fact.

Section 5.9. Installation of City's Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or pennit to be installed other items of equipment or other personal property in or upon the Leased Property. All such items shall remain

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the sole property of the City, in which the Authority has no interest, and may be modified or removed by the City at any time. The City must repair and restore any and all damage to the Leased Property resulting from the installation, modification or removal of any such items. Nothing in this Lease prevents the City from purchasing or leasing items to be installed under this Section under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest may attach to any part of the Leased Property.

Section 5.10. Liens. The City will not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Leased Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Authority do not materially and adversely affect the leasehold estate in the Leased Properly hereunder and for which the Assignee approves in writing, which approval may not be unreasonably withheld. Except as expressly provided in this Article V, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.

Section 5.11. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as Additional Payments hereunder, with interest at the rate set forth in Section 4.4(c).

Section 5.12. Condemnation by City. The City shall not exercise the power of condemnation with respect to the Authority's or the Assignee's leasehold interest in the Leased Properly so long as the Lease is valid and outstanding. If for any reason the foregoing covenant shall be held by a court of competent jurisdiction to be unenforceable and the City condemns the Authority's or the Assignee's leasehold interest in the Leased Property or if the City breaches such covenant, the City agrees that the value of the City's leasehold estate hereunder in the Leased Property shall be not less than the amount sufficient to prepay the aggregate Lease Payments.

ARTICLE VI

DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF PROCEEDS; ABATEMENT OF LEASE PAYMENTS

Section 6.1. Deposit of Net Proceeds. The Net Proceeds of any taking of the Leased Property or any portion thereof in eminent domain proceedings, and the Net Proceeds of any policy of insurance maintained under Section 5.4, shall be paid to the City or the Authority to be applied as hereinafter set forth in Section 6.2.

Section 6.2. Application of Net Proceeds. If the Leased Property is taken in eminent domain proceedings at any time during the Te1m of this Lease, or if the Leased Property is damaged due to an insured casualty which is covered by a policy of insurance or a program of self insurance maintained under Section 5 .4, the City shall as soon as practicable after such event, with the prior written consent of the Assignee, apply the Net Proceeds resulting therefrom to one of the following:

(a) repair the I "eased Properly to full use;

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(b) replace the Leased Property, at the City's sole cost and expense, with property of equal or greater value to the Leased Property immediately prior to the time of such destruction or damage, such replacement Leased Property to be subject to the Assignee's reasonable approval, whereupon such replacement shall be substituted in this Lease by appropriate endorsement;

(c) substitute additional property as provided in Section 4.7; or

(d) prepay the Lease Payments in accordance with Section 9.3(a).

The City will notify the Authority and the Assignee of which course of action it has elected to take within a reasonable time not to exceed 60 days after the occurrence of such eminent domain proceedings or such destruction or damage. Such repair, replacement, substitution or prepayment shall commence not later than 60 days after the occurrence of such taking, destruction or damage and be pursued diligently to completion. The Authority may (but is not required to) in its own name or in the City's name execute and deliver proofs of claim, receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy, and the City hereby grants to the Authority a power of attorney coupled with an interest to accomplish all or any of the foregoing.

Section 6.3. Abatement Due to Damage or Destruction. The Lease Payments are subject to abatement during any period in which by reason of damage or destruction ( other than by eminent domain which is provided for in Section 6.4) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement wi II continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. fn the event of any such damage or destruction, this Lease will continue in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage and destruction. Notwithstanding the foregoing, the Lease Payments arc not subject to abatement to the extent that rental interruption insurance proceeds are available to pay Lease Payments which would otherwise be abated under this Section 6.3, it being hereby declared that such amounts constitute special funds for the payment of the Lease Payments.

Section 6.4. Termination or Abatement Due to Eminent Domain. lfthe Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease will cease with respect thereto as of the day possession is so taken. If less than all of the Leased Property is taken permanently, or if the Leased Property is taken temporarily, under the power of eminent domain, (a) this Lease will continue in full force and effect with respect thereto and will not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there will be a partial abatement of Lease Payments allocated thereto based upon whether such event has occurred with respect to the Leased Property, in an amount to be determined by the City such that the resulting "Lease Payments" represent fair consideration for the use and occupancy of the remaining usable portions of the affected Leased Property.

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ARTICLE VII

OTHER COVENANTS OF THE CITY

Section 7.1. Disclaimer of Warranties. THE AUTIIORITY MAKES NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORTION THEREOF, OR ANY OTlIER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY PORTION OF TrIE LEASED PROPERTY OR A DEALER THEREIN AND THAT THE CITY LEASES THE LEASED PROPERTY AS-IS, lT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no event is the Authority liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease for the existence, furnishing, functioning or use of the Leased Property by the City.

Section 7. 2. Access to the Leased Property. The City agrees that the Authority, and the Authority's successors or assigns, has the right at all reasonable times, following at least 48 hours written notice provided to the City, to enter upon and to examine and inspect the Leased Property or any part thereof. The City further agrees that the Authority, and the Authority's successors or assigns, shall have such rights of access to the Leased Property or any component thereof, following at least 48 hours written notice provided to the City, as may be reasonably necessary to cause the proper maintenance of the Leased Property if the City fails to perform its obligations hereunder. Neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.

Section 7.3. Release and Indemnification Covenants. The City hereby agrees to indemnify the Authority, the Assignee and their respective directors, officers, employees, agents, successors and assigns against all claims, losses and damages, including legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or from any work or thing done on the Leased Property by the City, (b) any breach or default on the part of the City in the performance of any of its obligations under this Lease, (c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Property, (d) any intentional misconduct or negligence of any sublessee of the City with respect to the Leased Property, (e) the acquisition, construction, improvement and equipping of the Leased Property, (f) the use, presence, storage, disposal or clean-up of any Hazardous Substances or toxic wastes on the Leased Property or (g) the failure to comply with any Applicable Environmental Laws. No indemnification is made under this Section or elsewhere in this Lease for willful misconduct or gross negligence under this Lease by the Authority, the Assignee or their respective officers, agents, employees, successors or assigns.

