HomeMy WebLinkAboutApprove the Purchase of a New NOTAR Helicopter from MD Helic McERIM.
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[ fl EL& 1 L �l 1 To VAN AT LAW
ATTRNEiY AT LAW
A P R 0 F E S S 1 0 IN A L C 0 R P 0 R A T 1 0 N WRITER DIRECT
10TH FLOOR• TWO LEADERSHIP SQUARE (405)552-2208
211 NORTH ROBINSON •OKLAHOMA CITY,OK 73102-7103 FAX(405)228-7408
(405)235-9621 • FAX(405)235-0439 erin.vanlaanen@mcafeetaft.com
www.mcafeetaft.com
December 13, 2007
VIA FEDEX--GROUND
(714)374-1569
Marilyn Goldstein
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
(415) 765-7404
Tessie G. Panganiban, Vice President
BANC OF AMERICA LEASING& CAPITAL LLC
555 California Street, 4th Floor
San Francisco, CA 94104
RE: Return of FAA recorded documents
One (1) MD Helicopter, Inc., model 50ON aircraft bearing manufacturer's
serial number LN 105 and United States Registration Number N523HB
(the "Aircraft")
(Our File No. 2077/99)
Ladies:
I am enclosing the following instruments which were filed with the Federal
Aviation Administration (the "FAA") on May 18, 2007, and have now been returned with
complete FAA filing and/or recording information shown thereon (originals to the party as
noted):
(a) Bill of Sale by MD Helicopters, Inc., as seller, to City of Huntington
Beach (the "City") as buyer ("Bill of Sale A"), which Bill of Sale A was
recorded by the FAA on June 13, 2007, and assigned Conveyance No.
ZZ039077 (original to Marilyn);
(b) Bill of Sale by the City, as seller, to Banc of America Leasing & Capital
LLC ("BALC") as buyer ("Bill of Sale B"), which Bill of Sale B was
recorded by the FAA on June 13, 2007, and assigned Conveyance No.
ZZ039078 (original to Tessie);
2602258 1 DOC
-2-
(c) Master Equipment Lease and Schedule ("Master Lease") between BALC
and the City(with a$1 purchase option at the end of the term—see Article
X(c) of the Master Equipment Lease), which Master Lease was recorded
by the FAA on June 13, 2007, and assigned Conveyance No. ZZ039079
(original to Tessie); and
(d) Copy of FAA AC Form 8050-1 Aircraft Registration Application in the
name of the City, covering the Aircraft.
We appreciated the opportunity to assist you with this matter. Please let me know if
you have any questions or need further information. Thank you.
Sincer ,
hn M.4an Laanen
EMVUbc
Enclosures
2602258 1 DOC,
UNITED STATES OF AMERICA FORM APPROVED
U.S.DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION OMB NO.2120-0042
AIRCRAFT BILL OF SALE
FOR AND IN CONSIDERATION OF$ 1 &ovc THE
UNDERSIGNED OWNER(S)OF THE FULL LEGAL AND
BENEFICIAL TITLE OF THE AIRCRAFT DES-CRIBED i RECORDED
AS FOLLOWS: Federal Aviation AdmMistratio
UNITED STATES $23HB Date Time
REGISTRATION NUMBER -7-- 3
AIRCRAFT MANUFACTURER& MODEL corl, anc Nu bar
MD Helicopter Inc. 50ON
AIRCRAFT SERIAL No. RZ
LN 105
DOES THIS j8 DAY OF 2007
HEREBY SELL, GRANT,TRANSFER AND d
DELIVER ALL RIGHTS,TITLE,AND INTERESTS
IN AND TO SUCH AIRCRAFT UNTO: DoNdWdteInTNsBIwA
FOR FAA USE ONLY
NAME AND ADDRESS
OF INDMDUAL(S),GIVE LAST NAME.FIRST NAME,AND MIDDLE INITIAL)
LV Banc of America Leasing& Capital, LLC
Q
555 California Street, 4d'Floor
= San Francisco, CA 94104
C.�
AL
DEALER CERTIFICATE NUMBER
AND TO its successors
SINGULARLY THE SAID AIRCRAFT FOREVER,AND WARRANTS THE TITLE THEREOF:
IN TESTIMONY WHEREOF I HAVE SET my HAND AND SEAL THIS SDAY OF
NAME(S)OF SELLER SIGNATURE(S) TITLE
(TYPED OR PRINTED) (IN INK)(IF EXECUTED FOR (TYPED OR PRINTED)
2O-0WN HIP,ALL MUSTSI 1.
City of Huntington Central Service Mgr
WBeach a body co ora '!c
J and politic existing
Wunder the laws of the
N State of California
ACKNOWLEDGMENT(NOT REQUIRED FOR PURPOSES OF FAA RECORDING: HOWEVER.MAY BE REQUIRED BY LOCAL LAW FOR
VALIDITY OF THE INSTRUMENT.)
ORIGINAL: TO FAA:
AC Form 8050-2(9/92)(NSN 0052-OM29-"3)Supersedes Previous Edition
A` ` A� APPROVE AS TO F'OFti�t
` - JE ifER cG TH,Cltyr� arrTey
TO BE �r 1��;-"ti`D TO M&T' e
y '
Deputy CityAtt mey
imanageOKC_2262479_1
RECORDED
._ �������� Federal Aviation Administrat'
Date'1.3" 0-7 Time
M RE RETURNEC)TO M&T Convey b,r
MASTER EQUIPMENT LEASE✓PURCHASE AG
This Master Equipment Lease/Purchase Agreement (the "Agreement") dated as of April
14, 2006, and entered into between Banc of America Leasing & Capital, LLC, a Delaware
limited liability company ("Lessor"), and City of Huntington Beach, a body corporate and
politic existing under the laws of the State of California ("Lessee").
WITNESSETH:
WHEREAS, Lessee desires to lease and acquire from Lessor certain Equipment described
in each Schedule (as each such term is defined herein), subject to the terms and conditions of and
for the purposes set forth in each Lease; and in the event of a conflict the terms of a Schedule
prevail; and
WHEREAS, the relationship between the parties shall be a continuing one and items of
equipment may be added to the Equipment from time to time by execution of additional
Schedules by the parties hereto and as otherwise provided herein; and
WHEREAS, Lessee is authorized under the constitution and laws of the State to enter into
this Agreement and the Schedules hereto for the purposes set forth herein; and
WHEREAS,the governing body of Lessee has authorized the execution and delivery of
this Agreement and the Leases pursuant to action of the City Council on August 15, 2005.
Now, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the premises hereinafter contained, 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:
"Acquisition Amount" means the amount specified in each Lease and represented by
Lessee to be sufficient to acquire the Equipment listed in such Lease, which amount shall be not
less than $100,000 for each Lease.
"Acquisition Fund" means, with respect to any Lease, the fund established and held by
the Acquisition Fund Custodian pursuant to the related Acquisition Fund Agreement, if any.
"Acquisition Fund Agreement" means, with respect to any Lease, an Acquisition Fund
Agreement, substantially in the form of Exhibit A attached hereto, in form and substance
acceptable to and executed by Lessee, Lessor and the Acquisition Fund Custodian, pursuant to
which an Acquisition Fund is established and administered.
"Acquisition Fund Custodian" means the Acquisition Fund Custodian identified in any
Acquisition Fund Agreement, and its successors and assigns.
#219845v 13(Gov't Entity Master Lease) 1
"Acquisition Period" means, with respect to each Lease, that period stated in the
Schedule to such Lease during which the Lease Proceeds attributable to such Lease may be
expended on Equipment Costs.
"Agreement" means this Master Equipment Lease/Purchase Agreement, including the
exhibits hereto, together with any amendments and modifications to the Agreement pursuant to
Section 13.05.
"Code" means the Internal Revenue Code of 1986, as amended. Each reference to a
Section of the Code herein shall be deemed to include the United States Treasury Regulations
proposed or in effect thereunder.
"Commencement Date" means, for each Lease, the date when Lessee's obligation to pay
rent commences under such Lease, which date shall be the earlier of (i) the date on which the
Equipment listed in such Lease is accepted by Lessee in the manner described in Section 5.01,
and (ii) the date on which sufficient moneys to purchase the Equipment listed in such Lease are
deposited for that purpose with an Acquisition Fund Custodian.
"Equipment" means the property listed in each of the Leases and all replacements,
repairs, restorations, modifications and improvements thereof or thereto made pursuant to
Section 8.01 or Article V. Whenever reference is made in this Agreement to Equipment listed in
a Lease, such reference shall be deemed to include all such replacements, repairs, restorations,
modifications and improvements of or to such Equipment.
"Equipment Costs" means the total cost of the Equipment listed in each Lease, including
all delivery charges, installation charges, capitalizable consulting and training fees approved by
Lessor, legal fees, financing costs, and other costs necessary to vest full, clear legal title to the
Equipment in Lessee, subject to the security interest granted to and retained by Lessor as set
forth in each Lease, and otherwise incurred in connection with the financing provided by the
lease-purchase of the Equipment as provided in each Lease; provided that in no event shall
approved consulting and training fees or other non-capitalizable "soft" costs relating to the
Equipment listed in any Lease which are to be financed by Lessor hereunder exceed 2% of the
total cost of such Equipment as determined by Lessor; and provided further, that in no event
shall capitalizable delivery charges, installation charges, taxes and similar capitalizable "soft
costs" relating to such Equipment be included without Lessor's prior consent.
"Expense Fund" means, with respect to any Lease, the fund established and held by the
Acquisition Fund Custodian pursuant to the related Acquisition Fund Agreement, if any.
"Event of Default" means an Event of Default described in Section 12.01.
"Lease" means a Schedule and the terms of this Agreement which are incorporated by
reference into such Schedule. Each Schedule shall constitute a separate and independent Lease.
"Lease Proceeds" means, with respect to each Lease, the total amount of money to be
paid by Lessor to the Acquisition Fund Custodian for deposit and application in accordance with
such Lease and the Acquisition Fund Agreement.
#219845v 13(Gov't Entity Master Lease) 2
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"Lease Term" for each Lease means the Original Term and all Renewal Terms therein
provided and for this Agreement means the period from the date hereof until this Agreement is
terminated.
"Lessee" means the entity referred to as Lessee in the first paragraph of this Agreement.
"Lessor" means (a) the entity referred to as Lessor in the first paragraph of this Agree-
ment or (b) any assignee or transferee of any right, title or interest of Lessor in and to the
Equipment under a Lease or any Lease (including Rental Payments thereunder) pursuant to
Section 11.01, but does not include any entity solely by reason of that entity retaining or
assuming any obligation of Lessor to perform under a Lease.
"Maximum Equipment Cost" means the amount specified in each Lease.
"Original Term" means the period from the Commencement Date for each Lease until
the end of the fiscal year of Lessee in effect at such Commencement Date.
"Purchase Price" means, with respect to the Equipment listed on a Lease, the amount
that Lessee may pay to Lessor to purchase such Equipment as provided in such Lease.
"Renewal Terms" means the renewal terms of each Lease, each having a duration of one
year and a term coextensive with Lessee's fiscal year, as specified in the Schedule applicable
thereto.
"Rental Payments" means the basic rental payments payable by Lessee under each Lease
pursuant to Section 4.01, in each case consisting of a principal component and an interest
component.
"Schedule" means each separately numbered Schedule of Property substantially in the
form of Exhibit B-1 hereto together with a Rental Payment Schedule attached thereto
substantially in the form of Exhibit B-2 hereto.
"State" means the State of California.
"Utilization Period" means the date, with respect to each Lease not funded under an
Acquisition Fund Agreement, by which Lessee must deliver an Acceptance Certificate for the
Equipment under such Lease as indicated in Section 3.04(b).
"Vendor" means the manufacturer or supplier of the Equipment or any other person as
well as the agents or dealers of the manufacturer or supplier with whom Lessor arranged
Lessee's acquisition and financing of the Equipment pursuant to the applicable Lease.
ARTICLE II
Section 2.01. Representations and Covenants of Lessee. Lessee represents, covenants
and warrants for the benefit of Lessor on the date hereof and as of the Commencement Date of
each Lease as follows:
#219845v 13(Gov't Entity Master Lease) 3
(a) Lessee is a political subdivision of the State within the meaning of Section 103(c)
of the Code, duly organized and existing under the constitution and laws of the State, with full
power and authority to enter into this Agreement and each Lease and the transactions
contemplated hereby and to perform all of its obligations hereunder and under each Lease.
(b) Lessee has duly authorized the execution and delivery of this Agreement and each
Lease by proper action of its governing body at a meeting duly called, regularly convened and
attended throughout by the requisite quorum 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 and each Lease.
(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 body corporate and politic.
(e) Lessee has complied with such public bidding requirements as may be applicable
to this Agreement and each Lease and the acquisition by Lessee of the Equipment as provided in
each Lease.
(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. Lessee does not intend to sell or otherwise dispose
of the Equipment or any interest therein prior to the last Rental Payment (including all Renewal
Terms) scheduled to be paid under each Lease.
(g) Lessee has kept, and throughout the Lease Term of any Lease shall keep, its books
and records in accordance with generally accepted accounting principles and practices consistently
applied, and shall deliver to Lessor (i) annual audited financial statements (including (1) a balance
sheet, (2)statement of revenues, expenses and changes in fund balances for budget and actual,
(3)statement of cash flows and notes, and (4) schedules and attachments to the financial
statements) within 180 days of its fiscal year end, (ii) such other financial statements and
information as Lessor may reasonably request, and (iii) its annual budget for the following fiscal
year within 90 days of the current fiscal year end. The financial statements described in subsection
(i) shall be accompanied by an unqualified opinion of Lessee's auditor. Credit information relating
to Lessee may be disseminated among Lessor and any of its affiliates and any of their respective
successors and assigns.
(h) Lessee has an immediate need for the Equipment listed on each Schedule and
expects to make immediate use of the Equipment listed on each Schedule. Lessee's need for the
Equipment is not temporary and Lessee does not expect the need for any item of the Equipment
to diminish during the Lease Term to such item.
(i) The payment of the Rental Payments or any portion thereof is not (under the
terms of any Lease or any underlying arrangement) directly or indirectly (x) secured by any
interest in property used or to be used in any activity carried on by any person other than a state
or local governmental unit or payments in respect of such property; or (y) on a present value
basis, derived from payments (whether or not to Lessee) in respect of property, or borrowed
#219845v13(Gov't Entity Master Lease) 4
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money, used or to be used in any activity carried on by any person other than a state or local
governmental unit. The Equipment will not be used,directly or indirectly, in any activity carried
on by any person other than a state or local governmental unit. No portion of the Equipment
Costs for the Equipment will be used, directly or indirectly, to make or finance loans to any
person other than Lessee. Lessee has not entered into any management or other service contract
with respect to the use and operation of the Equipment.
0) There is no pending litigation, tax claim, proceeding or dispute that may adversely
affect Lessee's financial condition or impairs its ability to perform its obligations hereunder.
