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HomeMy WebLinkAbout56-Purchasing CITY'" SAIl ....1WIiH~......-r FOR COUNCIIAcnoN Fnxn: . Dean R. Meech, Purchasing Agent Subject: Lease Purchase Master Contracts 1. Cityicorp North America 2. G.E. Capital 3. MNC Government Finance ~_~: Purchasing DIIt8: Synopsis of Previoul Council ectIon: ~ 5 1 " '- d 1.:- I ;::- --.I .:::1 None -.- - :0: ....J ~ ~l .t."' ~" '-.:1 Recomrnendld motion: . Adopt Resolutions. ~". -"4~.~ Signetu Supporting dIIta .tr...hld: Yes Phone: 384-5085 W.-d: NIA ConUlCt penon: Dean R. Meech, Purchasing Agent FUNDING REQUIREMENTS: Amount: 1-4{1\ Soun:e: IAcct. No.1 IAcct. DncriDtionl FinlllCl: ~o. leil Nollll: '~.n'A' Agen4~~6'0 s g- CITY" SAN _RNARDIN~ REOJEST FOR COUNCILClcTION STAFF REPORT The proposed acti on is for p 1 aci ng three (3) lease Purchase Master Contracts in place with the City of San Bernardino. This li brary of fi nanci ng partners already approved by the Ci ty and in pl ace wi 11 save an extraordi nary amount of time in the processi ng of lease Purchase transactions. When lease Purchase financing is solicited you have eager vendors who pursue the potential. which in itself takes time. But in the final stages the transaction is subject to corporate or portfolio directors attitudes. The results are invested time in bringing the bid process and final concluding actions to an end that can be negated by the vendors policy. This type of procedure serves no purpose. The best utilization of lease Purchase Master Contracts in place is to procure the equipment. then approxinlately two (2) or three (3) weeks before takedown of that equipment call several or all of our in place finance partners and get current interest rates . Current interest rates will be be good for thirty (30) days. Then simply add a payment schedule to the already existing in place Master Contract with the lowest interest rate. These contracts cost us nothing until utilized. The 1ength1y time it takes for legal to agree and approve the contracts before action can take place is already done. The City can move with dispatch in satisfying the departments equipment needs. As the contracts grow in number that are acceptable to the City our "range of competitive interest rates grows. The extraordinary tillll! to secure a vendor who may wash out due to certain circumstances is eliminated. Once lease Purchase Master Contracts are in place it is recommended the financing of equipllll!nt should be negotiable. not acquired through the competitive bidding process. lease Purchase is too important to overall operations of the City. Financing interest rates can and have been adjusted downward to the City's advantage. To secure our primary mission of best advantage to the City. financing must be a negotiable item. The three vendors for lease Purchase Master Contracts proposed for council approval are as follows... 1. Citicorp North America 2. G.E. Capital 3. MNC Government Finance 75-0264 The above three vendor contracts have been approved by the City Attorneys Office and returned to Purchasing for proposed Council Action. ~~ ~CL~J:i;:.. De" .:.", ....,-.."g g." .. - ,. jiif~~ . 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 . o o RESOLUTION NO. RESOLUTION OF THE CITY OF SAN BERNARDINO ACCEPTING LEASE PURCHASE MASTER CONTRACT FOR MNC GOVERNMENT FINANCE FOR THE FURNISHING OF LEASE PURCHASE FINANCING. BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 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 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 . o o RESOLUTION OF THE CITY OF SAN BERNARDINO ACCEPTING LEASE PURCHASE MASTBR CON'l'IlACT 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 Bernardino at a meeting thereof, held on the day of , 1990, by the following vote, to wit: Council Members: AYES NAYS ABSTAIN ESTRADA REILLY FLORES MAUDSLEY MINOR POPE-LUDLAM MILLER 22 City Clerk 23 I I I I I I I I I I I I I I I I I I I I I I 24 IIIIIIIIIIIIIIIIIIIIII 25 IIIIIIIIIIIIIIIIIIIIII 26 I I I I I I I I I I I I I I I I I I I I I I 27 28 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 , . o o 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 approved this day of , 1990. w. R. HOlcomb, Mayor City of San Bernardino Approved as to form and legal content: JAMBS F. PENMAN, City Attorney DR:ma/MNCgovt.res July 5, 1990 3 - ~ - . . o o EOU:rPMENT LEASE/PURCHASZ AdRZZMENT ~; ~~ LEAS~'~C:~:~G== ~"r.::.;:O~f A the DIVISION OF MlfC CREDIT CORP ("Lea.or.) and CITY OF SAN BERNARDINO, CALIFORNIA ("Le.....'). In con.id.ration ot the .utual covenant., tena .nd condition. hereinatt.r contained, LePor hereby avnu to 1.... to Le...., and Lea...h.reby a9"''' to 1.... froll Lea.or, the property (h.r.in.tter, tot.ther with .11 repl.....nts and .cc...ion. th..to, r.t~ to .. the "B.d....nt.) ducribed in the ......ti.l U.. of BquipMftt Lettft .ttached h.r.to and in ona or lIOn certifloat.. of Acceptanc., in the tora attachlad, .xecuted .nd _11~ pUZ*uant h.r.to, .ubj.ct to the t.ras and conditions ..t torth h.r.in. Thi. Agr..m.nt is mad. upon the tollowing t.ras and conditions: 1. TERM. , , (a) COIII_nce.ent ot T,~. This Agr....nt ..11 be eff.ctiv. and the parti..' ob11g& iQn. hereQnder llball ..iM, a. ot the date h.r.ot. Th. t.ra ot 1..,. urid.&' tlli. Agre..nt with r.sp.ct to tho.. it... ot the Equi..