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HomeMy WebLinkAbout11-21-2017 Item 08 - PUrchase of Streets Maintenance Street Sweeper ad Heavy Duty Dump Truck Meeting Date: 11/21/2017 FROM: Daryl Grigsby, Public Works Director Xenia Bradford, Finance Director Prepared By: Isaac Shuck, Fleet Supervisor Tim Bochum, Public Works Deputy Director SUBJECT: STREETS MAINTENANCE DUMP TRUCK, TRANSFER DUMP TRAILER, AND SWEEPER TRUCK PURCHASE, SPECIFICATION NO. 91589 & 91595 RECOMMENDATION 1. Adopt a resolution of the City Council of the City of San Luis Obispo approving Equipment Lease. 2. Approve the lease purchase and authorize the Finance Director to execute a purchase order to Gibbs Truck Centers in the amount of $256,204.06 for one 2018 International HX series heavy duty dump truck outfitted with a Reliance transfer dump set; and 3. Approve the lease purchase and authorize the Finance Director to execute a purchase order to the Sweeper Shop in the amount of $303,052.78 for one 2018 Freightliner M2 heavy duty truck outfitted with a Schwarze M6 Avalanche sweeper unit; and 4. Authorize the City Manager, Finance Director and City Attorney to execute all related documents on behalf of the City to execute a five-year loan agreement not to exceed approved budget; and 5. Authorize the surplus designation of Fleet Asset No. 9713, a 1994 Freightliner heavy duty dump truck, Fleet asset 1102, a 2007 Reliance transfer dump trailer, and Fleet Asset No. 0817, a 2008 International street sweeper truck by sale, auction, trade-in or other method in accordance with the City’s policies and procedures as prescribed in the Financial Management Manual Section 405-L and 480. DISCUSSION Background The replacement of the heavy-duty dump truck, transfer dump trailer, and street sweeper truck used daily by the Streets Maintenance staff, was approved as part of the 2017-19 Financial Plan in Fiscal Year 2017-18. Each unit is used daily by the Streets Maintenance Division and critical for asphalt and paving operations. Sweeper Truck Surplus The Fleet Maintenance Supervisor is allowed to retain one surplus street sweeper truck to back up the two front line units. Fleet asset no. 0817 street sweeper is currently being used in this capacity. When asset no. 0909 street sweeper is replaced, it will then serve as the backup unit and asset no. 0817 street sweeper will be sold at auction. Packet Pg 91 8 Cooperative Purchase versus Local Purchase Heavy Duty Dump Truck and Transfer Dump Trailer Staff recommends a purchase to Gibbs Truck Center of Santa Maria in the amount of $256,204.06 for one 2018 International HX Series heavy duty dump truck including a Reliance transfer dump set. Pursuant to City purchasing guidelines, staff explored use of a multi-year cooperative purchasing agreement with the National Joint Powers Association (NJPA) Contract No. 08176-NVS, to purchase a heavy-duty dump truck outfitted with a transfer dump set. This resulted in a quote in the amount of $256,204.06 through its approved dealer, Gibbs Truck Center of Santa Maria, for a dump truck and transfer dump set that met City specifications. There is no local dealer within the City limits for comparative pricing. Street Sweeper Staff recommends a purchase to Schwarze Industries, Inc. in the amount of $303,052.06 for a 2018 Freightliner M2 heavy duty truck outfitted with a Schwarze M6 Avalanche sweeper unit. Pursuant to City purchasing guidelines, staff explored use of a multi-year cooperative purchasing agreement with the Houston-Galveston Area Council (HGAC) Buy Contract No. SW04-16, to purchase a heavy-duty truck outfitted with a street sweeper unit. This resulted in a quote in the amount of $303,052.76 through its approved dealer, Sweeper Shop, for a heavy-duty truck with a street sweeper unit that met City specifications. There is no local dealer within the City limits for comparative pricing. FISCAL IMPACT Lease Purchase The City has strategically used lease options as ways to reduce significant variations in the costs of replacing vehicles or other specialty equipment. Due to the high cost of the dump truck and sweeper, staff proposed and Council approved debt financing of these two vehicles in the 2017- 19 Financial Plan (FY 2017-18) to stabilize the annual costs needed to be paid from the Fleet Fund. Staff is seeking the authorization to execute a lease purchase agreement for the acquisition of the new dump truck and sweeper truck. These purchases are budgeted and approved for replacement as part of the 2017-18 Financial Plan. In the 2017-19 Financial Plan, page A1-28 the estimated debt financing to acquire these vehicles. The proposed annual lease payments are within the budgeted amounts in the financial plan and the proposed financing was reviewed by PFM, the City’s independent financial advisor. The purchase costs for each vehicle listed in the table below are within the approved 2017-19 Financial Plan budget estimates. The total cost is estimated as it includes final outfitting performed by Fleet Services after the vehicle arrives onsite. Packet Pg 92 8 Project 91589 Adopted Budget Fiscal Year Purchase Cost Total Cost Heavy Duty Dump Truck 290,000 17-18 $256,204.06 $260,000 Transfer Dump Trailer Included 17-18 Included Included Project 91595 Adopted Budget Fiscal Year Purchase Cost Total Cost Sweeper Truck 305,000 17-18 $303,052.06 $305,000 ALTERNATIVES Deny Funding and Purchase. The City Council could choose to deny or defer the heavy-duty dump truck and street sweeper vehicles. Staff does not recommend this option as the replacements were approved as part of the 2017-18 Financial Plan. The vehicles above have met their useful target life in both years and mileage. Denying or deferring the purchase could result in costly maintenance and repairs due to aging vehicles. Attachments: a - Dump Truck Quote b - Sweeper Truck Quote c - Disposing of Surplus Units - Section 405-L Procedures d - Surplus Personal and Unclaimed Property Policy - Section 480-A e - Auction Firm Services - Section 480-B f - Lease-Purchase Agreement g - Resolution of City Council Approving Equipment Lease Packet Pg 93 8 Salesperson:Mario Carmona phone 805-922-5778 Date:5/25/2017 TBD Name: CITY:San Luis Obispo ST/ZIP CA 93401 Seller # PHONE:781-7046 FAX: Year New/Used Make Model Body Type Price 2018 NEW INTL HX Dump $143,360.15 $94,400.00 Doc Fee $237,760.15 7.750%$18,426.41 County exempt 4. CA Tire Tax ($1.75 each)$17.50 5. Vehicle Price Including Tax $256,204.06 $0.00 $0.00 $256,204.06 BODY TYPE TRADE ALLOW 9. Optional Svc Contract AMOUNT OWING a. (DMV) Est. Cert. of Title exempt NET TRADE ALLOW b. Origination fee STOCK # Total Other Charges $0.00 Unpaid Balance (Amount Financed)$256,204.06 This order is subject to the written acceptance of Finance Charges Gibbs Truck Centers to which it is Total of Payments $256,204.06 addressed.Deferred Payment Price $256,204.06 Note: If vehicle is Used, The Vehicle is sold "AS IS" Salesman:Mario Carmona WITH NO WARRANTY unless otherwise endorsed by Seller. PURCHASER ACKNOWLEDGES RECEIPT OF AN EXACT Date:COPY OF THIS ORDER. cell 805-680-1374 Purchaser:__________________ Date: City of San Luis Obispo City of San Luis Obispo LIABILITY INSURANCE COVERAGE FOR BODILY INJURY AND PROPERTY DAMAGE CAUSED TO OTHERS IS NOT INCLUDED 8. Unpaid Balance successive month commencing *___________________20_____, and as follows:_________________________________________ *If no date is inserted in blank, the first installment is payable one month from date of agreement. and _________installments of $____________each, and ______ installments of $__________each, payable on the same day each $0.00 City of San Luis Obispo Payment Schedule: Purchase agrees to pay "TOTAL OF PAYMENTS" (item 9 above) in _____ installments of $___________each 7. Trade Allow SERIAL # NJPA Contract # 08176-NVS ischuck@slocity.org 505hp Cummins, 4500RDS Auto Reliance Transfer Set 1. Cash Price = GIBBS INTERNATIONAL INC TBD 2. Sales Tax MODEL SERIAL # 3. Federal Excise Tax (FET) Total Down/Deposit = 25 Prado Rd GIBBS TRUCK CENTERS 365 W Betteravia Rd, Santa Maria Ca. 93455 RETAIL ORDER FOR NEW AND USED MOTOR VEHICLES AND ATTACHMENTS 04508 I hereby order from you, subject to all terms, conditions and agreements contained here. 6. Down Payment/Deposit YEAR TRADE-IN MAKE Packet Pg 94 8 Contract No.:SW04-16 Date Prepared:3/27/2017 Buying Agency:Contractor: Contact Person: Prepared By: Phone:Phone: Fax:Fax: Email:Email: Product Code:BF05 Description: 158845 Cost Cost 0 0 1725 895 0 595 1390 380 94165 Subtotal B: 99150 Cost Cost 1000 1480 1100 1270 400 1380 5000 1760 3100 1750 Subtotal C: 18240 7% D. Total Cost before any other applicable Charges, Trade-Ins, Allowances, Discounts, Etc. (A+B+C) 1 276235 = Subtotal D: 276235 Cost Cost 5415 21402.78 Subtotal E: 26817.78 303052.78 Remote Grease Point, Conveyor/Main Broom Milling Style Drag Shoes Freight Leak Detection Kit 4 Corner Strobe Kit For this transaction the percentage is: Check: Total cost of Unpublished Options (C) cannot exceed 25% of the total of the Base Unit Price plus Published Options (A+B). Freightliner M2 2018 With 300 HP Engine Upgrade Complete Set of Filters, Chassis and Sweeper Broom, Reversable Broom, Tilt Power Dual Dual Rear Strober w/Guard LED Standard Hopper Main Broom, Tube Standard C. Unpublished Options - Itemize below - Attach additional sheet if necessary (Note: Unpublished options are items which were not submitted and priced in Contractor's bid.) LED Arrowstick Arrowboard, Traffic Guide, Split LED Mirror 12" Parabolic Set Subtotal From Additional Sheet(s): Freightliner M2 2015 Camera System, Four Description Description CONTRACT PRICING WORKSHEET For Standard Equipment Purchases M6 Avalanche SE A. Product Item Base Unit Price Per Contractor's H-GAC Contract: 256-851-1151 This Worksheet is prepared by Contractor and given to End User. If a PO is issued, both documents MUST be faxed to H-GAC @ 713-993-4548. Therefore please type or print legibly. City of San Luis Obispo Mr. Isaac Shuck (805) 781-7046 ishuck@slocity.org Schwarze Industries, Inc. Joe Hendrickson 256-990-1755 Description jhendrickson@schwarze.com Description Squeegee Conveyor B. Published Options - Itemize below - Attach additional sheet if necessary - Include Option Code in description if applicable (Note: Published Options are options which were submitted and priced in Contractor's bid.) F. Total Purchase Price (D+E): Delivery Date: 60-90 ARO 20-Sets of Gutter Brooms (100 Pieces No Boxes)Subtotal From Additional Sheet(s): Quantity Ordered: 5-Main Broom Refills Sales Tax, California 7.75% X Subtotal of A + B + C: E. Other Charges, Trade-Ins, Allowances, Discounts, Etc. Description Description Packet Pg 95 8 405-17 Section 405-L: Procedures DISPOSING OF SURPLUS UNITS 1. When a unit is replaced or otherwise permanently removed from service, report to Accounting that it is surplus and available for sale. 2. Include in each such report the following information for each unit reported: City identification number (e.g., 9901) Vehicle identification number (VIN) License number Model year (e.g.,2005), make (e.g., Ford), and model (e.g., F-350) Description (e.g., one-ton truck) Assigned department (e.g., Public Works) Assigned program (e.g., Signal and Light Maintenance) Acquisition year (e.g., 2004-05) Estimated surplus value Basis of estimated surplus value (e.g., blue book, previous auction proceeds) Current odometer or hourmeter reading Justification for replacement Current location Authorization to surplus (e.g., budget document that authorized replacement or other Council authorization to replace or dispose of the unit) 3.Finance Division will dispose of surplus vehicles in accordance Section 480 of the Finance Management manual. Packet Pg 96 8 480-10 Section 480-B AUCTION FIRM SERVICES OVERVIEW To reduce staff time in the sale and disposal of property, to reduce the amount of space being used to store surplus and unclaimed property, to improve the process of estimating the value of surplus property, and to maximize the value of return on surplus property, the Department of Finance & IT is authorized to contract with an auction firm to assist staff in the sale and disposal of personal property, consumable supplies and unclaimed property on an "as available basis" after authorization is given by the Council or the Director of Finance & IT to sell or dispose of City property. The policies and procedures provided below in conjunction with the City's auction firm will provide the staff with the opportunity to systematize the sale and disposal of this property. AUCTION FIRM RESPONSIBILITIES The following responsibilities will normally be assigned to the City's auction firm by Agreement between the City and the firm selected: A. The auction firm will be required to pickup any and all "marketable" surplus property by consignment and deliver this property to their premises where it shall be inventoried, sorted, identified, and catalogued. An auction will be conducted within 30 days of receipt of property and supplies. B. The auction firm will make the necessary arrangements for offering the property for sale by auction to the most qualified buyers to obtain the highest return possible. The auction firm will advertise the auction in a manner that will obtain the maximum participation by the public in at least one newspaper of general circulation in the City of San Luis Obispo for a minimum of five days prior to a scheduled auction. C. The property consigned to the auction firm will remain the property of the City until sold or disposed in accordance with these procedures. D. Property not sold at auction will be disposed by on of the following methods: 1. Consignment to a sub-contractor specializing in unique or special equipment and material for which there is no local market. 