Lessee will, at its expense, maintain its legal existence in good standing and do any further act
and execute, acknowledge, deliver, file, register and record any further documents Lessor may
reasonably request in order to protect Lessor's security interest in the Equipment and Lessor's
rights and benefits under this Lease.
ARTICLE III
Section 3.01. Lease of Equipment. Subject to the terms of this Master Lease, Lessor
agrees to provide the funds specified in each Lease to be provided by it to acquire the
Equipment, up to an amount equal to the Maximum Equipment Cost. Upon the execution of
each Lease, Lessor demises, leases, transfers and lets to Lessee, and Lessee acquires, rents and
leases from Lessor, the Equipment as set forth in such Lease and in accordance with the terms
thereof. The Lease Term for each Lease may be continued, solely at the option of Lessee, at the
end of the Original Term or any Renewal Term for the next succeeding Renewal Term up to the
maximum Lease Term set forth in such Lease. 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 each Lease for the next Renewal Term unless Lessee
shall have terminated such Lease pursuant to Section 3.03 or 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 in the applicable Lease.
Section 3.02. Continuation of Lease Term. Lessee intends, subject to Section 3.03, to
continue the Lease Term of each Lease through the Original Term and all Renewal Terms and to
pay the Rental Payments thereunder. Lessee affirms that sufficient funds are available for the
current fiscal year, and Lessee reasonably believes that an amount sufficient to make all Rental
Payments during the entire Lease Term of each Lease can be obtained from legally available
funds of Lessee. Lessee further intends to do all things lawfully within its power to obtain and
maintain funds sufficient and available to discharge its obligation to make Rental Payments due
hereunder, 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.
Section 3.03. Nonappropriation. Lessee is obligated only to pay such Rental Payments
under each Lease as may lawfully be made from funds budgeted and appropriated for that
purpose during Lessee's then current fiscal year. Should Lessee fail to budget, appropriate or
otherwise make available funds to pay Rental Payments under any Lease following the then
current Original Term or Renewal Term, such Lease or Leases shall be deemed terminated at the
#219945v 13(Gov't Entity Master Lease) 5
end of the then current Original Term or Renewal Term. Lessee agrees to deliver notice to
Lessor of such termination at least 90 days prior to the end of the 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 any Lease 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.
(a) As a prerequisite to the performance by Lessor of any of its obligations pursuant
to any Lease,Lessee shall deliver to Lessor the following:
(i) A fully completed Schedule,executed by Lessee;
(ii) An Acquisition Fund Agreement, executed by Lessee and the Acquisition
Fund Custodian, unless Lessor pays 100% of the Acquisition Amount directly to the
Vendor upon execution of the Lease;
(iii) A 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;
(iv) A certified copy of a resolution, ordinance or other official action of
Lessee's governing body authorizing the execution and delivery of this Lease and
performance by Lessee of its obligations hereunder;
(v) An opinion of counsel to Lessee in substantially the form attached hereto
as Exhibit D respecting such Lease and otherwise satisfactory to Lessor;
(vi) Evidence of insurance as required by Section 7.02 hereof;
(vii) All documents, including financing statements, affidavits, notices and
similar instruments, in form satisfactory to Lessor, which Lessor deems necessary or
appropriate at that time pursuant to Section 6.02;
(viii) A copy of a fully completed and executed Form 8038-G;
(ix) An Essential Use/Source of Funds Certificate in substantially the form
attached as Exhibit E; and
(x) Such other items, if any, as are set forth in such Lease or are reasonably
required by Lessor.
(b) In addition, the performance by Lessor of any of its obligations pursuant to any
Lease shall be subject to: (i) no material adverse change in the financial condition of Lessee
since the date of this Lease, (ii) no Event of Default having occurred, and (iii) if no Acquisition
Fund has been established, the Equipment must be accepted by Lessee no later than the date
specified in the Schedule (the "Utilization Period").
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(c) Subject to satisfaction of the foregoing, Lessor will pay the Acquisition Amount
for Equipment described in a Schedule to the Vendor or, if authorized by Lessee's governing
body, will reimburse Lessee for the prior payment of any such Acquisition Amounts by Lessee to
the Vendor, upon receipt of the documents described in Sections 5.01(a) and (b); or if an
Acquisition Fund has been established pursuant to an Acquisition Fund Agreement, Lessor will
deposit the Acquisition Amount for Equipment described in the Schedule with the Acquisition
Fund Custodian.
(d) This Agreement is not a commitment by Lessor to enter into any Lease not
currently in existence, and nothing in this Agreement shall be construed to impose any obligation
upon Lessor to enter into any proposed Lease, it being understood that whether Lessor enters into
any proposed Lease shall be a decision solely within Lessor's discretion.
(e) Lessee will cooperate with Lessor in Lessor's review of any proposed Lease.
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 Lease.
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.
Section 3.05. Nonsubstitution. If Lessor terminates a Lease pursuant to Section 12.02 or
Lessee terminates a Lease pursuant to Section 3.03, Lessee agrees, to the extent not prohibited by
law, not to purchase, lease, rent or otherwise acquire equipment performing functions similar to
those performed by the Equipment described in such Lease or obtain from any source the
services or information that the Equipment described in such Lease was to perform or provide, in
each case for a period equal to the shorter of (a) the longest period (if any) permitted by State
law for such purpose or(b) 360 days after such termination or occurrence.
ARTICLE IV
Section 4.01. Rental Payments. Subject to Section 3.03, Lessee shall promptly pay
Rental Payments, in lawful money of the United States of America, to Lessor on the dates and in
such amounts as provided in each Lease. 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. Lessee shall not permit the federal
government to guarantee any Rental Payments under any Lease. Rental Payments consist of
principal and interest payments as more fully detailed on each Schedule, the interest on which
begins to accrue as of the Commencement Date for each such Schedule.
Section 4.02. Interest and Principal Components. A portion of each Rental Payment is
paid as, and represents payment of, interest, and the Balance of each Rental Payment is paid as,
and represents payment of, principal. Each Lease shall set forth the principal and interest
components of each Rental Payment payable thereunder during the Lease Term.
Section 4.03. Rental Payments to Constitute a Current Expense of Lessee. Lessor and
Lessee understand and intend that the obligation of Lessee to pay Rental Payments under each
Lease shall constitute a current expense of Lessee payable solely from its general fund or other
funds that are legally available for that purpose and shall not in any way be construed to be a
#219845v 13(Gov't Entity Master Lease) 7
debt of Lessee in contravention of any applicable constitutional or statutory limitation or
requirement concerning the creation of indebtedness by Lessee, nor shall anything contained
herein or in a Lease constitute a pledge of the general tax revenues, funds or moneys of Lessee.
Section 4.04. 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 in each Lease 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, after it has been accepted by Lessee, any
defects, malfunctions, breakdowns or infirmities in the Equipment or any accident,
condemnation or unforeseen circumstances.
Section 4.05. Tax Covenants.
(a) Lessee agrees that it will not take any action that would cause the interest
component of Rental Payments to be or to become ineligible for the exclusion from gross income
of the owner or owners thereof for federal income tax purposes, nor will it omit to take or cause
to be taken, in timely manner, any action, which omission would cause the interest component of
Rental Payments to be or to become ineligible for the exclusion from gross income of the owner
or owners thereof for federal income tax purposes.
(b) In the event that Lessee does not spend the moneys in the Acquisition Fund within
six (6)months of the date the deposit is made pursuant to Section 3.04(c), Lessee will, if required
by section 148(f) of the Code to pay rebate: (i) establish a Rebate Account and deposit the
Rebate Amount (as defined in Section 1.148-3(b) of the Federal Income Tax Regulations) not
less frequently than once per year after the applicable Commencement Date; and(ii)rebate to the
United States, not less frequently than once every five (5) years after the applicable
Commencement Date, an amount equal to at least 90% of the Rebate Amount and within 60 days
after payment of all Rental Payments or the Purchase Price as provided in Section 10.01(a)
hereof, 100% of the Rebate Amount, as required by the Code and any regulations promulgated
thereunder. Lessee shall determine the Rebate Amount, if any, at least every year and upon
payment of all Rental Payments or the Purchase Price and shall maintain such determination,
together with any supporting documentation required to calculate the Rebate Amount, until six
(6) years after the date of the final payment of the Rental Payments or the Purchase Price.
Section 4.06. Event of Taxability. Upon the occurrence of an Event of Taxability, the
interest component shall be at a Taxable Rate retroactive to the date as of which the interest
component is determined by the Internal Revenue Service to be includible in the gross income of
the owner or owners thereof for federal income tax purposes, and Lessee will pay such additional
amount as will result in the owner receiving the interest component at the Taxable Rate
identified in the related Lease.
For purposes of this Section, "Event of Taxability" means a determination that the
interest component is includible for federal income tax purposes in the gross income of the
owner thereof due to Lessee's action or failure to take any action.
Section 4.07. Mandatory Prepayment. If the Lease Proceeds are deposited into an
Acquisition Fund, any funds remaining in the Acquisition Fund on or after the Acquisition
#219845v 13(Gov't Entity Master Lease) 8
Period and not applied to Equipment Costs, shall be applied by Lessor on the next Rental
Payment date, pro rata to the prepayment of the principal component of the outstanding Rental
Payments due under the applicable Schedule.
ARTICLE V
Section 5.01. Delivery, Installation and Acceptance of Equipment.
(a) Lessee shall order the Equipment, cause the Equipment to be delivered and
installed at the location specified in the Leases and pay any and all delivery and installation costs
and other Equipment Costs in connection therewith. When the Equipment listed in any Lease
has been delivered and installed, Lessee shall promptly accept such Equipment and evidence said
acceptance by executing and delivering to Lessor an Acceptance Certificate in the form attached
hereto as Exhibit F.
(b) Lessee shall deliver to Lessor original invoices and bills of sale (if title to such
Equipment has passed to Lessee) relating to each item of Equipment accepted by Lessee. With
respect to Equipment not purchased through an Acquisition Fund, Lessor shall, upon receipt of
an Acceptance Certificate from Lessee, prepare a Schedule of Property and Rental Payment
Schedule in the forms attached hereto as Exhibits B-1 and B-2. Lessee shall execute and deliver
such Schedules to Lessor within 5 business days of receipt.
Section 5.02. Quiet Enjoyment of Equipment. So long as Lessee is not in default under
the related Lease, neither Lessor nor any entity claiming by, through or under Lessor, shall
interfere with Lessee's quiet use and enjoyment of the Equipment during the Lease Term.
Section 5.03. Location; Inspection. Once installed, no item of the Equipment will be
relocated from the base location specified for it in the Lease on which such item is listed 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 Maintenance of the Equipment. Lessee will not install, use,
operate, or maintain the Equipment improperly, carelessly, in violation of any applicable law or
in a manner contrary to that contemplated by the related Lease. 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 (including the reversionary
interest) of Lessor in and to the Equipment or its interest or rights under the Lease.
Lessee agrees that it will maintain, preserve, and keep the Equipment in good repair and
working order, in accordance with manufacturer's recommendations. Lessor shall have no
responsibility to maintain, repair or make improvements or additions to the Equipment. If
commercially available, Lessee will maintain in force a standard maintenance contract with the
manufacturer of the Equipment, and upon request will provide Lessor with a copy of that
contract. Upon the prior written consent of Lessor, which consent shall not be unreasonably
withheld, Lessee may use another third party maintenance provider provided the maintenance
#219845v 13(Gov't Entity Master Lease) 9
contract between Lessee and such third party requires the third party to maintain the Equipment
at the manufacturer's then current release, revision and engineering change levels, including
hardware, software enhancements and microcode levels. In all cases, Lessee agrees to pay any
costs necessary for the manufacturer to re-certify the Equipment as eligible for manufacturer's
maintenance upon the return of the Equipment to Lessor as provided for herein.
Lessee shall not alter any item of Equipment or install any accessory, equipment or
device on an item of Equipment if that would impair any applicable warranty, the originally
intended function or the value of that Equipment. All repairs, parts, accessories, equipment and
devices furnished, affixed to or installed on any Equipment, excluding temporary replacements,
shall thereupon become subject to the security interest of Lessor.
ARTICLE VI
Section 6.01. Title to the Equipment. During each Lease Term, and so long as Lessee is
not in default under Article XII hereof, all right, title and interest in and to each item of the
Equipment shall be vested in Lessee immediately upon its acceptance of each item of
Equipment, subject to the terms and conditions of the applicable Lease. Lessee shall at all times
protect and defend, at its own cost and expense, its title in and to the Equipment from and against
all claims, liens and legal processes of its creditors, and keep all Equipment free and clear of all
such claims, liens and processes. Upon the occurrence of an Event of Default or upon
termination of a Lease pursuant to Section 3.03 hereof, full and unencumbered legal title to the
Equipment shall pass to Lessor. In addition, upon the occurrence of such an Event of Default or
such termination, Lessee shall execute and deliver to Lessor such documents as Lessor may
request to evidence the passage of such legal title to Lessor and the termination of Lessee's
interest therein, and upon request by Lessor shall deliver possession of the Equipment to Lessor
in accordance with Section 12.02. Upon purchase of the Equipment under a Lease by Lessee
pursuant to Section 10.01, Lessor's security interest or other interest in the Equipment shall
terminate, and Lessor shall execute and deliver to Lessee such documents as Lessee may request
to evidence the termination of Lessor's security interest in the Equipment subject to the related
Lease.
Section 6.02. Security Interest. To secure the payment of all of -Lessee's obligations
under each Lease, upon the execution of such Lease, Lessee grants to Lessor a security interest
constituting a first lien on (a) the Equipment applicable to such Lease, (b)moneys and invest-
ments held from time to time in the Acquisition Fund and (c) any and all proceeds of any of the
foregoing. Lessee agrees to execute and authorizes Lessor to file such notices of assignment,
chattel mortgages, financing statements and other documents, in form satisfactory to Lessor,
which Lessor deems necessary or appropriate to establish and maintain Lessor's security interest
in the Equipment, the Acquisition Fund and the proceeds thereof.
Section 6.03. Personal Property. The Equipment is and will remain personal property
and 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 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.
#219945v 13(Gov't Entity Master Lease) 10
ARTICLE VII
Section ZOO Liens, Taxes, Other Governmental Charges and Utility Charges. Lessee
shall keep the Equipment free of all levies, liens, and encumbrances except those created by each
Lease. The parties to this Agreement contemplate that the Equipment will be used for a govern-
mental or proprietary purpose of Lessee and that the Equipment will therefore be exempt from
all property taxes. If the use, possession or acquisition of any 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 such Equipment. Lessee shall pay
all utility and other charges incurred in the use and maintenance of 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 each Lease Term.