-nt dPcrlbed on a c.rtificat. ot Acceptanc. .hall coaaenoe on th..dll'ta on which such it... ot the Equipm.nt ar. a.cc.pted by L9<<~" &. indicated on the certificate ot Acc.pUnce (tIle.CO 'P"c.-nt Date.), and .hall terainat. on the la.t bu.ineta day of Le....'. then curr.nt fi.cal budget period '.uch period being h.&,.inaft.r ret.rred to a. the .Original T.ra.). As used h.r.in, "bu. in... day" m.ans any day on which CORR,rci.l banks are open for the purpo.. of carrying on a co~i.l banking busin..s in the stat. ot Lesse.'s location (th. "stat..). (b) Renlll"at of Lease Term. The Original T.rm with r.sp.ct to those it.ms of the Equip..nt d.scribed in a Certificate of Acceptance will b. autoaatically and .uc- ce.sively r.n.wed at the end of the original Term und.r the same t.ras and conditions tor such numb.r of .ucc.ssiv. r.n.wal p.riods ("Ren.wal Terms") as i. s.t forth on the Sch.dul. ot paym.nt. ("SCh.dul.") ex.cut.d by Le.... and attached to such c.rtificate ot Acc.ptance. . The la.t R.newal T.rm shall end on the last day ot the Full Lea.. T.ra (as sp.cified on the r.lat.d Sch.dule, provid.d that, for purposes of this Agreem.nt, "Full Lease Term" .hall ..an the last .xpiring Full Leas. T.rm speciti.d on a schedUl.)1 unl.ss Lesse. gives written notice to Lessor not l.ss than sixty (60) days prior to the end of the then curr.nt t.rm ot Lessee's 1. ..." - i"ntion to t.rainate this .r._a pur.u.nt to a.otlon 10 0 h.r.of or .ub-part Ce) of this a.otion, a. th. ca.. may be. Cc) T.~~nat:ion. Th. t.ra of th. 1.... her.und.r will t.rminate upIIth. .arlie.t to occur of .ny of th. following ev.nt.:' ..'~ -::-- C~. .xpiration of the Origin.l T.rm or any R.n.wal T.ra with r.sp.ct to all it... of th. Equipaant d..cribed in th. c.rtificate. of Acceptanc. and th. nonren.wal th.r.of in accordance with the t.ras and condition. of thi. Agr._.ntr (2) Th. purcha.e of all it... of th. Equipaent d..cribed in th. C.rtificat.. of Acc.ptanc. by Lee... und.r th. provi.ions of S.ction 8(C) or 10 of this Agreeaent, (3) A d.fault by Le.... .nd La..or'. .l.otion to t.rainat. this Agre.ment under S.ction 13' or (4) The payment by La.... of all r.ntal payaent. authoriz.d or r.quired to be paid by La.... bereunder with r..pect to all items of the Equipment de.cribed in the Certificates of Acceptance. Cd) Continuation of Lea.. T.rm bv La,.... La.... intends, .ubj.ct to the provi.ion. of .ub-part ee) of thi. S.ction, to continu. the term of th. l.a.e h.reUftdar through th. original T.rm and all Ren.wal Term. for the FUll Lea.e Term and to pay the rental payments her.under. Lee'" r.a.onably beli.ves that l~ally avail.bl. fund. in an amount .uffici.nt to make all rental payment. for the FUll Lea.eTerm can.b. obtain.d. Le.see furth.r intend. and h.reby oovenanta to do all thing. lawfully within it. pow.r to obtaln and maintain fund. from which the rental payment. may be mad., including making provision for .uch rental payaent. to the extent neces.ary in each budget submitted and .dopted in accordance with law, to use its bona fide be.t .ffort. to bave such portion of the budget approved, and to exh.ust .11 available reviews and appeal. in the event sucb portion of the budget is not approved. Ce) NonaDDrODriation. In the event suffici.nt fund. are not appropriated for the payment of all rental payment. required to be paid in the next succeeding Renewal Term hereunder and Lessee has no funds legally available for rental payment. from other sources, then Las.e. may terminat. this Agr.em.nt at the end of the original Term or th. then current Renewal Term, as the case may be, and La.... .hall not be obligated to make payment of the rental payment. provided for in this Agreement beyond the then current term. La.... agrees to deliver notice to Les.or of such termination at least sixty'(60) days prior to the end of th. th.n current term. If this Agreement is terminated under this .ub-part, 2 , - - - - - - - ~.. agr..., at Le....'. ~, .~.. and ri.k, peaceably ~ to d.liv.r .uch it... of the Equipllent to Le..or at .uch location a. i. .p.cifi.d by Le..o~, in the condition required by Sec:tion 5(b) her.of. To the .xtent lawful, Le.... covaaftta ~.it will not, until tb. date on whicb the next .ucca.ed1rMJ tt"(r-val Term would bav. .nded, .xpend or coaait any fund. for ~~~:purcba.e or u.. of equipllent to be u..d for the .... ~., or a purpo.. functionally .quival.nt to, the Equipll.nt. . 2. RENTAL PAYMENTS. ea) R.nt:al pavmant:. t:o "..ft,~blt:. .t!u~tt~.... o~ Le~.... Le..or and Le.... unci..... aDd ~... ~ the obU,.tion of Le.... to pay rental payaenu btan-'J:' aba11 conetitute a cun.nt expene. of Le.... and aba11'~ 1a any way be con.trued to be a d.bt of Le.... in aofttJ:'a~lon of any applicabl. con.titutional or .tatutoJ:'Y It.i'''~ OJ:' requir...nt. concerning tb. creation of indebted.... by L88a.e, nor .hall anything contained b.rein COft8t!