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Home My WebLink About1994-366 94-366 1 RESOLUTION OF THE CITY OF SAN BERNARDINO TO ENTER INTO AN AGREEMENT WITH SOUTHERN CALIFORNIA EDISON COMPANY FOR THE INSTALLATION AND FINANCING OF 2 ENERGY CONSERVATION MEASURES AT VARIOUS FACILITIES WITHIN THE CITY. 3 WHEREAS, Government Code Sections 4217.10 et seq., authorized the 4 governing board of a city to enter into negotiated agreements for the 5 installation and financing of energy conservation measures; and 6 7 WHEREAS, the energy conservation measure set forth in the proposed 8 agreement by and between Southern California Edison Company and the City of 9 San Bernardino will result in a projected net cost savings to the City of San 10 Bernardino. 11 12 NOW, THEREFORE, the Mayor and Common Council FINDS, DECLARES, RESOLVES 13 and ORDERS as follows: 14 15 1. The anticipated cost to the City of San Bernardino for conservation 16 services provided by the energy conservation facility under the proposed 17 agreement with Southern Cal iforni a Edi son Company/Envest wi 11 be less than 18 the anticipated marginal cost to the City of electrical or other energy that 19 would have been consumed by the City in the absence of this purchase. 20 21 2. The funds for the repayment of the financing or the cost of design, 22 construction, and operation of the energy conservation facility, or both, as 23 required by the agreement with SCE/Envest are projected to be available from 24 revenues resulting from funding which otherwise would have been used for 25 purchase of electrical, or other energy required by the City in the absence 26 of the energy conservation facility, or both. 27 28 94-366 1 RESOLUTION OF THE CITY OF SAN BERNARDINO TO ENTER INTO AN AGREEMENT WITH SOUTHERN CALI FORNIA EDISON COMPANY FOR THE INSTALLATION AND FINANCING OF 2 ENERGY CONSERVATION MEASURES AT VARIOUS FACILITIES WITHIN THE CITY. 3 3. The terms of the proposed agreement with SCEIEnvest are in the best 4 interest of the City of San Bernardino. 5 6 4. The agreement for energy conservation services and financing is 7 exempt from the provisions of the California Environmental Quality Act within 8 the meaning of Title XIV of the California Code of Regulations Section 15301. 9 10 5. The City Clerk is hereby authorized and directed to give notice that 1] the proposed energy conservation measures are exempt for the provisions of 12 the California Environmental Quality Act; and 13 14 6. The energy service agreement with SCE/Envest is hereby approved. 15 IIII 16 /111 17 II/I 18 /111 19 1/11 20 IIII 2] IIII 22 IIII 23 II/I 24 IIII 25 1/11 26 IIII 27 IIII 28 IIII 2 ~ 94-366 . , 1 RESOLUTION OF THE CITY OF SAN BERNARDINO TO ENTER INTO AN AGREEMENT WITH SOUTHERN CALIFORNIA EDISON COMPANY FOR THE INSTALLATION AND FINANCING OF 2 ENERGY CONSERVATION MEASURES AT VARIOUS FACILITIES WITHIN THE CITY. 3 I HEREBY CERTIFY that the foregoing resolution was duly adopted by the 4 Mayor and Common Council of the City of San Bernardino at a meeting thereof, , 1994 by the following vote, to wit: 5 held on the 5th day of December 6 7 Council Member: 8 9 NEGRETE 10 CURLIN 11 HERNANDEZ 12 OBERHELMAN 13 DEVLIN 14 POPE-LUDLAM 15 MILLER 16 17 18 AYES NAYS ABSTAIN ABSENT x x x x x x x C(~~ 19 City Cl erk 20 The foregoing resolution is hereby approved this 6th day of December , 1994, 21 ..;)~ ~.. ~ / (?u.'U.. ;{Vo~ Turn Minor, Mayor City of San Bernardino 94-;366 , . R[G'E/vr, ,D.-rn' , . ( f'/ "n '. /........ ~ . -ch~ Oce 23 . /I ? .'58 IHHGRAHO SOlUTIOHS PROPOSAl City of San Bernardino The City Hall, Carousel Mall, and Central Library November 1994 USE AND DISCLOSURE OF DATA The information disclosed hmin is proprietary material of Southern California Edison Company and is not to be reproduced, used, or disclosed in whole or in part for any purpose other than to evaluate this proposal or quotation without the writ- ten permission of Southern California Edison Company, 94 366 h B If Or [OHHHTS 1.0 EXECUTIVE SUMMARY 2.0 CURRENT OPERATIONS/CUSTOMER NEEDS - PRESENT SITUATION 3.0 ENVEST SOLUTION - DESCRIPTION - GENERAL BENEFITS OF EN VEST - FINANCIAL BENEFITS OF ENVEST - QUESTIONS/CONCERNS 4.0 ECONOMIC EVALUATION - CASH FLOW ANALYSIS FOR PROPOSED SOLUTION 5.0 PROJECT MANAGEMENT - PROJECT MANAGEMENT FUNCTIONS 6.0 PROJECT IMPLEMENTATION - SCHEDULED PROJECT DELlVERABLES - ABOUT ENVEST 7.0 IMPLEMENTATION PLAN - IMPLEMENTATION TEAM - PROJECT SCHEDULE 8.0 ApPENDICES - APPENDIX A, ENVEST PROCESS DESCRIPTION - APPENDIX B, ENERGY CONSERVATION MEASURES - APPENDIX C, PERIODIC REPORT EXAMPLE CUSTOMER AGREEMENT .. , , 94 366 fHfCUTIUf SUMMARV .- 94 366 ENVESTSCE Integ'rated Solution Proposal - The City of San Bernardino November 1994 , . Section 1, Executive Summary The Facilities Management Department of the City of San Bernardino is responsible for the safe and efficient operation of over 140 buildings throughout the City. Over 25% of the nearly $3,000,000 utility budget is spent in three facilities, including the City Hall, Carousel Mall and Central Library. The purpose of this proposal is ro demonstrate how an ENVEST Integrated Solution can modernize these facilities, reduce operating expenses and improve comfort without negatively impacting the City's general fund. No up/ront cash is required and the Solution will generate a positive cash flow for the City from the first day onward. The value of the proposed ENVEST Solution is: Project Price: Cash Flow to City Over 10 Years: $ 971,000 $ 290.000 Total Value of Solution $1,261,000 ENVEST proposes that the City of San Bernardino implement the following E:-IVEST Integrated Solution: PROJECT SITE/COMPQNENT BENIlFlT/RESULTOFECM A. City Hall . Central Mechanical System Reduce cost of operation Modernization Improve occupant comfort Eliminate CFC-based refrigerant . Parking Structure Lighting Retrofit Improve lighting levels Reduce operaring costs B. Carousel Mall Courts . Lighting Retrofit Reduce operating costs . Air Handling Unit Economizer Repairs Increase comfort Reduce operating costs C. Central Librarv . Lightilll! Retrofit Reduce operating costs Use and disclosure of this proposal data is subject co the restriction on the title page of this document. 1 94 356 ENVESTSCE Integrared Solution Proposal - The City of San Bernardino November 1994 . The ENVEST Solution offers the City several benefits: . Efficient use of the City's staff through the "single point of contact" project management provided by ENVEST . The ability to implement several energy efficiency retrofit projects at once by leveraging ENVEST 's project management and financing . Modernization of targeted City facilities . The reduction of specific pollutants emitted during electrical power generation (by lowering the City's overall power consumption) . Improving occupant/employee comfort The ENVEST Solution is projected ro save the City $166,000 in the first year of implementation. Payments to ENVEST will be $137,000 per year over the 10 year term of the agreement. This will provide the City with an annual positive cash flow of $29,000 per year, for a rotal retained savings of $290,000 over the 10 years. To ensure the City continues to receive the savings projected from implementation of this Solution, ENVEST will provide: . Equipment performance verification . Initial operations and maintenance training for the facilities staff . Measutement and verification of system performance for the first two years . Periodic energy reporting for the life of the agreement In recent years, the State has passed legislation to help cities in their effort to implement Energy Conservation Projects (ECPs). This legislation clearly states that a city may enter into a sole source energy conservation project and project financing if the anticipated savings to be realized through the implementation of the project are expected to exceed the costs to install and finance the project. This ENVEST Solution satisfies this requirement. Upon immediate approval by the City of San Bernardino, ENVEST will begin the implementation phase of the project with preliminary estimates of completion in less than eight months. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 2 , , 94 366 [URRfHT OPfRRTIOHS T 94 3G6 ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 Section 2. Current Operations/Customer Needs PRESENT SITUATION Owrview The Facilities Management Department of the Ciry of San Bernardino is responsible for the safe and efficient operation of over 140 buildings throughout the City. Fulfilling rhis responsibility requires significant expendirures for barh staffing and energy. In fact, the total current annual utility expenditure for these facilities exceeds $2,990,000. There are, however, several opporrunities which exist to reduce these utility expenses. As with all of Southern California, the continuing economic downturn has had a negative effect on the revenue available to run the City business. This reduction in revenue, combined wirh increased demands for other Ciry services such as police protection, has created additional pressures on rhe City to reduce operating costs. This places the City in rhe difficult position of deferring needed maintenance and delaying equipment replacement which, while meeting short term budgetary constraints, does not provide for a long term solution. Through discussions with Mr. James Sharer, Manager of the City's Facilities Management Department, it was murually agreed to focus rhe initial energy conservation efforts on thtee major facilities managed by his department: . The City Hall . The Carousel Mall Courrs . The Central Libtary The annual electrical energy consumprion in these three facilities is in excess of $760,000_ A). City Hall The City Hall Building, a six story, 95,000 square foot facility, was built in 1971 prior to the introduction of the California energy efficiency standards. The mechanical systems in the building are typical of this time frame. As a result, the City Hall is, unforrunately, a poor energy performer. The original central chiller plant was designed to serve not only the City Hall but also an exhibit center. The exhibit center has been disconnected from this facility resulting in an oversized, inefficient central chiller plant. The main air distribution systems are constant volume double duct systems. This type of sysrem maintains space temperatures by mixing both cool and hot air. This was a concept often used in the days of cheaper energy costS and is now acrually prohibited by the California energy conservation requirements in most applications. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 3 ". It 9 4 .3 6 ~ ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 The City has made some innovative, and successful, investments to reduce the operating costs in this building. In late 1993, a lighting retrofit was completed which has resulted in lowering both elecrrical demand and consumption leading ro lower elecrric utility bills. Thete are also ateas of this facility which operate twenty-fout hours a day. Two chillers located in the lower level of the Patking Structure ate operated at night to serve these areas, thus avoiding running the main chiller plant at night. As successful as this lighting retrofit projecr and rhese operating procedures have been, there remain opportunities for the City ro capture additional, significant energy savings by retrofirting rhe central mechanical systems and parking structure lighting. Addirional attention is needed to address rhe central chiller system which contains a CFC refrigerant. In addition to this type of refrigerant being known ro cause holes in rhe ozone layer, a ban on its future production will cause maintenance costs ro increase in the coming years. B). Carousel Mall Courts This facility, builr in the early 1970's, is a multi-tenanted, multi-use commercial faciliry. The City has the responsibility to light and condirion the common areas of the mall. The hearing, ventilating and air conditioning (HV AC) system for rhe common areas urilizes twO small chiller plants with reciprocating compressors utilizing R-22 refrigerant and evaporative cooling towers. Alrhough newer more efficient compressors are available, rhe improvement is relatively small and rhe energy cost savings would normally nor justify replacement. There is also no CFC issue in rhe near future wirh the R-22 refrigerant. The savings potential is further minimized by the operating scenario where the chillers are usually not operated during the November to February winter season. There is no heating currently used for the common areas. There are elecrric hearers locared near the enrrances bur rhey are no longer used and rherefore do not cause energy waste. There are several air handling units located on the roof with a bypass around the cooling coil for supply air remperature control. No heating capability is currently energized in these units. The mechanical sysrems serving rhese areas seem to operate fairly efficiently, however there is an opportunity to improve the efficiency of rhe lighring system and reduce operation costs through some HV AC control sysrem modifications. Use and disc/osure of this proposal data is subject to the restriction on the title page of this document. 4 94 366' . ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 C). Central Library The Central Library was built in 1984. The mechanical sysrems reflecr the California Title 24 energy efficiency requirements in force at thar time. There are two 80 ton air cooled chillers serving individual fan coil units for each zone. The chillers have an EER of 9.7 and there is no significant performance improvement available. Ar this time, we do not project any economically viable improvements ro the existing HV AC system. The lighring systems in this facility use T12, 34W, lamps with magnetic ballasts. They are a good targer for retrofit which will lead to reduced operating costs. During our initial field survey we also noticed a few unoccupied conference rooms wirh all the lights on which could utilize occupancy sensors to turn off the lights unless the space is occupied. Customer Needs Four key objectives regarding the City facilities and their operation were uncovered in conversations wirh the City staff. These objectives are: . Modernization of facilities wirhour impacting the general fund . Efficiency and comfort in rhe operation of the facilities . Proactive approach to environmental issues . Resources needed for coordination and project management of rerrofit projects The first of these is to modernize rhe facilities without unfavorably impacting the general fund budgering. The City is facing many significant challenges and the budget dollars need to be focused in these areas first. The Ciry must also protect rhe investment base which lies in these facilities. Money to fund improvements in these areas is scarce and difficulr ro secure. Secondly, the City is faced with the challenge and need to operate the facilities in the most efficient manner possible while providing a comfortable environment for the occupants/ employees. This challenge is complicated by several issues. Many of the mechanical systems in the City Hall are nearing the end of their economic life and need to be replaced. New technologies and manufacturing procedures allow the new replacement equipment to operate in a much more energy efficient manner. There are also many changes taking place on the environmental front. The chillers currently installed in the City Hall run on a CFC-based refrigerant. This type of refrigerant is being removed from production and is to be banned in the near future. A problem also exists in maintaining consistent comfort levels in City Hall. Original sysrem design being oversized, the addirion of personal computers and the many modifications that have been made in the space configurations have lead to serious comfort problems through-our the facility. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 5 94 366 ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 A third challenge facing the City is rhe increased awareness and pressure of dynamic environmental issues. A primary objective of the City is to be proacrive with regard to compliance of environmental regularions and to support conservation projects that also help ro reduce the level of airborne polluranrs emitred during electrical power generation. Finally, the City recognizes the need for dedicated projecr management to provide coordination and project support for the specified building retrofits. In addition to the manpower issue, the City is aware of the expertise required to effectively design/develop, procure, manage and verify the results for projects of this caliber. Proposal Objective The purpose of this proposal is to demonsrrate how an ENVEST Solurion will meet each of these needs while requiring no up-front cash and generate a positive cash flow for the City from the first day on. Use and disc/osure of this proposal data is subject to the restriction on the title page of this document. 6 , 94 366 fHUfST SOlUTIOH r ENVESTSC~ I~reJa~e9 Solution Proposal - The City of San Bernardino November 1994 Section 3. ENVEST Solution DESCRIPTION The ENVEST Solution contains a wide variety of process steps which lead to the City's desired resulrs. The following list is an outline of the process steps used to develop this proposal and the proposed plan for implementation of this ENVEST Solution. A more detailed description of this process can be found in Appendix A. . Pteliminary Energy Assessment . Scope of Work Development . Service Provider Network Review and Preliminary Selection . Competitive Evaluarion Process of Service Providers . Proposal Development . Cusromer Agreement Approval . Procurement . Engineering & Design . Project Implementation . Commissioning . Operaror Ttaining . Measurement & Evaluation of Results This section addresses the actual energy conservation measures (ECMs) to be performed as the ENVEST Solution is implemented. The savings associated with each aspect of the project are also identified. A), Ciry Hall HVAC - The existing chillers, cooling towers and pumps are oversized for the peak load tequired for the City Hall facility. The chillet plant will be resized and new chillers, cooling tower and pumps will be installed to meet the actual peak capacity of 300 tons (to be verified during the design phase). To achieve a level of redundancy, two chillers, sized at two-rhirds of the peak capacity (200 tons) will be installed. The total capacity of the new plant will be 400 tons. The chillers will use a non-CFC refrigerant. The chillers Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 7 94 366 . ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 will be insralled in parallel in a variable flow primary/secondary pumping atrangement (also termed a de-coupled system) with the chilled water distribution system. The primary chiller loop will use constant flow pumps and the secondary distribution system will use a pump controlled by an electronic variable speed drive (VSD) based on system pressure requirements. The existing cooling coil pumps and three-way valves will be removed and replaced with two-way valves. To assure there is no loss of City Hall operation during the central plant renovation, a temporary chiller has been included as part of the implementation strategy. The existing air-cooled chillers in the parking structure will be retained for backup but normally will not be operated. It is anticipated that the part load efficiency of a new chiller, even at the 40 ton level for the basement, will be betrer than the air-cooled chillers. The existing double duct systems in the penthouse serving the main floor areas will be converted to a double duct variable air volume system using variable speed drives (VSDs) on the main fan motors and replacement of the mixing boxes with double duct V A V boxes specifically designed for this type of system. The damper arrangement for an economizer cycle exists bur the controls are inoperative. The economizer operation will be placed in working order. As part of the initial verification study, the cooling loads of the individual zones will be recalculated based on curtent occupancy and use. As part of the design, new double duct V A V boxes will be selected based on the new load requirements and the system will be balanced ro these new requirements as part of the implementation scope. * ECM will save an estimated $73,800 in annual electric costs. Parking Strudure lighting- Existing T12-34W lamps will be replaced with T8 lamps and the magnetic ballasts and the fixtures will be washed. In addition specular optical reflectors will be installed in the existing fixtutes which will allow the fixtures to be de-lamped from two lamps to one lamp without lowering lighting levels. This further enhances the savings potential. Any broken sockets or cracked diffusers will be replaced. * ECM will save an estimated $66,500 in annual elecrric costs. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 8 94 366' ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 B). Carousel Mall Courts lighting - In the common areas, existing T12-34W lamps will be replaced with T8 lamps and the magnetic ballasts will be replaced with electronic ballasts. The parabolic reflecrors will be cleaned with an ultrasonic cleaning system. * ECM will save an estimated $7,800 in annual electric costs. HV AC - The economizer operarion on all the rooftop air handling unirs serving rhe common areas will be pur in working order. * ECM will save an estimared $2,600 in annual electric costs. C). Central Library lighting - Existing T12-34W lamps will be replaced with T8 lamps, the magnetic ballasts will be replaced wirh electronic ballasrs and the fixtures will be washed. Occupancy sensors will be installed in five areas rhar have limited occupancy. Any broken sockers or cracked diffusers will be replaced. * ECM will save an estimated $15,300 in annual electric cosrs. D). All Facilities (City Hall, Carousel Mall Courts, Central Library) Energy Management and Control System (EMCs)- Implementation of HVAC improvements at the City Hall requires upgrading the existing control system to a DDC based system. This new system will be a Carrier CCN Control System and will interface with the existing pneumatic actuators at City Hall. Also included are provisions for stare/stop control and status monitoring of the Carousel Mall Coures and Central Library HV AC systems via a new workstation to be locared at the City Hall. A gateway already exists at the Library for digital communications, but a gateway must be installed at rhe Mall. A more detailed listing of implementation products and approaches can be found in Appendix B. Use and disc/osure of this proposal data is subject to the restriction on the title page of this document. 9 . . '. ' ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 94 366 BENEFITS OF THE ENVEST SOLUTION (GENERAL) The EN VEST Solution is tailored to provide Solurions to the wants and needs addressed earlier in this proposal. Through the ENVEST Solurion we will provide rhe single point of contact and coordination to ensure successful implementation of your project. This in turn allows you to utilize your staff resources to address the everyday operating needs of your facilities and continue performing scheduled maintenance needs. This also reduces rhe "hassle" of developing, designing, procuring, project managing and verifying the results of such a comprehensive project. ENVEST provides the resources and experience needed ro successfully complete the project with litrle burden on your staff. In addition to rhis staff support, the City will have Southern California Edison standing in front of the Solurion providing: . Financial srrengrh . Long term continuing business relationships . Long term cusromer satisfaction Finally, this approach lets you realize the benefits of many successful projects being completed at one time. Your staff has proven they can successfully implement enetgy conservation projects through rhe City Hall lighting retrofit project. However, they are not able, on their own, to leverage up on the funding required to implement many projects at once and would not have the rime available to develop and implement these projects while continuing to perform their daily duties. The City can take a proacrive leadership role in environmental improvements in the Inland Empire through implementation of this proposal. The City will be replacing the ozone- depleting CFC refrigerant with an environmentally friendly one. The reduced electrical consumption projected for the City will also carry a related environmental benefit by reducing the polluranrs emitted by electrical power generation. Table 3.1 lists the projected reductions to be achieved over the next 10 years. Table 3.1 Emissions Reduction Over 1 0 Years POLLUTANT REPVCTION ('l'oi\!s) NOx 9 SOx 4 CO2 10,000 Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 10 ".' ,,"' ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 94 366 Through evaluation of the actual heating and cooling requirements in the City Hall and modifications to the air delivery system, significant improvements in the comfort conditions throughout the facility should be achieved. BENEFITS OF THE ENVEST SOLUTION (FINANCIAL) By providing 100% of the financing for the project, the ENVEST Solution will free-up the capital budget for investments in other City services or programs. There will be no upfront, out-of-pocket investment required by the City, By implementing the proven energy efficiency technologies proposed, the City's annual utility costs will be reduced by a projected $166,000. This tepresents a 21 % teduction in the utility costs for these facilities. In addition, the City will gain economic benefit through reduced maintenance costs. Because all of the new lighting and mechanical equipment will be under warranty, the City will not have to pay for bulb and ballast replacement or repair service on the mechanical equipment installed as part of this Solution during the equipment manufacturers specified warranty period, QUESTIONS/CONCERNS Q, How can the City do all of this without going out for bids' A. The State legislature recognized the need for cities to make energy efficiency improvements to their facilities. Because there are proven energy conservation technologies available to provide self funding retrofits projects, Government Code 4217 .10-4217 .18 was passed to allow the facilitation of these projects. Briefly stated, this allows a city to enter into a sole source energy conservation project and project financing if the anticipated savings to be realized through the implementation of the project are expected to exceed the costs to install and finance the project. This ENVEST Solution satisfies this requirement. (Note: The City of San Bernardino has been advised by Edison to seek the advice of its own tax, accounting and legal advisors and acknowledges that it is not telying on Edison for any tax, accounting or legal advice with respect to the transactions contemplated,) Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 11 94 366 fCOHOMIC fURlURTIOH T 94 3Sf> , ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 Section 4. Economic Evaluation CASH FLOW ANALYSIS FOR PROPOSED SOLUTION Project Price The currently estimated price for the ENVEST Solution described below is approximately $971K which includes all aspects of the developmenr, implementation, commissioning and post- implementation monitoring. In addition, the ENVEST Solution includes financing of this amount over a term of 10 years at a fixed annual interest rate of 7,20% (0.6% monthly) in the form of a municipal lease. This, combined with the expected energy savings of $166K per year, will tesult in the City of San Bernardino enjoying an esrimated net annual cash flow of $29K (as shown in Figure 4.1 below). Figure 4.1 Estimated Annual Cash Flow $761K $166K Initial Annual Savings I $29K I Current Energy Bills ENVEST Solution Savings ENVEST Payment Energy Bills During Repayment Energy Bills Alter Repayment . Electric Casts/Savings ~ ENVEST Payments The ENVEST Solution provides the City of Son Bernardino with estimated savings resulting in $29K of net energy savings during the repayment period, and $166K of energy savings following the repayment period. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 12 94 366 ENVESTSCE Inregrated Solution Proposal - The City of San Bernardino November 1994 The resulting cumulative cash flow rhe City will receive over the nexr 10 years is presenred below in Figure 4.2. $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Figure 4.2 Cumulative Cash Flow Over IO-Years CUMULATIVE CASH FLOW $0 2 3 4 6 7 8 9 10 5 Year Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 13 94 366 PROJfCT MRHRGfMfHT ~ 94 366 . ENVESTSCE Integr~ted Solution Proposal - The City of San Bernardino November 1994 Section 5. Project Management PROJECT MANAGEMENT FUNCTIONS The EN VEST Solution includes overall Project Management for the entire project. This section will highlight the major roles that the ENVEST Ptoject Manager will play. . Quality Assurance . Project Scheduling . Project Budget Management . Project Status Reporrs Quality Assuratue As part of the ENVEST Solution, a quality control process will be conducted to accomplish two goals: 1. Validate that the ECMs actually function as intended by design. 2. Support City staff to ensure proper system operation. Equipment Performance Verification - ENVEST will provide a thitd-party quality control engineer to verify the installation of each ECM and confirm that the product specifications, as indicated by the manufacturer's nameplate rating, are consistent with those listed in the design intent, Personnel will test equipment in all modes of operation, both individually and in relation to other components in rhe system. This field testing process will be based on customized ECM- specific commissioning procedures that the contractors will implement and the quality control engineer will witness. Operations and Maintenance Support - Since proper operation and maintenance is essential for the ongoing performance of the ECMs, ENVEST will provide a customized and integrared systems operating and maintenance manual for the City. ENVEST will also provide an initial session to rrain City operators and maintenance personnel how to operate, control and maintain the ECMs to ensure maximum efficiency. Use and disclosure of this proposal data is subject to the restriction on the title page of this dacument. 14 94 366 ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 Project Scheduling The ENVEST Project Manager will be the poinr of contact between the Ciry's Project Coordinator and ENVEST's Service Providers. In addition, the ENVEST Project Manager will document and distribute the minutes of all formal job-site meetings. Pro/ect Budget Management Adherence to the project's budget is primarily ENVEST's responsibiliry. ENVEST is responsible for the accuracy of the estimates of the time and resoutces required to implement the Solution. In rhe evenr of an unforeseen condition arising at the site, or a desired change in the scope of the work by the City of San Bernardino following the execution of rhe Customer Agreement, rhe ENVEST Project Manager shall prepare and submit to the City's Project Coordinator, change order documentation that shall define the change in the scope of work, it's cost, and the impact on the project schedule. No additional work, or change to rhe scope of work, shall proceed without the written authorization as executed by the City and ENVEST. Project Status Reports ENVEST's Project Manager shall issue Project Status Reports incorporating the minutes of the regularly scheduled on-site meetings to insure all involved parries are aware of rhe work as completed to date, tasks with the tesponsible party identified, unforeseen and contract administration issues with subsequent resolutions, notifications given, and overall progress as compared to rhe project schedule. The key objectives of the Project Status Reporrs are to: . Keep the City's, the Service Ptovider's and ENVEST's staff and management informed on all aspects of the project . Officially record completion of phase activities and project milestones . Communicate coordination and scheduling issues between the City, the Service Providers and ENVEST Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 15 94 366' PROJfCT IMPlfMfHTATIOH .-- 94 366 ENVESTsCE Integrared Solution Proposal - The City of San Bernardino November 1994 Section 6. Project Implementation SCHEDULED PROJECT DELIVERABLES Design ENVEST will prepare, complete and furnish to rhe Ciry for approval, the design documents for rhe improvemenrs in accordance with the general design direction and philosophy established. licenses alld Permits ENVEST shall obtain all necessary licenses and permirs necessary for the installarion of the improvemenrs. If any authoriry having jurisdiction tequires a revision to the designs prior ro issuing consent for the installation of the improvements, ENVEST will, with rhe City's approval, tevise the designs. Contracts ENVEST will have full responsibility for the negotiation, management, supervision, coordination and administration of all conttacts required for the implemenration of the improvemenrs, including, withour limitarion: . rhe preparation of the documents and presentation of these documents to rhe potential Service Provider or conrractors, in order to obtain pricing with respect to completion of the improvements . the award of the contracts ro one or more contractors who will complete the improvements or parr of the improvements entered into between ENVEST and rhe Service Provider or contractors, Construaion phase ENVEST will be responsible for: . Preparation of purchase orders and subcontracts . Verification of shop drawings and manufacturers' drawings . Correspondence relating to the completion of the improvements Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 16 , ' 94 3% ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 . Apptoval of substitution methods and materials after consultation with the City . Development of the project schedule and the final project description . Periodic visits ro the construction sire to ensure rhe progress of work and quality of matetials and workmanship are, in general, conforming with the requirements of the design and rhe contract entered into between EN VEST and rhe contractors co complete the improvements . Prepatation and submitral to the City of two copies of the project manuals and as- built drawings of mechanical and electrical sysrems related to the improvemenrs . Final inspection of the installation . Acceptance of the work of the contraccors . Srart-up and verification of equipment petformance upon insrallation of the Improvements . Training the City's technical personnel to ensure proper operation and maintenance of the new equipment and modified systems . Implementation of a monitoring and verification process co measure and documenr results Post-Construction Phase ENVEST will provide the following services: . Periodic visits to the facility to ensure rhat ENVEST's instructions have been followed and, if not, notification to the City of any irregularities . In the event that the performance of the imptovemenrs falls short of the projections, investigation of rhe cause, and notification indicating what action the City should rake co improve performance . Periodic reports (refer co Appendix C) . Administration and support of all warranties on City's behalf for materials and equipment installed for a period of 12 months . Verify specific energy efficiency measures were installed as planned Use and disclosure of this proposal data is subject to the restriction on the title page of this document. J 7 94,366 ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 . Ensure that energy consumption and savings teported for the installed measures are valid, reliable and accutately detetmined . End-use monitoting is done in an timely and cost-effective manner Past experience has shown that a properly designed and implemented end-use monitoring program is the best way to validate that the perfotmance expectations are being met. Verification is an integral part of overall quality control for the installation itself, and further acts to encourage the continuation of appropriate operating and maintenance procedutes tequired for rhe continued efficient petfotmance of the energy-saving equipment. ABOUT ENVEST ENVEST is uniquely qualified to provide the best solution for the City of San Bernardino. Backed by the 106 years of experience of quality, reliable electrical service of Southern California Edison, ENVEST has the financial backing tequired to ensure continued support for the life of the agreement. In addition, through the 20 years of energy conservation program implementation, ENVEST has learned what it takes to develop and implement successful energy conservation projects. ENVEST's only business is to provide energy efficiency solutions to Southern California Edison customers, ENVEST does not manufacture or sell any hardware or services which allows for the development and selection of the most cost-effective products and services provided by our Service Providers to meet the City's specific needs, Through quality project management, ENVEST's wrap-around warranty, and post-installation evaluation and reporting, the City will be assured of a successful energy efficiency improvement project for the life of the agreement. Use and disclosure of this proposal data is subject to the restriction on the title page afthis document. 18 . . 94 366 IMPUM~HTATIOH PlAH T . \ ENV~AsC~I~t~g~ated Solution Proposal - The City of San Bernardino November 1994 Section 7, Implementation plan IMPLEMENTATION TEAM The box below highlights recommended ENVEST Operations and Technical sraff, along with proposed Service Providers for the upcoming City of San Bernardino project: TITLE ROLE/RESPONSIBILITIES Project Manager . Primary Client Contact (David Taylor) . Project Managemenr . Quality Control . Post-installation Review Project Engineer . Preliminary Energy Assessment <John Tamney) . Project Scope Development . Service Provider Scope/Pricing Review . Selecrion of Service Providers . Post-installation Review M & V Project Manager . Pte and Post-insrallation Measurement & (Richard Pulliam) Verification Of Ener~v Usa~e Mechanical Service Provider . Mechanical Retrofit Wotk (Cal-Air Conditionini( Service) Lighting Service Provider . Lighting Retrofit Work (Advanced Resource Manai(emenr) PROJECT SCHEDULE Please refer co the following pages for HV AC and lighting schedules. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 19 94.3GB ENVESTSCE Integrated Solution Proposal - The City of San Bernardino o ... ... ... l- 'D ~>= <", I- ... 