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HomeMy WebLinkAboutKOCH FINANCIAL CORP - 2001-09-170 City Clerk's File Notes File # V o c- ` r\A� � C` t�1 Office of the City Clerk, Huntington Beach CA s-a� c- '� ��� -t►;,. (,� �� ��,,� cS:.�;,1 ols,� G: Follow Up File Notes Log Sheet 3_3�—(3 DATE: ``.. NM \'Y\NVNO � Y -k CAS C TO: 4 env- C.AGm 'mortk e-1K v\C C\ r-e \2� �UANQ �p6� FROM: Connie Brockway, City Clerk SUBJECT: COMPLETION BY YOUR DEPARTMENT OF CITY COUNCIL APPROVED AGENDA ITEM ITEM: 0 C �-N V-\ C \0`1 - !�kO Q\CA&U Date Approved: v, - �11 - Q) ( ' C�vaC�4 The above item can be officially filed if the following requirements are met: 2Ussz. �� AA �D`a QR /�k\ R , a 6 0 - . In order for the City Clerk's Office to proceed, please check as applicable: ( ) The necessary requirements will be provided by Date OR ( ) Completion of this item is no longer necessary. Department Head Signature cc: City Attorney City Administrator b/02 vgc PA04-�, \A, V,) City Attorney Deputy City Attorney • 4 ��y111r6Tpp OFFICE OF CITY ATTORNEY gun+ c` P.O. Box 190 2000 Main Street Gail Hutton Huntington Beach, California 92648 City Anomey October 1, 2..001 Koch Financial Corporation 17767 North Perimeter Drive, Suite 101 Scotsdale, Arizona 85255 Telephone (714) 536-5555 Fax (714) 374-1590 Re: Equipment Lease Purchase Agreement for Four Ambulances o Dated August 31, 2001 between Koch Financial Corporation, as Lessor, and City of Huntington Beach, as Lessee Ladies and Gentlemen: I am City Attorney for the City of Huntington Beach, California, a municipal corporation, and charter city duly organized and existing under and by virtue of the Constitution and-, the laws of the State of California. This opinion is delivered in connection with the Equipment Lease Purchase Agreement for four Ambulances, dated as of August 31, 2001 (the "Agreement"), between Koch Financial Corporation (the "Lessor") and City of Huntington Beach (the `Lessee"). All capitalized terms herein shall have the same meaning as in the foregoing Agreement. In rendering the opinion set forth herein, I have made no search, inquiry, investigation or otlier examination concerning the records or files of any court, public board or body, or other public records, other than the Lessee, and my opinion as expressed herein does not extend to any matter which might be disclosed as a result of any further search, inquiry, investigation or other examination. Whenever a statement herein is qualified "to the best of my knowledge," it is intended to indicate that, during the course of my representation of the Lessee in connection with this transaction, no information that would give me actual knowledge of the inaccuracy of such statement has come to my attention. I have not undertaken any independent investigation to determine the accuracy of such statements, and any limited inquiry undertaken by me during the preparation of this opinion letter should not be regarded as such investigation. No inference as to my knowledge of any matters bearing -on the accuracy of any such statements should be drawn from the fact of my representation of the Lessee. My opinion set forth herein does not extend to, and I express no opinion herein with respect to, (a) any laws of any jurisdiction including any federal law), other than the laws of the State of California, and (b) any matters covered by the securities, usury or tax laws, decisions, rules or regulations of any jurisdiction. FRU C-i LM: D-1 Koch Financial October 1, 2001 Page 2 Based on the foregoing, I am of the opinion that: (1) Lessee is a public body and politic, duly organized and existing under the laws of the State, and has a substantial amount of one or more of the following sovereign powers: (a) the power to tax, (b) the power of eminent domain, and (c) police power; (2) Lessee has the requisite power and authority to purchase the Equipment to execute and deliver the Agreement and to perform its obligations under the Agreement; (3) . The Agreement and the other documents either attached thereto or required therein have been duly authorized, approved and executed by and on behalf of Lessee, and the Agreement is a valid and binding obligation of Lessee enforceable in accordance with its terms; (4) The authorization, approval and execution of the Agreement and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state laws; and (5) To the best of my knowledge, and without exercising any investigation or due diligence, there is no proceeding pending or threatened in any court or before any governmental. authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transaction contemplated by the Agreement. or the security interest of Lessor or its assigns, as the case may be, in the Equipment. Lessor, its successors and assigns, including without limitation any Registered Owners, and any counsel rendering an opinion on the tax-exempt status of the interest components of Rental Payments are entitled to rely on this opinion. Very truly yours, itGail Hu ton City Attorney LM: D-1 • • EQUIPMENT LEASE PURCHASE AGREEMENT t; t ~ �� N1"�;'uTn,a I'A ./ r �tr Iii CA L. This EQUIPMENT LEASE PURCHASE AGREEMENT (the "Agreement"), dated as of August 31, 2 0.1, and -entered into between Koch Financial Corporation, a Kansas Corporation "Lessor" and the City of Hunk oirBeach a liod{'cdr~orate and rF rP ("Lessor"), ty y rP politic existing under the laws of the State of California ("Lessee"). WITNESSETH: WHEREAS, Lessor desires to lease the Equipment, as hereinafter described in Exhibit "A", to Lessee and Lessee desires to lease the Equipment from Lessor subject to the terms and conditions of and for the purposes set forth in this Agreement; and WHEREAS, Lessee is authorized under the constitution and laws of the State of California to enter into this agreement for the purposes set forth herein; NOW, THEREFORE, for and in consideration of the premises hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: ARTICLE I Section 1.01. Definitions. The following terms will have the meanings indicated below unless the context clearly requires otherwise. "Agreement" means this Equipment Lease Purchase .greement and any schedule or exhibit made apart hereof by the parties hereto, together with any amendments to the Agreement made pursuant to section 13.06. "Code" means the Internal Revenue Code of 1986, as amended. "Commencement Date" is the date when Lessee's obligation to pay rent commences under such Agreement, which date shall be the earliest of (i) the date on which the Equipment listed in such Agreement is accepted by Lessee in the manner described in Section 5.01, or (ii) the date on which sufficient moneys to purchase the Equipment listed in such Agreement are deposited for that purpose with an escrow agent, or (iii) the date proceeds are set aside for acquisition of Equipment as evidenced in Exhibit E, if applicable. "Equipment" means the property described in Exhibit "A", Equipment Description, and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to Article VIE. "Event of Default" means any event of default described in Section 12.01. "Issuance Year" means the calendar year in which the Commencement Date occurs. "Lease Term" means the Original Term and all Renewal Terms. "Lessee" means the entity described as such in the first paragraph of this Agreement, its successors and its assigns. "Lessor" means the entity described as such in the first paragraph of this Agreement, its successors and its assigns. "Original Term" means the period from the Commencement Date until the end of the budget year of Lessee in effect on the Commencement Date. "Purchase Price" means the amount designated as such on Exhibit A-1 hereto that Lessee may, in its discretion, pay to Lessor to purchase the Equipment. "Renewal Terms" means the renewal terms of this Agreement, each having a duration of one year and a term coextensive with Lessee's budget year. "Rental Payments" means the basic rental payments payable by Lessee pursuant to Section 4.01. "State" means the state in which Lessee located. • "Vendor" means the manufacturer of the Equipment as well as agents or dealers of the manufacturer from whom Lessor purchased or is purchasing the Equipment. ARTICLE II Section 2.01. Representations and Covenants of Lessee. Lessee represents, covenants and warrants for the benefit of Lessor as follows: (a) Lessee is a public body corporate and politic duly organized and existing under the constitution and laws of the State with full power and authority to enter into this Agreement and the transactions contemplated hereby and to perform all of its obligations hereunder. (b) Lessee has duly authorized the execution and delivery of this Agreement by proper action by its governing body at a meeting duly called, regularly convened and attended throughout by the requisite majority of the members thereof or by other appropriate official approval, and all requirements have been met and procedures have occurred in order to ensure the validity and enforceability of this Agreement. (c) No event or condition that constitutes, or with the giving of notice or the lapse of time or both would constitute, an Event of Default exists at the date hereof. (d) Lessee will do or cause to be done all things necessary to preserve and keep in full force and effect.its existence as a public body corporate and politic. (e) Lessee has complied with such public bidding requirements as may be applicable to this Agreement and the acquisition by Lessee of the Equipment. (f) During the Lease Term, the Equipment will be used by Lessee only for the purpose of performing essential governmental or proprietary functions of Lessee consistent with the permissible scope of Lessee's authority. (g) Lessee will annually provide Lessor with current financial statements, budgets, proofs of appropriation for the ensuing: budget year and other such financial information relating to the ability of Lessee to continue this Agreement as may be requested by Lessor. (h) Lessee has an immediate need for the Equipment and expects to make immediate use of the Equipment listed. Lessee's need for the Equipment is not temporary and Lessee does not expect the need for any item of the Equipment to diminish in the foreseeable future including the maximum Lease Term applicable to such item. (i) Lessee will use the proceeds of this Agreement as soon as practicable and with all reasonable dispatch for the purpose for which the Agreement has been entered into. No part of the proceeds of the Agreement shall be invested in any securities, obligations or other investments or used, at any time, directly or indirectly, in a manner which, if such use had been reasonably anticipated on the date of issuance of the Agreement, would have caused any portion of the Agreement to become "arbitrage bonds" within the meaning of Section 103(b)(2) or Section 148 of the Code and the applicable regulations of the Treasury Department. Section 2.02. Certification as to Arbitrage. Lessee hereby represents as follows: (a) The estimated total costs of the Equipment will not be less than the total Principal Portion of the Rental Payments listed in the Rental Payment Schedule. (b) The Equipment has been ordered or is expected to be ordered within six months of the date of this Agreement; and all amounts deposited in escrow to pay for the Equipment, and interest earnings, will be expended on costs of the Equipment and the financing within three years of the date of this Agreement. (c) No portion of amounts held in escrow to pay Equipment costs will be invested in investments having a substantially guaranteed yield for four years or more. (d) No proceeds of the Lease will bed to reimburse Lessee for expenditures mad• re than 60 days prior to the date of this Agreement. (e) Lessee has not created or established, and does not expect to create or establish, any sinking fund or similar fund (i) that is reasonably expected to be used to pay the Rental Payments, or (ii) that may be used solely to prevent a default in the payment of the Rental Payments. (f) The Equipment has not been and is not expected to be sold or otherwise disposed of by Lessee, either in whole or in part, prior to the last maturity of the Rental Payments. (g) Lessee will comply with all applicable provisions of the Code, including without limitation Sections 103 and 148 thereof, and the applicable regulations of the Treasury Department to maintain the exclusion of the interest components of Rental Payments from gross income for purposes of federal income taxation. (h) Lessee has not been notified of any listing or proposed listing of it by the Internal Revenue Service as,an issuer whose arbitrage certificates may not be relied upon. (i) To the best of my knowledge, information and belief, the above expectations are reasonable. ARTICLE III Section 3.01. Lease of Equipment. Lessor hereby demises, leases and lets to Lessee, and Lessee rents, leases and hires from Lessor, the Equipment in accordance with this Agreement for the Lease Term. The Lease Term may be continued, solely at the option of Lessee, at the end of the Original Tern- or any Renewal Term for an additional Renewal Term up to the maximum Lease Term L -.