Section 7.4. Assignment by the Authority. The Authority's rights under this Lease, including the right to receive and enforce payment of the Lease Payments to be made by the City hereunder, have been assigned to the Assignee under the Assignment Agreement. The City hereby consents to such assignment. The Authority hereby directs the City, and the City hereby agrees, to pay to the Assignee all payments payable by the City under Section 4.4 and all amounts payable by the City under Article IX. Whenever in this Lease any reference is made to the Authority and such reference concerns rights which the Authority has assigned to the Assignee, such reference shall be deemed to refer to the Assignee.

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The Authority and the Assignee may make additional assignments of their interests herein, but no such assignment will be effoctive as against the City unless and until the Authority or the Assignee has filed with the City written notice thereof. The City shall pay all Lease Payments hereunder under the written direction of the Authority or the assignee named in the most recent assignment or notice of assignment filed with the City. During the Term of this Lease, the City will keep a complete and accurate record of all such notices of assignment.

The Authority hereby acknowledges and agrees that (i) the interests assigned to the Assignee in the Assignment Agreement may only be assigned in whole and not in part, and (ii) any assignment shall not be effective until the Assignee shall have delivered to the City an executed letter of representations in substantially the fom1 set forth in Appendix E hereto.

Section 7. 5. Assignment and Subleasing by the City. This Lease may not be assigned by the City. With the prior written consent of the Assignee, the City may sublease the Leased Property, or any pottion thereof, subject to all of the following conditions:

(a) This Lease and the obligation of the City to make Lease Payments hereunder shall remain obligations of the City.

(b) The City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Assignee a true and complete copy of such sublease.

(c) Any sublease shall be expressly subject and subordinate to this Lease.

(d) No such sublease by the City may cause the Leased Property to be used for a purpose other than an essential government function and as may be authorized under the provisions of the laws of the State of California.

Section 7.6. Amendment Hereof This Lease may be amended with the prior written consent of the Assignee.

Section 7.7. follows:

Tax Covenants. At all times during the Lease Term, the City covenants as

(a) Qualified Renewable Energy Facility Project. The City shall assure that all of the Available Project Proceeds will be used for a Qualified Renewable Energy Facility or purposes in accordance with section 54C(a)(l) of the Tax Code.

(b) Qualified Issuer. The City shall maintain its status as a state or local governmental body as required by Section 54C(a)(2) of the Tax Code.

(c) Designation of Lease as New Clean Renewable Energy Bonds. The City hereby designates this Lease as New Clean Renewable Energy Bonds for purposes of section 54C(a)(3) of the Tax Code.

( d) Three Year Expenditure of Proceeds on Project. The City reasonably expects to expend all of the Available Project Proceeds for a Qualified Renewable Energy Facility purpose with respect to the Project within the Expenditure Period. To the extent that less than I 00 percent (100%) of the Available Project Proceeds are expended for a Qualified Renewable Energy Facility purpose by the end of the Expenditure Period, all nonqualificd bonds (as determined under

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Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period all in accordance with the requirements of Section 54A( d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code and as required by Sections 3.4 and 9.3(b).

( e) Binding Commitment to Spend Available Proiect Proceeds. The City reasonably expects that, within 6 months of the Closing Date, it will enter into a binding commitment with a third party to spend at least ten percent (10%) of the Available Project Proceeds for a Qualified Renewable Energy Facility purpose with respect to the Project.

(f) Financing Capital ExpenditureJ; No Working Capital. All Available Project Proceeds of this Lease will be spent on capital expenditures with a reasonably expected economic life of one year or more.

(g) Limitation on Issuance Costs. No proceeds of this Lease and investment earnings thereon, in an amount in excess of two percent (2%) of the proceeds of the sale of this Lease, will be used to pay costs of issuing of this Lease. If the fees of the original purchaser are retained as a discount on the purchase of this Lease, such retention shall be deemed to be an expenditure of proceeds of this Lease for said fees.

(h) Allocation of New Clean Renewable Energy Bond Volume Cap. The City has received allocations of a portion of the national New Clean Renewable Energy Bond volume cap.

(i) No Arbitrage. The City shall not take, or permit or suffer to be taken by any person or otherwise, any action with respect to the proceeds of this Lease which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of this Lease would have caused this Lease to be "arbitrage bonds" within the meaning of section 148 of the Tax Code as modified by Section 54A(d)(4) of the Tax Code, including the Treasury Regulations with respect thereto.

G) Rebate Compliance. The City shall take any and all actions necessary to assure compliance with Section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to this Lease. For purposes of this paragraph, investments of Available Project Proceeds during the Expenditure Period are deemed to comply with the requirements and limitations of Section 148 of the Tax Code.

(k) Limitation on Reserve Funds. No fund the proceeds of which arc pledged to, or are reasonably expected to be used directly or indirectly to pay, the principal or interest components of this Lease or arc reserved or otherwise set aside such that there is a reasonable assurance that such amounts will be available to pay the principal or interest components of this Lease will be funded with respect to this Lease except as follows: (i) the fund is funded at a rate not more rapid than equal annual installments, (ii) such fund is funded in a manner reasonably expected to result in an amount not greater than an amount necessary to repay the issue, and (iii) the yield on the fund is not greater than the rate determined under 54A(d)(5)(B) of the Tax Code.

(I) Acquisition, Disposition and Valuation of Investments. Except as otherwise provided in following sentence, the City covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Lease, or otherwise containing proceeds of this Lease shall be acquired, disposed of, and valued (as of the date that valuation is required by the Tax Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield

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restriction under applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) and investments in a reserve fund shall be valued at their present value (within the meaning of section 148 of the Tax Code).

(m) Prohibition on Financial Conflicts of Interest. The City hereby covenants and agrees to comply with all State of California ("State") and local law requirements governing conflicts of interest as such requirements may relate, directly or indirectly, to this Lease. The City hereby covenants and agrees to comply with any conflict of interest rules prescribed by the IRS or United States Department of the Treasury governing the appropriate Member of Congress, Federal, State, and local officials, and their spouses as such rules may apply to this Lease.

