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R2007-100 2007-07-23 RESOLUTION NO. R2007-100 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO ENTER INTO A MASTER LEASE/PURCHASE AGREEMENT WITH BANK OF AMERICA. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain Master Lease/Purchase Agreement with Bank of America is hereby approved in accordance with the terms and conditions attached hereto as Exhibit "A" and made a part hereof for all purposes. Section 2. That the City Manager or his designee is hereby authorized to execute and the City Secretary to attest all documents necessary to effectuate a Master Lease/Purchase Agreement with Bank of America. PASSED, APPROVED and ADOPTED this the 23rd day of J A.D., 2007. � UYy✓ TOM REID MAYOR ATTEST: OUN 1 T ITY CRETARY APPROVED AS TO FORM: ax-,:._A , Q-A--- DARRIN M. COKER CITY ATTORNEY Exhibit"A" Resolution 2007-100 07-0048 MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT THIS MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT (the "Agreement"), dated as of , 20 , is by and between BANC OF AMERICA PUBLIC CAPITAL CORP ("Lessor"), and CITY OF PEARLAND, TX("Lessee"). WITNESSETH: - WHEREAS, Lessee is a political subdivision of the State of Texas, and is authorized and empowered under the laws of the State, particularly the Public Property Finance Act, Texas Loc. Gov't. Code Ann. §271.001 et seq. (the "Act")to lease, as lessee, to purchase and receive, and to control and dispose of personal property, whether movable or fixed, considered by the City Council of Lessee to be necessary, useful or appropriate to one or more governmental purposes of Lessee. WHEREAS, the parties hereto desire that Lessee from time to time lease from Lessor Equipment (defined below) to be identified by Lessee on the terms and conditions set forth below, which Equipment the City Council of Lessee shall determine is necessary, useful and appropriate to one or more governmental purposes of Lessee and shall be specifically identified in any Schedule A (as hereinafter defined) attached hereto and made a part hereof; and WHEREAS, Lessee shall make Rental Payments (as hereinafter defined) and certain other payments directly to Lessor for the possession, use and ownership of the Equipment; and WHEREAS, this Agreement shall not constitute a debt or liability obligation of the State (as hereinafter defined) or Lessee or any political subdivision of the State, or a pledge of the faith and credit or taxing power of the State, or Lessee, or any political subdivision of the State, but shall be a special obligation payable solely from the current revenues of Lessee in accordance with the provisions hereof; and WHEREAS, as security for the payment of all of Lessee's obligations under this Agreement Lessee shall assign to Lessor a first priority perfected security interest in the Equipment; NOW, THEREFORE, for and in consideration of the premises and of the covenants hereinafter contained, and other valuable considerations, the parties hereto agree as follows: SECTION 1. DEFINITIONS. For the purposes of this Agreement and related documents, the following definitions will apply: 1.1. Acceptance Certificate. A Certificate of Lessee, in substantially the form set forth on Attachment A to Schedule A hereunder by which Lessee accepts delivery of the Equipment and authorizes Lessor to disburse funds for said Equipment. #765703v1 (BAPCC/Texas Lease Template). 1 1.2. Acceptance Date. Unless otherwise agreed to by the prior written consent of Lessor, the date on which the Acceptance Certificate is executed and delivered by Lessee to Lessor pursuant to the terms of this Agreement. 1.3 Acquisition Fund Agreement. The Acquisition Fund and Account Control Agreement entered into among Lessor, Lessee and the Acquisition Fund Custodian named therein, in connection with this Agreement. 1.4. Authorized Officer. (i) In the case of Lessor, any President or Vice President, and when used in reference to an act or document of Lessor, also means any other person authorized to perform the act or sign the document, and (ii) in the case of Lessee, the City Manager of the City Council, or any other person authorized by the City Council of Lessee. 1.5. Closing. The date of delivery of all executed documents related to this Agreement and any Schedule A hereunder as required under this Agreement and such related Schedule A. 1.6. Contract Price. The total cost of the Equipment listed in each Schedule A, 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, and otherwise incurred in connection with the financing provided by the lease-purchase of the Equipment as provided in each Schedule A; provided that (i) any such soft costs on a cumulative basis shall not exceed a percentage of the Maximum Amount 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. 