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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTIQNr-. N A L
From: Barbara Pachon, Director
Dept: Finance
Subject: Resolutions of the M&CC
authorizing a Master Lease Agreement
with Bank of America; and, awarding a
bid for the lease-purchase fiuancing of 12
refuse trucks to Bank of America.
Date: April 13, 2009
Meeting Date: April 20th, 2009
Syuopsis of Previous Council Action:
1/2012009 - Resolution 2009-09 authorizing the execution of an agreement and issuance of a
purchase order to Fairview Ford of San Bernardino for the purchase of 12 refuse trucks.
3/1612009 - Item requesting award oflease-purchase financing to FMLC to finance the
approved purchase of 12 refuse trucks. Item continued until 4/20/09 Council Meeting.
Recommended Motions:
Adopt Resolutions.
~~~~vf ~~
. Signature
Coutact person: Barbara Pachon, Director
Phone:
5242
Supporting data attached:
Staff Report and lease agreement documents.
Ward:
All
FUNDING REQUIREMENTS:
Amount: Semi Annual payments
of$297,751.33 starting
10/30/09 and continuing
for a seven year term.
Source: IWM Fund - Payment will
be included in FY 2009-
2010 IWM Budget.
Finance:
Council)'lotes: ds'i:) 2cYYlJ?J>
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Agenda Item No. 35
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
SUBJECT
Resolutions of the Mayor and Common Council of the City of San Bernardino authorizing a
Master Lease Agreement with Bank of America; and, awarding a bid for lease-purchase
financing to Bank of America to finance the purchase of twelve (12) refuse trucks. (Note: this
item was originally presented to the Mayor and Council at the March 16th meeting but the item
was continued by Council until the April 20th Council meeting).
BACKGROUND
Staff is requesting approval to award a bid for the lease-purchase financing of refuse trucks to
Bank of America. This request pertains onlv to the financing of the purchase; the actual
purchase of the trucks was approved bv the Mayor and Council at the Januarv 20. 2009 Council
Meeting. At that meeting the Mayor and Common Council approved Resolution 2009-09
authorizing the purchase of twelve (12) refuse trucks from Fairview Ford of San Bernardino and
also authorized the Director of Finance to solicit lease-purchase rate quotes in order to finance
the purchase.
When the City requires financing of major capital equipment purchases, past practice has been to
obtain rate quotes from lenders with pre-approved "master lease agreements" in place with the
City. The advantage of having "master lease agreements" in place is that the terms and
conditions of the lease financing (and related documents) have already been approved. The only
thing that changes each time new equipment needs to be financed is the pay-back period of the
lease and the interest rate. Accordingly, after soliciting rate quotes from these lenders with
master lease agreements in place, Finance recommended to the Mayor and Council at the March
16th meeting to award a bid for lease-purchase financing to First Municipal Leasing Corporation
(FMLC) to finance the purchase of twelve (12) refuse trucks. (Rate quotes were requested from
four lenders, but only one lender, FMLC, offered a viable bid.)
After discussion with the Mayor and Council at the March 16th meeting, Finance was directed to
obtain additional rate quotes from a wider range of financing providers (including those without
master lease agreements with the City) and then bring the item back to the April 20th Council
meeting. Staff researched which lenders the State uses for lease-purchase financing and also
reviewed lenders listed on the California Society of Municipal Finance Officers (CSMFO)
webpage. Then, in accordance with Council direction, staff requested additional rate quotes from
four more lenders (three with branches in San Bernardino) in addition to the four lenders
previously solicited (for a total of eight lenders). Bank of America was the only additional
lender to submit a quote (the other 3 lenders responded back "no bid").
After review of bid responses it was determined that Bank of America's bid was lower than that
submitted by FMLC, so staff is requesting Council to authorize the award of the lease-purchase
financing of the refuse trucks to Bank of America (see section below entitled "Rate Quote
Process" for details and analysis of rate quotes). Staff also requests authorization of a master
lease agreement with Bank of America since there is not an existing master lease agreement in
place between the City and Bank of America.
Also, during the March 16th Council meeting, a number of questions were raised in general about
"lease-purchase financing." Discussed below are some points that will hopefully provide
clarification to some of the issues.
. Lease-Purchase Financinf!. simply put, is a conditional sales or installment sales agreement.
While municipal leases are documented as leases, they have characteristics similar to loans.
A lease-purchase agreement is a financial instrument that allows an eligible governmental
agency to acquire essential equipment through periodic lease payments, which have a
principal and interest component. The interest earned by the lessor is generally exempt from
federal income tax. This allows the lessor to provide a much lower interest rate to a
municipality than would otherwise be possible. This structure is an alternative to purchasing
an asset with cash, acquiring its use for a period of time through a true lease, or issuing
bonds. Not all financial lending institutions offer municipal leases.
Tax exempt municipal leasing agreements are typically structured so that the term of the
financing matches the useful life of the asset (in the case of the City's refuse trucks, 7 years
has been determined by Fleet to be the useful life of the trucks). This is preferable to forcing
an asset to be financed far beyond its useful life ~ as often is the case with bond financing.
These financing agreements are structured as a lease to accommodate the fiscal funding
restrictions of the political body. In most cases, the obligation terminates if the municipality
fails to appropriate funds in the adopted budget at the beginning of the fiscal year (non-
appropriation clause) or if the municipality no longer has use of the equipment (abatement
clause).
. Lease-Purchase Financinf! vs. Bond Financinf! ~ A bond financing is an exercise of a
municipality's authority to incur debt. Unlike a bond issuance however, a lease-purchase
financing is not considered to be debt for state law purposes and voter approvals are not
necessary to authorize the transaction.
Also different is the underlying security for the two types of obligations. In a bond
financing, the municipality generally pledges a designated revenue stream, such as property
or sales tax, and obligates itself to raise revenue to the extent necessary to pay debt service.
In a lease-purchase financing arrangement however, the municipality pledges a security
interest in the assets being acquired.
The term 'tax-exempt' or 'municipal lease' refers to the interest earnings paid by the
governmental entity to the lender of a properly structured and documented lease. Interest
earnings paid to the lender are exempt from federal income tax per Section 103 of the
Internal Revenue Service Code. The same tax laws that enable a municipal bond to carry a
tax-exempt rate apply to a municipal lease and for this reason some of the language found in
lease-purchase agreements with regard to tax issues is similar to what isfound in municipal
bond language. Lease-purchase agreements must be evaluated under the same provisions of
the IRS Code as municipal bonds to assure that the interest component of the payments to the
lessor are tax-exempt.
2
Tax-exempt leasing is one of the simplest and most successful ways to purchase essential
equipment and facilities. In addition to qualifying for low interest rates, municipalities can
conserve their cash while acquiring the equipment and facilities necessary for their day-to-
day operation. There are few restrictions on the ability of municipalities to enter into a lease.
Most leases represent a year-to-year commitment on the part of a municipality to make lease
payments. Lease-purchasing is much easier and quicker than bonding. A lease agreement
can be completed in a matter of days, whereas a bond usually requires months or years of
planning and execution. Bond financing, unlike lease-purchase financing, requires a host of
participants including Bond Counsel, Underwriters, Financial Advisors, and Fiscal Agents to
produce and execute the Official Statement and numerous other bond documents and
resolutions.
. $30,000,000 limit for Qualified tax-exemvt oblif!ations. Section 265(b)(3) of the Internal
Revenue Service Code limits the amount of tax-exempt obligations a City may enter into in
one calendar year to $30,000,000. This limit was increased from $10,000,000 to
$30,000,000 as part of the "American Recovery and Reinvestment Act of 2009." Should the
City exceed this limit this calendar year (it is highly unlikely the City would enter into
$30,000,000 of tax-exempt obligations between now and December 31 '" 2009) it could still
enter into financing arrangements, but the ability to enter into "tax-exempt" obligations could
be diminished.
RATE OUOTE PROCESS
Originally, staff issued a request for rate quote (RFQ LQ 09-03) to the four financing/leasing
companies that have existing master lease agreements in place with the City and presented these
results to the Mayor and Council at the March 16th Council meeting. The RFQ requested lease-
purchase rate quotes to finance the $3,639,137.64 purchase of twelve (12) refuse trucks
(Resolution 2009-09 previously approved the purchase of the twelve (12) refuse trucks). The
RFQ requested an amortization schedule for a seven year term (consistent with the average seven
year life of a refuse truck) with semi-annual payments. When quotes were first obtained in
January, only FMLC and SunTrust submitted bids. The apparent low bidder, SunTrust, then
withdrew their bid citing their inability to credit approve the City. Staff then contacted FMLC.
FMLC then revised their bid, also citing the inability to credit approve the City, and required the
City to make a 20% down payment and changed some of the language in the master lease
agreement, removing the "non-appropriation" clause. At the time of the March 16th Council
meeting, the revised rate proposal from FMLC was the only viable bid.
After the March 16th Council meeting staff solicited quotes from additional lenders per the
direction received at the Council meeting (including those without master lease agreements in
place with the City). Of these four additional vendors, Bank of America was the only lender to
provide a rate quote. Three of the additional four lenders solicited answered "no bid".
Additionally, it is important to note that due to current economic circumstances, most lenders are
only willing to lock in their rates for approximately 15 days, so both Bank of America and
FMLC have revised their original bids. After analyzing the bid results, Bank of America's quote
was determined to be the lowest and best.
Summarized below are the rate quote results:
3
Lease Purchase Financin~ Provider Rate Quote Semi-Annual Pavment
SunTrust Leasing Corporation 4.09% N/A
Bid withdrawn
First Municipal Leasing Corp (FMLC) 4.95% $311,133.22
(l5t bid 1/26/09) Bid withdrawn
First Municipal Leasing Corp (FMLC) 4.85% $248,490.67
(revised bid 2/25/09) (also required 20% down payment
of $727,853.23)
First Municipal Leasing Corp (FMLC) 5.35% $251,894.53
(2nd bid 3/25/09) (also required 20% down payment
of $727,853.23)
Bank of America (l5t bid 3/25/09) 3.69003% $297,330.90
Bank of America (revised bid 4/13/09 3.73% $297,751.33
rate locked until 4/30/09)
Union Bank Declined to bid
Wells Fargo Declined to bid
Koch Financial Declined to bid
Comerica Declined to bid
Ford Motor Credit Declined to bid
Comerica Leasing Corporation and Koch Financial Corporation, both lenders that have master-
lease agreements in place with the City, stated that their corporations have chosen not to lend
during the current economic situation. Anne Kupfer of Union Bank and also explained that their
organization is not lending to new customers (for this type of financing) in this economic
climate. Wells Fargo declined to bid without a formal explanation but confirmed they received
the City's RFQ. Ford Credit declined to bid due to inability to meet our deadlines.
FINANCIAL IMPACT
The first payment of $297,751.33 is due in October of next fiscal year (FY 2009-2010) and the
second payment in a like amount is due in April of FY 2009-2010. Upon approval of these
resolutions, starting in FY 2009-2010, Finance will include the debt service payments in the
IWM Budget for each year of the seven-year lease term. (The lease purchase contract documents
include an "abatement clause" that basically states that the City will make all required debt
service payments as long as the City has use of the equipment.)
RECOMMENDA nON
Adopt Resolutions.
4
RESOLUTION NO.
(CQ)[P1[
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO AWARDING A BID FOR THE LEASE-PURCHASE FINANCING
3 OF TWELVE (12) REFUSE TRUCKS TO BANK OF AMERICA
4 WHEREAS, The Mayor and Common Council at the January 20th, 2009 Council Meeting
5 approved Resolution 2009-09 authorizing the execution of an agreement with Fairview Ford for
6 the purchase of twelve (12) refuse trucks in the amount of$3, 639,137.64; and
7 WHEREAS, Bank of America provided the lowest rate quote for the lease-purchase
8 financing of the twelve (12) refuse trucks.
9 NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
10 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
11 SECTION 1. That the Director of Finance is hereby authorized to execute on behalf of the
12 City the Purchase Agreement with Bank of America (the "Agreement"), a copy of which is
13 attached hereto and incorporated herein as Exhibit "A".
14 SECTION 2. The authorization to execute the above-mentioned actions is rescinded if not
15 completed within sixty (60) days of the passage of this resolution, or upon the occurrence of an
16 increase in the interest rate whichever shall occur first.
17 III
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l{- dO -0'1
I .:1:1 35"
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO A WARDING A BID FOR THE LEASE-PURCHASE FINANCING OF
2 TWEL VE (12) REFUSE TRUCKS TO BANK OF AMERICA
3 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
4 Common Council fo the City of San Bernardino at a
meeting thereof,
5 held on the day of
6 COUNCIL MEMBERS:
7
ESTRADA
8
BAXTER
9
BRINKER
10
SHORETT
11
KELLEY
12
JOHNSON
13
MCCAMMACK
14
15
16
,2009, by the following vote, to wit:
AYES
NAYS
ABSTAIN ABSENT
Rachel G. Clark, City Clerk
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The foregoing Resolution is hereby approved this
day of
,2009.
Patrick J. Morris, Mayor
City of San Bernardino
21
Approved as to form:
22
23
24
. Penman, City Attorney
25
26
27
28
2
EXHIBIT "A"
MASTER EQUIPMENT LEASElPuRCHASE AGREEMENT
This Master Equipment LeaselPurchase Agreement (the "Agreement ") dated as of April
30, 2009, and entered into between Bank of America, National Association, a national banking
association ("Lessor "), and City of San Bernardino, 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;
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.
"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
and Account Control 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.
#765674vl (BAPCC/CA Abatement Lease Template)
ICA Abatementl
"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.
"Contract Rate" means the rate identified as such in the applicable Schedule.
"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
soft costs such as freight, installation and taxes paid up front by Lessor and all 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 froth 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 (i) any such soft costs on a cumulative basis shall not exceed a percentage of the
Maximum Equipment Cost approved by Lessor and (ij) 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
"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 Vendor.
"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..
#765674vl (BAPCC/CA Abatement Lease Template) 2
"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 Agreement
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.
"Material Adverse Change" means (prior to the Utilization Period Expiration, a
downgrade in Lessee's external debt rating of two or more subgrades by either Moody's Investors
Service, Inc., or Standard & Poor's Ratings Group or any equivalent successor credit rating agency,
or any downgrade by either such agency that would cause Lessee's credit rating to be below
investment grade, and (be) thereafter, any change in Lessee's creditworthiness that could have a
material adverse effect on (i) the financial condition or operation of Lessee [and its subsidiaries
taken as a whole], or (ii) Lessee's ability to perform its obligations under this Agreement or any
Lease.
"Maximum Equipment Cost" means the cumulative amount specified in the latest Schedule
executed under this Agreement.
"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 A-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 from whom Lessor arranged Lessee's
acquisition and financing of the Equipment pursuant to the applicable Lease.
#765674vl (BAPCClCA Abatement Lease Template) 3
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:
(a) Lessee is a state or a political subdivision thereof 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.
(t) 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 (I) 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 end, (ii) such other [mancial statements and information as Lessor may
reasonably request, and (iii) its annual budget for the following fiscal year when approved but not
later than 30 days prior to its current fiscal year end. The financial statements described in
subsection (i) shall be accompanied by an unqualified opinion of Lessees's auditor. Credit
information relating tot Lessee may be disseminated among Lessor and any of its affiliates and any
of their respective successors and assign.
(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
#765674vl (BAPCC/CA Abatement Lease Template) 4
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 payment 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 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 Cost 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.
(j) 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 obligation 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 and to pay 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
#765674vl (BAPCC/CA Abatement Lease Template) 5
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. Abatement. During any period in which, by reason of material damage or
destruction or taking under the power of eminent domain (or sale to any entity threatening the use
of such power) or material title defect with respect to any Equipment, there is substantial
interference with the use and possession by Lessee of such Equipment, the rent applicable to such
Equipment shall be abated proportionately in whole or in part. Lessee shall immediately notifY
Lessor upon the occurrence of any event causing substantial interference with Lessee's use and
possession of any Equipment, and such notice shall be provided prior to the abatement of any rent.
The amount of abatement shall be such that the remaining rental obligation for each rental period
represents fair consideration for the use and possession of the portions of the Equipment that are
not affected by such interference. Such abatement shall commence on the date that Lessee's use
and possession of the affected Equipment is restricted because of such interference and end on the
earlier of (i) the date on which the use and possession thereof are restored to Lessee, or (ii) the date
on which Lessee either (x) replaces the affected Equipment or (y) uses the proceeds of insurance or
condemnation award to pay the applicable Purchase Price therefor. Notwithstanding any such
interference with Lessee's use and possession of a portion of the Equipment, this Lease shall
continue in full force and effect with respect to any remaining Equipment. Lessee waives the
benefits of Civil Code Sections 1932 and any and all other rights to terminate this Lease by virtue
of any interference with the use and possession of any Equipment.
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;
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(vii) All documents, including financing statements, affidavits, notices and
similar instrwnents, in fonn 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 Fonn 8038;
(ix) If any Equipment units are motor vehicles, properly competed certificates of
title for such vehicles; and
(x) Such other items, if any, as are set forth in such Lease or are reasonably
required by Lessor.
(b) In addition, the perfonnance 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 date listed as the
Utilization Period Expiration in the applicable Schedule.
(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); orif 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 infonnation
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 infonnation concerning the financial status of
Lessee and other matters related to Lessee.
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 equal to the Contract Rate plus 5% 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
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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 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. Lessee's obligations to make Rental Payments or pay other amounts hereunder
shall not be abated on account of obsolescence or failure of the Equipment to perform as desired.
Section 4.05. Tax Covenant. 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
ofthe owner or owners thereoffor federal income tax purposes.
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 Period
and not applied to Equipment Costs, shall be applied, in Lessor's discretion based upon the
amount remaining in such Fund, on the next Rental Payment date to either: (i) all or a portion of
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of the next Rental Payment and if such amount is in excess of the next Rental Payment then, any
remaining balance shall be applied to all or a portion of the next succeeding Rental Payments until
fully applied; or (ii) as prepayment to the remaining principal balance owing under the Schedule in
the inverse order of maturity.
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 fonn attached hereto as
Exhibit E.
(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 fonns 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 a condition comparable to that recommended by the manufacturer. Lessor shall
have no responsibility to maintain, repair or make improvements or additions to the Equipment. In
all cases, Lessee agrees to pay any costs necessary for the manufacturer to rectifY the Equipment as
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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 interest of Lessor therein.
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, and Lessee shall have no further interest therein. 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 ofall of Lesssee'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 investments
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.
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ARTICLE VII
Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges. Lessee
shall keep the Equipment free of all levies, liens, and encumbrances except those created by each
Lease. The parties to this Agreement contemplate that the Equipment will be used for a
governmental or proprietary purpose of Lessee and that the Equipment will. therefore be exempt
from all property taxes. If the use, possession or acquisition of 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 7.02. Insurance. Lessee covenants that it is an authorized self-insured public entity
for purposes of general liability, automobile liability, worker's compensation and property
coverage including but not limited to rental interruption coverage in an amount which shall cover
Rental Payments for no less than 24 months in the event Lessee exercises it rights to abate any
Rental Payments or portions thereof pursuant to Section 3.03 of the Agreement and warrants that
through its program of self-insurance, it has adequate coverage or resources to protect against
liabilities arising out of the terms, conditions and obligations of this Agreement. Lessee shall
furnish to Lessor evidence of such self-insurance coverage through each Lease Term. Lessee shall
not cancel or modify such 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
cancelled or modification.
Section 7.03 Risk of Loss. Subject to Section 3.03, whether or not covered by insurance
of self-insurance, Lessee hereby assumes all risk of loss of, or damage to and liability related to
injury or damage to any person 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.
Whether or not covered by insurance or self-insurance, Lessee hereby agrees to reimburse Lessor
(to the fullest extent permitted by applicable law, but only from legally available funds) for any and
all liabilities, obligations, losses, costs, claims, taxes or damages suffered or incurred by Lessor,
regardless of the cause thereof and all expenses incurred in connection therewith (including
without limitation, counsel fees and expenses, and penalties connected therewith imposed on
interest receive) arising out of or as s result of (a) entering into of this Agreement or any of the
transactions contemplated hereby, (b) the ordering, acquisition, ownership use, operation,
conditions, purchase, delivery, acceptance, rejection, storage or return of any item the Equipment,
(c) 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 (d) the breach of any covenant of Lessee in connection with a Lease or any material
misrepresentation provided by Lessee in connection with a Lease. The provisions ofthis 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 Lease for any reason.
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Section 7.04. 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 a rate
equal to the Contract Rate plus 5% 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
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 Rent 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
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improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) payor
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 temrinate and Lessor's 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
Equipment or the existence, furnishing, functioning or Lessee's use of any item, product or service
provided for in this Agreement Lease 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 by Lessor of the Equipment.
ARTICLE X
Section 10.01. Purchase Option. Lessee shall have the option to purchase all of the
Equipment listed in a Lease, upon giving written notice to Lessor at least 30, but not more than
120, days before the date of purchase, 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 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
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Lessor of its exercise of the purchase option 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 Tenn, 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 right, title and interests in and to such Equipment will be transferred and tenninated
in accordance with Section 6.01.
ARTICLE XI
Section 11.01. 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 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 Regulations D under the Securities Act of 1933, or a qualified institutional buyer
within the meaning of Rule 144A, and 1(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 on entity.
(b) Unless to an affiliate controlling, controlled by or under common control with
Lessor, no assignment, transfer or conveyance pennitted 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 Payment payable under a Lease, it shall thereafter be sufficient
that Lessee receives notices of the name and address of the bank or trust company as trustree 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 Sectopm 149 of the
Code. Lessee shall retain all such notices as a register of all assignees and shall make all payments
#765674v1 (BAPCC/CA Abatement Lease Template) 14
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 ofless 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 F 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:
(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 with Bank of America, N.A. and its
affiliates for borrowing money, lease financing of property or otherwise receiving credit under
which Lessee is an obligor under which there is outstanding, owing or committed an aggregate
amount of a least 10% of Lessee's aggregate current long- and short-term indebtedness, 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;
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(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 Equipment, continuing to
hold Lessee liable, but solely from legally 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;
(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; and
(d) by action pursuant to the California Code of Civil Procedure, or as otherwise
provided by law, obtain the issuance of a writ of mandamus enforcing, for the entire balance of the
remaining Lease Term, the duty of Lessee to appropriate and take all other administrative steps
necessary for the payment of rents, and other amounts due hereunder.
#765674vl (BAPCC/CA Abatement Lease Template) 16
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.
Section 13.02. 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 13.03. 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 or render
unenforceable any other provision hereof.
Section 13.04. Amendments, Changes and Modifications. This Agreement and each Lease
may only be amended by Lessor and Lessee in writing.
Section 13.05. 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.
#765674vl (BAPCClCA Abatement Lease Template) 17
Section 13.06. Applicable Law. This Agreement and each Lease shall be governed by
and construed in accordance with the laws of the State.
Section 13.07. 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.
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:
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
LESSEE:
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
~ . ~
~~l . ~:~~~~ (L
By
Title
(Seal)
Attest:
By
Title
#765674vl (BAPCC/CA Abatement Lease Template) 18
EXHffiIT A
SCHEDULE OF PROPERTY No.
Re: Master Equipment LeaselPurchase Agreement, dated as of
, between Bank of America, National Association, as
Lessor, and , as Lessee
1. Defined Terms. All terms used herein have the meanings ascribed to them in the
above-referenced Master Equipment LeaselPurchase 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 A-I. 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 B 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 Term Estate in 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.
#765674vl (BAPCC/CA Abatement Lease Template) A-I
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 $ , of which $ is
for deposit to the Expense Fund and the balance is for deposit to the Acquisition Fund.
7. Acquisition Period. The Acquisition Period applicable to this Schedule shall end on
December 31, 2009.
8.
Lease Term. The Lease Term shall consist of
months, ending on
9. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease,
the Purchase Option Commencement Date is
10. Pre-Payment Premium. On any Rental Payment Date after the first half of the lease
term, Lessee shall have the option to purchase all Equipment under a Schedule upon payment in
full of the Rental Payments then due under such Schedule plus the then applicable Purchase Price,
which will not include a prepayment premium on the unpaid balance as set forth in the applicable
Schedule.
11.
follows:
Registration. Any Equipment that is a motor vehicle is to be registered and titled as
(a) Registered Owner: City of San Bernardino
(b) Lienholder: Bank of America, N. A.
2059 Northlake Parkway
Mail Code GA3-oo3-Q4-01
Tucker, GA 30084-5399
Lessee shall be responsible for the correct titling of all Equipment leased hereunder. Lessee
will cause the original Certificates of Title to be delivered to Lessor for retention in Lessor's files
throughout the term of the Lease.
#765674vl (BAPCCICA Abatement Lease Template) A-2
Dated:
LESSOR:
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
LESSEE:
By
Title
By DO NOT EXECUTE
Title
(Seal)
Attest:
By
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.
#765674vl (BAPCC/CA Abatement Lease Template) A-3
EXHffiIT A-I
RENTAL PAYMENT SCHEDULE
Rental Rental Interest Principal Purchase
Payment Payment
Date Amount Portion Portion Price
.
Prepayment Premium for purposes of Section 10.01 (a) is 0%.
For purposes of this Lease, "Taxable Rate, " with respect to the interest component of
Rental Payments, means an aIUlua1 rate of interest equal to _ %.
LESSEE:
By DO NOT EXECUTE
Title
#765674vl (BAPCC/CA Abatement Lease Template) A-l-l
EXHIBIT B
ACCEPTANCE CERTIFICATE
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
Re: Schedule of Property No. , dated
to Master Equipment LeaseIPurchase Agreement, dated as of
, between Bank of America, National Association, as
Lessor, and , as Lessee.
Ladies and Gentlemen:
In accordance with the Master Equipment LeaseIPurchase Agreement (the "Agreement"),
the undersigned Lessee hereby certifies and represents to, and agrees with Lessor as follows:
1. All of 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:
By DO NOT EXECUTE
Title
(Seal)
#765674v\ (BAPCC/CA Abatement Lease Template) B-\
EXHIBIT C
CERTIFICATE
The undersigned, a duly elected and acting
("Lessee') certifies as follows:
Secretary of
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 LeaselPurchase Agreement dated as of and the
Schedule(s) thereunder and all future Schedule(s) (the "Agreements ') by and between Lessee and
Bank of America, National Association 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 DO NOT EXECUTE
Title
(The signer of this Certificate cannot be listed above as authorized to execute the
Agreements.)
#765674vl (BAPCCICA Abatement Lease Template) C-l
EXHIBIT D
OPINION OF COUNSEL TO LESSEE
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
Re: Schedule of Property No. , dated
to Master Equipment LeaselPurchase Agreement, dated as of
, between Bank of America, National Association, as
Lessor, and , as Lessee
Ladies and Gentlemen:
As legal counsel to ("Lessee"), I have examined (a) an executed
counteIpart of a certain Master Equipment LeaseIPurchase Agreement, dated as of ,
and Exhibits thereto by and between Bank of America, National Association ("Lessor ') and
Lessee (the "Agreement'), [and] an executed counteIpart of Schedule of Property No.
, 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 an executed counteIpart of that certain Acquisition Fund and Account Control
Agreement dated by and among Lessee, Lessor and the Custodian named therein
(the "Acquisition Fund Agreement")] (b) an executed counteIpart 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". [The Lease and the Acquisition
Fund Agreement are referred to herein collectively as the "Lease Documents"].
Based on the foregoing, I am of the following opinions:
I. Lessee is a public body corporate and politic, duly organized and existing under the
laws of the State, and [has a substantial amount of the following sovereign powers: (a) the power
to tax, (b) the power of eminent domain, and (c) police power][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 1 03 (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 [Documents] and to perform its obligations under the Lease
[Documents];
#765674vl (BAPCClCA Abatement Lease Template) E-l
3. The Lease [Documents] has [have] been duly authorized, approved, executed and
delivered by and on behalf of Lessee and the Lease [Documents are] [is] a valid and binding
obligation of Lessee enforceable in accordance with its [their] tenns;
4. The authorization, approval, execution and delivery of the Lease [Documents] and
all other proceedings of Lessee relating to the transactions contemplated thereby have been
performed in accordance with all open meeting laws, public bidding laws and all other applicable
state 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 Documents or the interest of Lessor
or its assigns, as the case may be, in the Equipment thereunder.
[6. The portion of rentals designated as and constituting interest paid by Lessee and
received by Lessor is excluded from Lessor's gross income for federal income tax purposes
under Section 103 of the Code and is exempt from State of personal income
taxes; and such interest is not a specific item for purposes of the federal individual or corporate
alternative minimum taxes.]
All capitalized tenns 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
Firm
Address
Telephone No.
Signature DO NOT EXECUTE
Dated
#337849v4 (CA Abatement Lease Template)
E-2
SCHEDULE OF PROPERTY No. 1
Re: Master Equipment LeaselPurchase Agreement, dated as of April
30, 2009, between Bank of America, National Association, as
Lessor, and City of San Bernardino, as Lessee
1. Defined Terms. All terms used herein have the meanings ascribed to them
in the above-referenced Master Equipment LeaselPurchase Agreement (the "Master
Equipment Lease ").
2. Equipment. The following items of Equipment are hereby included under
this Schedule of the Master Equipment Lease.
Twelve (12) Autocar Refuse Trucks, Model WX64
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 A-I. 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 B 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.
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 $3,639,137.64, of which
#765674vl (BAPCC/CA Abatement Lease Template) A-I
$0.00 is for deposit to the Expense Fund and the balance is for deposit to the Acquisition
Fund.
7. Acquisition Period. The Acquisition Period applicable to this Schedule
shall end on December 31, 2009.
8.
30,2016.
Lease Term. The Lease Tenn shall consist of 84 months, ending on April
9. Purchase Option Commencement Date. For purposes of Section 10.01 of
the Lease, the Purchase Option Commencement Date is April 30, 2016.
10. Pre-Payment Premium. On any Rental Payment Date after the first half of
the lease tenn, Lessee shall have the option to purchase all Equipment under a Schedule
upon payment in full of the Rental Payments then due under such Schedule plus the then
applicable Purchase Price, which will not include a prepayment premium on the unpaid
balance as set forth in the applicable Schedule.
11. Registration. Any Equipment that is a motor vehicle is to be registered and
titled as follows:
(a) Rel!istered Owner: City of San Bernardino
(b) Lienholder: Bank of America, N. A.
2059 Northlake Parkway
Mail Code GA3-003-04-01
Tucker, GA 30084-5399
Lessee shall be responsible for the correct titling of all Equipment leased hereunder.
Lessee will cause the original Certificates of Title to be delivered to Lessor for retention in
Lessor's files throughout the tenn of the Lease.
