Loading...
HomeMy WebLinkAbout1990-316 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 RESOLUTION NO. ;?u~S/& RESOLUTION OF THE CITY OF SAN BERNARDINO ACCEPTING LEASE PURCHASE MASTER CONTRACT FOR MNC GOVERNMENT FINANCE FOR THE FURNISHING OF LEASE PURCHASE FINANCING. 4 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 5 6 SECTION 1. That Lease Purchase Master Contract from MNC GOVERNMENT FINANCE, a copy of which is attached hereto and incorporated herein as Exhibit" A", is accepted by the City of San Bernardino for furnishing of Lease Purchase Financing; pursuant to this determination, the Purchasing Agent is hereby authorized and directed to issue a purchase order for said Lease Purchase Financing to said vendor; the Master Lease Purchase Contract award shall only be effective upon the execution of an Agreement by the Mayor of the City of San Bernardino and the tender of a Purchase Order by the Purchasing Agent. SECTION 2. This Agreement shall not take effect until fully signed and executed by both parties. The City shall not be obligated hereunder unless and until the Agreement is fully executed and no oral agreement relating thereto shall be implied or authorized. The authorization to execute the above referenced agreement is rescinded if the parties to the agreement fail to execute it within sixty (60) days of the passage of this resolution. SECTION 3. No transactions shall be initiated under the Master Lease contained in this agreement without the approval of the Mayor and Common Council. SECTION 4. The City shall not be obligated hereunder until a lease purchase schedule transaction for material, equipment, DR:ms/MNCgovt.res July 5, 1990 1 I , 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE CITY OF SAN BERNARDINO ACCEPTING LEASE PURCHASE MASTER CONTRACT FOR NMC GOVERNMENT FINANCE FOR THE FURNISHING OF LEASE PURCHASE FINANCING. supplies or contracted services is executed with the vendor under this contract. SECTION 5. The Purchasing Agent, Director of Finance and the City Attorney are hereby authorized to execute such documents as are necessary for the administration of this transaction. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San Bernardi9"o'at a 74J meeting thereof, held on the /bC'L day of \ ;ud/~ ,'1990, by the following vote, to wit: council~ AYES NAYS ABSTAIN ESTRADA / REILLY ;/ FLORES / MAUDSLEY /' MINOR ;/ POPE-LUDLAM ;/ MILLER / / / / / / / / / / / J;taUttd/ fY~'Ly,JflJtUtv f~/ C1. ty Clerk ~. / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / DR: ms/MNCgovt. res July 5, 1990 2 , 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE CITY OF SAN BERNARDINO ACCEPTING LEASE PURCHASE MASTER CONTRACT FOR MNC GOVERNMENT FINANCE FOR THE FURNISHING OF LEASE PURCHASE FINANCING. The_foregoing resolution is hereby this /,1 tL day of .1. /7).1 --- "-DO ! c. Approved as to form and legal content: JAMES F. PENMAN, City Attorney DR: ms/MNCgovt. res July 5, 1990 3 ... " EOUIPMENT LEASE/PURCHASE AGREEMENT THIS EQU1:PMENT day of"" DIVISION OF MNC CREDIT BERNARDINO, CALIFORNIA LEASE/PURCHASE AGREEMENT is made as of the 1990, by and between MNC LEASING, A CORP ("Lessor") and CITY OF SAN ("Lessee"). In consideration of the mutual covenants, terms and conditions hereinafter contained, Lessor hereby agrees to lease to Lessee, and Lessee hereby agrees to lease from Lessor, the property (hereinafter, together with all replacements and accessions thereto, referred to as the "Equipment") described in the Essential Use of Equipment Letter attached hereto and in one or more Certificates of Acceptance, in the form attached, executed and delivered pursuant hereto, subject to the terms and conditions set forth herein. This Agreement is made upon the following terms and conditions: 1. TERM . (a) Commencement of Term. This Agreement shall be effective and the parties' obligations hereunder shall arise, as of the date hereof. The term of lease under this Agreement with respect to those items of the Equipment described on a Certificate of Acceptance shall commence on the date on which such items of the Equipment are accepted by Lessee as indicated on the Certificate of Acceptance (the "Commencement Date"), and shall terminate on the last business day of Lessee's then current fiscal budget period (such period being hereinafter referred to as the "Original Term"). As used herein, "business day" means any day on which commercial banks are open for the purpose of carrying on a commercial banking business in the state of Lessee's location (the "state"). (b) Renewal of Lease Term. The Original Term with respect to those items of the Equipment described in a certificate of Acceptance will be automatically and suc- cessively renewed at the end of the original Term under the same terms and conditions for such number of successive renewal periods ("Renewal Terms") as is set forth on the Schedule of Payments ("Schedule") executed by Lessee and attached to such Certificate of Acceptance. The last Renewal Term shall end on the last day of the Full Lease