- forth in Exhibit A-1 hereto. At the end of the Original Tenn and at the end of each Renewal Term until the maximum Lease Tenn has been completed, Lessee shall be deemed to have exercised its option to continue this Agreement for the next Renewal Term if Lessee budgets and appropriates or otherwise makes legally available funds to pay Rental Payments for such Renewal Term, unless Lessee shall have terminated this Agreement pursuant to Section 10.01. The terms and conditions during any Renewal Tenn shall be the same as the terms and conditions during the Original Term, except that the Rental Payments shall be as provided on Exhibit A-1 hereto. Section 3.02. Continuation of Lease Term. Lessee currently intends, subject to Section 3.03, to continue the Lease Term, through the Original Term and all Renewal Terms and to pay the Rental Payments hereunder. Lessee reasonably believes that legally available funcls in an amount sufficient to make all Rental Payments during the maximum Lease Term can be obtained. Lessee further currently intends to do all things lawfully within its power to obtain and maintain funds from which the Rental Payments may be made, including making provision for such payments to the extent necessary in each budget or appropriation request submitted and adopted in accordance with applicable provisions of law, to have such portion of the budget or appropriation request approved and to exhaust all available reviews and appeals in the event such portion of the budget or appropriation request is not approved. Notwithstanding the foregoing, the decision whether or not to budget or appropriate funds or to extend this Agreement for any Renewal Term is within the discretion of the then current governing body of Lessee. Section 3.03. Nonappropriation. Lessee is obligated only to pay such Rental Payments under this Agreement as may lawfully be made from funds budgeted and appropriated for that purpose during Lessee's then current budget year. Should Lessee fail to budget, appropriate or otherwise make available funds to .pay Rental Payments. following .the then current Original Term or Renewal Term, this Agreement shall be deemed terminated at the end of the then current Original Tenn or Renewal Term. Lessee agrees to deliver notice to Lessor of such termination at least 90 days prior to the end of then current Original Term or Renewal Term, but failure to give such notice shall not extend the term beyond such Original Term or Renewal Term. If this Agreement is terminated in accordance with this Section, Lessee agrees to peaceably deliver the Equipment to Lessor at the location(s) to be specified by Lessor. Section 3.04. Conditions to Lessor's Performance Under Agreement. As a prerequisite to the performance by Lessor of any of its obligations pursuant to the Agreement, Lessee shall deliver to Lessor the following: (a) A Municipal Certificate executed by the Clerk or Secretary or other comparable officer of Lessee, in substantially the form attached hereto as Exhibit C, completed to the satisfaction of Lessor. (b) An opinion of counsel to Lessee in substantially the form attached hereto as Exhibit D satisfactory to Lessor. (c) All documents, including financing statements, affidavits, notices and similar instruments, in form satisfactory to Lessor, which Lessor deems necessary or appropriate at that time. (d) Such other items, if any, as reasonably required by Lessor. Nothing in this Agreement shall be construed to impose any obligation upon Lessor to enter into any proposed Agreement, it being understood that whether Lessor enters into any proposed Agreement shall be a decision solely within Lessor's discretion. Lessee will cooperate with Lessor in Lessor's review of any proposed Agreement: Without limiting the foregoing, Lessee will provide Lessor with any documentation or information Lessor may request in connection with Lessor's review of any proposed Agreement. Such documentation may include, without limitation, documentation concerning the Equipment and its contemplated use and location and documentation or information concerning the financial status of Lessee and other matters related to Lessee. ARTICLE IV �— Section 4.01. Rental Payments. Lessee shall promptly pay Rental Payments, exclusively from legally available funds, in lawful money of the United States of America to Lessor on the dates and in such amounts as described on Exhibit A-1 hereto. Lessee shall pay Lessor a charge on any Rental Payment not paid on the date such payment is due at the rate of 12% per annum or the maximum amount permitted by law, whichever is less, from such date. A portion of each Rental Payment is paid as and represents payment of, interest, as set fort, on Exhibit A-1 hereto. Section 4.02. Rental Payments to Constitute a Current Expense of Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments hereunder shall constitute a current expense of Lessee and shall no in any way be construed to be a debt of Lessee in contravention of any applicable constitutional or statutory limitation or requirement governing the creation of indebtedness by Lessee, nor shall anything contained herein constitute a pledge of the general tax revenues, funds or moneys of Lessee. . Section 4.03. RENTAL PAYMENTS TO BE UNCONDITIONAL. EXCEPT AS PROVIDED IN SECTION 3.03, THE OBLIGATIONS OF LESSEE TO MAKE RENTAL PAYMENTS AND TO PERFORM AND OBSERVE THE OTHER COVENANT$ AND AGREEMENTS CONTAINED HEREIN SHALL BE ABSOLUTE AND UNCONDITIONAL IN ALL EVENTS WITHOUT ABATEMENT, DIMINUTION, DEDUCTION, SET-OFF OR DEFENSE, FOR ANY REASON, INCLUDING WITHOUT LMTATION ANY FAILURE OF THE EQUIPMENT TO BE DELIVERED OR INSTALLED, ANY DEFECTS, MALFUNCTIONS, BREAKDOWNS OR INFIRMITIES IN THE EQUIPMENT OR ANY ACCIDENT, CONDEMNATION OR UNFORESEEN CIRCUMSTANCES. ARTICLE V Section 5.01. Delivery, Installation and Acceptance of the Equipment. Lessee shall order the Equipment, cause the Equipment to be delivered and installed at the location specified on Exhibit A to this Agreement and pay any and all delivery and installation costs in connection therewith. When the Equipment has been delivered, installed, tested and accepted by Lessee, Lessee shall immediately accept the Equipment and evidence said acceptance by executing and delivering to Lessor an acceptance certificate . acceptable to Lessor, included herein as Exhibit B. Section 5.02. Enjoyment of Equipment. Lessor shall provide Lessee with quiet use and enjoyment of the Equipment during the Lease Term, and Lessee shall peaceably and quietly have, hold and enjoy the Equipment during the Lease Term, without suit, trouble or hindrance from Lessor, except as otherwise expressly set forth in this Agreement. No Registered Owner shall interfere with such quiet use and enjoyment during the Lease Term so long as Lessee is not in default under this Agreement. Section 5.03. Location; Inspection. Once installed, the Equipment will not be moved from the location specified on Exhibit A to this Agreement without Lessor's consent, which consent shall not be unreasonably withheld. Lessor shall have the right at all reasonable times during regular business hours to enter into and upon the property of Lessee for the purpose of inspecting the Equipment. Section 5.04. Use. and Maintenanc• the Equipment. Lessee will not install, usetperate or maintain the Equipment improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Agreement. Lessee shall provide all permits and licenses, if any, necessary for the installation and operation of the Equipment. In addition, Lessee agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative or judicial body; provided that Lessee may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the opinion of Lessor, adversely affect the interest of Lessor in and to the Equipment or its interest or rights under this Agreement. Lessee agrees that it will, at Lessee's own cost and expense, maintain, preserve and keep the Equipment in good repair and working order. Lessor shall have no responsibility to maintain, repair or make improvements or additions to the Equipment. Upon the request of Lessor, Lessee will enter into a maintenance contract for the Equipment with Vendor. ARTICLE VI Section 6.01. Title to the Equipment. Upon acceptance of the Equipment by Lessee, title to the Equipment shall vest in Lessee subject to Lessor's rights under this Agreement; provided that title shall thereafter immediately and without any action by Lessee vest in Lessor, and Lessee shall immediately surrender possession of the Equipment to Lessor upon (a) any termination of this Agreement other than termination pursuant to Section 10.01 or (b) the occurrence of an Event of Default. It is the intent of the parties hereto that any transfer of title to Lessor pursuant to this Section shall occur automatically without the necessity of any bill of sale, certificate of title or other instrument of conveyance. Lessee shall, nevertheless, execute and deliver any such instruments as Lessor may request to evidence such transfer. Section 6.02. Security Interest. To secure the payment of all of Lessee's obligations under this Agreement, Lessee hereby grants to Lessor a se -:city interest constituting a fast lien on the Equipment and on all additions, attachments -.id accessions thereto, substitutions therefor and proceeds therefrom. Lessee agrees to execute such additional documents, in form satisfactory to Lessor, which Lessor deems necessary or in form satisfactory to Lessor, which Lessor deems necessary or appropriate to establish and maintain its security interest and the security interest of any assignee of Lessor in the Equipment. Section 6.03 Personal Property. The Equipment is and will remain personal property. The Equipment will not be deemed to be affixed to or a part of the real estate on which it may be situated, notwithstanding that the Equipment or any part thereof may be or hereafter become in any manner physically affixed or attached to such real estate or any building thereon. Upon the request of Lessor, Lessee will, at Lessee's expense, furnish a waiver of any interest in the Equipment from any party having an interest in any such real estate or building. ARTICLE VII Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges. Lessee shall keep the Equipment free of all levies, liens and encumbrances except those created by this Agreement. The parties to this Agreement contemplate that the Equipment will be used for a governmental or proprietary purpose of Lessee and that the Equipment will therefore be exempt from all property taxes. If the use, possession or acquisition of the Equipment is nevertheless determined to be subject to taxation, Lessee shall pay when due all taxes and governmental charges lawfully assessed or levied against or with respect to the Equipment. Lessee shall pay such taxes or charges as the same may become due; provided that, with respect to any such taxes or charges that may lawfully be paid in installments over a period of years, Lessee shall be obligated to pay only such installments as accrue during the Lease Term. Section 7.02. Insurance. At its own expense, Lessee shall maintain. (a) casualty insurance insuring the Equipment against. loss or damage by fire and all other risks covered by the standard extended coverage endorsement then in use in the State and any other risks reasonable required by Lessor in an amount at least equal to the then applicable Purchase Price of the Equipment, (b) liability insurance that protects Lessor from liability in all events in form and amount satisfactory to Lessor, and (c) workers' compensation coverage as required by the laws of the State; provided that, with Lessor's prior written consent, Lessee may self -insure against the risks described in clauses (a) and (b). All insurance proceeds from casualty losses shall be payable as hereinafter provided. Lessee shall furnish to Lessor evidence of such insurance or self-insurance coverage throughout each Lease Term. Lessee shall not materially modify or cancel such insurance or self-insurance coverage without first giving written notice thereof to Lessor at least 10 days in advance of such cancellation or modification. All such insurance shall be with insurers that are acceptable to Lessor, shall name Lessee and Lessor as insureds and shall contain a provision to the effect that such insurance shall not be canceled or modified materially without first giving written notice thereof to Lessor at least 10 days in advance of such cancellation or modification. All such casualty insurance shall contain a provision making any losses payable to Lessee and Lessor as their respective interests may appear. Section 7.03. Advances. In the eventZessee shall fail to either maintain the insurance4quired by this Agreement or keep the Equipment in good repair and working order, Lessor may, but shall be under no obligation to, purchase the required insurance and pay the cost of the premiums thereof and maintain and repair the Equipment and pay the cost thereof. All amounts so advanced by Lessor shall constitute additional rent for the then current Original Term or Renewal Term and Lessee covenants and agrees to pay such amounts so advanced by Lessor with interest thereon from the due date until paid at the rate of 12% per annum or the maximum amount permitted by law, whichever is less. ARTICLE VIII Section 8.01. Damage, Destruction and Condemnation. If (a) the Equipment or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Equipment or any part thereof shall be taken under the exercise or threat of the power of eminent domain by any governmental body or by any person, firm or corporation acting pursuant to governmental authority, Lessee and Lessor will cause the Net Proceeds of any insurance claim, condemnation award or sale under threat of condemnation to be applied to the prompt replacement, repair, restoration, modification or improvement of the Equipment, unless Lessee shall have exercised its option to purchase the Equipment pursuant to Section 10.01. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to Lessee. For purposes of this Article, the term "Net Proceeds" shall mean the amount remaining from the gross proceeds of any insurance claim, condemnation award or sale under threat of condemnation after deducting all expenses, including attorneys' fees, incurred in the collection thereof. Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to in Section 8.01, Lessee shall either (a) complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) purchase Lessor's interest in the Equipment pursuant to Section 10.01. The amount of the Net Proceeds, if any, remaining after completing such repair, restoration, modification or improvement or after purchasing Lessor's interest in the Equipment shall be retained by Lessee. If Lessee shall make any payments pursuant to this Section, Lessee shall not be entitled to any reimbursement therefor from Lessor nor shall Lessee be entitled to any diminution of the amounts payable under Article IV. ARTICLE IX Section 9.01. DISCLAIMER OF WARRANTIES. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE OF THE EQUIPMENT, OR WARRANTY WITH RESPECT THERETO. IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGE IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE EXISTENCE, FURNISHING, FUNCTIONING OR LESSEE'S USE OF ANY ITEM, PRODUCT OR SERVICE PROVIDED FOR IN THIS AGREEMENT. Section 9.02. Vendor's Warranties. Lessor hereby irrevocably appoints Lessee its agent and attorney -in -fact during the Lease Term, so long as Lessee shall not be in default hereunder, to assert from time to time whatever claims and rights (including without limitation warranties) related to the Equipment that Lessor may have against the Vendor. Lessee's sole remedy for the breach of such warranty, indemnification, or representation shall be against the Vendor of the Equipment and not against Lessor. Any such matter shall not have any effect whatsoever on the rights and obligations of Lessor with respect to this Agreement, including the right to receive full and timely payments hereunder. Lessee expressly acknowledges that Lessor makes, and has made, no representations or warranties whatsoever as to the existence or the availability of such warranties by the Vendor of the Equipment. ARTICLE X Section 10.01. Purchase Option. Lessee shall have the option to purchase Lessor's interest in the Equipment, upon giving written notice to Lessor at least 60 days before the date of purchase, at the following times and upon the following terms: (a) On the date of the last Rental Payment set forth in such Agreement (assuming such Lease has been renewed at the end of the Original Term and each Renewal Term), if such Agreement is still in effect on such day, upon payment in full of Rental Payments due on such Agreement and the payment of One Dollar ($1.00) to Lessor; (b) On the Rental Payment dates specified in Exhibit A-1, upon payment in full of the principal and accrued interest then due hereunder plus the then applicable Purchase Price as referenced in Exhibit A-1 plus $1.00 to Lessor; or 6 (c) In the event of substantial damage to or destruction or condemnation of substantially all of the Equipment, on the day Lessee specifies as the purchase date in Lessee's notice to Lessor of its exercise of the purchase option, upon payment in full of the Rental Payments then due hereunder plus the then applicable Purchase Price to Lessor; provided that if the purchase date is not a Rental Payment date, Lessee shall also pay an amount equal to the portion of the interest component of the Rental Payment accrued from the immediately preceding Rental Payment date to such purchase date, computed on the basis of a 360-day year of twelve 30-day months. ARTICLE XI Section 11.01. Assignment by Lessor. Lessor's right, title and interest in, and to Rental Payments and any other amounts payable by Lessee under this Agreement and its security interest in the Equipment, and all proceeds therefrom, may be assigned and reassigned in whole or in part to one or more assignees or subassignees by Lessor without the necessity of obtaining the consent of Lessee; provided that (a) any such assignment shall not be effective until Lessee has received written notice, signed by the assignor, of the name and address of the assignee, and (b) any assignment shall not be effective until it is registered on the registration books. Lessee shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees designated in such register. Lessee agrees to execute all documents, including notices of assignment and chattel mortgages or financing statements that may be reasonably requested by Lessor or any assignee to protect its interests and property assigned pursuant to this section 11.01. Lessee shall not have the right to and shall not assert against any assignee any claim, counterclaim or other right Lessee may have against Lessor or Vendor. Lessee hereby agrees that Lessor may, without notice to Lessee, sell, dispose of, or assign this Agreement through a pool, trust, limited partnership, or other similar entity, whereby one or more interests are created in this Agreement, or in the Equipment listed in or the Rental Payments under this Agreement. Section 11.02. Assignment and Subleasing by Lessee. None of Lessee's right, title and interest in, to and under this Agreement and in the Equipment may be assigned or encumbered by Lessee for any reason, except that Lessee may sublease all or part of the Equipment if Lessee obtains the prior written consent of Lessor and an opinion of nationally recognized counsel in the area of tax exempt municipal obligations satisfactory to Lessor that such subleasing will not adversely affect the exclusion of the interest components of the Rental Payments from gross income .for federal income tax purposes.. Any such sublease of all or part of the Equipment shall be subject to this Agreement and the rights of the Lessor in,. to and under this Agreement and the Equipment. ARTICLE XII Section 12.01. Events of Default Defined. Subject to the provisions of Section 3.03, any of the following events shall constitute an "Event of Default" under this Agreement: (a) Failure by Lessee to pay any Rental Payment or other payment required to be paid hereunder at the time specified herein; (b) Failure by Lessee to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in subparagraph (a) above, for a period of 30 days after written notice specifying such failure and requesting that it be remedied is given to Lessee by Lessor, unless Lessor shall agree in writing to an. extension of such time prior to its expiration; provided that, if the failure stated in the notice cannot be corrected within the applicable period, Lessor will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by Lessee within the applicable period and diligently pursued until the default is corrected; . (c) Any statement, representation or warranty made by Lessee in or pursuant to this Agreement or its execution, delivery or performance shall prove to have been false, incorrect, misleading or breached in any material respect on the date when made; (d) Lessee shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of Lessee, or of all or a substantial part of the assets of Lessee, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable federal bankruptcy law, or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or taking advantage of any insolvency law or any answer admitting the material allegations of a petition filed against Lessee in any bankruptcy, reorganization or insolvency proceeding; or (e) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator of Lessee or of all or a substantial part of the assets of Lessee, in each case without its application, approval or consent, and such *judgment or decree shall continue unstayed'�nd in effect for any period of 30 consecutive days. Section 12.02. Remedies on Default. Whenever any Event of Default exists, Lessor shall have the right, at its sole option without any further demand or notice, to take one or any combination of the following remedial steps: (a) By written notice to lessee, Lessor may declare all Rental Payments and other amounts payable by Lessee hereunder to the end of the then current Original Term or Renewal Term to be immediately due and payable; (b) With or without terminating this Agreement, Lessor may enter the premises where the Equipment is located and retake possession of the Equipment or require Lessee at Lessee's expense to promptly return any or all of the Equipment to the possession of Lessor at such place within the United States as Lessor shall specify, and sell or lease the Equipment or, for the account of Lessee, sublease the Equipment, continuing to hold Lessee liable for the difference between (i) the Rental Payments and other amounts payable by Lessee hereunder to the end of the then current Original Term or Renewal Term, and (ii) the net proceeds of any such sale, leasing or subleasing (after deducting all expenses of Lessor in exercising its remedies under this Agreement, including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing the Equipment and all brokerage, auctioneers' and attorneys' fees); subject, however, to the provisions of section 3.03 hereof. The exercise of any such remedies respecting any such Event of Default shall not relieve Lessee of any other liabilities under any other Agreement or the Equipment listed therein; and (c) Lessor may take whatever action at law or in equity may appear necessary or desirable to enforce its rights under such Agreement or as a secured party in any or all of the Equipment. Section 12.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Lessor to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice other than such notice as may be required in this Article. ARTICLE XM Section 13.01. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given ,when delivered or mailed by registered mail, postage prepaid, to the parties hereto at the addresses immediately after the signatures to this Agreement (or at such other address as either party hereto shall designate in writing to the other for notices to such party), to any assignee at its address as it appears on the registration books maintained by Lessee. Section 13.02. Release and indemnification. To the extent permitted by law, Lessee shall indemnify, protect, hold harmless, save and keep harmless Lessor from and against any and all liability, obligation, loss claim, tax and damage whatsoever, regardless of cause thereof, and all expenses in connection therewith (including without limitation counsel fees and expenses and any federal income tax and interest and penalties connected therewith imposed on interest received) arising out of or as the result of (a) the entering into of this Agreement, (b) the ownership of any item of Equipment, (c) the ordering, acquisition, use, operation, condition, purchase, delivery, rejection, storage, or return of any item of the Equipment, (d) or any accident in connection with the operation, use, condition, possession, storage or return of any item of the Equipment resulting in damage to property or injury to ordeath to any person, and/or (e) the breach of any covenant herein or any material misrepresentation contained herein. The indemnification arising under this paragraph shall continue in full force and effect notwithstanding the full payment of all obligations under this Agreement or the termination of the Lease Term for any reason. Section 13.03, Entire Agreement. This Agreement constitutes the entire agreement between Lessor and Lessee. Section 13.04, Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns. Section 13.05. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 13.06, Amendments, Changes and Modifications. This Agreement may be amended by mutual written consent of Lessor and Lessee. 4-15-03: 4:34PM; • 0804193606 it 2/ 2 Section 13.07. Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 13.08. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State. Section 13.09. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. IN WITNESS WHEREOF, Lessor and Lessee have caused this Agreement to be executed in their names by their duly authorized representatives as of the date written above. (LESSOR) Koch Financial Corporation 17767 North Perimeter Drive Suite 101 Scottsdale, AZ 85255 BY -- 3'",P11 TITLE (ATNY .lIIU1FAIF7 VICE-PRESIDENT OPERATIONS (LESSEE) City of Huntington Beach 2000 Main Street Huntington Bea , C do ' . 9264 BY ay ar TITLEDirec r of Administrative Services ATTEST TITLE APPROVED AS TO F RM. yi trne1-AU "- -- . _ . . _ .--.- - 0 n--) Four Ambulances City of Huntington Beach 2000 Main Street Huntington B By Title 9 EXHIBIT A TO EQUIPMENT LEASE PURCHASE AGREEMENT DESCRIPTION OF EQUIPMENT 10 EXHIBIT A-1 TO EQUIPMENT LEASE PURCHASE AGREEMENT RENTAL PAYMENT SCHEDULE Payment Payment Purchase Pmt # Date Amount Interest Principal Price 08/31/2001 1 09/30/2001 $41;994.85 $1,807.03 $40,187.82 $440,253.38 2 12/30/2001 $41:994.85 $4,959.32 $37,035.52 $402,477.14 3 03/30/2002 $41,994.85 $4,533.79 $37,461.06 $364,266.86 4 06/30/2002 $41,994.85 $4,103.36 .$37,891.49 $325,617.54 5 09/30/2002 $41,994.85 $3,667.99 $38,326.86 $286,524.14 6 12/30/2002 $41,994.85 $3,227.61 $38,767.24 $246,981.56 7 03/30/2003 $41,994.85 $2,782.17 $39,212.67 $206,984.63 8 06/30/2003 $41,994.85 $2,331.62 $39,663.23 $166,528.14 9 09/30/2003 $41,994.85 $1,875.89 $40,118.96 $125,606.80 10 12/30/2003 $41,994.85 $1,414.92 $40,579.92 $84,215.28 11 03/30/2004 $41,994.85 $948.66 $41,046.19 $42,348.17 12 06/30/2004 $41,994.85 $477.04 $41,517.81 $0.00 Totals: $503,938.18 $32,129.40 $471,808.78 City of H on e h By Title 11 EXHIBIT C TO EQUIPMENT LEASE PURCHASE AGREEMENT CERTIFICATE OF CLERK OR SECRETARY OF LESSEE 1, the undersigned, do hereby certify (i) that the officer of Lessee who executed the foregoing Agreement on behalf of Lessee and whose genuine signature appears thereon, is the duly qualified and acting officer of Lessee as stated beneath his or her signature and has been authorized to execute the foregoing Agreement on behalf of Lessee, and (ii) that the budget year of Lessee is from July 1. to June 30 to Dated: By: Title: 13 0.9 - c- MAWnnI, W. kV jV ^� \3 Council/Agency Meeting Held: Deferred/Continued to: Approved ❑ Conditionally Approved ❑ Denied DfR Jerk' ignature Co ncil Meeting Date: September 17, 2001 Department ID Number: FD 01-017 ti o CITY OF HUNTINGTON BEACH r'n c ; REQUEST FOR COUNCIL ACTION yC SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS rn�rn` SUBMITTED BY: RAY SILVER, City Administratoroz0L °- ? PREPARED BY: MICHAEL P. DOLDER, Fire Chief/Information Systems Dire- or/� CLAY MARTIN, Director of Administrative Services SUBJECT: APPROVE MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT WITH KOCH FINANCIAL CORPORATION FOR FOUR AMBULANCES Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: Should the City of Huntington Beach enter into a three (3) year master equipment lease/purchase agreement with KOCH Financial Corporation in the amount of $503,938 for the purchase of four ambulances? Funding Source: Funding will be from the FireMed Fund (50265403.85350) in the amount of $503,938 which is currently budgeted in FY 2000/01. If the proposed lease is approved, this amount will be paid in quarterly payments of $41,995 over a three (3) year period, beginning September 30, 2001. The specific payment totals for each of the fiscal years are as follows: FY 2000/01 - $41,995 (one payment); FY 2001/02 - $167,979 (four payments); FY 2002/03 - $167,979 (four payments); FY 2003/04 - $125,985 (three payments). Purchasing the four (4) ambulances through a lease/purchase provides a financial benefit for the FireMed Fund due to accrued interest on the fund balance and favorable lease terms resulting in approximately $10,000 savings over the term of the lease. Recommended Action: MOTION TO: 1. Approve and authorize the Director of Administrative Services, per Municipal Code Section 3.02.060, to enter into a lease/purchase agreement with KOCH Financial Corporation four (4) ambulances in the amount of $503,938 from the FireMed Fund with a maximum term not to exceed three (3) years in substantially the same form as the attached agreement. 2. Approve the City's obligation to indemnify KOCH Financial Corporation and its assignees pursuant to Section 13.02 of the master equipment lease/purchase agreement. 3. Authorize the Directorlof Administrative Services,.to execute all ancillary documents. on behalf of the City; without further approval of City Council required, in substantially the same form as the attached documents. 1EQUEST FOR COUNCIL AMION MEETING DATE: September 17, 2001 DEPARTMENT ID NUMBER: FD 01-017 Alternative Action(s): Deny the request and continue with current ambulance replacement/ purchasing practices. Analysis: The purchase of four (4) Fire Department ambulances was previously approved by City Council, with two included in the FY 2000/01 budget and two additional replacements approved at the June 18, 2001 City Council meeting. The ambulances to be replaced have been in service for over eight (8) years and each has over 128,000 miles. The frequent repairs needed for these vehicles have made it increasingly difficult to keep them in service, and their reliability is critical because of use in emergency medical transportation. A master equipment lease/purchase agreement (Attachment 1) is proposed for the replacement of the four (4) ambulances. This agreement has a value of $503,938 over a term of three (3) years. The first quarterly 41,994.85 is due September 30, 2001, and the last payment will be made une 30, 200 Currently, the FY 2000/01 budget contains $505,000 in the FireMed budget (accou 265403.85350) for these ambulances. There will be no impact to the General Fund. This lease/purchase agreement will allow the City to take advantage of competitive interest rates that are currently being offered. The interest rate being offered is 4.5% for the three (3) years of the lease. With the current interest rate established at 5.9%, the three (3) year lease will save the City approximately $10,000. Using this means of financing also allows the City to maintain a more favorable balance in the FireMed Fund. The master equipment lease/purchase agreement includes a reverse indemnification provision, Section 13.02, whereby the City agrees to reimburse and indemnify KOCH Financial Corporation, and its assignees, for all claims arising out of the master lease agreement, the transactions contemplated therein, and the equipment provided. This provision deviates from the City's standard provision. The Application for Insurance Requirements Waiver or Modification (Attachment 2) shows that the City's Settlement Committee approved the waiver. Additional minor changes to the attached documents may be required. Staff requests that Council approve the master lease agreement and authorize the Director of Administrative Services to execute all ancillary documents on behalf of the City in substantially the same form as set forth in the attached documents, allowing minor changes, if any, without further Council approval, but subject to approval of the City Attorney. Environmental Status: Not applicable. Attachment(s): FD01 017 KOCH Financial Lease for Four Ambulances.doc-2- 9/7101 2:40 PM • • ATTACHMENT 1 r a�n�ero� • • OFFICE OF CITY ATTORNEY e�uNtr ��` P.O. Box 190 2000 Main Street Gail Hutton Huntington Beach, California 92648 City Anomey October 1, 2001 Koch Financial Corporation 17767 North Perimeter Drive, Suite 101 Scotsdale, Arizona 85255 Re: Equipment Lease Purchase Agreement for Four Ambulances Dated August 31, 2001 between Koch Financial Corporation, as Lessor, and City of Huntington Beach, as Lessee Ladies and Gentlemen: Telephone (714) 536-5555 Fax (714) 374-1590 I am City Attorney for the City of Huntington Beach, California, a municipal corporation and charter city duly organized and existing under and by virtue of the Constitution and the laws of the State of California. This opinion is delivered in connection with the Equipment Lease Purchase Agreement for four Ambulances, dated as of August 31, 2001 (the "Agreement'), between Koch Financial Corporation (the "Lessor") and City of Huritington Beach (the "Lessee"). All capitalized terms herein shall have the same meaning as in the foregoing Agreement. In rendering the opinion set forth herein, I have made no search, inquiry, investigation or other examination concerning the records or files of any court, public board or body, or other public records, other than the Lessee, and my opinion as expressed herein does not extend to any matter which might be disclosed as a result of any further search, inquiry, investigation or other examination. Whenever a statement herein is qualified "to the best of my knowledge," it is intended to indicate that, during the course of my representation of the Lessee in connection with this transaction, no information that would give me actual knowledge of the inaccuracy of such statement has come to my attention. I have not undertaken any independent investigation to determine the accuracy of such statements, and any limited inquiry undertaken by me during the preparation of this opinion letter should not be regarded as such investigation. No inference as to my knowledge of any matters bearing on the accuracy of any such statements should be drawn from the fact of my representation of the Lessee. My opinion set forth herein does not extend to, and I express no opinion herein with respect to, (a) any laws of any jurisdiction including any federal law), other than the laws of the State of California, and (b) any matters covered by the securities, usury or tax laws, decisions, rules or regulations of any jurisdiction. LM: D-1 • Koch Financial October 1, 2001 Page 2 Based on the foregoing, I am of the opinion that: (1) Lessee is a public body and politic, duly organized and existing under the laws of the State, and has a substantial amount of one or more of the following sovereign powers: (a) the power to tax, (b) the power of eminent domain, and (c) police power; (2) Lessee has the requisite power and authority to purchase the Equipment to execute and deliver the Agreement and to perform its obligations under the Agreement; (3) . The Agreement and the other documents either attached thereto or required therein have been duly authorized, approved and executed by and on behalf of Lessee, and the Agreement is a valid and binding obligation of Lessee enforceable in accordance with its terms; (4) The authorization, approval and execution of the Agreement and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state laws; and (5) To the best of my knowledge, and without exercising any investigation or due diligence, there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transaction contemplated by the Agreement. or the security interest of Lessor or its assigns, as the case may be, in the Equipment. Lessor, its successors and assigns, including without limitation any Registered Owners, and any counsel rendering an opinion on the tax-exempt status of the interest components of Rental Payments are entitled to rely on this opinion.. Very truly yours, it Hu on City Attorney iMMIN WIPMENT LEASE PURCHASE AGREEPT This EQUIPMENT LEASE PURCHASE AGREEMENT (the "Agreement"), dated as of August 31, 2001, and entered into between Koch Financial Corporation, a Kansas Corporation ("Lessor"), and the City of Huntington Beach, a body corporate and politic existing under the laws of the State of California ("Lessee"). WITNESSETH: WHEREAS, Lessor desires to lease the Equipment, as hereinafter described in Exhibit "A", to Lessee and Lessee desires to lease the Equipment from Lessor subject to the terms and conditions of and for the purposes set forth in this Agreement; and WHEREAS, Lessee is authorized under the constitution and laws of the State of California to enter into this agreement for the purposes set forth herein; NOW, THEREFORE, for and in consideration of the premises hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: ARTICLE I Section 1.01. Definitions. The following terns will have the meanings indicated below unless the context clearly requires otherwise. "Agreement" means this Equipment Lease Purchasc. .greement and any schedule or exhibit made a parthereof by the parties hereto, together with any amendments to the Agreement made pursuant to section 13.06. "Code" means the Internal Revenue Code of 1986, as amended. "Commencement Date" is the date when Lessee's obligation to pay rent commences under such Agreement, which date shall be the earliest of (i) the date on which the Equipment listed in such Agreement is accepted by Lessee in the manner described. in Section 5.01, or (ii) the date on which sufficient moneys to purchase the Equipment listed in such Agreement are deposited for that purpose with an escrow agent, or (iii) the date proceeds are set aside for acquisition of Equipment as evidenced in Exhibit E, if applicable. "Equipment" means the property described in Exhibit "A", Equipment Description, and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to Article VIII. "Event of Default" means any event of default described in Section 12.01. "Issuance