#765674vl (BAPCClCA Abatement Lease Template) A-2
Dated: April 30, 2009
LESSOR:
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
BYW'o00<- ~rn~
Title Vl U> VC2..e.s U:Xo ~
#765674vl (BAPCClCA Abatement Lease Template) A-3
. LESSEE:
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
By
Title
(Seal)
Attest:
By
Title
EXHIBIT A-I
RENTAL PAYMENT SCHEDULE
Rental Rental Interest
Payment Payment Portion Principal Purchase
Date Amount 3.73% Portion Price
4/30/2009 3,639,137.64
10/30/2009 297,751.33 67,869.93 229,881.40 3,409,256.24
4/30/2010 297,751.33 63,582.64 234,168.69 3,175,087.54
10/30/2010 297,751.33 59,215.39 238,535.94 2,936,551.60
4/30/2011 297,751.33 54,766.70 242,984.64 2,693,566.96
10/30/2011 297,751.33 50,235.03 247,516.30 2,446,050.66
4/30/2012 297,751.33 45,618.85 252,132.48 2,193,918.18
10/30/2012 297,751.33 40,916.58 256,834.75 1,937,083.43
4/30/2013 297,751.33 36,126.61 261,624.72 1,675,458.71
10/30/2013 297,751.33 31,247.31 266,504.02 1,408,954.68
4/30/2014 297,751.33 26,277.01 271,474.32 1,137,480.36
10/30/2014 297,751.33 21,214.01 276,537.32 860,943.04
4/30/2015 297,751.33 16,056.59 281,694.74 579,248.29
10/30/2015 297,751.33 10,802.98 286,948.35 292,299 .94
4/30/2016 297,751.33 5,451.39 292,299.94 (0.00)
TOTAL 4,168,518.69 529,381.05 3,639,137.64
Prepayment Premium for purposes of Section 10.01 (a) is 0%.
For purposes of this Lease, "Taxable Rate, " with respect to the interest component of
Rental Payments, means an annual rate of interest equal to 5.4268%.
LESSEE:
City of San Bernardino
By
Title
#765674vl (BAPCCICA Abatement Lease Template) A-I-I
CERTIFICATE
The undersigned, a duly elected and acting
San Bernardino ("Lessee ") certifies as follows:
Secretary of City of
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 April -' 2009, and the
Schedule(s) thereunder and all future Schedule(s) (the "Agreements ') by and between Lessee
and Bank of America, National Association 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
Title
(The signer of this Certificate cannot be listed above as authorized to execute the
Agreements.)
#765674vl (BAPCClCA Abatement Lease Template) C-I
ACQUISITION FUND AND ACCOUNT CONTROL AGREEMENT
This Acquisition Fund and Account Control Agreement (this "Agreement"),
dated as of April 30, 2009, by and among Bank of America, National Association, a
national banking association (hereinafter referred to as "Lessor"), City of San
Bernardino, a political subdivision of the state of California (hereinafter referred to as
"Lessee") and Deutsche Bank National Trust Company, a national trust company
(hereinafter referred to as "Acquisition Fund Custodian").
Reference is made to that certain Master Equipment Lease/Purchase Agreement dated as
of April 30, 2009, between Lessor and Lessee (hereinafter referred to as the "Lease"), covering
the acquisition and lease of certain Equipment described therein (the "Equipment"). It is a
requirement of the Lease that the Equipment Cost of the Equipment (an amount not to exceed
$4,393,013.00) be deposited into an escrow under terms satisfactory to Lessor, for the purpose of
fully funding the Lease, and providing a mechanism for the application of such amounts to the
purchase of and payment for the Equipment.
The parties agree as follows:
I. Creation of ACQuisition Fund.
(a) There is hereby created a special trust fund to be known as the "City of
San Bernardino 2009 Acquisition Fund" (the "Acquisition Fund") to be held in trust by the
Acquisition Fund Custodian for the purposes stated herein, for the benefit of Lessor and Lessee,
to be held, disbursed and returned in accordance with the terms hereof.
(b) The Acquisition Fund Custodian shall invest and reinvest moneys on
deposit in the Acquisition Fund in Qualified Investments in accordance with written instructions
received from Lessee. Lessee shall be solely responsible for ascertaining that all proposed
investments and reinvestments are Qualified Investments and that they comply with federal, state
and local laws, regulations and ordinances governing investment of such funds and for providing
appropriate notice to the Acquisition Fund Custodian for the reinvestment of any maturing
investment. Accordingly, neither the Acquisition Fund Custodian nor Lessor shall be
responsible for any liability, cost, expense, loss or claim of any kind, directly or indirectly arising
out of or related to the investment or reinvestment of all or any portion of the moneys on deposit
in the Acquisition Fund, and Lessee agrees to and does hereby release the Acquisition Fund
Custodian and Lessor from any such liability, cost, expenses, loss or claim. Interest on the
Acquisition Fund shall become part of the Acquisition Fund, and gains and losses on the
investment of the moneys on deposit in the Acquisition Fund shall be borne by the Acquisition
Fund. For purposes of this agreement, "Qualified Investments" means any investments which
meet the requirements of (state law citation). IN 1HE ABSENCE OF WRITfEN INSTRUCTIONS, THE
ACQUISITION FUND CUSTODIAN IS HEREBY AUTHORIZED AND DIRECTED TO INVEST AND RE-
INVEST ALL FUNDS ON HAND IN 1HE GOLDMAN SACHS FINANCIAL SQUARE (FSQ) MONEY
MARKET FUNDS, TREASURY OBUGATIONS, FUND#470 (AAAmI Aaa).
#765408vl (BAPCC/AfA General)
(c) Unless the Acquisition Fund is earlier terminated in accordance with the
provisions of paragraph (d) below, amounts in the Acquisition Fund shall be disbursed by the
Acquisition Fund Custodian in payment of amounts described in Section 2 hereof upon receipt of
written authorization(s) from Lessor, as is more fully described in Section 2 hereof. If the
amounts in the Acquisition Fund are insufficient to pay such amounts, Lessee shall provide any
balance of the funds needed to complete the acquisition of the Equipment. Any moneys
remaining in the Acquisition Fund after December 31, 2009 (the "Acquisition Period") shall be
applied as provided in Section 4 hereof.
(d) The Acquisition Fund shall be terminated at the earliest of (i) the final
distribution of amounts in the Acquisition Fund or (ii) written notice given by Lessor of the
occurrence of a default or termination of the Lease due to non-appropriation.
(e) The Acquisition Fund Custodian may act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine and may assume the
validity and accuracy of any statement or assertion contained in such a writing or instrument.
The Acquisition Fund Custodian shall not be liable in any manner for the sufficiency or
correctness as to form, manner of execution, or validity of any instrument nor as to the identity,
authority, or right of any person executing the same; and its duties hereunder shall be limited to
the receipt of such moneys, instruments or other documents received by it as the Acquisition
Fund Custodian, and for the disposition of the same in accordance herewith.
(f) Unless the Acquisition Fund Custodian is guilty of gross negligence or
willful misconduct with regard to its duties hereunder, Lessee agrees to and does hereby release
and indemnify the Acquisition Fund Custodian and hold it harmless from any and all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or any other expense, fees or
charges of any character or nature, which it may incur or with which it may be threatened by
reason of its acting as Acquisition Fund Custodian under this agreement; and in connection
therewith, does to the extent permitted by law indemnify the Acquisition Fund Custodian against
any and all expenses; including reasonable attorneys' fees and the cost of defending any action,
suit or proceeding or resisting any claim.
(g) If Lessee and Lessor shall be in disagreement about the interpretation of
the Lease, or about the rights and obligations, or the propriety of any action contemplated by the
Acquisition Fund Custodian hereunder, the Acquisition Fund Custodian may, but shall not be
required to, file an appropriate civil action to resolve the disagreement. The Acquisition Fund
Custodian shall be reimbursed by Lessee for all costs, including reasonable attorneys' fees, in
connection with such civil action, and shall be fully protected in suspending all or part of its
activities under the Lease until a final judgment in such action is received.
(h) The Acquisition Fund Custodian may consult with counsel of its own
choice and shall have full and complete authorization and protection with the opinion of such
counsel. The Acquisition Fund Custodian shall otherwise not be liable for any mistakes of fact
or errors of judgment, or for any acts or omissions of any kind unless caused by its willful
misconduct.
#765408vl (BAPCClAFA General)
2
(i) Lessee shall reimburse the Acquisition Fund Custodian for all reasonable
costs and expenses, including those of the Acquisition Fund Custodian's attorneys, agents and
employees incurred for extra-ordinary administration of the Acquisition Fund and the
performance of the Acquisition Fund Custodian's powers and duties hereunder in connection
with any Event of Default under the Lease, or in connection with any dispute between Lessor
and Lessee concerning the Acquisition Fund.
2. Acauisition ofProJlertv.
(a) Acauisition Contracts. Lessee will arrange for, supervise and provide for,
or cause to be supervised and provided for, the acquisition of the Equipment, with moneys
available in the Acquisition Fund. Lessee represents the estimated costs of the Equipment are
within the funds estimated to be available therefor, and Lessor makes no warranty or
representation with respect thereto. Lessor shall have no liability under any of the acquisition or
construction contracts. Lessee shall obtain all necessary permits and approvals, if any, for the
acquisition, equipping and installation of the Equipment, and the operation and maintenance
thereof.
(b) Authorized Acauisition Fund Disbursements. Disbursements from the
Acquisition Fund shall be made for the purpose of paying (including the reimbursement to
Lessee for advances from its own funds to accomplish the purposes hereinafter described) the
cost of acquiring the Equipment.
(c) Reauisition Procedure. No disbursement from the Acquisition Fund shall
be made uuless and until Lessor has approved such requisition. Prior to disbursement from the
Acquisition Fund there shall be filed with the Acquisition Fund Custodian a requisition for such
payment in the form of Disbursement Request attached hereto as Schedule 1, stating each
amount to be paid and the name of the person, firm or corporation to whom payment thereof is
due. Each such requisition shall be signed by an authorized representative of Lessee (an
"Authorized Representative") and by Lessor, and shall be subject to the following:
I. Delivery to Lessor ofa certificate of Lessee to the effect that:
(i) an obligation in the stated amount has been incurred by Lessee, and that
the same is a proper charge against the Acquisition Fund for costs relating
to the Equipment identified in the Lease, and has not been paid; (ii) the
Authorized Representative has no notice of any vendor's, mechanic's or
other liens or rights to liens, chattel mortgages, conditional sales contracts
or security interest which should be satisfied or discharged before such
payment is made; (iii) such requisition contains no item representing
payment on account, or any retained percentages which Lessee is, at the
date of such certificate, entitled to retain; and (iv) the Equipment is
insured in accordance with the Lease.
2. Delivery to Lessor of an Acceptance Certificate executed by Lessee,
together with any Purchase Agreement Assignment or bill of sale and
invoice therefor as required by Section 3.04 of the Lease;
#765408vl (BAPCC/AFA General)
3
3. The disbursement shall occur during the Acquisition Period set forth in the
Schedule applicable to such Equipment;
4. There shall exist no Event of Default (nor any event which, with notice or
lapse of time or both, would become an Event of Default); and
5. No material adverse change in Lessee's or any guarantor's financial
condition shall have occurred since the date of the Lease.
3. Deoosit to ACQuisition Fund. Upon satisfaction of the conditions specified in
Section 3.04 of the Lease, Lessor will cause the Lease Proceeds to be deposited in the
Acquisition Fund. Lessee agrees to pay any costs with respect to the Equipment in excess of
amounts available therefor in the Acquisition Fund.
4. Excessive ACQuisition Fund. Following the final disbursement from the
Acquisition Fund at the end of the Acquisition Period, or termination of the Acquisition Fund as
otherwise provided herein, the Acquisition Fund Custodian shall transfer any remainder from the
Acquisition Fund to Lessor for application to amounts owed under the Lease in accordance with
Section 4.07 of the Lease.
5. Securitv Interest. The Acquisition Fund Custodian and Lessee acknowledge and
agree that the Acquisition Fund and all proceeds thereof are being held by Acquisition Fund
Custodian for disbursement or return as set forth herein. Lessee hereby grants to Lessor a frrst
priority perfected security interest in the Acquisition Fund, and all proceeds thereof, and all
investments made with any amounts in the Acquisition Fund. If the Acquisition Fund, or any
part thereof, is converted to investments as set forth in this agreement, such investments shall be
. made in the name of Acquisition Fund Custodian and the Acquisition Fund Custodian hereby
agrees to hold such investments as bailee for Lessor so that Lessor is deemed to have possession
of such investments for the purpose of perfecting its security interest.
6. Control of ACQuisition Account. In order to perfect Lessor's security interest by
means of control in (i) the Acquisition Fund established hereunder, (ii) all securities entitlements,
investment property and other financial assets now or hereafter credited to the Acquisition Fund,
(iii) all of Lessee's rights in respect of the Acquisition Fund, such securities entitlements,
investment property and other financial assets, and (iv) all products, proceeds and revenues of
and from any of the foregoing personal property (collectively, the "Collateral"), Lessor, Lessee
and Acquisition Fund Custodian further agree as follows:
(a) All terms used in this Section 6 which are defined in the Commercial
Code of the state of California ("Commercial Code") but are not otherwise defined herein shall
have the meanings assigned to such terms in the Commercial Code, as in effect on the date of
this Agreement.
(b) Acquisition Fund Custodian will comply with all entitlement orders
originated by Lessor with respect to the Collateral, or any portion of the Collateral, without
further consent by Lessee.
#765408vl (BAPCC/AFA General)
4
(c) Acquisition Fund Custodian hereby represents and warrants (a) that the
records of Acquisition Fund Custodian show that Lessee is the sole owner of the Collateral,
(b) that Acquisition Fund Custodian has not been served with any notice of levy or received any
notice of any security interest in or other claim to the Collateral, or any portion of the Collateral,
other than Lessor's claim pursuant to this Agreement, and (c) that Acquisition Fund Custodian is
not presently obligated to accept any entitlement order from any person with respect to the
Collateral, except for entitlement orders that Acquisition Fund Custodian is obligated to accept
from Lessor under this Agreement and entitlement orders that Acquisition Fund Custodian,
subject to the provisions of paragraph (e) below, is obligated to accept from Lessee.
(d) Without the prior written consent of Lessor, Acquisition Fund Custodian
will not enter into any agreement by which Acquisition Fund Custodian agrees to comply with
any entitlement order of any person other than Lessor or, subject to the provisions of
paragraph (e) below, Lessee, with respect to any portion or a1] of the Collateral. Acquisition
Fund Custodian shal] promptly notifY Lessor if any person requests Acquisition Fund Custodian
to enter into any such agreement or otherwise asserts or seeks to assert a lien, encumbrance or
adverse claim against any portion or all of the Collateral.
(e) Except as otherwise provided in this paragraph (e) and subject to
Section 1 (b) hereof, Acquisition Fund Custodian may a1]ow Lessee to effect sales, trades,
transfers and exchanges of Collateral within the Acquisition Fund, but will not, without the prior
written consent of Lessor, allow Lessee to withdraw any Collateral from the Acquisition Fund.
Acquisition Fund Custodian acknowledges that Lessor reserves the right, by delivery of written
notice to Acquisition Fund Custodian, to prohibit Lessee from effecting any withdrawals
(including withdrawals of ordinary cash dividends and interest income), sales, trades, transfers or
exchanges of any Collateral held in the Acquisition Fund. Further, Acquisition Fund Custodian
hereby agrees to comply with any and a1] written instructions delivered by Lessor to Acquisition
Fund Custodian (once it has had a reasonable opportunity to comply therewith) and has no
obligation to, and will not, investigate the reason for any action taken by Lessor, the amount of
any obligations of Lessee to Lessor, the validity of any of Lessor's claims against or agreements
with Lessee, the existence of any defaults under such agreements, or any other matter.
(1) Lessee hereby irrevocably authorizes Acquisition Fund Custodian to
comply with all instructions and entitlement orders delivered by Lessor to Acquisition Fund
Custodian.
(g) Acquisition Fund Custodian will not attempt to assert control, and does
not claim and will not accept any security or other interest in, any part of the Collatera], and
Acquisition Fund Custodian will not exercise, enforce or attempt to enforce any right of setoff
against the Collateral, or otherwise charge or deduct from the Collatera] any amount whatsoever.
(h) Acquisition Fund Custodian and Lessee hereby agree that any property
held in the Acquisition Fund shal] be treated as a financial asset under such section of the
Commercial Code as corresponds with Section 8-]02 of the Uniform Commercial Code,
notwithstanding any contrary provision of any other agreement to which Acquisition Fund
Custodian may be a party.
#765408vl (BAPCC/AFA General)
5
(i) Acquisition Fund Custodian is hereby authorized and instructed, and
hereby agrees, to send to Lessor at its address set forth in Section 7 below, concurrently with the
sending thereof to Lessee, duplicate copies of any and all monthly Acquisition Fund statements
or reports issued or sent to Lessee with respect to the Acquisition Fund.
7. Miscellaneous. Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Lease. This agreement may not be amended except in writing
signed by all parties hereto. This agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original instrument and each shall have the force and effect of
an original and all of which together constitute, and shall be deemed to constitute, one and the
same instrument. Notices hereunder shall be made in writing and shall be deemed to have been
duly given when personally delivered or when deposited in the mail, first class postage prepaid,
or delivered to an express carrier, charges prepaid, or sent by facsimile with electronic
confirmation, addressed to each party at its address below:
If to Lessor:
Bank of America, National Association
555 California Street, 4th Floor
Mail Code: CA5-705-04-01
San Francisco, CA 94104
Attn: Contract Administration
Fax: (415) 765-7373
If to Lessee:
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
Attn: Mr. Michael Gomez
Fax: (909) 384-5043
If to Acquisition
Fund Custodian:
Deutsche Bank National Trust Company
101 California Street, 46th Floor
San Francisco, CA 94111
Attn: Raafat Albert Sarkis
Phone: (415) 617-2801
Fax: (415) 617-4270
#765408vl (BAPCC/AFA General)
6
In Witness Whereof, the parties have executed this Acquisition Fund and Account
Control Agreement as of the date first above written.
Bank of America, National Association,
as Lessor
City of San Bernardino,
as Lessee
By ~:. ~~
Title: ,~ Ai+
By:
Title:
Deutsche Bank National Trust Company
As Acquisition Fund Custodian
By:
Title:
By:
Title:
#765408vl (BAPCClAFA General)
7
SCHEDULE 1
FORM OF DISBURSEMENT REQUEST
Re: Master Equipment LeaseIPurchase Agreement dated as of April--> 2009, by and
between Bank of America, National Association, as Lessor and City of San Bernardino,
as Lessee (the "Lease")
In accordance with the terms of the Acquisition Fund and Account Control Agreement,
dated as of April _, 2009, (the "Acquisition Fund and Account Control Agreement") by and
among Bank of America, National Association ("Lessor"), City of San Bernardino ("Lessee")
and Deutsche Bank National Trust Company (the "Acquisition Fund Custodian"), the
undersigned hereby requests the Acquisition Fund Custodian pay the following persons the
following amounts from the Acquisition Fund created under the Acquisition Fund and Account
Control Agreement (the "Acquisition Fund") for the following purposes.
Payee's Name and Address Invoice Number Dollar Amount
Purpose
The undersigned hereby certifies as follows:
(i) An obligation in the stated amount has been incurred by Lessee, and the same is a
proper charge against the Acquisition Fund for costs relating to the Equipment identified in the
Lease, and has not been paid. Attached hereto is the original invoice with respect to such
obligation.
(ii) The undersigned, as Authorized Representative, has no notice of any vendor's,
mechanic's or other liens or rights to liens, chattel mortgages, conditional sales contracts or
security interest which should be satisfied or discharged before such payment is made.
(iii) This requisition contains no item representing payment on account, or any
retained percentages which Lessee is, at the date hereof, entitled to retain.
(iv) The Equipment is insured in accordance with the Lease.
(v) No Event of Default, and no event which with notice or lapse of time, or both,
would become an Event of Default, under the Lease has occurred and is continuing at the date
hereof.
#765408vl (BAPCC/AFA General)
(vi) The disbursement shall occur during the Acquisition Period set forth in the
Schedule applicable to such Equipment.
(vii) No material adverse change in Lessee's or any guarantor's financial condition
shall have occurred since the date of the Lease.
Dated:
CITY OF SAN BERNARDINO
By:
Authorized Representative
Disbursement of funds from the Acquisition
Fund in accordance with the foregoing
Disbursement Request hereby is authorized
BANK OF AMERICA, NA TIONAL ASSOCIATION
as Lessor under the Lease
By:
Title: Vice President
#765408v I (BAPCCI AF A General)
2
Information Return for Tax-Exempt Governmental Obligations
... Under Internal Revenue Code section 149(e)
... See separate Instructions.
Caution: If the issue price is under $100,000, use Form B038-GC.
If Amended Return, check here ~ 0
2 Issuer's employer identification number
95 : 6000772
Room/suite 4 Report number
3
'o,m 8038-G
(Rev. November 2000)
Department of the Treasury
Internal Revenue Service
1 Issuer's name
CITY OF SAN BERNARDINO
3 Number and street (or P.O. box if mail is not delivered to street address)
300 NORTH D STREET
5 City. town. or post office, state, and ZIP code
SAN BERNARDINO, CA 92418-001
7 Name of issue
LEASE WITH OPTION TO PURCHASE AGREEMENT
OMS No. 1545-0720
6 Date of issue
04130/09
8 CUSIP number
NONE
9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative
MICHAEL GOMEZ, FINANCIAL ANALYST ( 909 1384-5146
T e of Issue (check a licable box(es) and enter the issue rice) See instructions and attach schedule
11 D Education 11
12 0 Health and hospital 12
13 D Transportation . . 13
14 D Public safety. . . 14
15 D Environment (including sewage bonds) 15
16 D Housing . . . . 16
17 GZI Utilities . . . . 17 3,639,137.64
18 D Other. Describe ~ 18
19 If obligations are TANs or RANs, check box ~ D If obligations are BANs. check box ~ D
20 If obli ations are in the form of a lease or installment sale, check box . . . . . . ~ D
Descri tion of Obli ations. Com lete for the entire issue for which this form is bein
04/30/2016 $ 3,639,137.64 $ N/A 4.000
Uses of Proceeds of Bond Issue (includin underwriters' discount)
Proceeds used for accrued interest . . . . . . . . . . . .
Issue price of entire issue (enter amount from line 21. column (b)). .
Proceeds used for bond issuance costs (including underwriters' discount) 24
Proceeds used for credit enhancement. . . . . . . . . . 25
Proceeds allocated to reasonably required reserve or replacement fund 26
Proceeds used to currently refund prior issues 27
Proceeds used to advance refund prior issues 28
Total (add lines 24 through 28). . . . . . . . . .
Nonrefundin roceeds of the issue subtract line 29 from line 23 and enter amount here) .
Descri tion of Refunded Bonds (Com lete this art onl for refund in bonds.)
Enter the remaining weighted average maturity of the bonds to be currently refunded ....
Enter the remaining weighted average maturity of the bonds to be advance refunded ....
Enter the last date on which the refunded bonds will be called. . . . . . . . ~
Enter the date(s) the refunded bonds were issued ~
Miscellaneous
Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5)
Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions)
Enter the final maturity date of the guaranteed investment contract.... N/A
Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a 0.00
If this issue is a loan made from the proceeds of another tax-exempt issue. check box ~ D and enter the name of the
issuer ~ and the date of the issue ~
If the issuer has designated the issue under section 265(b)(3)(B)(i)(lII) (small issuer exception), check box
If the issuer has elected to pay a penalty in lieu of arbitrage rebate. check box . . . . . . . . .
If the issuer has identified a hed e, check box . . . . . . . . . . . . . . . . . . . .
(e) Stated redemption
price at maturity
(d) Weighted
average maturity
(b) Issue price
ears
22
23
24
25
26
27
28
29
30
'0.00
0.00
0.00
0.00
0.00
31
32
33
34
35
36a
b
37
b
Ie) Yield
3.73 %
0.00
3,639,137.64
0.00
3,639,137.64
N/A
N/A
N/A
N/A
years
years
0.00
0.00
38
39
40
~GZ1
~D
~D
Sign
Here
Under penalties of perjury. I declare that I have examined this return and accompanying schedules and statements. and to the best of my knowledge
and belief. they are true. correct. and complete.
~ Signature of issuer's authorized representative
Date
~ Barbara S. Pachon, Director of Financt
, Type Of print name and title
Cat. No. 63773S Form 8038~G (Rev_ 11-2000)
For Paperwork Reduction Act Notice, see page 2 of the Instructions.
@
Fonn W-g
Request for Taxpayer
Identification Number and Certification
Give fonn to the
requester. Do not
send to the IRS.
(Rev. November 2005)
DepartrnentoftheTreasury
Internal Revenue Service
N Name (as shown on your income tax return)
~
Q. Business name, if different from above
5
....
~J
ll~
E!
'1:-
"0
1
..
OJ
m
en
o _'duaV 0 Corporation
Check appropriate box: Sole proprietor
AdO'ess (number, street, and apt. or suite no.)
City, state, and ZIP code
list account number(s) here (optional)
Tax a er Identification Number IN)
o Parln...h;p 0 Other ~ ....-.............
o Exempt from backup
withholding
Requester's name and address (optionaO
Enter your TIN in the appropriate box. The TIN provided must match the name given on Una 1 to avoid
backup wjthholdlng. For individuals, this Is your social security number (SSN). However. for a resident
allen, sole proprietor. or disregarded entity, see the Part I instructions on page 3. For other entitles. it is
your employer identtftcation number (EIN). If you do not have a number. see How to get a TIN on page 3.
Note. If the account is in more than one name, see the chart on page 4 for guidelines on whose
number to enter.
~
or
Employer klent:ification number
Certification
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and
2. I am not subject to backup wRhhoIding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal
Revenue Service ~RS) that I am subject to backup wRhholdlng as a resun of a failure to report all Interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding, and
3. I am a U.S. person OoolOOln9 a U.S. resident alien).
CertifIcation instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply.
For mortgage interest paid, acquisition or abandonment of secured property, cancellatkln of debt, contributions to an individual retirement
arrengemenlORAl. and generally, peyments other than interest and dividends. you are not required to sign the Certification, but you must
provide your correct TIN. (See the instructions on page 4.)
Sign I SIgnature of
Here u.s. person ~ D8IlI ~
Purpose of Form
A person who is required to file an Information return with the
IRS, must obtain your correct taxpayer Identification number
(TIN) to report. for example, Income paid to you, real estate
transactions, mortgage interest you paid. acquisition or
abandonment of secured property, cancellation of debt, or
contrtbutions you made to an IRA.
U.S. person. Use Form W-9 only if you are a U.S. person
Oncludlng a resident alien), to provide your correct TI N to the
person requesting it (the requester) and, when applicable, to:
1. Certify that the TIN you are giving is correct (or you are
waiting for a number to be issued).
2. Certify that you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are a
U.S. exempt payee.
In 3 above, if applicable, you are also certifying that as a
U.S. person, your allocable share of any partnership income
from a U.S. trade or business Is not subject to the
withholding tax on foreign partners' share of effectively
connected income.
Note. If a requester gives you a form other than Form W-9 to
request your TIN, you must use the requester's form if it is
substantially similar to this Form W-g.
For federal tax purposes, you are considered a person if you
are:
. An individual who is a citizen or resident of the United
States,
. A partnership, corporation, company. or association
created or organized in the United States or under the laws
of the United States. or
. Any estate (other than a foreign estate) or trust. See
Regulations sections 301. 7701-6(a) and 7(a) for additional
infonnation.
Special rules for partnerships. Partnerships that conduct a
trade or business in the United States are generally required
to pay a withholding tax on any foreign partners' share of
income from such business. Further, In certain cases where a
Form W-g has not been received, a partnership is required to
presume that a partner Is a foreign person, and pay the
withholding tax. Therefore. if you are a U.S. person that is a
partner in a partnership conducting a trade or business In the
United States, provide Form W-g to the partnership to
establish your U.S. status and avoid withholding on your
share of partnership income.
The person who gives Form W-9 to the partnership for
purposes of establishing its U.S. status and avoiding
withholding on its allocable share of net Income from the
partnership conducting a trade or business in the United
States is in the following cases:
. The U.S. owner of a disregarded entity and not the entity,
Form W-9 (Rev. 11-2005)
Cat. No. 10231X
Form W-g (Rev, 11.2005)
. The U.S. grantor or other owner of a grantor trust and not
the trust, and
. The U.S. trust (other than a grantor trust) and not the
beneficiaries of the trust.
Foreign person. If you are a foreign person, do not use
Form W-9. Instead, use the appropriate Form W-6 (see
Publication 5t5, Withholding of Tax on Nonresident Aliens
and Foreign Enttties).
Nonresident alien who becomes a resident alien.
Generally, only a nonresident alien individual may use the
terms of a tax treaty to reduce or eliminate U.S. tax on
certain types of income. However, most tax treaties contain a
provision known as a "saving clause." Exceptions specified
in the saving clause may permtt an exemption from tax to
continue for certain types of income even after the recipient
has otherwise become a U.S. resident alien for tax purposes.
If you are a U.S. resident alien who Is relying on an
exception contained in the saving clause of a tax trealy to
claim an exemption from U.S. tax on certain types of income,
you must attach a statement to Form W-9 that specifies the
following five ttems:
1. The trealy country. Generaily, this must be the same
treaty under which you claimed exemption from tax as a
nonresident alien.
2. The treaty article addressing the income.
3. The article number (or location) in the tax trealy that
contains the saving clause and tts exceptions.
4. The type and amount of income that qualifies for the
exemption from tax.
5. Sufficient facts to justify the exemption from tax under
the terms of the treaty article.
Example. Article 20 of the U.S.-China Income tax trealy
allows an exemption from tax for scholarship income
received by a Chinese student temporarily present in the
United States. Under U.S. law, this student will become a
resident alien for tax purposes II his or her stay in the Untted
States exceeds 5 calendar years. However, paragraph 2 of
the first Protocol to the U.S.-China treaty (dated April 30,
1964) allows the provisions of Article 20 to continue to apply
even after the Chinese student becomes a resident alien of
the Untted States. A Chinese student who qualifies for this
exception (under paragraph 2 of the first protocol) and is
relying on this exception to claim an exemption from tax on
his or her scholarship or fellowship income would attach to
Form W-9 a statement that includes the information
described above to support that exemption.
If you are a nonresident alien or a foreign enttty not subject
to backup wtthholding, give the requester the appropriate
completed Form W-6.
What Is backup withhOlding? Persons making certain
payments to you must under certain conditions wtthhold and
pay to the IRS 26% of such payments (after December 31,
2002). This is called "backup wtthholding." Payments that
may be subject to backup wtthholding include interest,
dividends, broker and barter exchange transactions, rents,
royallies, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not
subjec1to backup withholding.
You will not be subject to backup withholding on payments
you receive if you give the requester your correct TIN, make
the proper certifications, and report all your taxabie interest
and dividends on your tax retum.
Payments you receive will be subject to backup
withholding if:
1. You do not fumish your TIN to the requester,
2. You do not certify your TIN when required (see the Part
II instructions on page 4 for details),
Page 2
3. The IRS tells the requester that you fumlshed an
Incorrect TIN,
4. The IRS tells you that you are subject to backup
wtthholding because you did not report all your interest and
dividends on your tax retum (for reportable interest and
dividends only), or
5. You do not certify to the requester that you are not
subject to backup wtthholdlng under 4 above (for reportable
interest and dividend accounts opened after 1963 only).