Term (as specified on the related Schedule, provided that, for purposes of this Agreement, "Full Lease Term" shall mean the last expiring Full Lease Term specified on a Schedule); unless Lessee gives written notice to Lessor not less than sixty (60) days prior to the end of the then current term of Lessee's t i ti > '; intention to terminate this Agreement pursuant to Section 10 hereof or sub-part (e) of this Section, as the case may be. (c) Termination. The term of the lease hereunder will terminate up!n the earliest to occur of any of the following events: ~~~~t (i~:1rhe expiration of the Original Term or any Renewal Term with respect to all items of the Equipment described in the certificates of Acceptance and the nonrenewal thereof in accordance with the terms and conditions of this Agreement; (2) The purchase of all items of the Equipment described in the Certificates of Acceptance by Lessee under the provisions of section 8(c) or 10 of this Agreement; (3) A default by Lessee and Lessor's election to terminate this Agreement under Section 13; or (4) The payment by Lessee of all rental payments authorized or required to be paid by Lessee hereunder with respect to all items of the Equipment described in the Certificates of Acceptance. t j , (d) Continuation of Lease Term bv Lessee. Lessee intends, subject to the provisions of sUb-part (e) of this Section, to continue the term of the lease hereunder through the original Term and all Renewal Terms for the Full Lease Term and to pay the rental payments hereunder. Lessee reasonably believes that legally available funds in an amount sufficient to make all rental payments for the Full Lease Term can be obtained. Lessee further intends and hereby covenants to do all things lawfully within its power to obtain and maintain funds from which the rental payments may be made, including making provision for such rental payments to the extent necessary in each budget submitted and adopted in accordance with law, to use its bona fide best efforts to have such portion of the budget approved, and to exhaust all available reviews and appeals in the event such portion of the budget is not approved. (e) Nonaoorooriation. In the event sufficient funds are not appropriated for the payment of all rental payments required to be paid in the next succeeding Renewal Term hereunder and Lessee has no funds legally available for rental payments from other sources, then Lessee may terminate this Agreement at the end of the original Term or the then current Renewal Term, as the case may be, and Lessee shall not be obligated to make payment of the rental payments provided for in this Agreement beyond the then current term. Lessee agrees to deliver notice to Lessor of such termination at least sixty (60) days prior to the end of the then current term. If this Agreement is terminated under this sub-part, 2 Lessee agrees, at Lessee's cost, expense and risk, peaceably to deliver such items of the Equipment to Lessor at such location as is specified by Lessor, in the condition required by section 5(b) hereof. To the extent lawful, Lessee covenants t~~ it will not, until the date on which the next succeeding aenewal Term would have ended, expend or commit any funds for t~~'purchase or use of equipment to be used for the same purposeras, or a purpose functionally equivalent to, the Equipment. 2. RENTAL PAYMENTS. (a) Rental Pavments to Constitute a CUrrent Exoense of Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay rental payments hereunder shall constitute a current expense of Lessee and shall not in any way be construed to be a debt of Lessee in contravention of any applicable constitutional or statutory limitations or requirements concerning the creation of indebtedness by Lessee, nor shall anything contained herein constitute a pledge of the general tax revenues, funds or monies of Lessee. (b) Payment of Rental Pavments. Lessee shall pay rental payments exclusively from legally available funds, in lawful money of the united States of America, to Lessor in the ~ amounts and on the rent payment due dates set forth in the ~ Schedules without notice. (c) Interest and Principal Components. As set forth in the Schedules, 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. (d) Rental Payments to be Unconditional. The obligation of Lessee to make rental payments hereunder, and to perform and observe the covenants and agreements contained in this Agreement, shall be absolute and unconditional in all events, except as expressly provided in this Agreement. Lessee shall not assert any right of setoff, counterclaim, or abatement against its obligations hereunder, including (without limitation) by reason of equipment failure, disputes with the vendor(s) of the Equipment or Lessor, accident or any unforeseen circumstances. 