Section Z02. Insurance. Lessee shall during each Lease Term maintain or cause to be
maintained (a)casualty insurance naming Lessor and its assigns as loss payee and 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 reasonably required by Lessor,
in an amount at least equal to the then applicable Purchase Price of the Equipment; (b)liability
insurance naming Lessor as additional insured that protects Lessor from liability in all events in
form and amount satisfactory to Lessor; and (c)worker's 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 clause (a). Lessee shall furnish to Lessor evidence of such
insurance or self-insurance coverage throughout each Lease Term. Lessee shall not cancel or
modify such insurance or self-insurance coverage in any way that would affect the interests of
Lessor without first giving written notice thereof to Lessor at least 30 days in advance of such
cancellation or modification. Whether or not Lessee provides self-insurance, Lessee hereby
affirms that it assumes all risk of loss of, or damage to and liability related to injury or damage to
persons or property arising from the Equipment from any cause whatsoever, and no such loss of
or damage to or liability arising from the Equipment shall relieve Lessee of the obligation to
make the Rental Payments or to perform any other obligation under this Lease.
Section Z03. Advances. In the event Lessee shall fail to keep the Equipment in good
repair and working order, Lessor may, but shall be under no obligation to, 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. Unless Lessee shall have
exercised its option to purchase the Equipment by making payment of the Purchase Price as
provided in the related Lease, if, prior to the termination of the applicable Lease Term, (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
#219845v13(Gov't Entity Master Lease) 11
cause the Net Proceeds of any insurance claim or condemnation award or sale under threat of
condemnation to be applied to the prompt replacement, repair, restoration, modification or
improvement of the Equipment. Any balance of the Net Proceeds remaining after such work has
been completed shall be paid to Lessee.
If Lessee elects to replace any item of the Equipment (the "Replaced Equipment")
pursuant to this Section, the replacement equipment (the "Replacement Equipment") shall be of
similar type, utility and condition to the Replaced Equipment and shall be of equal or greater
value than the Replaced Equipment. Lessor shall receive a first priority security interest in any
such Replacement Equipment. Lessee shall represent, warrant and covenant to Lessor that each
item of Replacement Equipment is free and clear of all claims, liens, security interests and
encumbrances, excepting only those liens created by or through Lessor, and shall provide to
Lessor any and all documents as Lessor may reasonably request in connection with the
replacement, including, but not limited to, documentation in form and substance satisfactory to
Lessor evidencing Lessor's security interest in the Replacement Equipment. Lessor and Lessee
hereby acknowledge and agree that any Replacement Equipment acquired pursuant to this
paragraph shall constitute "Equipment" for purposes of this Agreement and the related Lease.
Lessee shall complete the documentation of Replacement Equipment on or before the next
Rental Payment date after the occurrence of a casualty event, or be required to exercise the
Purchase Option with respect to the damaged equipment.
For purposes of this Article, the term "Net Proceeds" shall mean the amount remaining
from the gross proceeds of any insurance claim or 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) pay
or cause to be paid to Lessor the amount of the then applicable Purchase Price for the Equipment,
and, upon such payment, the applicable Lease Term shall terminate and Lessor's security interest
in the Equipment shall terminate as provided in Section 6.01 hereof. The amount of the Net
Proceeds, if any, remaining after completing such repair, restoration, modification or
improvement or after purchasing such Equipment and such other 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 any other warranty or representation,
express or implied, with respect thereto and, as to Lessor, Lessee's acquisition of the Equipment
shall be on an "as is"basis. In no event shall Lessor be liable for any incidental, indirect, special
or consequential damage in connection with or arising out of this Agreement, any Lease, the
#219845v 13(Gov't Entity Master Lease) 12
Equipment or the existence, furnishing, functioning or Lessee's use of any item, product or
service provided for in this Agreement or any Lease.
Section 9.02. Vendor's Warranties. Lessor hereby irrevocably appoints Lessee its agent
and attorney-in-fact during each Lease Term, so long as Lessee shall not be in default under the
related Lease, to assert from time to time whatever claims and rights (including without
limitation warranties) relating to the Equipment that Lessor may have against Vendor. Lessee's
sole remedy for the breach of such warranty, indemnification or representation shall be against
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 any Lease, including the right
to receive full and timely payments under a Lease. Lessee expressly acknowledges that Lessor
makes, and has made, no representations or warranties whatsoever as to the existence or the
availability of such warranties relating to the Equipment.
ARTICLE X
Section 10.01. Purchase Option. Lessee shall have the option to purchase all of the
Equipment listed in a Lease, at the following times and upon the following terms:
(a) From and after the date specified in the related Schedule (the "Purchase Option
Commencement Date"), on the Rental Payment dates specified in each Lease, upon not less than
30 days' prior written notice, and upon payment in full of the Rental Payments then due under
such Lease plus the then applicable Purchase Price, which may include a prepayment premium
on the unpaid balance as set forth in the applicable Schedule; or
(b) In the event of substantial damage to or destruction or condemnation of
substantially all of the Equipment listed in a Lease, on the day specified in Lessee's notice to
Lessor of its exercise of the purchase option (which shall be the earlier of the next Rental
Payment date or 60 days after the casualty event) upon payment in full to Lessor of the Rental
Payments then due under such Lease plus the then applicable Purchase Price; or
(c) Upon the expiration of the Lease Term, upon payment in full of all Rental
Payments then due and all other amounts then owing under the Lease, and the payment of$1.00
to Lessor.
After payment of the applicable Purchase Price, Lessee will own the related Equipment,
and Lessor's security interests in and to such Equipment will be terminated.
ARTICLE Xl
Section I1.01. Assignment by Lessor.
(a) Lessor's right, title and interest in and to Rental Payments and any other amounts
payable by Lessee under any and all of the Leases, its security interest in the Equipment subject
to each such Lease, 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 any such assignment, transfer or conveyance to a trustee for the
benefit of owners of certificates of participation shall be made in a manner that conforms to any
applicable State law. Nothing in this Section 11.01 shall be construed, however, to prevent
#219845v 13(Gov't Entity Master Lease) 13
Lessor from executing any such assignment, transfer or conveyance that does not involve
funding through the use of certificates of participation within the meaning of applicable State
law, including any such assignment, transfer or conveyance as part of a multiple asset pool to a
partnership or trust;provided such certificates are sold only on a private placement basis (and not
pursuant to any "public offering") to a purchaser(s) who represent that (i) such purchaser has
sufficient knowledge and experience in financial and business matters to be able to evaluate the
risks and merits of the investment, (ii) such purchaser understands neither the Lease nor
certificates will be registered under the Securities Act of 1933, (iii) such purchaser is either an
"accredited investor" within the meaning of Regulation D under the Securities Act of 1933, or a
qualified institutional buyer within the meaning of Rule 144A, and (iv) it is the intention of such
purchaser to acquire such certificates (A) for investment for its own account or(B) for resale in a
transaction exempt from registration under the Securities Act of 1933; provided further, that in
any event, Lessee shall not be required to make Rental Payments, to send notices or to otherwise
deal with respect to matters arising under a Lease with or to more than one individual or entity.
(b) No assignment, transfer or conveyance permitted by this Section 11.01 shall be
effective until Lessee shall have received a written notice of assignment that discloses the name
and address of each such assignee;provided, that if such assignment is made to a bank or trust
company as trustee or paying agent for owners of certificates of participation, trust certificates or
partnership interests with respect to the Rental Payments payable under a Lease, it shall
thereafter be sufficient that Lessee receives notice of the name and address of the bank or trust
company as trustee or paying agent. During each Lease Term, Lessee shall keep, or cause to be
kept, a complete and accurate record of all such assignments in form necessary to comply with
Section 149 of the Code. 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 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 the Vendor. Assignments in part may include without
limitation assignment of all of Lessor's security interest in and to the Equipment listed in a
particular Lease and all rights in, to and under the Lease related to such Equipment. The option
granted in this Section may be separately exercised from time to time with respect to the
Equipment listed in each Lease,but such option does not permit the assignment of less than all of
Lessor's interests in the Equipment listed in a single Lease.
(c) If Lessor notifies Lessee of its intent to assign the Lease, Lessee agrees that it
shall execute and deliver to Lessor a Notice and Acknowledgement of Assignment substantially
in the form of Exhibit G attached to this Lease within five (5) business days after its receipt of
such request.
Section 11.02. Assignment and Subleasing by Lessee. None of Lessee's right, title, and
interest in, to and under any Lease or any portion of the Equipment may be assigned or encum-
bered by Lessee for any reason.
ARTICLE XII
Section 12.01. Events of Default Defined. Any of the following events shall constitute an
"Event of Default" under a Lease:
#219845v13(Gov't Entity Master Lease) 14
(a) Failure by Lessee to pay any Rental Payment or other payment required to be paid
under any Lease 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 any
Lease 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) Any default occurs under any other agreement for borrowing money or receiving
credit under which Lessee may be obligated as borrower, if such default consists of(i)the failure
to pay any indebtedness when due or (ii) the failure to perform any other obligation thereunder
and gives the holder of the indebtedness the right to accelerate the indebtedness;
(e) 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
(f) 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 or
Lessee or of all or a substantial part of the assets of Lessee, in each case without its application,
approval or consent, and such order,judgment or decree shall continue unstayed 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 payable by
Lessee pursuant to such Lease and other amounts payable by Lessee under such Lease to the end
of the then current Original Term or Renewal Term to be due;
(b) With or without terminating the Lease Term under such Lease, Lessor may enter
the premises where the Equipment listed in such Lease is located and retake possession of such
Equipment or require Lessee at Lessee's expense to promptly return any or all of such
Equipment to the possession of Lessor at such place within the United States as Lessor shall
specify, and sell or lease such Equipment or, for the account of Lessee, sublease such
#219845v13(Gov't Entity Master Lease) 15
Equipment, continuing to hold Lessee liable, but solely from Iegally available funds, for the
difference between (i) the Rental Payments payable by Lessee pursuant to such Lease and other
amounts related to such Lease or the Equipment listed therein that are payable by Lessee to the
end of the then current Original Term or Renewal Term, as the case may be, and (ii) the net
proceeds of any such sale, leasing or subleasing (after deducting all expenses of Lessor in
exercising its remedies under such Lease, including without limitation all expenses of taking
possession, storing, reconditioning and selling or leasing such Equipment and all brokerage,
auctioneer's and attorney's fees), subject, however, to the provisions of Section 3.03. The
exercise of any such remedies respecting any such Event of Default shall not relieve Lessee of
any other liabilities under any other Lease 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 Lease or as a secured party in any or all of the
Equipment subject to such Lease.
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 a Lease 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.
Section 12.04. Application of Moneys. Any net proceeds from the exercise of any
remedy under this Agreement, including the application specified in Section 12.02(b)(ii) (after
deducting all expenses of Lessor in exercising such remedies including without limitation all
expenses of taking possession, storing, reconditioning and selling or leasing Equipment and all
brokerage, auctioneer's or attorney's fees),shall be applied as follows:
(a) If such remedy is exercised solely with respect to a single Lease, Equipment listed
in such Lease or rights thereunder, then to amounts due pursuant to such Lease and other
amounts related to such Lease or such Equipment.
(b) If such remedy is exercised with respect to more than one Lease, Equipment listed
in more than one Lease or rights under more than one Lease, then to amounts due pursuant to
such Leases pro rata.
ARTICLE XIII
Section 13.01. Notices. All notices, certificates or other communications under any
Lease shall be sufficiently given and shall be deemed given when delivered or mailed by
registered mail, postage prepaid, or delivered by overnight courier, or sent by facsimile
transmission (with electronic confirmation) 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) and to any assignee at its address as it
appears on the registration books maintained by Lessee.
#219845v 13(Gov't Entity Master Lease) 16
Section 13.02. Release and Indemnification. To the extent permitted by law, but only
from legally available funds, 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 penalties connected therewith imposed on
interest received) arising out of or as a result of (a)the entering into of this Agreement or any
Lease, (b)the ownership of any item of the Equipment, (c) the ordering, acquisition, use,
operation, condition, purchase, delivery, rejection, storage or return of any item of the Equip-
ment, (d) 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 in a Lease or any material misrepresentation
contained in a Lease. The indemnification arising under this paragraph shall continue in full
force and effect notwithstanding the full payment of all obligations under all Leases or the
termination of the Lease Term under all Leases for any reason.
Section 13.03. Binding Effect. Each Lease shall inure to the benefit of and shall be
binding upon Lessor and Lessee and their respective successors and assigns.
Section 13.04. Severability. In the event any provision of any Lease shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not invalidate oz-
render unenforceable any other provision hereof.
Section 13.05. Amendments, Changes and Modifications. This Agreement and each
Lease may only be amended by Lessor and Lessee in writing.
Section 13.06. Execution in Counterparts. This Agreement and each Lease 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 13.07. Applicable Law. This Agreement and each Lease shall be governed by
and construed in accordance with the laws of the State.
Section 13.08. Captions. The captions or headings in this Agreement and in each Lease
are for convenience only and in no way define, limit or describe the scope or intent of any
provisions or sections of this Agreement or any Lease.
#219845v13(Gov't Entity Master Lease) 17
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 first above written.
LESSOR: LESSEE:
Banc of America Leasing& Capital, LLC City of Huntington Beach
555 California Street, 4th Floor 2000 Main Street
San Francisco, California 94104 Huntington Beach, CA 92648
Attention: Contract Administration Attention: Richard Amadril
Fax No.: (415) 343-0533 Fax No.: (714) 374-1530
By: By:
Name: ( Nam
Title: ICC ((A0W Title: C 1Nee, v'
(Seal)
Attest:
By:
Name: o nJ L. F
Title: C/er21c
List of Exhibits
Exhibit A -- Acquisition Fund Agreement
Exhibit B-1 -- Schedule of Property
Exhibit B-2 -- Rental Payment Schedule
Exhibit C -- Certificate
Exhibit D -- Opinion of Counsel Form
Exhibit E -- Essential Use/Source of Funds Certificate
Exhibit F -- Acceptance Certificate
Exhibit G -- Notice and Acknowledgement of Assignment
APP VEI AS TO FORM
E E � •TI City Attorney�.
By Leonie Mulvihill �'��`(�[� •,✓
Deputy City Attomey
#219845v13(Gov't Entity Master Lease) 18
EXHIBIT A
ACQUISITION FUND AGREEMENT
"Intentionally omitted from
FAA filing counterpart
as containing confidential
financial information
#219845v 13(Gov't Entity Master Lease) A-1
EXHIBIT B-1
SCHEDULE OF PROPERTY NO.
Re: Master Equipment Lease/Purchase Agreement, dated as of
between Banc of America Leasing & Capital, LLC, as Lessor, and City of
Huntington Beach, as Lessee
1. Defined Terms. All terms used herein have the meanings ascribed to them in the
above-referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment
Lease").
2. Equipment. The following items of Equipment are hereby included under this
Schedule of the Master Equipment Lease.
Quantity Description Serial No. Model No. Location
3. Payment Schedule.
(a) Rental Payments. The Rental Payments shall be in such amounts and
payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as
Exhibit B-2. Rental Payments shall commence on the date on which the Equipment listed in this
Schedule is accepted by Lessee, as indicated in an Acceptance Certificate substantially in the
form of Exhibit F to the Master Equipment Lease or the date on which sufficient moneys to
purchase the Equipment are deposited for that purpose with an Acquisition Fund Custodian,
whichever is earlier.