~ a pledge of the general tax revenue., fund. OJ:' 1IOfti.. of Le..... (b) PaVlllent of Rental pa~en~.. Le.... 8ball pay rantal payment. exclu.ively from l.gally .vailabl. r.nda, in lawful mon.y of tbe United State. of America, to ~80J:' in the . amount. and on the rent payment due date. .et forth in the ~ Scbedules without notice. t ~ (c) Interest and PrinciDal CaaDonen~.. As..t forth in tbe Schedule., a portion of each rental payment is paid aa, and represent. payment of, Ointer..t, and the balanoa of each rental payment i. paid as, and repre.ent. payment of, principal. (d) Rental pavaent. to be U9~ndi~i~~. The obligation of Le.... to make rental pay.enu b8J:'ltUftder, and to perform and ob.erve tbe covenant. and .9I:'....nta contained in this Agreement, .ball be ab.olute and unconditionel in all events, except a. expr..sly provided in tbi. Agreement. Le.... shall not a...rt any right of .etoff, countercl.im, or abat...nt again.t it. obligation. hereunder, including (without limitation) bY r.a.on of equipllent failure, di.pute. with the vendor(.) of the Equipment Qr Les.or, accident or any unfore...n circum.tanc.s. 3. REPRESENTATIONS AND COVENANTS OF LESSEE. Le.... r.presents, covenants and warrants to Les.or a. follow.: (a) Les.e. is a stat. or political .ubdivi.ion thereof within the meaning of Section 103(c) of the Internal Revenu. Code of 1986, as amend.d, (the "Code") and will do or cause to be done all things nec.ssary to pre.erv. and keep in full fore. and effect its existence as such. 3 - . (b) La.... is auth.iz.d Qd.r the con.titution andO la. of the Stat. to .nt.r into thi. A9r._.nt and the tran.action. cont..plat.d h.r.by and to p.rtora all of it. obli..uon:i"":::~ncod by an a...-......... __ cut ion and .. 'lv.ry ot this Agr....nt by or on bebalf of ' La.... h.. . duly authoriz.d by all n.ce...ry .ction of the governing body ot Le...., and Lea... ta.. obt.ined .ucla oth.r approv.l. and con..nt. a. ar. n.c..safY to cona.....t:e this Agr....nt. Le.... furth.r r.pr...nt., cov.nant.. and w.rrants th.t all r.quir...nt. have tte.n ut, lti\d procedur.. bav. occurred n.c....ry to .n.ur. the .nto1'C..bility of this Agr._.nt again.t Les..e, and lA.... bas co.plied with such public bidding require..nt. a. ..y b. applicabl. to ttals Agr._.nt and th. acqui.ition by Le.... ot the Bquipaent h.r.und.r. (d) La.... .hall cau.. to b. .x.cuted h.r.to an incuabency c.rtiticat. and .n opinion in tora and .ub.tanc. .ati.tactory to Le..or. .nd .ttacbed of ita counHl ..'-.~ (e) Le.... has d.t.rained that . pr...nt n.ed ..l.ta tor the Equip..nt which n.ed is not t..porary or expedtedto diminish in the near tutur.. Th. Equipment is ..sential to I." and will be u.ed by Le..e. only tor the purpo.. of perfo~in9 on. or more gov.rn.ental tunction. ot Lea... con.i.t.nt with t the perai..ibl. .cope ot lA....'. authority and will not be . u.ed in a trade or bu. in... ot any p.r.on or entity. Lea... .hall cau.. to b. .x.cut.d and attached h.r.to an ...enti.l U.. ot Equipm.nt Lett.r in'sub.tantially the to~ attached. (t) Upon r.qu..t during the p.riod this AgreeIlent i. in tore., Le.... will annually provide Le..or with current tinancial .tat...nt., budg.t., proot ot appropri.tion for the .n.uing ti.cal y.ar and .uch oth.r tinancial information r.lating to the ability ot Lessee to continu. this Agr....nt as may r.a.onably b. r.qu..ted by Le..or. (g) Th. Equipm.nt is, and .hall remain during the period this Agr.ement i. in tore., per.onal property and, when .ubject to u.. by Le..e. und.r this Agr..ment, will not be or become tixtures. (h) Le.... acknowl.dg.. that Le..or i. acting a. a tinancing .ourc. only with r..p.ct to the Equipm.nt which baa be.n .elect.d, and the relat.d .pecifications tor dev.lop.d, by Lesse.. (i) Le.... will promptly and duly .x.cut. and deliv.r to Les.or .uch turth.r docum.nt. (inCluding, without limitation, an Internal Revenu. s.rvice Fora 8038-G or any replacem.nt th.reof in .ub.tantially th. tora attaclaed), instrum.nts and assurances and take .uch furth.r action a. 4 Aor may from t1Jae to ti__aeanA1 reque.t in order to 0 carry out the intent and purpo.. of th . Agr......t and to ..tabli.h and prot.ct th. right. and ~..di.. created or int.nd.d to b. cr.at.d in favor of La..or h.r.und.r. -" 4. 'l'i~!& TO EQUIPMENT, SECURITY INTEREST. -'~ (a}t"'l'itle to the Rauimaent. During the t.ra of this Agr....nt, title to the Bquipa~t .hall v..t in La...., . .ubject to th. right. of La..or und.r thb Agre.....t. In the event of a d.fault a. .et forth in s.ction 13 ~f or nonappropriation a. ..t forth in S.ction 1(.) bereof, title to the Bquipa.nt shall imm.diat.ly v..t in La..or, and La.... .hall (at it. .xpen.. and ri.k) p.ac.ably d.liv.r the Equipa.nt to Le..or in th. condition r.quir.d pureuent to Section 5(b) her.of, at .uch location a. i. .pecified by La.ear. Cb) Security Yntere.t. To .ecur. the pr~ pa,..nt and perforaanc. a. and wh.n due of all at La....'. obl19ationa und.r this Agr..m.nt, Le.... h.r.by grant. to Lasear a firet priority ..curity inter..t in th. Equip..nt, all replaoeaent., sub.titution., acc..sion. proc.ed. (ca.h and non-ca.h), including the proce.d. of all in.uranc. polici.., thereof. La.... agr... that with r..p.ct to the Equip..nt Lassor shall have all of th. right. and re..di.. ot a ..cured party under . the unitorm Coma.rcial Cod. as in .ttect in the stat.. La.... may not dispo.e at any at the Equip..nt without the prior written con..nt at Las.or, notwith.tanding the fact that proc..ds constitut. a part ot the Equip..nt. 5. USE AND MAINTENANCE. " Ca) YAI. Le.... .hall us. the Equipaent .01.11 for the purpose ot pertorming on. or more gov.rnaeatal funct on. at Le.... and in a caretul, proper and lawful unner con.i.tent with the r.quir...nt. ot all applicabl. insuranc. pOlici.s r.lating to the Equipment. La.... will not chang. th. location at any Equipm.nt a. .pecified in the applicable certificate at Acc.ptance without th. prior