3. REPRESENTATIONS AND COVENANTS OF LESSEE. Lessee represents, covenants and warrants to Lessor as follows: (a) Lessee is a state or political subdivision thereof within the meaning of Section 103(C) of the Internal Revenue Code of 1986, as amended, (the "Code") and will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as such. 3 (b) Lessee is authorized under the Constitution and laws of the state to enter into this Agreement and the transactions contemplated hereby and to perform all of its obligations hereunder. ''''C,' (i'~A.S evidenced by an attachment hereto, the exe- cution and ivery of this Agreement by or on behalf of ' Lessee has n duly authorized by all necessary action of the governing body of Lessee, and Lessee has obtained such other approvals and consents as are necessary to consummate this Agreement. Lessee further represents, covenants and warrants that all requirements have been met, and procedures have occurred necessary to ensure the enforceability of this Agreement against Lessee, and Lessee has complied with such public bidding requirements as may be applicable to this Agreement and the acquisition by Lessee of the Equipment hereunder. (d) Lessee shall cause to be executed hereto an incumbency certificate and an opinion in form and substance satisfactory to Lessor. and attached of its counsel , .i~ (e) Lessee has determined that a present need exists for the Equipment which need is not temporary or expected to diminish in the near future. The Equipment is essential to and will be used by Lessee only for the purpose of performing one or more governmental functions of Lessee consistent with the permissible scope of Lessee's authority and will not be used in a trade or business of any person or entity. Lessee shall cause to be executed and attached hereto an Essential Use of Equipment Letter insubstantially the form attached. (f) upon request during the period this Agreement is in force, Lessee will annually provide Lessor with current financial statements, budgets, proof of appropriation for the ensuing fiscal year and such other financial information relating to the ability of Lessee to continue this Agreement as may reasonably be requested by Lessor. (g) The Equipment is, and shall remain during the period this Agreement is in force, personal property and, when subject to use by Lessee under this Agreement, will not be or become fixtures. 1 " j (h) Lessee acknowledges that Lessor is acting as a financing source only with respect to the Equipment which has been selected, and the related specifications for developed, by Lessee. (i) Lessee will promptly and duly execute and deliver to Lessor such further documents (including, without limitation, an Internal Revenue Service Form 8038-G or any replacement thereof in substantially the form attached), instruments and assurances and take such further action as 4 Lessor may from time to time reasonably request in. order to carry out the intent and purpose of this Agreement and to establish and protect the rights and remedies created or intended to be created in favor of Lessor hereunder. - 4. TITLE TO EQUIPMENT; SECURITY INTEREST. (afTitle to the Eauioment. During the term of this Agreement, title to the Equipment shall vest in Lessee, . subject to the rights of Lessor under this Agreement. In the event of a default as set forth in Section 13 hereof or nonappropriation as set forth in Section lee) hereof, title to the Equipment shall immediately vest in Lessor, and Lessee shall (at its expense and risk) peaceably deliver the Equipment to Lessor in the condition required pursuant to section 5(b) hereof, at such location as is specified by Lessor. (b) Security Interest. To secure the prompt payment and performance as and when due of all of Lessee's obligations under this Agreement, Lessee hereby grants to Lessor a first priority security interest in the Equipment, all replacements, substitutions, accessions proceeds (cash and non-cash), including the proceeds of all insurance policies, thereof. Lessee agrees that with respect to the Equipment Lessor shall have all of the rights and remedies of a secured party under the Uniform Commercial Code as in effect in the State. Lessee may not dispose of any of the Equipment without the prior written consent of Lessor, notwithstanding the fact that proceeds constitute a part of the Equipment. ~ 5. USE AND MAINTENANCE. (a) Use. Lessee shall use the Equipment solely for the purpose of performing one or more governmental functions of Lessee and in a careful, proper and lawful manner consistent with the requirements of all applicable insurance policies relating to the Equipment. Lessee will not change the location of any Equipment as specified in the applicable certificate of Acceptance without the prior written consent of Lessor, which consent shall not be unreasonably withheld. Lessee shall not attach or incorporate the Equipment to or in any other item of equipment in such a manner that the Equipment becomes or may be deemed to have become an accession to or a part of such other item of equipment. (b) Maintenance. Lessee, at its own expense, will keep and maintain, or cause to be kept and maintained, the Equipment in as good operating condition as when delivered to Lessee