'D ... '" ",- 5... ::;- ~ ,...~ t= e~ .. . ..~ -~ N ~.'::'. Ii::: = ...,.. .... () ~ <!) ~ '0' "" 00 ~ 1- .- OIl t- t:: '" .- '" .... - -Eh ~... ._ N ...J "0 .llN e... .- ~- Z'D 1-:01 November 1994 o ~ ... I I · . 1.1 '" ~ I ~ . u ] 1) i ~ ~ . E .~ .~ 1 1;' ::l1 ::; ::; ';I "'S '"S 'g.; 5 ~ ~ ~ ~ ~1~~5 ~5 ~5~ ~ ~ t j j I I t I I j f i ~ ~ ~ U ~ U ~ 8 e- N ~ . n ~ ~ ~ ~ ~ = ~ ~ ~ Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 20 . J r ::; '" .. ]1 ~ .C 0 0 u Z ,!; o t:: .- ] E <!) ~ a (/) '+-<""" 00-- .000 ,- N u-- ..0 .... - () <!) ., ''="l <!) o~ ~Cl 94 366 ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 ., -" 1l1li1 ... ~ - ... ~., :l1::' r- ~ 0 ~~ ~ ~ ... <> . I~': <", j i N ~~ :1 . '" <> ... '" I ....: ~... ~- ~ f-<> I- II ~ '" ~- i!~ .. t;; .. .~ -::f- ... ." fi "'~ . 'C g i. - e- . u z 0 '" ... Cl) f- '0' ... ~ ~~ g::: U =- -< .,.. s :> f- ::r: - . ~ ~ ".. .li- E j= ~ i5 ... . 0 ~ = I r 'S ] E " ~ g ~ 0: t .~ 'i ." g .. .. .l! ] e 1 !1. .~ . .~ 1 ~ ] f i i 8 ] .. 1l .3 ~ ] 1l .~ '" Cl) i ::; j ~ 'S ~ . ~ u ) C!l ~ 8 .. 0: J ~ ] t t J 8. ~ '" 'il ::; .5 .l! '" $ .~ ~ l !a g Ii. .. = .. i ~ g .5 .5 8 1l :i t .~ . ] ] I 0. '" 0. lZl J '~ 8. .g u 0 ~ 0: ;;; .. ~ ~ 0: if .....v '" .. ! x t j z ] i ] i ! j z ] '6 ] ! ~ ~ ~ ~ ! 3l .. 3l ~ 00- t > '" '" u J .000 'i. ,- N I ~ .5 U-.. ..0 :z~ -0- Cl) ., .= Cl) e- ... ... ... ~ <> r- .. '" 2 = l:: ::l :!: ::: :2 !:; ~ 2: l'l - ... ~ ., ~ :!l 07ii ... ... ... ... ... ~O . . Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 21 , ' 94 366 ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 :f ~ N. ~ N P t- o ... ... N i!:!l . t" j r N ::; . '" '" N '" ",- ~N ~- ~ '" N ~ ~ N ;; .. J> ] '6 . ...~ -0 s i .... u z 0 '" 0 N '0' N t:I: ~ N ~ U Ii < .., ~ > - :r: ~ N .~ J- 5_ r ~ 0 II ~ ,- ::l 1 ] l! i { u E E 0 :1 I I!:l .. a .~ .. 'jj ~ V) ] t .......r ml ~ ] 00>> '" u ... Coo .- N u__ ..0 ....- z 0 o .. .= 0 or- .. '" 0 ;;; ~8 _N ... ... ... Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 22 94 33G 94 :)f' RpPfHOICfS ,.- 94 366 'ENVESTSCE Integr~ted Solution Proposal - The City of San Bernardino November 1994 Section 8, Appendices ApPENDIX A - ENVEST PROCESS DESCRIPTION The ENVEST Solution began with a Preliminary Energy Assessment (PEA). During this time the ENVEST sales and operations teams evaluated the energy usage in the City's facilities, surveyed the mechanical and electrical systems and forecast potential costs necessary to implement energy conservation measures (ECMs) and corresponding savings. This was accomplished through review of facility drawings, interviews with the building operations staff and a site survey. Having identified a viable energy conservation project scope, focus turned to the ENVEST Service Provider Network. ENVEST has developed an extensive network of qualified Service Providers ro meet the requirements of each specific project. These organizations have been reviewed for technical proficiency as well as financial stability ro ensure positive long term results on projects. Four lighting firms and three mechanical firms were identified to participate in the next phase of rhe process, rhe Competirive Evaluation. During this phase of the project these firms were given a base scope of work to consider and were also encouraged ro identify and evaluate additional opportunities they found. The resulting proposals were reviewed and oral presentations were held with each of the Service Providers in order to select the firms who will provide the City the best technical solutions, Once rhe Service Providers for the lighting and mechanical work were selected, the Proposal Development phase of the process began, EN VEST reviewed the scope and economics wirh the City's staff to be sure their needs were being met. A final review with the Service Providers was then held in order to confirm the results to be obtained from implementation of the projecr. Finally, ENVEST developed this preliminary proposal for presentation to the City for acceptance. The next step following acceprance of this proposal is to negotiate and procure the services of the Service Providers for the specific scope of this Solution. The final design engineering will now begin. The Service Providers will perform rhe required engineering calculations necessary ro complete the design of the Solution. Once this design phase is complete ENVEST, in conjunction with the Service Providers and the City's staff, will obtain Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 23 94 366 ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 all necessary permits and approvals necessary for the project. Project implementation is now ready ro begin. ENVEST will provide Quality Assurance Project Management throughout the implementarion phase of the project. EN VEST will work vety closely with the City's staff ro see that scheduling and operating needs are met throughout the project. As the end of the installation nears ENVEST will begin the commissioning and operator training phase, No energy conservarion retrofit will produce the tesults expected if it is not installed and operating properly from the start. Also, the City's opetating staff needs ro know how to operate and maintain the new equipment to assure continued performance. The ENVEST Solution will provide these services. During the first year following the commissioning of the project, ENVEST will provide a comprehensive "wrap-around" warranty for all work done. If there are any performance or product problems the City need only ro notify ENVEST for resolution of the situation. If manufacturers offer extended warranties on their products, these extended warranties will be passed on ro the City at rhe end of this one year period, The final phase of rhe project is the Measurement and Evaluation period, For two years following the commissioning, ENVEST will pro-actively moniror and report the actual savings being generated by rhe Solution. If operating strategy changes are identified, EN VEST will notify the City and work rogether ro bring them back in line with original design of the Solution. If equipment performance should fall off, ENVEST will work with the manufaccurers and Service Providers to correct the situation, In this phase the actual results realized will be calculated and reported to the City. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 24 94 366 ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 ApPENDIX B - ENERGY CONSERVATION MEASURES Specified ECMs ENVEST provides the following package of ECMs: lighting Upgrades City Hall . Install Specular Optical Reflecrors in approximately 1794 existing fixtures, replace existing fluorescent lamps and ballasts with T8-32W tubes and elecrronic ballasts and clean fixtures. Replace lamp holders as required. Carousel Mall Courts . Replace existing fluorescent lamps and ballasts with T8-32W lamps and elecrronic ballasts in approximately 784 fixtures, clean fixture and parabolic reflectors. Replace lamp holders as required, . Replace approximately 25 circline lamps and clean fixtures. . Replace incandescent lamps in approximately four (4) fixtures with appropriate screw-in PL rype lamps and clean fixtures. Cenrral Library . Replace existing fluorescent lamps and ballasts with T8-32W lamps and electronic ballasts in approximately 286 fixtures, clean fixture and parabolic reflectors, Replace lamp holders as requited. . Install five (5) occupancy sensors . Replace incandescent lamps in approximately 4 fixtures with appropriate screw-in PL type lamps and clean fixtures. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 25 -, - 94 3()6 ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 Equipment Required: _ Approximately 6,350 T8-32W, 4-ft. fluorescent tubes _ Approximately 3610 electronic ballasts - Approximately 25 circline lamps _ Approximately 4 PL type lamps HV AC Upgrades City Hall . Replace existing cent tal chiller plant at the City Hall wirh a new downsized plant having a nominal capacity of 400 rons and using a variable flow chilled water distribution system. The plane will have two new equal sized chillers, a new cooling tower and new pumps as required. Existing chilled water pumps at the cooling coils will be removed and 2-way control valves will replace the existing 3-way valves. . Put the existing economizer cycle in working order. . Convert the two main penthouse double duct air handling systems ro double duct variable air volume systems. This will include new double duct V A V boxes as required and re balance of the air distribution system. Carousel Mall Courts . Put the existing economizer cycle in working order. . Provide a Carrier CCN control system including workstation to operate existing City Hall HV AC system and upgrades. . Provide start/stop control and status for the Carousel Mall Courts and Central Library HV AC systems. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 26 94 366 ENVESTSCE Integrated Solurion Proposal - The City of San Bernardino November 1994 Equipment Required: Two 200-ron high efficiency e1ecrric centrifugal chillers One 400-ton two cell cooling rower with two motor fan drives Two primary chilled watet pumps Two secondary chilled water pumps Two condenser water pumps VSDs for secondary chilled water pumps VSDs for main AH unit fan motors Double Duct V A V boxes as required Two-way chilled water control valves as required DDC controls as required Carrier CCN works ration Control gateway at Mall Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 27 94 366 '. _ . ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 ApPENDIX C - PERIODIC REpORT EXAMPLES This report describes the performance of the efficiency investments at during the month of February 1995, energy Demand savings in February were 255 kW, Energy consumption savings were 48,300 kWh, Figure 1 shows demand and consumption savings since June 1994, when the ENVEST energy efficiency retrofits were completed, Cost savings during February were $7,800. This is the sum of electric energy and demand charge reductions and gas charge reductions achieved as a result of the ENVEST energy efficiency retrofits, To date, cost savings are $56,500, or 8.7 percent of its net investment cost Figure 2 shows cumulative cost savings to the due to the energy efficiency retrofit During February, HVAC and lighting demand savings were 17 percent and 21 percent of pre-retrofit whole building demand, respectively, HV AC and lighting energy savings were 19 percent and 24 percent of pre-retrofit whole building energy consumption, respectively. Demand and demand savings are shown by end use in Figure 3, Energy consumption and energy savings are shown by end use in Figure 4. The trends in HV AC demand and energy consumption in the retrofitted are shown in Figures 5 and 6 respectively. The trends in lighting demand and energy consumption are shown in Figures 7 and 8 respectively. Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 28 '. ' ENVE~T4cE tn?e~r;lted Solurion Proposal - The City of San Bernardino '" 01 r:: ';;; III (/) ~ 300 250 200 150 100 50 o $60,000 $50,000 III Cl $40,000 c .:;: l'Cl (/) $30,000 Gl > :;:: $20,000 ~ :::l E :::l $10,000 () $0 November 1994 60,000 50,000 40,000 '" 01 r:: 30,000 .;;; III (/) 20,000 .r; :;: 10,000 .:0: 'l' (l) , C :J ..., 'l' 'l' 'l' (l) (l) (l) , , , 0) ~ t5 :J CD 0 q:: tf) 'l' (l) , > o Z ll'l (l) , .0 CD Ii. 'l' (l) , :; ..., 'l' (l) , <.l CD o ll'l (l) , c ('l] ..., , KV.."... kW -+- kWh I Figure 1. Building Load and Consumption Savings '<T '<T '<T 'l' '<T '<T 'l' L() L() O'l O'l O'l Q) O'l O'l Q) O'l O'l , -!.. , , , , , , , c: ::J Cl a. '0 > 0 c: ..0 ::J :::l CD 0 CD <1l CD ...., ...., <( en 0 z 0 ...., u.. Figure 2. Cumulative Utility Bill Savings . Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 29 94 '1(:(' ,) ttU ENVESTsCE Integrated Solution Proposal - The City of San Bernardino November 1994 Other Load 23% Lighting Savings 21% Lighting Load 17% HV AC Savings 17% HVAC Load 22% Figure 3, February Demand, by End-Use (kW) Other Consumption 21% HV AC Savings 19% Lighting Consumption 16% HVAC Consumption 20% Lighting Savings 24% Figure 4. February Energy Consumption, by End-Use (kWh) Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 30 94 31)1'" uU ENVESTSCE Integrated Solution Proposal - The City of San Bernardino November 1994 3: .ll: 'C c:: CO E CIl c 500 450 400 350 300 250 200 150 100 50 o III ScMngs o Dern:rd :~ ~; .".: /- , :"': ~ 0> , c:: :::::l -.. ~ 0> , ~ ~ ~ 0> 0> 0> , , , c> n U :::::l CIl 0 <( CJ) ~ 0> I > o Z ~ 0> , U Q) C LO 0> , c:: ro -.. LO 0> I .0 Q) LL :::::l -.. Figure 5. BV AC Demand and Savings 60,000 , .c 50,000 ~ ~ ~; , c:: 40,000 ~ 0 +:: Q. : 11 Savings E 30,000 , :::::l I 0 ConsumptiCl1 III 20,000 c:: 0 () 10,000 ~ >- ~ CIl 0 c:: W ~ ~ ~ ~ ~ ~ ~ It) It) (j) 0> 0> (j) 0> 0> (j) (j) 0> , ...!. I 6- I , 0 I , c: :::::l Cl '0 > c: ..a :::::l -.. :::::l CIl 0 0 Q) I1l Q) -.. <( en z Cl -.. LL Figure 6. BV AC Energy Consumption and Savings Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 31 , . 94 366 ENVESTSCE Integrared Solution Proposal - The Ciry of San Bernardino November 1994 3: ~ 'fi c: III E Ql C 450, 400 J 350 ~ 300 i ?; 250] r' i 200 J , 150 J 100 J , ". , 50 I o II Savings I c Demand I v. '<t '<t '<t '<t '<t '<t '<t l() l() OJ OJ OJ OJ OJ OJ OJ OJ OJ , , , , , , , , , c :J Cl a. - > () c .c :1 :1 Q) () 0 Q) CIl Q) ...., ...., <( en 0 z 0 ...., u. Figure 7. Lighting Demand and Savings 80,000 , 70,000 , .c 60,000 . 3: ~ c: 50,000 , 11 Savings 0 ;;:: 40,000 [J Consumption c.. E I ::I 30,000 J III I c: 20,000 1 0 0 >- 10,000 21 Ql c: W '<t '<t '<t '<t '<t '<t '<t l() l() OJ OJ OJ OJ OJ OJ OJ OJ OJ , , , , , , , , , C :J Cl a. U > () c .c :1 ...., :J Q) 0 0 Q) CIl Q) ...., <( en z 0 ...., u. Figure 8, Lighting Energy Consumption and Savings Use and disclosure of this proposal data is subject to the restriction on the title page of this document. 32 94 366 fHUfST [USTOMfR RGRffMfHT City of San Bernardino November 1994 USE AND DISCLOSURE OF DATA The information disclosed hrrein is proprietary material of Southern California Edison Company and is not to he reproduced, used, or disclosed in whole or in part for any purpose other than to evalMte this agreement, without the written permis- sion of South ern California Edison Company. 94 366 TABLE OF CONTENTS Page I, DEFINITIONS _____._._.__________..__..._.____________..____..___________..__________________..________________. 1 II. EDISON'S OBLIGATIONS AND COVENANTS .__...______________________________________________ 3 2.1 Implementation of the Project ___._._..______________....____________________________---.---- 3 2.2 Completion of the Project .____________.._________________________________________-------. 3 2 ,3 Work Schedule _________._____.____________________________.__.______________________________...______. 3 2.4 Permitring.______________________._..____________._.._______________________________......___________ 3 2.5 Changes _._.___________.__.._______________.._______________...._______________._._______________.._____ 3 2.6 Environmental Matters ___________._._______________________________________________________ 4 2.7 Periodic Reports_...._____________......_.________________________.______________________________ 4 2.8 Optional Reports_____......__________._._......._.____________....___________....._______________.._______ 4 III, OWNERSHIP AND PAYMENT OBLIGATIONS __________________________________.._________________ 4 IV. EDISON'S REPRESENTATIONS AND WARRANTIES._________________________________________ 4 4,1 Authority .___.________________________________________________________________________..__. 4 4.2 No Adverse Proceedings ________._.......___________________________.._______________..__________. 4 4.3 Compliance with Laws ..._____________________________________________________________......______. 4 V. CUSTOMER'S REPRESENTATIONS AND WARRANTIES _______________..___________._...._________. 5 5.1 Organization and Authority._____________________________._.___________...._____________.._____ 5 5.2 No Adverse Proceedings or ConflictL___________....____________..__________________.-------. 5 5.3 Licenses and Permits; Compliance with Laws._______________________.__._._.__________....___. 5 5.4 Financial Condition; Matetial Adverse Change _.____________________________.._._______ 5 5,5 Performance of Obligations ___._.__.._________________________..______________._....-..-----------...--. 5 5.6 Environmental Matrers _____...________________________________________..____________..._...._____. 5 5,7 Agreements Affecting Project Site ___________..____________________________________......___. 6 5.8 Advice _________...._.__________._..______________.________________________.._____________..__._________.._._ 6 VI, CUSTOMER'S OBLIGATIONS AND COVENANTS.____________________..__.______________.....__________... 6 6.1 Financial Statements and Other Reports _______________________________________...._______. 6 6,2 Compliance with Laws ._____.______________________...._.______________________.._______________.....___. 7 6,3 Cooperation and Access to Project Site._....________......___________..__________.._....___-----....-- 7 6.4 Access ro Records and Documents.__......________._._________....__..._______...._..___________...._.._____. 7 6.5 Confidentiality .____..__..__________......________.._.....__________._..__________.____________________.__. 7 VII. WARRANTIES _______.____________________.________...._________....________.______________.___________..______. 8 7 .1 Warranty of Equipment.___.__________._._______._.__________.._..________.._________......_.._______._. 8 7.2 Conditions of Warranty _._...._____________________.____________________________--------------.--. 8 7.3 No Other W arranties....________......_________.._________......_________..__________.._________.._______. 8 VIII. INSURANCE _____.__________.._.._________......._________...._____________________.....________...._____________. 8 8.1 Edison Provided Insurance .________________._____________________.._________.___---.---. 8 8.2 Customer Provided Insurance ________..___________..........__________..________...._.......----------....----. 8 MUNL253.V4,11l4/94 94 36G ' TABLE OF CONTENTS IX. DEFAULTS _______..__________..__..________________________...._..____________..______________....___.______. 10 9,1 Default by Customer ._..___________.._.____________.._______________.______________.___________ 10 9.2 Default by Edison_____________...._..____._______...._.___________...._______________...._________________. 10 X REMEDIES UPON DEFAULT ___..___.._____________..........________________________....____________._________. 11 10.1 Remedies Upon Customet Events of DefauIL__________________________._.____________. 11 10.2 Remedies Upon Edison Events of DefauIL...___________________________.._____________-....-. 11 XI. TERMINATION ._...._.________.___..____________.____________....._______________.._____________..___....____________... 12 11 . 1 Termination Upon an Event of Default .____________....___________________________.._....____ 12 11.2 Termination Prior to Commencement of W ork__________________..___.___________..____. 12 11.3 Termination Prior to Completion._________________.._.___________..________________________. 12 11 .4 Termination Upon Force Majeure ....___________.._._______________.._____________..___---------- 13 11.5 Termination Following Completion.