Year" means the calendar year in which the Commencement Date occurs. "Lease Term" means the Original Term and all Renewal Terms. "Lessee" means the entity described as such in the first paragraph of this Agreement, its successors and its assigns. "Lessor" means the entity described as such in the first paragraph of this Agreement, its successors and its assigns. "Original Term" means the period from the Commencement Date until the end of the budget year of Lessee in effect on the Commencement Date. "Purchase Price" means the amount designated as such on Exhibit A-1 hereto that Lessee may, in its discretion, pay to Lessor to purchase the Equipment. "Renewal Terms" means the renewal terms of this Agreement, each having a duration of one year and a term coextensive with Lessee's budget year. "Rental Payments" means the basic rental payments payable by Lessee pursuant to Section 4.01. "State" means the state in whossee is located. • "Vendor" means the manufacturer of the Equipment as well as agents or dealers of the manufacturer from whom Lessor purchased or is purchasing the Equipment. ARTICLE II Section 2.01. Representations and Covenants of Lessee. Lessee represents, covenants and warrants for the benefit of Lessor as follows: (a) Lessee is a public body corporate and politic duly organized and existing under the constitution and laws of the State with full power and authority to enter into this Agreement and the transactions contemplated hereby and to perform all of its obligations hereunder. (b) Lessee has duly authorized the execution and delivery of this Agreement by proper action by its governing body at a meeting duly called, regularly convened and attended throughout by the requisite majority of the members thereof or by other appropriate official approval, and all requirements have been met and procedures have occurred in order to ensure the validity and enforceability of this Agreement. (c) No event or condition that constitutes, or with the giving of notice or the lapse of time or both would constitute, an Event of Default exists at the date hereof. (d) Lessee will do or cause to be done all things necessary to preserve and keep in full force and effect. its existence as a public body corporate and politic. . (e) Lessee has complied with such public bidding requirements as may be applicable to this Agreement and the acquisition by Lessee of the Equipment. (f) During the Lease Term, the Equipment will be used by Lessee only for the purpose of performing essential governmental or proprietary functions of Lessee consistent with the permissible scope of Lessee's authority. (g) Lessee will annually provide. Lessor with current financial statements, budgets, proofs of appropriation for the ensuing: budget year and other such financial information relating to the ability of Lessee to continue this Agreement as may be requested by Lessor. (h) Lessee has an immediate need for the Equipment and expects to make immediate use of the Equipment listed. Lessee's need for the Equipment is not temporary and Lessee does not expect the need for any item of the Equipment to diminish in the foreseeable future including the maximum Lease Term'applicable to such item. (i) Lessee will use the proceeds of this Agreement as soon as practicable and with all reasonable dispatch for the purpose for which the Agreement has been entered into. No part of the proceeds of the Agreement shall be invested in any securities, obligations or other investments or used, at any time, directly or indirectly, in a manner which, if such use had been reasonably anticipated on the. date of issuance of the Agreement, would have caused any portion of the Agreement to become "arbitrage bonds" within the meaning of Section 103(b)(2) or Section 148 of the Code and the applicable regulations of the Treasury Department. Section 2.02. Certification as to Arbitrage. Lessee hereby represents as follows: (a) The estimated total costs of the Equipment will not be less than the total Principal Portion of the Rental Payments listed in the Rental Payment Schedule. (b) The Equipment has been ordered or is expected to be ordered within six months of the date of this Agreement; and all amounts deposited in escrow to pay for the Equipment, and interest earnings, will be expended on costs of the Equipment and the financing within three years of the date of this Agreement. (c) No portion of amounts held in escrow to pay Equipment costs will be invested in investments having a substantially guaranteed yield for four years or more. (d) No proceeds of the Lea Jol be used to reimburse Lessee for expendimoade more than 60 days prior to the date of this Agreement. (e) Lessee has not created or established, and does not expect to create or establish, any sinking fund or similar fund (i) that is reasonably expected to be used to pay the Rental Payments, or (ii) that may be used solely to prevent a default in the payment of the Rental Payments. (f) The Equipment has not been and is not expected to be sold or otherwise disposed of by Lessee, either in whole or in part, prior to the last maturity of the Rental Payments. (g) Lessee will comply with all applicable provisions of the Code, including without limitation Sections 103 and 148 thereof, and the applicable regulations of the Treasury Department to maintain the exclusion of the interest components of Rental Payments from gross income for purposes. of federal income taxation. (h) Lessee has not been notified of any listing or proposed listing of it by the Internal Revenue Service as an issuer whose arbitrage certificates may not be relied upon. (i) To the best of my knowledge, information and belief, the above expectations are reasonable. ARTICLE III Section 3.01. Lease of Equipment. Lessor hereby demises, leases and lets to Lessee, and Lessee rents, leases and hires from Lessor, the Equipment in accordance with this Agreement for the Lease Term. The Lease Term may be continued, solely at the option of Lessee, at the end of the Original Terr_ • ar any Renewal Term for an additional Renewal Term up to the maximum Lease Term forth in Exhibit A-1 hereto. At the end of the Original Term and at the end of each Renewal Term until the maximum Lease Term has been completed, Lessee shall be deemed to have exercised its option to continue this Agreement for the next Renewal Term if Lessee budgets and appropriates or otherwise makes legally available funds to pay Rental Payments for such Renewal Term, unless Lessee shall have terminated this Agreement pursuant to Section 10.01. The terms and conditions during any Renewal Term shall be the same as the terms and conditions during the Original Term, except that the Rental Payments shall be as provided on Exhibit A-1: hereto. Section 3.02. Continuation of Lease Term. Lessee currently intends, subject to Section 3.03, to continue the Lease Term through the Original Term and all Renewal Terms and to pay the Rental Payments hereunder. Lessee reasonably believes that legally available funds in an amount sufficient to make all Rental Payments during the maximum Lease Term can be obtained. Lessee further currently. intends to do all things lawfully within its power to obtain and maintain funds from which the Rental Payments may be made, including making provision for such payments to the extent necessary in each budget or appropriation request submitted and adopted in accordance with applicable provisions of law, to have such portion of the budget or appropriation request approved and to exhaust all available reviews and appeals in the event such portion of the budget or appropriation request is not approved. Notwithstanding the foregoing, the decision whether or not to budget or appropriate funds or to extend this Agreement for any Renewal Term is within the discretion of the then current governing body of Lessee. Section 3.03. Nonappropriation. Lessee is obligated only to pay such Rental Payments under this Agreement as may lawfully be made from funds budgeted and appropriated for that purpose during Lessee's then current budget year. Should Lessee fail to budget, appropriate or otherwise make available funds to pay Rental Payments following the then current Original Term or Renewal Term, this Agreement shall be deemed terminated at the end of the then current Original Tenn or Renewal Term. Lessee agrees to deliver notice to Lessor of such termination at least 90 days prior to the end of then current Original Term or Renewal Term, but failure to give such notice shall not extend the term beyond such Original Term or Renewal Tenn. If this Agreement is terminated in accordance with this Section, Lessee agrees to peaceably deliver the Equipment to Lessor at the location(s) to be specified by Lessor. Section 3.04. Conditions to Lessor's Performance Under Agreement. As a prerequisite to the performance by Lessor of any of its obligations pursuant to the Agreement, Lessee shall deliver to Lessor the following: (a) A Municipal Certificate executed by the Clerk or Secretary or other comparable officer of Lessee, in substantially the form attached hereto as Exhibit C, completed to the satisfaction of Lessor. f (b) An opinion of counsel to Lessee in substantially the form attached hereto as Exhibit D satisfactory to Lessor. (c) All documents, including financing statements, affidavits, notices and similar instruments, in form satisfactory to Lessor, which Lessor deems necessary or appropriate at that time. (d) Such other items, if any, as reasonably required by Lessor. Nothing in this Agreement shall be construed to impose any obligation upon Lessor to enter into any proposed Agreement, it being understood that whether Lessor enters into any proposed Agreement shall be a decision solely within Lessor's discretion. Lessee will cooperate with Lessor in Lessor's review of any proposed Agreement. Without limiting the foregoing, Lessee will provide Lessor with any documentation or information Lessor may request in connection with Lessor's review of any proposed Agreement. Such documentation may include, without limitation, documentation concerning the Equipment and its contemplated use and location and documentation or information concerning the financial status of Lessee and other matters related to Lessee. ARTICLE IV Section 4.01. Rental Payments. Lessee shall promptly pay Rental Payments, exclusively from legally available funds, in lawful money of the United States of America to Lessor on the dates and in such amounts as described on Exhibit A-1 hereto. Lessee shall pay Lessor a charge on any Rental Payment not paid on the date such payment is due at the rate of 12% per annum or the maximum amount permitted by law, whichever is less, from such date. A portion of each Rental Payment is paid as and represents payment of, interest, as set fort:- on Exhibit A-1 hereto. Section 4.02. Rental Payments to Constitute a Current Expense of Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments hereunder shall constitute a current expense of Lessee and shall no in any way be construed to be a debt of Lessee in contravention of any applicable constitutional or statutory limitation or requirement governing the creation of .indebtedness by Lessee, nor shall anything contained herein constitute a pledge of the general tax revenues, funds or moneys of Lessee. Section 4.03. RENTAL PAYMENTS TO BE UNCONDITIONAL. EXCEPT AS PROVIDED IN SECTION 3.03, THE OBLIGATIONS OF LESSEE TO MAKE RENTAL PAYMENTS AND TO PERFORM AND OBSERVE THE OTHER COVENANTS AND AGREEMENTS CONTAINED HEREIN SHALL BE ABSOLUTE AND UNCONDITIONAL IN ALL EVENTS WITHOUT ABATEMENT, DIMINUTION, DEDUCTION, SET-OFF OR DEFENSE, FOR ANY REASON, INCLUDING WITHOUT LIMITATION ANY FAILURE OF THE EQUIPMENT TO BE DELIVERED OR INSTALLED, ANY DEFECTS, MALFUNCTIONS, BREAKDOWNS OR INFIRMITIES. IN THE EQUIPMENT OR ANY ACCIDENT, CONDEMNATION OR UNFORESEEN CIRCUMSTANCES. ARTICLE V Section 5.01. Delivery, Installation and Acceptance of the Equipment. Lessee shall order the Equipment, cause the Equipment to be delivered and installed at the location specified on Exhibit A to this Agreement and pay any and all delivery and installation costs in connection therewith. When the Equipment has been delivered, installed, tested and accepted by Lessee, Lessee shall immediately accept the Equipment and evidence said acceptance by executing and delivering to Lessor an acceptance certificate acceptable to Lessor, included herein as Exhibit B. Section 5.02. Enjoyment of Equipment. Lessor shall provide Lessee with quiet use and enjoyment of the Equipment during the Lease Term, and Lessee shall peaceably and quietly have, hold and enjoy the Equipment during the Lease Term, without suit, trouble or hindrance from Lessor, except as otherwise expressly set forth in this Agreement. No Registered Owner shall interfere with such quiet use and enjoyment during the Lease Term so long as Lessee is not in default under this Agreement. Section 5.03. Location; Inspection. Once installed, the Equipment will not be moved from the location specified on Exhibit A to this Agreement without Lessor's consent, which consent shall not be unreasonably withheld. Lessor shall have the right at all reasonable times during regular business hours to enter into and upon the property of Lessee for the purpose of inspecting the Equipment. 