2. Direct sale to a buyer of unique or special equipment and material for which there is no local market. 3. By sale as salvage to a local dealer or any recycling firm. 4. By destruction at an appropriate landfill site and certification thereto. 5. Returned to the City. E. The material and equipment not sold at auction will be disposed of by one of the methods described above within 15 days from the date offered at auction. For the purpose of these Packet Pg 97 8 Section 480-A SURPLUS PERSONAL AND UNCLAIMED PROPERTY POLICY OVERVIEW This policy addresses the procedures for the disposal of surplus personal property, unclaimed property, consumable supplies, and junk. The policies and procedures for the disposal or sale of surplus real property, abandoned property and resale inventory are provided in other policy documents. In preparing this policy, not all issues or exceptions could be anticipated. Accordingly, the guidance given in this policy does not relieve Staff from exercising good judgment in their stewardship of the City's property resources. Whenever there is a question or doubt between the guidance provided in this policy and the good judgment expected of a prudent person, good judgment should always be the prevailing standard, with this policy as a minimum standard. LEGISLATIVE POLICY A. Surplus Property Section 906 of the City Charter provides that the Council must approve the sale of surplus property (real or personal) with an estimated value greater than $1,000. B. Unclaimed Property 1. Chapter 3.32 of the City Municipal Code provides for the disposal of unclaimed property by the Chief of Police. This property must be held for a minimum of four months and notice of sale must be given at least five days prior to sale by publication in a newspaper of general circulation. Property not sold may be destroyed by the Police Department after public auction. 2. Sections 2080.4 and 2080.6 of the Civil Code requires any person finding property valued at $10.00 or more to turn the property over to the Police Department within a reasonable time, stating when and where the property was found and providing a description of the property. If the property was saved, a statement is required from the "finder" describing: a.From what and how it was saved. b. Whether the owner of the property is known to the "finder". c.That the property has not been secreted, withheld, or partially disposed. 480-1 Packet Pg 98 8 Surplus Personal and Unclaimed Property Policy ADMINISTRATIVE POLICY A. The Director of Finance & Information Technology (IT) is authorized to declare as surplus those items of personal property and consumable supplies estimated to be less than $1,000 in value; Council approval is required to declare personal and consumable supplies as surplus with a value of $1,000. B. Department Heads are authorized to approve the disposal of property that is essentially without value due to technical obsolescence or its unrepairable (or economically unrepairable) condition. Department Heads may dispose of such junk property in the manner they deem most appropriate, consistent with other rules, regulations, and the City's ethics policy. C. Generally, estimating the value of surplus property is made by the Department Head or designated representative. In unique and unusual cases, Finance will assist Departments in estimating the value of property by using the City's auction firm to provide a professional estimate. However, in all cases, the Department Head must approve in writing the estimated value of the property to be sold or otherwise disposed. D. The Director of Finance & IT is authorized to sell, transfer, trade, or otherwise dispose of surplus personal property, consumable supplies, or unclaimed property in the most cost effective manner. Normally the sale of this property will be at auction with a firm contracted to provide the following services: 1. Sell and dispose of personal property, consumable supplies and unclaimed property at auction. 2. Provide professional estimates as to the value of personal property and consumable supplies when required. 3. Assist in the sale of unique or special property and consumable supplies that requires the use of a "specialty house" to sell or dispose of the property. 4. Dispose of unsaleable property, supplies and equipment at an approved disposal site. E. The Director of Finance & IT may dispose of surplus property and supplies by transfer to another local government agency or non-profit organization based on the recommendation of a Department Head. Although there may be circumstances where it is appropriate to make such transfer without compensation, cash or in-kind services should generally be received in an amount equal to or greater than the estimated value provided by the City's auction firm or the Department Head. In the case of vehicles, "low blue book value" may also be considered. F. When it is a normal business practice, trade value should be obtained to determine the most cost effective method of disposal and as a standard by which to evaluate the services of the City's auction firm. There may be circumstances when trade value of 480-2 Packet Pg 99 8 Surplus Personal and Unclaimed Property Policy property may exceed auction value, in which case the Director of Finance & IT may authorize the trade of surplus property versus sale at auction based on the recommendation of the appropriate Department head. G. Advertising the sale of the City's property and unclaimed property will be made by the City's auction firm in accordance with these procedures, the Auction Services Agreement, and legislative policy. Accordingly, the advertising must disclose that the property for sale at auction is either the surplus property of the City of San Luis Obispo or is unclaimed property in the possession of the City and it must state the date and time of sale. Property sold at auction will be advertised at least five days in a newspaper of general circulation in the City of San Luis Obispo. H. Property determined to be unclaimed by the Chief of Police may be sold at public auction in accordance with these policies and procedures under the following conditions: 1. It is a thing which is commonly the subject of sale. 2. The owner cannot (with reasonable diligence) be found. 3. The owner, if identified, refuses to pay the reasonable charges incurred by the City for storing and safeguarding of the property. PROCEDURES A. Surplus Personal Property and Consumable Supplies 1. Department Heads will identify personal property and supplies that are surplus to their needs and notify the Director of Finance & IT by Memorandum to sell or dispose of property identified, in accordance with City policy and procedures. The property to be declared surplus will be listed and include the City Asset Number (if applicable), a descriptive name of the property, quantity, pickup location, estimated value, and name of the contract person with their extension number. Separate memorandums must be prepared for property estimated to exceed $1,000 in value and for property estimated to be less than $1,000 in value. The memorandum (or listing) must indicate why the property is no longer required. 2. Department Heads may request that Finance assist them in estimating the value of personal property and consumable supplies. In such instances, Finance may request the services of the City's auction firm in estimating these values. However, these services are limited and should not be used except for unique and unusual property. 3. Special handling will be required for the disposal of toxic and hazardous materials, and should be coordinated with the City's Fire Department. 480-3 Packet Pg 100 8 Surplus Personal and Unclaimed Property Policy I. After receipt of a request to dispose of personal property and consumable supplies from a Department Head, Finance will circulate the list of property to other City Departments as an advisory memorandum. The property listed may be claimed by other Departments on a first come first serve basis. After 10 days from the date of the advisory memorandum, this listing will be forwarded to the Housing Authority, San Luis Coastal Unified School District, and United Way for their information. If none of these agencies expresses interest in the remaining property items within 10 days of receiving the listing, then the property will be consigned to the City's auction firm for sale or other method of disposal as determined by the Director of Finance & IT. Except in unusual circumstances, surplus property will generally remain on site pending its final disposition. This means that it is the responsibility of the interested party to make arrangements with the disposing department to view the property, discuss its condition, and coordinate any terms of transfer such as price, timing, and transportation. J. For property with a value of $1,000 or more, the Director of Finance & IT will prepare an Agenda Report for Council approval to declare the property as surplus after review by the operating departments as described above and prior to the consignment of property to the City's auction firm. B. Evidence The provisions of this policy do not address the disposal of property which is classified as evidence. Evidence is governed by the provisions of the penal code and must be dealt with accordingly. For example, evidence may be returned to the owner, subjected to lien, or classed as contraband and accordingly destroyed. However, evidence may also be determined by the Chief of Police to be unclaimed property and, in that event, will be processed in accordance with the policies and procedures provided below. C. Unclaimed Property Unclaimed property received by the City will be processed as follows: 1. The Police Department is required to receive, hold, and safekeep all property valued at more than $10 that is found within the City limits and turned in to the Police Department for safekeeping. The owner will be notified as to where the property may be claimed if the owner's identity can reasonably be determined. 2.If the owner appears within 120 days after receipt of the property by the Police Department, proves ownership, and pays all reasonable charges, the Police Department will return the property to the owner. 3.If the reported value of the property is fifty dollars or more (and no owner appears and proves ownership within 120 days), the Police Department will publish a notice, at least once, in a newspaper of general circulation. After seven days following the first published notice the following actions will be taken if no owner appears and proves ownership of the property; 480-4 Packet Pg 101 8 Surplus Personal and Unclaimed Property Policy G. If the property was found in the course of employment by a City employee, the property shall be sold at public auction. H. The title shall vest in the person who found the property if he or she is willing to pay the cost of the publication. I. If the reported value of the property is less than $50 and no owner appears and proves ownership of the property within 120 days, the title shall vest in the person who found the property, unless the property was found in the course of employment by a City employee, in which case the property shall be sold at public auction. J. Generally, the sale of unclaimed property will be made by the City's auction firm; however, in unique circumstances, the Chief of Police may request that Police Department staff conduct the auction. When the City's auction firm is used, the firm must be notified in writing with a list of property to be sold. This list does not require a statement of estimated values. The letter will give the name of the contact person and extension number, a short title property description, a pickup location, and a pickup time. K. Prior to sale, a listing of unclaimed property shall be provided to the Director of Finance & IT, who will circulate this list as an advisory memorandum to other City Departments. The property listed may be claimed by other Departments on a first come first serve basis. After a 15 day period from the date of the advisory memorandum, the unclaimed property will be available for sale at public auction according to policy. L. The unclaimed property to be sold by the City's auction firm will be transferred on consignment in accordance with the surplus property policies. M. Any property remaining unsold after being offered at public auction may be destroyed or otherwise disposed of by the City's auction firm. Approved by the City Manager on March 1, 1990; revised on January 14, 1994. 