(b) Purchase Price Schedule. The Purchase Price on each Rental Payment
date for the Equipment listed in this Schedule shall be the amount set forth for such Rental
Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this
Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule
(including the Rental Payment shown on the same line in the Rental Payment Schedule).
4. Representations, Warranties and Covenants. Lessee hereby represents, warrants
and covenants that its representations, warranties and covenants set forth in the Master
Equipment Lease are true and correct as though made on the date of commencement of Rental
Payments on this Schedule. Lessee further represents and warrants that no material adverse
change in Lessee's financial condition has occurred since the date of the Master Equipment
Lease.
#219845v13(Gov't Entity Master Lease) B-1-1
5. The Lease. The terms and provisions of the Master Equipment Lease (other than
to the extent that they relate solely to other Schedules or Equipment listed on other Schedules)
are hereby incorporated into this Schedule by reference and made a part hereof.
6. Lease Proceeds. The Lease Proceeds which Lessor shall pay to the Acquisition
Fund Custodian in connection with this Schedule is $ . It is expected that by
( ) months from the date of this Schedule No. Lessee will have taken possession
of all items of Equipment shown above and that a Lessee's Acceptance Certificate, or
Acceptance Certificates, will be signed by Lessee and delivered to Lessor on or before ( )
months from the date of this Schedule No.
7. Acquisition Period. The Acquisition Period applicable to this Schedule shall end
at the conclusion of the ( )_months following the date hereof.
8. Lease Term. The Lease Term shall consist of the Original Term and ( )
consecutive Renewal Terms, with the final Renewal Term ending on
9. Purchase Option Commencement Date. For purposes of Section 10.01 of the
Lease, the Purchase Option Commencement Date is
10. Utilization Period. The Utilization Period for this Schedule shall be no later than
11. Non-Utilization Fee. [if applicable]
#219845v13(Gov't Entity Master Lease) B-1-2
Dated:
LESSOR: LESSEE:
Banc of America Leasing & Capital,LLC City of Huntington Beach,California
555 California Street,4th Floor 2000 Main Street
San Francisco, California 94104 Huntington Beach, California 92648
Attention: Contract Administration Attention: Rick Amadril
By: By:
Name: Name:
Title: Title:
(Seal)
Attest:
By:
Name:
Title:
Counterpart No. of manually executed and serially numbered counterparts.
To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial
Code), no security interest herein may be created through the transfer or possession of any
Counterpart other than Counterpart No. 1.
#219845v13(Gov't Entity Master Lease) B-1-3
EXHIBIT B-2
RENTAL PAYMENT SCHEDULE
Rental Rental Interest Principal Purchase
Payment Payment Portion Portion Price
Date Amount
Prepayment Premium for purposes of Section 10.01(a)is
For purposes of this Lease, "Taxable Rate," with respect to the interest component of
Rental Payments,means an annual rate of interest equal to %.
LESSEE:
City of Huntington Beach
By: _
Name:
Title:
#219845v13(Gov't Entity Master Lease) B-2-1
EXHIBIT C
CERTIFICATE
The undersigned, a duly elected and acting Secretary / City Clerk of the City of
Huntington Beach("Lessee")certifies as follows:
A. The following listed persons are duly elected and acting officials of Lessee (the
"Officials") in the capacity set forth opposite their respective names below and that the facsimile
signatures are true and correct as of the date hereof;
B. The Officials are duly authorized, on behalf of Lessee, to negotiate, execute and
deliver the Master Equipment Lease/Purchase Agreement dated as of , and the
Schedule(s) thereunder and all future Schedule(s) (the "Agreements") by and between Lessee
and Banc of America Leasing & Capital, LLC, and these Agreements are binding and authorized
Agreements of Lessee, enforceable in all respects in accordance with their terms.
Name of Official Title Signature
Dated: By:
Name:
Title:
(The signer of this Certificate cannot be listed above as authorized to execute the Agreements.)
#219845v13(Gov't Entity Master Lease) C-1
EXHIBIT D
OPINION OF COUNSEL TO LESSEE
Banc of America Leasing &Capital, LLC
555 California Street,4th Floor
San Francisco, California 94104
Re: Schedule of Property No. 1, dated , to Master Equipment
Lease/Purchase Agreement, dated as of , between
Banc of America Leasing & Capital, LLC, as Lessor, and City of
Huntington Beach, as Lessee
Ladies and Gentlemen:
As legal counsel to City of Huntington Beach ("Lessee"), I have examined (a) an
executed counterpart of a certain Master Equipment Lease/Purchase Agreement, dated as of
, and Exhibits thereto by and between Banc of America Leasing & Capital, LLC
("Lessor") and Lessee (the "Agreement") and an executed counterpart of Schedule of Property
No. 1, dated , by and between Lessor and Lessee (the "Schedule"), which,
among other things, provides for the lease of certain property listed in the Schedule (the
"Equipment") and (b) an executed counterpart of the ordinances or resolutions of Lessee which,
among other things, authorize Lessee to execute the Agreement and the Schedule and (c) such
other opinions, documents and matters of law as I have deemed necessary in connection with the
following opinions. The Schedule and the terms and provisions of the Agreement incorporated
therein by reference together with the Rental Payment Schedule attached to the Schedule are
herein referred to collectively as the "Lease".
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 is a political subdivision of a state within the meaning of
Section 103(c) of the Internal Revenue Code of 1986, as amended (the "Code") and the
obligations of Lessee under the Agreement will constitute an obligation of Lessee within the
meaning of Section 103(a)of the Code, notwithstanding Section 103(b) of the Code.
2. Lessee has the requisite power and authority to lease and acquire the Equipment
and to execute and deliver the Lease and to perform its obligations under the Lease.
3. The Lease has been duly authorized, approved, executed and delivered by and on
behalf of Lessee and are valid and binding obligations of Lessee enforceable in accordance with
their respective terms.
4. The authorization, approval, execution and delivery of the Lease and all other
proceedings of Lessee relating to the transactions contemplated thereby have been performed in
#219845v 13(Gov't Entity Master Lease) D-1
accordance with all open meeting laws, public bidding laws and all other applicable state or
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 Lease or the security interest of Lessor or
its assigns, as the case may be, in the Equipment or other collateral thereunder.
6. All capitalized terms herein shall have the same meanings as in the Lease unless
otherwise provided herein. Lessor and its successors and assigns, and any counsel rendering an
opinion on the tax-exempt status of the interest components of the Rental Payments, are entitled
to rely on this opinion.
Printed Name: Signature:
Firm: Dated:
Address:
Telephone No.:
#219945v 13(Gov't Entity Master Lease) D-2
EXHIBIT E
ESSENTIAL USE/SOURCE OF FUNDS CERTIFICATE
Banc of America Leasing &Capital, LLC
555 California Street,4th Floor
San Francisco,California 94104
Re: Master Equipment Lease/Purchase Agreement dated as of
, between Banc of America Leasing & Capital, LLC, and City of
Huntington Beach ("Lessee") and Schedule of Property No. dated
This certificate confirms and affirms that the Aircraft described in the Agreement
referenced above is essential to the functions of Lessee or to the services Lessee provides its
citizens. Further, Lessee has an immediate need for, and expects to make immediate use of 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.
Lessee expects and anticipates adequate funds to be available for all future payments or
rent due after the current budgetary period.
Signature:
Name:
Title:
#219845v 13(Gov't Entity Master Lease) E-1
EXHIBIT F
ACCEPTANCE CERTIFICATE
Banc of America Leasing &Capital, LLC
555 California Street,4th Floor
San Francisco,California 94104
Re: Schedule of Property No. , dated to Master
Equipment Lease/Purchase Agreement,dated as of ,
between Banc of America Leasing & Capital, LLC, as Lessor, and City of
Huntington Beach, as Lessee
Ladies and Gentlemen:
In accordance with the Master Equipment Lease/Purchase Agreement(the "Agreement"),
the undersigned Lessee hereby certifies and represents to, and agrees with Lessor as follows:
1. The Equipment (as such term is defined in the Agreement) listed in the above-
referenced Schedule of Property (the "Schedule") has been delivered, installed and accepted on
the date hereof.
2. Lessee has conducted such inspection and/or testing of the Equipment listed in the
Schedule, 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.
Date:
LEssEE:
Approved by/Police Department City of Huntington Beach
Name:
Title By:
Name:
Title:
#219845v13(Gov't Entity Master Lease) F-1
EXHIBIT G
NOTICE AND ACKNOWLEDGEMENT OF ASSIGNMENT
DATED
BANC OF AMERICA LEASING & CAPITAL, LLC ("Assignor") hereby gives notice
that it has assigned and sold to ("Assignee") all of Assignor's right,
title and interest in, to and under Schedule of Property No. , dated
(the "Lease") to the Master Equipment Lease/Purchase Agreement ("Equipment Lease") dated
as of ,between Assignor and City of Huntington Beach ("Lessee").
For purposes of this Notice and Acknowledgment of Assignment (the
"Acknowledgment"), "Lease" means collectively the Lease identified above, together with all
exhibits, schedules, addenda and attachments related thereto, and all certifications and other
documents delivered in connection therewith. The term "Lease" specifically excludes all other
Schedules of Property entered into under the Equipment Lease and rental payments other than
with respect to the [Schedule of Property] identified above. Each capitalized term used but not
defined herein has the meaning set forth in the Equipment Lease described above.
1. Pursuant to the authority of Resolution adopted on
, Lessee hereby acknowledges the effect of the assignment of the Lease
and absolutely and unconditionally agrees to deliver to Assignee all rental payments and other
amounts coming due under the Lease in accordance with the terms thereof on and after the date
of this Acknowledgment.
2. Lessee hereby agrees that: (i) Assignee shall have all the rights of Lessor under
the Lease and all related documents, including, but not limited to, the rights to issue or receive all
notices and reports, to give all consents or agreements to modifications thereto, to receive title to
the equipment in accordance with the terms of the Lease, to declare a default and to exercise all
remedies thereunder; and (ii) except as provided in Section of the Lease, the obligations of
Lessee to make rental payments and to perform and observe the other covenants and agreements
contained in the Lease shall be absolute and unconditional in all events without abatement,
diminution, deduction, set-off or defense.
3. Lessee agrees that, as of the date of this Acknowledgment, the following
information about the Lease is true, accurate and complete:
Number of Rental Payments Remaining —
Amount of Each Rental Payment — $
Total Amount of Rents Remaining — $
Frequency of Rental Payments —
Next Rental Payment Due —
Funds Remaining in Escrow Fund — $
#219845v13(Gov't Entity Master Lease) G-1
4. The Lease remains in full force and effect, has not been amended and no
nonappropriation or event of default (or event which with the passage of time or the giving of
notice or both would constitute a default) has occurred thereunder.
5. Any inquiries of Lessee related to the Lease and any requests for escrow
disbursements, if applicable, and all rental payments and other amounts coming due pursuant to
the Lease on and after the date of this Acknowledgment should be remitted to Assignee at the
following address (or such other address as provided to Lessee in writing from time to time by
Assignee):
ACKNOWLEDGED AND AGREED:
LESSEE:
[FOR EXHIBIT PURPOSES ONLYI
By:
Name:
Title:
ASSIGNOR: BANC OF AMERICA LEASING & CAPITAL, LLC
[FOR EXHIBIT PURPOSES ONLYI
By:
Name:
Title:
#219845v 13(Gov't Entity Master Lease) G-2
SCHEDULE OF PROPERTY NO.1
Re: Master Equipment Lease/Purchase Agreement, dated as of April 14,
2006, between Banc of America Leasing & Capital, LLC, as Lessor, and
City of Huntington Beach, as Lessee
1. Defined Terms. All terms used herein have the meanings ascribed to them in the
above-referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment
Lease").
Aircraft shall mean (i) the Airframe, (h) the Engines, (iii) any APU, (iv) the Rotor Blades,
(v) the Rotor Components,(vi)the Parts,and (vi)the Records.
Airframe shall mean (i) the Aircraft described in Annex 1, and shall not include the
Engines, the Rotor Blades, the Rotor Components or any APU, and(ii) any and all Parts from time
to time incorporated in, installed on, or attached to such Aircraft and any and all Parts removed
therefrom so long as title thereto shall remain vested in Lessor in accordance with the applicable
terms of the Master Equipment Lease after removal from the Aircraft.
Applicable Law shall mean all applicable laws including all statutes, treaties,
conventions, judgments, decrees, injunctions, writs and orders of any court, governmental
agency or authority and rules, regulations, orders, directives, licenses and permits of any
governmental body, instrumentality, agency or authority as amended and revised, and any
judicial or administrative interpretation, of any of the same, including the airworthiness
certificate issued with respect to the Aircraft, all FARS (as defined below), Supplemental FARS,
airworthiness directives, and/or any of the same relating to noise, the environment, national
security, public safety,exports or imports or contraband.
Applicable Standards shall mean (i) Applicable Law, (ii) the requirements of the
insurance policies required hereunder, and (iii), with respect to the Airframe or any Engine, APU
or Part, all compliance requirements set forth in or under (A) all maintenance manuals initially
furnished with respect thereto, including any subsequent amendments or supplements to such
manuals issued by the manufacturer or supplier thereof from time to time, (B) all mandatory
service bulletins issued, supplied, or available by or through the applicable manufacturer with
respect thereto, (C) all applicable airworthiness directives issued by the FAA or similar
regulatory agency having jurisdictional authority, (D) all conditions to the enforcement of any
warranties pertaining thereto, and (E) Lessee's FAA approved maintenance program with respect
to the Airframe, the Engines, any APU or Part.
APU shall mean (i) any auxiliary power unit described in Annex 1 hereto and installed on
the Airframe as of the Commencement Date, whether or not hereafter installed on the Airframe
or any other airframe from time to time; (ii) any auxiliary power unit that may from time to time
be substituted, pursuant to the applicable terms of the Master Equipment Lease and this
Schedule, for an APU; and (iii) any and all Parts incorporated in or installed on or attached to
such auxiliary power unit or any and all Parts removed therefrom so long as Lessor shall retain
an interest therein in accordance with the applicable terms of the Master Equipment Lease and
this Schedule after such removal.
#219845v 13(Gov't Entity Master Lease) ]
Engine shall mean (i) each of the engines described in Annex 1 hereto and installed on
the Airframe as of the Commencement Date, whether or not hereafter any other airframe from
time to time or reinstalled on the Airframe or; (ii) any engine that may from time to time be
substituted for an Engine pursuant to the applicable terms of the Master Equipment Lease and
this Schedule; and (iii) any and all Parts incorporated in or installed on or attached to such engine
or any and all Parts removed therefrom so long as Lessor shall retain an interest therein in
accordance with the applicable terms of the Master Lease and this Schedule after such removal.
Estimated Annual Hours shall mean 500 annual flight hours.