___________._____________._________________---------- 13 XII. LIMITATION ON DAMAGES ______________________________________________________----------. 13 XIII. MISCELLANEOUS.______.__________________________________________________________.________. 13 13 ' 1 Public Utilities Commission J urisdiction ..___________________________._____________.______ 13 13.2 Assignability.___________._.___________.._____________._....___________...._____________......__________... 13 13,3 Ownership of Trade Secrets and Know-How __________.__________..______________.._.._____. 14 13.4 Severability .______.___________..______________._..__________....___________.._._______________________. 14 13.5 Effect of Waiver; Remedies Cumulative._______..._________________________________-.--. 14 13.6 Marshalling; Payments Set Aside _...__.___.________.__.________.._.____________..__________.._ 14 13. 7 Notices_._._______..____________..____________.__________..__._________.____________._.._____________._ 14 13.8 SurvivaL____.._....________..____.__________.........._..______________________.....__________________________----- 14 13.9 Applicable Law ...____________....___________....__________....___________________________________.___ 15 13.10 Final Agreement; Amendments ________________________....________.._.....___________---..-------. 15 13.11 Article and Section Headings ______________________________._.__________._.________------- 15 13.12 Dispute Resolution .___.__________._______________________________________._________...______ 15 13 . 13 Coun terparts .________.........__________............___________...___________...._.__________._._...._________._......._ 15 SCHEDULES 5.6 Hazardous Materials 5.7 Agreements Affecting Real Property EXHIBITS Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Description of Project Site Form of Certificate of Acceptance Form of Certificate of Final Completion Form of Lease Agreement Form of Recording Memorandum MUNI_2~3.V4,11/4194 94 366 Customer Agreement THIS AGREEMENT, dated as of Pet'wlbu 1"\, IQq'-L-, is entered into by and between SOUTHERN CALIFORNIA EDISON COMPANY ("Edison") and the CITY OF SAN BERNARDINO ("Customer ") relative to the following: A. Edison has developed ENVESTsCE, a program providing for the engineering, design, packaging, procurement, installation, financing and monitoring of cost-effective, energy-efficient equipment to public and private sector, commercial and industrial customers, B. Edison has delivered to Customer a preliminary proposal for the implementation and financing of certain energy efficiency solutions at Customer's premises, C. Based on such proposal, Customer desires to enter into this Agteement to implement the Project (as hereinafter defined) on the terms and conditions set forth herein. Accordingly, Customer and Edison hereby agree as follows: I. DEFINITIONS Capitalized terms used in this Agreement have the following meanings: "Acceptance" means the execution and delivery of the Certificate of Acceptance as provided in Section 2.2 hereof. "Agreement" means this Agreement together with all Schedules, Exhibits and any Amendments hereto. "Amendment" means a writren document executed by Customer and Edison which amends or modifies this Agreement or any other Project Document in any respect. "Change Order" means a document executed by Edison and Customer for a change in the Work specified in the Project Description. "Environmental Claim" means any accusation, allegation, notice of violation, claim, demand, abatement order or other order or direction, conditional or otherwise, by any governmental authority or any person for any damage, including without limitation, personal injury, tangible ot intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, in each case relating to, resulting from or in connection with Hazardous Materials and relating to the Project, "Environmental Laws" means all statutes, ordinances, orders, rules, regulations, plans, policies or decrees and the like relating to (a) environmental matrers including, without limitation, those relating to fines, injunctions, penalties, damages, contribution, cost recovery compensation, losses or injuries resulting from the Release or threatened Release of Hazardous Materials, (b) the generation, use, storage, transportation or disposal of Hazardous Materials, or (c) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare in any manner applicable to the Project ot Project Site. "Event of Default" shall have the meaning set forth in Article IX hereof. MUNJ253.v4.11/4/94 94 366 2 "Excluded Activity" means the containment, detection, disposal, discharge, handling, removal, storage, transportation, treatment or use of Hazardous Materials. "Final Completion List" means a list of corrective Work required to complete the Project. "Force Majeure" means any of the following events: (a) fire, lightening, flood, earthquake or other natutal disaster; ot (b) war, riot, civil disturbance or sabotage. "Hazardous Materials" means (a) any chemical, material or substance at any time defined as or included in any formulations intended to define, list ot classify substances by reason of deleterious ptoperties such as ignitability, corrosivity, radioactivity, reactivity, carcinogenicity, toxicity, or words of similar import under any applicable Environmental Laws or publications ptomulgated pursuant thereto; (b) asbestos in any form; (c) urea formaldehyde foam insulation; (d) equipment or fixtures containing polychlorinated biphenyls; and (e) any other chemical, material ot substances, exposure to which is ptohibited, limited or regulated by any governmental authority or which mayor could pose a hazard to health and safety of the owners, occupants or any other persons at or in the vicinity of the Project Site, "Lease Agreement" means the agreement to be entered into by Edison and Customer pursuant to Article III hereof. "Material Adverse Effect" means (a) a material adverse effect upon the activities, operations, properties, assets, condition (financial or otherwise) of Customer or (b) the impairment of, the ability of Customer to perform its obligations, or Edison's ability to enforce Customer's obligations, under any Project Document. "Option Purchase Price" as of any date means the Option Purchase Price determined in accordance with the Lease Agreement. "Payment" or "Payments" means each payment (including without limitation Base Rental and Additional Rental payments) provided for under the Lease Agreement. "Project" means the complete range of services and equipment to be provided by Edison under this Agreement as set forth in the Project Description. "Project Description" means the description of the Project to be agreed upon by the parties pursuant to Section 2.1 hereof. "Project Documents" means this Agreement, the Lease Agreement, the Project Desctiption and any other documents or instruments executed and delivered by Customer to Edison in connection with the Project. "Project Site" means the location ot locations of the Project specified in Exhibit A hereto. "Release" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including, without limitation, the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or into or out of the Project Site, including the movement of any Hazardous Materials through the air, soil, surface water or ground water or property. "Subcontractor" means either an entity contracting directly with Edison to furnish equipment or services as a part of or related ro the Project or an entity contracting with a Subcontractor of any tier ro furnish equipment or services as part of or related to the Project. MUNUS3.V4,11/4/94 94 366 3 "Substantial Completion" means completion of the Project except for matrers set forth on the Pinal Completion List. The date of Substantial Completion shall be the date of Acceptance. "Work" means all labor, materials, tools, equipment, services, transportation and other items required for the completion of the Project, II. EDISON'S OBLIGATIONS AND COVENANTS 2.1 Implementation of the Project, Edison has delivered a preliminary proposal to Customer containing a preliminary project description and preliminary proposal for financing the Project. Within approximately ~ weeks following the execution of this Agreement, Edison will perform such additional assessments, including engineering and design work, as necessary to develop the final project description. Upon completion of such assessments and consultation with Customer, Edison will submit to Customet the final project description (the "Project Description"), If the Project Description is unacceptable to Customer, Customer may terminate this Agreement in accordance with Section 11,2 hereof. Edison hereby undertakes to perform the Work required to complete the Project in accordance with the Project Description. All or any portion of the Work or other obligations of Edison hereunder may be provided by Subcontractors as determined by Edison in its sole discretion. Edison will seek to perform the Work in a manner which will minimize the distuption of the Project Site and Customer's operations and conduct of business. 2.2 Completion of the Project, At the time of Substantial Completion of the Project, Edison will have performed certain acceptance tesrs and reported the results thereof to Customer, Edison and Customer will thereupon execute a Certificate of Acceptance substantially in the form of Exhibit B hereto. Minor deficiencies which are not sufficient to delay Acceptance will be listed on a Final Completion List prepared by Edison. Edison will thereafter promptly complete the items on the Final Completion List to the reasonable satisfaction of, and by dates reasonably acceptable to, Customer. Upon completion of the items on the Final Completion List, Customer and Edison will execute a Certificate of Final Completion substantially in the form of Exhibit C hereto. 2,3 Work Schedule. Edison will use its reasonable efforts to commence and complete performance of the Work required to complete the Project within the schedule set forth in the Project Description, Edison will give notice to Customer any time it becomes reasonably apparent that the Work will not be completed within such schedule. Edison will not be tesponsible for any delay in completion of the Work resulting from (a) shortage of labor or materials, (b) strike or labor disturbance, (c) weather conditions, (d) governmental rule, regulation or order, including orders or judgments of any court or commission, (e) delay in obtaining any necessary permits, approvals, rights of way or easements, (f) delay in obtaining materials or labor at commercially reasonable prices or (g) the necessity of Customer undertaking any Excluded Activity, any Force Majeure or any other cause or condition beyond the control of Edison. 2.4 Permitting. Edison will use its reasonable efforts to obtain any and all permits or other governmental authorizations required for completion of the Project other than those to be obtained by Customer as set forth in the Project Description and those related to Excluded Activities, Customer agrees to cooperate with Edison or its Subcontractors in all respects in applying for and obtaining all necessary permits and approvals. 2,5 Changes. Changes in the Work as specified in the Project Description may only be made by a Change Order. Edison may request a MUN1.253.v4.11/4194 94 366' 4 III. OWNERSHIP AND PAYMENT OBLIGATIONS change in the Work by delivering a Change Order to Customer or Customer may request a Change Order. If the changes in the Work specified in a Change Order will affect the Costs of the Ptoject or the schedule fot completion of the Work, Edison and Customer shall mutually agree on any necessary Amendments to the Project Documents to modify the Payments and/or the schedule for completion of the Work. 2.6 Environmental Matters. Customer understands and agrees that Edison has not inspected the Project Site for the purpose of detecting the presence of Hazardous Materials, Neither Edison nor any of its tepresentatives, agents or Subcontractors will be responsible for any Excluded Activity relative to Hazardous Materials, If the completion of the Work requires any Excluded Activity, or other activity involving Hazardous Materials, Customer will promptly arrange for the same at its sole risk and expense. Customer further hereby releases and agrees to indemnify, defend and hold harmless Edison and its directors, officers, employees, agents, customers, partners and Subcontractors (as well as each of their respective directors, officers, employees, agents, customers and partners) from all costs, claims, damages and other liability arising out of any Environmental Claims, Hazardous Materials or Excluded Activities, except to the extent that such costs, claims, damages and other liability are the direct result of willful misconduct on the part of the indemnified party. 2.7 Periodic Reports. Following Acceptance, Edison will provide to Customer fot a period of 3 years after the date of acceptance, on a regular basis, reports estimating usage and savings resulting from implementation of the Project. 2.8 Optional Reports, At the election of Customer and subjecr to payment of any charges hereafter to be agreed upon in writing by Edison and Customer, Edison will provide to Customer such additional repores as may be mutually agreed upon. Concurrently with the delivery of the Project Description, Edison shall deliver to Customer a lease agreement substantially in the form of Exhibit D hereto (the "L e a s e Agreement") specifying the relative ownership rights of Customer and Edison in the Work and the terms and conditions of Customer's obligations to make Payments fot the Project to Edison. If such Lease Agreement is acceptable to Customer, Customer and Edison shall execute and deliver the Lease Agreement and any other documents required to be executed in connection therewith. If the Lease Agreement is not acceptable to Customer, Customer may terminate this Agreement in accordance with Section 11.2 hereof. IV, EDISON'S REPRESENTATIONS AND WARRANTIES 4,1 Authority. Edison has all teguisite power and authority to enter into this Agreement and any Project Documents and to perform its obligations hereunder and thereunder, and this Agreement and any other Project Documents, when executed and delivered, will be legal, valid and binding obligations of Edison enforceable in accordance with their respective terms. 4.2 No Adverse Proceedings. There are no suits, actions or other proceedings pending or, to Edison's knowledge, threatened against Edison, which would reasonably be expected to adversely affect Edison's ability to perform its obligations under rhis Agreement or any other Ptoject Document. 4.3 Compliance with Laws. Edison will perform its obligations hereunder in material compliance with applicable laws, rules and regulations and in material compliance with any and all reasonable rules of Customer relative to the Project Site which are specified in writing to Edison. MUNI.2HV4.1ll4N4 94 3CG 5 V, CUSTOMER'S REPRESENTATIONS AND WARRANTIES 5.1 Organization and Authority. Customer is a city organized and existing undet the Constitution and laws of the State of California and has all requisite power and authority to carryon its activities as now conducted and as proposed to be conducted, to enter into this Agreement and any other Project Documents, and to carry out the transactions contemplated hereby and thereby. This Agreement and any other Project Documents have been duly authorized and, when executed and delivered, will be legal, valid and binding obligations of Customer enforceable in accordance with their respective terms. 5,2 No Adverse Proceedings or Conflicts. There are no suits, actions or other proceedings pending or, ro Cusromer's knowledge, threatened against Customet which would adversely affect Customer's ability to perform its obligations under this Agreement or any other Project Documents. The executIOn, delivery and performance by Customer of thIS Agreement and any other Project Documents and the consummation of the transactions contemplated hereby and thereby do not and will not: (a) violate any provision of law or any order, judgment or decree of any court or other governmental agency binding on Customer, (b) violate any material contract, lease, deed of trust, undertaking, agreement, license, permit or other instrument to which Customer is a party, or (c) require any approval or consent of any governmental agency or other person, except such approvals and consents as have been obtained ot, with respect to causes (a) and (b) above except to the extent such violation would not r~asonably be expected to have a Marerial Adverse Effect. 5.3 Licenses and Permits; Compliance with Laws. Customer has all approvals, licenses and permits of all governmental or regulatory agencies, whether Federal, state or local, necessary for the conduct of its activities as presently conducted and proposed to be conducted, and Customer is in compliance with all applicable laws (including Environmental Laws), codes, statutes, tules, regulations and orders of any governmental or regulatory agency whether Federal, state or local (including zoning and building codes), except to the extent non-compliance would not reasonably be expected to have a Material Adverse Effect. 5.4 Financial Condition; Material Adverse Change. Customer has provided Edison with its audited, if available, otherwise unaudited, financial statements for the three fiscal years ended immediately preceding the date of this Agreement if available, othetwise for such fiscal periods as may be acceptable ro Edison. Such financial statements were prepared in conformity with generally accepted accounting principles except as otherwise noted thereon, and fairly present the financial position of Customer at the respective dates thereof and the results of operations and changes in financial position of Customet for the periods covered thereby. Since the date of the most recent financial statements deliveted ro Edison pursuant to this Section 5.4, there has beenno change in the business, operations, propertIes, prospects, assets or condition (financial or otherwise) of Customer which has had or would reasonably be expected to have a Material Adverse Effect. 5.5 Performance of Obligations. Customer is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any indenture, mortgage, deed of ttust, contract, lease, undertaking, agreement or other instrument to which Customer is a party or by which any of its properties are bound, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences, direct or indirect of such default or defaults, if any, would not reasonably be expected to have a Material Adverse Effect. 5.6 Environmental operations and conditions at Matters, All the Project Site MUNI,2~1_V4,1114194 94 ry;. '1 vulJ 6 comply in all material respects with all Environmental Laws. None of the operations of Cus,tomer at the Project Site is subject to any JudlClal or administrative proceeding alleging the, violation of or liability under any EnVironmental Laws. Neither the Project Site nor any operations thereon are subject to any outstanding order or agreement with any governmental authority or private party relating to (a) any Environmental Laws or (b) any EnvlConmental Claims. Except as disclosed on Schedule 5,6 hereto, to the best knowledge of Customer, no Hazardous Materials exist on under or about any Project Site are disclosed o~ Schedule 5.6 hereto, other than Hazardous Materials used in customary quantities in the ordinary course of Customer's activities which would not reasonably be expected to interfere with or affect the performance of the Work. 5.7 Agreements Affecting Project Site. All deeds of trust, leases, subleases and other agreements relating to the ownership, use or occupancy of, or encumbrances on, the Project Site are listed on Schedule 5.7 hereto and true and correct copies of each document listed on Schedule 5.7 hereto and any amendments thereto have been delivered to Edison. 