writt.n consent at La..or, which con..nt shall not b. unrea.onablI withheld. La.... .hall not attach or incorporate the Equ pa.nt to or in any other it.m of .quipm.nt in such a mann.r that the Equipm.nt b.com.s or may be de.med to have become an acc...ion to or a part at such other item of equipm.nt. (b) Maintenance. Lessee, at it. own .xpens., will ke.p and maintain, or caus. to be kept and maintain.d, the Equipa.nt in a. good operating condition a. wh.n deliv.red to Le.se. hereunder, ordinary w.ar and t.ar r..ulting trom proper use th.reof alone excepted, and will provide all maintenance and service and make all repairs reasonably n.c....ry tor .uch purpo.e. All replacement part. and acces.ion. .hall b. tree and clear of all liens, encumbrances or right. at other. and 5 ha'" a value and utility at tlLst .~l to th. part. or ~ acces.ion. r.placed. Le.... shall not aak. any _eerial alt.ration. to th. Equipm.nt without th. prior written consent of Le..or, wh~ch con..nt .hall not b. unr".onably witbbeld. All additio-....t:o th. Equipm.nt which ar. ....nt:i.l to ita op.rat:ion or..~Wbich cannot be d.tach.d without: ..tarially int.rf.ring~t:b such op.ration or adv.rs.ly affecting th. Equi~nt'. value and utility, shall be de..ed illCO~rated in th. Equipm.nt and .ubj.ct to th. t.rm. of thi. Agr.eaent a. if originally l....d h.r.under, and subj.ct to th. ..curit:y int.r..t of Le..or. Upon r.a.onabl. advance notic., I.e..or..hall have th. right to. in.p.ct the Equipm.nt and all _int:enallCe reooM8 with r..p.ct th.r.to, if any, at any r.a.onabl. ti.. during normal bu. in... hours. 6. FEES I TAXES; OTHER GOVERNMENTAL AND UTILITY CRUGBS, LIENS. (a) bU. Le.... .hall reimburse I.e..or for, and agr... to hold I.e..or harml... from, all titling, recordation, docuaentary .tamp and oth.r f..., ari.ing at any tt.e prior to or during the Full Lea.. T.rm, or upon or r.lat:ing to th. Equipaent or this Agr.em.nt. " (b) Tax... Oth.r.Gov.rn..n~al ehara.. ~ Ut:ilit:v Ch:1a... Th. part i.. cont.mplat. that the Bqgl,..at will be u. for a gov.rna.ntal purpo.. of I.e.... and that the Equi~t will be .x.mpt from all tax.. pr..ently ......ed and l.vi.d with r..pect to p.r.onal property. In the ..ent: that: the u.., po.....ion or acqui.ition of tb. BqUipaent i. found to be .ubj.ct to taxation in any form (exc.pt: for nst: inooae tax.. of Le..or), Le.... will pay a. th. .ame co.e du., all tax.. and gov.rnm.ntal charge. of any kind whataOeY8r that: may at any time b. lawfully a......d or l.vi.d during th. Full Lea.. T.rm again.t or with r..p.ct to th. Bquipment a. w.ll as all utility and oth.r"charg.s incurr.d in the operation and us. of the Equipment. (c) Li.n.. Le.... .hall k..p th. Equi~nt: fr.. and cl.ar of all lien., l.vies and .ncumbranc.., .xc.pt tho.. cr.ated under this Agr..ment. l 7. INSURANCE. (a) Ca.ualtv Insurance. At it. own expen.., I.e.... shall k..p the Equipment insur.d again.t 10.. or damage due to fir. and the ri.ks normally includ.d in .xt.nded coverag., malicious mischi.f and vandali.m, for not 1... than the Full In.urabl. Value of the Equip..nt. A. u.ed h.r.in, -Full In.urabl. Valu." m.ans the full replac...nt value of th. Equipment or the th.n applicabl. Purchas. price desi9Jlat.d as such on the Schedules, whichever is gr.ater. All insuranc. 6 f~lO.. or da..g. .hall protlb. t~ 10...., if any, aball ~ payable to Leaaor and lA...., a. th.ir interut. ..y aJIIlar and lA.... .hall utilize it. but .ffort. to have all Cbeok. r.lating to any .uch 10.... d.liv.r.d proaptly to lA.ear. 'l'ba N.t Proce._~ the in.uranc. required h.reby aball be applieel a. provideel.'.... Section 8 h.reof. Aa u.ed her.in, -N.t Proceed." ...... the a.ount r..aining froa the qroe. proc..da of any inauriftaa claim or cond.anation award aftc deduction of all .xpanau (including attorn.y.' f...) incurred in the coll.ction of .uch claim or award. (b) S.lf-In.uranc, Auain.t ca:y,ltv ~".. If Lea... in.ur.. .imilar properti.. again.t caaua ty 1... by &elf- in.uranc., La.... may .ati.fy it. obligationa with r.~ to ca.ualty in.uranc. h.r.und.r by providing ..lfi~ with r..pact to the Full In.urabl. Value of the I~i~nt by 8&aftS of an adequate in.uranc. fund. (c) Liabili~v In.uranc.. La.... shall .lso carry public liability in.uranc., both p.rsonal injury and.pt:oparty da..g., cov.ring the EquipMnt, in an amount .. ~.Ol" may. from tiM to time rea.onably r.quir. on notice to lA..i.... Le..or .hall be named a. an additional in.ured with ~pect to all .uch liability in.uranc.. Le......y .atisfy ita ~ Obligation. h.r.under by providing evidence of ..It-inaurance S to the satisfaction of Lessor. ! . . Cd) Wor~.n's co~~n.ation. Le.... .hall carry workmen's compen.ation insuranc. cov.ring all -.pl0f88S working on, in, near or about the Equipment, ord~te to the .ati.faction of Las.or'that ad.quate ..If-i~ i. provided, and shall require any other per.on or utity working on, in, n.ar or about the Equipment to carry .uch coycage, and wil~ furni.h to Le..or certificat.. .videncing .uch coverage throughout the Full Lea.e Term. Ce) General Reauir..,nt.. All in.uranc. r.quired under this Section 7 shall -.in form and amount and with compani.. rea.onably .ati.factory to La..or. La.... shall pay the premiums therefor and d.liver to La..or the policies of insurance or duplicates th.reof, or oth.r .vid.nc. .ati.