4 Section 5.04. Use. and Malhnce of the Equipment. Lessee will not in use, operate or maintain the Equipment improperly, carelessly, in violation of any applicable law or in a manner contrary to t1h use, by this Agreement. Lessee shall provide all permits and licenses, if any, necessary for the installation and operation of the Equipment. In addition, Lessee agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative or judicial body; provided that Lessee may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the opinion of Lessor, adversely affect the interest of Lessor in and to the Equipment or its interest or rights under this Agreement. Lessee agrees that it will, at Lessee's own cost and expense, maintain, preserve and keep the Equipment -in good repair and working order. Lessor shall have no responsibility to maintain, repair or make improvements or additions to the Equipment. Upon the request of Lessor, Lessee will enter into a maintenance contract for the Equipment with Vendor. ARTICLE VI Section 6.01. Title to the Equipment. Upon acceptance of the Equipment by Lessee, title to the Equipment shall vest in Lessee subject to Lessor's rights under this Agreement; provided that title shall thereafter immediately and without any action by Lessee vest in Lessor, and Lessee shall immediately surrender possession of the Equipment to Lessor upon (a) any termination of this Agreement other than termination pursuant to Section 10.01 or (b) the occurrence of an Event of Default. It is the intent of the parties hereto that any transfer of title to Lessor pursuant to this Section shall occur automatically without the necessity of any bill of sale, certificate of title or other instrument of conveyance. Lessee shall, nevertheless, execute and deliver any such instruments as Lessor may request to evidence such transfer. Section 6.02. Security Interest. To secure the payment of all of Lessee's obligations under this Agreement, Lessee hereby grants to Lessor a se^arity interest constituting a first lien on the Equipment and on all additions, attachments -.id accessions thereto, substitutions therefor and proceeds therefrom. Lessee agrees to execute such additional documents, in form satisfactory to Lessor, which Lessor deems necessary or in form satisfactory to Lessor, which Lessor deems necessary or appropriate to establish and maintain its security interest and the security interest of any assignee of Lessor in the Equipment. Section 6.03 Personal Property. The Equipment is and will remain personal property. The Equipment will not be deemed to be affixed to or a part of the real estate on which it may be situated, notwithstanding that the Equipment or any part thereof may be or hereafter become in any manner physically affixed or attached to such real estate or any building thereon. Upon the request of Lessor, Lessee will, at Lessee's expense, furnish a waiver of any interest in the Equipment from any party having an interest in any such real estate or building. ARTICLE VII Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges. Lessee shall keep the Equipment free of all levies, liens and encumbrances except those created by this Agreement. The parties to this Agreement contemplate that the Equipment will be used for a governmental or proprietary purpose of Lessee and that the Equipment will therefore be exempt from all property taxes. If the use, possession or acquisition of the Equipment is nevertheless determined to be subject to taxation, Lessee shall pay when due all taxes and governmental charges lawfully assessed or levied against or with respect to the Equipment. Lessee shall pay such taxes or charges as the same may become due; provided that, with respect to any such taxes or charges that may lawfully be paid in installments over a period of years, Lessee shall be obligated to pay only such installments as accrue during the Lease Term. Section 7.02. Insurance. At its own expense; Lessee shall maintain (a) casualty insurance insuring the Equipment against loss or damage by fire and all other risks covered by the standard extended coverage endorsement then in use in the State and any other risks reasonable required by Lessor in an amount at least equal to the then applicable Purchase Price of the Equipment, (b) liability insurance that protects Lessor from liability in all events in form and amount satisfactory to Lessor, and (c) workers' compensation coverage as required by the laws of the State; provided that, with Lessor's prior written consent, Lessee may self -insure against the risks described in clauses (a) and (b). All insurance proceeds from casualty losses shall be payable as hereinafter provided. Lessee shall furnish to Lessor evidence of such insurance or self-insurance coverage throughout each Lease Term. Lessee shall not materially modify or cancel such insurance or self-insurance coverage without first giving written notice thereof to Lessor at least 10 days in advance of such cancellation or modification. All such insurance shall be with insurers that are acceptable to Lessor, shall name Lessee and Lessor as insureds and shall contain a provision to the effect that such insurance shall not be canceled or modified materially without first giving written notice thereof to Lessor at least 10 days in advance of such cancellation or modification. All such casualty insurance shall contain a provision making any losses payable to Lessee and Lessor as their respective interests may appear. Section 7.03. Advances. Invent Lessee shall fail to either maintain the ce required by this Agreement or keep the Equipment in good repair and working order, Lessor may, but shall be under no oblif Vonto, purchase the required insurance and pay the cost of the premiums thereof and maintain and repair the Equipment and pay the cost thereof. All amounts so advanced by Lessor shall constitute additional rent for the then current Original Term or Renewal Term and Lessee covenants and agrees to pay such amounts so- advanced by Lessor with interest thereon from the due date until paid at the rate of 12% per annum or the maximum amount permitted by law, whichever is less. ARTICLE VIII Section 8.01. Damage, Destruction and Condemnation. If (a) the Equipment or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Equipment or any part thereof shall be taken under the exercise or threat of the power of eminent domain by any governmental body or by any person, firm or corporation acting pursuant to governmental authority, Lessee and Lessor will cause the Net Proceeds of any insurance claim, condemnation award or sale under threat of condemnation to be applied to the prompt replacement, repair, restoration, modification or improvement of the Equipment, unless Lessee shall have exercised its option to purchase the Equipment pursuant to Section 10.01. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to Lessee. For purposes of this Article, the term "Net Proceeds" shall mean the amount remaining from the gross proceeds of any insurance claim, condemnation award or sale under threat of condemnation after deducting all expenses, including attorneys' fees, incurred in the collection thereof. Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to in Section 8.01, Lessee shall either (a) complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) purchase Lessor's interest in the Equipment pursuant to Section 10.01. The amount of the Net Proceeds, if any, remaining after completing such repair, restoration, modification or improvement or after purchasing Lessor's interest in the Equipment shall be retained by Lessee. If Lessee shall make any payments pursuant to this Section, Lessee shall not be entitled to any reimbursement therefor from Lessor nor shall Lessee be entitled to any diminution of the amounts payable under Article IV. ARTICLE IX Section 9.01. DISCLAIMER OF WARRANTIES. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE OF THE EQUIPMENT, OR WARRANTY WITH RESPECT THERETO. IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGE IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE EXISTENCE, FURNISHING, FUNCTIONING OR LESSEE'S USE OF ANY ITEM, PRODUCT OR SERVICE PROVIDED FOR IN THIS AGREEMENT. Section 9.02. Vendor's Warranties. Lessor hereby irrevocably appoints Lessee its agent and attorney -in -fact during the Lease Term, so long as Lessee shall not be in default hereunder, to assertfrom time to time whatever claims and rights (including without limitation warranties) related to the Equipment that Lessor may have against the Vendor. Lessee's sole remedy for the breach of such warranty, indemnification, or representation shall be against the Vendor of the Equipment and not against Lessor. Any such matter shall not have any effect whatsoever on the rights and obligations of Lessor with respect to this Agreement, including the right to receive full and timely payments hereunder. Lessee expressly acknowledges that Lessor makes, and has made, no representations or warranties whatsoever as to the existence or the availability of such warranties by the Vendor of the Equipment. ARTICLE X Section 10.01. Purchase Option. Lessee shall have the option to purchase Lessor's interest in the Equipment, upon giving written notice to Lessor at least 60 days before the date of purchase, at the following times and upon the following terms: (a) On the date of the last Rental Payment set forth in such Agreement (assuming such Lease has been renewed at the end of the Original Term and each Renewal Term), if such Agreement is still in effect on such day, upon payment in full of Rental Payments due on such Agreement and the payment of One Dollar ($1.00) to Lessor; (b) On the Rental Payment dates specified in Exhibit A-1, upon payment in full of the principal and accrued interest then due hereunder plus the then applicable Purchase Price as referenced in Exhibit A-1 plus. $1.00 to Lessor; or 6 (c) In the event of substantial'3amage to or destruction or condemnation of sMantially all of the Equipment, on the day Lessee specifies as the purchase date in Lessee's notice to Lessor of its exercise of the purchase option, upon payment in full of the Rental Payments then due hereunder plus the then applicable Purchase Price to Lessor; provided that if the purchase date is not a Rental Payment- date, Lessee shall also pay an amount equal to the portion of the interest component of the Rental Payment accrued from the immediately preceding Rental Payment date to such purchase date, computed on the basis of a 360-day year of twelve 30-day months. ARTICLE XI. Section 11.01. Assignment by Lessor. Lessor's right, title and interest in, and to Rental Payments and any other amounts payable by Lessee under this Agreement and its security interest in the Equipment, and all proceeds therefrom, may be assigned and reassigned in whole or in part to one or more assignees or subassignees by Lessor without the necessity of obtaining the consent of Lessee; provided that (a) any such assignment shall not be effective until Lessee has received written notice, signed by the assignor, of the name and address of the assignee, and (b) any assignment shall not be effective until it is registered on the registration books. Lessee shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees designated in such register. Lessee agrees to execute all documents, including notices of assignment and chattel mortgages or financing statements that may be reasonably requested by Lessor or any assignee to protect its interests and property assigned pursuant to this section 11.01. Lessee shall not have the right to and shall not assert against any assignee any claim, counterclaim or other right Lessee may have against Lessor or Vendor. Lessee hereby agrees that Lessor may, without notice to Lessee, sell, dispose of, or assign this Agreement through a pool, trust, limited partnership, or other similar entity, whereby one or more interests are created in this Agreement, or in the Equipment listed in or the Rental Payments under this Agreement. Section 11.02. Assignment and Subleasing by Lessee. None of Lessee's right, title and interest in, to and under this Agreement and in the Equipment may be assigned or encumbered by Lessee for any reason, except that Lessee may sublease all or part of the Equipment if Lessee obtains the prior written consent of Lessor and an opinion of nationally recognized counsel in the area of tax exempt municipal obligations satisfactory to Lessor that such subleasing will not adversely affect the exclusion of the interest components of the Rental Payments from gross income for federal income tax purposes. Any such sublease of all or part of the Equipment shall be subject to this Agreement and the rights of the Lessor in, to and under this Agreement and the Equipment. ARTICLE XII Section 12.01. Events of Default Defined. Subject to the provisions of Section 3.03, any of the following events shall