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RESOLUTION NO 2 3

RESOLUTION OF THE INDIO WATER AUTHORITY OF THE CITY OF

INDIO CALIFORNIA AUTHORIZING THE EXECUTION OF THEWATER SYSTEM LEASE AND CERTAIN OTHER MATTERS

PERTAINING THERETO

WHEREAS as of April 9 2 the City of Indio the Cty and the

Redevelopment Agency of the City of Indio formed the Indio Water Authority theAuthority as a joint powers authority pursuant to the terms and conditions of thatcertain Joint Exercise of Powers Agreement and

WHEREAS on May 2 2 the City resoved to lease the Citys ater system

the Waer System to the Authority pursuant to the terms and conditions of thatcertain Lease Agreement the Lease by and between the City and the Authoritywhich provides among other things that the Authority would lease the Water System

operatethe Water System make annual rental payments to the

Cityand provide water

service to customers within the Citys ervice area and

WHEREAS the Authority has determined that it is in the best interests of the

Authority to lease the Water System from the City and

WHEREAS the Authority with the aid of its staff has reviewed the proposed

Lease and the Authority wishes to approve the Lease and matters related thereto and

WHEREAS the Authority with the aid of its staff has reviewed the proposedReimbursement Agreement the Reimbursement Agreement dated May 2 2 by

and between the Authority and the City and the Authority wishes to approve theReimbursement Agreement and matters related thereto and

WHEREAS the Authority with the aid of its staff has reviewed the proposedEmployee Lease Agreement the Employee Lease dated May 2 2 by andbetween the Authority and the Gity and the Authority wishes to approve the EmployeeLease and matters related thereto

NOW THEREFORE THE INDIO WATER AUTHORITY COMMISSION DOES

HEREBY RESOLVE AS FOLLOWS

Section Incorporation of Recitals The Recitals set forth above areincorporated herein and made an operative part of this Resolution

Section 2 Approval of the Lease The Authority hereby approves the lease ofthe Water System from the City and the execution of the Lease in substantially thesame form as Exhibit A ttached hereto and incorporated herein by reference withsuch revisions amendments and completions as the Authoritys xecutive Director andany of his designees each an Authorized Officer with the advice of counsel to the

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Authority shall approve which approval shall be conclusively evidenced by theexecution and delivery of the Lease by an Authorized Officer The terms and conditionsof the Lease shall be as provided in said Lease as finally executed

Section 3 Approval of the Reimbursement Agreement The Authority herebyapproves the execution of the Reimbursement Agreement in substantially the sameform as Exhibit B ttached hereto and incorporated herein by reference with such

revisions amendments and completions as an Authorized Officer with the advice ofcounsel to the Authority shall approve which approval shall be conclusively evidenced

by the execution and delivery of the Reimbursement Agreement by an AuthorizedOfficer The terms and conditions of the Reimbursement Agreement shall be as

provided in said agreement as finally executed

Section 4 Approval of the Employee Lease The Authority hereby approves theexecution of the Employee Lease in substantially the same form as Exhibit C ttachedhereto and incorporated herein by reference with such revisions amendments andcompletions as an Authorized Officer with the advice of counsel to the

Authorityshall

approve which approval shall be conclusively evidenced by the execution and deliveryof the Employee Lease by an Authorized Officer The terms and conditions of the

Employee Lease shall be as provided in said agreement as finally executed

Section 5 Additional Actions Any one of the Authorized Officers and each of

them is hereby authorized and directed jointly and severally to do any and all thingsand to execute and deliver any and all documents which he or she deems necessary o

advisable in order to consummate the agreements described herein and otherwise toeffectuate the purposes of this Resoution and the transactions contemplated hereby

Section 6 Effective Date This Resoution shall take effect from and after its

passage and approval

PASSED APPROVED AND ADOPTED this 2 St day of May 2 by the

following vote

AYES Baughn Friestad Hunt Bethel Lopez Wlso GodfreyNOES None

ABSENT Fesmire Harmon

BEN GODFRY

RE DENT

ATTEST

4

G THIA HERNANDEZ

CRETARY

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STATE OF CALIFORNIA

COUNTY OF R lERSIDE ss

CITY OF IND O

I Cynthia Hernandez Secretary of the Authority do hereby certify the foregoing to be a

full true and correct copy of Resoution No 2 3 dopted by the Indio Water

Authority Commission at a regular meeting on the 2 S t day of May 2

rfs4

C ithia Hernandez Secretar of theIndio Water Authority

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EXHIBIT A

RESOLUTION NO 2 3

LEASE

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IAE

THIS LEASE the Lease dated th ay of 2 the ExecutionDate is made by and between the INDIO WATERAUTH TY the Authority and theCITY CF NDIO the Cty he City and the Authority sometimeshereinafter are referred to

individually as a Party and collectivelyas the Parties with respect to the following facts

RECITALS

A The City is a public body corporate and politic organized and existing pursuantto the laws of the State of California Pursuant thereto the City is authorized to provide waterservice to all real property depicted on Exhibit A ttached hereto and incorporated herein byreference the System Boundaries

B The Authority is a joint powers authority formed under Sections 65 et sec of

the California Government Code

C The City desires to lease to the Authority and the Authority desires to lease fromthe City substantially all of the assets of the City used or useful in the provision of water servicewithin the System Boundaries

NOW THEREFORE in consideration of the mutual promises and covenants containedherein and for other good and valuable consideration the receipt and adequacy of which arehereby acknowledged the Parties agree as follows

ARTICLE

TERM

Term This Lease shall commenc e at 9 p n Tiny 2Commencement Date and end at midnight thirty 3 years thereafter unless this Lease isearlier termnated pursuant to the terms hereof in which event this Lease shall end on he date ofsuch termination Expiration Date

ARTICLE 2

RENTAL PAYIVIENTS

2 nnual Rent

a Except as otherwise provided herein to compensate the City for the leaseof the System as defined below to the Authority the Authority shall pay to the City rent asmor e particularly set forth in this Section 2 he rent the Authority currently is estimated topay the City during each year of the term is set forth below as follows

2 2 d 755 2 2 5 2 72 3 5 5 2 8 3

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2 4 53 2 9 62 5 546 2 2 93 2 6 562 2 2 26 2 7 579 2 22 62 8 596 2 23 95 2 9 6 4 2 24 32 632 2 25 68 2 65 2 26 6 2 2 67 2 27 45 2 3 69 2 28 85 2 4 7 2 2 29 27 2 5 733 2 3 7

The parties acknowledge and agree that Pnnacle One currently is updating the

study establishing the fair rental value of the System Accordingly once such update has beencompleted and the fair rental value of the System has been finally determined the City and theAuthority shall execute a supplement to this Lease so stating and specifying the rent theAuthority shall pay the City during each year of the term

b Subject to the satisfaction of the conditions precedent set forth in Articles6 and 7 the lease payment for the first st year shall be payable all in advance within ten days after the Execution Date Lease payments thereafter shall be paid in advance monthlybeginning July 2 2 and continuing on he first day of each consecutive month thereafterduring the term Notwithstanding the foregoing if the first lease payment due hereunder can notbe timely made because the Authority has not completed the sale o ease r evenu e bonds thensuch first lease

paymentshall be made

uponthe

Authoritys ompletion of the sale of such bondsand thereafter lease payments shall be made monthly as aforesaid

c The Authoritys bligation to make any payments to the City under thisLease shall be solely from the Rates and Charges as defined herein received by the Authorityhereunder and shall not be a debt or a charge lien or encumbrance on he property or income ofthe Authority

d The City acknowledges and agrees that all payments due to the City under4 n n n j l L t L 7 A Td ease be pdya a suouua e oas s any I nueU i ess o ne Authority neterm Indebtedness shall include without limitation bonds notes all other evidence ofindebtedness and all other

obligations instrumentsand

agreements pursuant to any provision oflaw to inance the lease construction of improvements to the System working capitalrequirements or liability or other insurance needs of the System

2 Delinquent Payments Al lease payments payable by the Authority to the Cityunder this Lease if not received within thirty 3 days after the same is due slZall bear interestat ten percent er annum rom the date due until received by the City The Authority alsoshall pay to the City a ee in the amount of one percent of the overdue amount tocompensate the City for the administrative costs incurred as a esult of the Authoritys ailure topay on time if suchoverdue amount is not received by the City within fifteen 5 ays after thesame is due

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2 ates and Charges

a Prior to or concurrently with the execution of the Lease the Authorityshall establish service and commodity rates and charges Rates and Charges which the