480-5 Packet Pg 102 8 Section 480-B AUCTION FIRM SERVICES OVERVIEW To reduce staff time in the sale and disposal of property, to reduce the amount of space being used to store surplus and unclaimed property, to improve the process of estimating the value of surplus property, and to maximize the value of return on surplus property, the Department of Finance & IT is authorized to contract with an auction firm to assist staff in the sale and disposal of personal property, consumable supplies and unclaimed property on an "as available basis" after authorization is given by the Council or the Director of Finance & IT to sell or dispose of City property. The policies and procedures provided below in conjunction with the City's auction firm will provide the staff with the opportunity to systematize the sale and disposal of this property. AUCTION FIRM RESPONSIBILITIES The following responsibilities will normally be assigned to the City's auction firm by Agreement between the City and the firm selected: A.The auction firm will be required to pickup any and all "marketable" surplus property by consignment and deliver this property to their premises where it shall be inventoried, sorted, identified, and catalogued. An auction will be conducted within 30 days of receipt of property and supplies. B.The auction firm will make the necessary arrangements for offering the property for sale by auction to the most qualified buyers to obtain the highest return possible. The auction firm will advertise the auction in a manner that will obtain the maximum participation by the public in at least one newspaper of general circulation in the City of San Luis Obispo for a minimum of five days prior to a scheduled auction. C.The property consigned to the auction firm will remain the property of the City until sold or disposed in accordance with these procedures. D.Property not sold at auction will be disposed by on of the following methods: 1. Consignment to a sub-contractor specializing in unique or special equipment and material for which there is no local market. 2. Direct sale to a buyer of unique or special equipment and material for which there is no local market. 3. By sale as salvage to a local dealer or any recycling firm. 4. By destruction at an appropriate landfill site and certification thereto. 5. Returned to the City. E.The material and equipment not sold at auction will be disposed of by one of the methods described above within 15 days from the date offered at auction. For the purpose of these 480-10 Auction Firm Services Packet Pg 103 8 instructions, the City will give approval as to the disposal method based on the recommendation of the auction firm and the method that is in the best interests of the City. F.The auction firm will provide the Department of Finance & IT with a list of consigned property with a check for the net proceeds from the auction or specialty sale within 60 days of receipt of consigned material and equipment providing the following information: 1. City Asset number (if available) 2. Short title description of the property 3. Date of sale or disposal 4. Purchaser or the disposal site 5. Total purchase price 6. Auction fee 7. Net to City 8. Method of disposal (sale at auction, transfer to a specialty house for sale, direct sale as salvage, transfer to an appropriate landfill or disposal site, return to City) 480-11 Packet Pg 104 8 CALIFORNIA FIXED GENERAL EQUIPMENT LEASE Long Name of Entity: City of San Luis Obispo Address: 990 Palm Street City, State Zip: San Luis Obispo, CA 93401 Attention: Kristin Eriksson Public Finance Office: County: San Luis Obispo Amount: 600,000.00 Rate: 1.94 Maturity Date: December 1, 2022 First Pmt Date: December 1, 2018 Payment Dates: June 1 and December 1 Auto Extend: 5 Governing Body: City Council Resolution Date: November 2, 2017 Dated Date: December 1, 2017 Day: 1st State: California Packet Pg 105 8 $600,000.00 FIXED-RATE EQUIPMENT LEASE/PURCHASE AGREEMENT Dated as of December 1, 2017 by and between ZB, N.A., as Lessor and CITY OF SAN LUIS OBISPO, as Lessee BANK QUALIFIED Packet Pg 106 8 TABLE OF CONTENTS ARTICLE I. Definitions and Exhibits.................................................................................................... 2 Section 1.1 Definitions and Rules of Construction ...................................................................... 2 Section 1.2 Exhibits ........................................................................................................................ 2 ARTICLE II. Representations Covenants and Warranties .................................................................. 3 Section 2.1 Representations, Covenants and Warranties of the Lessee .................................... 3 Section 2.2 Representations, Covenants and Warranties of the Bank ...................................... 9 ARTICLE III. AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS ................... 9 Section 3.1 Lease ............................................................................................................................ 9 Section 3.2 Term ............................................................................................................................. 9 Section 3.3 Extension of Lease Term .......................................................................................... 10 Section 3.4 Lease Payments ......................................................................................................... 10 Section 3.5 Fair Rental Value...................................................................................................... 10 Section 3.6 Budget and Appropriation ....................................................................................... 11 Section 3.7 Use and Possession .................................................................................................... 11 Section 3.8 Abatement of Lease Payments in Event of Loss of Use ......................................... 11 Section 3.9 Possession of Leased Property Upon Termination ................................................ 11 Section 3.10 No Withholding ..................................................................................................... 11 Section 3.11 Net-Net-Net Lease ................................................................................................. 12 Section 3.12 Offset ...................................................................................................................... 12 ARTICLE IV. Insurance ........................................................................................................................ 12 Section 4.1 Casualty and Theft Insurance ................................................................................. 12 Section 4.2 Rental Interruption Insurance ................................................................................ 12 Section 4.3 General Insurance Provisions .................................................................................. 13 ARTICLE V. Damage, Destruction and Eminent Domain; Use of Net Proceeds ............................. 14 Section 5.1 Application of Net Proceeds ..................................................................................... 14 ARTICLE VI. Covenants With Respect to the Leased Property ....................................................... 14 Section 6.1 Assignment by the Bank ........................................................................................... 14 Section 6.2 Interest in the Leased Property and the Lease ...................................................... 14 Section 6.3 Maintenance, Utilities, Taxes and Assessments ..................................................... 15 Section 6.4 Modification of the Leased Property ...................................................................... 15 Section 6.5 Permits ....................................................................................................................... 16 Section 6.6 Bank's Right to Perform for Lessee ........................................................................ 16 Section 6.7 Bank's Disclaimer of Warranties ............................................................................ 16 Section 6.8 Indemnification. ........................................................................................................ 16 Section 6.9 Annual Financial Information ................................................................................. 16 Packet Pg 107 8 ARTICLE VII. Assignment and Subleasing ......................................................................................... 17 Section 7.1 Assignment by the Bank ........................................................................................... 17 Section 7.2 Assignment and Subleasing by the Lessee .............................................................. 17 ARTICLE VIII. Events of Default and Remedies................................................................................. 17 Section 8.1 Events of Default Defined ........................................................................................ 17 Section 8.2 Remedies on Default ................................................................................................. 18 Section 8.3 No Remedy Exclusive ............................................................................................... 18 Section 8.4 Agreement to Pay Attorneys' Fees and Expenses .................................................. 18 Section 8.5 Waiver of Certain Damages ..................................................................................... 18 ARTICLE IX. Prepayment of Lease Proceeds ...................................................................................... 18 Section 9.1 Extraordinary Prepayment From Net Proceeds .................................................... 18 Section 9.2 Prepayment ............................................................................................................... 19 ARTICLE X. Miscellaneous ................................................................................................................... 19 Section 10.1 Notices .................................................................................................................... 19 Section 10.2 System of Registration. ......................................................................................... 19 Section 10.3 Instruments of Further Assurance ...................... Error! Bookmark not defined. Section 10.4 Binding Effect ........................................................................................................ 20 Section 10.5 Amendments .......................................................................................................... 20 Section 10.6 Section Headings ................................................................................................... 20 Section 10.7 Severability ............................................................................................................ 20 Section 10.8 Entire Agreement .................................................................................................. 20 Section 10.9 Execution in Counterparts ................................................................................... 20 Section 10.10 Arbitration ............................................................................................................. 