5.8 Advice. Customer hereby acknowledges that it has been advised by Edison that (a) there ate other Edison sponsored energy efflC1ency programs available to Customer including rebate programs and (b) there ar~ other vendors providing services similar to the ENVESTsCE program. Customer further acknowledges it is not relying on Edison for any legal, tax or accounting advice with respect to the transactions contemplated by the Project Documents and that Edison has advised Customer to consult its own legal, business, accounting and tax advisors. VI. CUSTOMER'S OBLIGATIONS AND COVENANTS 6.1 Financial Statements and Other Reports. Customer shall deliver the following to Edison: (a) Financial Statements. Financial statements, audited if available, as soon as practicable in any event within 60 days after the end of each fiscal quarter and within 120 days after the end of each fiscal year, including the balance sheet of Customer as at the end of such period and the related statements of income and cash flow of Customer for such period, all such financial statements to be in such form as reasonably acceptable to Edison. (b) Liti~ation. Promptly upon obtaining any knowledge of the institution of, or threat of, any action, suit, proceeding, governmental investigation or arbitration against or affecting Customer that would reasonably be expected to have a Material Adverse Effect or is relared to the Project, shall promptly give notice thereof to Edison and provide such information as may be reasonably available to it to enable Edison to evaluate such matter. (c) Events of Default. Promptly upon becoming aware of any condition or event that constitutes an Event of Default or would constitute an Event of Default after notice or lapse of time or both, Customer shall promptly give written notice thereof to Edison. (d) Material Events. Promptly upon becoming aware of any event, circumstance or condition that would reasonably be expected to result in a Material Adverse Effect, Customer shall promptly give writren notice thereof to Edison. MUNI.2S3.V4,11/4/94 ~4 3:6 7 (e) Environmental Notices. Customer shall promptly notify Edison in writing and in reasonable detail of: (i) any Environmental Claims relating to the Project or Project Site or any Release of Hazardous Materials at the Project Site required to be reported to any Federal, state or local governmental ot tegulatory agency under any applicable Environmental Laws; (ii) Customer's discovery of any Hazardous Materials at the Project Site not previously disclosed to Edison or any condition on the Project Site or adjoining or in the vicinity of the Project Site that would reasonably be expected to result in an Environmental Claim; and (iii) any request for information from any governmental agency that suggests that such agency is investigating whether an Environmental Claim may exist in relation to the Project or Project Sire, (f) Insurance Certificate, Upon execution of the Lease Agreement and upon each anniversary date thereof, Customer shall deliver to Edison a certificate executed by the Superintendent or Assistant Superintendent of Customer or another official designated by such officer and authorized to act on behalf of Customer under or with respect to the Project Documents certifying that all policies or self-insurance required by Section 8.2 have been obtained and are in full force and effect and specifying the dollar limits thereof. (g) Other Reports. Any other information regarding Customer relevant to the performance of the Work or Customer's performance of its obligations under the Project Documents, as from time to time may be reasonably requested by Edison. 6.2 Compliance with Laws, Customer shall comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, whether Federal, state or local, non-compliance with which would be reasonably expected to have a Material Adverse Effect. 6.3 Cooperation and Access to Project Site. Customer will cooperate with Edison, its agents, representatives and Subcontractors in connection with all aspects of the Project including engineering, design, permitting, installation, testing and monitoring. Customer will provide Edison, its agents, representatives and Subcontractors, wirh reasonable access to the Project Site and to power and water at all times as necessary to complete the Project, to perform any warranty repairs and to moni tor performance of the Work. Following completion of the Project until all obligations under the Lease Agreement have been indefeasibly paid in full, Customer will permit Edison to enter the Project Site at any time during normal business hours and upon reasonable notice to inspect the Work to ensure Customer's compliance with its obligations under the Project Documents. 6.4 Access to Records and Documents, Customer will provide Edison with full access to construction documents relating to the Project Site, equipment submittals, operation and maintenance manuals, utility usage bills and records and any other public access records or other records of Customer as are reasonably necessary or useful to Edison in completing the Project. Edison may copy any such records and documents for its own use under this Agreement. 6,5 Confidentiality. Customer agrees that all analyses and proposals prepared by Edison fot Customer in connection with this MUNI.25,>,V4.11/4194 94 3GG 8 Agreement and all copies thereof are and shall remain the sole property of Edison, Customer acknowledges and agrees that such documents contain confidential and proprietary information belonging to Edison and Customer agrees that they shall not be reproduced or disclosed to any other person without the prior writren consent of Edison. VII, WARRANTIES 7.1 Warranty of Equipment, For a period of one yeat from the date of Acceptance, Edison warrants the performance of the equipment in accordance with the specifications agreed upon and set forth in the Project Description. This warranty will include reasonable and customary labor costs to make any warranty correction or repair. Upon termination of the one-year period, Edison will assign to Customer Edison's rights under any manufacturers' warranties relating to the equipment, and Customer's sole remedy thereafter will be under such manufacturers' warranties. 7.2 Conditions of Warranty. The warranty set forth in Section 7,1 above is subject to the following conditions applicable to each item for which a breach of warranty is claimed: (a) upon discovery of any alleged breach of warranty, Customer will give Edison prompt wrirten notice thereof; (b) Customer will operate and maintain all equipment in accordance with all applicable operation and maintenance procedures; and (c) Customer will make available to Edison or its agents or Subcontractors facilities at the applicable Project Site to facilitate making any warranty correction or repair, 7.3 No Other Warranties. The warranties set forth in this Article VII are exclusive and are in lieu of all other warranties. Edison makes no other warranties or representations of any kind with respect to the Project, whether statutory, express or implied, including, without limitation, any warranties of merchantability and fitness for a particular purpose, any warranties arising from course of dealing or usage of trade, or any warranty of savings to be realized as a result of implementing the Project. VIII, INSURANCE 8.1 Edison Provided Insurance. Prior to Acceptance, Edison will maintain valid and collectible insurance as described below: (a) Worker's Compensation Insurance with statutory limits, as required by the State of California and Employer's Liability Insurance with limits of not less than $2,000,000, (b) Commercial General Liability Insurance, written on an "occurrence" basis, including owners' and contractors' protective liability, products/completed operations liability, broad form property damage liability and contractual liability, Such insurance will bear a combined single limit per occurrence and annual aggregate of not less than $2,000,000, exclusive of defense costs. Such insurance will (i) name Customer as an additional insured as respects Edison's acts or omissions; and (ij) contain standard cross-liability or severability of interest provisions, (c) Automobile Bodily Injury and Property Damage Liability Insurance with a combined single limit of $2,000,000 per occurrence. Such insurance will cover owned, non-owned and hired automotive equipment used in connection with the Project. Such insurance will acknowledge Customer as additional insured. (d) Edison may elect to self-insure all or part of its insurance obligations under this Section 8,1. 8.2 As long Customer Provided Insurance. as this Agreement and the Lease MUNL253.v4.11l4194 94 """'ro -.J~"u Agreement remain in effect, Customer shall maintain in full force and effect, at its expense, with insurers of recognized responsibility reasonably acceptable to Edison or through a program of self-insurance to the extent specifically permitted under this Section 8.2 and reasonably acceptable to Edison, all coverage on the Project Site and the Project required by this Section 8.2. Such insurance shall consist of: (a) A policy or policies of insurance against loss or damage to the Project Site, including the Project, known as "Property, All Risk" including, without limitation, equipment and machinery and the perils of earthquake and flood, Such insurance shall be maintained at and in an amount not less than the full replacement value of the Project Site, including the Project. The term "full replacement value" as used herein shall mean the cost of repair or replacement of the Project Site, including the Project, without deduction for depreciation; provided, however, that Customer's obligations under this clause (a) may be sarisfied by self-insurance. (b) Comprehensive General Liability coverage against claims for damages including death, personal injury, bodil y injury or property damage arising from operations involving the Project Site, including the Ptoject. Such insurance shall afford protection with a combined single limit of not less than $1,000,000 per occurrence with respect to bodily injury, death or property damage liability, or such greater amount as may from time to time be recommended by Customer's risk management officer or an independent insurance consultant retained by Customer for that purpose; provided, however, that Customer's obligations under this clause (b) may be satisfied by self-insurance. (c) Worker's Compensation Insurance issued by a tesponsible cartiet authorized under the laws of the State of 9 California to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such worker's compensation insurance to cover all persons employed by Customer at or in connection with the Project Site and to cover full liability for compensation under any such act; provided, however, that Customer's obligations under this clause (c) may be satisfied by self-insurance. (d) Rental intetcuption insurance to cover loss, toral or partial, of the use of any part of the Project Site or the Project as a result of any of the hazards covered by the insurance required pursuant to clause (a) above, in an amount sufficient at all times to pay the total rent payable under the Lease Agreement for a period adequate to cover the period of repair or replacement. Such policy shall provide that the amount payable thereunder shall not be less than an amount equal to three years Base Rental (as defined in the Lease Agreement). Customer shall provide a certificate of insurance to Edison naming Edison as the sole named loss payee with respect to insurance for damage to or loss of any of the Project and naming Edison as an additional insured on all liability insurance. All such insurance will provide for at least thirty (30) days prior notice to Edison before cancellation or material modification thereof. Customer hereby irrevocably appoints Edison its attorney-in-fact, upon and during the continuance of any Customer Event of Default, to make claims with respect to, receive payment of, and execute and endorse all documents, checks or drafts received in payment for loss or damage to any of the Project under any such insurance policy, Customer shall not make any settlements in respect of any insurance maintained in accordance with clauses (a) ot (d) above without the writren consent of Edison, Earthquake coverage secured in accordance with clause (a) MUNI.2HV4.1114Iy4 94 3G6 10 shall be maintained throughout the term of the Lease Agreement unless Customer shall in its sole discretion determine that such earthquake coverage is not commercially reasonable. IX, DEFAULTS 9.1 Default by Customer. The following will be Customer Events of Default under this Agreement: (a) Failure by Customer to make any Payment to Edison when due; (b) Failure of Customer to perform or comply with any other material term or condition of this Agreement which failure is not cured within 30 days of notice of such failure to Customer by Edison, provided that if such failure cannot be reasonably cured within 30 days, such cure period shall be extended up to an additional 30 days as long as Customer is making good faith efforts to cure the fail ure; (c) Closure of or cessation of activities by Customer at any Project Site fot any reason prior to receipt by Edison of all Payments or other charges due to Edison under this Agreement, the Lease Agreement or any other Project Document; (d) Failure of any representation or warranty of Customer in this Agreement to be true and correct in any material respect; (e) Any event or change shall occur which results in a Material Adverse Effect; (I) Customer files a voluntary perition for bankruptcy or any other artangement in insolvency proceedings, Ot makes an assignment for the benefit of its creditors, or admits in writing an inability to pay its debts generally as they become due; (g) A receiver is appointed for Customer or any bankruptcy or other insolvency proceeding is filed against Customer or any of its property and such appointment, bankruptcy, or insolvency proceeding is not terminated within 30 days of such appointment or filing; or (h) A couct having jurisdiction of the premises shall enter an order or decree for relief in respect of Customer in an involuntary case under any applicable bankruptcy, insolvency or similar law or for the dissolution or split up of Customer, which order or decree is not stayed, 9.2 Default by Edison. The following will be Edison Events of Default under this Agreement: (a) Failure of Edison to perform or comply with any material term or condition of this Agreement which failure is not cured within 30 days of written notice of such failure by Customer to Edison, provided that if such failure cannor be reasonably cured within 30 days, such cure period shall be extended for up to an additional 30 days as long as Edison is making good faith effotts to cuce the failure; (b) Failure of any representation or warranty of Edison in this Agreement to be true and correct in any material respect; (c) Edison files a voluntary petition for bankruptcy or any other arrangement in insolvency proceedings, or makes an assignment for the benefit of its creditors, or admits in writing an inability to pay its debts generally as they become due; (d) A receiver is appointed for Edison or any bankruptcy or other MUNL253.V4.11l41')4 94 366 II insolvency proceeding is filed against Edison or any of its property and such appointment, bankruptcy, or insolvency proceeding is not terminated within 30 days of such appointment or filing; or (e) A court having jurisdiction of the premises shall enter an order or decree for relief in respect of Edison in an involuntary case under any applicable bankruptcy, insolvency or similar law or for the dissolurion or split up of Edison, which order or decree is not stayed. X REMEDIES UPON DEFAULT 10.1 Remedies Upon Customer Events of Default. Upon the occurrence of a Customer Event of Default specified in Section 9.1, without limiting any other remedies available to Edison heteunder ot at law, Edison shall have the right, at its option, without any furthet demand or notice: (a) So long as Edison does not terminate the Lease Agreement or Customer's right to possession of the Project, to enforce all of its rights and remedies hereunder and under the Lease Agreement, including the right to recover rental payments as they become due under the Lease Agreement and any other tights available under Section 1951.4 of the California Civil Code; (b) To the extent permitted by law, without legal process, terminate this Agreement and the Lease Agreement by giving notice declaring termination (termination to be effective upon delivery) and enter the Project Site and dismantle and remove any Work without liability to Customer on an account of such actions; and (c) Exercise all remedies available to it at law ot equity or other appropriate proceedings, including without limitation, any remedies available to it under the rules of the California Public Utilities Commission governing the payment ot nonpayment of utility bills. In addition, unless and until the Lease Agreement has been terminated pursuant to the terms hereof, Customer shall be liable for all unpaid payments and other amounts due thereunder before and during the exercise of any of the foregoing remedies and for all legal fees, taxes, governmental charges and other costs and expenses incurred by reason of the occurrence of any Customer Event of Default or the exercise of Edison's remedies with respect thereto, Notwithstanding any othet provision of this Agreement or the Lease Agreement to the contraty, in no event shall Edison have the right to accelerate the payment of any Base Rental (as defined in the Lease Agreement). Notwithstanding any othet provision of this Agreement or the Lease Agreement, Edison shall, after payment of its reasonable fees and expenses, including those of its attorneys, (a) apply any amounts received from the exercise of its remedies hereunder after a Customer Event of Default to the satisfaction of all Base Rental and Additional Rental (as such terms are defined in the Lease Agreement) and all other amounts due or to become due under any of the Project Documents, and (b) to the extent any such moneys remain after all such payments are made, shall remit such moneys to Customer. 