hereunder, ordinary wear and tear resulting from proper use thereof alone excepted, and will provide all maintenance and service and make all repairs reasonably necessary for such purpose. All replacement parts and accessions shall be free and clear of all liens, encumbrances or rights of others and 5 have a value and utility at least equal to the parts or accessions replaced. Lessee shall not make any material alterations to the Equipment without the prior written consent of Lessor, which consent shall not be unreasonably withheld. All additio~to the Equipment which are essential to its operation ot-which cannot be detached without materially interfering~!th such operation or adversely affecting the Equipment's value and utility, shall be deemed incorporated in the Equipment and subject to the terms of this Agreement as if originally leased hereunder, and subject to the security interest of Lessor. Upon reasonable advance notice, Lessor shall have the right to inspect the Equipment and all maintenance records with respect thereto, if any, at any reasonable time during normal business hours. 6. FEES; TAXES; OTHER GOVERNMENTAL AND UTILITY CHARGES; LIENS. (a) Fees. Lessee shall reimburse Lessor for, and agrees to hold Lessor harmless from, all titling, recordation, documentary stamp and other fees, arising at any time prior to or during the Full Lease Term, or upon or relating to the Equipment or this Agreement. (b) Taxes. Other Governmental Charqes and Utility Charqes. The parties contemplate that the Equipment will be used for a governmental purpose of Lessee and that the Equipment will be exempt from all taxes presently assessed and levied with respect to personal property. In the event that the use, possession or acquisition of the Equipment is found to be subject to taxation in any form (except for net income taxes of Lessor), Lessee will pay as the same come due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied during the Full Lease Term against or with respect to the Equipment as well as all utility and other charges incurred in the operation and use of the Equipment. ~ f (c) Liens. Lessee shall keep the Equipment free and clear of all liens, levies and encumbrances, except those created under this Agreement. 7. INSURANCE. (a) Casualtv Insurance. At its own expense, Lessee shall keep the Equipment insured against loss or damage due to fire and the risks normally included in extended coverage, malicious mischief and vandalism, for not less than the Full Insurable Value of the Equipment. As used herein, "Full Insurable Value" means the full replacement value of the Equipment or the then applicable Purchase Price designated as such on the Schedules, whichever is greater. All insurance 6 for loss or damage shall provide that losses, if any, shall be payable to Lessor and Lessee, as their interests may appear and Lessee shall utilize its best efforts to have all checks relating to any such losses delivered promptly to Lessor. The Net Proceed.;~f the insurance required hereby shall be applied as providedW' section 8 hereof. As used herein, "Net Proceeds" m~s the amount remaining from the gross proceeds of any insurance claim or condemnation award after deduction of all expenses (including attorneys' fees) incurred in the collection of such claim or award. (b) Self-Insurance Aaainst Casualtv Loss. If Lessee insures similar properties against casualty loss by self- insurance, Lessee may satisfy its obligations with respect to casualty insurance hereunder by providing selfinsurance with respect to the Full Insurable Value of the Equipment by means of an adequate insurance fund. (c) Liabilitv Insurance. Lessee shall also carry public liability insurance, both personal injury and property damage, covering the Equipment, in an amount as Lessor may from time to time reasonably require on notice to Lessee. ' Lessor shall be named as an additional insured with respect to all such liability insurance. Lessee may satisfy its obligations hereunder by providing evidence of self-insurance to the satisfaction of Lessor. '. ~ :31. " (d) Workmen's Compensation. Lessee shall carry workmen's compensation insurance covering all employees working on, in, near or about the Equipment, or demonstrate to the satisfaction of Lessor that adequate self-insurance is provided, and shall require any other person or entity working on, in, near or about the Equipment to carry such coverage, and will furnish to Lessor certificates evidencing such coverage throughout the Full Lease Term. (e) General Requirements. All insurance required under this section 7 shall be in form and amount and with companies reasonably satisfactory to Lessor. Lessee shall pay the premiums therefor and deliver to Lessor the policies of insurance or duplicates thereof, or other evidence satis- factory to Lessor of such insurance coverage. Each insurer shall agree, by endorsement upon the policy or policies issued by it or by independent instrument furnished to Lessor, that (a) it will give Lessor thirty (30) days' prior written notice of the effective date of any material alteration or cancellation of such policy; and (b) insurance as to the interest of any named additional insured or loss payee other than Lessee shall not be invalidated by any actions, inactions, breach of warranty or conditions or negligence of Lessee with respect to such policy or policies. 