(n) Davis-Bacon Act Requirements. The City hereby covenants and agrees to comply with the wage rate requirements of Title 40, Subtitle II, Part A, Chapter 31, Subchapter IV of the United States Code as such requirements relate to the proceeds of this Lease.

( o) Direct Pay Election. The City hereby irrevocably elects to treat the Lease as "Specified Tax Credit Bonds" within the meaning of Section 643l(f) of the Tax Code such that the City will be eligible to receive direct payment by the federal government of a refundable credit equal to the lesser of the interest payable on the Lease or 70% of the tax credit rate applicable to this Lease.

(p) Maintenance of Qualification for Lease Subsidy Payments. The City shall take all actions necessary to assure that this Lease remains New Clean Renewable Energy Bonds under Section 54C(a) of the Code and specified tax credit bonds eligible for the Lease Subsidy Payments under Section 6431 of the Code. Notwithstanding any provisions of this Section, if the City shall provide to the Authority an opinion of Bond Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required in order for the Lease to be treated specified tax credit bonds under Section 6431 (f)(3) of the Code and New Clean Renewable Energy Bonds under Section 54C of the Code, the Authority may conclusively rely on such opinion in complying with the requirements of this Section, and the covenants hereunder shall be deemed to be modified to that extent.

The City shall comply with the instructions and requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full of the Lease Payments.

Section 7. 8. Environmental Covenants.

(a) Compliance with Laws; No Hazardous Substances. The City will comply with all Applicable Environmental Laws with respect to the Leased Property and will not use, store, generate, treat, transport, or dispose of any Hazardous Substance thereon or in a manner that would cause any Hazardous Substance to later flow, migrate, leak, leach, or otherwise come to rest on or in the Leased Property.

(b) In connection with its covenants provided in this Section 7.8, the City shall specifically comply with all requirements of the Asbestos Hazard Emergency Response Act (referred to as "AIIERA'' and constituting an Applicable Environn1ental Law); and performing re-inspections of Asbestos Containing Materials (as hereafter defined) at the Leased Property every three years. The City shall maintain all Asbestos Containing Materials in an intact and undamaged state and perform any demolition, renovation or other activities in accordance with all Applicable

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Environmental Laws. As used herein, (i) the term "Asbestos Containing Materials" means material in friable form containing more than one percent (I%) of the asbestiform varieties of chrysotile (serpentine), crocidolite (ricbeckite), amosite (cummington-itegrineritc), anthophyllite, tremolite and antinolite; and (ii) the term "Asbestos Management Plan" means that written plan for the Leased Property relating to monitoring and maintaining all Asbestos Containing Materials used or located on the Leased Property in accordance with the Asbestos Hazard Emergency Response Act (AIIERA).

(c) Notification ofAssignee. The City will transmit copies of all notices, orders, or statements received from any governmental entity concerning violations or asserted violations of Applicable Environmental Laws with respect to the Leased Property and any operations conducted thereon or any conditions existing thereon to the Assignee, and the City will notify the Assignee in writing immediately of any release, discharge, spill, or deposit of any [Tazardous Substances that has occurred or is occurring that in any way affects or threatens to affect the Leased Property, or the people, structures, or other property thereon, provided that no such notifications shall create any liability or obligation on the part of the Assignee.

(d) Access for Inspection. The City shall permit the Assignee, its agents, or any experts designated by the Assignee to have full access to the Leased Property during reasonable business hours for purposes of such independent investigation of compliance with all Applicable Environmental Laws, provided that the Assignee has no obligation to do so, or any liability for any failure to do so, or any liability should it do so.

Section 7. 9. Financial Statements; Budgets. Within 270 days following the end of each Fiscal Year of the City during the Term of this Lease, the City shall provide the Assignee with a copy of its audited financial statements for such Fiscal Year accompanied by an unqualified opinion of the City's independent certified public accountant or auditor. Such audited financial statements shall include a balance sheet, a statement of revenues, expenses and changes in fund balances for budget and actual, a statement of cash flows, notes, schedules and any attachments to the financial statements and such other financial infom1ation as the Assignee shall reasonably request. Upon Assignee's request, the City will provide the Assignee with a copy of its annual budget and any interim updates or modifications to such budget.

ARTICLEVID

EVENTS OF DEFAULT AND REMEDIES

Section 8.1. Events of Default Defined. Any one or more of the following events constitutes an Event of Default hereunder:

(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein or to maintain insurance as specified in Article V.

(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or perfom1ed hereunder, other than as referred to in the preceding clause (a) of this Section and other than a failure by the City to perform any covenant contained in Section 7.7 that does not materially adversely affect the Authority and its interests, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Assignee. However, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30 day period, the Authority

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and the Assignee shall not unreasonably withhold their consent to an extension of such time (for a period not to exceed 60 days) if corrective action is instituted by the City within such 30 day period and diligently pursued until the default is corrected.

( c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.

( d) Any representation, warranty or certification made by the City hereunder or in connection herewith shall have been incorrect or misleading when made.

( e) Any default occurs under any other agreement for borrowing money or receiving credit under which the City may be obligated as borrower, if such default consists of (i) the failure to pay any amount when due under such agreement or (ii) the failure to perform any other obligation thereunder and such failure gives the holder of such agreement the right to accelerate the amounts payable thereunder.

Section 8.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under this Lease; provided, however, that notwithstanding anything herein to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; provided, that no termination of this Lease shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise any one or more of the following remedies:

(a) Enforcement of Payments Without Termination. If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subparagraph (b) hereat; the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained, and the Authority may take whatever action at law or in equity that may appear necessary or desirable to collect each Lease Payment as it becomes due hereunder. The City shall reimburse the Authority for any deficiency arising out of the re-leasing or sale of the Leased Property, or, if the Authority is unable to re-lease or sell the Leased Property, then for the full amount of all Lease Payments to the end of the Tenn of this Lease, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Leased Property or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to enter upon and re-lease the Leased Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Leased Property, to place such property in storage or other suitable place located in Orange County, California for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by

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any such entry upon and re-leasing of the Leased Property and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Authority to re-lease the Leased Property in the event of such re-entry without effecting a surrender of this Lease, and further agrees that no acts of the Authority in etlecting such re-leasing shall constitute a surrender or termination of this Lease irrespective of the tenn for which such re­leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof. The City agrees to surrender and quit possession of the Leased Property upon demand of the Authority for the purpose of enabling the Leased Property to be re-let under this paragraph, and the City further waives the right to any rental obtained by the Authority in excess of the Lease Payments and hereby conveys and releases such excess to the Authority as compensation to the Authority for its services in re-leasing the Leased Property.