Authority shall charge water users within the System Boundaries The Rates and Charges are setforth on Exhibit B ttached hereto and by this reference incorporated herein

b The Authority may impose any additional increase in the Rates andCharges which the Authority reasonably believes is necessary to pay the reasonable costs of

operating and maintaining the System including without limitation the following

i water replenishment fees and assessments and related costs whichare required by owner s or operators of real property within the System Boundaries as requiredby any and all laws ordinances orders rules and regulations municipal state or federal board orthe Authority

ii the cost of purchased water and power

iii the cost of paving or excavation as moe particularly set forth in

Paragraph 3 2

iv the cost of insurance as moe particularly set forth in Article 5

v fees taxes assessments license and permit fees and other similarfees and charges required to be paid by the Authority to the City or any other governmentalagency in connection with the operation of the Water System including without limitation costsrelated to the National Polutant Discharge Elimination System costs related to changes in laws

as mor e particularly set forth in Paragraph 7 nd costs related to changes in water quality asmor e particularly set forth in Paragraph 7 2

v maintenance or repairs as moe particularly set forth in Article or capital improvements as moe particularly set forth in Article 9 to the System and

vi reimbursement to the Authority for the actual costs and directoverhead incurred by the Authority in connection with the System

2 Sa esY se ax The City shall pay all sales and use taxes arising out of the leaseof the System if any to the Authority

ARTICLE 3

DESCRIPTION OF TE SYSTE Vi

3 Description of the S s em Subject to the terms and conditions of this Lease TheCity leases to the Authority during the term of the Lease as extended and the Authority leasesfrom the City all of the assets properties and business of the City of every kind whethertangible intangible real personal or mixed wherever located used in connection with the Cityswater system and delivery of water to its customers or potential customers except the property

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described in Paragraph 3 elow of this Lease collectively referred to as the Systemincluding but without limitation to he following described assets

a Al water rights of the City including without limitation any right titleand interest in and to water by virtue of any contractual rights Water Rights

b Certain real property located in or around the City of Indio County ofRiverside California and moe particularly described and o depicted on Exhibit C ttachedhereto and by this reference incorporated herein Real Property

c Certain water wells and well stes ocated on he Real Property Legallydescribed and o depicted on Exhibit D attached hereto and by this reference incorporatedherein the Wels

d Certain water tanks pumping and appurtenant facilities legally describedandlor depicted on Exhibit E ttached hereto and by this reference incorporatedherein theFacilities

e The water system Water System owned and operated by the Cityexclusive of the Real Property Wells and Facilities including but no limited to ransmssionand distribution mains fire hydrants lateral services meters and meter boxes and appurtenantequipment or installations

i We ea ed easements including easements of record in RiversideCounty California Easements in connection with its business of supplying water describedon Exhibit F ttached hereto and by this reference incorporated herein

gAl

records and maps of the City relating to tl e operation or ownership ofthe System including without limitation customer accounts revenae records credit recordsloan records billing records accounts payable operating and building records plans mapscorrespondence meter log books surveying data permits and licenses engineering and titlereports collectively Records Notwithstanding the transfer of the Records to the Authorityall such Records will be kept at the City address set forth in Paragraph 24 elow The Citywill during the City business hours and as often as the Authority may request permit authorizedrepresentatives designated by the Authority to i ave access to Records ii ake copies of orexcerpts from such Records at the Authoritys xpense and iii discuss such Records withrepresentatives of the City

h The Citys nterest in various contracts and agreements permits franchisesand licenses in connection with the System A list of said contracts agreements permitsfranchises and licenses collectively the Contracts is attached hereto as Exhibit G nd bythis reference incorporated herein

i Customer lists f those to whom the City currently supplies water asidentified on computer media compatible with the Authoritys omputer system and deliveredconcurrently with the execution of the Lease and updated seven 7 ays prior to theCommencement Date the Water Accounts

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j Al tangible personal property owned or operated by the City and usedsubstantially in the ownership and operation of the System including without limitation allmachinery equipment and tools including without limitation those items identified on ExhibitI ttached hereto and by this reference incorporated herein Personal Property

k Al of the Citys ights in and to cash on hand in the water enterprise fundaccounts receivable owed or owing to the water enterprise fund and any deposits or any like orsimilar fund under any oral or written agreements held or received in connection with the

ownership and operation of the System collectively the Deposits

The City Water Customer Service telephone number 76 342 55account histories and any promotional material relating to the provision of water servicecollectively the Intangible Property

rn Al cash on hand with cash equivalents for promissory notes made infavor o and accounts receivable owing to the Citys ater enterprise fund as of theCommencement Date

3 Assumption of Liabilities The Authority agrees to assume only those contractsand obligations of the City which are listed on Exhibit G t is expressly understood and

agreed that the Authority shall not be liable for any other debts obligations or liabilities of theCity o any kind or nature other than those specifically assumed by the Authority in this Lease

3 Ownership Rights The Authority does not by virtue of this Lease obtain anyownership rights in the System Moreover the Parties acknowledge and agree that the rights ofall persons or entities extracting pumping or otherwise diverting water from the groundwaterbasins nderlying the System Boundaries currently are not adjudicated Accordingly should aphysical solution declaration of water rights or a formula for allocation of water rights andobligations ever become necessary through litigation o otherwise the Parties acknowledge and

agree that the extraction pumping or production history resulting from the Authoritys rovidingwater service within the System Boundaries or within any other area that hereafter becomes partof the System Boundaries by annexation into the City or otherwise pursuant to this Lease shallinure solely to the benefit of the City for the purpose o determining the Citys elative annualright to withdraw water froze such basins othing herein shall change any existing agreementwith respect to service of customers inside or outside the System Boundaries

ARTICLE 4

WATER SERVICE

4 he Authority to Provide Water Service On the Commencement Date the

Authority shall assume the obligation of providing water service to the persons or entities whosena mes are on he list of current Water Accounts as well as any other water user s and land owner swithin the System Boundaries as may presently or in the future request water service from the

Authority The Authority shall adopt and enforce the Citys ules regulations ordinances andpolicies with respect to the service of water as existing at the Execution Date The Authority

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may amend such rules regulations ordinances and policies from time to time without the priorwritten consent of the City

a During the term of the Lease no other person or entity shall have the rightto ser ve water within the System Boundaries except that the City may continue to sell bottled

water to he same extent and scope as exists on he execution of this Lease

b During the term of the Lease the City shall not ser ve water within orwithout the System Boundaries or authorize any third party to ser ve water within its boundariesexcept that the City may continue to sell bottled water to the same extent and scope as exist onthe execution of this Lease

c During the term of the Lease the City shall not file a petition cause anythird party to file a petition or support a petition which would allow a hird party to ser ve waterwithin the System Boundaries

4otification to Customers At least fifteen S days prior to the Commencement

Date the City and the Authority at the Authoritys ost and expense shall in writing notifythose persons or entities listed whose names ar e on he list of current Water Accounts that the

Authority shall provide water to such persons or entities as of the Commencement Date Furtherduring the term of the Lease as extended the City shall direct all other potential water user s andland owner s within the System Boundaries to the Authority for wa er service The City as acondition precedent to the se ce f waer to its customers required such customers to completeapplications accoun cards and o ike or similar documents collectively Customer CardsOn or before the Commencement Date the City shall assign the Customer Cards to the Authorityfor the Authoritys se and benefit during the term of this Lease as extended In furtherance ofthe assignment the City shall deliver Customer Cards to the Authority before the

Comz

edcene

tate Or the expiration or termination of the Lease the Authority shall assign

all outstanding Customer Cards to the City for the Citys se and benefit

4 I e City as Water User Any service connection the City Service Connectionwhere the City is the customer shall be charged the amount described in the Rates and Charges

4 ervice to Fire Departments The Authority shall continue to honor all existingoral contracts and other arrangements regarding all fire departments use of fire hydrant waterand fire hydrant access within the System Boundaries A list of the oral contracts and o therarrangements are set forth on Exhibit I ttached hereto and by this reference incorporatedherein

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ARTICLE

CUSTOMERSERVICE AT THE CITY HALL IN INDIC

5 Options to Provide Customer Service The Parties hereto desire to afford the

Authority the opportunity to provide customer service at a location owned or operated by theCity The term Customer Service shall include but not be limited to handling customerpayments turn ons ffs f service new service requests customer requests and such otherfunctions as shall be deemed necessary or reasonable by the Authority in its discretion TheAuthority and the City will each give a cooperative effort to maximze Customer Service to the