constitute an "Event of Default" under this Agreement: (a) Failure by Lessee to pay any Rental Payment or other payment required to be paid hereunder at the time specified herein; (b) Failure by Lessee to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in subparagraph (a) above, for a period of 30 days after written notice specifying such failure and requesting that it be remedied is given to Lessee by Lessor, unless Lessor shall agree in writing to an extension of such time prior to its expiration; provided that, if the failure stated in the notice cannot be corrected within the applicable period, Lessor will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by Lessee within the applicable period and diligently pursued until the default is corrected; (c) Any statement, representation or warranty made by Lessee in or pursuant to this Agreement or its execution, delivery or performance shall prove to have been false, incorrect, misleading or breached in any material respect on the date when made; (d) Lessee shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of Lessee, or of all or a substantial part of the assets of Lessee, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable federal bankruptcy law, or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or taking advantage of any insolvency law or any answer admitting the material allegations of a petition filed against Lessee in any bankruptcy, reorganization or insolvency proceeding; or (e) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator of Lessee or of all or a substantial part of the assets of Lessee, in each case without its application, approval or consent, an*i order, judgment or decree shall continue Wyed and in effect for any period of 30 consecutive days. Section 12.02. Remedies on Default. Whenever any Event of Default exists, Lessor shall have the right, at its sole option without any further demand or notice, to take one or any combination of the following remedial steps: (a) By written notice to lessee, Lessor may declare all Rental Payments and other amounts payable by Lessee hereunder to the end of the then current Original Term or Renewal Term to be immediately due and payable; (b) With or without terminating this Agreement, Lessor may enter the premises where the Equipment is located and retake possession of the Equipment or require Lessee at Lessee's expense to promptly return any or all of the Equipment to the possession of Lessor at such place within the United States as Lessor shall specify, and sell or lease the Equipment or, for the account of Lessee, sublease the Equipment, continuing to hold Lessee liable for the difference between (i) the Rental Payments and other amounts payable by Lessee hereunder to the end of the then current Original Term or Renewal Term, and (ii) the net proceeds of any such sale, leasing or subleasing (after deducting all expenses of Lessor in exercising its remedies under this Agreement, including without limitation all expenses of taking possession, storing, reconditioning and .selling or leasing the Equipment and all brokerage, auctioneers' and attorneys' fees); subject, however, to the provisions of section 3.03 hereof. The exercise of any such remedies respecting any such Event of Default shall not relieve Lessee of any other liabilities under any other Agreement or the Equipment listed therein; and (c) Lessor may take whatever action at law or in equity may appear necessary or desirable to enforce its rights under such Agreement or as a secured party in any or all of the Equipment. Section 12.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Lessor to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice other than such notice as may be required in this Article. ARTICLE XIII Section 13.01. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, to the parties hereto at the addresses immediately after the signatures to this Agreement (or at such other address as either party hereto shall designate in writing to the other for notices to such party), to any assignee at its address as it appears on the registration books maintained by Lessee. Section 13.02. Release and indemnification. To the extent permitted by law, Lessee shall indemnify, protect, hold harmless, save and keep harmless Lessor from and against any and all liability, obligation, loss claim, tax and damage whatsoever, regardless of cause thereof, and all expenses in connection therewith (including without limitation counsel fees and expenses and any federal income tax and interest and penalties connected therewith imposed on interest received) arising out of or as the result of (a) the entering into of this Agreement, (b) the ownership of any item of Equipment, (c) the ordering, acquisition, use, operation, condition, purchase, delivery, rejection, storage, or return of any item of the Equipment, (d) or any accident in connection with the operation, use, condition, possession, storage or return of any item of the Equipment resulting in damage to property or injury to or death to any person, and/or (e) the breach of any covenant herein or any material misrepresentation contained herein. The indemnification arising under this paragraph shall continue in full force and effect notwithstanding the full payment of all obligations under this Agreement or the termination of the Lease Term for any reason. Section 13.03. Entire Agreement. This Agreement constitutes the entire agreement between Lessor and Lessee. Section 13.04. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns. Section 13.05. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 13.06. Amendments, Changes and Modifications. This Agreement may be amended by mutual written consent of Lessor and Lessee. • • Section 13.07. Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 13.08. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State. Section 13.09. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. . IN WITNESS WHEREOF, Lessor and Lessee have caused this Agreement to be executed in their names by their duly authorized representatives as of the date written above. (LESSOR) Koch Financial Corporation 17767 North Perimeter Drive Suite 101 Scottsdale, AZ 85255 BY TITLE (LESSEE) City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 BY ay Martin TTTT,EDirector of Administrative Service: ATTEST TITLE APPROVED AS TO F RM: I yJ�t rhey Li'i41 �" 7-O/ 0 • EXHIBIT A TO EQUIPMENT LEASE PURCHASE AGREEMENT Four Ambulances City of Huntington Beach 2000 Main Street . Huntington Beach, California 92648 By Title DESCRIPTION OF EQUIPMENT 10 EXHIBI11-11 TO EQUIPMENT LEASE PURCHASE AtEEMINT RENTAL PAYMENT SCHEDULE Payment Payment Purchase Pmt #' Date Amount Interest Principal Price Utl/Jl/LUVl 1 09/30/2001 $41,994.85 $1,807.03 $40,187.82 $440,253.38 2 12/30/2001 $41,994.85 $4,959.32 $37,035.52 $402,477.14 3 03/30/2002 $41,994.85 $4,533.79 $37,461.06 $364,266.86 4 06/30/2002 $41,994.85 $4,103.36 $37,891.49 $325,617.54 5 09/30/2002 $41,994.85 $3,667.99 $38,326.86 $286,524.14 6 12/30/2002 $41,994.85 $3,227.61 $38,767.24 $246,981.56 7 03/30/2003 $41,994.85 $2,782.17 $39,212.67 $206,984.63 8 06/30/2003 $41,994.85 $2,331.62 $39,663.23 $166,528.14 9 09/30/2003 $41,994.85 $1,875.89 $40,118.96 $125,606.80 10 12/30/2003 $41,994.85 $1,414.92 $40,579.92 $84,215.28 11 03/30/2004 $41,994.85 $948.66 $41,046.19 $42,348.17 12 06/30/2004 $41,994.85 $477.04 $41,517.81 $0.00 Totals: $503,938.18 $32,129.40 $471,808.78 City of Huntington Beach By Title 11 EXHM19BI TO EQUIPMENT LEASE PURCHASE AftEMENT ACCEPTANCE CERTIFICATE Koch Financial Corporation 17767 North Perimeter Drive Suite 101 Scottsdale, AZ 85255 Re: Equipment Lease Purchase Agreement, dated as of August 31, 2001, (the "Agreement"), between Koch Financial Corporation ("Lessor") and the City of Huntington Beach ("Lessee"). Ladies and Gentlemen: [SEAL] In accordance with the Agreement, the undersigned Lessee hereby certifies and represents to, and agrees with, Lessor as follows: (1) All of the Equipment (as defined in the Agreement) has been delivered, installed and accepted on the date hereof. (2) Lessee has conducted such inspection and/or testing of the Equipment as it deems necessary and- appropriate and hereby acknowledges that it accepts the Equipment for all purposes. (3) Lessee is currently maintaining the insurance coverage required by section 7.02 of the Agreement. (4) No event or condition that constitutes, or with notice or lapse of time, or both, would constitute an Event of Default (as defined in the Agreement) exists at the date hereof. City of Huntington Beach By: Title: Acceptance Date: 12 EXHO C TO EQUIPMENT LEASE PURCHAAGREEMENT CERTIFICATE OF CLERK OR SECRETARY OF LESSEE I, the undersigned, do hereby certify (i) that the officer of Lessee who executed the foregoing Agreement on behalf of Lessee and whose genuine signature appears thereon, is the duly qualified and acting officer of Lessee as stated beneath his or her signature and has been authorized to execute the foregoing Agreement on behalf of Lessee, and (ii) that the budget year of Lessee is from July 1 to June 30 to Dated: By: Title: 13 OTO BE PRINTED ON ATTORNEY'S LETTERHEA9 EXHIBIT D TO EQUIPMENT LEASE PURCHASE AGREEMENT OPINION OF COUNSEL As legal counsel to Lessee, I have examined the Equipment Lease Purchase Agreement dated as of August 31, 2001 (the "Agreement"), between Koch Financial Corporation (the "Lessor") and the City of Huntington Beach (the "Lessee"), which, among other things, provides for the sale to and purchase by the Lessee of the Equipment, (b) an executed counterpart of the ordinance or . resolution of Lessee which, among other things, authorizes Lessee to. execute the Agreement and (c) such other opinions, documents and matters of law as I have deemed necessary in connection with the following opinions. Based on the foregoing, I am of the following opinions: (1) Lessee is a public body corporate and politic, duly organized and existing under the laws of the State, and has a substantial amount of one or more of the following sovereign powers: (a) the power to tax, (b) the power of eminent domain, and (c) police power; (2) Lessee has the requisite power and authority to purchase the Equipment and to execute and deliver the Agreement and to perform its obligations under the Agreement; (3) The Agreement and the other documents either attached thereto or required therein have been duly authorized, approved and executed by and on behalf of Lessee, and the Agreement is a valid and binding obligation of Lessee enforceable in accordance with its terms; (4) The authorization, approval and execution of the Agreement and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state and federal laws; and (5) There is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that,. if adversely determined, would adversely affect the transactions contemplated by the Agreement or the security interest of Lessor or its assigns, as the case may be, in the Equipment. All capitalized terms herein shall have the same meanings as in the foregoing Agreement. Lessor, its successors and assigns, including without limitation any Registered Owners, and any counsel rendering an opinion on the tax-exempt status of the interest components of Rental Payments are entitled to rely on this opinion. Printed Name: Dated: Address: Telephone No: ( ) Signature: 14 • EXHIBIT E 0 ACCEPTANCE OF RENTAL PAYMENT OBLIGATION Re: Equipment Lease Purchase Agreement, dated as of August 31, 2001, (the "Agreement"), between Koch Financial Corporation ("Lessor") and the City of Huntington Beach ("Lessee"). In accordance with the Equipment Lease Purchase Agreement (the "Agreement'), the undersigned hereby acknowledges and represents that: 1. All or a portion of the Equipment (as such term is defined in the Agreement) has not been delivered, installed, or available for use and has not been placed in service as of the date hereof, 2. Lessee acknowledges that Lessor has agreed to set aside funds in an amount sufficient to provide financing (to the extent requested by Lessee and agreed to by Lessor) for the Equipment (the "Financed Amount"); 3. The Financed Amount is set forth as the "Principal Component" of Rental Payments in the Rental Payment Schedule attached to the Schedule as Exhibit A-1 ("Exhibit A-1"); and 4. Lessee agrees to execute a Payment Request Form, attached hereto as Exhibit E-1, authorizing payment of the Financed Amount, or a portion thereof, for each disbursement of funds. NOTWITHSTANDING that all or a portion of the Equipment has not been delivered to, or accepted by, Lessee on the date hereof, Lessee warrants that: (a) Lessee's obligation to commence Rental Payments as set forth in Exhibit A-1 is absolute and unconditional as of the date of the Agreement and on each date set forth in Exhibit A-1 thereafter, subject to the terms and conditions of the Agreement; (b) Immediately upon delivery and acceptance of all the Equipment, Lessee will notify Lessor of Lessee's final acceptance of the Equipment by delivering to Lessor a "Final Acceptance Certificate" in the form set forth as Exhibit B; (c) In the event that any surplus amount remains from the funds set aside or an event of nonappropriation under the Agreement occurs, any amount then remaining shall be applied or distributed in accordance with Lessor's standard servicing procedures, which includes, but is not limited to, application of the remaining amount to the next Rental Payment and other amounts due; and (d) Regardless of whether Lessee delivers a Final Acceptance Certificate, Lessee shall be obligated to pay all Rental Payments (including principal and interest) as they become due as set forth in Exhibit A-1. AGREED TO on August 31, 2001: City of Huntington Beach M Title 15 • Exhibit E-1 • Form of Payment Request and Acceptance Certificate Lessor: Koch Financial Corporation 17767 North Perimeter Drive Suite 101 Scottsdale, AZ 85255 Lessee: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 RE: .