(b) Termination of Lease. If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease and re-lease all or any portion of the Leased Property. If the Authority terminates this Lease at its option and in the manner hereinafter provided due to a default by the City (and notwithstanding any re-entry upon the Leased Prope1ty by the Authority in any manner whatsoever or the re-leasing of the Leased Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments and Additional Payments. Any surplus received by the Authority from such re­leasing shall be applied by the Authority to Lease Payments due under this Lease. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease. The City covenants and agrees that no surrender of the Leased Propc1ty, or of the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice.

( c) Proceedings at Law or In Equity. If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder.

(d) Remedies under the Site Lease. If an Event of Default occurs and continues hereunder, the Authority may exercise its rights under the Site Lease.

Section 8.3. No Remedy Hxclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such 1ight or power or shall be construed to be a waiver thereof; but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII

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it shall not be necessary to give any notice, other than such notice as may be required in this Article Vlll or by law.

Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. If either party to this Lease defaults under any of the provisions hereof and the nondefaulting party should employ attorneys (including in-house legal counsel) or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys (including allocable costs and expenses of in-house legal counsel, if any) and such other expenses so incurred by the non defaulting party.

Section 8. 5. No Additional Waiver Implied by One Waiver. If any agreement contained in this Lease is breached by either party and thereafter waived by the other party, such waiver is limited to the particular breach so waived and will not be deemed to waive any other breach hereunder.

Section 8. 6. Assignee to Exercise Rights. Such rights and remedies as are given to the Authority under this Article Vlll have been assigned by the Authority to the Assignee, to which assignment the City hereby consents. Such rights and remedies shall be exercised solely by the Assignee.

ARTICLE IX

PREPAYMENT OF LEASE PAYMENTS

Section 9.1. Security Deposit. Notwithstanding any other provision of this Lease, the City may on any date secure the payment of the Lease Payments in whole or in part by depositing with a trustee, escrow agent or other fiduciary selected by the City and acceptable to the Assignee an amount of cash, which shall be held in a segregated trust or escrow fund under a trust or escrow agreement that is in form and content acceptable to the Assignee, which cash so held is either (a) sufficient to pay such Lease Payments without reinvestment, including the principal and interest components thereof, in accordance with the Schedule of Lease Payments set forth in Appendix C, or (b) invested in whole or in part in noncallable Federal Securities in such amount as will, in the opinion of an independent certified public accountant (which opinion must be in form and substance, and with such an accountant, acceptable to the Assignee and addressed and delivered to the Assignee), together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient, without reinvestment of any earning or income on such amounts, to pay such Lease Payments, when due under Section 4.4 or when due on any optional prepayment date under Section 9.2(a) as the City instructs at the time of said deposit. lf the City posts a security deposit under this Section with respect to all unpaid Lease Payments, and notwithstanding the provisions of Section 4.3, (a) the Term of this Lease will continue, (b) all obligations of the City under this Lease, and all security provided by this Lease for said obligations, will thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be made, all of the Lease Payments from such security deposit and its obligation provided in the next succeeding paragraph, and (c) the Authority's leasehold interest in the Leased Property will te1minate on the date of said deposit automatically and without further action by the City or the Authority. The City hereby grants a first priority security interest in and lien on said security deposit and all proceeds thereof in favor of the Assignee. Said secmity deposit shall be deemed to be and shall constitute a special fund for the payment of Lease Payments in accordance with the provisions of this Lease.

27

Notwithstanding anything in this Section 9.1 or otherwise in this Lease to the contrary, if the amount held in such security deposit shall at any time be insufficient (for whatever reason) to pay Lease Payments when due in full as provided in clause (a) or (b), as applicable, of the first paragraph of this Section 9.1, the City shall immediately pay to the Assignee on the applicable due date or due dates the amount of any such shortfall from funds legally available for such purpose.

Section 9.2. Optional Prepayment; Extraordinary Optional Prepayment Upon Change in Law. (a) The City may prepay the unpaid principal components of the Lease Payments in whole or in part, on any Lease Payment Date on or after March 1, 2024, by paying a prepayment price equal to 100% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date.

(b) In the event that a Change in Law ( as hereafter defined) occurs, on the day specified in the City's notice to the Authority of its exercise of the prepayment option provided under this subsection (b ), the City shall have the option to prepay all, or less than all, of the aggregate principal components of Lease Payments then unpaid from and after any Change in Law upon payment in full to the Authority of the sum of 100% of the aggregate principal components of the Lease Payment to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. "Change in Law" means legislation enacted by the Congress of the United States of America or a ruling, regulation or statement issued by the United States Department of the Treasury or the Internal Revenue Service, the effect of which (I) repeals, revokes or reduces the Lease Subsidy Payments from the United States Department of the Treasury under Section 54A or 6431 of the Tax Code (as currently in effect) with respect to this Lease or (II) imposes one or more new substantive conditions on the receipt by the City of such Lease Subsidy Payments under such Sections (as currently in eftect) and such conditions are unacceptable to the City; provided, however, that a Change in Law shall not occur as a result of (I) reductions in Lease Subsidy Payments due to automatic budgetary reductions imposed by the Congress of the United States of America related to deficit reduction measures, (II) the City's failure or inability for reasons within its control to receive or delay to receive all or any portion of any Lease Subsidy Payment from the United States Department of the Treasury, or (Ill) the City's failure to comply with applicable laws and regulations to obtain payment of any Lease Subsidy Payment from the United States Department of the Treasury, including without limitation any offset against any Lease Subsidy Payment as a result of other liabilities of the City to the United States Department of the Treasury.