- factory to Lessor of .uch insurance cov.ra,.. Each in.ur.r shall agr.e, by endorsement upon the policy or polici.. i..u.d by it or by indep.ndent in.trument furnish.d to La..or, that Ca) it will give Les.or thirty (30) day.' prior writt.n notic. of the effective date of any material alt.ration or cancellation of such policy, and Cb) in.uranc. a. to the int.re.t of any named additional insured or 10.. pay.. other than Lessee shall not be invalidated by any action., inactions, breach of warranty or condition. or n.gligence of Lessee with respect to such policy or policie.. 7 . 8. RISK OF LOSS; DAMAG. DESA-rION AND CONDmoo.TION, 0 USE OF NB'l' PROCEEDS. e.) Risk or Loss. Le.... ...um.s .11 ri.k of loes of or ~a,"'1;o the Equip.nt frOll anycaus. wau.t.oever, and no .uc:b loU'~f' or a..ge to the Bquipll4lftt, defect: therein, or unfit..... ~..ol..c.ne. th.r.of, .hall reli.v. Le.... of its obligation ~~k. r.nt.l p.yment. or perform .ny oth.r Obligation. h.r.under. eb) .Da..a.. ~tru~tion .~~ ~'iW'.....tion. It prior to the t.rain.tion of the ru 1. EA....,... (1). thaBqQ1paut: or any portion th.r.of is d..troyed (in whole or in Part) or is daaaged by fir. or oth.r c..ualty; or (2) title to, or the teaporary u.. of, the Equip..nt or any J!IIlrt th.reof or the ..tats of Le.... or Le..or in the BtUi.-nt or any part th.reof .hall b. tak.n und.r the ..-rc1ae of the powec of ..in.nt deadn by any gov.r~ntal body or by any JMR'IlOft, fin or cotpor.tion .cting und.r tov.rnaental authority, t..... and Le..or will c.u.e the N.t 'roQ..d. of any in.urenoe clataor condeanation .ward to b. appli.d to Le...... obligation. pur.u.nt to .ub-p.rt (c) of this S.ction. (c) Us. of Net Procead.. provid.d the Bqui,....t i. not dj....d to b. . tot.l 10.., Le.... .hall, at its .xpens. t. (.ub .ct to .pplic.tion of the N.t Proceed.), cau.. the repair, replacem.nt or re.tor.tion of the aff.cted ~i~nt. In the .v.nt of total d..truction of or da..g. to the Equipaent, Le.... .hall pay to Le..or on the rent par-ent due dat.. (a. ..t forth on the Sch~ul..) n.xt .UC~edin9 .~ d.t.. of .uch 10.. the amount of the Purch... trios applicabl. to .uch r.nt paym.nt due dat.., plus the r.ntal pa,.,nta due on .uch d.t.., plus any oth.r ..ount. th.n payable .))y .x..a.. h.r.und.r with r..p.ct to .uch Equi,..nt. upon.uch par-ent, the t.rm of the 1.... .nd the ..curity int.r..t of L8*l.or in the Bquip..nt .h.ll t.rmin.t., .nd Le.... will acquire full .nd un.ncumb.r.d title to the Equipaent a. provided in section 10 h.r.of. If Le..ee is not th.n in d.f.ult h.reunder, any portion of the N.t Proceed. in .xc... of the .mount requir.d to pay in full Les.e.'s oblig.tion. .. ..t forth in this .ub- p.rt (c) sh.ll be for the account of Le..... Le.... agr... that if the Net proc.ed. ar. in.uffici.nt to pay in full Le...... oblig.tions .s ..t forth in this .ubpart (e), Le.... sh.ll m.ke such p.yments to the .xtent of .ny d.fici.ncy. 9. DISCLAIMER OF WARRANTIES. LESSOR, NOT BEING A SELLER (AS SUCH TERM IS DEFINED IN 'l'HE UNIFORM COMMERCIAL coDE AS ENACTED IN 'l'HE STATE), NOR A SELLER'S AGENT. HBREBY BXPRESSLY DISCLAIMS AND MAKES TO LESSEE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR O'l'HERWISE, INCLUDING, BUT NOT LIMITED TO: 'l'HE FITNESS FOR USE, DESIGN OR CONDITION OF THE EQUIPMENT: 'l'HE QUALITY OR CAPACITY OF THE EQUIPMENT; 'l'HE WORKMANSHIP IN THE EQUIPMENT: THAT THE EQUIPMENT WILL SATISFY 8 ontRBQUIRBIIENTS OF ANY IAW, 'LE, QzCIFICATION OR "'-I'MC'l' 0 PQ'1'AINtNG'l'HERE'l'O' AND ANY GUARAN'1'Y OR WARRAN'l'Y AGADI8'1' PA'tBIrr INFRINGEMENT OR IATBIIT DEFIC'l'S, it being a91"e. t:bat all .uch ri.k., a. betw..n Le..or and Le._., ar., to be born. by Le..... .Leaaor i. not r..pon.ibl. or liable for any direct, indirect, incid.ntal or con..qu.ntial daaag. to or 10.... r..ul~lng from th. in.tallation, operation or u.. of th. lquipaant or any product. manufactured th.reby. All a..ignable warranti.. ..d. by th. v.ndor(.) or aanufact:urer(.) to Le..or are h.r.by a..igned to Le.... for and during th. Full Lea.. T.rm and Le.... agr... to r.aolv. all .ucb clat.. dir.ct:ly with th. v.ndor(.) or .anufactur.r(.). Provided t:bat Le.... i. not then in d.fault her.und.r, Les.or .hall cooperate fully with Le.... with re.pect: to th. resolution of .uch clai.., in good faith and by appropriate proceedinq. at Le...... expen... Any .uch claim .hall not aff.ct: in any .anner the unconditional obligation of Le.... to aaka r.nt paym.nt. h.reunder. 10. PURCHASE OF EQUIPMENT BY LESSEE. Provid.d t:bat Le.... is not th.n in d.fault under thi. A9r_..nt, any ..curity inter..t of te..or in the applicabl. it... of th. Equip.ent will b. terminated, this Agr....nt a. to sucb iteas of th. E~.ip.ent will terminate and te.... will ac~'i~ title to the applicable ite.. of the Equipment free and ~iesr of all f.,' lien. and .ncumbrances created by, or ari.ing through or under, Lessor: ... (a> at the end of the Full Lea.. T.ra with re.pect: to tho.e ite.. of the Equip..nt d..cribed on a certificate of Acc.ptanc., upon payment in full of all r.ntal payaant:s and oth.r amount. payable by Le.... h.reund.r for the Full Lea.. Term with r..pect to tho.e ite.. of the Equip..nt, (b> on any rent paym.nt due date with r..p.ct to tho.e ite.. of the Equip.ent d..crib.d on a c.rtificat. of Acc.ptance, upon payment by Le.... of the th.n applicabl. Purcha.. Price a. ..t forth on the applicabl. Sch.dul. plus all oth.r amount. then due by Le.... her.und.r. 