Citys ustomers

52 ocation of Customer Service The Authority shall provide a Customer ServiceCenter at the City Hall of the City located at Civic Center Mall Indio California 922Civic Center

53 Drop Box The City hereby agrees to provide the Authority with a space for adrop box at no additional cost and expense to the Authority adjacent to Indio City Hall at suchlocation as the City and the Authoritymutually shall agree The Authority shall install the dropbox at its sole cost and expense The purpose of the drop box location is to allow customers tomake payments for water service The drop box shall allow customers to insert payment intosuch box from the divers ide of an automobile truck or other vehicle The City agrees thatthose customers temporarily using the drop box space less than five 5 inutes shall not be invioation of any parking or other like or similar laws The Authority shall have the right todiscontinue the use of the drop box after discussion and consultation with the City by givingsixty 6 ays prior written notice of its election to discontinue use of the drop box

S4 Emergency Telephone Numbers The Parties acknowledge that the City WaterCustomer Service emergency number is routed to the City Poice Department The City shallcontinue to take such emergency calls

ARTICLE 6

CONDITIONS PRECEDENT TO THE AUTHOR TYS

ERFORMANCE

6 Satisfaction of Conditions The Authoritys bligation to lease the System issubject to he satisfaction or waiver by the Authority of all the conditions set forth below withinthe applicable time periods specified If any of these conditions are not satisfied within theapplicable time period if any the Authority may termnate this Lease as set forth below or maywaive in writing any or all of the conditions

62 Deposited Documents The City shall have signed acknowledged and deliveredall documents and instruments to the Authority as required in this Lease

63 alidity of Representations and Warranties Al representations and warranties

by the City in this Lease shall be true and correct in all material respects on the CommencementDate as if made at that time

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64 erformance of Covenants Al of the agreements of the City which are requiredin this Lease to be performed at or prior to the Executian Date shall have been performed

ARTICLE 7

CONDITIONS PRECEDENT TO THE CI TY S ERFORMANCE

7 Satisfaction of Conditions The Citys bligation to transfer the System is subjectto the satisfaction or waiver by the City of all conditions set forth below within the applicabletime periods specified If any of these conditions are not satisfied within the applicable timeperiod if any the City may termnate this Lease as set forth below or may waive in writing anyor all o he conditions

72 Deposited Documents The Authority shall have signed acknowledged anddelivered all documents and instruments to the City as required in this Lease

73 aliditoY f Representations and Warranties Al representations and warranties

by the Authority in this Lease shall be true and correct in all material respects on heCommencement Date as if made at that time

74 erformance of Covenants Al of the agreements of the Authority which arerequired in this Lease to be performed at or prior to the Execution Date shall have beenperformed

ARTICLE

EXECUTION OF LEASE

S Execution Dae ace he Parties hereto shall execute this Lease as of theExecution Date

8 eliveries by The City As of the Execution Date the City shall deliver to the

Authority

a An executed and acknowledged Memorandum of Lease in substantiallythe form and content of Exhibit J ttached hereto and incorporated herein by reference

b The originals of the documents set forth on Exhibit

c A properly executed and acknowledged Assignment of Contractssubstantially in the form of Exhibit L ttached hereto and incorporated herein by reference

d A bill of sale assignment a other evidence of transfer of those vehiclesset forth on Exhibit M

e Any additional instruments signed and properly acknowledged by theCity if appropriate as may be necessary to comply with this Lease

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ARTICLE 9

TIE CT S EPRESENTATIONS WARRANTIES AND COVE TS

The City represents warrants and covenants as true and correct as of the Execution Dateand Commencement Date the following

9 O nizatuon The City is a public body corporate and politic and existing in

good standing under the laws of California

92 apacity The City has the right power legal capacity and authority to enterinto and perform its obligations under this Lease

93 uthorization The execution delivery and performance of this Lease a avebeen or shall be duly authorized by the City b ill not vioate or contravene i ny provisionof applicable law ii ny order of any court or other agency of government or anyagreement or other instrument to which the City is a party or by which it is bound or be a breachof or constitute with or without notice or lapse of time or both a efault under any suchagreements or other instrumerlts and c will not result in the creation or imposition o any liencharge or encumbrance of any nature whatsoever upon the System

94 al iaity This Lease and all documents required to be executed by the City areand shall be when executed and delivered a legal valid and binding obligation of the Cityenforceable against it in accordance with their terms subject to the effect of bankruptcyinsolvency reorganization arrangement moratorium or other similar laws relating to oraffecting the rights of creditors generally and of general principles of equity

9 Operation of Facilities To the Citys urrent and actual knowledge the WellsFacilities and Water System are in good operating condition ordinary wear and tear exceptedand are not in need of repair beyond normal maintenance and there are no encumbrances or otherrestrictions which would interfere with the Authoritys se of or access thereto

96 itle The City has good and marketable title to all of the Personal Property andthe System free and clear of all leases security agreements conditional sales contracts or othertitle retention liens encumbrances security interests perfected or unperfected restrictions oradverse claims of any nature whether accrued absolute contingent or otherwise except as setforth herein Al tangible Personal Property of the City us un good operating condition and repairordinary wear and tear excepted

97 ater Service During the term of the Lease no other person or entity has orshall have the right or authority to ser ve water within the System Boundaries except that theCity may continue to sell bottled water to the same extent and scope as exists on he ExecutionDate

98 Compliance with Laws The City has complied with and is not in any materialrespect in vioation of applicable federal state o local statutes laws and regulations affectingthe System or the operation of its water system operation

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9 itle to Real Property The City has or on he Commencement Date shall havegood and marketable fee simple title to the Real Property Wells Water System and EasementsAl such real property is free and clear of any mortgages deeds of trust pledges or othermonetary liens

9 Liti ation There are no proceedings pending or threatened in writing against oraffecting the City at law or in equity in or before or by any federal state municipal or othergovernmental court department commission board bureau agency or instrumentalityconcerning the System or any portion thereof or the execution of this Lease The City is not indefault with respect to any final judgment writ injunction decree or regulation of any court orfederal state municipal or other governmental department commission board bureau agencyor instrumentality domestic or foreign with respect to the System or any portion thereof

9 Consents Etc No consent approval authorization of or registration declarationor filing with any governmental authority federal state or local is required in connection withthe execution and delivery of this Lease or the performance of or compliance with the termsprovisions and conditions thereof If any franchises licenses certificates authorizationsapprovals or consents from any federal state or local domestic or foreign governmentcommission bureau or agency are required for the ownership operation or maintenance by theCity o ts water operations such franchises licenses certificates authorizations approvals andconsents have been validly granted or will be obtained prior to the Commencement Date are infull force and effect and constitute valid and sufficient authorization therefor

9 2 Authority of Individuals The individuals

xecuting this Lease and thedocuments referenced herein on behalf of the City has ave he legal power right and actualauthority to bind the City to the terms and conditions of this Lease

9 3 Customer List The Water Accounts shall be complete and accurate in allmaterial respects as of the Execution Date and Commencement Date

9 4 Environmental Compliance To the Citys urrent and actual knowledge as of theCommencement Date the Real Property and Wells will not be in violation in any materialrespect of any federal state or local law ordinance or regulation relating to industrial hygiene orto the environmental conditions on under or about the Real Property and Wells including butnot limited to soil and groundwater conditions Except as otherwise disclosed herein neither theCity no to the Citys urrent and actual k

rwdge ny third Parties used generated

manufactured produced stored or disposed of under or about the Real Property and Wells ortransported to or from the Real Property and Wells any flammable explosives asbestoslubrication products radioactive materials hazardous wastes toxic substances or relatedinjurious materials whether injurious by themselves or in combination with other materialscollectively Hazardous Materials There is no proceeding or written inquiry by anygovernmental authority with respect to the presence of suchHazardous Materials on he ReaiProperty and Wells or the migration thereof from or to other property For the purpose of thisLease Hazardous Materials shall include but not be limited to substances defined as hazardoussubstances hazardous materials or toxc substances in the Comprehensive EnvironmentalResponse Compensation and Liability Act of 98 as amended 42 UC ection 96 et seqthe Hazardous Materials Transportation Act 49 UC ection 8 et seq the ResourceConservation and Recovery Act 42 UC ection 69 et seq those substances defined as

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hazardous wastes or hazardous substances under California law and in the regulations

adopted and publications promulgated pursuant to said laws

ART

CLE

IIE AU R

SEPRESENTATIONS WARRANTIES AND COVENANTS

The Authority represents warrants and covenants as true and correct as of the ExecutionDate and the Commencement Date the following

rganization The Authority is a joint powers authority existing and in goodstanding under the laws of California