= Equipment Lease Purchase Agreement dated August 31, 2001. Koch Financial Corporation is hereby requested to pay the person or corporation designated below as Payee, the sum set forth below in payment of a portion or all of the cost of the acquisition described below. The amount shown below is due and payable under the invoice of the Payee attached hereto with respect to the cost of the acquisition of the equipment and has not formed the basis of any prior request for payment. The equipment described below is part or all of the "Equipment" listed in Exhibit A to the Equipment Lease Purchase Agreement referenced above. anti Serial Number/Description: Amount: r Payee: Payee's Federal ID Number: Lessee hereby certifies and represents to and agrees with Lessor as follows: (1) The equipment described above has been delivered, installed and accepted on the date hereof. (2) Lessee has conducted such inspection and/or testing of said equipment as it deems necessary and appropriate and hereby acknowledges that it accepts said equipment for all purposes. (3) Lessee is currently maintaining the insurance coverage required by Section 7.02 of the Agreement. (4) No event or condition that constitutes, or with notice or lapse of time or both would constitute, an Event of Default (as such term is defined in the Agreement) exists at the date hereof. Dated: Approved: Koch Financial Corporation LESSOR By City of Huntington Beach LESSEE By Title FINAL ACCEPTANCE CERTIFICATE (THIS CERTIFICATE IS TO BE EXECUTED ONLY WHEN ALL EQUIPMENT HAS BEEN ACCEPTED) The undersigned hereby certifies that the equipment described above, together with the equipment described in and accepted by Payment Request and Acceptance Certificates previously filed by Lessee with the Lessor pursuant to the Agreement, constitutes all of the Equipment subject to the Agreement. Dated: City of Huntington Beach LESSEE By Title 16 *NTLAJ, USE/SOURCE OF FUNDS CERTI*TE City of Huntington Beach 2000 Main Street Huntington Beach; California 92648 Re: Equipment Lease/Purchase Agreement dated August 31, 2001 This certificate confirms and affirms that the Equipment described in the Agreement referenced above is essential to the functions of the Lessee or to the services Lessee provides its citizens. Further, Lessee has an immediate need for, and expects to make immediate use of, substantially all such Equipment, which need is not temporary or expected to diminish in the foreseeable future. Such Equipment will be used by Lessee only for the purpose of performing one or more of Lessee's governmental or proprietary functions consistent with the permissible scope of its authority. 1. Is the Equipment new, upgrade, additional or replacement? 2. If replacement, how old is the existing equipment? 3. Please fully explain the use of the Equipment including any specific department which may be its primary user: 4. If the Equipment is computer hardware or software, on what hardware will the software run and is the existing hardware owned or being leased? 5. From which fund will lease payments be made? 6. Will any loan or grant monies be used to make lease payments? Lessee expects and anticipates adequate funds to be available for all future payments or rent due after the current budgetary period. Signature: Name: Title: 17 • INVOICING INSTRUCTIONS • Pursuant to the Equipment Lease/Purchase Agreement dated August 31, 2001(the "Lease"), between Koch Financial Corporation (the "Lessor") and City of Huntington Beach (the "Lessee"), Lessee hereby acknowledges the obligations to make Payments promptly when due, in accordance with Exhibit A-1 to the Lease. 1. RECEIPT OF INVOICE: All invoices should be mailed to: -PROCESSING TIME ADDRESS DAYS ATTENTION: TEL. NO. (_) FAX. NO. 2. APPROVAL: Invoices are approved for payment by: ADDRESS ATTENTION: TEL. NO. (_ ) FAX. NO. (__) 3. ACCOUNTS PAYABLE: Checks are processed and mailed by: ADDRESS ATTENTION: TEL. NO., (_ ) FAX. NO. (__) PROCESSING TIME DAYS PROCESSING TIME DAYS 4. PURCHASE ORDER NUMBERS: Invoices require purchase order numbers: Yes No _ The current purchase order number is:_ Purchase order numbers change annually: Yes _ No _ Processing time for new purchase orders: LESSEE City of Huntington Beach By: Title Date 18 0 • Instructions for 8038-G: On 8038-G forms, the below described lines need to be filled out by the Lessee: Line No. 2: Fill in the Lessee's EIN number. (An issuer that does .not have an EIN should apply for one on Form SS-4, Application for Employer Identification Number, This form may be obtained from most IRS and Social Security Administration offices. File Form SS-4 according to the instructions on that form. If the EIN has not been received by the date of filing the 8038-G, write "Applied for" in the space for the EIN). 2. Line No. 4: Number reports consecutively based on the filing date (not the date of issue). For example, if the issuer filed two Forms 8038-G in the 1999 calendar year, the "report number" for the third Form 8038-G would be "G1999-3". If an issuer (e.g., a state) issues obligations through may departments or agencies, the issuer may assign a letter of the alphabet to each department or agency, and each may separately number its reports by indicating both the report number and letter (e.g., G1999-5-C, G1999-2-D). 3. Line No. 9: State the name and the title for the legal representative the IRS may call for more information. The legal representative is the person who will be contacted if there are any questions with respect to the IRS form 8038-G and the transaction reported. Typically this person is employed by the issuer and is the same person who signs the IRS Form 8038-G. 4• Line No. 10: State the telephone number of the person listed in line 9. Form 8038-G Information Return for Tax -Exempt Governmental Obligations 11765 (Rev. May 1999) �nder Internal Revenue Code Section 149 (e) • OMB No. 1545-0720 ► See separate instructions DepartmentInternal Revenue Service Inlemel Revenue Setvke Caution: Use Form 8038-GC if the issue rice is under $100,000 p Reporting Authority If Amended Return. Check here► 1 Issuer's name 2 Issuer's employer Identification_ Huntington Beach, City of 1 95-6000723 3 Number and street (or P.O. box if mail is not delivered to Street address) Room/suite 4 Report number 2000 Main Street G 2001- 5 City, town, or post office, state, and ZIP code 6 Date of Issue Huntington Beach, CA 92648 8/31/01 7 Name of issue 8 CUSIP number Equipment Lease Purchase Agreement dated August 31, 2001 None 9 Name and title of officer or legal representative whom the IRS may call 10 Telephone number of officer or legal representative Type of Issue (check applicable box(es) and enter the issue price) See Instructions and attach schedule 11 ❑ Education ...... ... ..... ...... ........ ....................... . 12 ❑ Health and hospital . . . . . ... . . . . . . . . . .. . . . . . . . . . . . . . . . . .. . . . . . . . . . . 13 ❑ Transportation ... .. .. . .. .. ... .............. .. ....... .. .. ... .... 14 ❑ Public safety ..... ... ..... .... .................. . .. ..... .... . . . 15 ❑ Environment (including sewage bonds) . .. . . ....................... ... .. . .. 16 ❑ Housing . . . 17 ❑ Utilities . . . .. . . . .. . . . . . . . . . . . . .. .. . . . .. . . . . . .. . . . . . . . . . .. . . . . 18 ® Other. Describe (see instructions) ► Four ambulances 19 If obligations are TANs or RANs, check box ► ❑ If obligations are BANS, check box ► ❑ 20 If obligations are in the form of a tease or installment sale, check box ► 11 12 13 14 15 16 17 18 $ 471,808.78 Description of Obliqations (Complete for the entire issue for which this form is being filed) (a) Final Maturity date (b) Issue Price ( c) Stated redemption (d) Weighted (e) Yield price at maturity average maturity 6/30/04 $ 471,808.78 $ n/a 3 years 4.596% j21 Uses of Proceeds of Bonds Issue(including underwriters' discount 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . .. . . .. . . . . . . . . . . .. .. . . . . . . . . . . . 22 23 Issue Price of entire issue (Enter amount from line 21, column (b) ... ........... . .. ... . . .. 23 24 Proceeds used for bond issuance costs (including underwriters' discount) . . . . . . . . . . . 24 25 Proceeds used for credit enhancement .... ...... ..................... 25 26 Proceeds allocated to reasonably require reserve or replacement fund . . . . . . . . . .. . . . 26 27 Proceeds used to currently refund prior issues . . . . . . . . . . . . . . . . . . . . . . .. . . . 27 28 Proceeds used to advance refund prior issues . . . . .. . . .. . . . . . . . . . . . . . . 28 29 Total (add lines 24 through 28) ......... ... .. ........... ............. ..... .. .. .. 29 30 Nonrefundin proceeds of the issue subtract line 29 from line 23 and enter amount here ................. 30 Description of Refunded Bonds (Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . ........ ... .. .. . . ► years 32 Enter the remaining weighted average maturity of the bonds to be advanced refunded ... .......... .... ► years 33 Enter the last date on which the refunded bonds will be called . . . .. . . . . . . . . . . . . . . ... . . . . . . . . ► 34 Enter the dates(s) the refunded bonds were issued ► Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) . . . . .. . . . . . . . . . . . 35 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) 36a b Enter the final maturity date of the guaranteed investment contract ► 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the issuer and the date of the issue ► 38 If the issuer has designated the issue under section 265 (b)(3)(B)(i)(III) (smaller issuer exception), check box . . .... .. ..... ► ❑ 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . .. .............. .. ........ ..... ► ❑ 40 If the issuer has identified a hedge, check box . . . . .. . . . . . . .. . .. . . . . . . . .... .. . . . .. . . . . . ► Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct and complete. Please Sign Here ► ► Signature of Issuer's authorized representative Date Type or print name and title For Paperwork Reduction Act Notice, see page 2 of the Instructions. Cat. No. 63773S Form 8038-G (Rev. 5-99) • 11 ATTACHMENT 2 • • 1. 2. 3. 4. CITY OF HUNTINGTON BEACH APPLICATION FOR INSURANCE REQUIREMENTS WAIVER OR MODIFICATION Name/Title/Department of Requesting Staff Membert' ��`� f ✓� �� ��/UNV► Date of Request tod Name of Contractor/Permittee Description of work to be performed 5. Value of Contract 15O3,g38•!� 6. Length of Contract 3 viaN 7. Type of Insurance Waiver or Modification Requested: 4evwuIx IR(Avw 0F D� gal Wk 13 IMP .GGwd. (a) Limits: (b) Coverage 8. Have you contacted Risk Management to determine if professional liabilitycoverage is available through SCOPE? WI A &a 1*/,AI.e44iJ 9. Reason for Request for Waiver or ct' of Limits W't&17&EW' V'uVl 1 Vy t VGy I� �cnr/ I, Povi OVY(. A MAM al 116ty ►lvjhU ,( m Departm Identify the risks to the City if this request for waiver or modifications (This section to be completed by Risk Manager) Recommendation: Approve Deny Risk Manager's Signature/Date Recommendation: Approve City Attorney's Signature/Date (This section to be completed by City Attorney) Deny Settlement Committee appro att.[is] ot] quired for this waiver. If Settlement Committee approval is equired, submit this form to City Atto ffic be placed on the agenda. Recommendation: Approve Deny City Council appro 1 [ s] [ n r quired for this waiver. If City Council approval is required, attach this form to the RCA after considera 'on b t Se lement Committee. This insurance waiver [is not] on City Council agenda. Reviewer's initials: j mp/mf s/mswai ver/3/ 14/00 RCA ROUTING SHEET INITIATING DEPARTMENT: I FIRE I SUBJECT: APPROVE MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT WITH KOCH FINANCIAL CORPORATION FOR FOUR AMBULANCES I COUNCIL MEETING DATE: I September 17, 2001 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Not Applicable Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Attached Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Find in s/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff - _ Assistant City Administrator (Initial) City Administrator Initial City Clerk ( r T-/, ,.. EXPLANATION FOR RETURN OF ITEM: RCA Author: Dolder/Justen RCA Author: Dolder/Justen