7 8. RISK OF LOSS; DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET PROCEEDS. (a) Risk of Loss. Lessee assumes all risk of loss of or dama9..~0 the Equipment from any cause whatsoever, and no such losj~f or damage to the Equipment, defect therein, or unfitness ot~~bsolescence thereof, shall relieve Lessee of its obligation at'make rental payments or perform any other obligations hereunder. (b) Damaqe. Destruction and Condemnation. If prior to the termination of the Full Lease Term (1) the Equipment or any portion thereof is destroyed (in whole or in part) or is damaged by fire or other casualty; or (2) title to, or the temporary use of, the Equipment or any part thereof or the estate of Lessee or Lessor in the Equipment or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority; Lessee and Lessor will cause the Net Proceeds of any insurance claim or condemnation award to be applied to Lessee's obligations pursuant to sub-part (c) of this Section. (c) Use of Net Proceeds. Provided the Equipment is not deemed to be a total loss, Lessee shall, at its expense , (subject to application of the Net Proceeds), cause the repair, replacement or restoration of the affected Equipment. .~ In the event of total destruction of or damage to the Equipment, Lessee shall pay to Lessor on the rent payment due dates (as set forth on the Schedules) next succeeding the dates of such loss the amount of the Purchase Price applicable to such rent payment due dates, plus the rental payments due on such dates, plus any other amounts then payable by Lessee hereunder with respect to such Equipment. Upon such payment, the term of the lease and the security interest of Lessor in the Equipment shall terminate, and Lessee will acquire full and unencumbered title to the Equipment as provided in Section 10 hereof. If Lessee is not then in default hereunder, any portion of the Net Proceeds in excess of the amount required to pay in full Lessee's obligations as set forth in this sub- part (c) shall be for the account of Lessee. Lessee agrees that if the Net Proceeds are insufficient to pay in full Lessee's obligations as set forth in this subpart (c), Lessee shall make such payments to the extent of any deficiency. 9. DISCLAIMER OF WARRANTIES. LESSOR, NOT BEING A SELLER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS ENACTED IN THE STATE), NOR A SELLER'S AGENT, HEREBY EXPRESSLY DISCLAIMS AND MAKES TO LESSEE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO: THE FITNESS FOR USE, DESIGN OR CONDITION OF THE EQUIPMENT; THE QUALITY OR CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP IN THE EQUIPMENT; THAT THE EQUIPMENT WILL SATISFY 8 THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR COMTRACT PERTAINING THERETO; AND ANY GUARANTY OR WARRANTY AGAINST PATENT INFRINGEMENT OR LATENT DEFECTS, it being agreed that all such risks, as between Lessor and Lessee, are. to be borne by Lessee. Lessor is not responsible or liable for any direct, indirect, incidental or consequential damage to or losses resul~ing from the installation, operation or use of the Equipment or any products manufactured thereby. All assignable warranties made by the vendor(s) or manufacturer(s) to Lessor are hereby assigned to Lessee for and during the Full Lease Term and Lessee agrees to resolve all such claims directly with the vendor(s) or manufacturer(s). Provided that Lessee is not then in default hereunder, Lessor shall cooperate fully with Lessee with respect to the resolution of such claims, in good faith and by appropriate proceedings at Lessee's expense. Any such claim shall not affect in any manner the unconditional obligation of Lessee to make rent payments hereunder. 10. PURCHASE OF EQUIPMENT BY LESSEE. Provided that Lessee is not then in default under this Agreement, any security interest of Lessor in the applicable items of the Equipment will be terminated, this Agreement as to such items of the Equipment will terminate and Lessee will acquire title ,.... to the applicable items of the Equipment free and clear of all liens and encumbrances created by, or arising through or under, Lessor: , (a) at the end of the Full Lease Term with respect to those items of the Equipment described on a Certificate of Acceptance, upon payment in full of all rental payments and other amounts payable by Lessee hereunder for the Full Lease Term with respect to those items of the Equipment; (b) on any rent payment due date with respect to those items of the Equipment described on a Certificate of Acceptance, upon payment by Lessee of the then applicable Purchase Price as set forth on the applicable Schedule plus all other amounts then due by Lessee hereunder. 