10.2 Remedies Upon Edison Events of Default. (a) If an Edison Event of Default specified in Section 9.2 hereof occurs prior to Acceptance and prior to commencement of the installation of the Project, Customer may terminate this Agreement by giving writren notice thereof to Edison and, upon such termination, Customer shall not be liable to Edison for any costs incurred by Edison hereundet, MUNL2HV4.1114194 94 3(j(; 12 (b) If an Edison Event of Default specified in Section 9.2 hereof occurs prior to Acceptance but after installation of the Project has begun, Customer may terminate this Agreement and the Lease Agreement by giving written notice rhereof to Edison which notice will be effective upon delivery and which will provide for either: (i) Edison to remove all Work from the Project Site and, within a reasonable period of time, to restore the Project Site as nearly as practicable to its condition priot to the commencement of the Project, provided such removal and restoration is reasonably feasible based upon the amount of the Work completed; or (ii) Customer to purchase the Work theretofore installed at a price equal to Edison's nonrecoverable costs incurred to the date of termination. (c) If an Edison Event of Default specified in Section 9.2 hereof occurs following Acceptance, Customer shall be enticled to recover any reasonable costs incurred by Customer directly as a result of such default. Edison agrees to pay all costs or expenses (including reasonable attorneys' fees) incurred by Customer in exercising and enforcing the remedies provided herein upon an Edison Event of Default. XI. TERMINATION 11.1 Termination Upon an Event of Default. This Agreement may be terminated by either Edison or Customer upon the occurrence of certain Events of Default in accordance with the provisions of Sections 10,1 and 10.2 hereof. 11.2 Termination Prior to Commencement of Work. In the event, prior to the delivery of the Project Description and Lease Agteement to Customer, Edison, as a result of its furrher assessments, determines that the proposed project does not meet the ENVESTsCE program requirements, Edison may terminate this Agreement. Edison shall give Customer writren notice of any such termination. Upon such a termination by Edison, Customer shall have no obligation to reimburse Edison for any costs incurred by Edison under this Agreement. In the event, upon delivery to Customer of the Project Description and Lease Agreement, the terms of either the Project Description or Lease Agreement are materially different from the terms set forrh in the preliminary proposal delivered to Customer and are unacceptable to Customer, Customer may terminate this Agreement. Customer shall give Edison writren notice of any such tetmination within 15 days of receipt of the Project Description and Lease Agreement. Upon such a termination by Customer, Edison will prepare and deliver to Customer a srarement of nonrecoverable costs incurred by Edison to the date of termination which will be due and payable by Customer upon delivery of such statement. 11.3 Termination Prior to Completion. In the event it becomes apparent that the Project cannot be completed with reasonable effort as a result of (a) stoppage of the Work by order of any court or public authority through no act or fault of Customer or Edison (including any employees of either), (b) delays in obtaining any necessary permits, approvals, easements or rights-of-way through no fault of Customer or Edison or (c) resulting from the necessity of Customer undertaking any Excluded Activity, either party may terminate this Agreement effective upon 15 days prior written norice co the other party. Upon such a termination under this Section 11.3, Edison will prepare and deliver to Customer a statement of non-recoverable costs incurred by Edison to the date of termination which will be due from and MUNI.253.V4,11/411)4 94 306 payable by Customer upon delivery of such statement. 11.4 Termination Upon Force Majeure. In the event the Project is or any Work thereon is wholly or partially damaged or destroyed by Force Majeure prior to Acceptance, Customer and Edison shall within 30 days mutually agree to continue to complete the Project or to terminate this Agreement. If the parries cannot reach a mutual agreement within 30 days, either parry may terminate this Agreement upon 15 days prior writren notice to the other parry, If Customer and Edison decide to complete the Project, they shall enter into any necessary Amendments to the Project Documents, including amendments to the schedule of Payments and schedule fot completion of the Work. If Customer and/or Edison decide to terminate this Agreement, Edison will prepare and deliver to Customer a statement of nonrecoverable costs incurred by Edison through the date of termination which will be due from and payable by Customer upon delivery of such statement. 11.5 Termination Following Completion. In the event Customer elects to exercise its option to purchase the Project pursuant to the Lease Agreement, this Agreement and the Lease Agreement shall terminate upon the consummation of such purchase. In the event there is an abatement of rental payments pursuant to Section 6 of the Lease Agreement as a result of material damage or destruction to the Project, Customer may elect either (a) to repair or replace, at Customer's sole cost and expense, the Project or portions thereof so damaged or destroyed in accordance with the specifications set forth in the Project Description, in which case this Agreement and the Lease Agreement shall continue in full force and effect or (b) to pay to Edison an amount equal to the Option Purchase Price and, upon such payment, this Agreement and the Lease Agreement shall terminate. 13 XII. LIMITATION ON DAMAGES In no event will either party to this Agreement be liable to the other parry under any porrion of this Agreement or any other Project Document for any special, indirect, incidental or consequential damages whatsoever whether in contract, tott (including negligence), strict liability or otherwise including, but not limited to, loss of use of or under utilization of labor or facilities, loss of revenue or anticipated profits, or claims from any customer of a party hereto, resulting from performance or nonperformance of obligations under the Project Documents or in the event of a suspension of the Project or termination of this Agreement or the other Project Documents. In no event will Edison be liable to Customer for an aggregate amount in excess of the aggregate amount of the Payments payable by Customer under the Lease Agreement. XIII, MISCELLANEOUS 13.1 Public Utilities Commission Jurisdiction. This Agreement and each other Project Document shall at all times be subject to such changes or modifications by the Public Utilities Commission of the State of California as said Commission may, from time to time, direct in the exercise of its jurisdiction. Customer understands and agrees that Edison may disclose cerrain information about the Project to said Commission as requested or required by said Commission. 13.2 Assignability, Customer may transfer or assign its rights and obligations under this Agreement and the other Project Documents to any person or entity which will thereafter own ot occupy the Ptoject Site; provided that such person or entity is reasonably acceptable to Edison and agrees in writing to be bound by all the terms and conditions of, and to assume all obligations of Customer under, all of the Project Documents, such agreement to be in form and substance reasonably satisfactory to Edison. MUNl.253,V4.ll/4194 \ 94 366 14 , Customer will cooperate in recording a memorandum of this Agreement, in the form atrached hereto as Exhibit E, in the teal ptoperty records of the county in which any Project Site is located to give future owners or occupants of the Project Site notice of this Agreement. 13.3 Ownership of Trade Secrets and Know-How, Customer acknowledges and agrees that any trade secrets, know-how or the like developed by Edison or its Subcontractors in the course of the implementation of the Project will be the sole property of Edison and may be used by Edison in performing similar projects for itself or others without further petmission of or obligation to Customer, 13.4 Severability. Any provision of any Project Document which is prohibited by, or unlawful or unenforceable under, any applicable law of any jurisdiction will, be ineffective as to such jurisdiction without invalidating the remaining provisions of such document; provided, however, that, to the extent that the provisions of any such applicable law can be waived, they are hereby waived by Customer, 13.5 Effect of Waiver; Remedies Cumulative. No failure or delay on the part of any party in the exercise of any power, right or privilege under any Project Document shall impair such power, right or ptivilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. Any waiver, permit, consent or approval of any breach or default under this Agreement or any other Project Document or of any provision or condition hereof or thereof, must be specifically set forth in an Amendment or Change Order. All rights and remedies under this Agteement and rhe other Project Documents are cumulative to, and not exclusive of, any rights or remedies available hereundet or thereunder, or otherwise available at law to the extent not inconsistent with any of the express provisions of the Project Documents. 13.6 Marshalling; Payments Set Aside. Edison shall not be under any obligation to marshall any assets in favor of Cusromer or any other party ot against or in payment of any or all of the obligations of Customer to Edison under the obligations of Customer to Edison under the Project Documents. To the extent that Customer makes a payment or payments to Edison, or Edison enforces any security interesr in any collatetal, and such payment or payments or the proceeds of such enforcement or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all liens, rights and remedies therefor or related thereto, shall be revised and continued in full fotce and effect as if such payment or payments had not been made or such enforcement had not occurred. 13,7 Notices. All notices, requests, demands or other communications required or permitred to be given under any of the Project Documents shall be in wtiting and may be personally served, telecopied, telexed or sent by United States mail and shall be deemed to have been given when delivered in person, upon receipt of telecopy ot telex or five business days after deposit in the United States mail, registered or certified, postage pre-paid and properly addressed to the parties at the addresses set forth on the signature pages hereof. Any party may change the address to which notices are to be addressed by giving the other party writren notice in the manner herein set forth. 13.8 Survival. Notwithstanding completion of the Project or termination of the Project or of this Agreement or any othet Project Document, the parties will continue to be bound by those provisions of this Agreement which by their nature survive such completion or termination. MUNI.253-V4.1114194 , 94 3G6 15 13.9 Applicable Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of California. 13.10 Final Agreement; Amendments. This Agreement and aJl othet Project Documents will become effective upon execution and delivery by both Edison and Customer. The Project Documents constitute the full and final understanding between Edison and Customer with respect to the subject matrer thereof, and merge and supersede aJl prior representations and discussions pertaining to such subject matter including any proposals theretofore made. Neither the Project Documents nor the nature and scope of the Project may be changed in any respect except by an Amendment or Change Order. 13,11 Article and Section Headings. Article and Section headings in the Agreement are for convenience only and will not be construed as interpretations of text. 13.12 Dispute Resolution. In the event of any dispute, claim ot disagreement arising out of or connected with this Agreement or any other Project Documents, the parties hereby agree to negotiate in good faith to resolve such dispute, claim or disagreement. If the parties are unable to resolve the disagreement, claim or dispute within 60 days of writren notice of such dispute, claim or disagreement by one party to the other, then the parties agree that such dispute, claim or disagreemen filtH. be settled by arbitration by three arbitra rs (of whom each party shall appoint one and e two so appointed shaJl appoint the third), i accordance with the Center for Public Res rces, Inc., Rules for Non-Administered rbirration of Business Disputes, as in eft ct on January 1, 1994: ptovided that no unitive damages shaJl be awarded in any s ch proceeding and each party shall bear its wn respective legal fees and expenses. A j gment upon the award rendered by the arbi ators may be entered by any court having j Isdiction thereof. The place of the atbitrat' n shall be within the County of Los may (but need not) Angeles, State of California or such other place as the parties may mutually agree. 13.13 Counterparts. This Agreement may be executed in sevetal counterparts in one or more separate documents all of which together shall constitute one and the same instrument with the same force and effect as though aJl of the parties had executed the same document. IN WITNESS WHEREOF, the undersigned being duly authorized and intending to be legally bound, through their respective authorized officers or representatives, subscribe their names to this instrument as of the date first written above. ~RNlAEOOnNmMPANY By: ~ ~/):7 Pamela A. Bass Vice President, ENVESTSCE Division Notice Address: Southern California Edison Company ENVESTSCE 6000 N. Irwindale Avenue Irwindale, California 91702 Atrention: Ken Pickrahn Facsimile: (818) 812-7614 CITY OF SAN BERNARDINO ~/ .:11~ By: / nn-1 /J1',<Y1 I . Tom Mmor Mayor, City of San Bernardino Notice Address: City of San Bernardino City Hall, 300 North D Street San Bernardino, CA 92418 Attention: Tom Minor Facsimile: ( ) MUNI.2HV4.1114194 ~, '. ". 94 366 16 SCHEDULE 5.6 HAZARDOUS MATERIALS (To be supplied by Customer) City Hall Asbestos and PCB ballasts are present. Contact Facilities Management Dept. for a full report. Carousel Mall Asbestos and PCB ballasts are known to be present. Contact Facilities Management Dept. for a full report. Feldheym Library Not Applicable MUNLl)3.V4,1114/94 " 94 366 17 SCHEDULE 5.7 AGREEMENTS AFFECTING PROJECT SITE (To be supplied by Customer) This section is not used. MUNL253.V4.11/4/94 " 94 3G6 18 EXHIBIT A DESCRIPTION OF PROJECT SITE There are three Project Sites. The three Project Sites ate as follows: City Hall 300 North D Street San Bernardino, CA 92418 Carousel Mall Courts 320 E Streer San Bernardino, CA 92418 Main Library 555 W 6th Street San Bernardino, CA 92418 MUNL253.V4,11l4194 94 366 ". 19 EXHIBIT B FORM OF CERTIFICATE OF ACCEPTANCE Reference is made to that certain ENVESTSCE Customer Agreement, dated as of (the "Customer Agreement"), by and between Southern California Edison Company ("Edison") and the City of San Bernardino ("Customer"), All capitalized tetms used herein without definition shall have the meanings given such terms in the Customer Agreement. This Certificate is being delivered pursuant to Section 2.2 of the Customer Agreement. Customer hereby accepts the Project as substantially complete. Edison shall complete the items on the Final Completion List attached to this Certificate in accordance with the provisions of Section 2,2 of the Customer Agreement. IN WITNESS WHEREOF, the undersigned have executed this Certificate this _ day of CITY OF SAN BERNARDINO By: Title: SOUTI-lERNCALIFORNIAEDISONCDMPANY By: Project Manager MUNI.253.V4.11/4194 94 366 20 EXHIBIT C FORM OF CERTIFICATE OF FINAL COMPLETION Reference is made to that certain ENVESTSCE Customer Agreement, dated as of _____________ (the "Customer Agreement"), by and between Southern California Edison Company ("Edison") and the City of San Bernardino ("Customer"). All capitalized terms used hetein without definition shall have the meanings given such terms in the Customer Agreement. Customer hereby acknowledges and agrees that all items listed on the Final Completion List have been completed to Customer's satisfaction and Customer hereby accepts the Project as completed. Executed this _ day of CITY OF SAN BERNARDINO By: Title: MUNI.2S3.V4.Ll/4194 943GB EXHIBIT D 21 FORM OF LEASE AGREEMENT THIS LEASE AGREEMENT (tltis "Agreement "), dated as of btCl.t'I\\:;r" 1"1, ,.qq~is entered into by and between SOUTHERN CALIFORNIA EDISON COMPANY ("Edison") and the CITY OF SAN BERNARDINO ("Customer") in connection with that certain Customer Agreement, dated as of 't?r.ctmQ{r_L"kL'l..'\..t (the "Customer Agreement"), by and between Edison and Customer. All capitalized terms used herein without definition shall have the meanings given such terms in the Customer Agreement. This is the Lease Agreement referenced in, and entered into pursuant to, the Customer Agteement. Reference is hereby made to the Customer Agreement for a complete statement of the terms and conditions under which this Agreement is entered into by the parties. Customer and Edison hereby agree as follows: 1. Lease of Project, Edison hereby leases the Project to Customer, and Customer hereby leases the Project from Edison and agrees to pay the Base Rental and the Additional Rental as provided herein for the use and possession of the Project, all on the terms and conditions set forth herein. 2. Lease Term, The term of this Agreement (the "Lease Term") shall commence on the date of Acceptance and end on the earliest of (a) [insert date], (b) the date of termination of this Agreement in accordance with Section 11.5 of the Customer Agreement and (c) the date on which Customer has exercised its option to pur- chase all of Edison's right, title and interest in the Project pursuant to Section 13 hereof. Customer hereby agrees, subject to the terms hereof, to pay to Edison the Base Rental and Additional Rental in the amounts, at the times and in the manner hereinafter set fotth, such amounts constituting in the aggregate the rent payable under this Agreement. 3. Rental Payments, (a) Base Rental. Customer agrees to pay, in legally available funds, Base Rental in the amounts set forth on Schedule I hereto. Such payments will be billed with Customer's monthly electric utility bill and shall be due by the due date reflected on such bill. The first pay- ment will be billed on Customet's first electric utility bill following the date of Acceptance, Payments not received by the due date indicated on the bill will accrue the same late payment charges as are ap- plicable to Customer's electric utility bills, (b) Additional Rental, In addition to the Base Rental set forth herein, Customer agrees to pay as Additional Rental all of the following: (i) All taxes and assessments of any nature whatsoever, including but not limited to excise taxes, ad valorem taxes, ad valorem and specific lien special assessments and gross receipts taxes, if any, levied upon the Project or upon any inter- est of Edison therein or in this Agreement as provided in Section 10 hereof; (ii) Insurance premiums, if any, on all insurance required pursuant to the Customer Agreement; and (iii) Any other fees, costs or expenses incutred by Edison in con- nection with the execution, per- formance or enforcement of the Project Documents or any MUNUB.V4.ll/4194 94 366 22 assignment thereof or any of the transactions contemplated hereby or thereby or telated to the Project, Amounts constituting Additional Rental payable hereunder shall be paid by Customer directly to the person or person to whom such amounts shall be payable, except as otherwise provided in Section 10 hereof. Customer shall pay all such amounts when due or at such later time as such amounts may be paid without pen- alty or, in any other case, within 30 days after notice in writing from Edison to Customer stating the amount of Additional Rental then due and payable and the purpose thereof. 