FAA Counsel shall mean such counsel as Lessor may designate from time to time to
assist it with FAA matters.
FAA shall mean the United States Federal Aviation Administration and/or the
Administrator of the Federal Aviation Administration and the Department of Transportation, or
any other entity, governmental department, bureau, authority, commission or agency succeeding
the functions of any of the foregoing, including, where applicable, the Transportation Security
Administration.
Fair Market Sales Value shall mean that certain value determined on the following basis:
(i) the value shall be the amount which would be obtained in an arm's length transaction between
an informed and willing buyer (who is neither a buyer in possession nor a used equipment
dealer), and an informed and willing seller under no compulsion to sell; (ii) the costs of removal
of the Aircraft from its then location shall not be a deduction from such value; and (iii) unless
otherwise provided herein, in determining any such value, it shall be assumed (whether or not the
same be true) (A) that the Aircraft has been maintained by Lessee and is in the condition in
which it is required to be returned to Lessor, in each case, in accordance with the Master
Equipment Lease and this Schedule, (B) such value has not been diminished due to the existence
of any damage history, and (C) that the total number of Airframe hours (including any
component with hourly overhaul schedules) accumulated from the Commencement Date to the
date that the Aircraft is returned or delivered to Lessor, or the date that the Aircraft is
repossessed or replevied by Lessor, or any other date of termination or cancellation do not
exceed the product of Estimated Annual Hours times the number of twelve month periods and
any portion thereof, from the Purchase Date to such expiration, termination, cancellation,
repossession, replevin, delivery or return date (any such excess, the "Excess Hours").
FARS shall mean the Federal Aviation Regulations, any Supplemental Federal Aviation
Regulations and all successor regulations thereto.
Federal Aviation Act shall mean Subtitle VII of Title 49 of the United States Code, as
amended and recodified.
Maintenance Requirements shall mean, with respect to the Airframe, any Engine, any
Rotor Blade, any Rotor Component,any APU or any Part, all compliance requirements set forth in
or under (i) all maintenance manuals initially furnished with respect thereto, including any
subsequent amendments or supplements to such manuals issued by the Manufacturer or Supplier
from time to time, (ii) all mandatory service bulletins issued, supplied, or available by or through
the Manufacturer and/or the Manufacturer of any Engine, any Rotor Blade, any Rotor
#219845v 13(Gov't Entity Master Lease) 2
Component, any APU or Part with respect thereto, (iii) all applicable airworthiness directives
issued by the FAA or similar regulatory agency having jurisdictional authority, (iv) all conditions
to the enforcement of any warranties pertaining thereto, and (v) Lessee's FAA approved
maintenance program with respect thereto.
Manufacturer shall mean MD Helicopters, Inc. and its successors and assigns as to (i)
the Airframe, (ii)Engines, (iii) Rotor Blades, and (iv) Rotor Components.
Parts shall mean all appliances, avionics, parts, instruments, appurtenances, accessories,
furnishings and other equipment of whatever nature (other than complete Engines) that may from
time to time be incorporated or installed in or attached to the Airframe, any Engine or any APU,
and any and all such appliances, avionics, parts, instruments, appurtenances, accessories,
furnishings and other equipment removed therefrom so long as Lessor shall retain a security
interest therein in accordance with the applicable terms of the Master Equipment Lease and this
Schedule after such removal.
Records shall mean any and all logs, manuals, certificates and data and inspection,
modification, maintenance, engineering, technical, and overhaul records (whether in written or
electronic form) with respect to the Aircraft, including, without limitation, all records (i) required
to be maintained by the FAA or any other governmental agency or authority having jurisdiction
with respect to the Aircraft or by any manufacturer or supplier of the Aircraft (or any part
thereof) with respect to the enforcement of warranties or otherwise, and (ii) evidencing Lessee's
compliance with Applicable Standards.
Rotor Blade shall mean (i) each of the rotor blades described and listed by manufacturer's
serial numbers in Annex I and originally installed on the Airframe whether or not thereafter
installed on such Airframe or any other airframe from time to time; (ii) any rotor blade that may
from time to time be substituted, pursuant to the applicable terms of the Agreement, for a Rotor
Blade subject to, described in, or covered by, the Agreement and/or this Schedule; and (iii) in
each case set forth in clauses (i) and (ii) hereof, with any and all Rotor Components and Parts
incorporated in or installed on or attached to such Rotor Blade or rotor blade or any and all Rotor
Components and Parts removed therefrom or so long as the same remain subject to the security
interest granted to Lessor in accordance with the applicable terms of the Master Equipment Lease
after removal from such Rotor Blade.
Rotor Com onent shall mean (i) each of the main rotor gear boxes, tail rotor gear boxes,
combining gearboxes, transmissions, servos, main and tail rotor head components and other rotor
components originally installed on the Airframe, whether or not thereafter installed on such
Airframe or any other airframe from time to time; (ii) any rotor component that may from time to
time be substituted, pursuant to the applicable terms of the Agreement, for a Rotor Component
subject to, described in, or covered by, the Agreement and/or this Schedule; and (iii) in each case
set forth in clauses (i) and (ii) hereof, with any and all Parts incorporated in or installed on or
attached to such Rotor Component or rotor component or any and all Parts removed therefrom or
so long as the same remain subject to the security interest granted to Lessor in accordance with the
applicable terms of the Agreement after removal from such Rotor Component.
Supplier shall mean MD Helicopters,Inc., and its successors and assigns.
#219845v13(Gov't Entity Master Lease) 3
2. Payment Schedule.
(a) Rental Payments. The Rental Payments shall be in such amounts and
payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as
Exhibit B-2. Rental Payments shall commence on the date on which the Aircraft listed in this
Schedule is accepted by Lessee, as indicated in an Acceptance Certificate substantially in the
form of Exhibit F to the Master Equipment Lease.
(b) Purchase Price Schedule. The Purchase Price on each Rental Payment
date for the Aircraft listed in this Schedule shall be the amount set forth for such Rental Payment
date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule.
The Purchase Price is in addition to all Rental Payments then due under this Schedule (including
the Rental Payment shown on the same line in the Rental Payment Schedule).
3. Representations, Warranties and Covenants. Lessee hereby represents, warrants
and covenants that its representations, warranties and covenants set forth in the Master
Equipment Lease are true and correct as though made on the date of commencement of Rental
Payments on this Schedule. Lessee further represents and warrants that no material adverse
change in Lessee's financial condition has occurred since the date of the Master Equipment
Lease.
4. The Lease. The terms and provisions of the Master Equipment Lease (other than
to the extent that they relate solely to other Schedules or Equipment listed on other Schedules)
are hereby incorporated into this Schedule by reference and made a part hereof.
5. Maximum Equipment Cost. The Maximum Equipment Cost applicable to this
Schedule is $507,830.09.
6. Acquisition Amount. The Acquisition Amount for the Equipment described in this
Schedule to be paid to the Vendor is $ 507,830.09.
7. Lease Term. The Lease Term shall consist of the Original Term and two (2)
consecutive Renewal Terms, with the final Renewal Term ending on June 1, 2009.
8. Purchase Option Commencement Date. For purposes of Section 10.01 of the
Lease, the Purchase Option Commencement Date is a Rental Payment Date on or after June 1,
2006.
9. Utilization Period. The Utilization Period for this Schedule shall be no later
than September 30, 2006.
10. Non-Utilization Fee. If for any reason the Aircraft is not delivered and accepted
by Lessee by March 30, 2007, Lessee shall pay to Lessor a Non-Utilization Fee of$10,000. This
fee is non-refundable.
#219845v13(Gov't Entity Master Lease) 4
11. General Aircraft Provisions.
A. Additional Documentation. In addition to the documentation described in section
3.04(a) of the Master Equipment Lease, Lessee shall provide the following documentation at
least 3 Business Days prior to the Commencement Date, in form and substance satisfactory to
Lessor and FAA Counsel:
(1) evidence as to the insurance coverage required under the Master Equipment
Lease and this Schedule, including, but not limited to, a certificate of insurance, copies of
endorsements (including a Lender endorsement), and, if requested by Lessor, copies of
applicable policies and written confirmation from the insurance underwriter or broker that
the insurance coverage provided is in compliance with the requirements of Section D of this
Schedule;
(2) copies of: (i) any purchase agreements entered into by Lessee in
connection with the acquisition of the Aircraft, (ii) the warranty bill of sale conveying title
to Lessor, but only as required by the FAA as provided below; (iii) if required by Lessor,
invoices for the purchase of the Aircraft, and (iv) such other documents relating to the
purchase or conveyance of title as Lessor may request;
(3) copies of the executed FAA Aircraft Registration Application (AC Form
8050-1) executed by Lessee, FAA Bill of Sale (AC Form 8050-2) conveying title to Lessor
for FAA registration purposes, and FAA Standard Airworthiness Certificate (AC Form
8100-2) for the Aircraft; and
(4) such other documents, certificates and opinions, and evidence of such
other matters, as Lessor, Lessor's counsel or FAA Counsel, may reasonably request.
B. Additional Closing Requirements. On or prior to the Commencement Date, Lessor
shall have received evidence that FAA Counsel has received in escrow: (i) the executed FAA
Aircraft Bill of Sale (AC Form 8050-2) conveying title to Lessor and the executed FAA Aircraft
Registration Application (AC Form 8050-1) in the name of Lessee (except for the pink copy,
which shall be available to be placed on the Aircraft upon acceptance thereof); (ii) executed
releases in form and substance satisfactory to FAA Counsel of any Liens on the Aircraft; (iii)
such other documents as are necessary, in the opinion of Lessor's counsel and/or FAA Counsel
to vest good title to the Aircraft in the name of Lessee and to perfect Lessor's first priority
security interest in the Aircraft; and (iv) the executed original of the Agreement, all the foregoing
being in proper form for filing with the FAA. On the Commencement Date, Lessor shall also
have received assurances from FAA Counsel, in form and substance satisfactory to Lessor, that(i)
the Aircraft (including the Airframe and Engines) is free and clear of all other Liens of record with
the FAA, (ii) title to the Airframe is vested in Lessor or that, upon filing of the FAA Aircraft Bill
of Sale (AC Form 8050-2) in the name of Lessor, title to the Airframe will be vested in Lessor,
(iii) Lessor, upon filing of the Agreement with the FAA, will have a valid and perfected security
interest in the Aircraft (including the Airframe and the Engines), and (iv) the filing of the Master
Equipment Lease and this Schedule with the FAA has been effected.
C. Grant of Security Interest, Title Matters; Nature of Transaction. In order to secure
the payment and performance of all of Lessee's obligations owing to Lessor in connection with
the Master Equipment Lease, including its obligations to make Lease Payments in connection
#219845v 13(Gov't Entity Master Lease) 5
with this Schedule, Lessee hereby grants to Lessor a first priority security interest in and lien on,
and collaterally assigns to Lessor,all of Lessee's right, title and interest in, to and under all of the
following collateral (collectively, the "Collateral"): (i) the Airframe, (ii) the Engines, (iii) any
APU, (iv) the Rotor Blades, (v) the Rotor Components, (vi) the Parts, (vi) the Records, and (viii)
proceeds of all of the foregoing. Lessee will cause the Aircraft to be registered in the records of
the Aircraft Registry of the FAA in accordance with applicable laws and regulations in the name
of Lessee at all times during the Term. At all times during the Term, the records of the Aircraft
Registry of the FAA shall reflect that Lessor has a duly perfected interest in the Aircraft free and
clear of all liens, charges, security interests, leaseholds and encumbrances of any nature
(collectively, "Liens") other than any Liens created in favor of Lessor and/or Lessee under this
Schedule. The parties agree that for all purposes under federal, state and local law, (a) this
Schedule will be treated as a financing transaction, (b) the transaction contemplated hereby
preserves ownership in the Aircraft in Lessee, and (c) Lessor does not by virtue of this Schedule
or otherwise assume any obligations, liabilities and/or duties of any kind whatsoever of Lessee or
any other person under, or with respect to, the Collateral. Upon the payment and performance of
all of Lessee's obligations owing to the Lessor in connection with this Schedule, including
Lessee's obligations to make Lease Payments hereunder, Lessor shall convey all of its rights,
title and interest in and to the Aircraft to Lessee, on an As-Is, Where-Is basis, with all faults and
wherever located, without representation or warranty of any kind, express or implied.
D. Insurance. Lessee agrees to maintain at all times, at its sole cost and expense,
with insurers of recognized reputation and responsibility satisfactory to Lessor (but in no event
having an A.M. Best or comparable agency rating of less than"A-"):
(1) (i) comprehensive aircraft liability insurance against bodily injury or property
damage claims including, without limitation, contractual liability, premises damage,
public liability, death and property damage liability, public and passenger legal liability
coverage, and sudden accident pollution coverage, in an amount not less than
$50,000,000.00 for each single occurrence, and (ii) personal injury liability in an amount
not less than $25,000,000.00;
(2) "all-risk" ground, taxiing, and flight hull insurance on an agreed-value basis,
covering the Aircraft, provided that such insurance shall at all times be in an amount not
less than the greater of (i) the full replacement value of the Aircraft (as determined by
Lessor), or (ii) the unpaid principal amount of the Note (each such amount re-determined
as of each anniversary of the date hereof for the next succeeding year throughout the term
of this Schedule); and
(3) war risk and allied perils (including confiscation, appropriation, expropriation,
terrorism and hijacking insurance) in the amounts required in clauses (1) and (2) above,
as applicable.
Any policies of insurance carried in accordance with this Schedule and any policies taken
out in substitution or replacement of any such policies shall (i) be endorsed to name
Lessor as an additional insured as its interests may appear (but without responsibility for
premiums), (ii) provide, with respect to insurance carried in accordance with clause (a) or
(b) above, that any amount payable thereunder shall be paid directly to Lessor as sole loss
payee and not to Lessor and Lessee jointly, (iii) provide for thirty (30) days' (seven (7)
#219845v13(Gov't Entity Master Lease) 6
days' in the case of war, hijacking and allied perils) prior written notice by such insurer
of cancellation, material change, or non-renewal, (iv) include a severability of interest
clause providing that such policy shall operate in the same manner as if there were a
separate policy covering each insured, (v) waive any right of set-off against Lessor, and
any rights of subrogation against Lessor, (vi) provide that in respect of the interests of
Lessor in such policies, that the insurance shall not be invalidated by any action or
inaction of Lessee or any other person operating or in possession of the Aircraft,
regardless of any breach or violation of any warranties, declarations or conditions
contained in such policies by or binding upon Lessee or any other person operating or in
possession of the Aircraft, and (vii) be primary, not subject to any co-insurance clause
and shall be without right of contribution from any other insurance. All of the coverages
required herein shall be in full force and effect worldwide throughout any geographical
areas to, in or over which the Aircraft is operated. All insurance proceeds payable under
the requisite policies shall be payable in U.S. Dollars.