11. QUIET POSSESSION. Lessor represents and covenants to Lessee that Lessor has full authority to enter into this Agreement, and that, conditioned upon Lessee performing all of the covenants and conditions hereof, as to claims of Lessor or persons claiming under Lessor, Lessee shall peaceably and quietly hold, possess and use the Equipment during the term of this Agreement subject to the terms and provisions hereof. 12. ASSIGNMENT; SUBLEASING; INDEMNIFICATION. (a) Assiqnment bv Lessor. This Agreement, and the rights of Lessor hereunder, or in, to and under individual certificates of Acceptance, the items of Equipment described therein and the Schedules attached thereto, may be assigned 9 and reassigned in whole or in part to one or more assignees or subassignees by Lessor, its assignees or subassignees at any time without the necessity of obtaining the consent of Lessee. Lessor agrees t~9ive notice of assignment to Lessee and upon receipt of suchfa~lice, Lessee agrees to make any book entries required as a r~lt of such assignment to accurately record the identity of~signee which shall be entitled to the rental payments set forth on the schedule(s) assigned, and to make all payments to the assignee designated in the assignment, notwithstanding any claim, defense, setoff or counterclaim whatsoever (whether arising from a breach of this Agreement or otherwise) that Lessee may from time to time have against Lessor or Lessor's assignees. Lessee agrees to execute all documents, including notices of assignment and chattel mortgages or financing statements, which may reasonably be requested by Lessor, its assignees or subassignees to protect their interests in the Equipment and in this Agreement. (b) No Sale. Assiqnment or SUbleasinq bv Lessee. This Agreement and the interest of Lessee in the Equipment may not be sold, assigned, sublet or encumbered by Lessee without the prior written consent of Lessor. (c) Release and Indemnification covenants. To the extent permitted by the laws and Constitution of the state, Lessee hereby assumes and agrees to indemnify, protect, save and keep harmless Lessor, its agents and employees, from and against any and all losses, damages, injuries, claims, demands and expenses, including legal expenses, of whatsoever kind and nature, arising on account of (1) the ordering, acquisition, delivery, installation or rejection of the Equipment; (2) the possession, maintenance, use, condition (including, without limitation, latent and other defects whether or not discoverable by Lessor or Lessee, any claim in tort, including actions for strict liability, and any claim for patent, trademark or copyright infringement) or operation of any item of the Equipment (by whosoever used or operated); or (3) the loss, damage, destruction, removal, return, surrender, sale or other disposition of the Equipment, or any item thereof. It is understood and agreed, however, that Lessor shall give Lessee prompt notice of any claim or liability hereby indemnified against and that Lessee shall be entitled to control the defense thereof, so long as Lessee is not in default hereunder. 13. EVENTS OF DEFAULT AND REMEDIES. (a) Events of Default. The following shall be "events of default" under this Agreement and the terms "event of default" and "default" shall mean, whenever they are used in this Agreement, anyone or more of the following events: 10 .... ~ l (1) failure by Lessee to pay any rental payment or other payment required to be paid hereunder at the time specific herein; or __ (2) failure by Lessee to observe and perform any other cOYt...~nant, condition or agreement on its part to be observed or: rformed hereunder and such failure shall con- tinue unreme ied for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied, unless Lessor shall agree in writing to an extension of such time prior to its expiration; or (3) any certificate, statement, representation, warranty or audit contained herein or heretofore or hereafter furnished with respect hereto by or on behalf of Lessee proving to have been false in any material respect at the time as of which the facts therein set forth were stated or certified, or having omitted any substantial contingent or unliquidated liability or claim against Lessee; or (4) commencement by Lessee of a case or pro- ceeding under the Federal bankruptcy laws or filing by Lessee of any petition or answer seeking reorganization, arrangement, composition, readjustment, liquidation, moratorium or similar relief under any existing or future bankruptcy, insolvency or ~ other similar laws or an answer admitting or not contesting ~ the material allegations of a petition filed against Lessee in any such proceeding; (5) a petition against Lessee in a proceeding under any existing or future bankruptcy, insolvency or other similar laws shall be filed and not withdrawn or dismissed within sixty (60) days thereafter; or (6) an attachment, levy or execution is threatened or levied upon or against the Equipment or any item thereof. (b) Remedies