( c) The City shall give the Authority notice of its intention to exercise its option to prepay the Lease Payments under this Section 9.2 not less than 30 days in advance of the intended prepayment date.

Section 9.3. Extraordinary Mandatory Prepayment From Certain Sources Under Certain Circumstances. (a) The City shall prepay the unpaid principal components of the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds to be used for such purpose under Section 6.2, by paying a prepayment price equal to I 00% of the aggregate principal components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. The City shall give the Authority notice of prepayment of Lease Payments under this Section 9.3(a) not less than 30 days in advance of such prepayment date.

(b) The City shall prepay the unpaid principal components of the Lease Payments in whole or in part on any date, from and to the extent of any amounts to be used for such purpose under Section 3.4, by paying a prepayment price equal to 101% of the aggregate principal

28

components of the Lease Payments to be prepaid, plus accrued interest on such prepaid principal components to the prepayment date. The City shall give the Authority notice of prepayment of Lease Payments under this Section 9.3(b) not less than 30 days in advance of such prepayment date.

( c) Prepayment in part of the unpaid principal components of Lease Payments as provided in this Section 9.3 shall be applied to reduce the principal components of Lease Payments in inverse order of the Lease Payment Dates.

ARTICLEX

MISCELLANEOUS

Section 10.1. Notices. Any notice, request, complaint, demand or other communication under this Lease shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City and the Assignee may, by written notice to the other parties, from time to time modify the address or number to which communications arc to be given hereunder.

If to the City:

Ifto the Authority:

lfto the Assignee:

City of Fountain Valley 10200 Slater A venue Fountain Valley, California 92708 Attention: City Manager Fax: (714) 593-4494

Fountain Valley Public Financing Authority I 0200 Slater Avenue Fountain Valley, California 92708 Attention: Executive Director Fax: (714) 593-4494

HASI OBS OP A LLC 1906 Towne Centre Boulevard, Suite 370 Annapolis, Maryland 2140 I' Attention: Legal Department Fax: (410) 571-6199

Section 10.2. Binding Effect. This Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns.

Section 10.3. Severability. If any provision of this Lease is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.

Section 10.4. Net-net-net Lease, This Lease is a "net-net-net lease" and the City hereby agrees that the Lease Payments are an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.

29

Section 10.5. Further Assurances and Corrective instruments. The Authority and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease. The City further agrees to provide such information and cooperate with the Assignee as reasonably requested by the Assignee, including, without limitation, furnishing budget and financial statements, verification of required insurance coverage, the value of the Leased Property, the status of the Project, and providing assistance with requests from rating agencies for private rating analysis; provided that such assistance shall not be inconsistent with the provisions of this Agreement and applicable law.

Section 10.6. Execution in Counterparts. This Lease may be executed in several counterparts, each of which is an original and all of which constitutes one and the same instrument.

Section 10. 7. Applicable Law. This Lease is governed by and construed in accordance with the laws of the State of California.

Section /0.8. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease.

Section 10.9. No Merger. It is the express intention of the Authority and the City that this Lease and the obligations of the parties hereunder are separate and distinct from the Site Lease and the obligations of the parties thereunder, and that during the term of the Site Lease and this Lease no merger of title or interest may occur or be deemed to occur as a result of the respective positions of the Authority and the City thereunder and hereunder.

Section 10.10. Third Party Beneficiary. The Assignee is made a party beneficiary hereunder with all rights of a third party beneficiary.

Section 10.11. Assignee as Provider of Financing Only. The Assignee is financing the acquisition of the Project. The Assignee has not been in the chain of title of the Project, does not operate, control or have possession of the Leased Property or the Project and has no control over the work performed by any vendor with respect to the Leased Property or the Project. The Assignee has no obligation with respect to the installation, operation, use, storage and maintenance of the Leased Property or the Project or any other obligations of the parties under this Agreement or the Site Lease.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Authority and the City have caused this Lease/Purchase Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written.

FOUNTAIN VALLEY PUBLIC FINANCING AUTllOR1TY, as Lessor

David Cain Treasurer

CITY OF FOUNATAIN VALLEY, as Lessee

David Cain Director of Finance

[Signature Page to Lease/Purchase Agreement/

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA ) ) ss.

COUNTY OF ORANGE )

On l - J.Ja -d-017 before me, Q l::?:C' {{ 1:.... L ~ r[t:eJ , Notary Public,

personally appeared 'l) &/ ', d ']){1y1...t~- Q_ S: Q. @ t ~ h, , who proved to me on the basis of satisfactory evidence to bee ~rson("l!J whose names(i;®are-syl)§fribcd to the within instrument and acknowle~d to me tha@sh:efthq executed the same in(hi§}her/their authorized capacity(ies\ and that by !fil§ilhetirhei:r signature(:sJ' on the instrument the person{,&), or the entity upon behalf of which the person(il1 acted, executed the instrument.

1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal

REBECCA L. LEIFKES ~ Notary Public w California ~ O~ange County j

Comm,ssion # 2162678 !: My Comm. Expires Sep 11, 2020

Site Center at Founder's Village Field Services Building Recreation Center Police Station

APPENDIX A

PROJECT SITES

Address 17969 Bushard Street 17300 Mount Herrrmann Street I 6400 Brookhurst Street I 0200 Slater Avenue

Total

A-1

Solar System Size (kW-de) Svstem Cost

117.5 $523,323 104.4 $469,741 339.3 $1,238,024

156.96 $491,821 861.76 $2,722,908

APPENDIXB

DESCRIPTION OF THE LEASED PROPERTY

The land and improvements thereon comprising the City's Fire Station No. I, located at 17737 Bushard Street, Fountain Valley, California, in the City of Fountain Valley, County of Orange, State of California, and which has the following legal description:

PARCEL A:

THAT PORTION OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN TffE RANCHO LAS BOLSAS, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, RECORDS OF SAID ORANGE COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT THE SOUTHEAST CORNER OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 30; THENCE ALONG THE EAST LINE OF SAID NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30, NORTII 0° 17' 55" WEST 143.53 FEET; THENCE SOUTH 88° 33' 21" WEST 178.40 FEET; THENCE SOUTH 1 ° 26' 39" EAST 143.50 FEET TO Tiffi SOUTH LINE OF SAID NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30; THENCE ALONG SAID SOUTH LINE NORTH 88° 33' 21" EAST 175.52 FEET TO THE POINT OF BEGINNING.