2 Capacity The Authority has the legal power capacity right and authority toenter into this Lease and the documents referenced herein and to consummate the transactions

and perform its obligations contemplated hereby

3 uthorization The execution delivery and performance of this Lease by the

Authority a as been or shall be duly authorized by the Authority and b ill not vioate orcontravene i ny provision of applicable law ii ny order of any court o other agency of thegovernment or iii any agreement or other instrument to which the Authority is a Party or bywhich it is bound or be a reach of or constitute with or without notice or lapse of time or botha efault under any such agreements or other instruments

alidity This Lease and all documents required hereby to be executed by the

Authority are and shall be when executed and delivered valid legally binding obligations of theAuthority and enforceable against it in accordance with their terms subject to the effect of

bankruptcy insolvency reorganization arrangement moratorium or other similar laws relatingto or affecting the rights of creditors generally and of general principles of equity

5 iti anon There are no proceedings pending or threatened against or affectingthe Authority at law or in equity in or before or by any federal state municipal or othergovernmental court department commission board bureau agency or instrumentality

concerning the execution of this Lease by the Authority The Authority is not in default withrespect to any final judgment writ injunction decree or regulation of any court or federal statemunicipal or other governmental department commission board bureau agency orinstrumentality domestic or foreign with respect to the execution of this Lease by the Authority

6 onsents No consent approval authorization of or registration declaration or

filing with any governmental authority federal state or local is required in connection with theexecution and delivery of this Lease by the Authority or the performance of or compliance withthe terms provisions and conditions thereof

7 uthority of Individuals The individuals

xecuting this Lease and thedocuments referenced herein on behalf of the Authority has ave he legal power right andactual authority to bind the Authority to the terms and conditions of this Lease

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ARTICLE

THE CI TYS BLIGATIONS BEFORE COMMENCEMENT DATE

From the Execution Date until the Commencement Date the City covenants as follows

onduct of Business in Normal Course The City will carry on he business andactivities of operating the System diligently and in substantially the same manne r as it haspreviously been carried out and shall no make or institute any unusual or novel methods ofpurchase sale lease management accounting or operation that will vary materially from thosemethods used by the City as of the date of this Lease except as required by governmentalauthority with jurisdiction or a court order

2 ew Transactions The City will not without the Authoritys ritten consent aener into any contract commitment or transaction not in the usual and ordinary course of theoperation of the System or b ell encumber or transfer any of the System

3 Exsi ng onracts Except in the normal couse of business and except asrequired by this Lease the Citywill not modify amend cancel or termnate any of its Contractsor agree to do any of those acts

4 ccuracy of The Cit s Representations and Warranties Al representations andwarranties of the City set forth in this Lease and in any written statements delivered to theAuthority by the City under this Lease will be true and correct in all material respects as of theExecution Date and the Commencement Date as if made on hat date If any event condition ornotice comes to the Citys ttention that might constitute a breach of any representations orwarranty the City shall disclose same to the Authority in writing The Authority within fifteen

S business days thereafter shall provide the City with its written determnation as to whetheror not the Authority waives said breach

ARTICLE 2

THE AUTHOR TYS

BLIGATIONS BEFORE COMMENCEMENT DATE

2 Accuracy of the Authoritys

epresentations and Warranties Al representationsand warranties of the Authority set forth in this Lease and in any written statements delivered tothe t ty by the Authority under this Lease will be true and correct in all material respects as ofthe Execution Date and the Commencement Date as if made on that date If any event conditionor notice comes to the Authoritys ttention that might constitute a breach of any representationsor warranty the Authority shall disclose same to the City in writing The City within fifteen 5business days thereafter shall provide the Authority with its written determination as to whetheror not the City waives said breach

ARTICLE 3

OBLIGATIONS OF THE PARTIES AFTER COMMENCEMENT DATE

3 tilit Users Fee On or after the Commencement Date until the expiration ortermination of the Lease the Authority hereby agrees to colect the utility user s fee on behalf of

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the City in conjunction with collection from customers residing within the City and served fromthe leased System for water service and remit the same to the City within thirty 3 days afterthe receipt thereof

3 2 onitor Telemetry Alarms The City Poice Department at its sole cost and

expense shall monitor all telemetry alarms located at the Real Property Wells Facilities andWater System in accordance with the Citys rocedure in effect at the execution of this LeaseThe telemetry alarms are located at such locations set forth on Exhibit N ttachedhereto and

by this reference incorporated herein If any alarm listed an Exhibit N s activated during suchsix 6 onth period the City Poice Department shall orally notify theAuthority immediatelyafter the City Poice Department has actual knowledge of its activation

3 3 Pav nExcavai on

a In operating and maintaining the System the Authority shall have the rightto exca vae within any street or property owned or operated by the City The City hereby assignsto the Authority all of its rights to excavate and perform work in any privately owned street or

property Prior to any excavation the Authority shall give the City forty igh 48 hours priorwritten or oral notice of its intent to excavate and the approximate location of the excavationexcept in the event of an emergency as reasonably determned by the Authority where the

Authority shall not be required to give the City prior notice In addition thereto the Authority atits soe cost and expense shall be required to coordinate its efforts with any utilities havingfacilities in such streets or property provided that the Authority shall have ail the Citys ightswith respect to priorities with respect to the System as to the use of the street or property and theCity hereby assigns all right interest and title thereto to the Authority The Authority shall berequired to obtain a permit from the City or pay any cost or expense to the City with respect to its

right to excavate in the street or property backfill compact a install temporary asphalt TheeAuthoritys ights under this Paragraph 3 3 hall be deemed a blanket encroachment permt asfurther described in Paragraph d

b The Authority shall be required to dispose at its cost and expense o allexcavated pavement in accordance with the Citys pplicable ordinances and regulations as suchordinances and regulations exist at the execution of the Lease

c At the conclusion of working on he facilities the Authority shall berequired to provide at its cost and expense sub ase compact ion of the backfill in accordancewith the Citys niform paving restoration requirements as shall exist at such time

d Upon completion of the compaction the Authority shall install permanentpaving at the Authoritys ole cost and expense provided that the Authority may installtemporary asphalt as the Authority shall deem necessary prior to the installation of permanentpaving

3 4 o Liens Except for the lien securing any lease revenu e bonds issued on behalfof the Authority at all times from and after the Commencement Date the Authority shall keepthe System free and clear of all liens claims and encumbrances and all claims of liens for laborservices materials supplies or equipment performed on behalf of or furnished to the AuthorityShould the Authority fail to pay and discharge or cause the System to be released from any such

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lien o claim of lien within thirty 3 ays after service on he Authority of written request fromthe City to do so he City may pay adjust compromiseand discharge any such lien or claim oflien on uch terms and manne r as the City may deem appropriate Notwithstanding theforegoing the Authority may in good faith and at the Authoritys ast and expense contest said

lien claim or demand in wllicll event the City shall not have the right to pay adjustcompromise or discharge any lien or claim If he Authority does not contest the lien o chargeand the City pays adjusts compromises or discharges the same the Authority shall on or beforethe first day o he next calendar month following such payment by the City reimburse the Cityfor the full amoun paid by the City in paying adjusting compromising and discharging suchlien or claim of lien including any reasonable attorneys fees or other costs expended by theCity together with interest at the rate often ercent per annum rom the date of paymentby the City to the date of repayment by the Authority

3 5 ssignment and Other Transfers Wthout the Citys rior written consent whichshall not be unreasonably withheld the Authority shall not voluntarily involuntarily byoperation of law or otherwise assign sublease dispose of sell grant a concession in licenseexchange convey mortgage encumber hypothecate pledge collaterally assign or otherwisetransfer the System or this Lease or any interest in the System or this Lease collectively aTransfer

a At least sixty 6 days prior to entering into any Transfer the Authorityshall submit to the City a written notice the Authoritys otice which includes or sets forth inreasonable detail i he form of the proposed Transfer including without limitation all relatedagreements documents instruments exhibits and escr ow instructions ii he na me and addressof the proposed transferee the Transferee iii he terms and conditions of the proposedTransfer including without limitation the commencement or effective date of the proposedTransfer which shall be at least sixty 6 ays after tl e Authoritys otice is given and iv henature character and current rating by Fitch or other comparable agency banking f ancialand other credit information and references with respect to the proposed Transferee and thebusiness of the proposed Transferee in reasonably sufficient detail to enable the City todetermne the proposed Transferees inancial responsibility and o reditworthiness

b Wthin sixty 6 days after the Citys eceipt from the Authority of theAuthoritys otice the City shall notify the Authority whether the City has consented to theproposed Transfer Failure to notify the Authority within such sixty 6 day period shall bedeemed approval If he City fails to consent the City shall within such sixty ay periodsend to he Authority in writing a list of all of the reason s for not approving the transfer Anyconsent by the City to any proposed Transfer shall not constitute a onsent with

respectto

anyother Transfer If he City consents to any proposed Transfer and the Authority fails toconsummate such Transfer within one hundred twenty 2 days of the Citys onsent then suchconsent shall be deemed withdrawn and the Authority shall be required again to comply with thisParagraph 3 5 efore making a Transfer

c The City shall not be deemed to have unreasonably withheld its consentwith respect to any Transfer if i he City shall not have received the Authoritys otice ii he