on Default. Whenever any event of default shall have occurred and be continuing, Lessor shall have the right, at its sole option without any further demand or notice, to exercise anyone or more of the following remedies: (1) with or without terminating this Agreement, retake possession of the Equipment and sell, lease or sublease items of the Equipment for the account of Lessee, with the net amount of all proceeds received by Lessor to be applied to Lessee's obligations hereunder including, but not limited to, all payments due and to become due during the Full Lease Term, holding Lessee liable for the excess (if any) of (i) the rental payments and the amounts payable by Lessee hereunder to the end or the Original Term or then current Renewal Term (whichever is applicable) and any other amounts then payable 11 by Lessee hereunder (including but not limited to -attorneys' fees, expenses and costs of repossession), over (ii) the net purchase price or rent and other amounts paid by a purchaser, lessee or sublessee of such items of the Equipment pursuant to such sale, l!L~se or sublease, provided that the excess (if any) of suc~~~mounts over the then applicable Purchase Price and the amo~s referred to in clause (i) shall be paid to Lessee; rc (2) require Lessee at Lessee's risk and expense promptly to return the Equipment in the manner and condition required in section 5(b) hereof to such location as is specified by Lessor; (3) if Lessor is unable to repossess the Equipment for any reason, the Equipment shall be deemed a total loss and Lessee shall pay to Lessor the amount due pursuant to section 8 hereof; and (4) exercise any other right, remedy or privi- lege which may be available to it under applicable laws of the state or any other applicable law or proceed by appropriate court action to enforce the terms of this Agreement or to recover damages for the breach of this Agreement or to rescind this Agreement as to the Equipment. In addition, Lessee will remain liable for all legal _ fees and other costs and expenses, including court costs, incurred by Lessor with respect to the enforcement of any of the remedies listed above or any other remedy available to Lessor. i ! ^ (c) No Remedv Exclusive. No remedy herein conferred upon or reserved to Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. Lessor's remedies hereunder may be exercised separately with respect to items of the Equipment. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. 14. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to perform or comply with any of its agreements con- tained herein, Lessor shall have the right, but shall not be obligated, to effect such performance or compliance, and the amount of any out of pocket expenses and other reasonable expenses of Lessor incurred in connection with the perfor- mance of or compliance with such agreement, together with interest thereon at the rate of one hundred twenty (120) per cent of the Prime Rate on the date of payment by Lessor (or such lesser amount as may be permitted by law), shall be 12 payable by Lessee upon demand. As used herein, "Prime' Rate" shall mean the rate of interest from time to time announced by Maryland National Bank, Baltimore, Maryland, as its prime rate, whether or not such rate is otherwise published. -,~f:i.,i ' within~ (10) days of receipt, Lessee shall execute, endorse and': ~. liver to Lessor any deed, conveyance, assignment or other in .rument in writing as may be required to vest in Lessor any right, title or power which by the terms hereof are expressed to be conveyed or conferred upon Lessor, including, without limitation, (a) Uniform commercial Code financing statements (including continuation statements), real property waivers; (b) documents and checks or drafts relating to or received in payment for any loss or damage under the policies of insurance required by the provisions of section 7 hereof to the extent that the same relates to the Equipment; and (c) upon default or nonappropriation or times thereafter as Lessor in its sole and absolute discretion may determine, of Lessee upon any bill of sale, document, instrument, invoice, freight bill, bill of lading or similar document relating to the Equipment in order to vest title in Lessor and transfer possession to Lessor. 15. MISCELLANEOUS. f .. 