Annually on or before the anniversary of the policy expiration date, Lessee shall furnish
to Lessor evidence of insurance coverage in form and substance satisfactory to Lessor
evidencing that Lessee has obtained the insurance coverages required herein for a twelve
(12) month or greater period commencing from and after such anniversary date. In the
event Lessee shall fail to maintain insurance as herein provided, Lessor may, at its
option, provide such insurance, and Lessee shall, upon demand, reimburse Lessor for the
cost thereof, together with interest at the rate of interest provided in Section 4.01 of the
Master Lease.
E. Use of Aircraft; Maintenance; Modifications; Security.
(1) Lessee will operate the Aircraft under and in compliance with Part 91 of
the FARs. Lessee shall not operate or permit the Aircraft to be operated for air taxi
operations or otherwise under Part 135 of the FARs. The Aircraft at all times will be
operated by duly qualified pilots having satisfied all requirements established and
specified by the FAA, the Transportation Security Administration, any other applicable
governmental authority and the insurance policies required under the Master Equipment
Lease and this Schedule: -
(2) Applicable Standards, including, without limitation, its operation,
maintenance and security. The Aircraft shall not be operated, used or located outside the
continental United States, except that it may be flown temporarily to any country in the
world for any purpose expressly permitted under the Master Equipment Lease and this
Schedule. Notwithstanding the foregoing, the Aircraft shall not be flown, operated, used
or located in, to or over any such country or area (temporarily or otherwise), (i) that is
excluded from the insurance required hereunder (or specifically not covered by such
insurance), (ii) with which the United States does not maintain favorable diplomatic
relations, (iii) in any area of recognized or threatened hostilities, or(iv) in violation of the
Master Equipment Lease and this Schedule or any Applicable Standards, including any
U.S. law or United Nations Security Council Directive. Lessee shall implement all
security measures required by any governmental authority, or by any insurance policies
or that are necessary or appropriate for the proper protection of the Aircraft (whether on
#219845v13(Gov't Entity Master Lease) 7
the ground or in flight) against theft, vandalism, hijacking, destruction, bombing,
terrorism or similar acts.
(3) Lessee will, at its own expense, (i) maintain, inspect, service, repair,
overhaul and test the Airframe, each Engine, any APU and each Part in accordance with
Applicable Standards; (ii) make any alteration or modification to the Aircraft that may at
any time be required to comply with Applicable Standards, to cause the Aircraft to
remain airworthy or to maintain the Aircraft's airworthiness certification; (iii) furnish all
parts, replacements, mechanisms, devices and servicing required therefor so that the
condition and operating efficiency of the applicable Airframe, Engine, APU or Part will at
all times be no less than its condition and operating efficiency as and when delivered to
Lessee, ordinary wear and tear from proper use alone excepted; (iv) promptly replace all
Parts that become worn out, lost, stolen, taken, destroyed, damaged beyond repair or
permanently rendered or declared unfit for use for any reason whatsoever; and(v) maintain
(in English) all Records in accordance with Applicable Standards. All repairs, parts,
replacements, mechanisms and devices so furnished shall immediately, without further
act, become part of the Aircraft and subject to the security interest created by the Master
Equipment Lease and this Schedule. All maintenance procedures shall be performed by
properly trained, licensed, and certified maintenance facilities and maintenance personnel
utilizing replacement parts approved by the FAA and the manufacturer of the applicable
Airframe, Engine, APU or Part. Without limiting the foregoing, Lessee shall comply with
all mandatory service bulletins and airworthiness directives by causing compliance to such
bulletins and/or directives to be completed through corrective action in lieu of operating
manual restrictions.
(4) Lessee will not make or authorize any improvement, change, addition or
alteration to the Aircraft that will impair the originally intended function or use of the
Aircraft, diminish the value of the Aircraft as it existed immediately prior thereto, or
violate any Applicable Standard; and any Part, mechanism, device or replacement added
to the Aircraft in connection therewith shall immediately, without further act, become
part of the Aircraft and subject to the security interest created by the Master Lease and
this Schedule.
F. Condition Upon Return.
(1) Return Generally. Upon the repossession, return or delivery of the
Aircraft to Lessor following the occurrence of any Event of Default or for any other
reason under the Master Equipment Lease ("Return"), Lessee will return the Aircraft
(together with all Records) to Lessor at a location specified by the Lessor within the
continental United States. Upon Return, the Aircraft shall be fully equipped with the
Engines, Rotor Blades, Rotor Components, transmission and gear box or the same
number, make, and model of engines, rotor blades, rotor components, transmission and
gear box as are set forth in Annex 1 to this Schedule and which are suitable for use on the
Airframe and shall have the same or improved utility, value, useful life, performance, and
efficiency (normal wear and tear excepted) as the Engines, Rotor Blades, Rotor
Components, transmission and gear box had on the date hereof. Furthermore, upon
Return the Aircraft (i) shall have a currently effective FAA airworthiness certificate; (ii)
shall be free and clear of all liens and encumbrances other than the security interest of
#219845v 13(Gov't Entity Master Lease) 8
Lessor hereunder; (iii) shall be in the same configuration, coloring and appearance and in
the same operating condition, ordinary wear and tear excepted, as of the Commencement
Date or, at Lessor's option, Lessee shall pay to Lessor an amount equal to the actual cost
of restoring the Aircraft to such condition; (iv) shall be in good operating condition,
physical condition and appearance (ordinary wear and tear excepted), with all systems
operating normally; (v) shall have no damage history (subject to the terms of Section F(2)
below); (vi) shall have no open mandatory service bulletins or airworthiness directives,
and if terminating action is required within six (6) months of the date of return, Lessee
shall comply with each of the same by terminating action, and shall be in compliance
with all other Applicable Law and Maintenance Requirements; and (vii) shall be
otherwise in the condition and repair required under the Master Equipment Lease and this
Schedule.
(2) Damage History. If Lessor is of the opinion that the Aircraft's Fair Market
Sales Value is diminished due to the existence of any damage history, Lessor and Lessee
shall consult for the purpose of determining the Diminution Amount (defined below), and
any values agreed upon in writing between Lessor and Lessee shall be binding on both
parties. The "Diminution Amount" shall mean the positive difference between the Fair
Market Sales Value of the Aircraft with and without such damage history. If Lessee and
Lessor fail to agree within ten (10) days after Return of the Aircraft, then Lessor shall
appoint an independent appraiser (reasonably acceptable to Lessee) to determine the
Diminution Amount. Lessee agrees to pay the costs and expenses of any such
determination and appraisal. The independent appraiser shall be required to complete such
determination as promptly as practicable, but in any event, not later than forty (40) days
after the date on which it is appointed. A final determination by the independent appraiser
regarding the extent of any Diminution Amount shall be binding on Lessee and Lessor.
Lessee shall pay to Lessor within ten (10) days after the independent appraiser's
determination an amount equal to the Diminution Amount,if any.
(3) Excess Use. Upon Return of the Aircraft to Lessor, Lessor and Lessee
shall consult for the purpose of determining the Excess Use Amount (defined below), if
any, and any amount so agreed upon in writing between Lessor and Lessee shall be
binding on both parties. The "Excess Use Amount" shall mean the amount, if any, by
which the Fair Market Sales Value of the Aircraft without such Excess Hours exceeds the
Fair Market Sales Value of the Aircraft with such Excess Hours. If Lessor and Lessee fail
to agree within ten (10) days after the return of the Aircraft to Lessor, then Lessor shall
appoint an independent appraiser (reasonably acceptable to Lessee) to determine the
Excess Use Amount. Lessee agrees to pay the costs and expenses of any such
determination and appraisal. The independent appraiser shall be required to complete
such determination as promptly as practicable, but in any event, not later than forty (40)
days after the date on which it is appointed. A final determination by the independent
appraiser regarding the extent of the Excess Use Amount, if any, shall be binding on Lessor
and Lessee. Lessee shall pay to Lessor within ten (10) days after the independent
appraiser's determination an amount equal to the Excess Use Amount.
(4) Mid-Life Condition. Upon Return of the Aircraft to Lessor (i) each
Engine shall have available operating hours or months until the next scheduled "hot
section" inspection, mid-life inspection or the next scheduled major overhaul of not less
#219845v 13(Gov't Entity Master Lease) 9
than fifty percent (50%) of the total operating hours or months available between such
hot section inspection, mid-life inspection, or major overhaul, as the case may be; (ii)
each gear box and transmission shall have available operating hours, cycles or calendar
months until the next scheduled inspection or overhaul of not less than fifty percent
(50%) of the total operating hours, cycles or calendar months available between such
inspection or overhaul, as the case may be; (iii) each Rotor Blade and Rotor Component
shall have available operating hours until the next scheduled major overhaul, inspection
or replacement of not less than fifty percent (50%) of the total operating hours available
between such major overhauls, inspections or replacements; (iv) the Airframe shall have
remaining not less than (aa) fifty percent (50%) of the available operating hours allowed
between airframe inspections; and (bb) fifty percent (50%) of the number of available
operating months allowed between airframe inspections until the next scheduled airframe
inspection; and (v) all life limited parts and components shall have remaining not less
than fifty percent (50%) of the available hours, cycles and/or months, as the case may be,
until the next scheduled replacement. In addition to the requirements set forth in clauses
(i), (ii), (iii), (iv) and (v) above, all inspections and scheduled maintenance required to be
performed on the Airframe, Engines, Rotor Blades, Rotor Components, transmission and
gearbox and all life limited parts and components within one hundred twenty(120) days of
the date of return and/or one hundred (100) hours of additional operation shall have been
performed by Lessee.
(5) Engines. If any Engine does not comply with Section F(4)(i) above, for
each such Engine, Lessee shall pay Lessor an amount equal to either (i) the current
estimated cost of the next scheduled "hot section" or mid-life inspection, as the case may
be (including in such estimated cost, all required replacements of life limited parts)
multiplied by the fraction wherein the numerator shall be the greater of (A) zero, or (B)
the difference between (x) the actual number of operating hours or months since the
previous hot section or mid-life inspection, as the case may be, and (y) fifty percent
(50%) of the total operating hours or months allowable between hot section or mid-life
inspections, as the case may be, and the denominator shall be the total operating hours or
months allowable between hot section or mid-life inspection, as the case may be, or (ii)
for each such Engine, the product of the current estimated cost of the next scheduled
major overhaul (including in such estimated cost, all required replacements of life limited
parts) multiplied by the fraction wherein the numerator shall be the greater of(A) zero, or
(B) the difference between (x) the actual number of hours of operation since the previous
major overhaul, and (y) fifty percent (50%) of the total operating hours allowable
between major overhauls, and the denominator shall be the total operating hours
allowable between major overhauls. Lessee shall, immediately upon request, assign to
Lessor its rights under any manufacturer's maintenance service contract or extended
warranty for the Aircraft.
(6) Transmission and Gear Box. If the transmission or gear box does not
comply with Section F(4)(ii) above, for each such transmission or gear box, Lessee shall
pay Lessor an amount equal to either (i) the current estimated cost of the next scheduled
inspection, as the case may be (including in such estimated cost, all required
replacements of life limited parts) multiplied by the fraction wherein the numerator shall
be the greater of (A) zero, or (B) the difference between (x) the actual number of
operating hours or months since the previous inspection, as the case may be, and (y) fifty
#219845v13(Gov't Entity Master Lease) 10
percent (50%) of the total operating hours or months allowable between inspections, as
the case may be, and the denominator shall be the total operating hours or months
allowable between inspections.
(7) Rotor Blades and Rotor Components. In the event that any Rotor Blade or
Rotor Component does not meet the conditions set forth in Section F(4)(iii) above, for
each such Rotor Blade or Rotor Component Lessee shall pay Lessor an amount equal to
the current estimated cost of the next scheduled overhaul, inspection or replacement
(including in such estimated cost, all required replacements of life limited parts)
multiplied by the fraction wherein the numerator shall be the greater of(i) zero or (ii) the
remainder of(x) the actual number of operating hours since the previous overhaul, minus
(y) 50% of the total operating hours allowable between overhauls, and the denominator
shall be the total operating hours allowable between overhauls.
(8) Airframe. If the Airframe does not comply with Section F(4)(iv) above,
Lessee shall pay to Lessor an amount equal to the sum of the product of the current
estimated cost of the next scheduled airframe inspection multiplied by the fraction
wherein the numerator shall be the greater of (i) zero, or (ii) the difference between (x)
the actual number of respective operating hours or months of operation since previous
airframe inspection, and (y) 50% of the respective total operating hours or months of
operation allowable between scheduled airframe inspections, and the denominator shall
be the respective total operating hours or months of operation between scheduled
airframe inspections.
(9) Maintenance Contracts. Lessee need not compensate Lessor as
contemplated in Sections F(5), (6) or (7) above, as the case may be, if at the time of
Return of the Aircraft to Lessor (A) the Engines, the Rotor Blades and the Rotor
Components, transmission and gear box are covered by a service and maintenance
contract in form and substance satisfactory to Lessor which provides for the maintenance
and/or overhaul of such property, (B) either (x) adequate reserves for future required
maintenance and/or overhaul shall have been provided for pursuant to such maintenance
contract, or (y) all amounts due and payable pursuant to such maintenance contract shall
have been paid in full through the date of return, and (C) the entity which provides the
maintenance and/or overhaul services under such maintenance contract shall either (x)
recognize the transfer by Lessee to Lessor of the rights and interests of Lessor (or its
designee) under such maintenance contract, or (y) acknowledge the rights and interests of
Lessor (or its designee) under such maintenance contract. Furthermore, Lessee need not
compensate Lessor as contemplated in Section F(8) above if at the time of Return of the
Aircraft to Lessor (1) the Airframe is covered by a service and maintenance contract in
form and substance satisfactory to Lessor which provides for the maintenance and/or
overhaul of such property, (2) either (x) adequate reserves for future required
maintenance and/or overhaul shall have been provided for pursuant to such maintenance
contract, or (y) all amounts due and payable pursuant to such maintenance contract shall
have been paid in full through the date of return, and (3) the entity which provides the
maintenance and/or overhaul services under such maintenance contract shall either (x)
recognize the transfer by Lessee to Lessor of the rights and interests of Lessor (or its
designee) under such maintenance contract, or(y) acknowledge the rights and interests of
Lessor(or its designee) under such maintenance contract.
#219845v 13(Gov't Entity Master Lease) 11
(10) Parts and Components. If any life limited part or component does not
comply with Section F(4)(v) above, Lessee shall pay to Lessor with respect to each part
or component for which said requirement is not met the dollar amount obtained by
multiplying (i) the ratio that the life expended in excess of fifty percent (50%) of the
available hours, cycles and/or months, as the case may be, until the next scheduled
replacement bears to the total allowable life (measured in hours, cycles and/or months, as
the case may be) for such part or component by (ii) Lessor's cost of replacement of such
part or component. Lessor's cost of replacement of a part or component shall include
Lessor's then current cost of purchasing the part or component itself and all of Lessor's
then current costs associated with the replacement.