20 Section 10.11 Applicable Law...................................................................................................... 21 EXHIBIT A SCHEDULE OF LEASE PAYMENTS EXHIBIT B DESCRIPTION OF LEASED PROPERTY EXHIBIT C RESOLUTION OF GOVERNING BODY EXHIBIT D OPINION OF LESSEE’S COUNSEL EXHIBIT E SECURITY DOCUMENTS EXHIBIT F DELIVERY AND ACCEPTANCE CERTIFICATE EXHIBIT G: FORM 8038 Packet Pg 108 8 LEASE/PURCHASE AGREEMENT This Lease/Purchase Agreement, dated as of December 1, 2017, by and between ZB, N.A., a national banking association duly organized and existing under the laws of the United States of America, as lessor (the “Bank”), and CITY OF SAN LUIS OBISPO, as lessee (the “Lessee”), a public agency duly organized and existing under the Constitution and laws of the State of California (the “State”); WITNESSETH: WHEREAS, the Lessee desires to finance the acquisition of the equipment and/or other personal property described as the “Leased Property” in Exhibit B (“Leased Property”) by entering into this Lease/Purchase Agreement with the Bank (“Lease”); and WHEREAS, the Bank agrees to lease the Leased Property to the Lessee upon the terms and conditions set forth in this Lease, with rental to be paid by the Lessee equal to the Lease Payments hereunder; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease; NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: Packet Pg 109 8 2 ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1 Definitions and Rules of Construction Unless the context otherwise requires, the capitalized terms used herein shall, for all purposes of this Lease, have the meanings specified in the definitions below. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa. The terms “hereby”, “hereof”, “hereto”, “herein”, “hereunder” and any similar terms, as used in this Lease, refer to this Lease as a whole. “Advance” shall have the meaning set forth in Section 2.1(l)(i)(D) hereof. “Authorizing Resolution” means the Resolution adopted by the Governing Body authorizing this Lease, in substantially the form attached hereto as Exhibit C. “Bank” shall have the meaning set forth in the Preamble hereof. “Business Day” means any day except a Saturday, Sunday, or other day on which banks in Salt Lake City, Utah or the State are authorized to close. “Code” means the Internal Revenue Code of 1986, as amended. “Commencement Date” means the date this Lease is executed by the Bank and the Lessee. “Fiscal Year” means the period extending from July 1 of each calendar year to June 30 of the subsequent calendar year. “Governing Body” means the governing body of the Lessee. “Lease” shall have the meaning set forth in the Whereas clauses hereof. “Lease Payment Date” shall have the meaning set forth in Section 3.4(a) hereof. “Lease Payments” means the rental payments described in Exhibit A hereto. “Leased Property” shall have the meaning set forth in the Whereas clauses hereof and in Exhibit B. “Lessee” shall have the meaning set forth in the Preamble hereof. “Net Proceeds” means insurance or eminent domain proceeds received with respect to the Leased Property, less expenses incurred in connection with the collection of such proceeds. “Obligation Instrument” shall have the meaning set forth in Section 2.1(c) hereof. “Permitted Encumbrances” means, as of any particular time: (i) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the Lessee may, pursuant to provisions of Section 6.3 hereof, permit to remain unpaid; (ii) this Lease; (iii) any contested right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law to the extent permitted under Section 6.4(b) hereof; (iv) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the execution date of this Lease and which the Lessee hereby certifies will not materially impair the use of the Leased Property by the Lessee; and (v) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of execution of this Lease and to which the Bank and the Lessee consent in writing. “Rebate Exemption” shall have the meaning set forth in Section 2.1(l)(ii)(A) hereof. “Regulations” shall have the meaning set forth in Section 2.1(l)(i) hereof. “Term” means the term of this Lease as described in Section 3.2 hereof. “State” shall have the meaning set forth in the Preamble hereof. Section 1.2 Exhibits. The Exhibits attached to this Lease are by this reference made a part of this Lease. Packet Pg 110 8 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.1 Representations, Covenants and Warranties of the Lessee. The Lessee represents, covenants and warrants to the Bank as follows: (a) Due Organization and Existence. The Lessee is a public agency of the State duly organized and existing under the Constitution and laws of the State. (b) Authorization; Enforceability. The Constitution and laws of the State authorize the Lessee to enter into this Lease and to enter into the transactions contemplated by, and to carry out its obligations under, this Lease. The Lessee has duly authorized, executed and delivered this Lease in accordance with the Constitution and laws of the State. This Lease constitutes the legal, valid and binding special obligation of the Lessee enforceable in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State. (c) No Conflicts or Default; Other Liens or Encumbrances. Neither the execution and delivery of this Lease nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby (i) conflicts with or results in a breach of the terms, conditions, provisions, or restrictions of any existing law, or court or administrative decree, order, or regulation, or agreement or instrument to which the Lessee is now a party or by which the Lessee is bound, including without limitation any agreement or instrument pertaining to any bond, note, lease, certificate of participation, debt instrument, or any other obligation of the Lessee (any such bond, note, lease, certificate of participation, debt instrument, and other obligation being referred to herein as an “Obligation Instrument”), (ii) constitutes a default under any of the foregoing, or (iii) results in the creation or imposition of any pledge, lien, charge or encumbrance whatsoever upon any of the property or assets of the Lessee, or upon the Leased Property except for Permitted Encumbrances. By way of example, and not to be construed as a limitation on the representations set forth in the immediately preceding paragraph: (A) no portion of the Leased Property is pledged or encumbered to secure or support any Obligation Instrument; and (B) the interests of the Bank in the Leased Property hereunder do not violate the terms, conditions or provisions of any restriction or revenue pledge in any agreement or instrument pertaining to any Obligation Instrument. (d) Compliance with Open Meeting Requirements. The Governing Body has complied with all applicable open public meeting and notice laws and requirements with respect to the meeting at which the Lessee’s execution of this Lease was authorized. Packet Pg 111 8 4 (e) Compliance with Bidding Requirements. Either there are no procurement or public bidding laws of the State applicable to the acquisition and leasing of the Leased Property pursuant to this Lease, or the Governing Body and the Lessee have complied with all such procurement and public bidding laws as may be applicable hereto. (f) No Adverse Litigation. There are no legal or governmental proceedings or litigation pending, or to the best knowledge of the Lessee threatened or contemplated (or any basis therefor) wherein an unfavorable decision, ruling, or finding might adversely affect the transaction contemplated in or the validity of this Lease. (g) Opinion of Lessee’s Counsel. The letter attached to this Lease as Exhibit D is a true copy of the opinion of Lessee’s Counsel. (h) Governmental Use of Leased Property. During the Term of this Lease, the Leased Property will be used solely by the Lessee, and only for the purpose of performing one or more governmental or proprietary functions of the Lessee consistent with the permissible scope of the Lessee’s authority, and the Leased Property will not be subject to any direct or indirect private business use. (i) Other Representations and Covenants. The representations, covenants, warranties, and obligations set forth in this Article are in addition to and are not intended to limit any other representations, covenants, warranties, and obligations set forth in this Lease. (j) No Defaults. The Lessee has never failed to make an appropriation or defaulted under any of its payment or performance obligations or covenants, either under any municipal lease of the same general nature as this Lease, or under any of its bonds, notes, or other obligations of indebtedness for which its revenues or general credit are pledged or are liable. (k) No Legal Violation. The Leased Property is not, and at all times during the Term of this Lease will not be in violation of any federal, state or local law, statute, ordinance or regulation. (l) General Tax and Arbitrage Representations and Covenants (i) The certifications and representations made by the Lessee in this Lease are intended, among other purposes, to be a certificate permitted in Section 1.148- 2(b) of the Treasury Regulations promulgated pursuant to Section 148 of the Code (the “Regulations”), to establish the reasonable expectations of the Lessee at the time of the execution of this Lease made on the basis of the facts, estimates and circumstances in existence on the date hereof. The Lessee further certifies and covenants as follows: (A) The Lessee has not been notified of any disqualification or proposed disqualification of it by the Commissioner of the Internal Revenue Service as an issuer which may certify bond issues. (B) To the best knowledge and belief of the Lessee, there are no facts, estimates or circumstances that would materially change the conclusions, certifications or representations set forth in this Lease, and the expectations herein set forth are reasonable. Packet Pg 112 8 5 (C) The Scheduled Term of this Lease does not exceed the useful life of the Leased Property, and the weighted average term of this Lease does not exceed the weighted average useful life of the Leased Property. (D) Each advance of funds by the Bank to finance Leased Property under this Lease (each an “Advance”) will occur only when and to the extent that the Lessee has reasonably determined and identified the nature, need, and cost of each item of Leased Property pertaining to such Advance. (E) No use will be made of the proceeds of this Lease or any such Advance, or any funds or accounts of the Lessee which may be deemed to be proceeds of this Lease or any such Advance, which use, if it had been reasonably expected on the date of the execution of this Lease or of any such Advance, would have caused this Lease or any such Advance to be classified as an “arbitrage bond” within the meaning of Section 148 of the Code. (F) The Lessee will at all times comply with the rebate requirements of Section 148(f) of the Code as they pertain to this Lease, to the extent applicable. (G) In order to preserve the status of this Lease and the Advances as other than “private activity bonds” as described in Sections 103(b)(1) and 141 of the Code, as long as this Lease and any such Advances are outstanding and unpaid: (I) none of the proceeds from this Lease or the Advances or any facilities or assets financed therewith shall be used for any “private business use” as that term is used in Section 141(b) of the Code and defined in Section 141(b)(6) of the Code; (II) the Lessee will not allow any such “private business use” to be made of the proceeds of this Lease or the Advances or any facilities or assets financed therewith; and (III) none of the Advances or Lease Payments due hereunder shall be secured in whole or in part, directly or indirectly, by any interest in any property used in any such “private business use” or by payments in respect of such property, and shall not be derived from payments in respect of such property. (H) The Lessee will not take any action, or omit to take any action, which action or omission would cause the interest component of the Lease Payments to be ineligible for the exclusion from gross income as provided in Section 103 of the Code. (I) The Lessee is a “governmental unit” within the meaning of Section 141(b)(6) of the Code. (J) The obligations of the Lessee under this Lease are not federally guaranteed within the meaning of Section 149(b) of the Code. Packet Pg 113 8 6 (K) This Lease and the Advances to be made pursuant hereto will not reimburse the Lessee for any expenditures incurred prior to the date of this Lease and do not constitute a “refunding issue” as defined in Section 1.150-1(d) of the Regulations, and no part of the proceeds of this Lease or any such Advances will be used to pay or