PARCELB:

THE EASTERLY 175.51 FEET OF THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30, TOWNSHIP 5 SOUTH, RANGE IO WEST, IN THE RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SECTION lS SHOWN ON A MAP RECORDED TN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, TN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF TRACT NO. 4764, AS SIIOWN ON A MAP RECORDED TN BOOK 175, PAGES 13 AND 14 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY, ALSO BEING A POINT TN THE NORTH LINE OF SAID SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30; THENCE EASTERLY ALONG SAID NORTH LINE OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30 491.68 FEET TO THE EAST LINE OF SAID SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 30; HENCE SOUTH 0° 17' 55" EAST ALONG SAID EAST LINE A DISTANCE OF 15.63 FEET TO THE NORTHEAST CORNER OF THE LAND SHOWN ON RECORD OF SURVEY RECORDED IN BOOK 48, PAGE 43, RECORDS OF SAID COUNTY; THENCE SOUTH 87° 08' 35" WEST ALONG THE NORTH LINE OF SAID RECORD OF SURVEY 492.07 FEET, MORE OR LESS, TO THE EAST LINE OF SAID TRACT NO. 4764; THENCE NORTH 0° 17' 55" WEST ALONG SAID EAST LINE 27.76 FEET TO THE POINT OF BEGINNING.

B-1

Pmt. Payment No. Date

2/2/2017

9/1/2017

2 3/1/2018

3 9/1/2018

4 3/1/2019

5 9/1/2019

6 3/1/2020

7 9/1/2020

8 3/1/2021

9 9/1/2021

10 3/1/2022

11 9/1/2022

12 3/1/2023

13 9/1/2023

14 3/1/2024

15 9/1/2024

16 3/]/2025

17 9/1/2025

18 3/1/2026

19 9/1/2026

20 3/l/2027

21 9/1/2027

22 3/1/2028

23 9/1/2028

24 3/1/2029

25 9/1/2029

26 3/1/2030

27 9/1/2030

28 3/1/2031

29 9/1/2031

30 3/1/2032

31 9/1/2032

32 3/1/2033

APPENDIXC

SCHEDULE OF LEASE PAYMENTS

Outstanding Principal Interest Balance* Portion Portion

$2,843,166.36

2,843,166.36 $73,287.35

2,807,768.70 $35,397.66 63,118.29

2,772,371.02 35,397.68 62,332.47

2,721,664.18 50,706.84 61,546.64

2,670,957.33 50,706.85 60,420.94

2,617,682.78 53,274.55 59,295.25

2,564,408.22 53,274.56 58,112.56

2,508,478.00 55,930.22 56,929.86

2,452,547.77 55,930.23 55,688.21

2,393,871.25 58,676.52 54,446.56

2,335,194.73 58,676.52 53,143.94

2,273,678.55 61,516.18 51,841.32

2,212, 162.38 61,516.17 50,475.66

2,147,710.39 64,451.99 49,110.00

2,083,258.39 64,452.00 47,679.17

2,015,771.52 67,486.87 46,248.34

1,948,284.64 67,486.88 44,750.13

1,877,660.85 70,623.79 43,251.92

1,807,037.06 70,623.79 41,684.07

1,733,171.27 73,865.79 40, l l 6.22

1,659,305.47 73,865.80 38,476.40

1,582,089.43 77,216.04 36,836.58

1,504,873.39 77,216.04 35,122.39

1,424,195.63 80,677.76 33,408.19

1,343,517.87 80,677.76 31,617.14

1,259,263.59 84,254.28 29,826.10

1,175,009.32 84,254.27 27,955.65

1,087,060.31 87,949.01 26,085.21

999,111.30 87,949.01 24,132.74

907,345.81 91,765.49 22,180.27

815,580.33 91,765.48 20,143.08

719,873.03 95,707.30 18,105.88

C-1

Total Lease Subsidy Lease Payment

Pa~mcnt Amount

$73,287.35 $51,647.78

98,515.95 44,481.34

97,730.15 43,927.54

112,253.48 43,373.74

111,127.79 42,580.44

112,569.80 41,787.13

111,387.12 40,953.65

112,860.08 40,120.17

111,618.44 39,245.14

113,123.08 38,370. ll

111,820.46 37,452.12

113,357.50 36,534.12

111,991.83 35,571.70

113,561.99 34,609.28

112,13 l.l 7 33,600.93

113,735.21 32,592.58

112,237.01 31,536.75

!13,875.71 30,480.91

112,307.86 29,376.00

113,982.01 28,271.09

112,342.20 27,115.46

114,052.62 25,959.83

112,338.43 24,751.79

114,085.95 23,543.74

112,294.90 22,281.54

114,080.38 21,019.34

112,209.92 19,701.18

114,034.22 18,383.02

112,081.75 17,007.06

113,945.76 15,631.10

111,908.56 14,195.43

113,813.18 12,759.75

Total Lease Subsidy Pmt. Payment Outstanding Principal Interest Lease Payment No. Date Balance* Portion Portion Payment Amount 33 9/1/2033 624,165.71 95,707.32 15,981.18 111,688.50 11,262.41

34 3/1/2034 524,387.50 99,778.21 13,856.48 I 13,634.69 9,765.07

35 9/1/2034 424,609.29 99,778.21 11,641.40 111,419.61 8,204.04

36 3/1/2035 320,627.28 103,982.01 9,426.33 113,408.34 6,643.01

37 9/1/2035 216,645.27 103,982.01 7,117.93 111,099.94 5,016.21

38 3/1/2036 108,322.64 108,322.63 4,809.52 113,132.15 3,389.42

39 9/1/2036 (0.00) 108,322.64 2,404.76 110,727.40 1,694.71

Total $2,843,166.36 $1,482,606.13 $4,325,772.49 $1,044,836.63

C-2

APPENDIXD

LEASE SUPPLEMENT FORM

There is hereby subjected to the terms of that certain Lease/Purchase Agreement, dated as of February I, 2017, by and between the Fountain Valley Public Financing Authority (the "Lessor"), and the City of Fountain Valley (the "City") the following items which shall comprise a portion of the Property, as defined therein:

Description of Substituted Property

[Insert Description]

Cost

I, the City Representative, hereby certify that:

(!) the fair rental value and the useful life of the above-described portion of the Property at least equals the fair rental value and the useful life of the portion of the Property for which it was substituted;

(2) the above-described portion of the Property will be used by the City for authorized public purposes and can be leased under the provisions of the Lease;

(3) the above-described portion of the Property is currently owned by the City; and

(4) the above-described portion of the Property will be acquired, constructed or improved no later than the date on which the portion of the Property for which it was substituted would have been acquired, constructed or improved.

I, the City Representative, hereby certif'y that the portion of the Property being acquired, constructed or improved will be owned by the Lessor free and clear of all liens or claims of others, except for the lien of the Lease and the rights of the City under the Lease, and that the Lessor will not encumber title to the substituted portion of the Property while the Lease remains outstanding.

CITY OF FOUNTAIN VALLEY

By: [signature) Authorized Representative

D-1

APPENDIXE

FORM OF ASSIGNEE LETTER OF REPRESENTATIONS

City of Fountain Valley 100 Slater A venue Fountain Valley, California 92708

[Initial Purchaser Only]: [Raymond James & Associates, Inc. One Embarcadero Center, Suite 650 San Francisco, CA 94111]

Re: Assignment of Lease/Purchase Agreement dated as of February 1, 2017, between the Fountain Valley Public Financing Authority and the City of Fountain Valley

Dear Sir/Madam:

The rights of the Fountain Valley Public Financing Authority (the "Authority") under the Site Lease dated as of February I, 2017, between the City of Fountain Valley (the "City") and the Authority, and the Lease/Purchase Agreement dated as of February 1, 2017 (the "Lease"), between the Authority and the City, [originally assigned to _____________ ,] including the right to receive the Lease Payments, Additional Payments and prepayments described in the Lease ( collectively, the "Assigned Property"), are being assigned to the undersigned (the "Assignee"). The Lease requires assignees of the Authority's rights under the Lease to complete, execute, and deliver to the City a letter ofrepresentations (a "Letter of Representations"), in substantially the form hereof, upon or prior to taking ownership or control of the Assigned Property. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Lease.

The Assignee hereby certifies, represents, warrants, acknowledges and covenants to the City as follows:

(1) The Assignee is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated or fonned and is authorized to accept the assignment of the Assigned Property.

(2) The Assignee (MARK APPROPRIATELY):

L__J is a "qualified institutional buyer" (a "Qualified Institutional Buyer") within the meaning of Rule 144A promulgated under the Securities Act of 1933, as amended (the "Securities Act"), or

Ll is an "accredited investor" as described in Section 50l(a)(l), (2), (3) or (7) of Regulation D promulgated under tbe Securities Act (an "Institutional Accredited Investor").

(3) The Assignee has sufficient knowledge and experience in financial and business matters, including the acquisition and ownership of municipal obligations similar to the Assigned Property, to be capable of evaluating the merits and risks of its

E-1

accepting the assignment of and retaining ownership of the Assigned Property. The Assignee is able to hear the economic risks of such a financial transaction.

( 4) The Assignee recognizes that the ownership of the Assigned Property involves significant risks, that there is no established market for the Assigned Property, that none is likely to develop, and, accordingly, that the Assignee must bear the economic risk of retaining ownership of the Assigned Property for an indefinite period of time.

(5) The Assignee understands and acknowledges that, under the provisions of the Lease, the Assigned Property may be held in whole only and is suhject to the transfer limitations described herein, in the Lease, and in the Assignment Agreement.

(6) The Assignee understands and agrees that it may transfer the Assigned Property in whole, and not simply a portion thereat; only to an institution that (a) is either (i) a Qualified Institutional Buyer that is purchasing such Assigned Property for not more than one account, for its own account and not with a view to distributing such Assigned Property, or (ii) an Institutional Accredited Investor that is purchasing such Assigned Property for not more than one account, for its own account and not with a view to distributing such Assigned Property, and (b) only if such Qualified Institutional Buyer or Institutional Accredited Investor delivers to the City a completed and duly executed Letter of Representations substantially in the fonn hereof, and (c) otherwise complies in all respects with the provisions of the Lease and the Assignment Agreement regarding such transfer.

(7) The Assignee is not relying upon the City or its affiliates, agents, or employees for advice as to the merits and risks of acquiring the Assigned Property. The Assignee has sought such accounting, legal, and tax advice as it has considered necessary to make an informed decision concerning its acquisition of the Assigned Property.

(8) The Assignee has conducted its own independent examination ot; and has had an opp01tunity to ask questions and receive answers concerning, the City, the Assigned Property and the security therefor, and the transactions and documents related to or contemplated by the foregoing.

(9) The Assignee has been furnished with, or given access to, all documents and information that the Assignee has requested regarding the City, the Property, the Assigned Property and the security therefor, and the transactions and documents related to or contemplated by the foregoing, and all matters related thereto.

(I 0) The Assignee understands and agrees that the offering and sale of the Assigned Property to the initial purchaser were exempt from Ruic 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, pursuant to Section (d) of said Rule and that no offering document or prospectus was delivered by the City in connection with such offoring and sale.

(11) The person executing this letter on behalf of the Assignee is duly authorized to do so on the Assignee's behalf.

E-2

[Initial Purchaser Only]:

[(12) The Assignee is not purchasing the Assigned Property for more than one account, is purchasing the Assigned Property for its own account, and is not purchasing the Assigned Property with a view to distributing, transferring or reselling the Assigned Property. The Assignee intends to hold and book the Assigned Property as a loan in its loan portfolio.

(13) The Assignee is a lender that regularly extends credit by acquiring loans in the fonn of state and local government obligations such as the Lease in the normal course of its business.]