Certain payees and payments are exempt from backup
wtthholding. See the instructions below and the separate
Instructions for the Requester of Form W-9.
Also see Special rules regarding partnerships on page 1.
Penalties
Failure to furnish TIN. If you fail to furnish your correct TIN
to a requester, you are subject to a penalify of $50 for each
such failure unless your failure is due to reasonable cause
and not to willful neglect.
Civil penalty for false infonnation with respect to
witthholding. If you make a false statement with no
reasonable basis that resulls in no backup wtthholding, you
are subject to a $500 penally.
Criminal penalty for falsifying Information. Willfully
falsifying certifications or affirmations may subject you to
criminal pen allies including fines and/or Imprisonment.
Misuse of TINs. If the requester discloses or uses TINs in
violation of federal law, the requester may be subject to civil
and criminal penallies.
Specific Instructions
Name
If you are an Individual, you must generally enter the name
shown on your income tax retum. However, II you have
changed your last name, for instance, due to marriage
without informing the Social Security Administration of the
name change, enter your first name, the last name shown on
your social security card, and your new last name.
II the account is in joint names, list first, and then circle,
the name of the person or enttty whose numbar you entered
in Part I of the form.
Sole proprietor. Enter your individual name as shown on
your income tax retum on the "Name" line. You may enter
your business, trade, or "doing business as (DBA)" name on
the "Business name" line.
Umlted liability COmpany (LLC). If you are a single-member
LLC (Including a foreign LLC with a domestic owner) that is
disregarded as an entity separate from its owner under
Treasury regulations section 301.7701-3, enter the owner's
name on the "Name" line. Enter the LLC's name on the
"Business name" line. Check the appropriate box for your
filing status (sole proprietor, corporation, etc.), then check
the box for "Other" and enter "LLC" in the space provided.
other entities. Enter your business name as shown on
required federal tax documents on the "Name" line. This
name should match the name shown on the charter or other
legal document creating the enttty. You may enter any
business, trade, or DBA name on the "Business name" line.
Note. You are requested to check the appropriate box for
your status (individual/sole proprietor, corporation, etc.).
Exempt From Backup Withholding
If you are exempt, enter your name as described above and
check the appropriate box for your status, then check the
"Exempt from backup wtthholding" box in the line following
the business name, sign and date the form.
Form W-9 (Rev. 11-2005)
Generally, Individuals Oncluding sole proprtetors) are not
exempt from backup wijhholding. CorporaJions are exempt
from backup wijhholding lor certain payments, such as
interest and dividends.
Note. II you are exempt from backup wijhholdlng, you
should still complete this lorm to avoid possible erroneous
backup withholding.
Exempt payees. Backup wijhhoiding Is not required on any
payments made to the following payees:
1. An organization exempt from tax under section 501 (a),
any IRA, or a custodial account under section 403(b)(7) if the
account satisfies the requirements of section 401 (f)(2),
2. The Unijed States or any of ijs agencies or
instrumentalijies,
3. A state, the District of Columbia, a possession of the
Unijed States, or any of their political subdivisions or
instrumentalities,
4. A foreign govemment or any of ijs polijical subdivisions,
agencies, or instrumentalijles, or
5. An international organization or any of ijs agencies or
instrumentalijles.
Other payees that may be exempt from backup
wijhholding include:
6. A corporaJion,
7. A foreign central bank of issue,
B. A dealer in securities or commodijles required to register
in the Unijed States, the Distrtct of Columbia, or a
possession of the United States,
9. A Mures commission merchant registered wijh the
Commodijy Futures Trading Commission,
10. A real estate investment trust,
11. An entijy registered at all times durtng the tax year
under the Investment Company Act of 1940,
12. A common trust fund operaJed by a bank under
section 584(a),
13. A financial Institution,
14. A middleman known in the investment community as a
nominee or custodian, or
15. A trust exempt from tax under section 664 or
descrtbed in section 4947.
The chart below shows types of payments that may be
exempt from backup withholding. The chart applies to the
exempt recipients listed above, 1 through 15.
IF the payment is for . . . THEN the payment is exempt
for...
Interest and dividend payments
All exempt recipients except
for 9
Broker transactions
Exempt recipienls 1 through 13.
Also, a person reglstered under
the Investment Advisers Act of
1940 who regularly acts as a
broker
Barter exchange transactions
and patronage dividends
Payments over $600 required
to be reported and direct
sales over $5,000 1
'See Form 1099-MISC, Miscellaneous Income, and its instructions.
tHowever, the following payments made to a corporation Qncluding gross
proceeds paid to an attorney under section 6045(1), even if the attorney is a
corporation) and reporta~ on Form 1099-MtSC are not exempt from
backup withholding: medical and health care payments. attorneys' fees; and
payments for services paid by a federal executive agency.
Exempt recipients 1 through 5
Generally, E!Jempt recipients
, through 7
Page 3
Part I. Taxpayer Identification
Number (TIN)
Enter your TIN In the approprtate box. If you are a resident
alien and you do not have and are not eligible to ~et an SSN,
your TIN is your IRS individual taxpayer identificatIon number
(ITIN). Enter it In the social security number box. If you do
not have an mN, see How to get a TIN below.
If you are a sole proprtetor and you have an EIN, you may
enter eijher your SSN or EIN. However, the IRS prefers that
you use your SSN.
If you are a single-owner LLC that is disregarded as an
entijy separaJe from its owner (see Umiled liability company
(LLC) on page 2), enter your SSN (or EIN, if you have one). If
the LLC Is a corporation, partnership, etc., enter the entijy's
EIN.
Note. See the chart on page 4 for further clarification of
name and TIN combinations.
How to get a TIN. If you do not have a TIN, apply for one
immediately. To apply for an SSN, get Form 88-5,
Application for a Social Security Card, from your local Social
Secu~ AdministraJion office or get this form online at
www.socialsecurlty.gov. You may also get this form by
calling 1-Boo-n2-1213. Use Form W-7, Application for IRS
Individual Taxpayer Identification Number, to apply for an
mN, or Form SS-4, Application for Employer Identification
Number, to apply for an EIN. You can apply for an EIN online
by accessing the IRS websije at www.irs.govlbuslnesses and
clicking on Employer ID Numbers under Related Topics. You
can get Forms W-7 and S8-4 from the IRS by visiting
www.lrs.govorbycalling 1-BOO-TAX-FORM
(1-800-829-3676).
If you are asked to complete Form W-9 but do not have a
TIN, write "Applied For" in the space for the TIN, sign and
date the form, and give ij to the requester. For interest and
dividend payments, and certain payments made with respect
to readily tradable instruments, generally you will have 60
days to get a TIN and give It to the requester before you are
subjeclto backup wijhholdlng on payments. The 6O-day rule
does not apply to other types of payments. You will be
subjeclto backup wijhholdlng on all such payments until you
provide your TIN to the requester.
Note. Writing "Applied For" means that you have already
applied for a TIN or that you intend to apply for one soon.
Caution: A disregarded domestic entity thai has a foreign
owner must use Ihe appropriate Form W-B.
Form W-9 (Rev. 11-20(5)
Page 4
Part II. Certification
To establish to the w~hhoJding agent that you are a U.S.
person, or resident alien, sign Form W-9. You may be
requested to sign by the w~hholdlng agent even if ~ems I, 4,
and 5 below indicate otherwise.
For a joint account, only the person whose TIN is shown in
Pari I should sign (when required). Exempt recipients, see
Exempt From Backup Wtlhholdlng on page 2.
Signature requirements. Complete the certification as
Indicated In 1 through 5 below.
1. Interest, dividend, and barter exchange accounts
opened before 1984 and broker accounts considered
active during 1983. You must give your correct TIN, but you
do not have to sign the certification.
2. Interest, dividend, broker, and barter exchange
accounts opened after 1983 and broker accounts
considered Inactive during 1983. You must sign the
certification or backup w~hholding will apply. If you are
subject to backup w~hholding and you are merely providing
your correct TIN to the requester, you must cross out ~em 2
In the certification before signing the form.
3. Real estate transactlons. You must sign the
certification. You may cross out item 2 of the certification.
4, Other payments. You must give your correct TIN, but
you do not have to sign the certification unless you have
been notified that you have previously given an Incorrect TIN.
"Other payments" Include payments made In the course of
the requester's trade or business for rents, roya~ies, goods
(other than bills for merchandise), medical and hea~h care
services Qncluding payments to corporations}, payments to a
nonemployee for services, payments to certain fishing boat
crew members and fishermen, and gross proceeds paid to
attorneys Qncludlng payments to corporations}.
5. Mortgage Interest paid by you, acquisition or
abandonment of secured property, cancellation of debt,
qualllied tuition program payments (under section 529),
IRA, Coverdell ESA, Archer MSA or HSA contributions or
distributions, and pension distributions. You must give
your correct TIN, but you do not have to sign the
certification.
What Name and Number To Give the
Requester
For this tvDe of aecount
1. Individual
2. Two or more individuals (joint
account)
3. Custodian account of a minor
(Unllorm Gift to MlnolS Act)
4. a. The usual revocable
savings trust (grantor is
also trustee)
b. So-called trust account
that is not a legal or valid
trust under state law
5. Sole proprietorship or
single-owner LlC
GIve name and SSN of:
The individual
The actual owner of the account
or, if combined funds, the first
individual on the account 1
The minor 2
The grantor-trustee 1
The actual owner 1
The owner 3
For this type of account:
6. Sole proprletOJShip or
single-owner LlC
7. A valid trust, esta1:e, or
pension trust
8. Corporate or LLC electing
corporate status on Fonn
8832
9. Association, club, rengious,
charitable, educational, or
other tax-exempt organization
10. Partnership or multi-member
LLC
11. A broker or registered
nominee
12. Account with the Department
of Agriculture in the name of
a public entity (such as a
state or local government,
school district, or prison) that
receives agricultural program
payments
GIve name and ElN ot
The owner 3
Legal entity 4
The corporation
The organization
The partnership
The broker or nominee
The public entity
lUst first and circle the name of lhe person whose number you furnish. If
only one person on a joint account has an SSN, thai person's number must
be furnished.
2 Circle the minor's name and furnish the minor's $SN.
3you must show your individual name and you may also enter your business
or "DBA to name on the second name line. You may usa either your SSN or
EIN Of you have one). ff you are a sole proprietor, IRS encourages you to
use your SSN.
. Ust first and circle the name of Ule legal trust, estate, or pension trust. (00
not furnish the TIN of the personal representative or trustee unless the legal
entity itself Is not designated in the account tlt]e.) Also see Special fUJes
regarding partnerships on page 1.
Note. If no name is circled when more than one name is
listed, the number will be conslderad to be that of the first
name listed.
Privacy Act Notice
Section 6109 of the Intemal Revenue Code requires you to provide your correct TIN to persons who must file information returns
with the IRS to report interest, dividends, and certain other Income paid to you, mortgage interest you paid, the acquis~ion or
abandonment of securad property, cancellation of debt, or contributions you made to an IRA, or Archer MSA or HSA. The IRS
uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this
information to the Department of Justice for civil and criminal litigation, and to c~ies, states, the District of Columbia, and U.S.
possessions to carry out their tax laws. We may also disclose this information to other countries under a tax treaty, to federal
and state agencies to enforce federaJ nontax criminal laws, or to federal law enforcement and Intelligence agencies to combat
terrorism.
You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 28% of taxable
interest, dividand, and certain other payments to a payee who does not give a TIN to a payer. Certain penailles may also apply.
ON LEGAL COUNSEL'S LETIERBEARD
OPINION OF COUNSEL TO LESSEE
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
Re: Schedule of Property No. I, dated April 30, 2009, to Master
Equipment LeaselPurchase Agreement, dated as of April 30, 2009
between Bank of America, National Association, as Lessor, and
City of San Bernardino, as Lessee
Ladies and Gentlemen:
As legal counsel to City of San Bernardino ("Lessee '), I have examined (a) an
executed counterpart of a certain Master Equipment LeaseIPurchase Agreement, dated as
of April 30, and Exhibits thereto by and between Bank of America, National Association
("Lessor") and Lessee (the "Agreement"), [and] an executed counterpart of Schedule of
Property No.1, dated April 30, 2009, 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 an executed counterpart of that certain
Acquisition Fund and Account Control Agreement dated April 30, 2009 by and among
Lessee, Lessor and the Custodian named therein (the "Acquisition Fund Agreement")]
(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". [The Lease
and the Acquisition Fund Agreement are referred to herein collectively as the "Lease
Documents"].
Based on the foregoing, I am of the following opinions:
1. Lessee is a public body corporate and politic, duly organized and existing.
under the laws of the State, and [has a substantial amount of the following sovereign
powers: (a) the power to tax, (b) the power of eminent domain, and (c) police power][is a
political subdivision of a state within the meaning of Section 1 03( 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 [Documents) and to perform its
obligations under the Lease [Documents);
#337849v4 (CA Abatement Lease Template) B-2
3. The Lease [Documents] has [have] been duly authorized, approved,
executed and delivered by and on behalf of Lessee and the Lease [Documents are] [is] a
valid and binding obligation of Lessee enforceable in accordance with its [their] terms;
4. The authorization, approval, execution and delivery of the Lease
[Documents] and all other proceedings of Lessee relating to the transactions
contemplated thereby have been performed in accordance with all open meeting laws,
public bidding laws and all other applicable state 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 Documents or the
interest of Lessor or its assigns, as the case may be, in the Equipment thereunder.
[6. The portion of rentals designated as and constituting interest paid by
Lessee and received by Lessor is excluded from Lessor's gross income for federal
income tax purposes under Section 103 of the Code and is exempt from State of
personal income taxes; and such interest is not a specific item for
purposes of the federal individual or corporate alternative minimum taxes.]
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
EXECUTE
Firm
Address
Telephone No.
Signature
DO
NOT
Dated
#337849v4 (CA Abatement Lease Template)
B-3
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: Barbara Pachon, Director
Subject: Resolution of the Mayor and
Common Council of the City of San
Bernardino awarding a bid for lease
purchase financing to First Municipal
Leasing Corporation for the purchase of
twelve (12) refuse trucks.
Dept: Finance
Date: March 9,2009
MICC Meeting Date: March 16, 2009
Synopsis of Previous Council Action:
Resolution 2009-09 1/20/2009
Resolution authorizing the execution of an agreement and issuance of a purchase order to Fairview Ford of
San Bernardino pursuant to section 3.04.010-B3 of the Municipal Code for the purchase of twelve (12)
refuse trucks complete with refuse bodies and LNG conversion to be utilized by the IWM Division; and
authorizing the Purchasing Manager to solicit lease-purchase rate quotes and award a lease-purchase to the
lowest responsible leasing company.
Recommended Motion:
1. Adopt Resolution; and,
2. Authorize the Director of Finance to amend the FY 2008-2009 budget by transferring $200,000 from
527-415-5505; $100,000 from 527-413-5014; $90,000 from 527-413-5015; and $40,000 from 527-411-
5706 to the following accounts; $305,300 to 527-412-5803 and $124,700 to 527-413-5803
eMItPA / tr/A-
Si~ature
Contact Person: Barbara Pachon
Phone: 5242
Supporting data attached:
Ward: All
Amount: FY 08-09 $727,827.53; FY 09-10 $496,981.34
Source: 527-412-5803 and 527-413-5803
FUNDING REQUIREMENTS:
Council Notes:
Finance:
(;evlrJUSj ""- / ~ d- / & -0 c;
Agenda Item No. /&,
3--/fo-oC;
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
SUBJECT
Resolution of the Mayor and Common Council of the City of San Bernardino awarding a bid for
lease purchase financing to First Municipal Leasing Corporation for the purchase of twelve (12)
refuse trucks.
BACKGROUND
At the January 20, 2009 Council Meeting, the Mayor and Common Council approved Resolution
2009-09 authorizing the purchase of twelve (12) refuse trucks from Fairview Ford of San
Bernardino and also authorized the Director of Finance to solicit lease-purchase rate quotes.
The City has pre-approved "Master Lease Agreements" in place with a number of financing
institutions. When lease-purchase financing is necessary, Finance obtains rate quotes from these
pre-approved providers.
Rate Ouote Process
Staff issued a request for rate quote (RFQ LQ 09-03) to the four (4) financing/leasing companies
that have existing Master Lease Agreements in place with the City. The RFQ requested lease-
purchase rate quotes and an amortization schedule with seven (7) year financing with semi-
annual payments for twelve (12) refuse trucks. Resolution 2009-09 approved the purchase of the
twelve (12) refuse trucks at a cost of$3,639,137.64. RFQ LQ 09-03 was sent to four companies.
Four responses were received and are summarized below.
Lease-Purchase Providers
SunTrust Leasing Corporation
First Municipal Leasing Corporation
Comerica Leasing Corporation
Koch Financial Corporation
Rate
4.09%
4.95%
Semi-Annual Pavment
$302,878.19
$311,133.22
Comerica Leasing Corporation and Koch Financial Corporation responded to the RFQ LQ 09-03
with a "No Bid". Both lease-purchase providers stated that their corporations have chosen not to
lend during the current economic situation.
SunTrust Leasing Corporation (Sun Trust) was the apparent bid winner. Finance staff began the
contractual process with SunTrust to finalize a lease-purchase agreement. Unfortunately,
SunTrust was unable to credit approve the City for this lease-purchase and thus withdrew their
bid.
After Sun Trust was unable to credit approve the City for this lease-purchase Finance staff began
the contractual process with First Municipal Leasing Corporation (FMLC). FMLC working with
Capital One Public Funding was able to credit approve the City. However, due to the current
economic situation the lease-purchase agreement requires different terms from the City's past
lease-purchase agreements. Outlined below are some of the differences:
. The lease-purchase agreement is a Firm Term Covenant pledging Integrated Waste
Management revenue for debt payments. Past agreements have been Non-
Appropriation agreements.
. FMLC / Capital One Public Funding used a private Bond Counsel to review the
contract.
. The City may not exercise a purchase option until March 20, 2013.
. The City is required to place a down payment of 20% ($727,827.53) of the purchase
amount into an escrow account on the day escrow is opened. The remaining funds
necessary for the purchase and applicable fees will be provided by the FMLC / Capital
One Public Funding.
The difference in terms for this lease-purchase agreement from past lease-purchase agreements
reflects the unfavorable lending market in today's economy. The terms proposed by FMLC /
Capital One Public Funding that are outlined above are designed to help minimize lending risk in
the down economy.
As part of the agreement of terms for the lease-purchase agreement with FMLC / Capital One
Public Funding they lowered their bid rate from 4.95% to 4.85% and extended their fixed interest
rate to March 20, 2009 to accommodate for Mayor and Common Council approval.
FINANCIAL IMPACT
The down payment required is $727,827.53. $300,000 was included in the FY 2008-2009
budget for debt service payments. The remaining $427,827.53 needed for the 20% down
payment will corne from IWM fund expenditure savings. A budget amendment transferring the
funds is necessary and apart of the recommended motions. This lease-purchase doesn't require
any further payments this fiscal year. For FY 2009-2010 total debt service payments for this
lease-purchase will be $496,981.34. Due to the required 20% down payment, debt service
payments starting in FY 2009-2010 will be lower than staff originally projected.
RECOMMENDATION
I. Adopt Resolution
2. Authorize the Director of Finance to amend the FY 2008-2009 budget by transferring
$200,000 from 527-415-5505; $100,000 from 527-413-5014; $90,000 from 527-413-5015;
and $40,000 from 527-411-5706 to the following accounts; $305,300 to 527-412-5803 and
$124,700 to 527-413-5803
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AWARDING A BID FOR LEASE PURCHASE FINANCING
TO FIRST MUNICIPAL LEASING CORPORATION FOR THE PURCHASE OF
TWELVE (12) REFUSE TRUCKS
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
WHEREAS, the Mayor and Common Council at the January 20,2009 Council Meeting
approved Resolution 2009-09 authorizing the execution of an agreement and purchase in the
amount of $3,639, 13 76.64 for twelve (12) refuse trucks with Fairview Ford
NOW, THEREFORE, BE IT RESOLVE BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOW:
SECTION 1. That First Municipal Leasing Corporation provided the lowest rate quote
for the lease-purchase of twelve (12) refuse trucks. Pursuant to this determination the Director
of Finance is hereby authorized to execute lease purchase documents with First Municipal
Leasing Corporation.
SECTION 2. The authorization to execute the above-mentioned actions is rescinded if
not completed within sixty (60) of the passage of this resolution.
III
III
III
III
III
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III
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AWARDING A BID FOR LEASE PURCHASE FINANCING
TO FIRST MUNICIPAL LEASING CORPORATION FOR THE PURCHASE OF
TWELVE (12) REFUSE TRUCKS
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
day of
, 2009 by the following vote, to wit:
on the
Council Members:
AYES
NAYS
ABSTAIN
ABSENT
ESTRADA
BAXTER
BRINKER
VACANT
KELLEY
JOHNSON
MCCAMMACK
Rachel G. Clark, City Clerk
The foregoing resolution is hereby approved this
day of
2009.
Patrick J. Morris, Mayor
City of San Bernardino
Approved as to Form:
}/f
a es F. Penman, City Attorney
C I T Y 0 F SAN B ERN A R DIN 0 RECEIVED-CITY CLER~
INTEROFFICE MEMORANDUM 2009 APR 20 PH 12: 53
FINANCE DEPARTMENT
TO:
Rachel Clark, City Clerk iJ I !
Barbara Pachon, Director of Finance f!t!cZ:c/vJrv
April 20, 2009
FROM:
DATE:
SUBJECT:
Agenda Items 35 & 39
COPIES:
Mark Weinberg, Interim City Manager
John Wilson, Sf. Assistant City Attorney
After review of contract docwnents related to the lease-purchase financing of refuse trucks and
patrol cars by the City Attorney's Office, it has been determined that the following changes
should be read into the record at the time of consideration of the following items on the Council
Agenda for April 20'\ 2009. The motion to adopt should be that adoption is subject to the
changes announced:
Item #35. Resolution A (master lease al!.reement with B of A): this resolution is deleted.
Item #35. Resolution B (financinl!. of 12 refuse trucks):
On page 3 of the Lease/Purchase Agreement is the definition of "Schedule"
It should read: "Means each separately numbered Schedule of Property substantially in
the form of Schedule of Property No. I hereto together with a Rental Payment Schedule attached
thereto substantially in the form of Exhibit A-I hereto.
Item #39. Resolution (financinl!. of28 Crown Victorias for Police Dept.):
On page 3 of the Lease/Purchase Agreement is the definition of "Schedule"
It should read: "Means each separately numbered Schedule of Property substantially in
the form of Schedule of Property No.2 hereto together with a Rental Payment Schedule attached
thereto substantially in the form of Exhibit A-I hereto. .. ,/ ' (
Entered Into Ree. at MCC/CDC (", ":-'!.~.' (, · 1
by: !iA.th_Arzu~'-J !)l'-~~_, '
Agenda "em No: 3 " --"-~t-----L -..
by: y .A'-C~lv..z. 1:::1. C3:::-<!.AAG
City Cia DC Secretary
City of San Bemardino
Clark Ra
From:
Sent:
To:
Cc:
Subject:
Pachon_Ba
Monday, April 20, 2009 12:59 PM
Sassoon_Lo; Wheeler_Ka
Clark_Ra; Weinberg_Ma; McNeely-Ch; Fischer_Ke
RE: Agenda Item #35 and #39
Yes, at this point we just need these items to be approved to get the financing set up
before the equipment arrives. Having a set master lease agreement in place would have
simplified implementation of any future leases with Bank of America but we will deal with
that down the road if we have that situation.
We did hear back from John Wilson and he gave is Ok so I have distributed a memo to City
Clerk, City Manager's Office and to John Wilson that I hope now puts us allan the same
page so these two items can be approved.
Thanks
Barbara
-----Original Message-----
From: Sassoon Lo
Sent: Monday,-April 20, 2009 12:48 PM
To: Pachon Ba; Wheeler Ka
Cc: Clark Ra; Weinberg-Ma; McNeely Ch; Fischer Ke
Subject: Re: Agenda Item #35 and #39
Is this ok with u barbara?
-----Original Message-----
From: Pachon Ba <Pachon Ba@sbcity.org>
To: Wheeler Ka <Wheeler-Ka@sbcity.org>
CC: Clark Ra <Clark Ra@sbcity.org>; Weinberg Ma <Weinberg Ma@sbcity.org>; Sassoon 10
<Sassoon Lo@sbcity.org>; McNeely Ch <McNeely Ch@sbcity.org>; Fischer Ke
<Fischer=Ke@sbcity.org> ~
Sent: Man Apr 20 12:06:26 2009
Subject: Agenda Item #35 and #39
There are going to be changes to the motions for items #35 and #39 which are the financing
for the refuse trucks and the police vehicles.
The City Attorney Office decided they do not want a Master Lease document approved so
Motion A for item #35 will be tabled. Since we are not going to have a master lease we
need to make a change to the wording on page 3 of the Lease/Purchase Agreement for the
definition of "Schedule".
We are currently waiting on approval from the City Attorney Office on the wording for the
definition of "Schedule". Once we get this approved by the City Attorney Office (Bank of
American has already approved this) we will send you all a memo with the wording change
that has to be read into the motion on the floor by the City Clerk.
Thanks
Barbara
Clark Ra
From:
Sent:
To:
Cc:
Subject:
Pachon_Ba
Menday, April 20, 2009 12:06 PM
Wheeler Ka
Clark_Ra; Weinberg_Ma; Sasseen_Le; McNeelLCh; Fischer_Ke
Agenda Item #35 and #39
There are going to be changes to the motions for items #35 and #39 which are the financing for the
refuse trucks and the police vehicles.
The City Attorney Office decided they do not want a Master Lease document approved so Motion A
for item #35 will be tabled. Since we are not going to have a master lease we need to make a
change to the wording on page 3 of the Lease/Purchase Agreement for the definition of "Schedule".
We are currently waiting on approval from the City Attorney Office on the wording for the definition of
"Schedule". Once we get this approved by the City Attorney Office (Bank of American has already
approved this) we will send you all a memo with the wording change that has to be read into the
motion on the floor by the City Clerk.
Thanks
Barbara
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING A LEASE PURCHASE MASTER
AGREEMENT WITH BANK OF AMERICA FOR THE FURNISHING OF LEASE
PURCHASE FINANCING
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION 1. That Master Equipment Lease I Purchase Agreement with Bank of
America (the "Agreement"), a copy of which is attached hereto and incorporated herein as
Exhibit "A", is approved by the City of San Bernardino for the furnishing of Lease-Purchase
Financing.
SECTION 2. The City shall not be obligated under the Agreement unless and until
actual financing is required for a specific lease purchase
SECTION 3. No transaction shall be initiated under this Master Lease Agreement
without the approval by the Mayor and Common Council as a separate schedule under the
Master Lease Agreement
SECTION 4. The authorization to execute the above-mentioned actions is rescinded if
not completed within sixty (60) of the passage ofthis resolution.
III
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-df: 35
f4s"P
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12 BRINKER
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING A LEASE PURCHASE MASTER
AGREEMENT WITH BANK OF AMERICA FOR THE FURNISHING OF LEASE
PURCHASE FINANCING
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
day of
, 2009 by the following vote, to wit:
on the
AYES
NAYS
ABSTAIN ABSENT
Council Members:
ESTRADA
BAXTER
13
14
15
16
17
18
19
20
21
22
SHORETT
KELLEY
JOHNSON
MCCAMMACK
Rachel G. Clark, City Clerk
The foregoing resolution is hereby approved this
day of
2009.
23 Patrick J. Morris, Mayor
City of San Bernardino
24 Approved as to Form:
James F. Penman, City Attorney
EXHIBIT "A"
MASTER EQIDPMENT LEASE/PuRCHASE AGREEMENT
This Master Equipment LeaselPurchase Agreement (the "Agreement') dated as of April
30, 2009, and entered into between Bank of America, National Association, a national banking
association ("Lessor '), and City of San Bernardino, a body corporate and politic existing under
the laws of the State of California ("Lessee 'j.
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;
NOw, TlIEREFORE, 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.
"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
and Account Control 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.
#765674vl (BAPCC/CA Abatement Lease Template)
leA Abatement)
"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 LeaseIPurchase 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.
"Contract Rate" means the rate identified as such in the applicable Schedule.
"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
soft costs such as freight, installation and taxes paid up front by Lessor and all 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 froth 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 (i) any such soft costs on a cumulative basis shall not exceed a percentage of the
Maximum Equipment Cost approved by Lessor and (ii) 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
"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 Vendor.
"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..
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"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 Agreement
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.
"Material Adverse Change" means (prior to the Utilization Period Expiration, a
downgrade in Lessee's external debt rating of two or more sub grades by either Moody's Investors
Service, Inc., or Standard & Poor's Ratings Group or any equivalent successor credit rating agency,
or any downgrade by either such agency that would cause Lessee's credit rating to be below
investment grade, and (be) thereafter, any change in Lessee's creditworthiness that could have a
material adverse effect on (i) the financial condition or operation of Lessee [and its subsidiaries
taken as a whole], or (ii) Lessee's ability to perform its obligations under this Agreement or any
Lease.
"Maximum Equipment Cost" means the cumulative amount specified in the latest Schedule
executed under this Agreement.
"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 A-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 from whom Lessor arranged Lessee's
acquisition and financing of the Equipment pursuant to the applicable Lease.
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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:
(a) Lessee is a state or a political subdivision thereof 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.
(1) During the Lease Term, the Equipment will be used by Lessee only for the purpose
of performing essential govenunental 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 (I) 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 end, (ii) such other fmancial statements and information as Lessor may
reasonably request, and (iii) its annual budget for the following fiscal year when approved but not
later than 30 days prior to its current fiscal year end. The financial statements described in
subsection (i) shall be accompanied by an unqualified opinion of Lessees's auditor. Credit
information relating tot Lessee may be disseminated among Lessor and any of its affiliates and any
of their respective successors and assign.
(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
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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 payment 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 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 Cost 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.
(j) 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 obligation 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 and to pay 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
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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. Abatement. During any period in which, by reason of material damage or
destruction or taking under the power of eminent domain (or sale to any entity threatening the use
of such power) or material title defect with respect to any Equipment, there is substantial
interference with the use and possession by Lessee of such Equipment, the rent applicable to such
Equipment shall be abated proportionately in whole or in part. Lessee shall immediately notify
Lessor upon the occurrence of any event causing substantial interference with Lessee's use and
possession of any Equipment, and such notice shall be provided prior to the abatement of any rent.
The amount of abatement shall be such that the remaining rental obligation for each rental period
represents fair consideration for the use and possession of the portions of the Equipment that are
not affected by such interference. Such abatement shall commence on the date that Lessee's use
and possession of the affected Equipment is restricted because of such interference and end on the
earlier of (i) the date on which the use and possession thereof are restored to Lessee, or (ii) the date
on which Lessee either (x) replaces the affected Equipment or (y) uses the proceeds of insurance or
condemnation award to pay the applicable Purchase Price therefor. Notwithstanding any such
interference with Lessee's use and possession of a portion of the Equipment, this Lease shall
continue in full force and effect with respect to any remaining Equipment. Lessee waives the
benefits of Civil Code Sections 1932 and any and all other rights to terminate this Lease by virtue
of any interference with the use and possession of any Equipment.