discharge any obligations of the Lessee the interest on which is or purports to be excludable from gross income under the Code or any predecessor provision of law. (L) In compliance with Section 149(e) of the Code relating to information reporting, the Lessee will file or cause to be filed with the Internal Revenue Service Center, Ogden, UT 84201, within fifteen (15) days from the execution of this Lease, IRS Form 8038-G or 8038-GC, as appropriate, reflecting the total aggregate amount of Advances that can be made pursuant to this Lease. (M) None of the proceeds of this Lease or the Advances to be made hereunder will be used directly or indirectly to replace funds of the Lessee used directly or indirectly to acquire obligations at a yield materially higher than the yield on this Lease or otherwise invested in any manner. No portion of the Advances will be made for the purpose of investing such portion at a materially higher yield than the yield on this Lease. (N) Inasmuch as Advances will be made under this Lease only when and to the extent the Lessee reasonably determines, identifies and experiences the need therefor, and will remain outstanding and unpaid only until such time as the Lessee has moneys available to repay the same, the Lessee reasonably expects that (I) the Advances will not be made sooner than necessary; (II) no proceeds from the Advances will be invested at a yield higher than the yield on this Lease; and (III) the Advances and this Lease will not remain outstanding and unpaid longer than necessary. (O) The Lessee will either (i) spend all of the moneys advanced pursuant to this Lease immediately upon receipt thereof, without investment, on the portion of the Leased Property that is to be financed thereby; or (ii) invest such moneys at the highest yield allowable and practicable under the circumstances until they are to be spent on the portion of the Leased Property that is to be financed thereby, and track, keep records of, and pay to the United States of America, all rebatable arbitrage pertaining thereto, at the times, in the amounts, in the manner, and to the extent required under Section 148(f) of the Code and the Treasury Regulations promulgated in connection therewith. At least five percent (5%) of the total amount of moneys that are expected to be advanced pursuant to this Lease are reasonably expected to have been expended on the Leased Property within six (6) months from the date of this Lease. All moneys to be advanced pursuant to this Lease are reasonably expected to have been expended on the Leased Property no later than the earlier of: (I) the date twelve (12) months from the date such moneys are advanced; and (II) the date three (3) years from the date of this Lease. Packet Pg 114 8 7 (P) This Lease and the Advances to be made hereunder are not and will not be part of a transaction or series of transactions that attempts to circumvent the provisions of Section 148 of the Code and the regulations promulgated in connection therewith (I) enabling the Lessee to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, and (II) overburdening the tax-exempt bond market, as those terms are used in Section 1.148-10(a)(2) of the Regulations. (ii) Arbitrage Rebate Under Section 148(f) of the Code. With respect to the arbitrage rebate requirements of Section 148(f) of the Code, either (check applicable box): (A) Lessee Qualifies for Small Issuer Exemption from Arbitrage Rebate. The Lessee hereby certifies and represents that it qualifies for the exception contained in Section 148(f)(4)(D) of the Code from the requirement to rebate arbitrage earnings from investment of proceeds of the Advances made under this Lease (the “Rebate Exemption”) as follows: (1) The Lessee has general taxing powers. (2) Neither this Lease, any Advances to be made hereunder, nor any portion thereof are private activity bonds as defined in Section 141 of the Code (“Private Activity Bonds”). (3) Ninety-five percent (95%) or more of the net proceeds of the Advances to be made hereunder are to be used for local government activities of the Lessee (or of a governmental unit, the jurisdiction of which is entirely within the jurisdiction of the Lessee). (4) Neither the Lessee nor any aggregated issuer has issued or is reasonably expected to issue any tax-exempt obligations other than Private Activity Bonds (as those terms are used in Section 148(f)(4)(D) of the Code) during the current calendar year, including the Advances to be made hereunder, which in the aggregate would exceed $5,000,000 in face amount, or $15,000,000 in face amount for such portions, if any, of any tax- exempt obligations of the Lessee and any aggregated issuer as are attributable to construction of public school facilities within the meaning of Section 148(f)(4)(D)(vii) of the Code. For purposes of this Section, “aggregated issuer” means any entity which (a) issues obligations on behalf of the Lessee, (b) derives its issuing authority from the Lessee, or (c) is subject to substantial control by the Lessee. The Lessee hereby certifies and represents that it has not created, does not intend to create and does not expect to benefit from any entity Packet Pg 115 8 8 formed or availed of to avoid the purposes of Section 148(f)(4)(D)(i)(IV) of the Code. Accordingly, the Lessee will qualify for the Rebate Exemption granted to governmental units issuing less than $5,000,000 under Section 148(f)(4)(D) of the Code ($15,000,000 for the financing of public school facilities as described above), and the Lessee shall be treated as meeting the requirements of Paragraphs (2) and (3) of Section 148(f) of the Code relating to the required rebate of arbitrage earnings to the United States with respect to this Lease and the Advances to be made hereunder. - or - (B) Lessee Will Keep Records of and Will Rebate Arbitrage. The Lessee does not qualify for the small issuer Rebate Exemption described above, and the Lessee hereby certifies and covenants that it will account for, keep the appropriate records of, and pay to the United States, the rebate amount, if any, earned from the investment of gross proceeds of this Lease and the Advances to be made hereunder, at the times, in the amounts, and in the manner prescribed in Section 148(f) of the Code and the applicable Regulations promulgated with respect thereto. (m) Qualified Tax-Exempt Obligations. Based on the following representations of the Lessee, the Lessee hereby designates this Lease and the interest components of the Lease Payments hereunder as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code: (i) this Lease and the Lease Payments hereunder are not private activity bonds within the meaning of Section 141 of the Code; (ii) the Lessee reasonably anticipates that it, together with all aggregated issuers, will not issue during the current calendar year obligations (other than those obligations described in clause (iii) below) the interest on which is excluded from gross income for federal income tax purposes under Section 103 of the Code which, when aggregated with this Lease, will exceed an aggregate principal amount of $10,000,000; (iii) and notwithstanding clause (ii) above, Lessee and its aggregated issuers may have issued in the current calendar year and may continue to issue during the remainder of the current calendar year private activity bonds other than qualified 501(c)(3) bonds as defined in Section 145 of the Code. For purposes of this subsection, “aggregated issuer” means any entity which (a) issues obligations on behalf of the Lessee, (b) derives its issuing authority from the Lessee, or (c) is subject to substantial control by the Lessee. The Lessee hereby certifies and represents that it has not created, does not intend to create and does not expect to benefit from any entity formed or availed of to avoid the purposes of Section 265(b)(3)(C) or (D) of the Code. Packet Pg 116 8 9 Section 2.2 Representations, Covenants and Warranties of the Bank. The Bank is a national banking association, duly organized, existing and in good standing under and by virtue of the laws of the United States of America, has the power to enter into this Lease, is possessed of full power to own and hold real and personal property, and to lease and sell the same, and has duly authorized the execution and delivery of this Lease. This Lease, constitutes the legal, valid and binding obligation of the Bank, enforceable in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the rights of creditors generally. ARTICLE III AGREEMENT TO LEASE; TERM OF LEASE; LEASE PAYMENTS Section 3.1 Lease. The Bank hereby leases the Leased Property to the Lessee, and the Lessee hereby leases the Leased Property from the Bank, upon the terms and conditions set forth herein. In conjunction therewith, Lessee shall act as agent of the Bank to acquire and obtain delivery of the Leased Property and hereby agrees to cause the acquisition and delivery of the Leased Property at the times and places set forth for such acquisitions and delivery. It is hereby understood that all such Lease Payments shall be abated until the Leased Property shall be acquired and delivered with such Lease Payments resuming proportionately with the actual acquisition and delivery of such Leased Property. Concurrently with its execution of this Lease, the Lessee shall deliver to the Bank fully completed documents substantially in the forms attached hereto as Exhibits A through E and Exhibit H. Upon delivery and acceptance of the Leased Property by the Lessee, Lessee shall deliver to Bank an executed copy of the Delivery and Acceptance Certificate attached hereto as Exhibit F. As a condition to precedent to each Advance, Lessee shall provide Lessor with a completed Lease Purchase Agreement Form of Advance attached in Exhibit G along with: 1) the name and address of or wire instructions for all Payees to whom funds should be disbursed from such Advance; 2) the amount to be Advanced; 3) the purpose(s) for such Advance; and 4) all invoices of vendors showing that each obligation, item of cost, or expense has been properly incurred, is a proper charge against this Lease/Purchase Agreement, and has not been the basis for a previous Advance. Section 3.2 Term. The Term of this Lease shall commence on the date of execution hereof and shall end on December 1, 2022 (the “Maturity Date”), unless extended pursuant to Section 3.3, or unless terminated prior thereto upon the earliest of any of the following events: (a) Default and Termination. A default by the Lessee and the Bank's election to terminate this Lease under Section 8.2 hereof; Packet Pg 117 8 10 (b) Payment of All Lease Payments. The payment by the Lessee of all Lease Payments required under Section 3.4 hereof; (c) Prepayment. Upon a prepayment of Lease Payments pursuant to Article IX hereof. Section 3.3 Extension of Lease Term. If on the Maturity Date, the Lease Payments shall not be fully paid, or if the Lease Payments hereunder shall have been abated at any time and for any reason, then the Term shall be extended until all Lease Payments shall be fully paid, except that the Term shall in no event be extended ten years beyond the Maturity Date. Section 3.4 Lease Payments. (a) Time and Amount. Subject to the provisions of Section 3.8 (regarding abatement in event of loss of use of any portion of the Leased Property), and Article IX (regarding prepayment of Lease Payments), the Lessee agrees to pay to the Bank, its successors and assigns, as annual rental for the use and possession of the Leased Property, the Lease Payments (denominated into components of principal and interest) in the amounts specified in Exhibit A, to be due and payable in arrears on each payment date identified in Exhibit A (or if such day is not a Business Day, the next succeeding Business Day) specified in Exhibit A (the “Lease Payment Date”). In the event that the Lessee does not pay a Lease Payment due on the respective Lease Payment Date, the Bank shall provide prompt written notice to the Lessee of such failure to pay; provided, however, that failure to give such notice shall not excuse any event of default under such Section 8.1 hereof. (b) Rate on Overdue Payments. In the event the Lessee should fail to make any of the Lease Payments required in this Section, the Lease Payment in default shall continue as an obligation of the Lessee until the amount in default shall have been fully paid, and the Lessee agrees to pay the same with interest thereon, to the extent permitted by law, from the date such amount was originally payable at the rate equal to the original interest rate payable with respect to such Lease Payments. (c) Additional