(11) Inspection Overhaul Charges. All restoration costs and prorated
inspection and/or overhaul charges, if any, shall be due upon presentation to Lessee of an
invoice setting forth in reasonable detail the calculation of such amounts due, including
the names of all sources used for the required cost estimates. Unless both Lessor and
Lessee agree to an alternative source, or as provided herein, the Manufacturers of the
Airframe, Engines, Rotor Blades, Rotor Components, transmission and gear box shall be
used as the sources for all cost estimates.
(12) Fuel. Upon Return of the Aircraft to Lessor, each fuel tank shall contain
no less than fifty percent (50%) of its full capacity, or in the case of differences in such
quantity, an appropriate adjustment will be made at the then current market price of fuel.
(13) Records. Return of the Aircraft to Lessor, Lessee shall deliver all Records
to Lessor, including:
(i) All of the following: (A) all records of maintenance, alterations
and major repairs, (B) all Airframe and Engine logbooks endorsed for current total time
and cycles for the airframe, total time and cycles for each Engine and an entry for total
time and cycles since overhaul and hot section inspection for each Engine; and the
Airframe logbook must include all appropriate endorsements (i.e., maintenance releases)
verifying that the avionics have been periodically tested and inspected in accordance with
all applicable provisions of the FARS and the applicable maintenance program, (C) a
current written summary certified by a FAA-licensed mechanic listing the status of all
applicable airworthiness directive and service bulletins for the Airframe, Engines, Rotor
Blades, Rotor Components, transmission and gear box, and (D) a written summary
certified by a FAA-licensed mechanic of the current status of life limited and/or
overhauled components for the Airframe and Engines (in accordance with the
Manufacturer's recommended intervals).
(ii) The following documentation and data for each component having
an overhaul or inspection requirement of life limit, which components are identified in
pertinent sections of the maintenance program applicable to the Aircraft as follows: (A)
an airworthiness release certificate or maintenance release tag, (B) the Vendor work order
or copy thereof verifying the details of each component overhaul, and (C) an appropriate
record certifying the date and expended time status of the component when installed (i.e.,
copy of log or inspection squawk card), all of which must be properly organized and
provided on board the Aircraft at the time it is returned to Lessor.
#219845v13(Gov't Entity Master Lease) 12
(iii) To the extent not covered above, Lessee will also deliver to Lessor
all work cards, computerized maintenance history, component serviceability tags, STCs,
337s, maintenance manuals, and structural repair manuals.
All manuals or other documents delivered to Lessor which are subject to periodic
revision will be fully up-to-date and current to the latest revision standard of any
particular manual or document. If the Aircraft is on a computerized maintenance
program, such program will be up-to-date in accordance with the Manufacturer's
recommended maintenance schedule and fully assignable to Lessor at redelivery. Lessee
will provide all of the following Records to Lessor upon return of the Aircraft to Lessor,
regardless of whether Lessee has conducted its periodic inspections of the Aircraft in
accordance with an inspection program approved by the FAA. In the event any Records
are missing or incomplete, Lessor shall have the right to cause any such Records to be
reconstructed at Lessee's expense. All Records shall be in English.
(14) Replacement Engines and Rotor Blades. If any engine or rotor blade not owned
by Lessee shall be installed on the Airframe upon its Return to Lessor, then Lessee will,
concurrently with such delivery, at its own expense, furnish Lessor with a full warranty bill of
sale, in form and substance satisfactory to Lessor with respect to each such engine and rotor
blade and with a written opinion of FAA Counsel to the effect that, upon such return, Lessor will
acquire a valid and perfected interest in such engine and rotor blade free and clear of all Liens.
Thereupon, unless an Event of Default shall have occurred and be continuing, Lessor will
transfer to Lessee, all of Lessor's right, title and interest in and to any Engine and Rotor Blade
not installed on the Airframe at the time of the Return of such Airframe. Each on an "AS-IS,
WHERE-IS" basis, and "With All Faults", without any representation or warranty, express or
implied, of any kind from Lessor.
(15) Inspections. Upon the written request of Lessor, Lessee shall certify to Lessor
that the Aircraft is in the condition required by this Section F, or indicate what maintenance or
repair is needed to bring the Aircraft to the specified condition. Upon Return of the Aircraft to
Lessor, Lessor shall have the right, but not the duty, to inspect the Aircraft, any component
thereof and/or the Records, at any reasonable time and from time to time,wherever located, upon
reasonable prior written notice to Lessee except that no advance notice shall be necessary prior
to any inspection conducted, and such inspection may be conducted at any time, after the
occurrence of an Event of Default. Upon request of Lessor, Lessee shall promptly confirm to
Lessor the location of the Aircraft and/or the Records. Lessee shall be responsible for the cost of
such inspection and shall pay Lessor such amount within ten (10) days of demand. If the results
of such inspection indicate that the Aircraft, any Engine, any Rotor Blade or Rotor Component
or Part, has not been maintained or returned in accordance with the provisions of the Master
Equipment Lease or this Schedule, Lessee shall pay to Lessor within ten (10) days of demand, as
liquidated damages, the estimated cost of servicing or repairing any such non-complying item.
Such amount shall be determined by Lessor by obtaining two quotes for such service or repair
work and taking their average. Lessee shall bear the cost, if any, incurred by Lessor in obtaining
such quotes.
(16) Survival. The provisions of this Section F shall survive the expiration,
cancellation or other termination of the Master Equipment Lease or this Schedule or any Return
of the Aircraft to Lessor by Lessee or any other person for any reason whatsoever.
#219845v13(Gov't Entity Master Lease) 13
(17) Injunctive Relief. Without limiting any other terms or conditions of the Master
Equipment Lease or this Schedule, the provisions of this Section F are of the essence in the
agreement of the Lessor and Lessee concerning the Aircraft, and upon application to any court of
equity having jurisdiction, Lessor shall be entitled to a decree against Lessee requiring specific
performance of the covenants of Lessee set forth herein.
G. Truth in Leasinig. THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT
TO THE MAINTENANCE REQUIREMENTS OF PARTS 91 AND/OR 135 AS
APPLICABLE, OF THE FEDERAL AVIATION REGULATIONS ("FARS") UPON THE
REGISTRATION OF THE AIRCRAFT WITH THE FAA. LESSEE CERTIFIES THAT
DURING THE TWELVE (12) MONTHS (OR PORTION THEREOF DURING WHICH THE
AIRCRAFT HAS BEEN SUBJECT TO. U.S. REGISTRATION) PRECEDING THE
EXECUTION OF THIS LEASE, THE AIRCRAFT HAS BEEN MAINTAINED AND
INSPECTED UNDER PARTS 91 AND/OR 135 AS APPLICABLE, OF THE FARS. LESSEE
CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER
PARTS 91 AND/OR 135, AS APPLICABLE, OF THE FARS FOR OPERATIONS TO BE
CONDUCTED UNDER THIS LEASE. UPON EXECUTION OF THIS LEASE, AND
DURING THE TERM HEREOF, THE LESSEE, WHOSE NAME AND ADDRESS ARE SET
FORTH IMMEDIATELY BELOW, ACTING BY AND THROUGH THE SIGNATORY
HERETO, WHO EXECUTES THIS SECTION SOLELY IN HER/HIS CAPACITY OF THE
LESSEE SET FORTH BELOW HER/HIS SIGNATURE, CERTIFIES THAT LESSEE SHALL,
BE RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT UNDER
THIS LEASE (WHILE IT HAS POSSESSION OF THE AIRCRAFT), UNLESS
OPERATIONAL CONTROL OF THE AIRCRAFT IS PROVIDED TO AN AIR TAXI
OPERATOR CERTIFICATED UNDER PART 135 OF THE FARS, IF AND TO THE
EXTENT PERMITTED HEREUNDER. THE LESSEE FURTHER CERTIFIES THAT IT
UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE
FARS, PROVIDED HOWEVER, THAT THE LESSEE SHALL NOT BE DEEMED TO BE
RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT FOR SO LONG
AS THE AIRCRAFT IS IN POSSESSION OF ANY SUCH AIR TAXI OPERATOR HAVING
OPERATIONAL CONTROL TO THE EXTENT PERMITTED HEREUNDER. AN
EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND
PERTINENT FARS CAN BE OBTAINED FROM THE NEAREST FEDERAL AVIATION
FLIGHT STANDARD DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE, OR
AIR CARRIER DISTRICT OFFICE.
#219845v 13(Gov't Entity Master Lease) 14
Executed and delivered as of the date set forth above.
BANC OF AMERICA LEASING & CITY OF HUNTINGTON BEACH
CAPITAL,LLC (Les r) (Lessee)
I I e�a
By: By: ?/Z I
Name: G' Ir Name: Dan T. Villella
Title:
i Title:
ce President Director of Finance
This is Counterpart No. of a total of 4 counterparts. Only Counterpart No.
1 shall be considered chattel paper for purposes of the Uniform Commercial
Code and a security interest may be perfected only by possession of
Counterpart No. 1.
ATTACHMENTS: Annex 1 —Additional Aircraft Items
AP VED AS TO FORM
J McG ,City Attorney,
LIl
i�
nie MulviliiU
d /n�0r
!Deputy City, "l l�
#219845v 13(Gov't Entity Master Lease) 15
i
FORM APPROVED
OMB No.2120-OW
UNITED STATES OF AMER"DEPARTMENT OF TRANSPORTATION
Frax1RAL Arun N MIMNBIRATION-UM MON1olE•AEmossu w-m ce1191
AIRCRAFT REGISTRATION APPLICATION CERT. ISSUE DATE
UNITED STATES
REGISTRATION NUMBER N
AIRCRAFT MANUFACTURER A MODEL
MD Helicoptes, Inc. 500N
AIRCRAFT SERIAL No.
LN105 FOR FAA USE ONLY
TYPE OF REGISTRATION(Check one box)
❑ 1. Individual ❑ 2. Partnership ❑ 3.Corporation ❑ 4.Co-owner K) 5.Goer. ❑ &N—cmz-Corporation
i
NAME OF APPLICANT(Person(.)shovm an evidence of owrnrNatip I YkdvidkW,!lire fast name.first name,and middle irdllsL)
City of Huntington Beach
TELEPHONE NUMBER:( / ) L . S / •S
ADDRESS(PemnrMM mailing address for*0 applicant Llcled.)
NMrear and street: 2000 Main Street
Rural Routs: PO.am
CITY STATE ZIP CODE
Huntington Beach CA 92648
❑ CHECK HERE IF YOU ARE ONLY REPORTING A CHANGE OF ADDRESS
ATTENTIONI Read the following statement before signing this application.
This portion MUST be completed.
A false or dishonest answer to any question In this application may be grounds tar pu lshrnert by fine and I or wnpnsonnana
(us.Code,rib 18.Sea I=).
CERTIFICATION
VNE CERTIFY:
(1)That firs above aircraft Is owned by One undersigned appNcareL who is a ddzen(Including corporations)
of the United Stales.
(For voting trust,give name of trustee: ),or:
CHECK ONE AS APPROPRIATE:
a.❑A resident atian,with alien registration(Form 1-151 or Form 1-551)No.
b.❑A non-citizen corporation organized and daft brrstrnesa Mier ens laws of(stab)
and said aircraft is based and primarily used m the United Stales.Records or aght hours are available for
inspection at
i (2)That ft aircraft Is not registered under the laws of any foreign cordrr.and
(3)That legal evidence of ownership to attached or has been filed with the Federal Aviation Admiietr Wm
NOTE: M executed for co-ownership all appkants must sign. Use reverse side'd necessary.
TYPE OR PRINT NAME BELOW SIGNATURE
SIGNATURE TITLE DATE
�U.�? , Commander, Aviation 1 07
o z z SIGNATURE TIRE Group DATE
MRay Villescas
=d w SIGNATURE TITLE DATE
MID
NOTE Pending mompt of the Certificate of Aircraft Registration,the aircraft may be operated for a period not n excess of 90
days.during which time the PINK copy of cis application must be tarried in to afcralL
I
AC Form 8050.1 (12/m0)(0052.M82 7)Supersedes Previous Edmm
Annex 1
The Airframe and Engine
One (1) MD Helicopters, Inc. model 50ON aircraft bearing manufacturer's serial number LN105 and
United States Registration No. N523HB and one (1) Rolls Royce model 250-C20R engine bearing
manufacturer's serial number CAE-295892.
imenegeOKC_2267234_I DOC
ROVEI
UNITED STATES OF AMERICA FORM
No 2P
U.S.DEPARTMENT, OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION
AIRCRAFT BILL OF SALE
FOR AND IN CONSIDERATION OF $ 10 &OVC THE
UNDERSIGNED OWNER(S) OF THE FULL LEGAL
AND BENEFICIAL TITLE OF THE AIRCRAFT DES-
CRIBED AS FOLLOWS:
UNITED STATES
RE�GIISTRRAFTTIONNUMBER 523HB
AIMDR HellicoptersREFncMODEL SOON
AIRCRAFT SERIAL No.
LN105
DOES THIS 18th DAY OF May 26)7
HEREBY SELL, GRANT, TRANSFER AND
DELIVER ALL RIGHTS, TITLE, AND INTERESTS
IN AND TO SUCH AIRCRAFT UNTO: Do Not Write In This Block
FOR FAA USE ONLY
NAME AND ADDRESS
(IF INDNIDUAL(S),GIVE LAST NAME,FIRST NAME,AND MIDDLE INITIAL.)
City of Huntington Beach
¢ 2000 Main Street
eWi� Huntington Beach, CA 92648 RECORDED
= Fed4O Aviation Administration
IM Date Time
a Cone ml3ar g
B
DEALER CERTIFICATE NUMBER
AND TO their CUTO ,ADMINISTRATORS,AND ASSIGNS TO HAVE AND TO HOLE
SINGULARLY THE SAID AIRCRAFT FOREVER,AND WARAMM THE TITLE THEREOF
IN TESTIMONY WHEREOF We HAVE SET Our HAND AND SEAL THIS 18th DAY OF May 20 07
NAME(S)OF SELLER SIGNATURE(S) TITLE
(TYPED OR PRINTED) (IN INK)(IF EXECUTED (TYPED OR PRIMED)
FOR CO-0WNERSHIP,ALL MUST
S N)
WMD Helicopters, I c General Counsel
J
J .R 1 11 Walti and Secretary
W
N
I INAAM
ACKNOWLEDGMENT (NOT REQUIRED P S EVER, MAY BE REQUIRE[
BY LOCAL LAW FOR VALIDITY OF THE INSTRUMENT.)