11. QUIET POSSESSION. Le.sor repr..ent. and cov.nant. to Les.ee that Le..or has full authority to .nt.r into thi. Agr....nt, and that, conditioned upon Le..e. perforaing all of the covenant. and conditions hereof, as to claim. of Le..or or per.on. clai.ing under Lessor, Lessee shall peaceably and quietly hold, pos.ess and use the Equipment during th. term of this Agreement subject to the terms and provision. her.of. 12. ASSIGNMENT: SUBLEASING: INDEMNIFICATION. (a> Assianment bv Lessor. Thi. Agr..ment, and the right. of Le.sor h.reunder, or in, to and und.r individual Certificates of Acceptance, the item. of Equipm.nt de.crib.d th.rein and the Schedules attached th.reto, may b.'a..ign.d 9 anc:l r~.ign.d in whole or in pat to o. or JIOre a..iCJll'" or .uba..iCJll... by Le..or, it. a..ign.,- or .ub...ign... at any ti.. without th. nece..iti of ob~.J.n~ the consent of Leea... ......or .9r... tf!!:;41v. not c. of ...1...."t to Lee." .nd upon .:.ceipt of SUob'~,' ice, Le.... .9r....o ... .ny book .nui.. . r.quired a. a .. JlP!i' t of .uch a..i9....t to .ccur.t.ly recoJ:d th. identity of~iCJlle. wh1ch Sh.ll be .ntiUed to th. rental p.ya.nts ..t forth on th. schedule(.) ...i9aed, .nd to Nke all p.ya.nt. to the ...1gn.. d..ignat.4, in th. ...1~t, notwith.tanding .ny clai., def.ns., ..~off or count.rcl.1. what.oev.r (wh.th.r arising fro. a br__ of this ACJr88UIlt or oth.rwis.) that Le.... may frOll ti.. to ti.. hav. ag.inst Le.sor or Le..or'. a..ign.... ~.....vr'" to ...cute all document., including notic.. of'a..i~tand chatt.l .ortga9.. or f in.ncing .tat...n, ts, whi~= re..onably be r.qu..ted by Le..or, it. a..i,... or .1qne.. to protect their int.rests in th. Equip..nt and in thi. Agr....nt. (b) No Sa1.. u.ian~t: ~\' ~~~l't:~na bY T~.". 'l'bis Agr....nt and th. 1nt.rut of, LiI!II'" ',n the Equipment -y not be .old, as.igned, subl.t or .ncujDered by Le.... without the prior writt.n cons.nt of Le.sor. (c) R.1.a.. and In~"'!I,.i~~=on ~.nant:.. '1'0 th. .xt.nt p.rmitt.d by th. law. "" CO' , . tufton of the. state, Le.... h.r.by a..u... and agr... to inJ.-nify, proteGt, AV. and k..p harml... Le..or, it. a,.nt. abd employ..., from aAd again.t any and all 10...., d"'9..' injuri.., cl.1a8, d.-.nd. and .xp.n..., including l.gal .XJMhUI8., of what.oever kill\land natur.,arising on account of (1) th. oJ:d.r1ng, aoqlll.1tlon, d.liv.ry, in.tallation or r.jectionof th. Equipment. (2) th. po.....ion, maint.nance, us., condition (including, without li.itation, lat.nt and oth.r defect. wh.th.r or not di.cov.rabl. by Le..or' or Le...., any claim in tort, including action. for .trict liability, and any claim for pat.nt, trad.mark or copyright infring...nt) or operation of any it.. of th. Equip..nt (by who.o.v.r u..d or op.rat.d)' or (3) th. 10.., da.age, d..truction, r.1IOVal, r.turn, .urrend.r, .al. or oth.r di.position of the Equipment, or any it.. th.r.of. It i. und.rstood and agr..d, hOWeV.r, that Le..or shall give Le.... pro.pt notice of ~ny claim or liability h.reby indemnified against and that Le.S.. .hall b. .ntitl.d to control th. d.f.ns. ther.of, .0 long as Le.... i. not in default hereund.r. 13. EVENTS OF DEFAULT AND REMEDIES. ea) Event. of Default. The following .hall b. "event. of default" under this Agr....nt and th. teras ".vent of d.fault" and "default" shall ..an, wh.never th.y ar. \lAd in this Agreement, anyone or more of the following .v.nt.: 10 o .... 'I , " . (1) failure. Le.A to pay any rental 0 pa~nt or other payment required to be paid hereund.r at th. ti.. .pecific herein; or , .~ (2) failure by Le.... to ob..rv. .nd parforJI .ny Otba:l':E.nt, condition or .gr....nt on ita part to be ob..rved or fOrll.d h.r.und.r and .uch failure .b.ll con- tinu. unr led for a p.riod of thirty (30) day. .ft.r written notic. .p.cifying .uch failure and r.qu..ting that it be r...died, unlee. Les.or .hall agr.. in writing to an .xten.ion of .uch time prior to it. expiration, or (3) any certificat., .tat...nt, r.pr~~tion, warr.nty or .udit contain.d her. in or h.r.tofor. Or bereafter furni.h.d with re.pect h.r.to by or on beh.lf of Le.... proving to h.v. b.en fal.e in any mat.ri.l r..pect .ttba tt.. a. of which the fact. ther.in ..t forth were .t.ted Or c.rtified, or having omitt.d any sub.tantial conting.ntor unliquidat.d liability or claim again.t Le...., or (4) comm.nc.m.nt by Le.... of . c... or pro- c..ding und.r the F.deral bankruptcy law. or filing ~ .Les... of any petition or answ.r s.eking reorgania.tion, arra~, cOllpo.ition, r.adju.tment, liquidation, moratoria oralal1ar r.1i.f und.r any .xisting or future b.nkruptcy, inao1venay or i oth.r .imilar law. or an answer admitting or not ~1n9 t the mat.rial allegations of a p.tition fil.d again.t Le.... in t any .uch proc.eding; (5) a p.tition again.t Le.... in a proceeding und.r any .xi.ting or future bankrup~, in.o1v.ncy Or oth.r si.i1.r law. .ha1l b. fil.d and not withdrawn or di..i..ed within sixty (60) days th.r.aft.r; or (6) an attachm.nt, l.vy or .x.cution i. thr.at.n.d or levied upon or again.t the Equip..nt or any it_ th.reof. (b) Remedie. on Default. Wh.n.v.r any ev.nt of d.fault .hall have occurred and b. continuing, Lessor .hal1 have the right, at it. sole option without any furth.r demand or notice, to .xerci.e any on. or mol'. of the following r.m.di.s: (1) with or without t.rllinating this Agr....nt, retake po.....ion of the Equipm.nt and ..11, 1.... or .ubl.... it... of the Equipm.nt for the account of Le...., with the net amount of all proce.ds r.c.iv.d by Les.or to be applied to Le....'