Payments. Any additional payments required to be made by the Lessee hereunder, including but not limited to Sections 4.1, 4.2, 4.3, and 6.3 of this Lease, shall constitute additional rental for the Leased Property. Section 3.5 Fair Rental Value. The Lease Payments shall be paid by the Lessee in consideration of the right of possession of, and the continued quiet use and enjoyment of, the Leased Property during each such period for which said Lease Payments are to be paid. The parties hereto have agreed and determined that such total rental represents the fair rental value of the Leased Property. In making such determination, consideration has been given to the value of the Leased Property, other obligation of the parties under this Lease (including but not limited to costs of maintenance, taxes and insurance), the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the Lessee and the general public, and the transfer of the Bank's leasehold interest in the Leased Property at the end of the Term. Packet Pg 118 8 11 Section 3.6 Budget and Appropriation. Subject to the provisions of Section 3.8, the Lessee covenants to take such action as may be necessary to include all Lease Payments due hereunder in its annual budget and to make the necessary annual appropriations therefor, and to maintain such items to the extent unpaid for that Fiscal Year in its budget throughout such Fiscal Year. The covenants on the part of the Lessee herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the ministerial duty of each and every public official of the Lessee 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 Lessee to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the Lessee. Section 3.7 Use and Possession. The total Lease Payments due in any Fiscal Year shall be for the Lessee's right to use and possession of the Leased Property for such Fiscal Year. Section 3.8 Abatement of Lease Payments in Event of Loss of Use. (a) Period. The obligation of the Lessee to pay Lease Payments shall be abated during any period in which by reason of damage, destruction or taking by eminent domain or condemnation with respect to any portion of the Leased Property there is substantial interference with the Lessee's right to use and possession of such portion of the Leased Property. (b) Amount. The amount of such abatement shall be determined by the Lessee such that the resulting Lease Payments represent fair consideration for the Lessee's right to use and possession of the portion of the Leased Property not damaged, destroyed or taken. Such abatement shall commence with such damage, destruction or taking and end with the substantial completion of the replacement or work or repair; provided, however, that during abatement, special sources of money, including without limitation proceeds of rental interruption insurance, shall be applied to pay the Lease Payments. (c) Repair or Replacement. In the event of such abatement, the Lessee will use its best efforts to repair or replace the damaged or destroyed or taken portion of the Leased Property, as the case may be, from Net Proceeds, subject to the requirements of Section 5.1 hereof, or special funds of the Lessee or other moneys the application of which would not result in the obligations of the Lessee hereunder constituting indebtedness of the Lessee in contravention of the Constitution and laws of the State. Section 3.9 Possession of Leased Property Upon Termination. Upon termination of this Lease pursuant to Section 3.2(a), the Lessee shall transfer the Leased Property to the Bank in such manner as may be specified by the Bank, and the Bank shall have the right to take possession of the Leased Property by virtue of the Bank’s ownership interest as lessor of the Leased Property. To the extent the Leased Property is equipment, the Lessee at the Bank’s direction shall ship the Leased Property to the destination designated by the Bank, by loading the Leased Property at the Lessee’s cost and expense, on board such carrier as the Bank shall specify. Section 3.10 No Withholding. Packet Pg 119 8 12 Notwithstanding any dispute between the Bank and the Lessee, including a dispute as to the failure of any portion of the Leased Property in use by or possession of the Lessee to perform the task for which it is leased, the Lessee shall make all Lease Payments when due and shall not withhold any Lease Payments pending the final resolution of such dispute. Section 3.11 Net-Net-Net Lease. This Lease shall be deemed and construed to be a “net-net-net lease” and the Lessee hereby agrees that the Lease Payments shall be an absolute net return to the Bank, free and clear of any expenses, charges or set-offs whatsoever, except as expressly provided herein. Section 3.12 Offset. Subject to the provisions of Section 3.8, Lease Payments or other sums payable by the Lessee pursuant to this Lease shall not be subject to offset or counterclaim and the Lessee shall not be entitled to any credit against such Lease Payments or other sums by reason of any dispute between the Lessee and the Bank, any vendor or manufacturer of any part of the Leased Property, or any other person. ARTICLE IV INSURANCE Section 4.1 Casualty and Theft Insurance. (a) Casualty and Theft Insurance: Coverage. The Lessee shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, insurance against loss or damage to any portion of the Leased Property caused by fire and lightning, with extended coverage and theft, vandalism and malicious mischief insurance. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. (b) Amount. Such insurance shall be in an amount (except that such insurance may be subject to deductible clauses of not to exceed $50,000 for any one loss) not less than the replacement cost of the Leased Property. (c) Joint or Self-Insurance. Such insurance may be maintained as part of or in conjunction with any other insurance carried or required to be carried by the Lessee, and, subject to Bank’s consent and compliance with Section 4.3(b) hereof, may be maintained in the form of self-insurance by the Lessee. (d) Payment of Net Proceeds. The Net Proceeds of such insurance shall be applied as provided in Section 5.1. Section 4.2 Rental Interruption Insurance. (a) Coverage and Amount. The Lessee shall maintain or cause to be maintained, rental income or use and occupancy insurance in an amount not less than the maximum Lease Payments payable in any one year period (calculated based upon the maximum principal component hereunder as provided in Exhibit A and an interest rate as provided in Exhibit A hereto), to insure against abatement of Lease Packet Pg 120 8 13 Payments caused by perils covered by the insurance required to be maintained as provided in Section 4.1 hereof. (b) Joint Insurance. Such insurance may be maintained as part of or in conjunction with any other rental income insurance carried by the Lessee. (c) Payment of Net Proceeds. The Net Proceeds of such rental interruption insurance shall be paid to the Bank to be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. Section 4.3 General Insurance Provisions. (a) Payment of Premiums. The Lessee shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. (b) Self Insurance. The Lessee may only self insure against the risks described in Section 4.1 hereof if and to the extent such self-insurance method or plan of protection shall afford reasonable protection to the Bank in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by other public agencies in the State other than the Lessee. Insurance provided through a California joint powers authority of which the Lessee is a member or with which the Lessee contracts for insurance shall be deemed to be self-insurance for purposes hereof. Any self-insurance maintained by the Lessee pursuant to this Article IV shall comply with the following terms: (1) The self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid; the adequacy of such fund shall be evaluated on an annual basis by an independent insurance consultant; and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of such independent insurance consultant; (2) [Reserved] (3) In the event that the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by an independent insurance consultant, shall be maintained. Packet Pg 121 8 14 ARTICLE V DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS Section 5.1 Application of Net Proceeds. If Net Proceeds received by the Lessee are expected to equal at least 110% of the projected costs of replacement or repair, as demonstrated in an attached reconstruction budget provided at the time, and, in the event that damage, destruction or taking results or is expected to result in an abatement of Lease Payments, such replacement or repair can be fully completed within a period not in excess of the period in which rental interruption insurance proceeds, as described in Section 4.2 together with other identified available moneys, will be available to pay in full all Lease Payments coming due during such period as demonstrated in an attached reconstruction schedule provided at the time, then such Net Proceeds shall be used by the Lessee to replace or repair the damaged or taken facilities. If the Lessee cannot make the representations regarding repair or reconstruction in the paragraph above or replacement or repair of any portion of the Leased Property is not economically feasible or in the best interest of the Lessee, then the Net Proceeds shall be applied to prepayment of Lease Payments as provided in Article IX hereof; provided that in the event of damage or destruction in whole of the Leased Property and in the event such Net Proceeds, together with any other funds then on hand are not sufficient to prepay all the Lease Payments then outstanding, then the Lessee shall not be permitted to certify that repair, replacement or improvement of all of the Leased Property is not economically feasible or in the best interest of the Lessee. In such event, the Lessee shall proceed to repair, replace or improve the Leased Property as described herein from legally available funds in the then current Fiscal Year. ARTICLE VI COVENANTS WITH RESPECT TO THE LEASED PROPERTY Section 6.1 Use of the Leased Property. The Lessee represents and warrants that it has an immediate need for, and expects to make immediate use of, all of the Leased Property to carry out and give effect to the public purposes of the Lessee, which need is not temporary or expected to diminish in the foreseeable future. Section 6.2 Interest in the Leased Property and the Lease. (a) Bank Holds Leasehold Interest During Term. During the Term of this Lease, the Bank does and shall hold an ownership interest in the Leased Property as lessor thereof. The Lessee shall take any and all actions reasonably required, including but not limited to executing and filing any and all documents reasonably required, to maintain and evidence such title and interest at all times during the Term of this Lease. (b) Title Transferred to Lessee at End of Term. Upon expiration of the Term as provided in Section 3.2(b) or 3.2(c) hereof, all right, title and interest of the Bank in and to all of the Leased Property shall be transferred to and vest in the Lessee, without the necessity of any additional document of transfer. Packet Pg 122 8 15 Section 6.3 Maintenance, Utilities, Taxes and Assessments. (a) Maintenance; Repair and Replacement. Throughout the Term of this Lease, as part of the consideration for the rental of the Leased Property, all repair and maintenance of the Leased Property shall be the responsibility of the Lessee, and the Lessee 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 Lessee or any sublessee thereof. In exchange for the Lease Payments herein provided, the Bank agrees to provide only the Leased Property, as hereinbefore more specifically set forth. The Lessee waives the benefits of subsections 1 and 2 of Section 1932 of the California Civil Code, but such waiver shall not limit any of the rights of the Lessee under the terms of this Lease. (b) Tax and Assessments; Utility Charges. The Lessee shall also pay or cause to be paid all taxes and assessments, including but not limited to utility charges, of any type or nature charged to the Lessee or levied, assessed or charged against any portion of 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 Lessee shall be obli gated to pay only such installments as are required to be paid during the Term of this Lease as and when the same become due. (c) Contests. The Lessee may, at its 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; provided that prior to such nonpayment it shall furnish the Bank with the opinion of an independent counsel