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;
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(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;
(ix) If any Equipment units are motor vehicles, properly competed certificates of
title for such vehicles; 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) ifno Acquisition Fund has
been established, the Equipment must be accepted by Lessee no later than date listed as the
Utilization Period Expiration in the applicable Schedule.
(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 fmancial status of
Lessee and other matters related to Lessee.
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 equal to the Contract Rate plus 5% 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
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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 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. Lessee's obligations to make Rental Payments or pay other amounts hereunder
shall not be abated on account of obsolescence or failure of the Equipment to perform as desired.
Section 4.05. Tax Covenant. 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 thereoffor federal income tax purposes.
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 Period
and not applied to Equipment Costs, shall be applied, in Lessor's discretion based upon the
amount remaining in such Fund, on the next Rental Payment date to either: (i) all or a portion of
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of the next Rental Payment and if such amount is in excess of the next Rental Payment then, any
remaining balance shall be applied to all or a portion of the next succeeding Rental Payments until
fully applied; or (ii) as prepayment to the remaining principal balance owing under the Schedule in
the inverse order of maturity.
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 E.
(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 a condition comparable to that recommended by the manufacturer. Lessor shall
have no responsibility to maintain, repair or make improvements or additions to the Equipment. In
all cases, Lessee agrees to pay any costs necessary for the manufacturer to rectify the Equipment as
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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 interest of Lessor therein.
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, and Lessee shall have no further interest therein. 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 Lesssee'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 investments
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.
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ARTICLE VII
Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges. Lessee
shall keep the Equipment free of all levies, liens, and encumbrances except those created by each
Lease. The parties to this Agreement contemplate that the Equipment will be used for a
governmental or proprietary purpose of Lessee and that the Equipment will. therefore be exempt
from all property taxes. If the use, possession or acquisition of 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
charge& 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 7.02. Insurance. Lessee covenants that it is an authorized self-insured public entity
for purposes of general liability, automobile liability, worker's compensation and property
coverage including but not limited to rental interruption coverage in an amount which shall cover
Rental Payments for no less than 24 months in the event Lessee exercises it rights to abate any
Rental Payments or portions thereof pursuant to Section 3.03 of the Agreement and warrants that
through its program of self-insurance, it has adequate coverage or resources to protect against
liabilities arising out of the terms, conditions and obligations of this Agreement. Lessee shall
furnish to Lessor evidence of such self-insurance coverage through each Lease Term. Lessee shall
not cancel or modify such 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
cancelled or modification.
Section 7.03 Risk of Loss. Subject to Section 3.03, whether or not covered by insurance
of self-insurance, Lessee hereby assumes all risk of loss of, or damage to and liability related to
injury or damage to any person 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.
Whether or not covered by insurance or self-insurance, Lessee hereby agrees to reimburse Lessor
(to the fullest extent permitted by applicable law, but only from legally available funds) for any and
all liabilities, obligations, losses, costs, claims, taxes or damages suffered or incurred by Lessor,
regardless of the cause thereof and all expenses incurred in connection therewith (including
without limitation, counsel fees and expenses, and penalties connected therewith imposed on
interest receive) arising out of or as s result of (a) entering into of this Agreement or any of the
transactions contemplated hereby, (b) the ordering, acquisition, ownership use, operation,
conditions, purchase, delivery, acceptance, rejection, storage or return of any item the Equipment,
(c) 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 (d) the breach of any covenant of Lessee in connection with a Lease or any material
misrepresentation provided by Lessee in connection with a Lease. The provisions ofthis 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 Lease for any reason.
#765674vl (BAPCClCA Abatement Lease Template) II
Section 7.04. 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 a rate
equal to the Contract Rate plus 5% 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
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 Rep]acement 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 Rent 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 8.0],
Lessee shall either (a) complete such replacement, repair, restoration, modification or improvement
#765674vl (BAPCC/CA Abatement Lease Template) 12
improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) payor
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 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
Equipment or the existence, furnishing, functioning or Lessee's use of any item, product or service
provided for in this Agreement Lease 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 by Lessor of the Equipment.
ARTICLE X
Section 10.01. Purchase Option. Lessee shall have the option to purchase all of the
Equipment listed in a Lease, upon giving written notice to Lessor at least 30, but not more than
120, days before the date of purchase, 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 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
#765674vl (BAPCClCA Abatement Lease Template) 13
Lessor of its exercise of the purchase option 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$l.oo to Lessor.
After payment of the applicable Purchase Price, Lessee will own the related Equipment,
and Lessor's right, title and interests in and to such Equipment will be transferred and terminated
in accordance with Section 6.01.
ARTICLE XI
Section 11.01. 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 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 Regnlations D under the Securities Act of 1933, or a qualified institutional buyer
within the meaning of Rule 144A, and l(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 on entity.
(b) Unless to an affiliate controlling, controlled by or under common control with
Lessor, 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 Payment payable under a Lease, it shall thereafter be sufficient
that Lessee receives notices of the name and address of the bank or trust company as trustree 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 Sectopm 149 of the
Code. Lessee shall retain all such notices as a register of all assignees and shall make all payments
#765674v1 (BAPCC/CA Abatement Lease Template) 14
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 F 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:
(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 with Bank of America, N.A. and its
affiliates for borrowing money, lease financing of property or otherwise receiving credit under
which Lessee is an obligor under which there is outstanding, owing or committed an aggregate
amount of a least 10% of Lessee's aggregate current long- and short-term indebtedness, 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;
#765674vl (BAPCC/CA Abatement Lease Template) ]5
(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 Equipment, continuing to
hold Lessee liable, but solely from legally 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;
(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; and
(d) by action pursuant to the California Code of Civil Procedure, or as otherwise
provided by law, obtain the issuance of a writ of mandamus enforcing, for the entire balance of the
remaining Lease Term, the duty of Lessee to appropriate and take all other administrative steps
necessary for the payment of rents, and other amounts due hereunder.
#765674vl (BAPCClCA Abatement Lease Template) 16
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 shan 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 shan 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 shan 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 sening or leasing Equipment and an brokerage,
auctioneer's or attorney's fees), shall be applied as fonows:
(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. An 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.
Section 13.02. Binding Effect. Each Lease shan inure to the benefit of and shall be binding
upon Lessor and Lessee and their respective successors and assigns.
Section 13.03. Severability. In the event any provision of any Lease shan be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
Section 13.04. Amendments. Changes and Modifications. This Agreement and each Lease
may ouly be amended by Lessor and Lessee in writing.
Section 13.05. Execution in Counterparts. This Agreement and each Lease may be
simultaneously executed in several counterparts, each of which shan be an original and all of
which shan constitute but one and the same instrument.
#765674vl (BAPCC/CA Abatement Lease Templale) 17
Section 13.06. Applicable Law. This Agreement and each Lease shall be governed by
and construed in accordance with the laws of the State.
Section 13.07. 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.
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:
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
LESSEE:
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
fB' . ~
~hl e~ P~~.~ 0/
By
Title
(Seal)
Attest:
By
Title
#765674vl (BAPCC/CA Abatement Lease Template) 18
EXHffiITA
SCHEDULE OF PROPERTY No.
Re: Master Equipment LeaseJPurchase Agreement, dated as of
, between Bank of America, National Association, as
Lessor, and , as Lessee
1. Defined Terms. All terms used herein have the meanings ascribed to them in the
above-referenced Master Equipment LeaselPurchase 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 A-I. 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 B 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 Tenn Estate in 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.
#765674vl (BAPCC/CA Abatement Lease Template) A-I
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 $ , of which $ is
for deposit to the Expense Fund and the balance is for deposit to the Acquisition Fund.
7. Acquisition Period. The Acquisition Period applicable to this Schedule shall end on
December 31, 2009.
8. Lease Term. The Lease Term shall consist of _ months, ending on
9. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease,
the Purchase Option Commencement Date is
10. Pre-Payment Premium. On any Rental Payment Date after the first half of the lease
term, Lessee shall have the option to purchase all Equipment under a Schedule upon payment in
full of the Rental Payments then due under such Schedule plus the then applicable Purchase Price,
which will not include a prepayment premium on the unpaid balance as set forth in the applicable
Schedule.
11.
follows:
Registration. Any Equipment that is a motor vehicle is to be registered and titled as
(a) Registered Owner: City of San Bernardino
(b) Lienholder: Bank of America, N. A.
2059 Northlake Parkway
Mail Code GA3-003-Q4-01
Tucker, GA 30084-5399
Lessee shall be responsible for the correct titling of all Equipment leased hereunder. Lessee
will cause the original Certificates of Title to be delivered to Lessor for retention in Lessor's files
throughout the term of the Lease.
#765674v\ (BAPCCICA Abatement Lease Template) A-2
Dated:
LESSOR:
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
LESSEE:
By DO NOT EXECUTE
Title
By
Title
(Seal)
Attest:
By
Title
Counterpmi No. _ of _ manually executed and serially mnnbered counterpmis.
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.
#765674vl (BAPCClCA Abatement Lease Template) A-3
EXHffiIT A-I
RENTAL PAYMENT SCHEDULE
Rental Rental Interest Principal Purchase
Payment Payment
Date Amount Portion Portion Price
Prepayment Premium for purposes of Section 10.Ol(a) is 0%.
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:
By DO NOT EXECUTE
Title
#765674vl (BAPCC/CA Abatement Lease Template) A-I-I
EXHIBIT B
ACCEPTANCE CERTIFICATE
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
Re: Schedule of Property No. , dated
to Master Equipment LeaselPurchase Agreement, dated as of
, between Bank of America, National Association, as
Lessor, and , as Lessee.
Ladies and Gentlemen:
In accordance with the Master Equipment LeaselPurchase Agreement (the "Agreement"),
the undersigned Lessee hereby certifies and represents to, and agrees with Lessor as follows:
1. All of 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:
By DO NOT EXECUTE
Title
(Seal)
#765674v 1 (BAPCC/CA Abatement Lease Template) B-1
EXHIBITC
CERTIFICATE
The undersigned, a duly elected and acting
("Lessee") certifies as follows:
Secretary of
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
Bank of America, National Association and these Agreements are binding and authorized
Agreements of Lessee, enforceable in all respects in accordance with their terms.
Name of Official
Title
Signature
By DO NOT EXECUTE
Dated
Title
(The signer of this Certificate cannot be listed above as authorized to execute the
Agreements.)
#765674vl (BAPCC/CA Abatement Lease Template) C-I
EXHIBIT D
OPINION OF COUNSEL TO LESSEE
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
Re: Schedule of Property No. , dated
to Master Equipment LeaselPurchase Agreement, dated as of
, between Bank of America, National Association, as
Lessor, and , as Lessee
Ladies and Gentlemen:
As legal counsel to ("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 Bank of America, National Association ("Lessor '') and
Lessee (the "Agreement''), [and] an executed counterpart of Schedule of Property No.
, 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 an executed counterpart of that certain Acquisition Fund and Account Control
Agreement dated by and among Lessee, Lessor and the Custodian named therein
(the "Acquisition Fund Agreement")] (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". [The Lease and the Acquisition
Fund Agreement are referred to herein collectively as the "Lease Documents"].
Based on the foregoing, I am of the following opinions:
1. Lessee is a public body corporate and politic, duly organized and existing under the
laws of the State, and [has a substantial amount of the following sovereign powers: (a) the power
to tax, (b) the power of eminent domain, and (c) police power][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 I03(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 [Documents] and to perform its obligations under the Lease
[Documents];
#765674vl (BAPCC/CA Abatement Lease Template) E-l
3. The Lease [Docwnents] has [have] been duly authorized, approved, executed and
delivered by and on behalf of Lessee and the Lease [Documents are] [is] a valid and binding
obligation of Lessee enforceable in accordance with its [their] terms;
4. The authorization, approval, execution and delivery of the Lease [Documents] and
all other proceedings of Lessee relating to the transactions contemplated thereby have been
performed in accordance with all open meeting laws, public bidding laws and all other applicable
state 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 Documents or the interest of Lessor
or its assigns, as the case may be, in the Equipment thereunder.
[6. The portion of rentals designated as and constituting interest paid by Lessee and
received by Lessor is excluded from Lessor's gross income for federal income tax purposes
under Section 103 of the Code and is exempt from State of personal income
taxes; and such interest is not a specific item for purposes of the federal individual or corporate
alternative minimum taxes.]
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
Firm
Address
Telephone No.
Signature DO NOT EXECUTE
Dated
#337849v4 (CA Abatement Lease Template)
E-2
SCHEDULE OF PROPERTY No. 1
Re: Master Equipment Lease/Purchase Agreement, dated as of April
30, 2009, between Bank of America, National Association, as
Lessor, and City of San Bernardino, as Lessee
I. 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.
Twelve (12) Autocar Refuse Trucks, Model WX64
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 A-I. 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 B 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.
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 $3,639,137.64, of which
#765674vl (BAPCClCAAbatement Lease Template) A-I
$0.00 is for deposit to the Expense Fund and the balance is for deposit to the Acquisition
Fund.
7. Acquisition Period. The Acquisition Period applicable to this Schedule
shall end on December 31, 2009.
8.
30,2016.
Lease Term. The Lease Term shall consist of 84 months, ending on April
9. Purchase Option Commencement Date. For purposes of Section 10.01 of
the Lease, the Purchase Option Commencement Date is April 30, 2016.
10. Pre-Payment Premium. On any Rental Payment Date after the first half of
the lease term, Lessee shall have the option to purchase all Equipment under a Schedule
upon payment in full of the Rental Payments then due under such Schedule plus the then
applicable Purchase Price, which will not include a prepayment premium on the unpaid
balance as set forth in the applicable Schedule.
11. Registration. Any Equipment that is a motor vehicle is to be registered and
titled as follows:
(a) Registered Owner: City of San Bernardino
(b) Lienholder: Bank of America, N. A.
2059 Northlake Parkway
Mail Code GA3-003-Q4-01
Tucker, GA 30084-5399
Lessee shall be responsible for the correct titling of all Equipment leased hereunder.
Lessee will cause the original Certificates of Title to be delivered to Lessor for retention in
Lessor's files throughout the term of the Lease.
#765674vl (BAPCC/CA Abatement LcaseTemplate) A-2
Dated: April 30, 2009
LESSOR:
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
By (0.VCle"- ~ Vi'.-l ~
Title \)lC-R .r~S L& ~
#765674vl (BAPCC/CA Abatement Lease Template) A-3
LESSEE:
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
By
Title
(Seal)
Attest:
By
Title
Rental
Payment
Date
4/30/2009
10/30/2009
4/30/2010
10/30/2010
4/30/2011
10/30/2011
4/30/2012
10/30/2012
4/30/2013
10/30/2013
4/30/2014
10/30/2014
4/30/2015
10/30/2015
4/30/2016
TOTAl
EXHIBIT A-I
RENTAL PAYMENT SCHEDULE
Rental
Payment
Amount
Interest
Portion
3.73%
Principal
Portion
297.751.33 67,869.93 229,881.40
297,751.33 63,582.64 234,168.69
297,751.33 59,215.39 238,535.94
297,751.33 54,766.70 242,964.64
297,751.33 50,235.03 247,516.30
297,751.33 45,618.85 252,132.46
297,751.33 40,916.58 256,834.75
297,751.33 36,126.61 261,624.72
297,751.33 31,247.31 266,504.02
297,751.33 26,277.01 271,474.32
297,751.33 21,214.01 276,537.32
297,751.33 16,056.59 281,694.74
297,751.33 10,802.98 286,948.35
297,751.33 5,451.39 292,299.94
4,168,518.69 529,381.05 3,639,137.64
Prepayment Premium for purposes of Section 1O.01(a) is 0%.
Purchase
Price
3,639,137.64
3,409,256.24
3,175,087.54
2,936,551.60
2,693,566.96
2,446,050.66
2,193,918.18
1,937,083.43
1,675,458.71
1,408,954.68
1,137,480.36
860,943.04
579,248.29
292,299.94
(0.00)
For purposes of this Lease, "Taxable Rate, " with respect to the interest component of
Rental Payments, means an annual rate of interest equal to 5.4268%.
LESSEE:
City of San Bernardino
By
Title
#765674vl (BAPCC/CA Abatement Lease Template) A-I-I
CERTIFICATE
The undersigned, a duly elected and acting
San Bernardino ("Lessee ") certifies as follows:
Secretary of City of
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 LeaseIPurchase Agreement dated as of April --' 2009, and the
Schedule(s) thereunder and all future Schedule(s) (the "Agreements ') by and between Lessee
and Bank of America, National Association 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
Title
(The signer of this Certificate cannot be listed above as authorized to execute the
Agreements.)
#765674vl (BAPCClCA Abatement Lease Template) C-l
ACQUISITION FUND AND ACCOUNT CONTROL AGREEMENT
This Acquisition Fund and Account Control Agreement (this "Agreement"),
dated as of April 30, 2009, by and among Bank of America, National Association, a
national banking association (hereinafter referred to as "Lessor"), City of San
Bernardino, a political subdivision of the state of California (hereinafter referred to as
"Lessee") and Deutsche Bank National Trust Company, a national trust company
(hereinafter referred to as "Acquisition Fund Custodian").
Reference is made to that certain Master Equipment Lease/Purchase Agreement dated as
of April 30, 2009, between Lessor and Lessee (hereinafter referred to as the "Lease"), covering
the acquisition and lease of certain Equipment described therein (the "Equipment"). It is a
requirement of the Lease that the Equipment Cost of the Equipment (an amount not to exceed
$4,393,013.00) be deposited into an escrow under terms satisfactory to Lessor, for the purpose of
fully funding the Lease, and providing a mechanism for the application of such amounts to the
purchase of and payment for the Equipment.
The parties agree as follows:
I. Creation of Acquisition Fund.
(a) There is hereby created a special trust fund to be known as the "City of
San Bernardino 2009 Acquisition Fund" (the "Acquisition Fund") to be held in trust by the
Acquisition Fund Custodian for the purposes stated herein, for the benefit of Lessor and Lessee,
to be held, disbursed and returned in accordance with the terms hereof.
(b) The Acquisition Fund Custodian shall invest and reinvest moneys on
deposit in the Acquisition Fund in Qualified Investments in accordance with written instructions
received from Lessee. Lessee shall be solely responsible for ascertaining that all proposed
investments and reinvestments are Qualified Investments and that they comply with federal, state
and local laws, regulations and ordinances governing investment of such funds and for providing
appropriate notice to the Acquisition Fund Custodian for the reinvestment of any maturing
investment. Accordingly, neither the Acquisition Fund Custodian nor Lessor shall be
responsible for any liability, cost, expense, loss or claim of any kind, directly or indirectly arising
out of or related to the investment or reinvestment of all or any portion of the moneys on deposit
in the Acquisition Fund, and Lessee agrees to and does hereby release the Acquisition Fund
Custodian and Lessor from any such liability, cost, expenses, loss or claim. Interest on the
Acquisition Fund shall become part of the Acquisition Fund, and gains and losses on the
investment of the moneys on deposit in the Acquisition Fund shall be borne by the Acquisition
Fund. For purposes of this agreement, "Qualified Investments" means any investments which
meet the requirements of [state law citation). IN TIIE ABSENCE OF WRITTEN INSTRUCTIONS, TIIE
ACQUISITION FUND CUSTODIAN IS HEREBY AUTHORIZED AND DIRECTED TO INVEST AND RE-
INVEST ALL FUNDS ON HAND IN THE GOWMAN SACHS FINANCIAL SQUARE (FSQ) MONEY
MARKET FUNDS. TREASURY OBLIGATIONS, FUND#470 (AAAmJ Aaa).
#765408vl (BAPCC/AfA General)
I
( c) Unless the Acquisition Fund is earlier terminated in accordance with the
provisions of paragraph (d) below, amounts in the Acquisition Fund shall be disbursed by the
Acquisition Fund Custodian in payment of amounts described in Section 2 hereof upon receipt of
written authorization(s) from Lessor, as is more fully described in Section 2 hereof. If the
amounts in the Acquisition Fund are insufficient to pay such amounts, Lessee shall provide any
balance of the funds needed to complete the acquisition of the Equipment. Any moneys
remaining in the Acquisition Fund after December 31, 2009 (the "Acquisition Period") shall be
applied as provided in Section 4 hereof.
(d) The Acquisition Fund shall be terminated at the earliest of (i) the final
distribution of amounts in the Acquisition Fund or (ii) written notice given by Lessor of the
occurrence of a default or termination of the Lease due to non-appropriation.
(e) The Acquisition Fund Custodian may act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine and may assume the
validity and accuracy of any statement or assertion contained in such a writing or instrument.
The Acquisition Fund Custodian shall not be liable in any manner for the sufficiency or
correctness as to form, manner of execution, or validity of any instrument nor as to the identity,
authority, or right of any person executing the same; and its duties hereunder shall be limited to
the receipt of such moneys, instruments or other documents received by it as the Acquisition
Fund Custodian, and for the disposition of the same in accordance herewith.
(f) Unless the Acquisition Fund Custodian is guilty of gross negligence or
willful misconduct with regard to its duties hereunder, Lessee agrees to and does hereby release
and indemnify the Acquisition Fund Custodian and hold it harmless from any and all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or any other expense, fees or
charges of any character or nature, which it may incur or with which it may be threatened by
reason of its acting as Acquisition Fund Custodian under this agreement; and in connection
therewith, does to the extent permitted by law indemnify the Acquisition Fund Custodian against
any and all expenses; including reasonable attorneys' fees and the cost of defending any action,
suit or proceeding or resisting any claim.
(g) If Lessee and Lessor shall be in disagreement about the interpretation of
the Lease, or about the rights and obligations, or the propriety of any action contemplated by the
Acquisition Fund Custodian hereunder, the Acquisition Fund Custodian may, but shall not be
required to, file an appropriate civil action to resolve the disagreement. The Acquisition Fund
Custodian shall be reimbursed by Lessee for all costs, including reasonable attorneys' fees, in
connection with such civil action, and shall be fully protected in suspending all or part of its
activities under the Lease until a final judgment in such action is received.
(h) The Acquisition Fund Custodian may consult with counsel of its own
choice and shall have full and complete authorization and protection with the opinion of such
counsel. The Acquisition Fund Custodian shall otherwise not be liable for any mistakes of fact
or errors of judgment, or for any acts or omissions of any kind unless caused by its willful
misconduct.
#765408vl (BAPCOAFA General)
2
(i) Lessee shall reimburse the Acquisition Fund Custodian for all reasonable
costs and expenses, including those of the Acquisition Fund Custodian's attorneys, agents and
employees incurred for extra-ordinary administration of the Acquisition Fund and the
performance of the Acquisition Fund Custodian's powers and duties hereunder in connection
with any Event of Default under the Lease, or in connection with any dispute between Lessor
and Lessee conceming the Acquisition Fund.
2. ACQuisition ofProoerty.
(a) ACQuisition Contracts. Lessee will arrange for, supervise and provide for,
or cause to be supervised and provided for, the acquisition of the Equipment, with moneys
available in the Acquisition Fund. Lessee represents the estimated costs of the Equipment are
within the funds estimated to be available therefor, and Lessor makes no warranty or
representation with respect thereto. Lessor shall have no liability under any of the acquisition or
construction contracts. Lessee shall obtain all necessary permits and approvals, if any, for the
acquisition, equipping and installation of the Equipment, and the operation and maintenance
thereof.
(b) Authorized ACQuisition Fund Disbursements. Disbursements from the
Acquisition Fund shall be made for the purpose of paying (including the reimbursement to
Lessee for advances from its own funds to accomplish the purposes hereinafter described) the
cost of acquiring the Equipment.
( c) Reauisition Procedure. No disbursement from the Acquisition Fund shall
be made unless and until Lessor has approved such requisition. Prior to disbursement from the
Acquisition Fund there shall be filed with the Acquisition Fund Custodian a requisition for such
payment in the form of Disbursement Request attached hereto as Schedule I, stating each
amount to be paid and the name of the person, firm or corporation to whom payment thereof is
due. Each such requisition shall be signed by an authorized representative of Lessee (an
"Authorized Representative") and by Lessor, and shall be subject to the following:
1. Delivery to Lessor of a certificate of Lessee to the effect that:
(i) an obligation in the stated amount has been incurred by Lessee, and that
the same is a proper charge against the Acquisition Fund for costs relating
to the Equipment identified in the Lease, and has not been paid; (ii) the
Authorized Representative has no notice of any vendor's, mechanic's or
other liens or rights to liens, chattel mortgages, conditional sales contracts
or security interest which should be satisfied or discharged before such
payment is made; (iii) such requisition contains no item representing
payment on account, or any retained percentages which Lessee is, at the
date of such certificate, entitled to retain; and (iv) the Equipment is
insured in accordance with the Lease.
2. Delivery to Lessor of an Acceptance Certificate executed by Lessee,
together with any Purchase Agreement Assignment or bill of sale and
invoice therefor as required by Section 3.04 of the Lease;
#765408v1 (BAPCClAFA General)
3
3. The disbursement shall occur during the Acquisition Period set forth in the
Schedule applicable to such Equipment;
4. There shall exist no Event of Default (nor any event which, with notice or
lapse of time or both, would become an Event of Default); and
5. No material adverse change in Lessee's or any guarantor's financial
condition shall have occurred since the date of the Lease.
3. Deoosit to Acquisition Fund. Upon satisfaction of the conditions specified in
Section 3.04 of the Lease, Lessor will cause the Lease Proceeds to be deposited in the
Acquisition Fund. Lessee agrees to pay any costs with respect to the Equipment in excess of
amounts available therefor in the Acquisition Fund.
4. Excessive Acquisition Fund. Following the final disbursement from the
Acquisition Fund at the end of the Acquisition Period, or termination of the Acquisition Fund as
otherwise provided herein, the Acquisition Fund. Custodian shall transfer any remainder from the
Acquisition Fund to Lessor for application to amounts owed under the Lease in accordance with
Section 4.07 of the Lease.
5. Security Interest. The Acquisition Fund Custodian and Lessee acknowledge and
agree that the Acquisition Fund and all proceeds thereof are being held by Acquisition Fund
Custodian for disbursement or return as set forth herein. Lessee hereby grants to Lessor a first
priority perfected security interest in the Acquisition Fund, and all proceeds thereof, and all
investments made with any amounts in the Acquisition Fund. If the Acquisition Fund, or any
part thereof, is converted to investments as set forth in this agreement, such investments shall be
. made in the name of Acquisition Fund Custodian and the Acquisition Fund Custodian hereby
agrees to hold such investments as bailee for Lessor so that Lessor is deemed to have possession
of such investments for the purpose of perfecting its security interest.
6. Control of Acquisition Account. In order to perfect Lessor's security interest by
means of control in (i) the Acquisition Fund established hereunder, (ii) all securities entitlements,
investment property and other financial assets now or hereafter credited to the Acquisition Fund,
(iii) all of Lessee's rights in respect of the Acquisition Fund, such securities entitlements,
investment property and other financial assets, and (iv) all products, proceeds and revenues of
and from any of the foregoing personal property (collectively, the "Collateral"), Lessor, Lessee
and Acquisition Fund Custodian further agree as follows:
(a) All terms used in this Section 6 which are defined in the Commercial
Code of the state of California ("Commercial Code") but are not otherwise defined herein shall
have the meanings assigned to such terms in the Commercial Code, as in effect on the date of
this Agreement.
(b) Acquisition Fund Custodian will comply with all entitlement orders
originated by Lessor with respect to the Collateral, or any portion of the Collateral, without
further consent by Lessee.
#765408vl (BAPCC/AFA General)
4
(c) Acquisition Fund Custodian hereby represents and warrants (a) that the
records of Acquisition Fund Custodian show that Lessee is the sole owner of the Collateral,
(b) that Acquisition Fund Custodian has not been served with any notice of levy or received any
notice of any security interest in or other claim to the Collateral, or any portion of the Collateral,
other than Lessor's claim pursuant to this Agreement, and (c) that Acquisition Fund Custodian is
not presently obligated to accept any entitlement order from any person with respect to the
Collateral, except for entitlement orders that Acquisition Fund Custodian is obligated to accept
from Lessor under this Agreement and entitlement orders that Acquisition Fund Custodian,
subject to the provisions of paragraph (e) below, is obligated to accept from Lessee.
(d) Without the prior written consent of Lessor, Acquisition Fund Custodian
will not enter into any agreement by which Acquisition Fund Custodian agrees to comply with
any entitlement order of any person other than Lessor or, subject to the provisions of
paragraph (e) below, Lessee, with respect to any portion or all of the Collateral. Acquisition
Fund Custodian shall promptly notifY Lessor if any person requests Acquisition Fund Custodian
to enter into any such agreement or otherwise asserts or seeks to assert a lien, encumbrance or
adverse claim against any portion or all of the Collateral.
(e) Except as otherwise provided in this paragraph (e) and subject to
Section I (b) hereof, Acquisition Fund Custodian may allow Lessee to effect sales, trades,
transfers and exchanges of Collateral within the Acquisition Fund, but will not, without the prior
written consent of Lessor, allow Lessee to withdraw any Collateral from the Acquisition Fund.
Acquisition Fund Custodian acknowledges that Lessor reserves the right, by delivery of written
notice to Acquisition Fund Custodian, to prohibit Lessee from effecting any withdrawals
(including withdrawals of ordinary cash dividends and interest income), sales, trades, transfers or
exchanges of any Collateral held in the Acquisition Fund. Further, Acquisition Fund Custodian
hereby agrees to comply with any and all written instructions delivered by Lessor to Acquisition
Fund Custodian (once it has had a reasonable opportunity to comply therewith) and has no
obligation to, and will not, investigate the reason for any action taken by Lessor, the amount of
any obligations of Lessee to Lessor, the validity of any of Lessor's claims against or agreements
with Lessee, the existence of any defaults under such agreements, or any other matter.
(f) Lessee hereby irrevocably authorizes Acquisition Fund Custodian to
comply with all instructions and entitlement orders delivered by Lessor to Acquisition Fund
Custodian.
(g) Acquisition Fund Custodian will not attempt to assert control, and does
not claim and will not accept any security or other interest in, any part of the Collateral, and
Acquisition Fund Custodian will not exercise, enforce or attempt to enforce any right of setoff
against the Collateral, or otherwise charge or deduct from the Collateral any amount whatsoever.
(h) Acquisition Fund Custodian and Lessee hereby agree that any property
held in the Acquisition Fund shall be treated as a financial asset under such section of the
Commercial Code as corresponds with Section 8-102 of the Uniform Commercial Code,
notwithstanding any contrary provision of any other agreement to which Acquisition Fund
Custodian may be a party.