1.7. Determination of Taxability. One of the following determinations, made in regard to section 103 of the Code (as defined herein) to the effect that by reason of any action or inaction by Lessee or any violation by Lessee of any of its covenants or representations in this Agreement or any misrepresentation in any certificate furnished in connection with any Schedule A hereunder, the interest payable on such Schedule A is includable in the gross income of owner of such obligation: (i) a final determination, decision or decree by the Commissioner or any District Director of Internal Revenue, or by any court of competent jurisdiction, which is not subject to further review, or (ii) an opinion of a nationally recognized bond counsel furnished by Lessor to Lessee. 1.8. Equipment. The goods enumerated on each Schedule A that is now or may hereafter from time to time become attached hereto and incorporated herein by reference, together and with any and all additions, modifications, attachments, replacements and parts thereof • 1.9. Equipment Acquisition Account. The account so designated and established by Lessee with Lessor pursuant to Section 14.2 hereof 1.10. Lease Proceeds. With respect to any Schedule A, the total amount of money or other consideration to be paid or provided by Lessor, in no event to exceed the Maximum #765703v1 (BAPCC/Texas Lease Template) 2 Contract Amount, for application in accordance with such Schedule A and Section 14 hereof, including (a) the Contract Price of each item of Equipment set forth on such Schedule A payable to the Vendor thereof upon acceptance by Lessee and (b)the amount,if any, paid by Lessor and applied to the reasonable costs of issuance of such Schedule A. 1.11. Lease Term. With respect to this Agreement and any Schedule A hereunder, the term specified in the applicable Schedule A in accordance with Section 3 hereof. 1.12. Lease Term Commencement Date. The date as set forth on each Schedule A hereto. 1.13. Lease Term Interest Rate. The interest rate per annum.on the Lease Proceeds as set forth on each Schedule A hereto as adjusted pursuant to the provisions of Section 4.4 hereof. 1.14. Material Adverse Change. (a) 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, or (b) any change in Lessee's creditworthiness that could have a material adverse effect on (i) the financial condition or operations of Lessee and its subsidiaries taken as a whole, or (ii) Lessee's ability to perform its obligations under this Agreement or any Schedule A. 1.15. Maximum Amount. The amount as set forth on each Schedule A hereto. 1.16. Permitted Investments. Any investment authorized pursuant to the Public Funds Investment Act, V.T.C.A. Government Code §2256.001 et seq. and the written investment policy of Lessee. 1.17. Purchase Agreement or Purchase Agreements. Each of the purchase agreements between Lessee and the Vendors of the Equipment. 1.18. Purchase Price. The amount set forth in the Schedule A relating to the Equipment described therein. 1.19. Rebate Account. The account so designated by Lessee if so established pursuant to this Agreement. 1.20. Rental Payments. The scheduled payments (but excluding indemnifications and reimbursements and Additional Rents payable to Lessor hereunder) payable by Lessee pursuant to the provisions of this Agreement and each Schedule A. 1.21. Schedule A. The document(s) now or hereafter from time to time attached hereto and incorporated herein by reference and signed by the parties which, among other things, describes the equipment to be leased by Lessor to Lessee, describes the Lease Term for the Equipment listed thereon and Lessee's obligations with respect to payment and which shall be numbered consequentially from No. 1 upward. 1.22. State. The State of Texas. #765703v1 (BAPCC/Texas Lease Template) 3 1.23. Taxable Rate. The interest rate representing the equivalent yield to Lessor of the Lease Term Interest Rate if the interest component of the Rental Payments is included in the gross income of Lessor under the Code. 1.24. Total Contract Price. The amount as set forth in each Schedule A hereto. 1.25. UCC. The State's Uniform Commercial Code. 1.26. Vendor or Vendors. The manufacturer or manufacturers of an item of Equipment, as well as the agents or dealers of the manufacturer, from whom Lessor has purchased or is purchasing items of Equipment. SECTION 2. LEASE OF EQUIPMENT. 