IN WITNESS WHEREOF, the Assignee has executed this Letter of Representations as of the date set forth below.

Dated : _____ , 20_ Firm Name:

By:

Name:

Title:

E-3

CERTU<'lCATE OF ACCEPTANCE OF LEASlUPURCHASE AGREEMENT

This is to certify that the interest in real property conveyed by the Lease/Purchase Agreement, dated as of February I, 2017, between Fountain Valley Public Financing Authority, as lessor, and the City of Fountain Valley, as lessee (the "City"), is hereby accepted by the undersigned officer on behalf of the City pursuant to the authority conferred by duly adopted resolutions of the City Council of the City, and the City consents to recordation thereof by its duly authorized officer.

Dated: January 26, 2017

CITY OF FOUNTAIN VALLEY, as Lessee

By: David Cain Director of Finance

RAYMOND JAMES®

BOND PRICING

City of Fountain Valley - Hannon Armstrong CREBs Final Numbers

Maturity Bond Component Date Amount Rate

Taxable Term Bond 2036:

03/01/2018 35,397.66 4.440% 09/01/2018 35,397.68 4.440%

03/01/2019 50,706.84 4.440% 09/01/2019 50,706.85 4.440%

03/01/2020 53,274.55 4.440% 09/01/2020 53,274.56 4.440%

03/01/2021 55,930.22 4.440% 09/01/2021 55,930.23 4.440%

03/01/2022 58,676.52 4.440% 09/01/2022 58,676.52 4.440%

03/01/2023 61,516.18 4.440% 09/01/2023 61,516.17 4.440%

03/01/2024 64,451.99 4.440% 09/01/2024 64,452.00 4.440%

03/01/2025 67,486.87 4.440% 09/01/2025 67,486.88 4.440%

03/01/2026 70,623.79 4.440% 09/01/2026 70,623.79 4.440%

03/01/2027 73,865.79 4.440% 09/01/2027 73,865.80 4.440%

03/01/2028 77,216.04 4.440% 09/01/2028 77,216.04 4.440%

03/01/2029 80,677.76 4.440% 09/01/2029 80,677.76 4.440%

03/01/2030 84,254.28 4.440% 09/01/2030 84,254.27 4.440%

03/01/2031 87,949.01 4.440% 09/01/2031 87,949.01 4.440%

03/01/2032 91,765.49 4.440% 09/01/2032 91,765.48 4.440%

03/01/2033 95,707.30 4.440% 09/01/2033 95,707.32 4.440%

03/01/2034 99,778.21 4.440% 09/01/2034 99,778.21 4.440%

03/01/2035 103,982.01 4.440% 09/01/2035 103,982.01 4.440%

03/01/2036 108,322.63 4.440% 09/01/2036 108,322.64 4.440%

2,843,166.36

Note: The IRS tax credit rate on 1/18/17 is 4.40%.

Dated Date Delivery Date

First Coupon

Jan 18, 2017 1:28 pm Prepared by Raymond James (UR)

02/02/2017 02/02/2017 03/01/2018

Yield

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

4.440% 4.440%

Price

100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000

Page 3

Jan 18, 2017   1:28 pm  Prepared by Raymond James (UR)    Page 3

BOND PRICING

City of Fountain Valley ‐ Hannon Armstrong CREBsFinal Numbers

MaturityBond Component Date Amount Rate Yield Price

Taxable Term Bond 2036:03/01/2018 35,397.66 4.440% 4.440% 100.00009/01/2018 35,397.68 4.440% 4.440% 100.00003/01/2019 50,706.84 4.440% 4.440% 100.00009/01/2019 50,706.85 4.440% 4.440% 100.00003/01/2020 53,274.55 4.440% 4.440% 100.00009/01/2020 53,274.56 4.440% 4.440% 100.00003/01/2021 55,930.22 4.440% 4.440% 100.00009/01/2021 55,930.23 4.440% 4.440% 100.00003/01/2022 58,676.52 4.440% 4.440% 100.00009/01/2022 58,676.52 4.440% 4.440% 100.00003/01/2023 61,516.18 4.440% 4.440% 100.00009/01/2023 61,516.17 4.440% 4.440% 100.00003/01/2024 64,451.99 4.440% 4.440% 100.00009/01/2024 64,452.00 4.440% 4.440% 100.00003/01/2025 67,486.87 4.440% 4.440% 100.00009/01/2025 67,486.88 4.440% 4.440% 100.00003/01/2026 70,623.79 4.440% 4.440% 100.00009/01/2026 70,623.79 4.440% 4.440% 100.00003/01/2027 73,865.79 4.440% 4.440% 100.00009/01/2027 73,865.80 4.440% 4.440% 100.00003/01/2028 77,216.04 4.440% 4.440% 100.00009/01/2028 77,216.04 4.440% 4.440% 100.00003/01/2029 80,677.76 4.440% 4.440% 100.00009/01/2029 80,677.76 4.440% 4.440% 100.00003/01/2030 84,254.28 4.440% 4.440% 100.00009/01/2030 84,254.27 4.440% 4.440% 100.00003/01/2031 87,949.01 4.440% 4.440% 100.00009/01/2031 87,949.01 4.440% 4.440% 100.00003/01/2032 91,765.49 4.440% 4.440% 100.00009/01/2032 91,765.48 4.440% 4.440% 100.00003/01/2033 95,707.30 4.440% 4.440% 100.00009/01/2033 95,707.32 4.440% 4.440% 100.00003/01/2034 99,778.21 4.440% 4.440% 100.00009/01/2034 99,778.21 4.440% 4.440% 100.00003/01/2035 103,982.01 4.440% 4.440% 100.00009/01/2035 103,982.01 4.440% 4.440% 100.00003/01/2036 108,322.63 4.440% 4.440% 100.00009/01/2036 108,322.64 4.440% 4.440% 100.000

2,843,166.36

Dated Date 02/02/2017Delivery Date 02/02/2017First Coupon 03/01/2018

Note:  The IRS tax credit rate on 1/18/17 is 4.40%.

RAYMOND JAMES®