#765408v I (BAPCCI AF A General)
5
(i) Acquisition Fund Custodian is hereby authorized and instructed, and
hereby agrees, to send to Lessor at its address set forth in Section 7 below, concurrently with the
sending thereof to Lessee, duplicate copies of any and all monthly Acquisition Fund statements
or reports issued or sent to Lessee with respect to the Acquisition Fund.
7. Miscellaneous. Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Lease. This agreement may not be amended except in writing
signed by all parties hereto. This agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original instrument and each shall have the force and effect of
an original and all of which together constitute, and shall be deemed to constitute, one and the
same instrument. Notices hereunder shall be made in writing and shall be deemed to have been
duly given when personally delivered or when deposited in the mail, first class postage prepaid,
or delivered to an express carrier, charges prepaid, or sent by facsimile with electronic
confirmation, addressed to each party at its address below:
If to Lessor:
Bank of America, National Association
555 California Street, 4th Floor
Mail Code: CA5-705-04-01
San Francisco, CA 94104
Attn: Contract Administration
Fax: (415) 765-7373
Ifto Lessee:
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
Attn: Mr. Michael Gomez
Fax: (909) 384-5043
If to Acquisition
Fund Custodian:
Deutsche Bank National Trust Company
101 California Street, 46th Floor
San Francisco, CA 94111
Attn: Raafat Albert Sarkis
Phone: (415) 617-2801
Fax: (415) 617-4270
#765408vl (BAPCC/AFA General)
6
In Witness Whereof, the parties have executed this Acquisition Fund and Account
Control Agreement as of the date first above written.
Bank of America, National Association,
as Lessor
City of San Bernardino,
as Lessee
BYc!t~ ~~
Title: '''<"-0 .v+
By:
Title:
Deutsche Bank National Trust Company
As Acquisition Fund Custodian
By:
Title:
By:
Title:
#765408vl (BAPCC/AFA General)
7
SCHEDULE 1
FORM OF DISBURSEMENT REQUEST
Re: Master Equipment Lease/Purchase Agreement dated as of April-, 2009, by and
between Bank of America, National Association, as Lessor and City of San Bernardino,
as Lessee (the "Lease")
In accordance with the terms of the Acquisition Fund and Account Control Agreement,
dated as of April _, 2009, (the "Acquisition Fund and Account Control Agreement") by and
among Bank of America, National Association ("Lessor"), City of San Bernardino ("Lessee")
and Deutsche Bank National Trust Company (the "Acquisition Fund Custodian"), the
undersigned hereby requests the Acquisition Fund Custodian pay the following persons the
following amounts from the Acquisition Fund created under the Acquisition Fund and Account
Control Agreement (the "Acquisition Fund") for the following purposes.
Payee's Name and Address Invoice Number Dollar Amount
Purpose
The undersigned hereby certifies as follows:
(i) An obligation in the stated amount has been incurred by Lessee, and the same is a
proper charge against the Acquisition Fund for costs relating to the Equipment identified in the
Lease, and has not been paid. Attached hereto is the original invoice with respect to such
obligation.
(ii) The undersigned, as Authorized Representative, has no notice of any vendor's,
mechanic's or other liens or rights to liens, chattel mortgages, conditional sales contracts or
security interest which should be satisfied or discharged before such payment is made.
(iii) This requisition contains no item representing payment on account, or any
retained percentages which Lessee is, at the date hereof, entitled to retain.
(iv) The Equipment is insured in accordance with the Lease.
(v) No Event of Default, and no event which with notice or lapse of time, or both,
would become an Event of Default, under the Lease has occurred and is continuing at the date
hereof.
#765408vl (BAPCClAFA General)
1
(vi) The disbursement shall occur during the Acquisition Period set forth in the
Schedule applicable to such Equipment.
(vii) No material adverse change in Lessee's or any guarantor's financial condition
shall have occurred since the date of the Lease.
Dated:
CITY OF SAN BERNARDINO
By:
Authorized Representative
Disbursement of funds from the Acquisition
Fund in accordance with the foregoing
Disbursement Request hereby is authorized
BANK OF AMERICA, NATIONAL ASSOCIA nON
as Lessor under the Lease
By:
Title: Vice President
#765408v I (BAPCC/ AF A General)
2
Foem 8038-G
Issuer's name
Information Return for Tax-Exempt Governmental Obligations
.... Under Internal Revenue Code section 149(e)
.... See separate Instructions.
Caution: If the issue price is under $100,000, use Form B038-Ge.
If Amended Return, check here ~ D
2 Issuer's employer identification number
95 : 6000772
Room/suite 4 Report number
3
OMS No. 1545-0720
(Rev. November 2000)
Depanmen! oflhe Treasury
Internal Revenue Service
3 Number and street (or P.O. box if mail is not delivered to street address)
300 NORTH 0 STREET
CITY OF SAN BERNARDINO
5 City. town, or post office, state, and ZIP code
SAN BERNARDINO, CA 92418-001
7 Name of issue
LEASE WITH OPTION TO PURCHASE AGREEMENT
6 Date of issue
04/30/09
8 CUSIP number
NONE
9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer Of legal representative
MICHAEL GOMEZ, FINANCIAL ANALYST ( 909 ) 384-5146
e of Issue (check a licable box(es) and enter the issue rice) See instructions and attach schedule
D Education 11
D Health and hospital 12
D Transportation . 13
D Public safety. 14
D Environment (including sewage bonds) 15
D Housing . 16
GZI Utilities 17 3,639,137.64
D Other. Describe ~ 18
If obligations are TANs or RANs, check box ~ D If obligations are BANs, check box ~ D
If obli ations are in the form of a lease or installment sale, check box ... D
Oescri tion of Obli ations. Com lete for the entire issue for which this form is be in
04/30/2016 $ 3,639,137.64 $ N/A 4.000 ears
Uses of Proceeds of Bond Issue (includin underwriters' discount)
22 Proceeds used for accrued interest .
23 Issue price of entire issue (enter amount from line 21, column (b))
24 Proceeds used for bond issuance costs (including underwriters' discount) 24
25 Proceeds used for credit enhancement . 25
26 Proceeds allocated to reasonably required reserve or replacement fund 26
27 Proceeds used to currently refund prior issues 27
28 Proceeds used to advance refund prior issues 28
29 Total (add lines 24 through 28) .
30 Nonrefundin receeds of the issue (subtract line 29 from line 23 and enter amount here) .
Oescri tion of Refunded Bonds (Com lete this art onl for refundin bonds.)
31 Enter the remaining weighted average maturity of the bonds to be currently refunded ~
32 Enter the remaining weighted average maturity of the bonds to be advance refunded ....
33 Enter the last date on which the refunded bonds will be called ....
34 Enter the date(s) the refunded bonds were issued ~
Miscellaneous
Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5)
Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions)
Enter the final maturity date of the guaranteed investment contract.... N/A
Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a 0.00
If this issue is a loan made from the proceeds of another tax-exempt issue, check box.... 0 and enter the name of the
issuer.... and the date of the issue ....
If the issuer has designated the issue under section 265(b)(3)(B)(i)(lII) (small issuer exception), check box
If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box
If the issuer has identified a hed e, check box
35
36a
b
37
b
38
39
40
lb) Issue price
(e) Stated redemption
price at maturity
(e) Yield
(d) Weighted
average maturity
3.73 %
0.00
3,639,137.64
0.00
3,639,137.64
N/A
N/A
N/A
N/A
years
years
0.00
0.00
~1lI
~D
~D
Sign
Here
Under penalties of peoury. I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge
and belief, they are true, correct. and complete
~ Signature of issuer's authorized representative
~ Barbara S. Pachon, Director of FinanCt
,. Type Of print name and tItle
Date
For Paperwork Reduction Act Notice. see page 2 of the Instructions.
@
Cat No. 637735
Form 8038-G (Rev. 11-2000)
Foon W-g
Request for Taxpayer
Identification Number and Certification
Give fonn to the
requester. Do not
send to the IRS.
VAev. Nov~ber2005)
Department of the Treasury
Internal Revenue Service
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(f)
Name (as shown on your income tax return)
Business name, jf different from above
D IndividuaV D Corporation
Check appropriate box: Sole proprietor
Address (number, street, and apt. or suite no.)
City, state, and ZIP COde
List account number(s} here (optiona~
O 0 0 Exempt from backup
Partnership OI:her'" --------....------ withholding
Requester's nama and address (optiona~
~
or
Enter your TIN in the appropriate box. The TIN provided must match the name given on Una 1 to avoid
backup withholding. For individuals, this Is your social security number (SSN). However, for a resident
alien, sole proprietor. or disregarded entity, see the Part I instructions on page 3. For other entities, it is
your employer identifICation number (EIN). If you do not have a number, see How to get a TIN on page 3.
Note. If the account is in more than one name, see the chart on page 4 for guidelines on whose
number to enter.
Certification
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me). and
2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result 01 a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding, and
3. I am a U.S. person Oncluding a U.S. resident alien).
Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not appty.
For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt. contributions to an individual retirement
arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the Certification, but you must
provide your correct TIN. (See the instructions on page 4.)
Sign I SIgnature 01
Here . u.s. per$OO .. Dale ..
Purpose of Form
A person who is required to file an Information return with the
IRS, must obtain your correct taxpayer identification number
(fIN) to report, for example, income paid to you, real estate
transactions, mortgage interest you paid, acquisition or
abandonment of secured property, cancellation of debt, or
contributions you made to an IRA.
U.S, person. Use Form W-9 only if you are a U.S. person
(including a resident alien), to provide your correct TIN to the
person requesting tt (the requester) and, when applicabie, to:
1. Certify that the TIN you are giving is correct (or you are
waiting for a number to be issued).
2. Certify that you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are a
U.S. exempt payee.
In 3 above, if applicable, you are also certifying that as a
U.S. person, your allocable share of any partnership income
from a U.S. trade or business is not subject to the
withholding tax on foreign partners' share of effectively
connected income.
Note. If a requester gives you a fonn other than Form W-9 to
request your TIN, you must use the requester's form if it is
substantially similar to this Form W-9.
For federal tax purposes, you are considered a person if you
are:
. An individual who is a citizen or resident of the United
States,
. A partnership, corporation, company, or association
created or organized in the Untted States or under the laws
of the Untted States, or
. Any estate (other than a foreign estate) or trust. See
Regulations sections 301.7701-6(a) and 7(a) for addttional
infonnation.
Special rules for partnerships. Partnerships that conduct a
trade or business in the United States are generally required
to pay a wtthholding tax on any foreign partners' share of
income from such business. Further, in certain cases where a
Form W-9 has not been received, a partnership is required to
presume that a partner is a foreign person, and pay the
withholding tax. Therefore, if you are a U.S. person that is a
partner in a partnership conducting a trade or business in the
United States, provide Form W-9 to the partnership to
establish your U.S. status and avoid wtthholding on your
share of partnership income.
The person who gives Form W-9 to the partnership for
purposes of establishing tts U.S. status and avoiding
wtthhoiding on tts allocable share of net income from the
partnership conducting a trade or business in the United
States is in the following cases:
. The U.S. owner of a disregarded entity and not the entity,
Form W-9 (Rev. 11~2005)
Cat. No. 10231X
Form W-9 (Rev. 11-2005)
. The U.S. grantor or other owner of a grantor trust and not
the trust, and
. The U.S. trust (other than a grantor trust) and not the
beneflciaries of the trust.
Foreign person. If you are a foreign person, do not use
Form W-9. Instead, use the appropriate Form W-8 (see
Publication 515, Withholding of Tax on Nonresident Aliens
and Foreign Enmies).
Nonresident alien who becomes a resident alien.
Generally, only a nonresident alien individual may use the
terms of a tax treaty to reduce or eliminate U.S. tax on
certain types of income. However, most tax treaties contain a
provision known as a "saving clause." Exceptions specified
in the saving clause may permll an exemption from tax to
continue for certain types of income even after the recipient
has otherwise become a U.S. resident alien for tax purposes.
If you are a U.S. resident alien who is relying on an
exception contained in the saving clause of a tax treaty to
claim an exemption from U.S. tax on certain types of income,
you must attach a statement to Form W-9 that specifles the
following five lIems:
,. The treaty country. Generally, this must be the same
treaty under which you claimed exemption from tax as a
nonresident alien.
2. The treaty article addressing the income.
3. The article number (or location) in the tax treaty that
contains the saving clause and its exceptions.
4. The type and amount of income that qualifies for the
exemption from tax.
5. Suffjcient facts to justify the exemption from tax under
the terms of the treaty article.
Example. Article 20 of the U.S.-China income tax treaty
ailows an exemption from tax for scholarship income
received by a Chinese student temporarily present in the
Unlled States. Under U.S. law, this student will become a
resident alien for tax purposes if his or her stay in the United
States exceeds 5 calendar years. However, paragraph 2 of
the flrst Protocol to the U.S.-China treaty (dated April 30,
1984) allows the provisions of Article 20 to continue to apply
even after the Chinese student becomes a resident alien of
the Unlled States. A Chinese student who qualifies for this
exception (under paragraph 2 of the flrst protoco~ and is
relying on this exception to claim an exemption from tax on
his or her scholarship or fellowship Income would attach to
Form W-9 a statement that includes the information
described above to support that exemption.
If you are a nonresident alien or a foreign entity not subject
to backup withholding, give the requester the appropriate
completed Form W-8.
What is backup withholding? Persons making certain
payments to you must under certain conditions wllhhold and
pay to the IRS 28% of such payments (after December 31,
2002). This is called "backup withholding." Payments that
may be subject to backup withholding include interest,
dividends, broker and barter exchange transactions, rents,
royalties, nonemployee pay, and certain payments from
flshlng boat operators. Real estate transactions are not
subject to backup withholding.
You will not be subject to backup withholding on payments
you receive if you give the requester your correct llN, make
the proper certifications, and report all your taxable interest
and dividends on your tax return.
Payments you receive will be subject to backup
withholding if:
,. You do not furnish your TIN to the requester,
2. You do not certify your TIN when required (see the Part
II instructions on page 4 for details),
Page 2
3. The IRS tells the requester that you furnished an
incorrect TIN,
4. The IRS tells you that you are subject to backup
wllhholding because you did not report all your interest and
dividends on your tax return (for reportable interest and
dividends only), or
5. You do not certify to the requester that you are not
subject to backup withhoidlng under 4 above (for reportable
interest and dividend accounts opened after 1983 only).
Certain payees and payments are exempt from backup
wllhholdlng. See the instructions below and the separate
Instructions for the Requester of Form W-9.
Also see Special rules regarding partnerships on page 1.
Penalties
Failure to furnish TiN. If you fail to furnish your correct TIN
to a requester, you are subject to a penalty of $50 for each
such failure unless your failure is due to reasonable cause
and not to willful neglect.
Civil penalty for false infonnation with respect to
withholding. If you make a false statement with no
reasonable basis that results in no backup withholding, you
are subject to a $500 penalty.
Criminal penalty for falsifying information. Willfully
falsifying certifications or affirmations may subject you to
criminal penalties including fines and/or imprisonment.
Misuse of TINs. If the requester discloses or uses TINs in
violation of federal law, the requester may be subject to civil
and criminal penalties.
Specific Instructions
Name
If you are an individual, you must generally enter the name
shown on your income tax return. However, if you have
changed your last name, for Instance, due to marriage
without informing the Sociai Security Administration of the
name change, enter your first name, the last name shown on
your social security card, and your new last name.
If the account is In joint names, list flrst, and then circlll,
the name of the person or entity whose number you entered
In Part I of the form.
Sole proprietor. Enter your individual name as shown on
your income tax return on the "Name" line. You may enter
your business, trade, or "doing business as (DBA)" name on
the "Business name" line.
Umited liability company (LLC). If you are a single-member
LLC (including a foreign LLC with a domestic owner) that is
disregarded as an entity separate from its owner under
Treasury regulations section 301.7701-3, enter the owner's
name on the "Name" line. Enter the LLC's name on the
"Business name" line. Check the appropriate box for your
flling status (sole proprietor, corporation, etc.), then check
the box for "Other" and enter "LLC" in the space provided.
Other entities. Enter your business name as shown on
required federal tax documents on the "Name" line. This
name should match the name shown on the charter or other
legal document creating the entity. You may enter any
business, trade, or DBA name on the "Business name" line.
Note. You are requested to check the appropriate box for
your status (individual/sole proprietor, corporation, etc.).
Exempt From Backup Withholding
If you are exempt, enter your name as described above and
check the appropriate box for your status, then check the
"Exempt from backup withholding" box in the line following
the business name, sign and date the form.
Form W-9 (Rev. 11-2005)
Page 3
Generally, individuals Oncluding sole proprietors) are not
exempt from backup w~hholding. Corporations are exempt
from backup withholding for certain payments, such as
interest and dividends.
Note. If you are exempt from backup w~hholding, you
should still complete this fonn to avoid possible erroneous
backup withholding.
Exempt payees. Backup w~hholding is not required on any
payments made to the following payees;
1. An organization exempt from tax under section 501 (aJ,
any IRA, or a custodial account under section 403(b)(7) if the
account satisfies the requirements of section 401 (1)(2),
2. The Un~ed States or any of ~s agencies or
instrumentalities,
3. A state, the District of Columbia, a possession of the
United States, or any of their political subdivisions or
instrumentalities,
4. A foreign government or any of its political subdivisions,
agencies, or instrumental~ies, or
5. An international organization or any of its agencies or
instrumentalities.
Other payees that may be exempt from backup
withholding include:
6. A corporation,
7. A foreign central bank of issue,
8. A dealer in securities or commodities required to register
in the United Slates, the District of Columbia, or a
possession of the United States,
9. A futures commission merchant registered with the
Commod~ Futures Trading Commission,
10. A real estate investment trust,
11. An ent~ registered at all times during the tax year
under the Investment Company Act of 1940,
12. A common trust fund operated by a bank under
section 584(a),
13. A financial institution,
14. A middleman known in the investment community as a
nominee or custodian, or
15. A trust exempt from tax under section 684 or
described in section 4947.
The chart below shows types of payments that may be
exempt from backup withholding. The chart applies to the
exempt recipients listed above, 1 through 15.
IF the payment Is for, . .
THEN the payment is exempt
for.. .
Interest and dividend payments
All exempt recipients except
for 9
Broker transactions
Exempt recipients 1 through 13.
Also, a person registered under
the Investment Advisers Act of
1940 who regularly acts as a
broker
Barter exchange transactions
and patronage dividends
Exempt recipients 1 through 5
Generally, exempt recipients
1 through 72
Payments over $600 required
to be reported and direct
sales over $5,000 '
'See Fonn 1099-MISC, Miscellaneous Income, and its instructions.
,
However, the following paymen1s made to a corporation (including gross
proceeds paid to an attorney l.IIlder section 6045(1), even if the attorney is a
corporation} and reportable on Foon 1Q99-MISC are not exempt from
backup withholding: medical and health care payments, attorneys' fees; and
payments for services paid by a federal executive agency.
Part I. Taxpayer Identification
Number (TIN)
Enter your TIN in the appropriate box. .If. you are a resident
alien and you do not have and are not eligible to Qet an SSN,
your TIN is your IRS individual taxpayer identification number
(ITIN). Enter it in the social security number box. If you do
not have an rTI N, see How to get a TIN below.
If you are a sole proprietor and you have an EIN, you may
enter e~her your SSN or E1N. However, the IRS prefers that
you use your SSN.
If you are a singlEHlwner LLC that is disregarded as an
ent~ separate from its owner (see Umited liability company
(LLC) on page 2), enter your SSN (or EiN, if you have one). If
the LLC is a corporation, partnership, etc., enter the ent~'s
EIN.
Note. See the chart on page 4 for further clarification of
name and TIN combinations.
How to get a TIN. If you do not have a TIN, apply for one
immediately. To apply for an SSN, get Fonn SS-5,
Application for a Social Security Card, from your local Social
Security Administration office or get this fonn online at
www.socialsecurity.gov. You may also get this fonn by
calling 1-S00-772-1213. Use Fonn W-7, Application for IRS
Individual Taxpayer Identification Number, to apply for an
rTIN, or Form SS-4, Application for Employer Identification
Number, to apply for an EIN. You can apply for an EIN online
by accessing the IRS website at www.irs.govlbusinesses and
clicking on Employer ID Numbers under Related Topics. You
can get Fonns W-7 and SS-4 from the IRS by vis~ing
www.lrs.govorby calling 1-600-TAX-FORM
(1-S00-S29-3676).
If you are asked to complete Form W-9 but do not have a
TIN, write "Applied For" in the space for the TIN, sign and
date the form, and give ~ to the requester. For interest and
dividend payments, and certain payments made with respect
to readily tradable instruments, generally you will have 60
days to get a TIN and give ~ to the requester before you are
subject to backUp w~hholding on payments. The 60-day rule
does not apply to other types of payments. You will be
subject to backup w~hholding on all such payments until you
provide your TIN to the requester.
Note. Writing "Applied For" means that you have already
applied for a TIN or that you intend to apply for one soon.
Caution: A disregarded domestic entity that has a foreign
owner must use the appropriate Form W-S.
Form W-9 (Rev. 11-2(05)
Page 4
Part II. Certification
To establish to the withholding agent that you are a U.S.
person, or resident alien, sign Form W-9. You may be
requested to sign by the wrthholding agent even if rtems I, 4,
and 5 below indicate otherwise.
For a joint account, only the person whose TIN is shown in
Part I should sign (when required). Exempt recipients, see
Exempt From Backup Withholding on page 2.
Signature requirements. Compiete the certification as
indicated in 1 through 5 below.
1. Interest, dividend, and barter exchange accounts
opened before 1984 and broker accounts considered
active during 1983. You must give your correct TIN, but you
do not have to sign the certification.
2. Interest, dividend, broker, and barter exchange
accounts opened after 1983 and broker accounts
considered inactive during 1983. You must sign the
certification or backup wrthholding will apply. If you are
subject to backup wrthholding and you are merely providing
your correct TIN to the requester, you must cross out item 2
in the certification before signing the form.
3. Real estate transactions. You must sign the
certification. You may cross out Item 2 of the certification.
4, Other payments. You must give your correct TIN, but
you do not have to sign the certification unless you have
been notified that you have previously given an incorrect TiN.
"Other payments' Include payments made in the course of
the requester's trade or business for rents, royarties, goods
(other than bills for merchandise), medical and hearth care
services Qncluding payments to corporations), payments to a
nonemployee for services, payments to certain fishing boat
crew members and fishermen, and gross proceeds paid to
attorneys Qncluding payments to corporations).
5. Mortgage interest paid by you, acquisition or
abandonment of secured property, cancellation of debt,
qualllled tuition program payments (under section 529),
IRA, Coverdell ESA, Archer MSA or HSA contributions or
distributions, and pension distributions. You must give
your correct TIN, but you do not have to sign the
certification.
What Name and Number To Give the
Requester
For this type of account
1. Individual
2. Two or more indivktuals Ooint
account)
3. Custodian account of a minor
(Unrtorm Grtt to Minors Act)
4_ a. The usual revocable
savings trust (grantor is
also trustee)
b. So-called trust account
that is not a legal or valid
trust under state law
5. Sole proprietorship or
single-ownerLLC
For this type of account:
6. Sole proprietorship or
single-owner LLC
7. A valid trust, estate, or
pension trust
B. Corporate or LLC eJecting
corporate status on Fonn
8832
9. Associatoo, club, reDgious,
charitable, educattonal, or
other tax-exempt organization
10. Partnership or multi-member
LLC
11. A broker or registered
nominee
12. Account with the Department
of Agriculture in the name of
a public entity (such as a
state or Jocal government,
school district, or prison) that
receives agricultural program
payments
GIve name and SSN of:
The individual
The actual owner of the account
OJ, if combined funds, the first
individual on the account 1
The minor 2
The grantor-trustee 1
The actual owner I
The owner J
GIve name and EIN ot.
The owner J
Legal entity 4
The corporation
The organization
The partnership
The broker or nominee
The public entity
'Ust first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must
be furnished.
~Circ)e the minor's name and fimish the minor's SSN.
3you must show your individual name and you may also enter your business
or ~DBA~ name on the second name line. You may usa either your SSN or
EIN (If you ha'Ve one). If you are a sole proplietor, IRS encourages you to
use your SSN,
4 Ust first and circle the name of the legal trust, estate, or pension trust. (Do
not furnish the TIN of the personal representative or trustee unless the legal
entity Itself is not designated in the account title.) Also see Special rules
regarding pattnerships on page 1.
Note. If no name is circled when more than one name is
listed, the number will be considered to be that of the first
name listed.
Privacy Act Notice
Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons who must file information returns
wrth the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisrtion or
abandonment of secured property, cancellation of debt, or contributions you made to an IRA, or Archer MSA or HSA. The IRS
uses the numbers for identification purposes and to heip verify the accuracy of your tax return. The IRS may aiso provide this
information to the Department of Justice for civil and criminal iitigation, and to crties, states, the District of Columbia, and U.S.
possessions to carry out their tax laws_ We may also disclose this information to other countries under a tax treaty, to federal
and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and Intelligence agencies to combat
terrorism.
You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 28% of taxable
interest, dividend, and certain other payments to a payee who does not give a TIN to a payer. Certain penarties may also apply.
ON LEGAL COUNSEL'S LETTERBEARD
OPINION OF COUNSEL TO LESSEE
Bank of America, National Association
555 California Street, 4th Floor
San Francisco, California 94104
Re: Schedule of Property No. I, dated April 30, 2009, to Master
Equipment Lease/Purchase Agreement, dated as of April 30, 2009
between Bank of America, National Association, as Lessor, and
City of San Bernardino, as Lessee
Ladies and Gentlemen:
As legal counsel to City of San Bernardino ("Lessee '), I have examined (a) an
executed counterpart of a certain Master Equipment LeaseIPurchase Agreement, dated as
of April 30, and Exhibits thereto by and between Bank of America, National Association
("Lessor') and Lessee (the "Agreement'), [and] an executed counterpart of Schedule of
Property No.1, dated April 30, 2009, 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 an executed counterpart of that certain
Acquisition Fund and Account Control Agreement dated April 30, 2009 by and among
Lessee, Lessor and the Custodian named therein (the "Acquisition Fund Agreement")]
(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". [The Lease
and the Acquisition Fund Agreement are referred to herein collectively as the "Lease
Documents"].
Based on the foregoing, I am ofthe following opinions:
1. Lessee is a public body corporate and politic, duly organized and existing.
under the laws of the State, and [has a substantial amount of the following sovereign
powers: (a) the power to tax, (b) the power of eminent domain, and (c) police power][is a
political subdivision of a state within the meaning of Section I 03( 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 [Documents] and to perform its
obligations under the Lease [Documents];
#337849v4 (CA Abatement Lease Template) B-2
3. The Lease [Documents] has [have] been duly authorized, approved,
executed and delivered by and on behalf of Lessee and the Lease [Documents are] [is] a
valid and binding obligation of Lessee enforceable in accordance with its [their] terms;
4. The authorization, approval, execution and delivery of the Lease
[Documents] and all other proceedings of Lessee relating to the transactions
contemplated thereby have been performed in accordance with all open meeting laws,
public bidding laws and all other applicable state 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 Documents or the
interest of Lessor or its assigns, as the case may be, in the Equipment thereunder.
[6. The portion of rentals designated as and constituting interest paid by
Lessee and received by Lessor is excluded from Lessor's gross income for federal
income tax purposes under Section 103 of the Code and is exempt from State of
personal income taxes; and such interest is not a specific item for
purposes of the federal individual or corporate alternative minimum taxes.)
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
EXECUTE
Firm
Address
Telephone No.
Signature
DO
NOT
Dated
#337849v4 (CA Abatement Lease Template)
B-3
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AWARDING A BID FOR LEASE PURCHASE FINANCING
TO FIRST MUNICIPAL LEASING CORPORATION FOR THE PURCHASE OF
TWELVE (12) REFUSE TRUCKS
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
WHEREAS, the Mayor and Common Council at the January 20,2009 Council Meeting
approved Resolution 2009-09 authorizing the execution of an agreement and purchase in the
amount of$3,639,1376.64 for twelve (12) refuse trucks with Fairview Ford
NOW, THEREFORE, BE IT RESOLVE BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOW:
SECTION 1. That First Municipal Leasing Corporation provided the lowest rate quote
for the lease-purchase of twelve (12) refuse trucks. Pursuant to this determination the Director
of Finance is hereby authorized to execute lease purchase documents with First Municipal
Leasing Corporation.
SECTION 2. The authorization to execute the above-mentioned actions is rescinded if
not completed within sixty (60) of the passage ofthis resolution.
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9 ESTRADA
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AWARDING A BID FOR LEASE PURCHASE FINANCING
TO FIRST MUNICIPAL LEASING CORPORATION FOR THE PURCHASE OF
TWELVE (12) REFUSE TRUCKS
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
, 2009 by the following vote, to wit:
Council Members:
AYES
NAYS
ABSTAIN
ABSENT
10 BAXTER
BRINKER
VACANT
KELLEY
JOHNSON
MCCAMMACK
Rachel G. Clark, City Clerk
The foregoing resolution is hereby approved this
day of
2009.
Patrick J. Morris, Mayor
City of San Bernardino
Approved as to Form:
i-,f.
es F. Penman, City Attorney
LEASE WITH OPTION TO PURCHASE AGREEMENT
THIS LEASE WITH OPTION TO PURCHASE AGREEMENT (this Lease) dated as of
this 20lh day of March, 2009 , is made and entered into by and between First Municipal Leasing
Corporation, a corporation duly organized and existing under the laws of the state of Colorado as lessor
(Lessor), whose principal business address is as shown on the execution page hereof; and the City of Sau
Bernardino, a political subdivision of the state of California as lessee (Lessee), whose address is as
shown on the execution page hereof.
ARTICLE I: DEFINITIONS AND EXHIBITS
Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this
Section shall, for all purposes of this Lease, have the meanings herein specified.
Contractor: Each of the manufacturers or vendors from whom Lessee has ordered or will
order or with whom Lessee has contracted or will contract for the manufacture, delivery and/or
installation of an Equipment Group or any portion thereof.
Equipment Group: An item or items of personal property designated from time to time
by Lessee which are described in an Equipment Schedule, and which are being or will be leased with
option to purchase by Lessee pursuant to this Lease.
Equipment Schedule: A schedule consisting of the separate but like numbered pages in
the form provided in Exhibits A and B which have been completed with respect to an Equipment Group
and executed by Lessor and Lessee as indicated therein.
Fiscal Year: The twelve month fiscal period of Lessee which commences on Julv 1st
in every year and ends on the following June 30lh .
Interest: The portion of any Rental Payment designated as and comprising interest as
shown in any Equipment Schedule.
Lease: With respect to each Equipment Group, this Lease with Option to Purchase
Agreement and the Equipment Schedule in which such Equipment Group is described, which shall
constitute a separate contract relating to such Equipment Group.
Net Proceeds: Any insurance proceeds or condemnation award, paid with respect to any
Equipment Group, remaining after payment therefrom of all expenses incurred in the collection thereof.
Payment Date: The date upon which any Rental Payment is due and payable as provided
in any Equipment Schedule.