4. Consideration. The payments of Base Rental and Additional Rental under this Agreement for each fiscal year of Customer ("Fiscal Year") or portion thereof during the Lease Term shall constitute the total rental for such Fiscal Year or pottion thereof and shall be paid by Customer for and in consideration for the use and possession, and the continued quiet use and enjoyment, of the Project by Customer for and during such Fiscal Year or portion there- of. The parties hereto have agreed and deter- mined that such total annual rental is not in excess of the total annual fair rental value of the Project. In making such determination, consid- eration has been given to the costs of financing of the Project, the uses and purposes served by the Projecr, and the benefits therefrom that will accrue to the parties by reason of this Agreement and the other Project Documents and to the general public by reason of Customer's use of the Project. 5. Budget. Customer hereby cove- nants to take such action as may be necessary to include all Base Rental and Additional Rental due hereunder in its annual budgets and to make the necessary annual appropriations for all such Base Rental and Additional Rental, subject to Section 6 hereof. During the Lease Term, Customet shall annually furnish to Edison, a certificate stating that the final budget for such Fiscal Year contains the annual appropriations set forth in the preceding sentence. The covenants on the part of Customer herein contained shall be deemed to be and shall be construed to be ministerial duties imposed by law and it shall be the ministerial duty of each and every public official of Customer to take such actions and to do such things as are tequired by law in the perfotmance of such official duty of such officials to enable Customer to carry out and perform the covenants and agreements on the part of the Customer contained in this Agreement and the other Project Documents, The obligation of Customer to make Base Rental or Additional Rental pay- ments does not constitute an obligation of Customer for which Customer is obligated to levy or pledge any form of taxation or for which Customer has levied or pledged any form of taxation. The obligation of Customer to make Base Rental or Additional Rental payments does not constitute an indebtedness of Customer, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. 6, Rental Abatement. Except to the extent of (a) amounts, if any, received in respect of rental interruption insurance and (b) amounts, if any, otherwise legally available to Customer for payments in respect of this Agreement, rental payments due hereunder shall be subject to abatement in accordance with this Section 6 during any period in which, by reason of mate- rial damage or destruction of the Project or any portion thereof, there is substantial interference with the use and possession of the Project or any portion thereof by Customer. The amount of annual rental abatement shall be such that the resulting rental payments in any Fiscal Year during which such interference continues, excluding any amounts described in clauses (a) or (b) above, do not exceed the annual fair rental value of the portions of the Project which are still substantially useable by Customet, as evidenced by a written statement of determina- tion delivered to Cusromer by Edison. Such abatement shall continue for the period com- MUNL2B.V4.1114194 94 3CG 23 mencing with the date of such damage or desttuction and ending with the restoration of the Project or portion thereof to useable condi- tion. In the event of such damage or destruction, this Agreement shall continue in full force and effect, unless terminated in accordance with Section 11.5 of the Customer Agreement. 7. Ownership. Ownetship and title to the Project shall at all times remain with Edison. All materials and equipment consti- tuting the Project shall temain personal property whether or not they become affixed or attached to any real property, Customer agrees to obtain any waiver of landlord or mortgagee necessary to protect Edison's interest in the Project. Customer shall at all times protect and defend, at its own cost and expense, the ownership of Edison of the Project against all claims, liens and legal processes of creditors of Customer and other persons and keep the Project free and clear from all such claims, liens and processes. Upon termination of this Agreement, all of Edison's right, title and interest in the Project, shall be transferred directly to Customer or, at the option of Customer, to any assignee or nominee of Customer, in accordance with the provisions of this Agreement, free and clear of any interest of Edison. 8. Possession and Use. Customer shall not, without the prior writren consent of Edison, remove the Project or any portions thereof from the Project Site, part with posses- sion or control thereof or sell, pledge, mortgage or otherwise encumber the Project or any part thereof or assign or encumber any interest under this Agreement, except for assignments made in accordance with the Customer Agreement. Customer shall, at its own expense, use the Project in accordance with all operating manuals and instructions, shall comply with all laws, ordinances and regulations relating to its use, opetation and maintenance, and shall not use the Project for any illegal purpose. Customer shall, at its sole cost and expense, during the Lease Term, keep and maintain the Project or cause the same to be kept or maintained, in good operating order, repair and condition and shall as promptly as pracricable repair or replace any portion of the Project which is destroyed or damaged to such an extent that there is sub- stantial interference with the use and possession of the Project or any portion thereof by Customer which would result in an abatement of rental payments or any portion thereof pursuant to Section 6 hereof, whether or not there are sufficient insurance proceeds to pay for such repair or replacement. Customer shall not make any alterations, additions or improvements to the Project without the priot written consent of Edison. 9. Insurance and Risk of Loss. As long as this Agreement and the Customer Agreement are in effect, Customer shall assume all responsibility for loss or damage to the Project and shall hold Edison harmless against the same. Customer shall maintain insurance on the Project Site and the Project as specified in the Customer Agreement. 10, Taxes and Other Governmental Charges, Edison and Customer contemplate that the Project will be used for a governmental or proprietary purpose of Customer and, there- fore, the Project will be exempt from all taxes presently assessed and levied with respect to the Projecr. Nevertheless, Customer hereby agrees to pay during the Lease Term, as the same respec- tively become due, all taxes (except for income or franchise taxes of Edison) and governmental chatges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project; provided, however, that with respect to any governmental charges that may lawfully be paid in installments over a period of years, Customer shall be obligated to pay only such installments as are accrued during such time as this Agreement is in effect; and provided further, that Customer may contest in good faith the validity or application of any tax or governmental charge in any reasonable man- ner which does not, in the opinion of inde- pendent counsel reasonably acceptable to Edison, adversely affect the right, title or MUN1.253.V4.) 1/4/';14 94 366 24 interest of Edison in and to any portion of the Project or its rights or interest under this Agreement or any of the other Project Documents or subject any por-tion of the Project to loss or forfeiture. Any such taxes or charges shall constitute Additional Rental under Section 3(b) hereof and shall be payable directly to the entity assessing such taxes or charges; provided, howevet, that if such payments are required by law to be paid by Edison, Customer shall promptly reimburse Edison, on demand, for all such payments made by Edison. 11. Uniform Commercial Code Financing Starements. Customet shall execute such Uniform Commercial Code financing state- ments, amendments thereto and continuation statements as Edison shall request to evidence Edison's interest in the Project. 12. Edison May Perform, If Customer fails to perform any agreement contained herein, Edison may itself perform, or cause performance of, such agreement, and the expenses of Edison incurred in connection therewith shall be pay- able by Customer and shall constitute Additional Rental under Section 3(b) hereof. 13. Option to Purchase. (a) Customer shall have the exclu- sive right and option, which shall be irre- vocable during the Lease Term, to pur- chase all of Edison's right, title and inter- est in the Project, but only if Customer is not in default under any Project Document and only in the manner pro- vided in this Section 13. (b) The option purchase price (the "Option Purchase Price") for the pur- chase of all of Edison's right, title and interest in the Project shall be the applic- able Option Purchase Price specified in Schedule II hereto. Customer shall exercise its option to purchase by giving notice thereof to Edison not later than thirty days prior to the day on which it desires to purchase all of Edison's right, title and interest in the Project. (c) Upon payment of the applic- able Option Purchase Price, Edison shall execute and deliver to Customer a quit claim deed conveying to Customer or its nominee all of Edison's right, title and interest in the Project. 14. Conditions to Effectiveness. Edison's obligations under this Agreement are subject to the satisfaction as of the date hereof of the following conditions: (a) Customer shall have delivered a favorable written opinion, dated the date hereof, of counsel to Customer (which counsel shall be reasonably satisfactory to Edison), with respect to the matters set fotth on Schedule III to this Agreement. (b) A certificate signed by the Superintendent or Assistant Superintendent of Customer or such other responsible parties as may be acceptable to Edison certifying that (i) all of the representations and warranties of Customer in the Customer Agreement are true, correct and complete as of the date hereof as if made on the date hereof, (ii) there has been no mate- rial adverse change in Customer's financial condition or results of operations since the most recent financial statements delivered to Edison pursuant to the Customer Agreement, (iii) Customer has included all Base Rental and Additional Rental due hereunder for the current Fiscal Year in its annual budget for the current Fiscal Year and has made the necessary appropriations fot such amounts, MUN1.253.v4.11/4194 ~ 94 366 25 (iv) Customer is not in de- fault in the performance of any of its obligations under the Customer Agreement, (c) Customer shall have delivered to Edison certificates of insurance evidenc- ing compliance with Section 8.2 of the Customer Agreement. (d) Customer shall have delivered to Edison a Tax and Nonarbitrage Certificate substantially in the form of Schedule III hereto. (e) Customer shall have delivered to Edison all Uniform Commercial Code Financing Statements requested by Edison in accordance with Section 11 hereof. (f) Customer shall have executed such other documents and taken such other actions as Edison may reasonably request. 15. Tax Matters. In ordet to maintain the exclusion from gross income for Fedetal income tax purposes of the interest component of the Base Rental payments, Customer cove- nants to comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Internal Revenue Code of 1986, as amended. In furtherance of this covenant, Customer agrees to comply with the Tax and Nonarbitrage Certificate delivered pursuant to Section 14 (d) hereof, as such certificate may be amended from time to time, as a source of guidance for compliance with such proviSIOns. 16. Validity. If for any reason this Agreement shall be held by a court of competent jurisdiction to be void, voidable or unenforce- able by Edison or by Customer, or if for any reason it is held by such a court that any of the covenants and agreements of Customer here- under or under any of the Project Documents, including the covenant to pay Base Rental and Additional Rental heteunder, is unenforceable for the full term hereof, then and in such event for and in consideration of the right of Customer to possess, occupy and use the Project, which right in such event is hereby granted, this Agreement shall thereupon become and shall be deemed to be a lease from year to year under which the annual Base Rental payments and Additional Rental payments herein specified will be paid by Customer. 17. Captions. Captions in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 18, Governing Law. This Agreement shall be governed by, and construed in accord- ance with, the laws of the State of California. 19. Counterparts. This Agreement may be executed in one or more counterparts and by different parties hereto in separate coun- terparts, each of which when so executed and delivered shall be deemed an original, but all such countetparts together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their respective officers there- unto duly authorized as of the date first written above. SO~CALIFORNIAEDISONmMPANY BY:~AU. ~ Title: V iff Pnc,ldLY\.~, ~N'iE:S\ biv(~ CITY OF SAN BERNARDINO ~- . , By: / ~\ filc ~ Z-ff'. , Title: /' //1- ':C'/< MUNI.253.V4.1114/94 26 94 366 SCHEDULE I BASE RENTAL PAYMENTS Payment Date Total Base Rental Payment Principal Component Interest Component 6/1995 $11,375.41 $5,548.93 $5,826.48 7/1995 $11,375.41 $5,582.23 $5,793.19 8/1995 $11,375.41 $5,615.72 $5,759.69 9/1995 $11,375.41 $5,649.41 $5,726.00 10/1995 $11,375.41 $5,683.31 $5,692.10 11/1995 $11,375.41 $5,717.41 $5,658.00 12/1995 $11,375.41 $5,751.71 $5,623.70 1/1996 $11,375.41 $5,786.22 $5,589.19 2/1996 $11,375.41 $5,820.94 $5,554.47 3/1996 $11,375.41 $5,855.87 $5,519.54 4/1996 $11,375.41 $5,891.00 $5,484.41 5/1996 $11,375.41 $5,926.35 $5,449.06 6/1996 $11,375.41 $5,961.91 $5,413.50 7/1996 $11,375.41 $5,997.68 $5,377.73 8/1996 $11,375.41 $6,033.66 $5,341.75 9/1996 $11,375.41 $6,069.87 $5,305.54 10/1996 $11,375.41 $6,106.29 $5,269.13 11/1996 $11,375.41 $6,142.92 $5,232.49 12/1996 $11,375.41 $6,179.78 $5,195.63 1/1997 $11,375.41 $6,216.86 $5,158.55 2/1997 $11,375.41 $6,254.16 $5,121.25 3/1997 $11,375.41 $6,291.69 $5,083.73 4/1997 $11,375.41 $6,329.44 $5,045.98 5/1997 $11,375.41 $6,367.41 $5,008.00 6/1997 $11,375.41 $6,405.62 $4,969.79 7/1997 $11,375.41 $6,444.05 $4,931.36 8/1997 $11 ,375.41 $6,482.71 $4,892.70 9/1997 $11,375.41 $6,521.61 $4,853.80 10/1997 $11,375.41 $6,560.74 $4,814.67 11/1997 $11,375.41 $6,600.11 $4,775.3 I 12/1997 $11,375.41 $6,639.71 $4,735.71 1/1998 $11,375.41 $6,679.54 $4,695.87 2/1998 $11,375.41 $6,719.62 $4,655.79 3/1998 $11,375.41 $6,759.94 $4,615.47 4/1998 $11,375.41 $6,800.50 $4,574.91 5/1998 $11,375.41 $6,841.30 $4,534.11 6/1998 $11,375.41 $6,882.35 $4,493.06 7/1998 $11,375.41 $6,923.64 $4,451.77 8/1998 $11,375.41 $6,965.19 $4,410.23 9/1998 $11,375.41 $7,006.98 $4,368.43 10/1998 $11,375.41 $7,049.02 $4,326.39 11/1998 $11,375.41 $7,091.31 $4,284.10 12/1998 $11,375.41 $7,133.86 $4,241.5 5 MUNI.2~3.v4.1114/94 943GG 27 SCHEDULE I BASE RENTAL PAYMENTS Payment Date Total Base Rental Payment Principal Component Interest Component 1/1999 $11,375.41 $7,176.66 $4,198.75 2/1999 $11,375.41 $7,219.72 $4,155.69 3/1999 $11,375.41 $7,263.04 $4,112.37 4/1999 $11,375.41 $7,306.62 $4,068.79 5/1999 $11,375.41 $7,350.46 $4,024.95 6/1999 $11,375.41 $7,394.56 $3,980.85 7/1999 $11,375.41 $7,438.93 $3,936.48 8/1999 $11,375.41 $7,483.56 $3,891.85 9/1999 $11,375.41 $7,528.47 $3,846.95 10/1999 $11,375.41 $7,573.64 $3,801.78 1111999 $11,375.41 $7,619.08 $3,756.33 12/1999 $11,375.41 $7,664.79 $3,710.62 112000 $11,375.41 $7,710.78 $3,664.63 2/2000 $11,375.41 $7,757.05 $3,618.37 3/2000 $11,375.41 $7,803.59 $3,571.82 4/2000 $11,375.41 $7,850.41 $3,525.00 5/2000 $11,375.41 $7,897.51 $3,477.90 6/2000 $11,375.41 $7,944.90 $3,43051 7/2000 $11,375.41 $7,992.57 $3,382.85 8/2000 $11,375.41 $8,040.52 $3,334.89 9/2000 $11,375.41 $8,088.76 $3,286.65 10/2000 $11,375.41 $8,137.30 $3,238.11 1112000 $11,375.41 $8,186.12 $3,189.29 12/2000 $11,375.41 $8,235.24 $3,140.17 1/2001 $11,375.41 $8,284.65 $3,090.76 2/2001 $11,375.41 $8,334.36 $3,041.05 3/2001 $11,375.41 $8,384.36 $2,991.05 4/2001 $11,375.41 $8,434.67 $2,940.74 5/2001 $11,375.41 $8,485.28 $2,890.13 6/2001 $11,375.41 $8,536.19 $2,839.22 7/2001 $11,375.41 $8,587.41 $2,788.00 8/2001 $11,375.41 $8,638.93 $2,736.48 9/2001 $11,375.41 $8,690.76 $2,684.65 10/200 I $11,375.41 $8,742.91 $2,632.50 111200 I $11,375.41 $8,795.37 $2,580.04 12/2001 $11,375.41 $8,848.14 $2,527.27 MUNUB.V4.11!4/94 94 366 28 SCHEDULE I BASE RENTAL PAYMENTS Payment Date Total Base Rental Principal Interest Payment Comoonent COffioonent 1/2002 $11,375.41 $8,901.23 $2,474.18 2/2002 $11,375.41 $8,954.63 $2,420.78 3/2002 $11,375.41 $9,008.36 $2,367.05 4/2002 $11,375.41 $9,062.41 $2,313.00 5/2002 $11,375.41 $9,116.79 $2,258.62 6/2002 $11,375.41 $9,171.49 $2,203.92 7/2002 $11,375.41 $9,226.52 $2,148.89 8/2002 $11,375.41 $9,281.88 $2,093.54 9/2002 $11,375.41 $9,337.57 $2,037.84 10/2002 $11,375.41 $9,393.59 $1,981.82 11/2002 $11,375.41 $9,449.95 $1,925.46 12/2002 $11,375.41 $9,506.65 $1,868.76 1/2003 $11,375.41 $9,563.69 $1,811.72 2/2003 $11,375.41 $9,621.08 $1,754.34 3/2003 $11,375.41 $9,678.80 $1,696.61 4/2003 $11,375.41 $9,736.88 $1,638.54 5/2003 $11,375.41 $9,795.30 $1,580.11 6/2003 $11,375.41 $9,854.07 $1,521.34 7/2003 $11,375.41 $9,913.19 $1,462.22 8/2003 $11,375.41 $9,972.67 $1,402.74 9/2003 $11,375.41 $10,032.51 $1,342.90 10/2003 $11,375.41 $10,092.70 $1 ,282.71 11/2003 $11,375.41 $10,153.26 $1 ,222.15 12/2003 $11,375.41 $10,214.18 $1,161.23 1/2004 $11,375.41 $10,275.46 $1,099.95 2/2004 $11,375.41 $10,337.12 $ I ,038.29 j/2004 $11,375.41 $10,399.14 $976.27 4/2004 $11,375.41 $10,461.53 $913.88 5/2004 $11,375.41 $10,52430 $85 I.l I 6/2004 $11,375.41 $10,587.45 $787.96 7/2004 $11,375.41 $10,650.97 $724.44 8/2004 $11,375.41 $10,714.88 $660.53 9/2004 $11,375.41 $10,779.17 $596.24 10/2004 $11,375.41 $10,843.84 $531.57 11/2004 $11,375.41 $10,908.91 $466.50 12/2004 $11,375.41 $10,974.36 $401.05 112005 $11,375.41 $11,040.21 $335.20 212005 $11,375.41 $11,106.45 $268.96 3/2005 $11,375.41 $11,173.09 $202.32 4/2005 $11,375.41 $11,240.13 $135.29 5/2005 $11,375.41 $11,307.57 $67.85 MUNI_2S~_V4,11l4/'}4 ., 94 366 SCHEDULE II 29 OPTION PURCHASE PRICE SCHEDULE Termination Termination p D p ayment ate avment 6/1995 $971,080 7/1995 $965,531 8/1995 $959,949 9/1995 $954,333 10/1995 $948,684 11/1995 $943,000 12/1995 $937,283 111996 $931,531 2/1996 $925,745 3/1996 $919,924 4/1996 $914,068 5/1996 $908,177 6/1996 $902,251 7/1996 $896,289 8/1996 $890,291 9/1996 $884,257 10/1996 $878,188 11/1996 $872,081 12/1996 $865,938 1/1997 $859,759 2/1997 $853,542 3/1997 $847,288 4/1997 $840,996 5/1997 $834,666 611997 $828,299 7/1997 $821,893 8/1997 $815,449 9/1997 $808,967 10/1997 $802,445 1111997 $795,884 12/1997 $789,284 111998 $782,645 2/1998 $775,965 