acceptable to the Bank to the effect that, by nonpayment of any such items, the interest of the Bank in such portion of the Leased Property will not be materially endangered and that the Leased Property will not be subject to loss or forfeiture. Otherwise, the Lessee shall promptly pay such taxes, assessments or charges or make provisions for the payment thereof in form satisfactory to the Bank. Section 6.4 Modification of the Leased Property. (a) Additions, Modifications and Improvements. The Lessee shall, at its own expense, have the right to make additions, modifications, and improvements to any portion of the Leased Property if such improvements are necessary or beneficial for the use of such portion of the Leased Property. All such additions, modifications and improvements shall thereafter comprise part of the Leased Property and be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in any way damage any portion of the Leased Property or cause it to be used for purposes other than those authorized under the provisions of State and federal law or in any way which would impair the State tax-exempt status or the exclusion from gross income for federal income tax purposes of the interest components of the Lease Payments; and the Leased Property, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is not substantially less than the value of the Leased Property immediately prior to the making of such additions, modifications and improvements. (b) No Liens. Except for Permitted Encumbrances, the Lessee will not permit (i) any liens or encumbrances to be established or remain against the Leased Property or (ii) any mechanic's or other lien to be established or remain against the Leased Property for labor or materials furnished in connection with any additions, modifications or improvements made by the Lessee pursuant to this Section; provided that if any such mechanic’s lien is established and the Lessee shall first notify or cause to be notified the Bank of the Lessee's intention to do so, the Lessee 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 Packet Pg 123 8 16 and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Bank with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Bank. The Bank will cooperate fully in any such contest. Section 6.5 Permits. The Lessee will provide all permits and licenses necessary for the ownership, possession, operation, and use of the Leased Property, and will comply with all laws, rules, regulations, and ordinances applicable to such ownership, possession, operation, and use. If compliance with any law, rule, regulation, ordinance, permit, or license requires changes or additions to be made to the Leased Property, such changes or additions will be made by the Lessee at its own expense. Section 6.6 Bank's Right to Perform for Lessee. If the Lessee fails to make any payment or to satisfy any representation, covenant, warranty, or obligation contained herein or imposed hereby, the Bank may (but need not) make such payment or satisfy such representation, covenant, warranty, or obligation, and the amount of such payment and the expense of any such action incurred by the Bank, as the case may be, will be deemed to be additional rent payable by the Lessee on the Bank’s demand. Section 6.7 Bank's Disclaimer of Warranties. The Bank has played no part in the selection of the Leased Property, the Lessee having selected the Leased Property independently from the Bank. The Bank, at the Lessee’s request, has acquired or arranged for the acquisition of the Leased Property and shall lease the same to the Lessee as herein provided, the Bank’s only role being the facilitation of the financing of the Leased Property for the Lessee. THE BANK MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, QUALITY, DURABILITY, SUITABILITY, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE LESSEE OF THE LEASED PROPERTY, OR ANY PORTION THEREOF. THE LESSEE ACKNOWLEDGES THAT THE BANK IS NOT A MANUFACTURER OR VENDOR OF ALL OR ANY PORTION OF THE LEASED PROPERTY, AND THAT THE LESSEE IS LEASING THE LEASED PROPERTY AS IS. In no event shall the Bank be liable for incidental, direct, indirect, special or consequential damages, in connection with or arising out of this Lease, for the existence, furnishing, functioning or Lessee's use and possession of the Leased Property. Section 6.8 Indemnification. To the extent permitted by applicable law, the Lessee hereby agrees to indemnify and hold harmless the Bank, its directors, officers, shareholders, employees, agents, and successors from and against any loss, claim, damage, expense, and liability resulting from or attributable to the acquisition, construction, or use of the Leased Property. Notwithstanding the foregoing, the Bank shall not be indemnified for any liability resulting from the gross negligence or willful misconduct of the Bank. Section 6.9 Annual Financial Information. During the term of this Lease, the Lessee covenants and agrees to provide the Bank as soon as practicable when they are available; (i) a copy of the Lessee's final annual budget for each fiscal year; (ii) a copy of the Lessee's most recent financial statements; and (iii) any other financial reports the Bank may request from time to time. Packet Pg 124 8 17 ARTICLE VII ASSIGNMENT AND SUBLEASING Section 7.1 Assignment by the Bank. The parties hereto agree that all rights of Bank hereunder may be assigned, transferred or otherwise disposed of, either in whole or in part, provided that notice of any such assignment, t ransfer or other disposition is given to Lessee. Section 7.2 Assignment and Subleasing by the Lessee. The Lessee may not assign this Lease or sublease all or any portion of the Leased Property unless both of the following shall have occurred: (i) the Bank shall have consented to such assignment or sublease; and (ii) the Bank shall have received assurance acceptable to the Bank that such assignment or sublease: (A) is authorized under applicable state law, (B) will not adversely affect the validity of this Lease, and (C) will not adversely affect the exclusion from gross income for federal income tax purposes of the interest components of the Lease Payments. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.1 Events of Default Defined. The following shall be “events of default” under this Lease and the terms “events of default” and “default” shall mean, whenever they are used in this Lease, any one or more of the following events: (a) Payment Default. Failure by the Lessee to pay any Lease Payment required to be paid hereunder by the corresponding Lease Payment Date. (b) Covenant Default. Failure by the Lessee to observe and perform any warranty, covenant, condition or agreement on its part to be observed or performed herein or otherwise with respect hereto other than as referred to in clause (a) of this Section, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the Lessee by the Bank; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Bank shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Lessee within the applicable period and diligently pursued until the default is corrected. (c) Bankruptcy or Insolvency. The filing by the Lessee of a case in bankruptcy, or the subjection of any right or interest of the Lessee under this Lease to any execution, garnishment or attachment, or adjudication of the Lessee as a bankrupt, or assignment by the Lessee for the benefit of creditors, or the entry by the Lessee into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Lessee in any proceedings instituted under the provisions of the federal bankruptcy code, as amended, or under any similar act which may hereafter be enacted. Packet Pg 125 8 18 Section 8.2 Remedies on Default. Whenever any event of default referred to in Section 8.1 hereof shall have happened and be continuing, it shall be lawful for the Bank to exercise any and all remedies available pursuant to law or granted pursuant to this Lease. 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. Section 8.3 No Remedy Exclusive. No remedy conferred herein upon or reserved to the Bank 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 any 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 Bank to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice, other than such notice as may be required in this Article or by law. Section 8.4 Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this Lease should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will pay on demand to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party. Section 8.5 Waiver of Certain Damages. With respect to all of the remedies provided for in this Article VIII, the Lessee hereby waives any damages occasioned by the Bank’s repossession of the Leased Property upon an event of default. ARTICLE IX PREPAYMENT OF LEASE PAYMENTS Section 9.1 Extraordinary Prepayment From Net Proceeds. The Lessee shall be obligated to prepay the Lease Payments in whole or in part on any date, from and to the extent of any Net Proceeds or other moneys pursuant to Section 5.1 hereof. The Lessee and the Bank hereby agree that such Net Proceeds or other moneys shall be credited towards the Lessee's obligations hereunder (except in the case of such prepayment of the Lease Payments in whole) pro rata among Lease Payments so that following prepayment, the remaining annual Lease Payments will be proportional to the initial annual Lease Payments. Packet Pg 126 8 19 Section 9.2 Prepayment. Subject to the terms and conditions of this Section, the Bank hereby grants an option to the Lessee to prepay in whole or in part on any Lease Payment Date at a prepayment price equal to the outstanding principal component of the Lease Payments, without premium, plus the accrued interest component of the Lease Payments to such prepayment date. To exercise this option, the Lessee must deliver to the Bank written notice specifying the date on which the prepayment is to be made (the “Closing Date”), which notice must be delivered to the Bank at least thirty (30) days prior to the Closing Date specified therein. ARTICLE X MISCELLANEOUS Section 10.1 Notices. Unless otherwise specifically provided herein, all notices shall be in writing addressed to the respective party as set forth below (or to such other address as the party to whom such notice is intended shall have previously designated by written notice to the serving party), and may be personally served, telecopied, or sent by overnight courier service or United States mail: If to Bank: ZB, N.A. One South Main, 17th Floor Salt Lake City, Utah 84133 Attention: Kirsi Hansen If to the Lessee: City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Attention: Kristin Eriksson Such notices shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if transmitted by 4:00 p.m. (Salt Lake City time) on a Business Day or, if not, on the next succeeding Business Day; (c) if delivered by an overnight courier service, two Business Days after delivery to such courier properly addressed; or (d) if by United States mail, four Business Days after depositing in the United States mail, postage prepaid and properly addressed. Section 10.2 System of Registration. The Lessee shall be the Registrar for this Lease and the rights to payments hereunder. The Bank shall be the initial Registered Owner of rights to receive payments hereunder. If the Bank transfers its rights to receive payments hereunder, the Registrar shall note on this Lease the name and address of the transferee. Packet Pg 127 8 20 Section 10.3 Reserved Section 10.4 Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Bank and the Lessee and their respective successors and assigns. Section 10.5 Amendments. This Lease may be amended or modified only upon the written agreement of both the Bank and the Lessee. Section 10.6 Section Headings. Section headings are for reference only, and shall not be used to interpret this Lease. Section 10.7 Severability. In the event any provision of this Lease shall be held invalid or unenforceable by a court of competent jurisdiction, to the extent permitted by law, such holding shall not invalidate or render unenforceable any other provision hereof. Section 10.8 Entire Agreement. This Lease and the attached Exhibits constitute the entire agreement between the Bank and the Lessee and supersedes any prior agreement between the Bank and the Lessee with respect to the Leased Property, except as is set forth in an Addendum, if any, which is made a part of this Lease and which is signed by both the Bank and the Lessee. Section 10.9 Execution in Counterparts. This Lease may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 10.10 Arbitration. To