City is not reasonably satisfied that the proposed Transferee is financially responsible and ocreditworthy or iii he proposed Transfer will conflict with or result in a breach of any o he

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provisions of or constitute a default under any agreement instrument or document to which the

City is a Party or by which the System may be bound

d Upon receipt of an approval of Transferee the Authority shall be releasedor discharged from any liability whether past present or future under this Lease

e Any Transfer must contain the following provisions which provisionswhether contained in such Transfer or not shall apply to such Transfer i uch Transfer shall besubject and subordinate to all provisions of this Lease and ii o Transferee shall be permittedto enter into any subsequent Transfer without the Citys rior written consent

AItTIC LE 4

INSURANCE

4 nsurance The Authority shall carry and maintain at the Authoritys ole costand expense at all times during the term of this Lease a policy of commercial general liabilityinsurance covering the Authoritys ctivities hereunder Such insurance policy shall na me the

City as an additional insured with respect to the operation and maintenance of the System

4 2 aiver of Subrogation The Parties release each other and their respectiveauthorized representatives from any claims for damage to any person or to the System that arecaused by or result from risks insured against under any insurance policies carried by the Partiesand in force at the time of any such damage Each Party shall cause each insurance policyobtained by it to provide that the insurance company waives all right of recovery by way ofsubrogation against either Party in connection with any damage covered by any policy NeitherParty shall be liable to the other for any damage caused by any of the risks insured against under

any insurance policy required by this Lease

4 3 eneral Insurance Requirements Al the insurance required under this Leaseshall a e issued by insurance companies with a financial rating of at least an A A tatus asrated in the most recent edition of Bests nsurance Reports b e issued as a primary policyand c ontain an endorsement requiring thirty 3 days written notice from the insurance

company to both Parties and any lender before cancellation or change in the coverage scope oramount of any policy Each policy or a certificate of the policy together with evidence ofpayment or premiums shall be deposited with the other Party at the commencement o he termand on renewal of the policy not less than thirty 3 ays before expiration of the term of thepolicy

RTICLE 5

INDEMNITIES

5 ndemnities By the City

a The City agrees to indemnify defend and hod harmless the Authority itsofficers directors employees agents successo s and assigns from any and all claims actions

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costs expenses including reasonable attorneys fees and costs damages or liabilities which anyor all o them ever pays or legally is obligated to pay relating to the Citys wnership and use ofthe System prior to the Commencement Date including but not limited to itigation subject to

Paragraph 5 2 elow The City shall further indemnify defend and hod harmess the

Authority its officers directors employees agents successors and assigns from and against anyand all claims actions costs expenses including reasonable attorneys fees and costs damagesor liabilities which any or all of them eve pays or legally is obligated to pay arising from anybreach including the Citys epresentations or warranties or default by the City under the termsof this Lease or any other document relating to the System executed by the Authority and o heCity or arising from any act neglect fault or omission of the City or its agents contractorsemployees or servants

b The City hereby agrees to indemnify defend and hod harmless the

Authority its officers directors employees agents successo s and assigns from and against andshall reimburse the Authority for any and all Claims The term Cams shall mean any and allcosts including reasonable attorneys fees and expenses expenses or losses arising from anyand all claims losses damages liabilities fines penalties charges injury to person or propertyadministrative and judicial procedures and orders injunctive relief judgments remedial action

requirements and enforcement actions of any kind arising directly or indirectly out of orattributable to any Release as defined herein except if such Release was caused by the

Authority Wthout limiting the foregoing Claims include any repair of any damage to any RealProperty or any other property damage caused by any removal remediation or disposal ofHazardous Materials as defined herein The term Release shall mean any presence usegenerating storing spilling leaking pumping pouring discharging injecting escapingleaching dumping or disposing of Hazardous Materials into the environment or about on romunder within or affecting any Real Property or transported to or from any Real Property

includingcontinued

migrationof Hazardous Materials

asdefined

hereininto or

through soilsurface water or groundwater

c The City hereby agrees to fully indemnify defend and hod harmess the

Authority its officers directors employees agents successo s and assigns from and against alllosses claims damages liabilities actions suits proceedings judgments demands costs and

expenses including reasonable attorneys fees and o charges which are occasioned by orcaused by result from or arise out of the breach of the covenants or the failure of the City tocomply with the terms of Paragraph 5 r any repair cleanup or detoxification orpreparation and implementat ionof any removal remedial response closure or other planconcerning any Hazardous Materials as defined herein located on or before the

Commencement Date on underor

about the Real Property

5 2 ndemnities By the Authority

a The Authority agrees to indemnify defend and hod harmess the City itselected officials public officers employees agents successo s and assigns from any and allclaims actions costs expenses including reasonable attorneys fees and costs damages orliabilities which any or all of them eve pays or legally is obligated to pay relating to theAuthoritys peration of the System during the term of the Lease including but not limited tolitigation The Authority shall further indemnify defend and hod harmess the City its officersdirectors shareholders employees agents successors and assigns from and against any and all

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claims actions costs expenses including reasonable attorneys fees and costs damages orliabilities which any or all of them ever pays or legally is obligated to pay arising from anybreach including the Authoritys epresentations or warranties or default by the Authorityunderthe terms of this Lease or any other document relating to he System executed by the Cty ndthe Authority or arising from any act neglect fault or omssion of the Authority or its agentscontractors employees or servants or arising from any legal proceeding contesting theAuthoritys ayment of or ability to pay the rent due under this Lease

b The Authority hereby agrees to indemnify defend and hod harmless theCity from and against and shall reimburse the City for any and all Authority Claims The termAuthority Claims shall mean any and all costs including reasonable attorneys fees andexpenses expenses or losses arising from any and all claims losses damages liabilities finespenalties charges injury to person or property admnistrative and judicial procedures andorders injunctive relief judgments remedial action requirements and enforcement actions of anykind arising directly or indirectly ou of or attributable to any Release caused by the AuthorityWthout limiting the foregoing Authority Claims include any repair of any damage to any RealProperty or any other property damage caused by any removal remediation or disposal ofH rrlnug Va er aS

c The Authority hereby agrees to fully indemnify defend and hod harmlessthe City its elected officials public officers employees agents successo s and assigns from andagainst all losses claims demands costs and expenses including reasonable attorneys feesandlor charges which are occasioned by or caused by failure of the Authority to comply withthe terms of Paragraph 5 2 r any repair cleanup or detoxification or preparation andimplementation of any removal remedial response closure or other plan concerning anyHazardous Materials on under or about the Real Property

d The Authority agrees to indemnify defend and hod harmless the City itselected officials public officers employees agents successo s and assigns from any anal allclaims actions costs expenses including reasonable attorneys fees and casts damages orliabilities which any or all o them ever pays or legally is obligated to pay arising from orrelating to Ct f ndio v oachella Valley Water District Desert Sands Unified SchooDistrict and Does nclusive and related cr oss cti ons Case No INC O l 8 66 filed in theSuperior Court of California County of Riverside

ARTICLE 6

PERMITS

6 ssuance of Permts by The City On or before the Commencement Date the Cityshall at the Authoritys ost and expense irrevocably issue or cause all agencies under itsdominion and contro to issue to the Authority all consents approvals permits authoritylicenses or entitlements Permits necessary to operate maintain repair replace enlargeincrease modify or otherwise deal with the System as now constituted or as may be modified bythe Authority during the term of the Lease including the right to excavate in the City ownedproperty Where appropriate to the circumstances said Permts shall constitute and operate as a

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blanket encroachment permit Al Permts issued hereunder shall apply to the Authority and its

employees agents contractors and subcontractors o any tier

6 2 ermts by Qther Non ty A encies Except as set forth in Paragraph 6 above the Authority shall at its cost and expense obtain from all other federal state or

municipal boards or authorities the Permts necessary to operate and maintain the Systemincluding without limitation any cost or expense related to the National Polutant DischargeElimination System