2.1. Acquisition of Equipment; Conditions Precedent. (a) Lessee either has ordered or shall order the Equipment pursuant to one or more Purchase Agreements from one or more Vendors. Lessee shall remain liable to each such Vendor with respect to its duties and obligations in accordance with the Purchase Agreement, and as between Lessor and Lessee, Lessee shall bear the risk of loss with respect to any loss or claim relating to any item of Equipment covered by any Purchase Agreement. (b) The obligation of Lessor to purchase, pay or provide other consideration for, or provide an item of Equipment or to deposit the Lease Proceeds to the Equipment Acquisition Account is subject to the receipt by Lessor of the following documents and the satisfaction of the following conditions, all of which shall be satisfactory to Lessor in form and substance: (i) Lessee shall have accepted the Equipment by delivery to Lessor of an Acceptance Certificate, whereupon the item of Equipment shall immediately become subject to and governed by the provisions of this Agreement and the related Schedule A; (ii) There shall exist no Event of Default (as defined in Section 12.1 hereof) under this Agreement or any Schedule A hereunder, or any condition, event or act which with notice or lapse of time, or both, would become an Event of Default thereunder which has not been remedied or waived; (iii) There shall exist no Material Adverse Change in the financial condition of Lessee; (iv) This Agreement, the applicable Schedule A (including all attachments) duly executed by Lessee and an Acquisition Fund Agreement duly executed by Lessee and Acquisition Fund Custodian; (v) Evidence of insurance as required under Section 6.7 hereof; and (vi) Financial information and such other documents, instruments or other items as may be reasonably required by Lessor. #765703v1 (BAPCC/Texas Lease Template) 4 • 2.2. Lease of Equipment. Upon execution of each Schedule A, Lessor shall provide the consideration specified in such Schedule A to be provided by it to acquire the Equipment and to lease to Lessee, and Lessee shall lease from Lessor the Equipment, all in accordance with the provisions of this Agreement and the related Schedule A, to have and to hold for the Lease Term. Lessee hereby_acknowledges and agrees that Lessor shall retain a perfected-first priority security interest in the Equipment in accordance with this Agreement. The execution and delivery of this Agreement and any Schedule A hereunder shall-not obligate Lessor to execute and deliver any Schedule A or to provide any funds or other consideration with respect to any Schedule A unless and until such Schedule A has been executed and delivered by all other parties thereto and all conditions set forth in this Agreement and such Schedule A have been satisfied. SECTION 3. LEASE TERM. 3.1. Lease Term. (a) The Lease Term applicable to any Schedule A shall commence on the Lease Term Commencement Date'and shall terminate on the last business day of Lessee's then current fiscal budget period (such period hereinafter referred to as the "Original Lease Term") unless renewed pursuant to Section 3.1(b)hereof. (b) The Original Lease Term with respect to the items of Equipment described in each Schedule A will be automatically and successively renewed at the end of the Original Lease Term under the same terms and conditions for such number of successive renewal periods (such renewal periods hereinafter individually referred to as a "Renewal Lease Term") as is set forth on such Schedule A. 3.2. Termination of Lease Term. The Lease Term applicable to any Schedule A will terminate upon the earliest to occur of any of the following events: (a) The expiration of the Original Lease Term or any Renewal Lease Term with respect to all items of Equipment described in a Schedule A and the non-renewal thereof in. accordance with the terms and conditions of this Agreement; or (b) The exercise by Lessee of the option granted under the provisions of Sections 5.1 or 6.8 hereof to purchase the Equipment identified in such Schedule A; or (c) Lessor's election to terminate this Agreement under Section 12.2 due to Lessee's default hereunder or termination of this Agreement under the provisions of Section 3.3; or (d) The payment by Lessee of all Rental Payments in accordance with this Agreement with respect to such Schedule A and any additional amounts required to be paid by Lessee hereunder. 