the extent permitted by law, any dispute, controversy or claim arising out of or based upon the terms of this Lease or the transactions contemplated hereby shall be settled exclusively and finally by binding arbitration. Upon written demand for arbitration by any party hereto, the parties to the dispute shall confer and attempt in good faith to agree upon one arbitrator. If the parties have not agreed upon an arbitrator within thirty (30) days after receipt of such written demand, each party to the dispute shall appoint one arbitrator and those two arbitrators shall agree upon a third arbitrator. Any arbitrator or arbitrators appointed as provided in this section shall be selected from panels maintained by, and the binding arbitration shall be conducted in accordance with the commercial arbitration rules of, the American Arbitration Association (or any successor organization), and such arbitration shall be binding upon the parties. The arbitrator or arbitrators shall have no power to add or detract from the agreements of the parties and may not make any ruling or award that does not conform to the terms and conditions of this Lease. The arbitrator or arbitrators shall have no authority to award punitive damages or any other damages not measured by the prevailing party’s actual damages. Judgement upon an arbitration award may be entered in any court having jurisdiction. The prevailing party in the arbitration proceedings shall be awarded reasonable attorney fees and expert witness costs and expenses. Packet Pg 128 8 21 Section 10.11 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Packet Pg 129 8 22 IN WITNESS WHEREOF, the Bank has caused this Lease to be executed in its name by its duly authorized officer, and the Lessee has caused this Lease to be executed in its name by its duly authorized officer, as of the date first above written. ZB, N.A., as Lessor By _________________________________________________ Title ________________________________________________ CITY OF SAN LUIS OBISPO, as Lessee By _________________________________________________ Authorized Officer Packet Pg 130 8 EXHIBIT A SCHEDULE OF LEASE PAYMENTS 1. Interest. Interest components have been computed at the rate of one point ninety-four percent (1.94%) per annum calculated based on actual number of days elapsed during a 360 day year. 2. Payment Dates and Amounts. Packet Pg 131 8 EXHIBIT B DESCRIPTION OF LEASED PROPERTY One (1) Street Sweeper One (1) Dump Truck Packet Pg 132 8 EXHIBIT C RESOLUTION OF GOVERNING BODY A resolution approving the form of the Lease/Purchase Agreement with ZB, N.A., Salt Lake City, Utah and authorizing the execution and delivery thereof. Whereas, the City Council (the “Governing Body”) of City of San Luis Obispo (the “Lessee”) have determined that a true and very real need exists for the leasing of the property described in the Lease/Purchase Agreement presented to this meeting; and Whereas, the Lessee has reviewed the form of the Lease/Purchase Agreement and has found the terms and conditions thereof acceptable to the Lessee; and Whereas, the Governing Body has taken the necessary steps under applicable law to arrange for the leasing of such property under the Lease/Purchase Agreement; and Be it resolved by the Governing Body as follows: Section 1. The terms of said Lease/Purchase Agreement are in the best interests of Lessee for the leasing of the property described therein. Section 2. The appropriate officers and officials of the Lessee are hereby authorized and directed to execute and deliver the Lease/Purchase Agreement in substantially the form presented to this meeting and any related documents and certificates necessary to the consummation of the transactions contemplated by the Lease/Purchase Agreement for and on behalf of the Lessee. The officers and officials of the Lessee may make such changes to the Lease/Purchase Agreement and related documents and certificates as such officers deem necessary or desirable, such approval to be conclusively evidenced by the execution and delivery thereof. Section 3. The officers and officials of the Governing Body and the Lessee are hereby authorized and directed to fulfill all obligations under the terms of the Lease/Purchase Agreement. Packet Pg 133 8 I hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted by the City Council of the City of San Luis Obispo at a meeting thereof on ____________________, 2017 by the following vote of the members thereof: AYES: NOES: ABSENT: CITY OF SAN LUIS OBISPO By __________________________________________ Print Name ____________________________________ Title _________________________________________ Attest: By Secretary of the Board Packet Pg 134 8 3477 EXHIBIT D FORM OF OPINION OF COUNSEL TO LESSEE To: ZB, N.A. One South Main Street, 17th Floor Salt Lake City, Utah 84133 Gentlemen: As counsel for City of San Luis Obispo (“Lessee”), I have examined duly executed originals of the Lease/Purchase Agreement (the “Lease”) dated this 1st day of December, 2017, between the Lessee and ZB, N.A., Salt Lake City, Utah (“Bank”), and the proceedings taken by Lessee to authorize and execute the Lease (the “Proceedings”). Based upon such examination as I have deemed necessary or appropriate, I am of the opinion that: 1. Lessee is a body corporate and politic, legally existing under the laws of the State of California (the “State”). 2. The Lease and the Proceedings have been duly adopted, authorized, executed, and delivered by Lessee, and do not require the seal of Lessee to be effective, valid, legal, or binding. 3. The governing body of Lessee has complied with all applicable open public meeting and notice laws and requirements with respect to the meeting at which the Proceedings were adopted and the Lessee's execution of the Lease was authorized. 4. The Lease is a legal, valid, and binding obligation of Lessee, enforceable against the Lessee in accordance with its terms except as limited by the state and federal laws affecting remedies and by bankruptcy, reorganization, or other laws of general application affecting the enforcement of creditor's rights generally. 5. Either there are no usury laws of the State applicable to the Lease, or the Lease is in accordance with and does not violate all such usury laws as may be applicable. 6. Either there are no procurement or public bidding laws of the State applicable to the acquisition and leasing of the Leased Property (as defined in the Lease) from the Bank under the Lease, or the acquisition and leasing of the Leased Property from the Bank under the Lease comply with all such procurement and public bidding laws as may be applicable. 7. There are no legal or governmental proceedings or litigation pending or, to the best of my knowledge, threatened or contemplated (or any basis therefor) wherein an unfavorable decision, ruling or finding might adversely affect the transactions contemplated in or the validity of the Lease. 8. The adoption, execution and/or delivery of the Lease and the Proceedings, and the compliance by the Lessee with their provisions, will not conflict with or constitute a breach of or default under any court decree or order or any agreement, indenture, lease or other instrument or any existing law or administrative regulation, decree or order to which the Lessee is subject or by which the Lessee is or may be bound. __________________________ Attorney for Lessee Packet Pg 135 8 EXHIBIT E SECURITY DOCUMENTS Attach California Certificates of Title showing the following lien holder: ZB, N.A. One South Main Street, 17th Floor Salt Lake City, UT 84133 Packet Pg 136 8 EXHIBIT F DELIVERY AND ACCEPTANCE CERTIFICATE To: ZB, N.A. Reference is made to the fixed rate Equipment Lease Agreement between the undersigned (“Lessee”), and ZB, N.A. (“Lessor”), dated December 1, 2017, (“the Lease”) and to the Equipment as such term is defined therein. In connection therewith we are pleased to confirm to you the following: 1. All of the Equipment has been delivered to and received by the undersigned; all installation or other work necessary prior to the use thereof has been completed; said Equipment has been examined and/or tested and is in good operating order and condition and is in all respects satisfactory to the undersigned and as represented, and that said Equipment has been accepted by the undersigned and complies with all terms of the Lease. Consequently, you are hereby authorized to pay for the Equipment in accordance with the terms of any purchase orders for the same. 2. In the future, in the event the Equipment fails to perform as expected or represented we will continue to honor the Lease in all respects and continue to make our rental and other payments thereunder in the normal course of business and we will look solely to the vendor, distributor or manufacturer for recourse. 3. We acknowledge that Bank is neither the vendor nor manufacturer or distributor of the Equipment and has no control, knowledge or familiarity with the condition, capacity, functioning or other characteristics of the Equipment. 4. The serial number for each item of Equipment which is set forth on Exhibit “B” to the Lease is correct. This certificate shall not be considered to alter, construe, or amend the terms of the Lease. Lessee: CITY OF SAN LUIS OBISPO By: __________________________________________ (Authorized Signature) Date: ________________________________________ Packet Pg 137 8 EXHIBIT G FORM OF ADVANCE RE: . [NAME OF LESSEE] ZB, N.A. One South Main Street, 17th Floor Salt Lake City, UT 84133 You are hereby authorized to disburse with regard to the above-referenced transaction the following: ADVANCE NUMBER: __________ NAME AND ADDRESS OF PAYEE: ___________________________________ ___________________________________ ___________________________________ OR, WIRE INSTRUCTIONS OF PAYEE: ___________________________________ ___________________________________ ___________________________________ ___________________________________ AMOUNT: $ _________________________ PURPOSE FOR WHICH EXPENSE HAS BEEN INCURRED: ___________________ _______________________________________________________________________ _______________________________________________________________________ PLEASE ATTACH INVOICES. Each obligation, item of cost, or expense mentioned herein has been properly incurred, is a proper charge against the Lease/Purchase Agreement, and has not been the basis for a previous Advance. DATED: ___________________ By: ______________________________ Title: ______________________________ Packet Pg 138 8 EXHIBIT H FORM 8038 (Attached) Packet Pg 139 8 R ______ RESOLUTION NO._________(2017 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING EQUIPMENT LEASE WHEREAS, the City Council (the “Governing Body”) of City of San Luis Obispo (the “Lessee”) have determined that a true and very real need exists for the leasing of the property described in the Lease/Purchase Agreement presented to this meeting; and WHEREAS, the Lessee has reviewed the form of the Lease/Purchase Agreement and has found the terms and conditions thereof acceptable to the Lessee; and WHEREAS, the Governing Body has taken the necessary steps under applicable law to arrange for the leasing of such property under the Lease/Purchase Agreement; and. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. The terms of said Lease/Purchase Agreement are in the best interests of Lessee for the leasing of the property described therein. SECTION 2. The appropriate officers and officials of the Lessee are hereby authorized and directed to execute and deliver the Lease/Purchase Agreement in substantially the form presented to this meeting and any related documents and certificates necessary to the consummation of the transactions contemplated by the Lease/Purchase Agreement for and on behalf of the Lessee. The officers and officials of the Lessee may make such changes to the Lease/Purchase Agreement and related documents and certificates as such officers deem necessary or desirable, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 3. The officers and officials of the Governing Body and the Lessee are hereby authorized and directed to fulfill all obligations under the terms of the Lease/Purchase Agreement. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2017. ____________________________________ Mayor Heidi Harmon Packet Pg 140 8 Resolution No. _____ (2017 Series) Page 2 R ______ ATTEST: ____________________________________ Carrie Gallagher, City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, _________. ____________________________________ Carrie Gallagher City Clerk Packet Pg 141 8 Page intentionally left blank. Packet Pg 142 8