ARTICLE 7CFLANCE dVITH LAWS

7 ompliance Wth Laws Subject to Citys ompliance with its obligations underthis Lease and any matter arising out of the condition of the System on he Commencement Datethe Authority at its expense shall comply with and conform to all laws ordinances orders rules

and regulations municipal state and federal and any and all requirements and orders of anymunicipal state or federal board or authority collectively the Orders present and future inany way relating to the operation and maintenance of the System o the use of the Systemthroughout the entire term of this Lease as extended

7 2 hanges in Water Quality

a F cept as set forth herein the Authority at its expense shall operate andmaintain the same quality of water as existing at the execution of the Lease

b If any municipal state or federal board or authority or any law ordinance

order ruleor

regulation collectively the

Pquirements requires the Authority or the City to

improve or change the quality of the water the Authority shall be responsible for paying all costsand expenses associated therewith

c If any of the Wells begins to produce water of a lower quality thanexisting at the execution of this Lease the Authority at its expense shall be required to expendany money necessary to improve such water quality

d If any of the Wells begins to provide water of a ower quality than existingat the time of the execution of the Lease due to the need to rehabilitate any of the Wells or anyportion thereof or the need to modify any of the Wells or any portion thereof the terms and

conditions of Article 9 shall apply

7 3 ater Assessments The Authority shall be required to pay any and all waterreplenishment fees and assessments and related casts which are required by owner s or operatorsof real property within the System Boundaries as required by any and all laws ordinancesorders rules and regulations municipal state or federal board or authority present or future

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ARTICLE 8

MAINTENANCE AND REPAIRS

aintenance of System Subject to the terms and conditions of this Lease and the

Citys ompliance with its obligations hereunder and any matter arising out of the condition othe System on he Commencement Date the Authority shall maintain the System and allimprovements in good condition and repair ordinary wea and tear excepted

ARTICLE 9

CAPITAL IMPRCJVEMENTS

9 he Authoritys

bligation for Capital Expenditures The Authority shall berequired to construct or replace any capital improvement The term capital improvement shallmean any major improvements to the System that extend its life or increases its function icapacity o efficiency The Authority may construct or replace such capital improvements asshall be determned by the Authority in its sole and absoute discretion after consultation withthe City

9 2 ominion Over New Development As part of the Authoritys ole right tooperate the System and ser ve waer within the System Boundaries the Parties heretoacknowledge and agree that the Authority shall have the authority ove third parties constructingwa er facilities including but not limited to eservoirs pumps pipelines and meter sizes inconnection with new development New Domestic Water System within the SystemBoundaries or within any other area that hereafter becomes part of the System Boundaries byannexation into the City or otherwise Upon completion and acceptance of any New DomesticWater System the Parties hereto will amend this Lease to add such system to this Lease andthereafter the Authority will maintain and operate such New Domestic Water System inaccordance with the terms and conditions of this Lease Notwithstanding the foregoing theParties acknowledge the City shall have authority ove all aspects o new developmentnotinvolving any New Domestic Water System

9 3 onstruction of City Projects The City is in the process of constructing orcausing to be constructed certain water projects City Projects Upon the execution of thisLease the Authority shall diligently and continuouslyprosecute all City Projects to completionin conformance with all laws rules and regulations of all governmental bodies and agenciesThe Authority shall pay directly all costs associated with the construction of City Projectsincluding but not limited to urnishing of labor and materials and the Authority shall keep theCity harmess from such costs Uponcompletion and acceptance of any City Projects theParties hereto will add such City Projects to this Lease and thereafter the Authority will maintainand operate City Projects in accordance with the terms and conditions of this Lease

9 4 Auhoi t ovemens During the term of the Lease in addition to theimprovement described in Paragraph 9 he Authority may construct additional water capitalimprovements Authority Improvements If the Authority determnes to construct AuthorityImprovements the Authority will give the City notice of such fact Upon completion of anyAuthority Improvements the Parties hereto will amend this Lease to add such Authority

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Improvements to this Lease and thereafter the Authority will maintain and operate AuthorityImprovements in accordance with the terms and conditions of this Lease

ARTICLE 2

DAMAGE OR DESTRUCTION

2D otal or Partial Destruction If during the term the System or any portionthereof is totally or partially destroyed from any cause whatsoever the Authority shall berequired at its cost and expense to make such repairs or replacements as is necessary in theopinion of the Authority to restore water service to the customers as soon as reasonablypracticable

ARTICLE 2

DEFAULT AND REMEDIES

2 efault by the Authority The Authority shall be deemed to be in default underthe terms of this Lease as follows

a If he Authority shall fail to pay any installment of rent or other sum whendue and suchdefault continues for a period of thirty 3 days after the due date provided that itshall no be in default if a ona fide dispute exists with respect to any amount not paid unless thematter has been submtted to dispute resolution but not resoved within ninety 9 days asextended by mutual agreement of the Parties or

b If he Authority shall fail to promptly perform or observe any covenantcondition or

agreement to be performed by the Authority under this Lease within thirty 3 aysafter written notice from the City provided that it shall not be in default if a bona fide disputeexists with respect to whether there has been a failure to perform in a timely manner in anymaterial respect any obligation hereunder unless that mat er has been submtted to disputeresoution and not resoved within ninety 9 ays as extended by mutual agreement of theParties

22 efault by the City The City shall be deemed to be in default under the terms ofthis Lease as follows

a If he City shall fail to pay any sum when due and such default continuesfor a

period of thirty 3 days after the due date provided that it shall not be in default if a onafide dispute exists with respect to any amount not paid unless the matter has been submtted todispute resoution but not resoved within ninety 9 days as extended by mutual agreement ofthe Parties or

b If the City shall fail to promptly perform or observe any covenantcondition or agreement to be performed by the City under this Lease within thirty 3 ays afterwritten notice from the Authority provided that it shall not be in default if a bona fide disputeexists with respect to whether there has been a ailure to perform in a timely manner in anymaterial respect any obligations hereunder unless that matter has been submtted to dispute

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resoution but not resoved within ninety 9 ays as extended by mutual agreement of theParties

23 esoution of Disputes

a Each Party shall continue to perform its obligations hereunder pendingresoution of any dispute provided that notwithstanding any other provision of this Leaseneither Party shall be required to make the disputed portion of any payment pending resoutionof a dispute

b The Parties agree to cooperate and use all reasonable efforts pursuant tothe terms of this Lease to facilitate the operation and maintenance o he System and theAuthoritys roviding service within the System Boundaries Accordingly the Parties agree ingood faith to undertake the resoution of all disputes in an equitable and timely mannerprovided that if any matter is not resoved within ninety 9d days as extended by mutualagreement of the Parties either Party is then free to pursue all other legally available remediesincluding all legally available remedies in connection with an improper termnation of this Leaseby the other Party provided however when a dispute occu s under the Lease the Party claimingthe dispute will give notice to the nondisputing Party of the occu rence of the dispute Thenotice shall include a detailed explanation of the nature of the dispute Wthin seven 7 aysafter receipt of the notice o such longer time as shall be agreed by the Parties the Parties shalluse their best efforts to meet and confer to resove the dispute If the dispute cannot be resolvedthe remaining provisions of this Paragraph 23 hall apply

24 emedies Except as otherwise provided herein if either Party commts a defaultor breach in any material respect and such default or breach remains uncuredafter the time

period if any permitted for cue under this Agreement then in addition to all other remediesthat the Parties hereto may have at law or in equity which remedies shall be cumulative to anyremedies provided in this Lease the non efaulting Party may termnate this Lease

ARTICLE 22

EXPIRATION OF LEASE

22 iraion At the expiration of the term the Authority shall surrender to the Citythe possession of the System including without limitation all cash accounts receivableinvestments liabilities of any kind the Water Rights Real Property Wells Facilities WaterSystem and Easements Records subject to Paragraph 22 2 below Contracts subject toParagraph 22 3 elow Water Accounts subject to Paragraph 22 4 below Deposits andIntangible Property and shall execute any assignments bills of sale or other instruments ordocuments of conveyance reasonably necessary to surrender the same

22 2 ecords Pursuant to Paragraph 3g ll Records existing on theCommencement Date were retained by the City After the expiration or termnation of theLease the Authority shall be entitled to retain all records from the Commencement Date to thedate of the expiration or termination of the Lease Both Parties shall be permitted to have accessto the records retained by the other Party at all reasonable times