3.3. Non-appropriation. Subject to the provisions of Section 15 hereof, in the event sufficient funds are not appropriated for the payment of all Rental Payments required to be paid in the next succeeding Renewal Lease Term, then Lessee may terminate this Agreement at the end of the Original Lease Term or the then current Renewal Lease Term, as the case may be, and #765703v1 (BAPCC/Texas Lease Template) 5 Lessee shall not be obligated to make payment of the Rental Payments provided for in such Schedule A beyond the Original Lease Term or the then current Renewal Lease Term, as the case may be. LESSEE AGREES TO DELIVER NOTICE TO LESSOR OF SUCH TERMINATION PROMPTLY AFTER ANY DECISION TO NON-APPROPRIATE IS MADE. SECTION 4. RENTAL PAYMENTS. 4.1. Rental Payments to Constitute a Current Expense of Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments hereunder and under any Schedule A shall constitute a current expense of Lessee and shall not in any way be construed to be a debt of Lessee in contravention of any applicable constitutional or statutory limitations or requirements concerning the creation of indebtedness by Lessee, nor shall anything construed herein constitute a pledge of the general tax revenues, funds or moneys of Lessee. No provision, covenant or agreement contained in this Agreement or any obligation herein imposed on Lessee, or the breach thereof, shall constitute or give rise to or impose upon Lessee a pecuniary liability, a charge upon its general credit or taxing powers, (if any), or a pledge of its general revenues. In making the provisions, covenants and agreements set forth in this Agreement, Lessee has not obligated itself except with respect to the Equipment and the application of Rental Payments to be paid by Lessee hereunder. 4.2. Intentionally Omitted. 4.3. Amount and Times of Payment. As rental for the Equipment, Lessee hereby agrees to pay Lessor the amounts specified in each Schedule A at the times and in the manner set forth therein. 4.4. Allocation of Interest. A portion of each Rental Payment shall be allocated to interest in accordance with the amortization schedule attached to the Schedule A and its corresponding Acceptance Certificate. 4.5. Lease Term Interest Rate. The Rental Payments shall bear interest during the Lease Term at the rate set forth in each Schedule A; provided, however, in the event of a Determination of Taxability, such interest rate set forth in each Schedule A shall automatically increase to the Taxable Rate retroactive to the date of the occurrence of the Determination of Taxability and Lessee will pay such additional amount as will result in Lessor receiving the interest component of the Rental Payments at the Taxable Rate; provided, further, that such interest rate set forth in each Schedule A or such interest rate set forth in each Schedule A as increased by the terms hereof, respectively, shall never exceed the then maximum interest rate allowed for similar governmental obligations pursuant to Chapter 1204, Texas Government Code, as amended, or other applicable laws in effect as of the date of such Schedule A or as of the date of any increase to such interest rate, respectively. 4.6. Place of Payments. All payments required to be made to Lessor hereunder shall be made at Lessor's principal office or as may be otherwise directed by Lessor or its assignee. 4.7. Late Payment. Should Lessee fail to pay any part of the Rental Payments or any other sum required to be paid by Lessor on or before the due date thereof, such unpaid amount #765703v1 (BAPCC/Texas Lease Template) 6 shall continue to accrue interest at the Lease Term Interest Rate plus 5.0% or the maximum rate allowed under Texas law for Rental Payments, whichever is less, until paid. 4.8. Abatement of Payments. There will be no abatement or reduction of payments by Lessee for any reason, including but not limited to, any defense, recoupment, setoff, counterclaim, or any claim (real or imaginary) arising out of or related to any defects, damages, malfunctions, breakdowns or infirmities of the Equipment. Lessee assumes and shall bear the entire risk of loss and damage to the Equipment from any cause whatsoever, it being the intention of the parties that the Rental Payments shall be made in all events unless the obligation to make Rental Payments is terminated as otherwise provided herein. 4.9. Rental Payments to Be Unconditional. The obligations of Lessee to make payment of the Rental Payments and all other payments and fees due hereunder, as well as to perform and observe all other covenants hereunder, shall be absolute and unconditional in all events, without abatement, diminution, deduction, set-off or defense for any reason, including without limitation any failure of the Equipment to be delivered or installed, any defects, malfunctions, breakdowns or infirmities in the Equipment or any accident,. condemnation, destruction or unforeseen circumstances. Notwithstanding any dispute between Lessee and Lessor, any vendor or any other person, Lessee shall make all Rental Payments when due and shall not withhold any Rental Payments pending final resolution of such dispute,nor shall Lessee assert any right of set-off or counterclaim against its obligation to make such payments required under this Agreement. 