3/1998 $769,245 4/1998 $762,485 5/1998 $755,685 6/1998 $748,844 711998 $741,961 811998 $735,Q38 9/1998 $728,072 10/1998 $721,065 1111998 $714,016 12/1998 $706,925 Termination Termination p D p avment ate avment 111999 $699,791 2/1999 $692,615 3/1999 $685,395 4/1999 $678,132 511999 $670,825 6/1999 $663,475 7/1999 $656,080 8/1999 $648,641 9/1999 $641,158 10/1999 $633,629 11/1999 $626,056 12/1999 $618,437 112000 $610,772 2/2000 $603,061 3/2000 $595,304 4/2000 $587,500 5/2000 $579,650 6/2000 $571,752 7/2000 $563,808 8/2000 $555,815 9/2000 $547,774 10/2000 $539,686 1112000 $531,548 12/2000 $523,362 112001 $515,127 2/2001 $506,842 3/2001 $498,508 4/2001 $490,124 5/2001 $481,689 6/2001 $473,204 7/2001 $464,667 8/2001 $456,080 9/2001 $447,441 10/2001 $438,750 11/2001 $430,007 12/2001 $421,212 Termination Termination D p Payment ate avment 112002 $412,364 2/2002 $403,463 3/2002 $394,508 4/2002 $385,500 5/2002 $376,437 6/2002 $367,321 7/2002 $358,149 8/2002 $348,923 9/2002 $339,641 10/2002 $330,303 1112002 $320,910 12/2002 $311,460 112003 $301,953 2/2003 $292,389 3/2003 $282,768 4/2003 $273,089 5/2003 $263,352 6/2003 $253,557 7/2003 $243,703 8/2003 $233,790 9/2003 $223,817 10/2003 $213,785 1112003 $203,692 12/2003 $193,539 1/2004 $183,325 2/2004 $173,049 3/2004 $162,712 4/2004 $152,313 5/2004 $141,851 6/2004 $131,327 7/2004 $120,740 8/2004 $110,089 9/2004 $99,374 10/2004 $88,595 11/2004 $77,751 12/2004 $66,842 112005 $55,867 212005 $44,827 3/2005 $33,721 4/2005 $22,548 5/2005 $11 ,308 MUNI.253,V4.1114194 94 366 30 SCHEDULE III FORM OF OPINION OF COUNSEL Counsel to Customer shall give IIJ1 opinion to the effect of the following:* (i) Customer is a city, duly orgllllized IIJ1d validly existing utlder tbe Constitution and the laws of the State of California, (ii) The Project Documents have been duly authorized, executed and delivered by Customer and constirure legally valid and binding obligations of Cusromer enforcmle against Customer in accordance with their terms, except as enforceability may be subject to bankruptcy, insolvency, reorganizatioo, fu.udulent conveyance, moratorium or similar laws affecting creditors' righrs generally and general principles of equity, (ili) To the best of my knowledge, none of the execution, delivery or performance of any of the Project Documents (a) violate any material law or any order, judgment or decree of any court at governmental agency binding on Customer, (b) violate any material contract, undertaking, agreement, HceDSe, permit or other instruments to which Customer is a party, or (c) require any approval or consent of any governmental agency or other person, except such approvals and consentS as have been obtained, * All ...pitAljrtd _ shAll ~ tho ",,.,,,Ilfgl ,WrtI llim tantlS i7r tho ellS!."",. Agr-t, (iv) To the be.t of my knowledge, there is no action, suit, claim ot proceeding pending or tll reatened againSt Customer (a) conresting the authority of Customer to enter iOto or perform in obligations undet any of the Project Documents, (b) challenging the wlidity of the Project DocumentS or any of the transactions referred to therein or contemplated thereby, (c) seeking to teSttllin or enjoin Customer from entering into, or making any payments under, the Customer Agreemenr or the Lease Agreement, or (d) which if adversely derermined to Customer would have a material :oJ verse effect upon the financial condition or revenues of Cusromer, JoCUNf.~"T.UtJ4194 - 94 30G SCHEDULE IV 31 FORM OF TAX AND NONARBITRAGE CERTIFICATE This Tax and Nonatbitrage Certificate is being executed in connection with the execution of ~ the Lease llreement, dated as of /).....- - ;; ,_,t.;j, " " , '._ "'/'" - / / " (the Lease), by and between the City of San Bernardino ("Customer") and Southern California Edison Company ("Edison"), pursuant to which Customer is obligated to make certain Base Rental payments to Edison (the "Rental Payments") with respect to the use of the Ptoject {as referenced in the Lease (the "Project")} . In Section 15 of the Lease, Customet has covenanted to comply with all of the requirements of Sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended (the "Code"), necessaty to maintain the exclusion of the interest with respect to the Rental Payments from gross income for federal income tax purposes, The tepresentations and covenants herein are in addition to such general covenants in the Lease, The accuracy of the representations and compliance with the covenants herein and in the Lease are essential to the continued tax-exempt status of the interest with respect to the Rental Payments. Edison will rely on Customer's representations and Customer's compliance with the covenants set forth herein in forming its conclusion with regard to the exclusion, under Sections 103 and 141 through 150 of the Code, of the interest with respect to the Rental Payments from gross income for federal income tax purposes. All capitalized terms used in this certificate and not otherwise herein defined have the meanings ascribed to them by the Lease. The definition of any term defined herein shall apply for all purposes elsewhere herein unless otherwise specifically provided. I. PLAN OF FINANCING, Customer's obligation to make Rental Payments under the Lease is referred to herein as the "Lease Obligation". Customer's Lease Obligation is comprised of principal components (the "Principal Components") and interest components (the "Interest Components"). Customer is undertaking the Lease Obligation for the purpose of financing its acquisition of the Project. Upon full payment of all Rental Payments due and payable under the Lease, all right and title to the Project will immediately inure to the benefit of the Customer. The Lease Obligation will run for the period set fotth in the Lease, II. PRIVATE ACTIVITY RESTRICTIONS, A. Private Activity Bonds, The Lease Obligation is intended to avoid classification for purposes of federal income taxation, as a "pri~ate activity bond" as such term is defined in Section 141(a) of the Code. In order to avoid such classification, the Lease Obligation must fail either (i) the private business use test, as desctibed in Section B below, or (ii) the private loan test, as described in Section C below. B. Private Business Use Test. In order ro fail the private business use test, all of the conditions set forth in this Section B must be met. Customer hereby represents and covenants to Edison that all of the following conditions are and will continue to be met: 1. General. No mote than 10% of the Project will be used in any trade or business activity carried on by an person or entity, including the United States Government and all of its agencies and instrumentalities, other than a state or political subdivision of a state (hereafter, any such person is referred to as a MUNL25:l_v4.11l4/94 " 94 30 6 32 "Nongovernmental Person" and any such use is referred to as a "Nongovernmental Use"). In addition, no more than 5 % of the proceeds of the Lease Obligation (or the Project) may be used in any trade or business activity catried on by any Nongovernmental Person where such use is (i) disproportionate to a related governmental use or (ii) is unrelated to the governmental use of the proceeds of the Lease Obligation. For purposes of the private business use test, the proceeds of the Lease Obligation (and the Project) are not deemed used by any person (including an industrial customer) who uses the Project on the same basis as the general public. However, use by each and every person using the project on a basis different from the general public is aggregated in determining if the thresholds for private activity bond status are satisfied. Nongovernmental Use includes, for example, use as a lessee, the purchase of output, use as a joint venturer, licensing the Project to a Nongovernmental Person, or instances in which benefits ate detived from the leased financed items, such as having the items satisfy zoning or other permit requirements in connection with a trade or business of a Nongovernmental Person. 2. Management Contracts. No portion of the Project will be used by any corporation or other Nongovernmental Person pursuant to a management or similar contract unless the requirements of Revenue Procedure 93-19 are satisfied. 3. Leases, Licenses and Joint Ventures. With the exception of the spaces in the parking structure which are currently being used by private business, Customer will not lease, license, sublease or sublicense during the period the Lease Obligation is outstanding, any portion of the Project, including no additional private business use of parking spaces, to a Nongovernmental Person such that the Lease Obligation will be considered a private activity bond. Customer will not engage in any joint venture with any Nongovernmental Person, during the period the Lease Obligation is outstanding, in which any portion of the Project will be used by a Nongovernmental Person, 4. No Nongovernmental Use. As of the date hereof, Customer does not anticipate any Nongovernmental Use of the Project other than as described in the following: Customer and Edison agree that a portion of the parking structure which is part of this project is being used by private business, Ptesently 216 of the 1,172 patking spaces (or 18.4%) are being reserved for use by private business. The cost of the facilities being installed in the parking structure is approximately $101,000. The 18.4% of this amount being used for private purpose is approximately $19,000 which is less than 5 % of the total project of $971 ,000. Therefore, the project fails the private business use test and will be eligible for tax exempt financing. The Customer understands and agrees that further Nongovernmental Use of any of the Project (such as by selling or leasing any portion of the Project or the facilities in or at which rhe Project is located) could cause interest with respect to the Lease Obligation to fail to be excluded from gross income for tax purposes, The Customer agrees that it will not enter into a sale, lease or other artangement which would constitute additional Nongovernmental Use of any portion of the Project without (i) obtaining Edison's agreement that such arrangement will not advetsely affect the tax-exempt status of the Lease Obligation or (ii) providing Edison with an opinion of nationally MUNI.2'i'l.V4.11/4/94 ,\ 94 366 33 recognized bond counsel to the effect that such arrangement will not adversely affect the tax-exempt status of the Lease Obligation, C. Private Loan Test. In order to fail the private loan test, no more than the lesser of $5,000,000 or 5% of the Lease Obligation proceeds may be used (directly or indirectly) to make or finance loans to a Nongovernmental Person. Customer hereby represents and covenants to Edison that neither the Project nor the Lease Obligation will be used, directly or indirectly, to make or finance any loan to a Nongovernmental Person. III. ARBITRAGE Customer hereby represents and covenants to Edison as follows: A. No Unspent Proceeds. Customer is undertaking the Lease Obligation solely for the purpose of acquiring the Project. Thus, no proceeds generated by the Lease Obligation will remain unexpended on the date hereof. B. Replacement Proceeds of the Lease Obligation. Payments of principal and interest on the Lease Obligation will be billed with Customer's monthly electric utility bill and shall be due by the due date reflected on such bill. Any amounts set aside or expected to be used by Customer for purposes of satisfying its Lease Obligation will constitute "Replacement Proceeds" of the Lease Obligation, All such amounts will be spent within a 12-month period beginning on the date of deposit (and any amount received from investment of moneys so set aside will be spent within a 12-month petiod beginning on the date of receipt), except for a teasonable carry-ovet amount not to exceed the greater of 12-months' earnings on such account or 1/12 of annual payments with respect to the Lease Obligation. Customer does not expect to create or esrablish any other sinking fund or similar fund with respect to the Lease Obligation. The Lease Obligation does not replace funds which were set aside or expected to be used to pay the costs of the Project. C. Artifice or Device. The execution of the Lease Obligation is not and will not be part of a transaction or series of transactions which are an attempt to circumvent the provisions of Section 148 of the Code and the regulations promulgated thereunder, or under any similar provision of prior law, which (i) enables Customer to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage and (ii) increases the burden on the market for tax- exempt obligations. IV. REPORTING AND RESPONSIBILITY. A. Information Reporting. Customer has reviewed the Internal Review Service Form 8038-G atrached hereto as Exhibit A, and all information thereon is correct and complete. B. Responsibility, The undersigned and other officers of the Customer are charged with the responsibility for the execution of the Lease. The undersigned has made due inquiry with tespect to such actions and is fully informed as to the representations and covenants set forth in this document. CITY OF SAN BERNARDINO .., /.. . y , , . .-., t:./:L- Date: I. kt; >"1~[ ./- /1 /;.:- By: -;;n 1 )tUt?~ Title: , . //1 i''''"l';/? MUNUB_V411141')4 , . 94 366 34 EXHIBIT A INTERNAL REVENUE SERVICE FORM 8038-G (See Attached) MUNL253.V4.1114194 ... . 94 3C6 EXHIBIT E 35 FORM OF RECORDING MEMORANDUM Recording Requested By And When Recorded Mail To: Southern California Edison Company ENVESTSCE 6000 N. Irwindale Avenue Irwindale, CA 91702 Atrention: Ken Pickrahn MEMORANDUM OF CUSTOMER AGREEMENT THIS MEMORANDUM OF CUSTOMER AGREEMENT (this "M e m 0 ran dum "), dated as of ______________________________, fur references purposes, is by and between the CITY OF SAN BERNARDINO ("Customer") and SOU THE R N CALIFORNIA EDISON COMPANY ("Edison"). Customer is the [owner/lessee] of that certain real property described on Exhibit A hereto (the "Property"), Edison is a public utility providing electrical service in the area in which the Property is located. Customer and Edison are parties to that certain ENVESTSCE Customer Agreement, dated as~ ~"~~m~ Agreement"), the terms and conditions of which are heteby incorporated by this reference and made a part of this Memorandum as if completely set forth herein. Pursuant to the Customer Agreement Edison has agreed to provide energy efficiency solutions to Customer, as more fully described in the Customer Agreement, to improve the energy efficiency of the facilities located on the Property. The Customer Agteement provides, among other things, that (a) Customer or any successors-in-interest occupying the Ptoperty shall pay certain payments to Edison for the energy efficiency solutions installed at the Ptoperty; and (b) the interest of Customer in the Customer Agreement may not be assigned to any person othet than one who succeeds to the interest of Customer in the Property, and then only if such successor expressly assumes in writing for the benefit of Edison all of the obligations of Customer under the Customer Agreement. Further, Edison may discontinue the ptovision of electricity to the Property if the payments required by the Customer Agreement are not made within the time periods prescribed in the Customer Agreement. The sole purpose of this Memorandum is to place on notice all persons (including any person or persons who acquires or intends to acquire any interest in the Ptoperty from Customer) that Customer is a party to the Customer Agreement, and that any person acquiring any interest in the Property from Customer may only do so upon the terms and subject to the conditions outlined in the immediatel y preceding paragraph of this Memorandum. MUNUB,V4.1114/94 , 94 J65 36 . EDISON [CITY OF SAN BERNARDINO} By: Its: Date: STATE OF CALIFORNIA ) ) ss. ) COUNTY OF WITNESS my hand and official seaL Signature (Seal) [SOUllIERN mMPANY} CALIFORNIA By: Its: Date: STATE OF CALIFORNIA ) ) ss. ) COUNTY OF WITNESS my hand and official seal. Signature (Seal) MUNI.253,V4,11l4194 r 7 Form 94 8038.G 3GC Information Return for Tax-Exempt Governmental Obligations ~ Undor Inlomal Rovonuo Code secllon 140(0) ... a.. ..parat. Instructions. (1).. Fonn 8038-GC n tho Issuo price II under $l00,OOO~ If Amended Return, check here ~ 2 ~a omployer Idontiflcation number OMS No.1 S.S-0120 . . . (Rev, Moy 1093) D.putmenI of 1M T,...",. W",* A..,....,. SetvIc:e Re ortin , Issuora name Author' 3 Number end atr..t (or P,O. box n moll I. not delivered to atr..t addr.ss) 4 R.port number G19 . Oato of lasuo II Clly, lawn. atat.. end ZIP cod. 7 Name of Isouo . CUSIP Number l' e 01 Issue Iicable box es and enter the issue nce 9 0 Education (attach schedul&-see Instructions). . 10 0 Health and hospital (attach schedul&-see Instructions). 11 0 Transportation . . . . , . . . . 12 0 Public safety, . . . . . . . . . 13 0 Environment (including sewage bonds) . 14 0 Housing . . . . , . . . . , 15 0 Utilities . . . . . , . . . . . 18 0 Other. Describe (see Instructions) ~ 17 " obligations are tax or other revenue anticipation bonds. check box ~ 0 18 If obfi ations are In the lorm of a lease or Installment sale, check box ~ 0 Descn tion of Obli ations 10) 11>) Matunty date Interest rlt. Issue price $ 1-) lssue price (ell sr.ted redemption ic..tmltu' 8C~ . ':.:~~.) FInal maturity. % Entire Issue . Uses of Ori inal Proceeds of Bond Issue mcludin Proceeds used for accrued Interest . . . . . . . . . , . Issue price of entire Issue (anter amount from line 20, column (c)) . Proceeds used for bond Issuance costs Qncluding underwriters' discount) 23 Proceeds used for credit enhancement. , . . . . . . . . 24 Proceeds allocated to reasonably required reserve or replacement fund 25 Proceeds used to refund prior Issues . , . . . . . . . . 26 Total (add lines 23 through 26) . , . . . . . . . . . , . , . Nonrefundin oceeds of the Issue subtract line 27 from line 22 and enter amount here. . . Descn tion of Relunded Bonds com lete this art onl lor relundin bonds 29 Enter the remaining weighted average maturity of the bonds to be refunded . ~ years 30 Enter the last date on which the refunded bonds will be called. . . , , . . ~ 31 Enter the date s the refunded bonds were Issued ~ Miscellaneous 32 Enter the amount of the state volume cap allocated to the Issue . . . . , '. . . . . ~ 33 Enter the amount of the bonds designated by the issuer under section 265(b)(3)(8)(i)OIQ (small Issuer exception). . . . . . . . . . . . . , . . . . . . . , , . . , . . . ~ 34 Pooled financings: a Enter the amount of the proceeds of this issue that are to be used to m.:>ke loans to other governmental units ~ b "this Issue Is a loan made from the proceeds of another tax-exempt issue, check box ~ 0 and enter the name of the Issuer ~ and the date of the Issue ~ 35 If the Issuer has elected to a a ena In lieu of rebate, check box . . , , . . ~ 0 Under penalties of perjury, I declare that I have examined this retum and accompanying schedules and statements, and to the best of my knowledge and belie', they .... true. correct, .nd complele. Please Sign Here ~ Signatl./fe of officer Oal. ~ Type or print name and title For Paperwork Reduction Act Notice. see page 1 of the Instructions. Cat. No. 6J773S Form 8038-G (Rev. 5-93) 6/28/93 Published by Tax Management Inc., I Subsidiary of The Bureau of National Affairs. Inc. 17 8038-G. I