Permitted Encumbrances: As of any particular time: (i) liens for taxes and assessments
not then delinquent, (ii) this Lease and amendments hereto, and (iii) Lessor's interest in any Equipment
Group.
Schedule.
Principal: The portion of any Rental Payment designated as principal in any Equipment
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DW-LSE-A-061898
Purchase Option Price: With respect to any Equipment Group, as of the Payment Dates
specified in the Equipment Schedule relating thereto, the amount so designated and set forth opposite
each such date in such Equipment Schedule.
Rental Pavment: With respect to any Equipment Group, the payment due from Lessee to
Lessor on each Payment Date during the Term of this Lease, as shown in the Equipment Schedule relating
thereto.
Revenues: all revenues of the Refuse Fund of the Lessee derived from rates, fees, and
charges.
Net Revenues means Revenues less Operation and Maintenance Costs.
Overation and Maintenance Costs means all expenses and costs of management,
operation, and maintenance of Lessee's solid waste disposal enterprise and all incidental costs, fees and
expenses properly chargeable to that enterprise (but excluding debt service payments and depreciation,
replacement and obsolescence charges or reserves therefor and amortization of intangibles or other
bookkeeping entries of a similar nature).
Revenue Obligation means an obligation payable solely from the Revenues or secured by
a pledge of the Revenues.
Svecifications: The bid specifications andlor purchase order pursuant to which Lessee
has ordered any Equipment Group from a Contractor.
State: The State of California.
State and Federal Law or Laws: The Constitution and any law of the State and any
charter, ordinance, rule or regulation of any agency or political subdivision of the State; and any law of
the United States, and any rule or regulation of any federal agency.
Term of this Lease or Lease Term: With respect to any Equipment Group, the period
during which this Lease is in effect as specified in Section 4.1.
Section 1.2. Exhibits. The following Exhibits are attached to and by reference made a
part ofthis Lease:
Exhibit A: A form of schedule describing an Equipment Group being leased by Lessee
pursuant to this Lease, and setting forth the date and amount of each Rental Payment coming due during
the Lease Term with respect to the Equipment Group, the amount of such Rental Payments comprising
Principal and Interest, and the price at which Lessee may exercise its option to purchase Lessor's interest
in such Equipment Group in accordance with Article X. The serial or other identifYing numbers relating
to the Equipment Group, if any, and the due date of each Rental Payment shall be inserted when
available.
Exhibit B: A form of Certificate of Acceptance of Lessee indicating that the Equipment
Group described therein has been delivered and installed in accordance with the Specifications, and has
been accepted by Lessee, the date on which Rental Payments shown in the page of Exhibit A relating
thereto shall commence, and that certain other requirements have been met by Lessee.
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation I City of San Bernardino
Page 2 of22
Exhibit C: A form of opinion of counsel to Lessee as to the organization, nature and
powers of Lessee; tbe validity, execution and delivery of this Lease and various related documents; the
absence of litigation; and related matters.
ARTICLE II: REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. Representations. Warranties and Covenants of Lessee. Lessee represents
and warrants to and covenants with Lessor with respect to this Lease and each Equipment Group, as
follows:
(a) Lessee is a political subdivision of the State, duly organized and existing under the
Constitution and laws of the State, and is authorized under the Constitution and laws of the State to enter
into this Lease and the transactions contemplated hereby, and to perform all of its obligations hereunder.
(b) The execution and delivery of this Lease (and all documentation relating to any
Equipment Group) by the officer of Lessee executing it has been duly authorized by a duly adopted
resolution of Lessee's governing body, or by other appropriate official action, and such action has
complied and/or will comply with all public bidding and other State and Federal Laws applicable to this
Lease and the acquisition and financing of the Equipment Group( s) by Lessee.
(c) Lessee will use the Equipment Group(s) during the Lease Term relating thereto only
to perform essential governmental functions.
(d) Lessee will take no action that would cause the Interest portion of the Rental
Payments to become includible in gross income of the recipient for federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the Code) and Treasury Regulations promulgated
thereunder (the Regulations), and Lessee will take and will cause its officers, employees and agents to
take all affirmative actions legally within its power necessary to ensure that the Interest portion of the
Rental Payments does not become includible in gross income of the recipient for federal income tax
purposes under the Code and Regulations.
(e) Lessee will submit to the Secretary of the Treasury information reporting statements
and other information relating to this Lease and each Equipment Group at the times and in the forms
required by the Code and the Regulations.
(I) Upon delivery and installation of any Equipment Group, Lessee will provide to
Lessor a completed and executed copy of a Certificate of Acceptance relating thereto in the form attached
hereto as Exhibit B, and an opinion of its legal counsel in the form attached hereto as Exhibit C, provided
that if Lessor and Lessee agree to use the Alternative Procedure set forth in Section 3.4 hereof such legal
opinion shall be provided to Lessor upon execution of the Escrow Agreement.
(g) Lessee has not incurred any other Revenue Obligations that are currently
outstanding.
Section 2.2. Representations and Warranties of Lessor. Lessor represents and warrants
to Lessee as follows:
(a) Lessor is a corporation duly organized, existing and in good standing under and by
virtue of the laws of the State of Colorado, and if necessary is duly qualified, in good standing as a
foreign corporation and authorized to transact business in the State; has power to enter into this Lease; is
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 3 of22
possessed of full power to own and hold real and personal property, and to lease the same; and has duly
authorized the execution and delivery of this Lease.
(b) Neither the execution and delivery of this Lease, nor the fulfillment of or compliance
with the terms and conditions thereof, nor the consummation of the transactions contemplated thereby,
conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any
agreement or instrument to which Lessor is now a party or by which Lessor is bound, constitutes a default
under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of Lessor, or upon any Equipment Group except Permitted
Encumbrances.
ARTICLE III: LEASE OF EQUIPMENT GROUP
Section 3.1. Acquisition of Equipment Group. Lessee shall advise Lessor of its desire to
lease an Equipment Group and of the desired lease terms. Upon agreement by Lessor and Lessee as to the
lease of the Equipment Group and such terms, Lessee shall order the Equipment Group from the
appropriate Contractor or Contractors and notifY Lessor in writing of the Equipment Group cost and the
estimated delivery period, whereupon Lessor shall furnish to Lessee a proposed schedule in the form
attached Exhibit A relating to the Equipment Group completed insofar as possible. Nothing herein shall
obligate Lessor to lease any Equipment Group to Lessee until Lessor shall have so concurred in writing to
the lease of any Equipment Group.
Section 3.2. Equipment Group Delivery: Documentation. Upon delivery of any
Equipment Group, Lessee shall inspect such Equipment Group, and if such Equipment Group meets
Lessee's Specifications, Lessee shall within three (3) business days from the date of delivery of the
Equipment Group provide to Lessor a completed and executed copy of a Certificate of Acceptance
relating thereto in the form attached hereto as Exhibit B, and a completed and executed copy of the
related Exhibit A. Simultaneously with the delivery, Lessor and Lessee shall take all actions necessary
to vest legal title to the Equipment Group in Lessee, and to perfect a security interest therein in favor of
Lessor or a person, firm or corporation designated by it.
Section 3.3. Lease: Eniovment: Inspection. Lessor hereby leases each Equipment Group
made subject to this Lease to Lessee, and Lessee hereby leases such Equipment Group from Lessor, upon
the terms and conditions set forth in this Lease. Lessor hereby covenants to provide Lessee during the
Term of this Lease with the quiet use and enjoyment of the Equipment Group, and Lessee shall during the
Term of this Lease peaceably and quietly have and hold and enjoy the Equipment Group, without suit,
trouble or hindrance from Lessor, except as expressly set forth in this Lease. Lessor will, at the request of
Lessee and at Lessee's cost, join in any legal action in which Lessee asserts its right to such possession
and enjoyment to the extent Lessor lawfully may do so. Lessee agrees that Lessor shall have the right at
all reasonable times to examine and inspect the Equipment Group. Lessee further agrees that Lessor shall
have such rights of access to the Equipment Group as may be reasonably necessary to cause the proper
maintenance of the Equipment Group in the event of failure by Lessee to perform its obligations
hereunder.
Section 3.4. Alternative Procedure: Escrow Agreement. Notwithstanding the provisions
of Sections 3.1 and 3.2, if, upon agreement by Lessor and Lessee as to any Equipment Group to be
acquired and leased by Lessee under this Lease, Lessor and Lessee enter into an escrow agreement
establishing a fund from which the Equipment Group cost is to be paid, and an amount sufficient, together
with anticipated interest earnings thereon, to pay such cost is deposited therein by Lessor: (a) Lessor and
Lessee shall immediately complete and execute an Exhibit A relating to the Equipment Group; and (b) the
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bemardino
Page 4 of22
Rental Payments relating to the Equipment Group shall be due and payable commencing upon execution
of and as provided in such Exhibit A.
ARTICLE IV: TERM OF LEASE
Section 4.1. Lease Term. This Lease shall be in effect for a Term commencing upon its
date of execution and ending when the Term applicable to all Equipment Groups subject hereto has ended
as provided in Section 4.5. This Lease shall be in effect with respect to each Equipment Group for a
Term commencing upon the date of execution of the Equipment Schedule relating thereto and ending as
provided in Section 4.5.
Section 4.2. Reserved.
Section 4.3. Reserved
Section 4.4. Reserved
Section 4.5. Termination of Lease Term. The Term of this Lease with respect to any
Equipment Group will terminate upon the occurrence of the first of the following events: (a) the exercise
by Lessee of its option to purchase Lessor's interest in the Equipment Group pursuant to Article X; (b) a
default by Lessee and Lessor's election to terminate this Lease pursuant to Article XII; or (c) the payment
by Lessee of all Rental Payments and all other amounts authorized or required to be paid by Lessee
hereunder with respect to the Equipment Group.
ARTICLE V: RENTAL PAYMENTS
Section 5.1. Rental Pavments. Lessee agrees to pay Rental Payments with respect to
each Equipment Group to Lessor, or to such other person(s) or entity(ies) to which Lessor has assigned
such Rental Payments as specified in Article XI, at such place as Lessor or such assignee may from time
to time designate by written notice to Lessee. Lessee shall pay the Rental Payments in lawful money of
the United States of America. A portion of each Rental Payment is paid as and represents the payment of
Interest. Exhibit A of each Equipment Schedule sets forth the Interest component of each Rental
Payment.
Section 5.2. Liability of Lessee Limited to Revenues Received. Notwithstanding any
other provisions contained herein, the Lessee shall not be required to advance any moneys derived from
any source of income other than the Revenues for the payment of the Rental Payments or for the
performance of any agreements or covenants required to be performed by it contained herein. The Lessee
may, however, advance moneys for any such purpose so long as such moneys are derived from a source
legally available for such purpose and may be legally used by the Lessee for such purpose.
Section 5.3. Covenant to Budget and Appropriate from Revenues. Lessee represents and
warrants that (a) Lessee will do all things lawfully within its power (including, without limitation,
prescribing, revising and collecting sufficient rates and fees) to obtain sufficient Revenues for the
payment of Rental Payments when due and (b) Lessee acknowledges that Lessor has relied upon these
representations as an inducement to enter into this Lease. Lessee covenants to take such action as may be
necessary to include all Rental Payments due under the Lease in each of its budgets during the Lease
Term and to make the necessary annual appropriations for all such Rental Payments. The covenants on
the part of Lessee in shall be deemed to be and shall be construed to be ministerial duties imposed by law
and it shall be the duty of each and every public official of Lessee to take such action and do such things
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 5 of22
as are required by law in the performance of the official duty of such officials to enable Lessee to carry
out and perform the covenants and agreements in this Lease.
Section 5.4. Rental Pavments to be Unconditional. The obligation of Lessee to make
Rental Payments or any other payments required hereunder from the Revenues shall be absolute and
unconditional in all events. Notwithstanding any dispute between Lessee and Lessor or any other person,
Lessee shall make all Rental Payments and other payments required hereunder when due and shall not
withhold any Rental Payment or other payment pending final resolution of such dispute nor shall Lessee
assert any right of set-off or counterclaim against its obligation to make such Rental Payments or other
payments required under this Lease. Lessee's obligation to make Rental Payments or other payments
during the Lease Term shall not be abated through accident or unforeseen circumstances. However,
nothing herein shall be construed to release Lessor from the performance of its obligations hereunder; and
if Lessor should fail to perform any such obligation, Lessee may institute such legal action against Lessor
as Lessee may deem necessary to compel the performance of such obligation or to recover damages
therefor.
Section 5.5 Pledge of Revenues. Lessee hereby irrevocably pledges all of the Revenues
to the payment of the Rental Payments. This pledge shall constitute a first lein on the Revenues for the
payment of the Rental Payments.
Section 5.6 Limitations on Additional Revenue Obligations. Lessee shall not incur
additional Revenue Obligations, unless the Lessee first delivers to Lessor a statement certifYing that:
(I) Lessee is not in default under the terms of this Lease and (2) the Net Revenues for the latest Fiscal
Year were at least 1.10 times the sum of (a) the Rental Payments becoming due and payable in the Fiscal
Year in which that amount is at its maximum and (b) the maximum annual debt service on all other
Revenue Obligations including the obligations proposed to be incurred.
Lessee shall not incur any additional Revenue Obligations, secured by a pledge of
Revenues that is superior to the pledge securing the Rental Payments.
ARTICLE VI: INSURANCE AND NEGLIGENCE
Section 6.1. Liability Insurance. Upon ordering any Equipment Group and prior to
receipt of possession of the Equipment Group, Lessee shall take such measures as may be necessary to
ensure that any liability for injuries to or death of any person or damage to or loss of property arising out
of or in any way relating to the condition or the operation of the Equipment Group or any part thereof, is
covered by a blanket or other general liability insurance policy maintained by Lessee. The Net Proceeds
of all such insurance shall be applied toward extinguishment or satisfaction of the liability with respect to
which any Net Proceeds may be paid.
Section 6.2. Property Insurance. Upon receipt of possession of any Equipment Group,
Lessee shall have and assume the risk of loss with respect thereto. Lessee shall procure and maintain
continuously in effect during the Term of this Lease, all-risk insurance, subject only to the standard
exclusions contained in the policy, in such amount as will be at least sufficient so that a claim may be
made for the full replacement cost of any part of the Equipment Group damaged or destroyed and to pay
the applicable Purchase Option Price of the Equipment Group. Such insurance may be provided by a
rider to an existing policy or under a separate policy. Such insurance may be written with customary
deductible amounts. The Net Proceeds of insurance required by this Section shall be applied to the
prompt repair, restoration or replacement of the Equipment Group, or to the purchase of the Equipment
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation I City of San Bemardino
Page 6 of22
Group, as provided in Section 6.7. Any Net Proceeds not needed for those purposes shall be paid to
Lessee.
Section 6.3. Worker's Compensation Insurance. If required by State law, Lessee shall
carry worker's compensation insurance covering all employees on, in, near or about any Equipment
Group, and upon request, shall furnish to Lessor certificates evidencing such coverage throughout the
Term of this Lease.
Section 6.4. Requirements For All Insurance. All insurance policies (or riders) required
by this Article shall be taken out and maintained with responsible insurance companies organized under
the laws of one of the states of the United States and qualified to do business in the State; and shall
contain a provision that the insurer shall not cancel or revise coverage thereunder without giving written
notice to the insured parties at least ten (10) days before the cancellation or revision becomes effective.
Each insurance policy or rider required by this Article VI shall name Lessor as an additional insured party
and loss payee. Lessee shall deposit with Lessor policies (and riders) evidencing any such insurance
procured by it, or a certificate or certificates of the respective insurers stating that such insurance is in full
force and effect. Before the expiration of any such policy (or rider), Lessee shall furnish to Lessor
evidence that the policy has been renewed or replaced by another policy conforming to the provisions of
this Article, unless such insurance is no longer obtainable in which event Lessee shall notifY Lessor of
this fact.
Section 6.5. Self-Insurance. Notwithstanding the provisions of Sections 6.1 through 6.3,
Lessee may elect to meet the requirements of any such section through self-insurance provided by a
Qualified Self-Insurance Program having coverage limits equal to or greater than those specified in such
Section. In such event Lessee shall give Lessor notice of such election and provide to Lessor a full, true
and correct copy of all documents providing for the establishment and administration of the Qualified
Self-Insurance Program. As used herein, Qualified Self-Insurance Program means a program of self-
insurance which has been established by Lessee, or by Lessee and other political subdivisions of the State,
pursuant to a State law specifically authorizing the program, and which is funded in a manner similar to
commercial insurance or in a manner specified in such State law.
Section 6.6. Lessee's Negligence. Lessee assumes all risks and liabilities, whether or not
covered by insurance, for loss or damage to any Equipment Group and for injury to or death of any person
or damage to any property, whether such injury or death be with respect to agents or employees of Lessee
or of third parties, and whether such property damage be to Lessee's property or the property of others,
which is proximately caused by the negligent conduct of Lessee, its officers, employees and agents.
Lessee hereby assumes responsibility for and agrees to reimburse Lessor for all liabilities, obligations,
losses, damages, penalties, claims, actions, costs and expenses (including reasonable attorney's fees) of
whatsoever kind and nature, imposed on, incurred by or asserted against Lessor that in any way relate to
or arise out of a claim, suit or proceeding based in whole or in part upon the negligent conduct of Lessee,
its officers, employees and agents, to the maximum extent permitted by law.
Section 6.7. Damage to or Destruction of Equipment Group. If after delivery of any
Equipment Group to Lessee all or any part of the Equipment Group is lost, stolen, destroyed or damaged
beyond repair, Lessee shall as soon as practicable after such event either: (a) replace the same at Lessee's
sole cost and expense with equipment of equal or greater value to the Equipment Group immediately prior
to the time of the loss occurrence, such replacement equipment to be subject to Lessor's reasonable
approval, whereupon such replacement shall be substituted in this Lease by appropriate endorsement; or
(b) pay the applicable Purchase Option Price of the Equipment Group as set forth in Exhibit A. Lessee
shall notifY Lessor of which course of action it will take within fifteen (15) days after the loss occurrence.
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation I City of San Bernardino
Page 7 of22
If Lessee fails or refuses to notify Lessor within the required period, Lessor may, at its option, declare the
applicable Purchase Option Price of the Equipment Group set forth in Exhibit A immediately due and
payable, and Lessee shall be obligated to pay the same. The Net Proceeds of all insurance payable with
respect to the Equipment Group shall be available to Lessee and shall be used to discharge Lessee's
obligation under this Section. On payment of the Purchase Option Price with respect to any Equipment
Group, this Lease shall terminate with respect to such Equipment Group and Lessee thereupon shall
become entitled to such Equipment Group AS IS, WITHOUT WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY LESSEE, except
that such Equipment Group shall not be subject to any lien or encumbrance created by or arising through
Lessor.
ARTICLE VII: OTHER OBLIGATIONS OF LESSEE
Section 7.1. Use; Permits. Lessee shall exercise due care in the installation, use,
operation and maintenance of all Equipment Groups, and shall not install, use, operate or maintain the
Equipment Groups improperly, carelessly, in violation of any State and Federal Law or for a purpose or in
a manner contrary to that contemplated by this Lease. Lessee shall obtain all permits and licenses
necessary for the installation, operation, possession and use of the Equipment Groups. Lessee shall
comply with all State and Federal Laws applicable to the installation, use, possession and operation of the
Equipment Groups, and if compliance with any such State and Federal Law requires changes or additions
to be made to the Equipment Groups, such changes or additions shall be made by Lessee at its expense.
Section 7.2. Maintenance of Equipment Group bv Lessee. Lessee shall, at its own
expense, maintain, preserve and keep the Equipment Groups in good repair, working order and condition,
and shall from time to time make all repairs and replacements necessary to keep the Equipment Groups in
such condition. Lessor shall have no responsibility for any of these repairs or replacements.
Section 7.3. Taxes, Other Governmental Char!!es and Utility Charges. Except as
expressly limited by this Section, Lessee shall pay all taxes and other governmental charges of any kind
which are at any time lawfully assessed or levied against or with respect to any Equipment Group, the
Rental Payments or any part thereof, or which become due during the Term of this Lease, whether
assessed against Lessee or Lessor. Lessee shall also pay when due all gas, water, steam, electricity, heat,
power, telephone, and other charges incurred in the operation, maintenance, use, occupancy and upkeep
of the Equipment Groups, and all special assessments and charges lawfully made by any governmental
body for public improvements that may be secured by a lien on the Equipment Groups; provided that with
respect to special assessments or other governmental charges that may lawfully be paid in installments
over a period of years, Lessee shall be obligated to pay only such installments as are required to be paid
during the Term of this Lease as and when the same become due. Lessee shall not be required to pay any
federal, state or local income, inheritance, estate, succession, transfer, gift, franchise, gross receipts,
profit, excess profit, capital stock, corporate, or other similar tax payable by Lessor, its successors or
assigns, unless such tax is made in lieu of or as a substitute for any tax, assessment or charge which is the
obligation of Lessee under this Section.
Section 7.4. Advances. If Lessee shall fail to perform any of its obligations under this
Article, Lessor may, but shall not be obligated to, take such action as may be necessary to cure such
failure, including the advancement of money, and Lessee shall be obligated to repay all such advances on
demand, with interest at the rate of 18% per annum or the maximum rate permitted by law, whichever is
less, from the date of the advance to the date of repayment.
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Dated as of March 20, 2009
First Municipal Leasing Corporation I City of San Bemardino
Page 8 of22
ARTICLE VIII: TITLE; SECURITY INTEREST; LIENS
Section 8.1. Title. During the Term of this Lease with respect to any Equipment Group,
and so long as Lessee is not in default under Article XII, legal title to the Equipment Group and any and
all repairs, replacements, substitutions and modifications to it shall be in Lessee. Upon termination of this
Lease with respect to any Equipment Group pursuant to Article XII hereof, full and unencumbered legal
title to such Equipment Group shall pass to Lessor, and Lessee shall have no further interest therein. In
either of such events, Lessee shall execute and deliver to Lessor such documents as Lessor may request to
evidence the passage of legal title to such Equipment Group to Lessor and the termination of Lessee's
interest therein, and upon request by Lessor shall deliver possession of the Equipment Group to Lessor in
accordance with Section 12.3. Upon termination of this Lease with respect to any Equipment Group
through exercise of Lessee's option to purchase pursuant to Article X or through payment by Lessee of all
Rental Payments and other amounts relating thereto, Lessor's security or other interest in such Equipment
Group shall terminate, and Lessor shall execute and deliver to Lessee such documents as Lessee may
request to evidence the termination of Lessor's security or other interest in such Equipment Group.
Section 8.2. Security Interest. Lessee grants to Lessor a continuing, first priority security
interest under the Uniform Commercial Code or, if applicable, other State law in each Equipment Group,
the proceeds thereof and all repairs, replacements, substitutions and modifications thereto or thereof made
pursuant to Section 8.5, in order to secure Lessee's payment of all Rental Payments with respect thereto
due during the Term ofthis Lease and the performance of all other obligations herein to be performed by
Lessee. Lessee will join with Lessor in executing such financing statements or other documents and will
perform such acts as Lessor may request to establish and maintain a valid first lien and perfected security
interest in each Equipment Group. If requested by Lessor, Lessee shall conspicuously mark each
Equipment Group with appropriate lettering, labels or tags, and maintain such markings during the Term
of this Lease, so as clearly to disclose Lessor's security interest in the Equipment Group.
Section 8.3. Liens. During the Term of this Lease, Lessee shall not, directly or
indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or
claim on or with respect to the Equipment Groups, other than the respective rights of Lessor and Lessee
as herein provided and Permitted Encumbrances. Except as expressly provided in Section 7.3 and this
Article, Lessee shall promptly, at its own expense, take such action as may be necessary duly to discharge
or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the same shall arise at any
time. Lessee shall reimburse Lessor for any expense incurred by Lessor in order to discharge or remove
any such mortgage, pledge, lien, charge, encumbrance or claim.
Section 8.4. Installation of Lessee's Equipment. Lessee may at any time and from time
to time, in its sole discretion and at its own expense, install other items of equipment in or upon any
Equipment Group, which items shall be identified by tags or other symbols affixed thereto as property of
Lessee, shall remain the sole property of Lessee, and may be modified or removed by Lessee at any time
provided that Lessee shall repair and restore any and all damage to the Equipment Group resulting from
the installation, modification or removal of any such items.
Section 8.5. Modification of Equipment Group. Lessee shall, at its own expense, have
the right to make repairs to the Equipment Group, and to make repairs, replacements, substitutions and
modifications to all or any of the parts thereof. All such work and any part or component used or
installed to make a repair or as a replacement, substitution or modification, shall thereafter comprise part
of the Equipment Group and be subject to the provisions of this Lease. Such work shall not in any way
damage the Equipment Group or cause it to be used for purposes other than those authorized under the
provisions of State and Federal Law or those contemplated by this Lease; and the Equipment Group, upon
LEASE WITH OPTION TO PURCHASE AGREEMENT
. Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bemardino
Page 9 of 22
completion of any such work shall be of a value which is not less than the value of the Equipment Group
immediately prior to the commencement of such work.
Section 8.6. Personal Property. Each Equipment Group is and shall at all times be and
remain personal property notwithstanding that the Equipment Group or any part thereof may be or
hereafter become in any manner affixed or attached to or embedded in or permanently rested upon real
property or any building thereon or attached in any manner to what is permanent by means of cement,
plaster, nails, bolts, screws or otherwise.
ARTICLE IX: WARRANTIES
Section 9.1. Selection of Equipment GrouP. Each Equipment Group and the Contractor
therefor have been selected by Lessee, and Lessor shall have no responsibility in connection with the
selection of such Equipment Group, its suitability for the use intended by Lessee, the acceptance by the
Contractor or its sales representative of the order submitted, or any delay or failure by the Contractor or
its sales representative to manufacture, deliver or install the Equipment Group for use by Lessee. Lessee
authorizes Lessor to add the serial number of any item in the Equipment Group to Exhibit A when
available.
Section 9.2. Installation and Maintenance of Equipment Group. Lessor shall have no
obligation to install, erect, test, inspect, service or maintain the Equipment Group under any
circumstances, but such actions shall be the obligation of Lessee or the Contractor.
Section 9.3. Contractor's Warranties. Lessor hereby assigns to Lessee for and during the
Term of this Lease, all of its interest, if any, in all Contractor's warranties and guarantees, express or
implied, issued on or applicable to any Equipment Group, and Lessor hereby authorizes Lessee to obtain
the customary services furnished in connection with such warranties and guarantees at Lessee's expense.
Section 9.4. Patent Infringement. Lessor hereby assigns to Lessee for and during the
Term of this Lease all of its interest, if any, in patent indemnity protection provided by any Contractor
with respect to any Equipment Group. Such assignment of patent indemnity protection by Lessor to
Lessee shall constitute the entire liability of Lessor for any patent infringement by Equipment Groups
furnished pursuant to this Lease.
Section 9.5. Disclaimer of Warranties. EACH EQUll'MENT GROUP IS
DELIVERED AS IS, AND LESSOR MAKES NO WARRANTY OR REPRESENTATION,
EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR
THE USE CONTEMPLATED BY LESSEE OF ANY EQUll'MENT GROUP, OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO ANY EQUll'MENT GROUP. IN
NO EVENT SHALL LESSOR BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL
DAMAGES IN CONNECTION WITH OR ARISING OUT OF TillS LEASE OR ANY
EQUll'MENT GROUP OR LESSEE'S USE OF ANY EQUIPMENT GROUP.
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 10 of22
ARTICLE X: OPTION TO PURCHASE
Section 10.1. When Available. Commencing on the 8th payment date of March 30,
2013, Lessee shall have the option to purchase any Equipment Group on that or any subsequent Payment
Date relating thereto, for the then applicable Purchase Option Price set forth in the page of Exhibit A
relating thereto, but only if Lessee is not in default under this Lease, and only in the manner provided in
this Article.
Section 10.2. Exercise of Option. Lessee shall give notice to Lessor of its intention to
exercise its option to purchase with respect to any Equipment Group not less than thirty (30) days prior to
the Payment Date on which the option is to be exercised and shall deposit with Lessor on the date of
exercise an amount equal to all Rental Payments and any other amounts relating to such Equipment
Group then due or past due (including the Rental Payment relating thereto due on the Payment Date on
which the option is to be exercised) and, the applicable Purchase Option Price set forth in the Equipment
Schedule relating thereto. The closing shall be on the Payment Date on which the option is to be
exercised at the office of Lessor.
Section 10.3. Release of Lessor's Interest. Upon exercise of the purchase option with
respect to any Equipment Group by Lessee, Lessor shall conveyor release to Lessee, all of its right, title
and/or interest in and to the Equipment Group by delivering to Lessee such documents as Lessee
reasonably deems necessary for this purpose.
ARTICLE XI: ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING
Section 11.1. Assignment by Lessor. Lessor shall not assign its obligations under this
Lease, and no purported assignment thereof shall be effective. All of Lessor's right, title and/or interest in
and to any Equipment Schedule, Equipment Group, the Rental Payments and other amounts due with
respect thereto, and the right to exercise all rights under this Lease relating to such Equipment Schedule
and Group may be assigned and reassigned in whole to one or more assignees or subassignees by Lessor
at any time, without the consent of Lessee. No such assignment shall be effective as against Lessee
unless and until the assignor shall have filed with Lessee a copy or written notice thereof identifYing the
assignee. During the Lease Term Lessee shall keep a complete and accurate record of all such
assignments.
Section 11.2. Assignment and Subleasing bv Lessee. Neither this Lease nor Lessee's
interest in an Equipment Group may be sold, assigned, transferred, pledged or mortgaged by Lessee
without the written consent of Lessor. However, Equipment Group may be subleased by Lessee to a State
agency or other political subdivision of the State for the performance of essential government services by
such agency or subdivision without the consent of Lessor, provided that: (a) this Lease and the obligation
of Lessee to make Rental Payments hereunder shall remain obligations of Lessee, and (b) the sublessee
assumes the obligations of Lessee under the Lease with respect to the Equipment Group subleased to the
extent of the interest subleased. Lessee shall immediately furnish to Lessor a true and complete copy of
such sublease. No sublease shall cause the Interest component of the Rental Payments due with respect to
the Equipment Group to become includible in gross income of the recipient for federal income tax
purposes.
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page II of22
ARTICLE XII: EVENTS OF DEFAULT AND REMEDIES
Section 12.1. Events of Default Defined. The following shall be "events of default"
under this Lease and the terms "events of default" and "default" shall mean, whenever they are used in
this Lease, anyone or more of the following events:
(a) Failure by Lessee to pay any Rental Payment or other payment required to be paid
under this Lease with respect to any Equipment Group at the time specified herein and the continuation of
said failure for a period of thirty (30) days.
(b) Failure by Lessee to observe and perform any covenant, condition or agreement on
its part to be observed or performed with respect to any Equipment Group, other than as referred to in
Clause (a) of this Section, for a period of thirty (30) days after written notice specifYing such failure and
requesting that it be remedied has been given to Lessee by Lessor, unless Lessor shall agree in writing to
an extension of such time prior to its expiration; provided, however, 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) The determination by Lessor that any representation or warranty made by Lessee in
Section 2.1 was untrue in any material respect upon execution of this Lease.