'E' ;~ 'f (a) Notices. All notices (excluding billings and communications in the ordinary course of business) hereunder shall be in writing, sent by certified mail, return receipt requested, addressed to the other party at its respective address stated below the signature of such party or at such other address as such party shall from time to time designate in writing to the other party; and shall be effective from the date of mailing. (b) Bindinq Effect. This Agreement shall inure to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns. (c) severability; Survival. Any provision of this Agreement which is prohibited or unenforceable in any juris- diction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, Lessee hereby waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect. The representations, warranties and covenants of Lessee herein shall be deemed to be continuing and to survive the closing hereunder. Each execution by Lessee of a Schedule shall be deemed a reaffirmation and warranty that there shall have been no material adverse change in the financial 13 : condition of Lessee from the date of execution hereof. obligations of Lessee under Sections lee), 6 and l2(c), accrue during the term of this Agreement, shall survive termination of this Agreement. (~fExecution in Counterparts. This Agreement may be executed~ several counterparts, each of which shall be original an~ll of which shall constitute but one and the same instrument. The which the an (e) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State. (f) captions. The captions in this Agreement are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (g) Entire Aqreement. This Agreement constitutes the entire agreement between Lessor and Lessee. No waiver, consent, modification or change of terms of this Agreement shall bind either party unless in writing signed by both parties, and then such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given. There are no understandings, I agreements, representations or warranties, express or implied, I not specified herein regarding this Agreement or the Equipment f leased hereunder. Any terms and conditions of any purchase order or other document (with the exception of supplements) submitted by Lessee in connection with this Agreement which are in addition to or inconsistent with the terms and conditions of this Agreement will not be binding on Lessor and will not apply to this Agreement. Lessee by the signature below of its authorized representative acknowledges that it has read this Agreement, understands it, and agrees to be bound by its terms and conditions. 14 t IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above set f~h. .,'~,:,;., :;!f.';Z ,-;rt~~ , ATTEST: ATTEST: MNC LEASING, A DIVISION OF MNC CREDIT CORP Lessor By: 502 Washington Avenue Towson, Maryland 21204 CITY OF SAN BERNARDINO, CALIFORNIA Lessee By: 300 North "0" street San Bernardino, CA 92418 15 -l , RIDER NO. .r.,'~,c_.~ ;.:-~ "-l'll-~: Attached to and made a part of that certain Equipment Lease/Purchase Agreement ("Agreement") dated as of , ~990 by and between MNC LEASING, A DIVISION OF MNC CREDIT CORP, as lessor, and CITY OF SAN BERNARDINO, CALIFORNIA, as lessee. 1. The parties assume that Lessor can exclude the interest component of the rental payments from Federal gross income. Lessee covenants and agrees that it will (i) use a book entry system to register the owner of this Agreement so as to meet the applicable requirements of section 149(a)(3) of the Code; (ii) timely file a Form 8038-G (or, if the invoice price of the Equipment is less than $100,000, a Form S03S-GC) with the Internal Revenue Service in accordance with Section 149(e) of the Code; (iii) not permit the Equipment to be directly or indirectly used for a private business use within the meaning of section 141 of the Code; and (iv) comply with all provisions and regulations applicable to excluding interest from Federal gross income pursuant to section ~03 of the Code. 'I' 'I 2. If Lessor either (i) receives notice, in any form, from the Internal Revenue Service; or (ii) reasonably deter- mines, based on an opinion of independent tax counsel selected by Lessor and approved by Lessee, which approval Lessee shall not unreasonably withhold, that Lessor may not exclude any interest from Federal gross income because Lessee breached a covenant contained herein, then Lessee shall pay to Lessor within thirty (30) days after Lessor notifies Lessee of such determination an amount equal to the sum of (x) penalties, fines, interest, and additions to tax (including taxes imposed on the interest component of all rental payments due through the date of such event) that are imposed on Lessor as a result of the loss of the exclusion and that Lessor cannot deduct in computing its Federal income tax liability divided by one minus the highest Federal regular marginal tax rate in effect for the tax period for which Lessor lost the exclusion plus (y) penalties, fines, interest, and additions to tax that are imposed on Lessor as a result of the loss of the exclusion and that Lessor can deduct in computing its Federal income tax liability. Additionally, Lessee agrees that upon the occurrence of such an event, it shall pay additional rent to Lessor on each succeeding rent payment due date in such amount as will maintain Lessor's after-tax yield on the transaction evidenced by this Agreement. ,- , 3. The obligations of Lessee hereunder which accrue during the term of this Agreement shall survive termination of this AgreeT~' "";:':',:~~ The parties;~ree that this Rider is an integral part of the Agreement .'1",. Date: MNC LEASING, A DIVISION OF MNC CREDIT CORP Lessor By: CITY OF SAN BERNARDINO, CALIFORNIA Lessee i ~ By: f 2