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22 3 ontracts At the expiration or termination of the Lease the City may as sume theContracts if n existence or any other contracts and agreements with respect to the System Onthe termination or expiration the Parties heretoshall execute an assignment of such contractsand agreements substantially in the form and content of Exhibit N ttached hereto and

incorporated herein by reference except that the Authority shall be the assignor and the Cityshall be the assignee Except for the foregoing the Authority hereby agrees to hod harmess andindemnify the City for all loss expenses damages and costs including reasonable attorneysfees arising from o in connection with the Authoritys iabilities or obligations not assumedpursuant to this Paragraph or as otherwise agreed herein

22 4 ater Accounts Ninety 9 ays prior to the Expiration Date the Authorityshall deliver to the City a list of customers the Authority is supplying water as of that date TheCity hereby agrees to initiate the service of water to such customers as of the day after thetermination or expiration of the Lease The terms and conditions of Paragraph 4 hall apply tothe notification of customers with the Authority standing in the place of the City herein and theCity standing in the place of the Authority herein

AR CLE 3

GENERAL PROVISIONS

23 otices Any notice approval consent waiver or other communication requiredor permitted to be given or to be served upon either Party in connection with this Agreementshall be in writing Such notice shall be personally served sent by facsimile telegram or cableor sent prepaid by registered or certified mail with return receipt requested or sent by reputableovernight delivery service such as Federal Express and shall be deemed given a f personallyserved when delivered to the Party to whom such notice is addressed b f given by facsimiletelegram or cable when sent c if given by prepaid or certified mail with return receiptrequested on he date of execution of the retun receipt or d f sent by reputable overnightdelivery service such as Federal Express when received Any notice given by facsimiletelegram or cable shad be confirmed in writing and such confirmation shall be sent or deliveredby any o he other means of delivery set forth in this Section within forty igh 48 hours afternotice was sent by facsimile telegram or cable Such notices shall be addressed to the Party towhom such notice is to be given at the address specified by each Party in a writing delivered orsent to he other Party in accordance with this Section

23 2 ntire Agreement This Lease contains all agreements promises andunderstandings between the Authority and the City and no verbal or oral agreements promisesor understandings shall or will be binding upon either the Authority or the City and any additionvariation or modification to this Lease shall be vod and ineffective unless made in writing andsigned by the Parties hereto

23 3 uccessors Each and all of the covenants and conditions of this Lease shall be

binding on and shall inure to the benefit of the successo s and assigns of the respective Parties

23 4 urther Assurances Either the Authority or the City at any time upon reasonablerequest of the other Party will execute acknowledge and deliver all such additional documentsinstruments and other Leases and all such further assurances and will do or cau se to be done all

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further acts and things in each case as may be proper or reasonably necessary to carry out thepurposes hereof

23 5 overning Law This Lease and performance hereof shall be governedinterpreted construed and regulated by the Laws of the State of California

23 6 Attorneys Fees In any action between the Parties arising out of this Lease or inconnection with the System the prevailing Party in the action shall be entitled in addition todamages injunctive relief or other relief to its reasonable costs and expenses including withoutlimitation costs and reasonable attorneys fees fixed by the court and any attorneys fees andcosts incurred in enforcing any judgment

23 7 itles Captions and Para raphs Titles and captions are for convenience only andshall not constitute a portion of this Lease References to paragraph numbers are to paragraphsas numbered in this Lease unless expressly stated otherwise

23 8 o Waiver A waiver by either Party of a breach of any of the covenantsconditions or agreements under this Lease to be performed by the other Party shall not beconstrued as a waiver of any succeeding breach of the same or other covenants agreementsrestrictions or conditions of this Lease

23 9 odifications Any alteration change or modification of or to this Lease in orderto become effective shall be made in writing and in each instance signed on behalf of eachParty

23 everability If any term provision condition or covenant of this Lease or itsapplication to any Party or circumstances shall be held to any extent invalid or unenforceablethe remainder of this Lease or the application of the term provision condition or covenant topersons or circumstances other than those as to whom or which it is held invalid or

unenforceable shall not be affected and shall be valid and enforceable to the fullest extentpermitted by law

23 erger of Prior Agreements and Understandings This Lease contains the entire

understanding between the Parties relating to the transaction contemplated by this Lease Alprior or contemporaneous agreements understandings representations and statements oral orwritten are merged into this Lease and shall be of no further force or effect

23 2 Counterparts This Lease may be signed in multiple counterparts which when

signed by all Parties shall constitute a binding agreement

23 3 Estoppel Certificate Wthin ten days after notice from a Party heretoRequesting Party the other Party Responding Party shall execute and deliver to theRequesting Party in recordable form a certificate stating a hat this Lease is unmodified andin full force and effect or in full force and effect as modified and stating all modifications b het hen ur en ease payments c he dates to which the lease payments have been paid inadvance d hether the Responding Party or the Requesting Party is in default under thisLease and e uch other matters as the Requesting Party shall reasonably request TheResponding Partys ailure to deliver such certificate within such ten day l eriod shall beconclusive upon the Respond ing Par ty for the benefit of the Requesting Party any succe ss oin

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interest to the Re uestng Party he Requesting Partys ender or the Requesting Partys nvestorsthat except as may be rep ented by he Requesting Party hs ease is unmodified and 3n fullforce and effect no lease payment has been paid in advance and neither the Requesting Party nothe Responding Party is n efault under this Lease

23 4 otice ox ater Bll The Authority will at the Citys ritten request include amessage on water bills which contains public service material prepared by the City providedhathe inclusion of the requested message is compatible with the Authoritys illing equipment anddoes not increase the cost of postage o other expenses The City acknowledges that the

Authority will allow use of the water bills to provide water quality conservation and other publicservice information and messages

IN WTNESS WHEREOF the Parties have hereunto set their hands on the date firstabove written

The Authority

Indio Water Authority

Steve Compton Treasurer

The City

The City of Indio

J

yao d ng ty Manager

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EXHIBIT LIST

EXHIBIT A Depiction of System Boundaries Recital A

EXHIBIT B Rates and Charges Section 2

EXHIBIT C Description of Real Property Section 3

EXHIBIT D Description of Wells and Well Sites located on

Real Property Section 3 c

EXHIBIT E Description of Water Tanks Pumping and

Appurtenant Facilities Section 3d

EXHIBIT F Description of We ea ed asements

Section 3

fEXHIBIT Cr List of Contracts Section 3 hEXHIBIT H Personal Property Section 3jEXHIBIT I Fire Department Agreements Section 4

EXHIBIT J Memorandum of Lease Section 2

EXHIBIT I Original Documents Section 82

EXHIBIT L Assignment of Contracts Section 2

EXHIBIT M A List of Items Transferred by Way of Bll ofSale or Assignment Section 2

EXHIBIT N Telemetry Alarm Locations Section 3 2

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EXHBT A

Depiction of Sys tem Boundaries Recital A

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xr

eII Site IA s located at the Intersection of Avenue 45 Palo l erde Street on he

south east side ofAvenue 45

WeII Site IB s located at the intersection ofAvenue 45 PacifZC Avenue IOCation on

Pacific approximately2 ft south o Avenue 45 on he south west side of PacificAvenue

y

WeII Site IC s a block building inside the City o IndioPublic Works Yard Located at8 venue 45 well site C is located at the southeast side o the public services yard

Wel site 28 s located on Crown Way Avenue west o Monroe Street at the south west

corner o Crown Way Park

We Site 2C is located on Crown Way Avenue west o Monroe at the south east co nero Crown Way Park

Well Site 2D is located inside Booster House 2 complex at 8 3 rown Way Avenueo he north west side o Crown Way Avenue

Well Site 3A a s located at the Intersection o Garden Daisy Street in D Caz z on arksouth west o Daisy Street

WeII Site 3B is located on he orth Side o D Carreon Bvd approximately 4 feeteast o Monroe Street

Well Site 3C is located inside Reservoir 3 fenced area at the end o Garden Street

Well Site 4 s located on he north side o Avenue 46 just east o Shields Road

WeII Site 4B is located inside Reservoir 4 t intersection o Avenue 45 Shields Roada the north east co ner o site

WeII Site 4C is located inside Reservoir 4 t the intersection o Avenue 46 ShieldsRoad a the west side o he site