(d) The filing by Lessee of a voluntary petition in bankruptcy, or failure by Lessee
promptly to lift any execution, garnishment or attachment of such consequence as would impair the
ability of Lessee to carry on its governmental function or adjudication of Lessee as a bankrupt, or
assignment by Lessee for the benefit of creditors, or the entry by Lessee into an agreement of composition
with creditors, or the approval by a court of competent jurisdiction of a petition applicable to Lessee in
any proceedings instituted under the provisions of the United States Bankruptcy Code, as amended, or
under any similar acts which may hereafter be enacted.
The provisions of this Section ]2.1 and Section ]2.2 are subject to the following limitation: if by reason
of force maieure Lessee is unable in whole or in part to carry out its obligations under this Lease, other
than its obligation to pav Rental Payments which shall be paid when due notwithstanding the provisions
of this paragraph, Lessee shall not be deemed in default during the continuance of such inability. The
term "force maieure" as used herein shall mean, without limitation, the following: acts of God; strikes,
lockouts or other labor disturbances; acts of public enemies; orders or restraints of any kind of the
government of the United States of America or the State or their respective departments, agencies or
officials, or any civil or military authority; insurrections; riots; landslides; earthquakes; fires; storms;
droughts; floods; explosions; breakage or accident to machinery, transmission pipes or canals; or any
other cause or event not reasonably within the control of Lessee and not resulting from its negligence.
Lessee agrees, however, to remedy with all reasonable dispatch the cause or causes preventing Lessee
from carrying out its obligations under this Lease; provided that the settlement of strikes, lockouts and
other labor disturbances shall be entirely within the discretion of Lessee and Lessee shall not be required
to make settlement of strikes, lockouts and other labor disturbances by acceding to the demands of the
opposing party or parties when such course is in the judgment of Lessee unfavorable to Lessee.
Section 12.2. Remedies on Default. Whenever any event of default referred to in Section
12.1 hereof shall have happened and be continuing, Lessor shall have the right, at its option and without
any further demand or notice, to take one or any combination of the following remedial steps:
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of Sao Bernardino
Page 12 of22
(a) With or without tenninating this Lease, declare all Rental Payments with respect to
each Equipment Group to which such event of default relates due or to become due during the Fiscal Year
in effect when the default occurs to be immediately due and payable by Lessee, whereupon such Rental
Payments shall be immediately due and payable.
(b) With or without tenninating this Lease, repossess any Equipment Group to which
such event of default relates by giving Lessee written notice to deliver such Equipment Group to Lessor,
whereupon Lessee shall return such Equipment Group to Lessor in accordance with Section 12.3, at
Lessee's expense; or in the event Lessee fails to do so within ten (10) days after receipt of such notice,
Lessor, at its option, may enter upon the premises where the Equipment Group is located and take
immediate possession of and remove the same without liability to Lessor or its agents for such entry or
for damage to property or otherwise. Notwithstanding the fact that Lessor has taken possession of any
Equipment Group, Lessee shall continue to be responsible for the Rental Payments due with respect
thereto during the Fiscal Year then in effect. If this Lease has not been tenninated, Lessor shall return the
Equipment Group to Lessee at Lessee's expense when the event of default is cured.
(c) If Lessor tenninates this Lease and takes possession of any Equipment Group, within
sixty (60) days thereafter use its best efforts to sell such Equipment Group or any portion thereof in a
commercially reasonable manner at public or private sale in accordance with applicable State laws.
Lessor shall apply the proceeds of such sale to pay the following items in the following order: (i) all costs
incurred in securing possession of the Equipment Group; (ii) all expenses incurred in completing the sale;
(iii) the applicable Purchase Option Price of the Equipment Group; and (iv) the balance of any Rental
Payments owed by Lessee during the Fiscal Year then in effect with respect thereto. Any sale proceeds
remaining after the requirements of Clauses (i), (ii), (iii) and (iv) have been met shall be paid to Lessee.
(d) Exercise any other right, remedy or privilege which may be available to it under
applicable law or in equity.
Section 12.3. Return of Equipment Group. Upon the expiration or tennination of this
Lease with respect to any Equipment Group prior to the payment of all Rental Payments due with respect
thereto, Lessee shall return such Equipment Group to Lessor in the condition, repair, appearance and
working order required in Section 7.2, in the following manner as may be specified by Lessor: (a) by
delivering the Equipment Group at Lessee's cost and expense to such place within the State as Lessor
shall specifY; or (b) by loading such portions of the Equipment Group as are considered movable at
Lessee's cost and expense, on board such carrier as Lessor shall specifY and shipping the same, freight
prepaid, to the place within the State specified by Lessor. If Lessee refuses to return the Equipment
Group in the manner designated, Lessor may repossess the Equipment Group and charge to Lessee the
costs of such repossession or pursue any remedy described in Section 12.2.
Section 12.4. No Remedv Exclusive. No remedy conferred upon or reserved to Lessor
by this Article is intended to be exclusive and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease. 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 by Lessor or its assignee.
Section 12.5. Agreement to Pav Attorneys' Fees and Expenses. In the event either party
to this Lease should default under any of the provisions hereof and the nondefaulting party should employ
attorneys and/or incur other expenses for the collection of moneys or for the enforcement of perfonnance .
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation I City of San Bernardino
Page \3 of22
or observance of any obligation or agreement on the part of the defaulting party herein contained, the
defaulting party agrees that it will be responsible for all reasonable costs and expenses, including
attorneys' fees, as determined by court order or mutual agreement. The costs, salary and expenses of the
Lessee's City Attorney and members of his office in enforcing this contract on behalf of the Lessee shall
be considered as "attorney's fees" for the purposes of this paragraph.
Section 12.6. Late Charge. Whenever any event of default referred to in Section 12.1,
Clause (a) hereof shall have happened and be continuing with respect to any Equipment Group, Lessor
shall have the right, at its option and without any further demand or notice, to require a late payment
charge for each thirty (30) day period or part thereof during which such event of default occurs equal to
four percent (4%) of the delinquent amount, and Lessee shall be obligated to pay the same immediately
upon receipt of Lessor's written invoice therefor; provided, however, that this Section 12.6 shall not be
applicable if or to the extent that the application thereof would affect the validity ofthis Lease.
ARTICLE XIII: ADMINISTRATIVE PROVISIONS
Section 13. I. Notices. All notices, certificates, legal opinions or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered or deposited in the United
States mail in registered form with postage fully prepaid to the addresses specified on the execution page
hereof; provided that Lessor and Lessee, by notice given hereunder, may designate different addresses to
which subsequent notices, certificates, legal opinions or other communications will be sent.
Section 13.2. Financial Information. During the Term of this Lease, Lessee annually
will 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 Lease as
may be requested by Lessor or its assignee.
Section 13.3. Bindin~ Effect. This Lease shall inure to the benefit of and shall be
binding upon Lessor and Lessee and their respective successors and assigns.
Section 13.4. Severability. In the event any provision of this Lease shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
Section 13.5. Amendments. Changes and Modifications. This Lease may be amended or
any of its terms modified only by written document duly authorized, executed and delivered by Lessor
and Lessee.
Section 13 .6. Captions. The captions or headings in this Lease are for convenience only
and in no way define, limit or describe the scope or intent of any provisions, Articles, Sections or Clauses
of this Lease.
Section 13.7. Further Assurances and Corrective Instruments. Lessor and Lessee agree
that they will, from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of any Equipment Group hereby leased or
intended so to be, or for otherwise carrying out the expressed intention of this Lease.
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 14 of22
Section 13.8. Execution in Counterparts. This 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 13.9. Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State.
IN WITNESS WHEREOF, Lessor has caused this Lease to be executed in its corporate
name by its duly authorized officer; and Lessee has caused this Lease to be executed in its name by its
duly authorized officer, as of the date first above written.
CITY OF SAN BERNARDINO, Lessee
FIRST MUNICIPAL LEASING
CORPORATION, Lessor
By:
Barbara S. Pachon
By:
Lynn P. Bartsch
Title: Director of Finance
Title President
Address:
300 North D Street
San Bernardino, CA 92418-0001
Address:
1905 Foothills Drive South
Golden, CO 80401-9186
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 15 of22
EXHIBIT A
EQUIPMENT SCHEDULE NO. 001
Dated as of March 20, 2009
SCHEDULE OF EQUIPMENT GROUP, RENTAL PAYMENTS, ETC.
The following equipment comprises an Equipment Group which is the subject of the Lease with
Option to Purchase Agreement dated as of March 20, 2009, between the undersigned Lessor and
Lessee:
Item Ouantitv
Description
Serial Numbers
Cost
A 12 (twelve)
2009 Autocar WX64 Chassis and
Refuse Bodies w/LNG Conversion
[Including sales tax]
$3.639.137.64
Unknown
Total Equipment Cost
$3,639,137.64
Add Issuance Cost
$
4,600.00
(Less): Lessee Escrow Deposit
$ 727,827.53
(Less): Estimated Escrow Earnings
$
N/A
Net Financed Amount
$2,915,910.11
INTENTIONALLY LEFT BLANK
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 16 of22
SCHEDULE OF RENT AL PAYMENTS RELATING TO EQUIPMENT GROUP
Annual Percentage Rate: 4.85%
Interest Accrual Commencement Date March 20, 2009
AMORTIZATION SCHEDULE - Normal Amortization, 360 Day Year
Payment # Due Date Rental Interest Principal Purchase
Payment Portion Portion Option (-)
Lease 03/20/2009 2,915,910.11
1 09/30/2009 248,490.67 75,136.83 173,353.84 2,742,556.27
2 03/30/2010 248,490.67 66,506.99 181,983.68 2,560,572.59
3 09/30/2010 248,490.67 62,093.89 186,396.78 2,374,175.81
4 03/30/2011 248,490.67 57,573.76 190,916.91 2,183,258.90
5 09/30/2011 248,490.67 52,944.03 195,546.64 1,987,712.26
6 03/30/2012 248,490.67 48,202.02 200,288.65 1,787,423.61
7 09/30/2012 248,490.67 43,345.02 205,145.65 1,582,277.96
8 03/30/2013 248,490.67 38,370.24 210,120.43 1,372,157.53
9 09/30/2013 248,490.67 33,274.82 215,215.85 1,156,941.68
10 03/30/2014 248,490.67 28,055.84 220,434.83 936,506.85
11 09/30/2014 248,490.67 22,710.29 225,780.38 710,726.47
12 03/30/2015 248,490.67 17,235.12 231,255.55 479,470.92
13 09/30/2015 248,490.67 11,627.17 236,863.50 242,607.42
14 03/30/2016 248,490.67 5.883.25 242.607.42 0.00
Totals 3,478,869.38 562,959.27 2,915,910.11
(*) After payment of Rental Payment due on such date.
CITY OF SAN BERNARDINO, Lessee FIRST MUNICIPAL LEASING
CORPORATION, Lessor
By: Lynn P. Bartsch
By: Barbara S. Pachon
Title: Director of Finance
Title President
Date: March
,2009
Date: March 11,2009
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 17 0122
EXHIBIT B -
EQUIPMENT SCHEDULE NO. 001
CERTIFICATE OF ACCEPTANCE
I, , the undersigned, hereby certify that I am the duly qualified
and acting of the City of San Bernardino (Lessee); and,
with respect to the above-referenced Equipment Schedule to the Lease With Option to Purchase
Agreement dated as of March 20, 2009 (the Lease), by and between Lessee and First Municipal
Leasing Corporation (Lessor), that:
I. The following equipment described in the above-referenced
Equipment Schedule No. 001, Exhibit A, Item A,
(the Equipment Group) has been delivered and installed in accordance with Lessee's
Specifications (as that term is defined in the Lease) and has been accepted by Les~
~W>\,~
~~\\'Vu
The equipment is, or will be, located at the following addressees) [if multiple locations apply,
indicate the particular equipment located at the specific address provided]:
San Bernardino, CA 92401
2. The fourteen (14) semi-annual rental payments provided for in the above-referenced
Equipment Schedule Exhibit A, (the Rental Payments) shall commence and be due and payable
on September 30, 2009 and semi-annually thereafter on each March and September 30th through
March 30, 2016, in the amounts shown on such Equipment Schedule.
3. Lessee has appropriated and/or taken other lawful actions necessary to provide
moneys sufficient to pay all Rental Payments required to be paid under the Lease during the
current fiscal year of Lessee, and such moneys will be applied in payment of all such Rental
Payments due and payable during such current fiscal year.
4. (Lessee has obtained from a reputable insurance company qualified to do business in
the State of insurance with respect to all risks required to be covered by, and in accordance with,
Article VI of the Lease.) (Lessee is providing self-insurance with respect to all risks required to
be covered by, and in accordance with, Sections 6.1, 6.2 and 6.4 of the Lease.)*
5. Lessee is exempt from all personal property taxes, and is subject to sales and/or use
taxes with respect to the Equipment Group and the Rental Payments.
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page ]80f22
6. During the Lease Term (as defined in the Lease) the Equipment Group will be used by
Lessee to perform essential governmental functions. Such functions are:
7. There is no litigation, action, suit or proceeding pending or before any court,
administrative agency, arbitrator or governmental body, that challenges the organization or
existence of Lessee; the authority of Lessee or its officers or its employees to enter into the Lease
with respect to the Equipment Group; the proper authorization, approval and execution of the
Lease with respect to the Equipment Group and other documents contemplated thereby; the
appropriation of moneys, or any other action taken by Lessee to provide moneys sufficient to
make Rental Payments coming due under the Lease in Lessee's current fiscal year with respect to
the Equipment Group; or the ability of Lessee otherwise to perform its obligations under the
Lease and the transactions contemplated thereby with respect to the Equipment Group.
Dated:
, 2009
CITY OF SAN BERNARDINO,
Lessee
By:
~~WA\W>\b~
Title:
Attachments: Invoice / wire instructions
Certificate of Insurance
Manufacturer Statement of Origin [licensed vehicle]
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation I City of San Bernardino
Page 19 of22
PROCEEDS PAYMENT AUTHORIZATION
NO.
American National Bank, as Escrow Agent, is hereby requested to pay from the Escrow Account
established by the Lease With Option To Purchase Agreement dated as of March 20, 2009, by
and among the Lessor, and the Lessee, to the person or corporation designated below as Payee,
the sum set forth below in payment ( of all / of a portion) of the acquisition cost(s) described
below. The amount shown below is due and payable under a purchase order or contract with
respect to the Equipment described below and has not formed the basis of any prior request for
payment.
The Lessee has accepted the Equipment under this lease agreement noted on
Exhibit B -
to Equipment Schedule 001.
Payee:
Address:
Attn:
Amount: $
Description of Equipment cost:
Dated:
,2009
~~lMtl [F)[L~
Capital One Public Funding, LLC,
Assignee
City of San Bernardino,
Lessee
By: Jonathan A. Lewis
Its: Senior Vice President
By:
Its:
Documents attached hereto:
Exhibit B - executed by Lessee
Invoice / Wire instructions
Manufacturer's Statements of Origin (copy)
Certificate of Insurance
CITY OF SAN BERNARDINO
OFFICE OF THE CITY ATTORNEY
EXHmIT C
JAMES F. PENMAN
City Attorney
OPINION OF COUNSEL
Lessee
City of San Bernardino
300 N. "D" Street
San Bernardino, CA 92418
Lessor
First Municipal Leasing
Corporation,
1905 Foothills Drive South
Golden, Colorado 80401-9186
Re: LEASE WITH OPTION TO PURCHASE AGREEMENT dated March 20, 2009,
Between First Municipal Leasing Corporation, a Colorado Corporation, and the City
of San Bernardino, a political subdivision of the State of California
Ladies and Gentlemen:
As legal counsel to City of San Bernardino, (the "Lessee"), I have examined (a) a certain
Lease With Option to Purchase Agreement dated as of March 20, 2009 and Exhibits A to C thereto
by and between First Municipal Leasing Corporation (the "Lessor") and City of San Bernardino, (the
"Lease"), and (b) Draft Proceeds Payment Authorization, and (c) Draft (Final Approving Opinion)
Re: Lease with Option to Purchase Agreement and Equipment Schedule No. 001 dated March 20,
2009, between First Municipal Leasing Corporation and the City of San Bernardino, and (d) Draft
Certificate of Incumbency Lease with Option to Purchase Agreement dated as of March 20, 2009,
and (e) unsigned Certificate of Resolution, and (f) Draft Insurance Coverage Disclosure Lease with
Option to Purchase Agreement Equipment Schedule No. 001 Dated as of March 20,2009 First
Municipal Leasing Corporation, Lessor City of San Bernardino, Lessee, and (g) Draft Designation
as a Qualified Tax-Exempt Obligation Lease with Option to Purchase Agreement Dated as of March
20,2009, and (h) Draft Addendum for Escrow Funding Equipment Schedule 001 to Lease with
Option to Purchase Agreement, and (i) Draft Escrow Agreement dated as of March 20,2009, and
(j) Arbitrage Certificate, and (k) completed and unsigned IRS Form 8038-G for execution by the
F:\WILSON\Opinions of Counsel \first munileasingcorp 3.11..Q9.wpd
CITY HALL
300 NORTH '0' STREET. SAN BERNARDINO, CALIFORNIA 92418
(714) 384-5355
Finance Director of Lessee, and (I) Notice of Assignment and Letter of Direction - Lease, and (m)
Notice of Assignment and Letter of Direction Escrow Agreement, and (n) Proceeds Payment
Authorization No. 01, and (0) an executed counterpart of the ordinances or resolutions of Lessee
which, among other things, authorize Lessee to execute the Agreement, and (P) such other opinions,
documents and matters oflaw as 1 have deemed necessary in connection with the following opinion.
In rendering this opinion, we have assumed without inquiry:
(a) The authenticity of all documents submitted to us as copies of the originals and in draft form,
and the conformity of such copies and drafts to the originals as they are finally executed and
delivered by Lessee and Lessor;
(b) That the Lease has been or will be duly authorized, executed and delivered by Lessor;
( c) That the Lease constitutes valid, legal and binding obligations of Lessor enforceable against
Lessor in accordance with its terms; and
(d) That the Lease accurately describes and contains the mutual understandings of the parties, and
that there are not oral or written statements or agreements that modify, amend or vary, or
purport to modify, amend or vary, any ofthe terms thereof
Based on the foregoing, I am of the following opinion:
(1) Lessee is a public body corporate and politic, duly organized and existing under the laws of
the State, or has a substantial amount of one of the following sovereign powers: (a) the power
to tax, (b) the power of eminent domain, or ( c) police power;
(2) The name of the lessee contained in the Lease is the correct legal name of the Lessee;
(3) Lessee has the requisite power and authority to lease and acquire the Equipment with an
option to purchase and to execute and deliver the Lease and to perform its obligations under
the Lease and the Equipment Schedules and the Escrow Agreement;
(4) The Lease and the Equipment Schedules and the Escrow Agreement has been duly
authorized, approved, executed, and delivered by and on behalf of Lessee and the Lease and
the Equipment Schedules and the Escrow Agreement is a legal, valid and binding obligation
of Lessee enforceable in accordance with its terms, subject to (i) all applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium and other similar laws; (ii) the
qualification that certain waivers, restrictions and remedies provided for in this Lease,
including without limitation certain indemnification obligations, may be wholly or partially
unenforceable under California law; and (iii) general principles of equity.
(5) 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
accordance with all open meeting laws, public bidding laws and all other applicable state laws;
and
2
F:\WILSON\Opinions ofCounsel\first munileasingcorp 3-11-09. wpd
(6) To the best of my knowledge, 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 thereunder.
(7) There is no litigation, action, suit or proceeding pending or before any court, administrative
agency, arbitrator or governmental body, that challenges the organization or existence of
Lessee; the authority of Lessee or its officers or its employees to enter into the Lease and the
Equipment Schedules and the Escrow Agreement; the proper authorization, approval and/or
execution of the Lease, the Equipment Schedules, the Escrow Agreement and other
documents contemplated thereby; the appropriation of moneys to make Rental Payments
under the Lease for the current fiscal year of Lessee; or the ability of Lessee otherwise to
perform its obligations under the Lease, the Equipment Schedules, the Escrow Agreement
and the transactions contemplated thereby.
(8) This opinion is being provided for the benefit of Lessee, Lessor, and Lessor's successors and
assigns.
In rendering the opinions set forth above, with your permission, I have assumed that the
execution of the Lease and the Equipment Schedules and the performance of the Lessee's obligations
thereunder do not and will not result in the violation of any constitutional, statutory, or other
limitation relating to the marmer, form, or amount of indebtedness that may be incurred by the Lessee,
which matters are addressed in the legal opinion delivered by Kronick, Moskovitz, Tiedemann &
Girard, a Professional Corporation, addressed to you.
All of the opinions set forth above are also subject to the following qualifications, limitations and
exceptions:
(a) The opinions expressed herein are limited to matters governed by the laws of the State of
California. No opinion is expressed regarding the laws of any other jurisdiction.
(b) The opinions expressed herein are based upon the law in effect on the date hereof, and we
assume no obligation to revise or supplement them if the law is changed by legislative action,
judicial decision or otherwise.
Dated: March 20, 2009
JAMES F. PENMAN
City Att~ .
By: -:t ~
John F/Wilson
Senior Assistant City Attorney
3
F:\WILSON\Opinions ofCounsel\flfSt munileasingcorp 3-11-09.wpd
CERTIFICATE OF INCUMBENCY
LEASE WITH OPTION TO PURCHASE AGREEMENT
DATED AS MARCH 20, 2009
I, Rachel G. Clark, do hereby certifY that I am the duly elected or appointed and acting City Clerk
of the City of San Bernardino (the "Lessee"), a political subdivision duly organized and existing
under the laws of the State of California, and that, as of the date hereof, the individuals named
below are the duly elected or appointed officers of the Lessee holding the offices set forth
opposite their respective names.
NAME
TITLE
Director of Finance
Barbara S. Pachon
Financial Analyst
Michael Gomez
Purchasing Manager
Deborah Morrow
Accounting Manager
Kate Myers
Deputy Director I Budget Manager
Rita Conrad
IN WITNESS WHEREOF, I have duly executed this certificate and affixed the seal of
such entity hereto this day of March, 2009.
Rachel G. Clark
SEAL
CERTIFICATION OF RESOLUTION
I, Rachel G. Clark, City Clerk of the City of San Bernardino, certify that the attached copy of
Resolution No. is a true and correct copy of the original resolution passed
on the 16th day of March, 2009, as such resolution appears on the minutes of the City of San
Bernardino. I further attest that this resolution has not been amended or withdrawn since its
adoption on March 16th, 2009.
Dated this
day of March, 2009
Rachel G. Clark
SEAL
INSURANCE COVERAGE DISCLOSURE
LEASE WITH OPTION TO PURCHASE AGREEMENT
Equipment Schedule NO. 001
DATED AS OF MARCH 20, 2009
FIRST MUNICIPAL LEASING CORPORATION, Lessor
CITY OF SAN BERNARDINO, Lessee
RE: INSURANCE COVERAGE REQUIREMENTS
1. In accordance with the Lease with Option to Purchase agreement, Lessee certifies that
it has instructed the insurance agent named below
(Name)
(Address)
(Telephone)
to issue:
_X_ a. All Risk Physical Damage Insurance on the leased Equipment evidenced by a
Certificate of Insurance and Long Form Loss Payable Clause naming the Assignee
Capital One Public Fundin!!. LLC, as Loss Payee.
Coverage Required:
Termination Value Specified.
_X_ b. Public Liability Insurance evidenced by a Certificate oflnsurance naming the
Assignee
Capital One Public Fundin!!, LLC. as an Additional Insnred.
Minimum Coverage Required:
$1,000,000.00 per person
$5,000,000.00 aggregate bodily injury liability
$1,000,000.00 property damage liability.
Proof of insurance coverage will be provided to Lessor and/or its assigns prior to the time
the Equipment is delivered to Lessee.
CITY OF SAN BERNARDINO, Lessee
by Barbara S. Pachon
Title: Director of Finance
Date: March ---' 2009
DESIGNATION AS A QUALIFIED TAX-EXEMPT OBLIGATION
LEASE WITH OPTION TO PURCHASE AGREEMENT
DATED AS OF MARCH 20, 2009
WHEREAS, the City of San Bernardino (the "Lessee"), a political subdivision
duly organized and existing under the laws of the State of California, has entered into a
Lease With Option To Purchase Agreement with First Municipal Leasing Corporation as
lessor dated as above; and
WHEREAS, the Lessee desires to supplement the lease,
NOW THEREFORE, in consideration of the premises hereinafter contained, the
Lessee hereby certifies that:
The Lessee has not issued or effected the issuance of, and reasonably anticipates
that it shall not issue or effect the issuance of more than Thirty Million Dollars
($30,000,000) of tax-exempt obligations during the calendar year 2009, and hereby
designates the lease of Equipment to which this certificate pertains as a "qualified tax-
exempt obligation" within the meaning of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
IN WITNESS WHEREOF, the Lessee has caused this supplement to the Lease to
be executed by its respective officer(s) thereunto duly authorized, all as of the date and
year first above written.
CITY OF SAN BERNARDINO, Lessee
By:
Barbara S. Pachon
Title: Director of Finance
Date: March _, 2009
ADDENDUM FOR ESCROW FUNDING
EQUIPMENT SCHEDULE NO. 001
to
LEASE WITH OPTION TO PURCHASE AGREEMENT
This Addendum for Escrow Funding, Equipment Schedule No. 001 to Lease With Option
To Purchase Agreement (the "Addendum"), dated as of March 20,2009, is made and entered into
by and between First Municipal Leasing Corporation, as Lessor, and the City of San Bernardino,
as Lessee.
WITNESSETH:
WHEREAS, Lessor and Lessee have entered into a Lease with Option to Purchase
Agreement dated as of March 20, 2009 and Equipment Schedule No. 001 dated as of March 20,
2009 thereto (the "Lease"), whereby Lessor has agreed to lease and sell to Lessee a certain
Equipment Group described therein (the "Equipment Group"); and
WHEREAS, in order to assure the availability of moneys to pay the cost of the
Equipment Group and costs of issuance and facilitate the acquisition of the Equipment Group,
Lessee shall deposit in escrow the sum of $727,827.53, and has requested Lessor to deposit
$2,915,910.11 in escrow to complete the amount needed for this purpose and to enter into an
Escrow Agreement, and Lessor is willing to do so.
NOW, THEREFORE, in consideration of the execution of the Lease by each of the
parties and the mutual covenants hereinafter set forth, the parties hereto recite and agree as
follows:
I. This Addendum shall comprise part of the Lease, and all terms capitalized but not
defined herein shall have the meanings given to them in the Lease.
2. Lessor and Lessee shall enter into, and cause American National Bank, Denver, CO, as
escrow agent (the "Escrow Agent"), to enter into, an Escrow Agreement dated as of March 20,
2009 (the "Escrow Agreement"), providing for the administration of the moneys deposited by
Lessor and Lessee with the Escrow Agent pursuant to this Addendum.
3. Upon execution of the Lease and the delivery to Lessor by Lessee of all documents
required to be delivered upon execution of the Lease, and upon Lessee's deposit of $727.827.53
with the Escrow Agent for credit to the Equipment Acquisition Fund created pursuant to the
Escrow Agreement, Lessor shall deposit or cause to be deposited with the Escrow Agent the sum
of $2.915.910.11 for credit to the Equipment Acquisition Fund created pursuant to the Escrow
Agreement, which with the Lessee's deposit shall be held, invested and disbursed in accordance
with the Escrow Agreement.
Page 1 of2
4. The amount so deposited shall comprise full performance by Lessor of Lessor's
obligations under the Lease with respect to the Equipment Group and Lessee shall therefore be
obligated to perform all of its obligations thereunder with respect to the Equipment Group,
including, without limitation, the payment of Rental Payments with respect to the Equipment
Group as provided therein.
IN WITNESS WHEREOF, the parties by their duly authorized officers have executed this
Addendum pursuant to Sections 3.4 and 13.5 of the Lease as of the day and year first written
above.
CITY OF SAN BERNARDINO,
Lessee
FIRST MUNICIPAL LEASING
CORPORATION, Lessor
By: Barbara S. Pachon
By:
Title: Director of Finance
Title
ADDENDUM FOR ESCROW FUNDING
Dated as of March 20, 2009
First Municipal Leasing Corporation / City of San Bernardino
Page 2 of 2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated as of March 20, 2009 (this "Escrow Agreement"),
between the City of San Bernardino ("Lessee"), a political subdivision of the state of
California with its principal offices at 300 North D Street, San Bernardino, CA 92418-0001,
First Municipal Leasing Corporation ("Lessor"), a Colorado corporation with its principal
offices at 1905 Foothills Drive South, Golden, CO 80401-9186, and American National Bank
("Escrow Agent"), a national banking association duly organized, existing and authorized to
accept escrow deposits of the character herein set out under and by virtue of the laws of
Colorado, with its principal offices and domicile at 3033 E. First Avenue, Denver, CO 80206-
9985
WITNESSETH:
WHEREAS, Lessee and Lessor have entered into a Lease with Option to Purchase
Agreement dated as of March 20,2009, and Equipment Schedule No. 001 (the "Lease"), pursuant
to which Lessor agrees, subject to the conditions provided therein, to pay the cost of each
Equipment Group (such term, and any other capitalized terms used in this Escrow Agreement
without definition having the meanings set forth in the Lease) described in the Equipment
Schedules, and
WHEREAS, Lessor and Lessee will provide in advance of the acquisition of each
Equipment Group described in Lease Exhibit A which is accompanied by an Addendum for
Escrow Funding the sums set forth in such Addendum for Escrow Funding to be available in
periodic draws for making payment to the Contractors, and
WHEREAS, Lessor and Lessee now desire to provide for the safekeeping and investment
of such money advanced by Lessor pending disbursement for acquisition of the Equipment
Group described in Equipment Schedule No. 001 and for the procedures in disbursing such
money for the acquisition of such Equipment Group,
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
herein set forth, and intending to be legally bound, the parties hereto agree as follows:
I. Escrow Agent hereby acknowledges receipt of a true and correct copy of the Lease and
reference herein to or citation herein of any provision of said document shall be deemed to
incorporate the same as a part hereof in the same manner and with the same effect as if fully set
forth herein.
2. There is hereby created and established with Escrow Agent a special and irrevocable
escrow fund designated the Equipment Acquisition Fund (the "Equipment Acquisition Fund") to
be held in the custody of Escrow Agent separate and apart from other funds of Lessor, Lessee or
Escrow Agent.
Page J of6
3. Lessor and Lessee shall deposit with Escrow Agent the sums set forth in the
Addendum for Escrow Funding to Equipment Schedule No. 001 with Lessor's deposit
representing the initial principal amount of the obligation of Lessee under the Lease to be used
pursuant to the terms of this Escrow Agreement for the acquisition of the applicable Equipment
Group.