ORIGINAL: TO FAA
AC Fonn 8050-2(9/92)(NSN 0052-00-629-0003)Supersedes Previous Edition
CITY OF HUNTINGTON BEA M
MEETING DATE: August 15, 2005 DEPARTMENT ID NUMBER: PD-05-009
Council/Agency Meeting Held: 13J—
Deferred/Continued to: (42
?�A_pproved ❑ Conditionally Approved ❑ Denied / y ler Sign re
August 15, 2005 Departme D Number: PD-05-009
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
Nip
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS ;;
SUBMITTED BY: DR. P NELOP CULBRETH-GRAF , CITY ADM INISTRATCj'R
PREPARED BY: KENNETH W. SMALL, CHIEF OF POLICE r
SUBJECT: APPROVE THE PURCHASE OF POLICE HELICOPTER
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: The Huntington Beach Police Department operates a seven-day a
week Aeronautic program with three MD520 NOTAR helicopters. Helicopter N520HB was
purchased in 1992 and has accumulated in excess of 11,000 flight hours. It is essential to
the efficient operation of the program that this helicopter be replaced with a new one. The
purchase of a new NOTAR helicopter from MD Helicopters, Inc., will significantly reduce
expected maintenance costs over the next several years.
Funding Source: The total cost for the new helicopter is $1,393,495. This amount
represents the purchase price, tax, financing charges (presently quoted at 4.24%) and
retrofitting costs.
Type of Funding Funding Source Fund Number Amount
Fund balance 2004- Holly Seacliff Fund 307 $161,119
2005
Fund balance 2004- State Abandoned Vehicle Funds 875 $453,000
2005
Fund balance 2004- Narcotic Forfeiture 214 $248,211
2005
Future Year General General Fund ($350,000 is 100 $531,165
Fund Appropriations expected from sale proceeds in
2005-2006 that was not anticipated
in the proposed.budget)
Total $1,393,495
RCA Helicopter Purcahse 8-15-05.doc 8/2/2005 8:58 AM
I _ D
REQUEST FOR COUNCIL ACTION
MEETING DATE: August 15, 2005 DEPARTMENT ID NUMBER: PD-05-009
Recommended Action:
1. Authorize the Police Chief to expend $1,393,495 for the purchase (from MD Helicopters,
Inc.) and retrofitting of one MD 520N, NOTAR replacement helicopter; and
2. Appropriate $161,119 from Holly Seacliff Fund to expend for the purchase of a helicopter;
and
3. Appropriate $453,000 from the State Abandoned Vehicle Fund to expend for the
purchase of the helicopter; and
4. Appropriate $248,211 from the Narcotics Forfeiture Fund to expend for the purchase of
the helicopter, install avionics and other equipment for retrofitting; and
5. Direct the Finance Officer to enter into a 3-year financing agreement with a lending
institution to borrow a current estimate of $507,830 plus fiscal costs of $23,335. The
interest rate on this transaction is 4.24%. The estimated first quarterly payment of
$45,291 will begin on September 1, 2006 and the final payment to be made on June 1,
2009. These amounts will need to be budgeted in subsequent fiscal years.
Alternative Action(s): Do not execute the agreement between the City of Huntington
Beach and MD Helicopters, Inc., and do not approve the purchase of a MD 520N NOTAR
replacement helicopter and direct staff accordingly.
Analysis: The Police Department has operated an Aeronautics Unit since 1968. A review
of Huntington Beach Aeronautics Law Enforcement Program has shown that the optimum
program operates with three (3) helicopters. This optimizes the number of available flight
hours, while minimizing the maintenance costs per ship. All three of the current helicopters
are MD520N NOTAR helicopters. In 1992, the Huntington Beach Police Department
purchased its first NOTAR helicopter. The concept behind this airship was to reduce noise
and provide a safer airship for the flight crews. A study of accidents related to helicopters
found that the cause of most of the incidents was attributed to tail rotor failure. In 1999, the
Police Department purchased a second NOTAR airship, unit N521. In 2001, a third NOTAR
was purchased to replace our last tail-rotor helicopter and standardized the fleet.
The below chart illustrates the reduction in projected maintenance costs with the purchase of
a new helicopter.
Projected Maintenance Costs 2007 2008 2009 Total
Old Helicopter (N520HB) $199,936 $40,384 $279,463 $519,783
Maintenance Cost
Saving in Maintenanace Cost
for the New Helicopter ($199,165) ($7,309) ($238,119) ($444,593)
Purchased
New Helicopter Maintenance Cost $771 $33,075 $41,344 $75,190
RCA Helicopter Purcahse 8-15-05.doc ,8= 8/2/2005 10:28 AM
a
REQUEST FOR COUNCIL ACTION
MEETING DATE: August 15, 2005 DEPARTMENT ID NUMBER: PD-05-009
The initial contract rice to purchase the helicopter from MD Helicopters, Inc., is
p p p p
$1,150,956.00. Providing the City agrees to make advance payments of $350,000 at the
time of order, and an additional $350,000 payment at delivery mid-point (three to five months
after the initial advance payment), MD Helicopters, Inc., will provide $20,000 and $10,000
discounts, respectively. Those discounts will reduce the purchase price to $1,120,956.
Including tax the cost will be $1,207,830.09. An additional $150,000, which will not be
financed, will be expended on avionics, radios and other equipment that can be purchased
and installed at a significantly lower rate by police department mechanics than if the police
department were to out-source the installation.
Based on recent information from MD Helicopters, Inc., the projected fair market value of the
Police Department's 1992 N520 helicopter in July 2006 (expected date of sale) will be
approximately $350,000. It is the Police Department's intention to complete the sale of the
1992 N520 by the delivery date of the new helicopter. If that does not occur monies from the
General Fund would need to be temporarily advanced to cover initial loan installments until
such time that a sale is final. Once completed, the General Fund monies would be
reimbursed with the proceeds of the sale.
The Finance Department recently completed research with several lending institutions to
obtain the most favorable rates and financing terms. Of the institutions contacted, Bank of
America offered the most attractive terms. The amount financed $507,830 will be funded in
June 2006 and will be placed into an interest bearing escrow account. Quarterly payments of
$45,291 begin on September 1, 2006 and continue through June 1, 2009. The total amounts
of General Fund monies financed will be $507,830 as follows:
Fiscal Year Amount
2005-2006 $80,240
2006-2007 $165,645
2007-2008 $172,782
2008-2009 $89,163
Total $507,830
General Fund monies are planned for the final four (4) installment payments of the loan.
These payments would begin on September 1, 2006 and continue through June 1, 2009. If
General Fund monies were not available at that time, it is anticipated that the police
department could fund the final four (4) installment payments with Narcotic Forfeiture or State
Abandoned Vehicle Funds. It is expected that both of these accounts will continue to
generate revenue during the course of the loan.
RCA Helicopter Purcahse 8-15-05.doc 8/2/2005 8:58 AM
3
REQUEST FOR COUNCIL ACTION
MEETING DATE: August 15, 2005 DEPARTMENT ID NUMBER: PD-05-009
Environmental Status: Not applicable
Attachment(s):
City Clerk's
• • Number No. Description
1. Fiscal Impact Statement
RCA Helicopter Purcahse 8-15-05.doc Ile- 8/2/2005 8:58 AM
ATTACHMENT # 1
CITY OF HUNTINGTON BEACH
A" INTERDEPARTMENTAL COMMUNICATION
TO: PENELOPE CULBRETH-GRAFT, DPA, CITY ADMINISTRATOR
FROM: DAN T.VILLELLA, CPA, FINANCE OFFICER
SUBJECT: FIS 2005- 30 PURCHASE OF NEW POLICE HELICOPTER
DATE: AUGUST 1, 2005
As required by Resolution 4832, this Fiscal Impact Statement has been prepared for
"Purchase of New Police Helicopoter."
If the City Council approves this action (total appropriation $1,393,435), the estimated
unreserved fund balances at September 30, 2005 of the following funds would be reduced
to:
-Holly Seacliff Unreserved reduced to zero
Narcotics Forfeiture State Unreserved reduced to $245,000
State Abandoned Vehicles Fund Unreserved reduced to $27,000
There is no effect on the General Fund balance for fiscal year 2005-2006. This action will
require General Fund appropriations in fiscal years 2005-2006 to 2008-2009
Dan Villella,
Finance Officer
Administrative Services
Central Services Division +
optoc
SOLE-SOURCE JUSTIFICATION
For use on all goods and services acquisitions.
This justification document consists of two(2)pages. All information must be provided and all questions must be answered. The"Required Approvals"
section must include a date for each signature,as appropriate for the transaction.
Requesting Department Information
Requestor Name: Lieutenant Tom Donnelly Division Manager: Lieutenant Tom Donnelly
Acting Division Commander/Administrative Operations
(Type names. Do not sign.)
Department: Police Department Head: Kenneth W. Small
ffypenames. Do not si n. Must be same as signature below.
Department Contact Information
Contact Name: Sergeant Tom Arnold Street Address: Police Department-Aero Bureau
18401 Gothard Avenue
Telephone: Huntington Beach, CA 92648
714 536.5997
FAX: Shipping Address: Delivery received at factory.
Cellular phone: 714.608.5973
ifcl Co: 71 .,
Contractor/Supplier Name: MD Helicopters, Inc.
Contractor/Supplier Address: 4555 E. McDowell Road, Building 615, Mesa,Arizona 85215-9734
Original Contract Amount:* Amendment Amount:*(if applicable) New Contract Amount:
$1,393,495 $ $
(*Includes original contract and previously (*Includes original contract and all amendments,
approved amendments) (*Current amendment only) including current amendment
ProVlde ., Gri tj° tti a Stu l� I ; ,,I ddlat e= , y
Model MD 520N, S/N: LN106, MD520N NOTAR Helicopter
Contract Type: Contract Term: What account numbers
Select One: ® Goods will be used to purchase.
❑ Service Begin: Bus Unit: 21470101
❑ Goods& End: Obj.Code: 83000
Services Bus Unit: 30770101
Obj. Code: 83000
Bus Unit: 8767010
ON. Code: 85250
��(Department Head a tral Services Manager Administrative Services Assistant City Administrator
p�J Approved ElDenied ie Director. ❑Approved El Denied
/� L l("p roved El Denied
Executive Director/Date en I ry s anage •e Assist.City Adm./Date
Transactions exceeding Adm.Services Dir./Date ( g$50,000
must be council approved)
Remit completed form to: Central Services Division
2000 Main St,Huntington Beach,CA 92648
Administrative Services
Central Services Division
Complete responses must be provided for all of the following items.
A. THE GOOD/SERVICE REQUESTED IS RESTRICTED TO ONE SUPPLIER FOR THE REASONS STATED BELOW:
1. Why is the acquisition restricted to this goods/services/supplier?
(Explain why the acquisition cannot be competitively bid.
The Police Aero Bureau currently has a fleet of three MD500 series NOTAR helicopters.The Police
Department employs a full time mechanic who performs the majority of the scheduled maintenance and
unscheduled repairs to the fleet.The parts,tools, and training involved in maintaining the fleet of
helicopters are highly specialized. Purchasing a new helicopter that is of the same make and model of our
current fleet is crucial in order to efficiently manage this program.The only supplier who offers for sale
new MD520 NOTAR's is MD Helicopters, Inc. out of Mesa,Arizona.
2. Provide the background of events leading to this acquisition.
The Huntington Beach Police Department operates a seven-day a week Aeronautic program with three
MD520 NOTAR helicopters. Helicopter N520HB was purchased in 1992 and has accumulated in excess of
11,000 flight hours. It is essential to the efficient operation of the program that this helicopter be replaced
with a new one. The purchase of a new NOTAR helicopter from MD Helicopters, Inc.,will significantly
reduce expected maintenance costs over the next several years.
3. Describe the uniqueness of the acquisition (why was the good/service/supplier chosen?)
In 1992,the Huntington Beach Police Department purchased its first NOTAR(No Tail Rotor) helicopter.
The concept behind this airship was to reduce noise and provide a safer airship for the flight crews. A
study of accidents related to helicopters found that the cause of most of the incidents was attributed to
tail rotor failure. MD Helicopters, Inc. manufactures the only NOTAR helicopter available for purchase.
4. What are the consequences of not purchasing the goods/services or contracting with the proposed
supplier?
Ever increasing maintenance costs on an aging fleet and the loss of patrol time due to unscheduled
repairs will be very costly and could result in significant loss of patrol time.
5. What market research was conducted to substantiate no competition, including evaluation of other items
considered?
(Provide a narrative of your efforts to identify other similar or appropriate goods/services,including a summary of how the department
concluded that such alternatives are either inappropriate or unavailable. The names and addresses of suppliers contacted and the reasons
for not considering them must be included OR an explanation of why the survey or effort to identify other goods/services was not performed.)
Cost/hour to operate a single light turban helicopter is significantly lower than other helicopters in the
same class and category. Other products considered are much more expensive initially and significantly
more costly to operate. Other than comparing initial costs and operating costs, a survey of vendors was
not completed since MD Helicopters, Inc. is the only supplier of new MD520 NOTAR's.
B. PRICE ANALYSIS
1. How was the price offered determined to be fair and reasonable?
(Explain what the basis was for comparison and include cost analyses as applicable.)
Helicopters in the similar class and category are significantly more costly to purchase and operate. Price
comparison of the MD520 purchased new is impossible to conduct due to MD Helicopters, Inc. being the sole
supplier of this product.
2. Describe any cost savings realized or costs avoided by acquiring the goods/services from this supplier.
N/A
8/4/2005 2
R A ROUTING
C
INITIATING DEPARTMENT: Police
SUBJECT: PURCHASE OF NEW POLICE HELICOPTER
COUNCIL MEETING DATE: August 15, 2005
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 Attome ) Not Applicable
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
Findings/Conditions for Approval and/or Denial Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED`` RETURNED FOR R ED'
Administrative Staff
Assistant City Administrator Initial ( )
City Administrator (Initial) ( ) ( )
City Clerk ( )
EXPLANATION FOR RETURN OF ITEM:
Only)(Below Space For City Clerk's Use
RCA Author: Lt. Terry Lindsey/Mindy James
Jones, Dale
From: Flynn, Joan
Sent: Monday, August 15, 2005 1:48 PM
To: Jones, Dale; Esparza, Patty
Subject: FW: HB buying another helicopter?
-—--Original Message-----
From: Dapkus, Pat o
Sent: Monday, August 15, 2005 12:36 PM � -�-�
To: Flynn, Joan
Subject: FW: HB buying another helicopter? G"') -
C-y
--- Original Message-----
From: Gail Yabuki [mailto:bachrocks@earthlink.net]
Sent: Sunday, August 14, 2005 10:30 PM '
To: city.council@surfcity-hb.org
Cc: Pat Dapkus; Cathy Fikes
Subject: HB buying another helicopter?
To the City Council Members:
We read in last Thursday's "Independent" that the city council is
going to be voting on whether or not to purchase a FOURTH
helicopter for the police department 's use. We would like to
express our extreme opposition to this matter. There are way too
many areas in this city that need attention and an additional
helicopter is definately NOT one of them! Please vote against
this waste of taxpayer's money.
The helicopter's that we have drive us crazy-especially at night
when they circle around and around-- many times after midnight.
We wish the city would use the money used on the helicopters to
put more policemen on our streets.
Thanks for reading this.
Sincerely,
K. and G. Yabuki
i