. Obligation. h.reund.r including, but not limited to, all paym.nt. due and to b.com. due during the Full Le... T.rII, holding Le.... liable for the eXC... (if .ny) of (i) the r.ntal paym.nt. and the amount. payab1. by Le.... h.r.und.r to the .nd orth. original Term or then curr.nt R.n.wal T.rJI (which.v.r is applicable) and any oth.r amount. then payab1. 11 b~.... b.r.und.r (inClUdi~but ~ li.it.d to .ttorn.y.' ~ t..., .xpen... .nd co.t. ot r.po.....ion), ov.r (ii) the n.t purcb... price or r.nt .nd otb.r .lIOunt. p.id by . purcba_r, . 1..... or .ubl..... ot .ucb .itua of th. Equipm.nt pursuant to .ucb ..1., ~... or .ubl...., provided tb.t th. oc._ (if .ny) ot .u~ J~lIOUnt. ov.r th. th.n applic.bl. Purcha.. Pric. .nd tb. .IIO~. r.t.rred to in cl.u.. (i) .b.ll be p.id to Le.... ; ."". (2) r.quir. Le.... .t Le....'. ri.k .nd expense pro.ptly to return the Equi,.ent in th. mann.r .nd condition r.quir.d in S.ction 5(b) b.r.ot to .uch location .. i. .peciti.d by Le..or; (3) it Le..or i. un.bl. to r.~a..a th. Equipm.nt tor .ny r..son, th. Equips.nt .h.ll be d....d . tot.l 10.. .ndLe.... .h.ll p.y to Le..or the .lIOunt due pur.u.nt to s.ction 8 bereot; and (4) .xerci.e any otb.r right, r..-dy or privi- l.g. wbicb .ay b. available to it und.r .pplicabl. lawa of the st.t. or any otber applicabl. law or proce.d by .ppropriat. court action to enforce tbe t.rms of this Aqr....nt or to recover d.m.g.. for tbe breacb of tbi. Agr....nt or to re.cind tbis Agr..m.nt as to tbe Equipm.nt. I '! ~. . . In addition, Le.see will r.main li.bl. tor .11 leg.l fe.s .nd otber co.ts and .xp.nse., including court coata, incurr.d by Le..or witb resp.ct to tb. .nforceaent of .ny of tb. remedi.s listed above or any otber rem.dy .v.il.bl. to Les.or. . (c) No Remedv Exclusive. No r.mady h.r.in conf.rr.d upon or r..erv.d to Le.sor i. int.nd.d to be .xclusiv. and every .ucb r.medy .ball be cumul.tiv. and sb.ll b. in .ddition to .v.ry otb.r r.m.dy giv.n und.r tbis Agr....nt or now or b.r.aft.r exi.ting at law or in equity. Le..or'. remedi.. b.r.under m.y be .x.rcis.d separately with r..pect to items of tb. Equip.ent. No d.lay or omission to .x.rci.. .ny right or pow.r accruing upon any detault sball impair .ny .uch right or pow.r or shall b. construed to be a waiv.r tbereof, but .ny such rigbt and pow.r may be exercised from time to time and .s often as may be de.m.d expedient. 14. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Le.... fails to perform or comply witb any of it. agr....nts con- tained berein, Lessor sball bave the rigbt, but sball not b. obligated, to effect such performance or compli.nc., and th. amount of any out of pocket expenses and oth.r r..son.bl. expens.s of Les.or incurred in connection with tb. perfor- mance of or compliance witb sucb agr..ment, tog.th.r witb interest tbereon at tbe rate of one hundr.d tw.nty (120) p.r cent of tbeprim. Rate on tbe date of paym.nt by Lessor (or sucb lesser amount as may be permitted by law), sball be 12 - - - - ---.-.. -..... ~bl. by Le.... upon d.ma. A. CLd h.r.in, .Prt.e bu. 0 .ball mean the rat. of int.r..t from ti.. to ti.. announced by Maryland National Bank, Baltiaore, M.ryl.nd, a. it. prt.e r.t., wh.th.r or not such r.te i. oth.rwi.e publi.hed. Withi~' ~-(10) days of receipt, Lea... ahall execuu, endor.. and '-liv.r to Lessor .ny deed, conv.lanc., a..i9Jlll8ftt or oth.r i . .nt in writing .. may be requ r.d to v..t in Le..or any right, title or power whicb by the t.r.- h.r.of ar. exp~e..ed to be conv.yed or conferred upon Lea8or, inclUding, witbout limitation, (a) Uniform c~rcial Code financing .tat..ent. (including continuation .tat..-nta), real property waivers, (b) document. and checka or dratt. relatincJ to or received in payment for any lo.s or d...ge under the pOlici.. of insuranc. required by tbe provi.ion. of SeDtion 7 h.reof to the e~ent that tbe ..m. rel.te. to the ~'...nt' .nd (c) upon d.fault or nonappropriation Or tt.e. ~ .. Le..or in it. sole and .b.olute di.cr.tion ..y detezaine, of Le.... upon .ny bill of ..le, docum.nt, in.t~nt, invoice, freigbt bill, bill of l.ding or .iailar docuaent rel.ting to tbe Equipment in order to v..t title in Le..or and tr.n.fer po.....ion to Lessor. 15. MISCELLANEOUS. " (.) Notices. All notice. (.xcluding bUU",. ,and co..unic.tion. in the ordin.ry cour.e of bu. in...) ~ .b.ll be in writing, ..nt by c.rtified ..il, retQJn ....1pt reque.t.d, .ddr....d to the oth.r party at It. respective .ddre.. .t.ted below the .1gnatur. of .uch p.rty or at 8\ICb other .ddr... .. sucb party .b.ll from tlme to tt.e d"l9ft&u in writing to tb. other p.rty, and .h.ll be .ffectlve froa the d.t. of mal1lng. (b) Bindina Eff.ct. Thi. Agr....nt .hall inure to tbe b.n.fit of .nd .b.ll be blnding upon Le..or .nd t..... .nd tbeir re.pective successor. and ...1gn.. (c) Severabilitv, Survival. Any provi.ion ofthi. Agr.em.nt wbich 1. prohibit.d or un.nforc.abl. in any juri.