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e

Booster House Locations

Booster Douse Located at Public Services Yard 83 Avenue 45

This plant has 2 natural a s 97 4ukesha Motors and O hp Electric IvlotorControlling all three wells dnd the three boosters at this site is a masterontroller modeS 5 Murphy lBooster douse 2 Located west o Monroe Street on Crown Way 8 3 s Iant has2 naturaI

as 97 Waukesha motors and horse power electric motorsP

Controlling aII three wells and the three Boosters al this site is a master controler model5 MuIpI y

Booster House 3 ocated west of Daisy Street in Dr Carreon Park This Iant hnatural Gas 33 6 Caterpillar motors and horse power Electric Motor C o w

2

all three wells and the three Boosters at Ibis site is a master controller mode S xllingMurphy

Booster use 4 ocated of the Intersection o Shields Road Avenue 46 This lasthas Booster pumps all Eiectnc P he ocke pJ y pump is horse power P2 s 2horse power P3 is 2 horse power P s 2 horse power Controlin ag II three wellsat fhe fou booster at this siteis

amaster controler model S S Murphy

rt

Ll 99

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eIA natural Gas 33 6 Cate illar motorWeI horse power motor Hollow shaft electric

J

Wel G horse power motor Holow Shaft ElectricWeI 2B 5 horsepowermotor H low haft electricWel 2C atural Gas 33 6 Caterpillar motorWel 2i horse power GE Holow Shaft ElectricWell 3 Natural Gas 33 6 Caterpillar MotorWeII 3B horsepower motor Holow Shaft ElectricWeli 3 C atural Gas 97 Waukesha EngineWell 4 horse power motor Holow Shaft Electric

We 48T us site has two options both eectri c nd atural gas lectric 2 hopower moo Hollow Shaft 2 aua gas 9 5 Wakesha motorrse

S L 4C horse power motor Holow Shafr Electric

R sexvor Located at Indio Public Services yard 83 Avenu e 5 2 aIeservor 2 Located at 8 3 rown Way west o Monroe Street 2 Gal

Reservoir 3 ocated atwest end of Garden Street 2 Ga I

Reservoir 4 Icated at Intersection o Avenue 46 and Shields Ro ad 2 al

r

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EX BIDescription o We ea ed Easements Section 3

O

4d S At

933 889A 3

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EXH Z2rr

Descr i t i on aerRea ed Easements

Al easements l i censes orcol ectivey rEasementsrr hed b orx e and sml ar rightsIndo a ng u of or in connection with the cif

of the City ofen arge reconstruct r emove and replace o p e r a t eC structanan epar improve and reocae ppei nes aspectoher faclities and appurtenances thereto includinan ndlimted to measuring devices ar valves bow fs g but noservce connect i on structues used or usef u tas ns andwat er and wester distribution together wth ari h a r e s s s m i s s i o nofand from such facl i ti es existing on he dae hexeof or righs tothe fuue by the City of Indo whether

or no the

acquired inrecorded in he Ofa a Records of Riverside Count

Easements aeY Caifona

e

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EXHIBIT r

Lst of Contracts Memorandum of Understanding daed

MaY 2 997 bUNLINE SERVICES GROUP ae y c d bet W e ub C agency and the CITY OF SNDIO

Per mt No D 322 issued by the SOUTH COASTtA G H M E N TDISTRICT to the CITY OF INDIO AIR QUALITYdated May 3 99 73 permt No R 699 2 issued by the SOUTH COASTMANAGEMENT DISTRICT to the CITY OF IND O dated Ma

IR QUALITYY Q 993

pex m N R 699 2 issued by the SOUTH COASM GRMENT DISTRICT to the CITY OF INDIO dated J a RQUALITY

4nuar y 2

E per mt NoD 3 7 issued b y M t h eNfANGEMENTDISTRICT to the CITY OF IND O xd ted

T AIR QUALITYMay 5 993

6 t o D 3222 issued J bMANAGEMENT DISTRICT to the C I T YtQ FI N D I O HCOAST AIR QU P ITYdated May 7 9937 e t No D 3 72 issued bMANAGEMENT DISTRICT to the CITY tO FIND px COAST AIR QUALITYdated May 5 9938

I

to D 3 73 issued b

MANAGEMENT DISTRICT to the CITY tO FI N D I 4 HCOAST AIR QUALITYdaed May 5 3997permt No D 3 74 issued bM

IGEMENT DISTRICT to the CITY tO FINDH OAST AIR QUALITYO dated May 5 gg3

permt No D 35 issued bMANAGEMENT DISTRICT to the CITY tO FI N D S T xCOAST FAIR QUALITYO daed May 5 9933 Appi cai on No 3 99SOUTH COAST AIR

granted as of Apri 996 by theNDO

QUALITY MANAGEMENT DISTRICT to the CI TY OF

2 Pem

to D 3 76 issued by thevYAGEMENT DISTRICT to the CITY OF IND O Hd

OAST AIR QUALy

ced May 5 3 g3 3

Application No 3SOUTH COAST AIR ganed as of Api l l 996 by theUALITY MANAGEMENT DISTRICT to the CITY OFINDIpe

4 Permit NoM A N A G E M E N T

Per mt NoMANAGEMENT

D 3 77 issuedDISTRICT to the

D 3 78 issuedDISTRICT to the

b

CITY tO FI N D I O Hb

G TY O FI N D U I TH

COAST AIRdaed May 5

COAST AIRdaed May 5

QUALITY 993

QUALITY 993

tr

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fv

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l6 ora Agreemment to provide st andby ervices to the Car ver TactMuua pursuant to Cty of Indio Accoun 2J o 6263

ubject

to the Raes and Charges as defined in the Leasej existing athe t i me servce is request ed

lOra Agreement to provide s an dby ervce to the 7a e actpusuan to Accoun No 2 7 6 ubject to the Raes andCharges exi sting at the time service is request ed

z

r Exhb t r Page 2r

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OflUU2Q

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EXH BXT H

One l lympian CD2 hal e moun emergency generator model3 85 5 eri a 4AG4U2 D3VCO24 72

Ths trale mounted eectrica gener ao was purchase o e usedn t i mes of emergency to provide eec s a pow er for any eectri cWel3 pumps wthn the Cty s aer system Al wel stes haveeen retrofi tted wth special eectrica switching pane s toaccommodate ths gener ao

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o

f

c ti C s nd ui mend

r

r

Ta to TooPP g LF T maI Ta int

hnac c Model T

Z pping Too Muller WR tcbet X2

SS6 Tapping Too Mueller 5 5 694557 Ta in TooPP g Mueller

m 558 CL 2 Drilling Machine wlBts adapfers 4 luu 2

559 Poit model B Milling Iviachine

56 Test Kit Midwest InstrumentsBaclcf lowmadel83City LD 94

562 Test KitMdu es nstrumentsBackflowD CheckValve Model 89

CtyI

2632

S63 Chlorinator W2 ace Merman 227Portable IOOOB

r 6S Well Sounder

566 Leak Deteotor fiisher M scope eakDetector

model XL7 SNA 828Ctty I n H 2494

569 Statute

Electrtc ValveCity I 9 7 O O I 5 4

Turning Too

57 Electric Valve Toledo 64368Turning Too P i p eThreader

599 Tren Shore

ShortngModel 5288 6 cornplete shorin gsections 4 singles 2 baubles withHydraulic Pump

N Backflow Tester Duke Barton Model 246 BF 2two each

NIA CL2 pumps LMI model S LS ei teachwith s i g a n a lcapability

R

CL2 pumps LIvSI model 7S LS 3 hree each

aa

sf w agnal captVtlttys

a oxH T H

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r7A 98VATER DEPT MUELLER

w n

DESCRIPTION QTY3 X2 OTS OR METERS 95

r 3 4 N TS 955 8i 2 OLTS X95 UTS 93 4 X 32 B R EAK AWAY B O LTS 323 4 IP X FLR CORD 22PXFLANGEANGLE STOP g34 NSTA TITS X IP p

3 4 NSTA lTE X ADAPTER COUP 53 4 FLR X IP ADAPTS R FM g

2 LR FLR UNfON 2 LR FLR fUTUNf O r 53 4 LR FLR NUT NfON 82 LR X FLR NUT NfON 2

P IP ADAPTER 3p 2 LR M IP

NSTA TITS X f f IP 25 I4 ATE VALVE

GE HP DLm5K445 6 47 SER 8272 3 8YAKAWA MOTOR OONP S 27 33 8 Z MODEL BSUK

HATCH BACKGAT CONVERTER HSA 4J M RECONDITION OVER HAUL CYLHEAD 2HONEYWELL CIRCULAR CARTS 3 7553 7

HONEYWEL L 7 563 45 E RM AssEM

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