4. To the extent permitted by law with such collateral or security as required by law, any
money held as part of the Equipment Acquisition Fund shall be promptly invested and reinvested
by Escrow Agent upon the written direction of Lessee in any of the following investments: (i)
United States Government Obligations; (ii) bonds, debentures, participation certificates or notes
issued by, or obligations the prompt payment of principal and interest for which is guaranteed by,
any of the following: Bank for Cooperatives, Federal Financing Bank, Federal Land Banks,
Federal Home Loan Banks, Federal Intermediate Credit Banks, Federal National mortgage
Association, Export-Import Bank of the United States, Student Loan Marketing Association,
Farmers Home Administration, Federal Home Loan Mortgage Corporation or Government
National Mortgage Association, or any other agency or corporation which has been or may
hereafter be created by or pursuant to an Act of the Congress of the United States as an agency or
instrumentality thereof; or (iii) certificates of deposit, time deposits, bank repurchase agreements
or any other interest -bearing banking arrangements with any banking or savings institution
(including Escrow Agent or any bank with which Escrow Agent is affiliated) which is insured by
the Federal Deposit Insurance Corporation, provided that such certificates of deposit or time
deposits, bank repurchase agreements or other interest-bearing banking arrangements, if not
insured by the Federal Deposit Insurance Corporation, are either (a) issued by national or state
banks having capital and surplus of at least $100,000,000 or (b) fully secured by United States
Government obligations. No investment shall be made in a security maturing later than the date
on which Lessee reasonably anticipates needing such funds for the payment of the cost of the
applicable Equipment Group. Lessee shall notity Escrow Agent as to the dates on which funds
are needed for disbursement and the estimated amount of each such disbursement and Escrow
Agent may rely upon this information in connection with all investment or reinvestment of funds.
5. (a) The Escrow Agent shall disburse funds from the Equipment Acquisition Fund to
the Contractors, upon receipt of a written request from Lessee executed by either Barbara S.
Pachon, Director of Finance, Michael Gomez, Financial Analyst, Deborah Morrow,
Purchasing Manager, Kate Myers, Accounting Manager, or Rita Conrad, Deputy
DirectorlBudget Manager acknowledged by Lessor, setting forth the following: (I) the amount
to be disbursed, (2) the address to which such funds are to be forwarded, (3) a brief description of
the purpose of the payment, and (4) a statement that the costs being paid pursuant to that
disbursement were not subject to a previous draw. The request of Lessee shall contain as
attachments, bills, receipts, invoices or other documents acceptable to Lessee and Lessor
evidencing the amount and purposes for which the disbursement is requested. Lessee agrees to
submit to Lessor the above-mentioned attachments in form and substance satisfactory to Lessor
for acknowledgment and such other documents and certificates as Lessor may reasonably request
to evidence the proper expenditure of the money in the Equipment Acquisition Fund for the
Escrow Agreement
Dated as of March 20, 2009
City of San Bernardino / First Municipal Leasing Corporation / American National Bank
Page 2 of6
DW-ESC-061898
purposes of acquiring the applicable Equipment Group. Escrow Agent has no duty to ascertain
the correctness of any docwnents submitted in connection with any direction to disburse funds.
Payments to Contractors for costs of the Equipment Group are expected to be made according to
the following payment schedule:
Estimated
Dates
Description
Amount
Partial Payments TBD
May-December 2009
Equipment as described in Equipment Schedule No. 001
Exhibit A, Item A
$3,639.137.64
Total
$3,639,137.64
Escrow Agent shall disburse funds from the Escrow Account to the following persons on the date
hereof for payment of costs of issuance of the Lease and Escrow:
Issue
Cost
Payee
Address
Amount
Lessor Fee
First Municipal Leasing
Corporation
1905 Foothills Dr. So
Golden, CO 8040 I
$4,600.00
(b) If the aggregate of interest earnings in the Equipment Acquisition Fund exceeds
$1.00 (including interest earnings previously distributed), then on each Payment Date thereafter
relating to the Equipment Group for which the Equipment Acquisition Fund was established,
commencing March 30, 2010 the Escrow Agent shall disburse such excess earnings to Lessor,
automatically without receipt of written request therefor, and Lessor shall apply such
disbursement against Lessee's obligation to pay the principal portion of the Rental Payment
relating to such Equipment Group due on such date; provided, however, that if the amount of
such excess earnings available for such disbursement on any such Payment Date exceeds the
principal portion of the Rental Payment due with respect to such Equipment Group on such date,
then the Escrow Agent shall disburse only the amount of such principal portion to Lessor under
this Paragraph 5(b) on such Payment Date and shall retain the balance in the Equipment
Acquisition Fund to be applied pursuant to this Paragraph 5(b) on the next Payment Date or
pursuant to Paragraph 6, as applicable.
(c) No assignment of Lessor's interest in Rental Payments shall be effective as against the
Escrow Agent unless and until the assignor shall have filed with the Escrow Agent a written
notice thereof identifYing the assignee and, if such assignment is of less than all of any Rental
Payment, identifYing the assignee's interest in each Rental Payment.
6. Upon receipt of an executed Certificate of Acceptance of Lessee, in the form of
Exhibit B to the Lease (the "Certificate of Acceptance"), and after payment of all costs of the
Escrow Agreement
Dated as of March 20, 2009
City of San Bernardino / First Municipal Leasing Corporation / American National Bank
Page 3 of6
DW.ESC.(J61&9&
Equipment Group pursuant to Paragraph 5 of this Escrow Agreement, Escrow Agent shall pay to
Lessor any money remaining on deposit in the Equipment Acquisition Fund. Lessor shall apply
such money to the outstanding principal amount of the related Equipment Schedule and shall
reduce the amount of each remaining Rental Payment relating to such Equipment Group and the
principal and interest portions thereof accordingly. Any deficiency between the amount on
deposit in the Equipment Acquisition Fund and the cost of the Equipment Group to be funded
therefrom shall be the responsibility of Lessee, and neither Lessor nor Escrow Agent makes any
warranty to Lessee or shall be responsible to Lessee if the amount on deposit in the Equipment
Acquisition Fund is insufficient to fully fund such cost.
7. (a) Upon written notification to Escrow Agent by Lessor that an event of default has
occurred with respect to an Equipment Group, Escrow Agent shall forthwith disburse all money
on deposit in the Equipment Acquisition Fund to Lessor. In such event, Lessee shall continue to
be obligated to Lessor to the extent, if any, set forth in the Lease.
(b) Upon written notification to Escrow Agent by Lessor that Lessee has failed to provide
an executed Certificate of Acceptance by March 30, 2010 with respect to an Equipment Group,
Escrow Agent shall forthwith disburse all money on deposit in the Equipment Acquisition Fund
to Lessor. Lessee agrees that in the event that such transfer to Lessor is made, it shall pay
immediately and directly to Lessor an amount equal to sum of the Purchase Option Price for such
Equipment Group, interest from the date that such amount was deposited pursuant to this Escrow
Agreement, or such later date to which interest has been paid, until the date of payment by
Lessee, at the interest rate per annum utilized in the Schedule of Rental Payments for such
Equipment Group and all expenses, legal fees and other costs incurred by Lessor in connection
with the establishment and enforcement of the escrow established pursuant to this Escrow
Agreement in connection with such Equipment Group, all subject to the appropriation of legally
available funds therefore as set forth in the Lease. Any amount disbursed to Lessor pursuant to
the first sentence of this paragraph 7(b) shall be applied against Lessee's obligation under the
second sentence of this paragraph 7(b). Any escrow proceeds remaining after the requirements
of the first and second sentences of this paragraph 7(b) have been met shall be paid to Lessee by
Lessor. It is the intention of the parties that Lessee shall indemnify and hold harmless Lessor, to
the extent permitted by law, for all costs incurred in connection with the Lease and this Escrow
Agreement in the event that Lessee fails to provide an executed Certificate of Acceptance within
the applicable period set forth in this Escrow Agreement hereto relating to the Equipment Group.
Such period may be extended by the written consent of Lessor filed with Escrow Agent.
8. This Escrow Agreement may be modified or amended only with the written consent of
all parties hereto.
9. Lessor agrees to pay Escrow Agent a setup fee of $500.00 with Lessee paying all other
reasonable and necessary fees and expenses of Escrow Agent in connection with its duties and
obligations under this Escrow Agreement.
Escrow Agreement
Dated as of March 20,2009
City of San Bernardino I First Municipal Leasing Corporation I American National Bank
Page 4 of6
DW-ESC-061898
10. In the event of Escrow Agent's failure to account for any of the funds received by it,
said funds shall be and remain the property of Lessee in trust for the purposes set forth in this
Escrow Agreement, and if for any reason such funds cannot be identified, the assets of Escrow
Agent shall be impressed with a trust for the amount thereof and Lessee shall be entitled to a
preferred claim upon such assets until such identification is made.
II. This Escrow Agreement shall terminate when all transfers required to be made by
Escrow Agent from the Equipment Acquisition Fund under the provisions hereof shall have been
made.
12. In the event of any dispute between the parties hereto as to the facts of default, the
validity or meaning of these instructions or any other fact or matter relating to the transaction
between the parties, the Escrow Agent is instructed as follows:
That it shall be under no obligation to act, except under process or order of court, or until
it has been adequately indemnified to its full satisfaction, and shall sustain no liability for its
failure to act pending such process or court order or indemnification.
That it may in its sole and absolute discretion, deposit the property herein or so much
thereof as remains in its hands with the then Clerk, or acting Clerk, of the District Court of the
City and County of Denver, State of Colorado, interplead the parties hereto, and upon so
depositing such property and filing its complaint in interpleader it shall be relieved of all liability
under the terms hereof as to the property so deposited, and furthermore, the parties hereto for
themselves, their legal representatives, successors and assigns do hereby submit themselves to
the jurisdiction of said court and do hereby appoint the then Clerk, or acting Clerk, of said court
as their Agent for the service of all process in connection with such proceedings. The institution
of any such interpleader action shall not impair the rights of the Escrow agent under Paragraph 9
above.
13. If anyone or more of the covenants or agreements provided in this Escrow
Agreement on the part of Lessor, Lessee or Escrow Agent to be performed should be determined
by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be
deemed and construed to be severable from the remaining covenants and agreements herein
contained and shall in no' way affect the validity of the remaining provisions of this Escrow
Agreement.
14. This Escrow Agreement may be executed in several counterparts, all or any of which
shall be regarded for all purposes as one original and shall constitute and be but one and the same
instrument.
15. This Escrow Agreement shall be construed and enforced in accordance with the laws
of the State of Colorado.
Escrow Agreement
Dated as of March 20, 2009
City of San Bernardino I First Municipal Leasing Corporation I American National Bank
Page 5 of6
DW-ESC-06t898
IN WITNESS WHEREOF, the parties hereto have each caused this Escrow Agreement to
be executed by their duly authorized officers and attested as of the date first above written.
CITY OF SAN BERNARDINO,
LESSEE
By:
Barbara S. Pachon
Title: Director of Finance
Date: March~, 2009
FIRST MUNICIPAL LEASING CORPORATION,
LESSOR
By:
Its:
Date: March II, 2009
AMERICAN NATIONAL BANK,
ESCROW AGENT
By:
Kathleen Connelly
Title: Vice President - Corporate Trust
Date: March II, 2009
Escrow Agreement
Dated as of March 20, 2009
City of San Bernardino / First Municipal Leasing Corporation / American National Bank
Page 6 of6
DW-ESC-061898
March 10, 2009
American National Bank
Kathleen Connelly
3033 E 1st Ave, 2nd Fl
Denver CO 80206
Re: Investment Letter for City of San Berandino
I have reviewed the investment information provided to me by the Escrow Agent.
I approve of the investment of the escrowed funds into the Federated Treasury
Obligations Fund.
Sincerely yours,
Barbara S Pachon
City of San Bernardino
Director of Finance
--- ~--
AmericanNationalBanli
Trust Division
March 10, 2009
City of San Bernardino
Attn: Ms. Barbara S. Pachon, Director of Finance
300 North '0' Street
San Berardino CA 92418-0001
Re: Investment of Escrow Funds
Dear Ms. Pachon:
Pursuant to Section 4 of the Escrow Agreement, dated as of the 20th day of March, 2009,
between First Municipal Leasing Corporation (the Lessor), the City of San Berardino (the
Lessee), and American National Bank (the Escrow Agent), the Lessee shall direct the
Escrow Agent to invest the deposits in the account in writing.
I understand that the amounts invested will need to be liquid so as to be available to fund
the purchase of equipment at any time.
The Federated Treasury Obligations Fund, a money market, has the highest ratings
available from the Rating Agencies. I have attached a Fact Sheet. The prospectus can be
found on-line at:
ptto:! /www.federatedinvestors.com/daf/pdf/prospectus/G02 705-01. pdf
Please let me know if you require additional information.
Please sign and date the direction acknowledgement attached and send it back to me at
your earliest convenience.
A fee of $500 is payable by the Lessor at the inception of the Lease. This will be the
only escrow fee due throughout the term of the escrow under the normal course of
business. Additional fees will incur should a dispute arise causing the Escrow Agent to
hire counselor if there are an unusually high number of transactions outside what is
anticipated by the Escrow Agreement.
Cheyenne _ Colorado Springs _ Denver . Grand Junction . www.anbbank.com _ Member Sturm Financial Group
Page 2
March 10, 2009
San Berardino Investment Letter
If you have any questions, please contact me at 303.394.5412 or
kconnellv@anbbank.com. I am looking forward to working with you.
Sinlrely yours, a:J
!?~
ARBITRAGE CERTIFICATE
The undersigned, Barbara S. Pachon, hereby certifies that I am duly qualified and acting
Director of Finance, of the City of San Bernardino, CA, (the "Lessee"), and that in my official
capacity as such officer, I am responsible for the execution and delivery by the Lessee of a Lease
With Option to Purchase Agreement, dated as of March 20, 2009 (the "Lease"), between First
Municipal Leasing Corporation (the "Lessor"), as lessor, and the Lessee, as lessee, and (b) the
execution and delivery by the Lessee of an Escrow Agreement dated as of March 20, 2009 (the
"Escrow Agreement"), among the Lessee, the Lessor and the escrow agent named therein.
This Certificate is being issued pursuant to Section 103 and Section 148 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated
thereunder (the "Regulations").
The following facts, estimates and circumstances are in existence on the date of this
Certificate or are reasonably expected to occur hereafter.
1. The Lease is being entered simultaneously with the delivery of this certificate pursuant
to the laws of the State of California and a resolution adopted by the City Council (the
"Resolution"), to provide funds to pay the costs of acquiring equipment listed on Exhibit A,
(Schedule Of Equipment, Rental Payments, Etc.), of the Lease (the "Equipment").
2. Pursuant to the Lease, the Lessee is required to make Rental Payments with respect
thereto, comprising principal and interest, on the dates and in the amounts set forth in Lease
Exhibit A ( the "Rental Payments").
3. On the date hereof, Lessee will deposit with the Escrow Agent the amount of
$727,827.53, and Lessor will deposit, or cause to be deposited, with the Escrow Agent, the
amount of $2,915,910.11, which together will be used to pay the cost of the Equipment and costs
of issuance. Any interest earned thereon will be expended by the Lessee in payment of principal
on the next available date.
4. The Lessee has or expects to enter into contracts for the acquisition of the Equipment
within six months of the date hereof, which contracts will obligate the payment of not less than
5% of the proceeds of the Lease.
5. The Equipment will be acquired with due diligence on or before December 30, 2009.
6. All of the spendable proceeds of the lease will be expended on the Equipment within
three (3) years from the date of execution of the Lease. No proceeds of the Lease will be used to
reimburse the Lessee for expenditures made prior to the date ofthe issuance of the Lease
7. The total proceeds to be derived from the Lease, together with investment earnings
thereon and other money contributed by the Lessee, do not exceed the amounts expected to be
necessary for the governmental purpose for which the Lease is issued.
Page I of2
8. There have not been created or established, nor does the Lessee expect to create or
establish, any sinking fund or other similar fund (i) that is reasonably expected to be used to pay
rental payments under the Lease, or (ii) that may be used solely to prevent a default in the
payment of rental payments under the Lease.
9. The interest of the Lessee in the Equipment has not been, and is not expected during
the term of the Lease, to be sold or otherwise disposed of by the Lessee (except for dispositions
resulting from normal wear, obsolescence or depreciation) prior to the final rental payment date
of the Lease.
10. No reserve fund has been or will be established for the Lease with respect to the
Rental Payments.
II. In the Lease the Lessee has covenanted to take all actions necessary to ensure that the
interest paid under the Lease remains excludable from gross income under the Code. Such
covenant includes, without limitation, the requirement to comply with the requirements of the
Code relating to the rebate of arbitrage profit to the United States Government.
12. The Lease is not a "hedge bond" within the meaning of Section 149(G) of the Code.
The Lessee reasonably expects that (i) 85% of the spendable proceeds of the Lease will be used
to carry out the governmental purpose of the Lease within three years after the date hereof, and
(ii) not more than 50% of the proceeds of the Lease will be invested in investments having a
substantially guaranteed yield for four years or more.
13 . To the best of the knowledge and belief of the undersigned, the expectations of the
Lessee as set forth above, are reasonable; and there are no present facts, estimates and
circumstances which would damage the foregoing expectations.
WITNESS Our hands this 20th day of March, 2009
CITY OF SAN BERNARDINO,
Lessee
By:
Barbara S. Pachon
Title: Director of Finance
ARBITRAGE CERTIFICATE
City of San Bernardino
Page 2
Form 8038-G
Information Return for Tax-Exempt Governmental Obligations
.... Under Internal Revenue Code section 149(e)
.... See separate Instructions.
Caution: If the issue price is under $100,000. use Form 8038-GC.
OMS No. 1545-0720
(Rev. November 2000)
Department of the Treasury
Internal Revenue Service
If Amended Return, check here ~ D
2 Issuer's employer identification number
95 : 6000772
Re ortin Authorit
Issuer's name
CITY OF SAN BERNARDINO
3 Number and street (or P.O. box jf mail is not delivered to street address)
300 NORTH D STREET
5 City, town, or post office. state, and ZIP code
SAN BERNARDINO, CA 92418.001
7 Name of Issue
LEASE WITH OPTION TO PURCHASE AGREEMENT
9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative
MICHAEL GOMEZ, FINANCIAL ANALYST ( 909 ) 384-5146
T e of Issue check a Iicable box(es) and enter the issue rice) See instructions and attach schedule
11 D Education 11
12 D Health and hospital 12
13 D Transportation . . 13
14 D Public safety. . . 14
15 D Environment (including sewage bonds) . 15
16 D Housing . . . . 16
17 ~ Utilities . . . . 17 2,915,910.11
18 D Other. Describe ~ 18
19 If obligations are TANs or RANs, check box ~ D If obligations are BANs. check box ~ D
20 If obli ations are in the form of a lease or installment sale, check box . . . . . . ~ D
Oescri tion of Obli ations, Com lete for the entire issue for which this form is bein
Room/suite 4 Report number
3 001
6 Date of issue
03-20-09
8 CUSIP number
NONE
(d) Weighted
average maturity
(b) Issue price
(e) Stated redemption
price at maturity
(e) Yield
ears
4.850 %
N/A 7.00
underwriters' discount
4,600.00
2,911,310.11
0,00
2,915,910.11
22
23
24
25
26
27
28
29
30
Proceeds used for accrued interest . . . . . . . . . . . .
Issue price of entire issue (enter amount from line 21, column (b)). .
Proceeds used for bond issuance costs (including underwriters' discount)
Proceeds used for credit enhancement. . . . . . . . . .
Proceeds allocated to reasonably required reserve or replacement fund
Proceeds used to currently refund prior issues
Proceeds used to advance refund prior issues
Total (add lines 24 through 28). . . . . .
Nonrefundin roceeds of the issue (subtract line 29 from line 23 and enter amount here) .
Oeser; tion of Refunded Bonds (Com lete this art onl for refundin bonds.)
Enter the remaining weighted average maturity of the bonds to be currently refunded . ~
Enter the remaining weighted average maturity of the bonds to be advance refunded . ....
Enter the last date on which the refunded bonds will be called. . . . . . .. . ~
Enter the date(s) the refunded bonds were issued ~
Miscellaneous
Enter the amount of the state volume cap allocated to the issue under section 141 (bIl5)
Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions)
Enter the final maturity date of the guaranteed investment contract ~ N/A
Poaled financings: a Proceeds of this issue that are ta be used ta make loans to other governmental units 37a 0.00
If this issue is a ioan made from the proceeds of another tax-exempt issue. check box ~ D and enter the name of the
issuer ~ and the date of the issue ~
If the issuer has designated the issue under section 265(bIl3)(Bllilllll) (smali issuer exception), check box ~ ~
If the issuer has elected to pay a penaity in lieu of arbitrage rebate, check box . . . . . . . . . ~ D
If the issuer has identified a hed e. check box . . . . . . . . . . . . . . . . . . . . ~ D
Under penalties of pedury. I declare that I have examined this return and accompanying schedules and statements, and to the besl of my knowledge
and belief, they are true. correct, and complete.
24
25
26
27
28
4,600.00
0.00
0.00
0.00
0.00
N/A
N/A
NIA
N/A
years
years
31
32
33
34
0.00
0.00
35
36a
b
37
b
38
39
40
Sign
Here
~ Signature of issuer's authorized representative
Date
~ Barbara S. Pachon. Director Finance
, Type or print name and title
For Paperwork Reduction Act Notice, see page 2 of the Instructions.
*
~.~~y~~orm 8038-G (Rev 11-20001
NOTICE OF ASSIGNMENT
AND LETTER OF DIRECTION - LEASE
First Municipal Leasing Corporation, ("Lessor") hereby gives notice to the City of San
Bernardino ("Lessee") that it has assigned all of its rights to receive payments relating to the
equipment comprising an Equipment Group as set forth on Equipment Schedule No. 001,
now or hereafter leased thereunder, under the Lease With Option To Purchase Agreement
dated as of March 20, 2009, including without limitation all amounts of rent, insurance, and
condemnation proceeds, indemnity or other payments of any kind for or with respect to any
item of equipment, any and all payments or proceeds due or to become due as a result of the
sale, lease or other disposition of the Equipment Group, all rights to receive notices and give
consents and to exercise the rights of the Lessor under the Lease, and all right claims, and
causes of action which Assignor may have against the manufacturer or seller of the equipment
in respect of any defects therein; and such assignment was made to Capital One Public
Funding, LLC., ("Assignee"), effective March 20, 2009.
This Lease requires 14 semi-annual payments of $248,490.67 payable commencing September
30,2009, and each March 30 and September 30 thereafter, through March 30, 2016.
As of March 20,2009, the date of the assigmnent, all 14 payments remain on the contract.
Beginning with the September 30, 2009 lease payment, all future pavments should be
forwarded to the Assignee at the following address:
Capital One Public Funding, LLC
265 BroadhoIlow Road
Melville, NY 11747
or as otherwise directed by Assignee.
Correspondence and all other matters regarding the lease should be directed to:
Catherine DeLuca
Assistant Vice President
Capital One Public Funding, LLC
265 BroadhoIlow Road
Melville, NY 11747
631-531-2802
FAX: 631-298-2332
Any assigned payments received by Lessor are received in trust for the Assignee and will be
immediately delivered to Assignee.
The undersigned Lessee has received no notice of a prior sale, transfer, assignment,
hypothecation or pledge of the Lease or of the lease payments reserved thereunder.
The undersigned Lessee recognizes and will continue to recognize Assignee as the Lessor as
to all rights of Lessor under the Lease and the right of Assignee to receive the assigned lease
payments described herein, and that no modification, amendment, or addendum to the Lease
shall be effective without Assignee's written consent.
FIRST MUNICIPAL LEASING CORPORATION, Lessor
By:
Title
Date: March II, 2009
Acknowledged:
CITY OF SAN BERNARDINO, Lessee
By: Barbara S. Pachon
Title: Director of Finance
Date: March _, 2009
First Municipal Leasing Corporation - Notice of Assignment
Lease With Option To Purchase Agreement
Dated as of March 20, 2009
Page 2 of 2
NOTICE OF ASSIGNMENT
AND LETTER OF DIRECTION
ESCROW AGREEMENT
First Municipal Leasing Corporation, ("Lessor") hereby gives notice to American National Bank,
("Escrow Agent") , that it has assigned all of its rights to receive payments under the Lease With
Option To Purchase Agreement and Equipment Schedule No. 001 dated as of March 20,
2009, as between Lessor and the City of San Bernardino, ("Lessee") and in the Equipment
leased thereunder, including without limitation all amounts of rent, insurance, and condemnation
proceeds, indemnity or other payments of any kind for or with respect to any item of Equipment,
any and all payments or proceeds due or to become due as a result of the sale, lease or other
disposition of the Equipment, and all rights to receive notices and give consents and to exercise
the rights of the Lessor under the Lease; and such assignment was made to Capital One Public
Funding, LLC, ("Assignee"), effective March 20,2009.
This Lease requires 14 semi-annual payments of $248,490.67 payable commencing September
30,2009, and each March 30 and September 30 thereafter, through March 30, 2016.
As of March 20, 2009, the date of the assignment, all 14 payments remain on the contract.
Beginning with the September 30, 2009 lease payment, all future Davments should be forwarded
to the Assignee at the following address:
Capital One Public Funding, LLC
265 Broadhollow Road
Melville, NY 11747
or as otherwise directed by Assignee.
CorresDondence and all other matters regarding the lease should be directed to:
Catherine DeLuca
Assistant Vice President
Capital One Public Funding, LLC
265 Broadhollow Road
Melville, NY 11747
631-531-2802
FAX: 631-298-2332
Any assigned payments received by Lessor are received in trust for the Assignee and will be
immediately delivered to Assignee.
NOTICE OF ASSIGNMENT
AND LETTER OF DIRECTION
ESCROW AGREEMENT
Page 2
The undersigned Lessee has received no notice of a prior sale, transfer, assignment,
hypothecation or pledge of the Lease or of the lease payments reserved thereunder.
The undersigned Lessee recognizes and will continue to recognize Assignee as the Lessor as to
all rights of Lessor under the Lease and the right of Assignee to receive the assigned lease
payments described herein, and that no modification, amendment, or addendum to the Lease shall
be effective without Assignee's written consent.
FIRST MUNICIPAL LEASING CORPORATION, Lessor
By:
Title
Date: March II, 2009
Acknowledged:
CITY OF SAN BERNARDINO, Lessee
By: Barbara S. Pachon
Title: Director of Finance
Date: March _, 2009
Acknowledged:
AMERICAN NATIONAL BANK, Escrow Agent
By:
Kathleen Connelly
Title: ice President - Corporate Trust
Date: March -.ll, 2009
PROCEEDS PAYMENT AUTHORIZATION
NO.O!
American National Bank, as Escrow Agent, is hereby requested to pay from the Escrow Account
established by the Lease With Option To Purchase Agreement dated as of March 20, 2009, by
and among the Lessor, and the Lessee, to the person or corporation designated below as Payee,
the sum set forth below in payment of issue cost(s) described below. The amount shown below is
due and payable under a purchase order or contract with respect to the Equipment described
below and has not formed the basis of any prior request for payment.
The Lessee has accepted the Equipment under this lease agreement noted on
Exhibit B-1 to Equipment Schedule 001.
Payee:
FIRST MUNICIPAL LEASING CORPORATION
Address:
1905 Foothills Drive South
Golden, CO 80401-9136
Amount:
$4,600.00
Description of Equipment cost: Lessor / Escrow Agent Fees
Dated: March
,2009
Capital One Public Funding, LLC,
Assignee
City of San Bernardino,
Lessee
Barbara S. Pachon
Director of Finance
By: Jonathan A. Lewis
Its: Senior Vice President
By:
Its:
Documents attached hereto:
Exhibit B-1 executed by Lessee
Invoice / Wire instructions
EXHIBIT B-1
EQUIPMENT SCHEDULE NO. 001
CERTIFICATE OF ACCEPTANCE
I, Barbara S. Pachon, the undersigned, hereby certify that I am the duly qualified and
acting Director of Finance of the City of San Bernardino, (Lessee); and, with respect to the
above-referenced Equipment Schedule to the Lease With Option to Purchase Agreement
dated as of March 20, 2009, (the Lease), by and between Lessee and First Municipal Leasing
Corporation (Lessor), that:
I. The Lessor Fee, cost of issuance, described in the above-referenced Equipment
Schedule Exhibit A has been accepted by Lessee:
2. The rental payments provided for in the above-referenced Equipment Schedule
Exhibit A (the Rental Payments) shall commence and be due and payable on September 30,
2009, and each March 30, and September 30th thereafter, in the amounts shown on such
Equipment Schedule.
3. Lessee has appropriated and/or taken other lawful actions necessary to provide
moneys sufficient to pay all Rental Payments required to be paid under the Lease during the
current fiscal year of Lessee, and such moneys will be applied in payment of all such Rental
Payments due and payable during such current fiscal year.
4. There is no litigation, action, suit or proceeding pending or before any court,
administrative agency, arbitrator or governmental body, that challenges the organization or
existence of Lessee; the authority of Lessee or its officers or its employees to enter into the Lease
with respect to the Equipment Group; the proper authorization, approval and execution of the
Lease with respect to the Equipment Group and other documents contemplated thereby; the
appropriation of moneys, or any other action taken by Lessee to provide moneys sufficient to
make Rental Payments corning due under the Lease in Lessee's current fiscal year with respect
to the Equipment Group; or the ability of Lessee otherwise to perform its obligations under the
Lease and the transactions contemplated thereby with respect to the Equipment Group.
Dated: March _' 2009
CITY OF SAN BERNARDINO, Lessee
By:
Barbara S. Pachon
Its: Director of Finance
Attachment: First Municipal Leasing Corporation Invoice
LEASE WITH OPTION TO PURCHASE AGREEMENT
Dated as of March 20, 2009
First Municipal Leasing Corporation I City of San Bernardino
Page 20 of22
f' U~.~
IIL~
FIRST MUNICIPAL LEASING CORPORATION@
March 20, 2009
Barbara Pachon
Director of Finance
CITY OF SAN BERNARDINO
300 North D Street
San Bernardino, CA 92418
INVOICE
Cost ofIssuance / Lessor / Escrow Fee: $4,600.00
payable in connection with the completion of the
Lease With Option to Purchase Agreement
and Escrow Agreement
dated as of March 20, 2009
between
CITY OF SAN BERNARDINO, Lessee,
FIRST MUNICIPAL LEASING CORPORATION, (FMLC), Lessor,
and
AMERICAN NATIONAL BANK, Escrow Agent.
Please remit the above [ by wire transfer] to
First Municipal Leasing Corporation
1905 Foothills Drive South
Golden, CO 80401-9186
Beneficiary Account Number (BNF) 3008002937
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, CA 94104
Wire Routing Transit Number (RTN) 121 000 248
FMLC appreciates the opportunity to be of service to CITY OF SAN BERNARDINO
1905 Foothills Drive South . Golden, CO 80401-9186
. ,:-, . 888 . 456 . 0046 . 888. FAX. FMLC .