- diction .b.ll, .s to such juriSdiction, be in.ff.ctiv. to the ext.nt of such prOhibition or un.nforce.bility wlthout invalid.ting the remaining provisions h.r.of, and any .uch problbitlon or unenforc.ability in .ny jurisclictlon .hall not inv.lidat. or render unenforceable .uch provi.ion in .ny oth.r juri.diction. To the extent permitted by .pplicabl. l.w, Le.... h.reby waive. any provision of l.w which rend.r. .ny provi.ion her.of prohibited or unenforc..bl. ln any r..pect. Tbe repr..ent.tions, w.rr.nti.. .nd coven.nt. of Le.... ber.in .hall be de.med to b. continulng .nd to .urvlv. tbe clo.ing hereunder. Each execution by Le.... of a Sch.dul. sball be deemed a reaffirmation and warranty th.t there sball bave been no material adverse change in tbe fin.ncial ,- :!Io,l 13 -.L ..... - -- ... cA:Ution of Le.... from theat. oO.x.cution her.of. Th. . obligation. of Le.... und.r s.ction. 1(.), 6 and 12(c), wbiab accru. during the t.rm of tbi. Ag~..m.nt, .hall .urviv. th. t.rmination of this Agreem.nt. ;!:.- (it.Rx.cution in Count.rDart.. Thi. Agr.eMIlt -y b. .x.cuted '0 ..v.ral count.rpart., .ach of which .hall be an original a~l of which shall constitut. but on. and th. .am. in.trum.nt. (.) ADDlicabl. Law. Thi. Agr...ant: shall be gov.m.d by and con.tru.d in accordanc. with th. law. of th. stat.. (f) CaDUon.. Th. capUon. in thi. AgreeMllt an for conv.ni.nc. of r.f.ranc. only and .ball not d.fin. or li.it any of the t.rm. or provi.ion. b.reof. (g) Entir~ Aar....nt. Thi. Agr....nt conatltut.. the .ntir. .gr...nt' b.tw..n Le..or .nd Lea.... No _lv., con..nt, modification or cbang. of t.ras of thi. Aljr....nt . .ballbind .ith.r party unl.ss in writing .igned by botb parti.., and th.n such w.iv.r, con..nt, aodification GC abang. .ball be .ff.ctive only in the .pecific in.tanea and for th. .pecific purpo.. given. Tb.re are no un4er.tandin;8, I .gr..m.nt., repr.s.ntations or warr.a. nU.., .xpr... or 1911ed, . not .pecifi.d h.rein regarding thi..Agr....nt or tbe.........nt , l....d h.r.und.r. Any t.rm. .nd condition. of any ~. . ord.r or oth.r docum.nt (with tb. exc.ption of .UlPl_thU) .ubmitted by Le.... in connection with thi. Agneunt which are in addition to or incon.i.t.nt witb the t.ras and condition. of this Agree..nt will not be binding on Le..or and will not apply to this Agr....nt. Le.... by th. .lIQtun b.low of it. authorized r.pr...ntativ. aQknowledg" that it h.. r.ad this Agr....nt, und.r.tand. it, and .gr... to be bound by it. term..and condition.. 14 . - ...... - ...."...- . . IN WITNESS WHEREOF, the parties hereto have caused this . Agree_nt to be duly executed as of the day and year fint above set f~. ..c~ }'f;: . ....,: ATTEST: MNC LBASING, A DIVISION OF MNC CREDIT CORP Lessor ATTEST: By: 502 WashinClton Avenue Towson, Maryland 21204 CITY OF SAN BERNARDINO, CALIFORNIA Les.ee By: 300 North -D- street San Bernardino, CA 12418 15 - . o ~ t '~ . . . o o '--:0-. ............ ;,:;:; .. !iIi!~' Attached to and made a part of that c.rtain Bqui~nt Lea../Purcha.. Agr....nt ("Agre..nt") date4 a. of , 1.990 by and bet....n MHC I.BASDfG, A DIVISION OP MHC CltBDIT CORP, a. l..sor, and' CITY 0.. SAIl BBIt1GRDIHO, CALIPORNIA, a. 1...... RIDER NO. 1. Th. partie. a..ume that Le..or can elC1ude the int.re.t compon.nt of the rental payaenta froa Pederal VZO-. inco... Le.... cov.nants and agre.. that it will(!) uae a book .ntry .ystem to regist.r the owner of this ~t so a. to ..et the applicable r.quir...nt. of seation 14'(a) (3) of the COd., (ii) timely file a Fo~ 8038-G (or, if the involoe pric. of the Equip.ent is l.s. than $100,000, a ro~ I031-GC) with the Internal Revenue Service in accordanoe with sectidn 14'(.) of the Code, (iii) not pe~it th..Bqui~ to be directly or indir.ctly used for a private bu.i"'*. usa w~1n the ..aning of S.ction 141 of the Cod.; and (iv) O;"'JI\ly"lth , all provi.ions and regulation. applicabl. to exe1udliV 1 int.r..t from Federal gross inco.. pursuant to seation103 of the Code. 2. If Le.sor either (i) receive. notice, in any fOra, from the Int.rnal Revenu. s.rvic.; or (11) reasonUJly......- mines, based on an opinion of independ.nt tax counsel ....~ed by Le.sor and approv.d by Le...., which approv-.1 Lu...tdaall not uar.a.onably withhold, that Le..or may not exclude anr int.re.t from F.d.ral gross inco.. becau.. Le.... br..Ghed a cov.nant contained herein, then Le.s.e .hall pay to Le..or within thirty (30) days aft.r Le..or notifi.. Lee... of.uch d.terlllination an amount equal to the sum of (x) penaltl.., fin.s, interest, and additions to tax (inclucUnq tax.. iIIpo..d on the interest component of all rental payaent. due throUgh the date of such event) that are impo.ed on Le.eor a. a ~sult of the loss of the exclusion and that Le.sor cannot deduct in computing its Federal income tax liability divided by on. minus the high.st Federal regular marginal tax rata in .ff.ct for the tax period for which Lessor lost the exclu.ion Qlua (y) p.nalties, fines, interest, and addition. to tax that ar. imposed on Les.or as a result of the loss of the exclu.ion and that Lessor can deduct in computing its Fed.ral inco.. tax liability. Additionally, Lessee agrees that upon the occurrence of such an event, it shall pay additional .rent to Le.sor on each succeeding rent payment due date in such amount as will maintain Lessor's after-tax yield on the tran.action evidenced by this Agreement. . o o o 3. The obligations of Lesse~ hereunder which accrue during the tera of this Agreement shall survive teraination of this Agre~. ....~ The partie.:'jiree that this Rider is an integral part of the Agreement. . ~': Date: MNC LEASING, A DIVISION 01' DC CREDIT CORP Lessor By: CITY OF SAN BERNARDINO, CALIFORNIA Lessee By: 2 t f