4.10. Appointment of Servicer. Lessor shall have the right to designate an entity to act as the"Servicer" for the collection of Rental Payments payable by Lessee, the enforcement of remedies or the distribution of funds to one or more holders of interests in this Agreement, all as provided herein. Any Servicer appointed under this Section shall be a trust company or a bank having the powers of a trust company, having a capital and surplus of not less than$25,000,000. Any such Servicer shall notify Lessee and Lessor of its acceptance of the appointment and, upon giving such notice, shall become Servicer, vested with all the property, rights and powers of the Servicer hereunder, without any further act or conveyance. In no event shall Servicer be entitled to assign its responsibilities hereunder without the written consent of Lessee. Such Servicer shall execute, deliver, record and file such instruments as are required to confirm or perfect its acceptance hereunder and set forth its duties hereunder. SECTION 5. PREPAYMENT; PURCHASE. 5.1. Purchase Rights. Lessee shall be entitled to full title and all ownership interests in the Equipment identified on a particular Schedule A, and Lessor's security interest therein shall be terminated: (a) Upon payment in full of all Rental Payments of the applicable Schedule A and all other amounts due under this Agreement,with respect to such Schedule A; or (b) Upon written notice by Lessee delivered at least thirty (30) days in advance of any date on which a Rental Payment is due, and upon the payment on such date of the Rental Payments due, the Purchase Price, and all other amounts owed by Lessee hereunder. #765703v1 (BAPCC/Texas Lease Template) 7 5.2. Optional Prepayment. Lessee shall have the right to prepay the outstanding principal balance of each Schedule A hereunder, in full at any time, provided, that as conditions precedent to Lessee's right to make, and Lessor's obligation to accept, any such prepayment: (i)Lessor shall have actually received the notice required in Section 5.1(b) above providing the amount of principal which will be prepaid (the "Prepaid Principal") and the date (the "Prepayment Date") on which the prepayment will be made; and (ii) each such prepayment shall be in the amount of 100% of the principal amount to be prepaid, plus accrued unpaid interest thereon to the Prepayment Date, plus the amount equal to one percent (1%) of the Purchase Price,plus any other sums which have become due to Lessor under such Schedule A on or before the Prepayment Date but have not been paid, provided, however, in no event shall any prepayment cause the interest rate on any Schedule A to exceed the maximum interest rate allowed for similar governmental obligations pursuant to Chapter 1204, Texas Government Code, as amended, or other applicable laws in effect as of the date of such Schedule A. All prepayments of principal shall be applied to principal in inverse order of maturity. 5.3. Consummation of Purchase. Lessor's security interest in the Equipment identified in a particular Schedule A shall be terminated and released automatically in conjunction with the receipt of the full Purchase Price or the final Rental Payment due thereunder plus any other amounts then due from Lessee hereunder, unless an Event of Default hereunder shall have occurred and be continuing as of such date. Such date may at the discretion of Lessor be extended for such additional period as Lessor's counsel reasonably determines to be necessary to reflect the impact of, and avoid the risks related to, bankruptcy-related laws. On such date, Lessor shall deliver to Lessee such deeds, termination statements, bills of sale and other documents and instruments as Lessee shall reasonably require to evidence the transfer of all right, title and interest of Lessor in such Equipment to Lessee free and clear of all liens and encumbrances created by or arising, directly or indirectly, through Lessor. 5.4. Mandatory Prepayment. Subject to Section 13.1, all or substantially all of the assets of Lessee, including Lessee's interest in this Agreement and the Equipment, may be acquired in any manner by another entity, subject to the opinion of counsel acceptable to Lessor as to the continued exclusion from gross income of the interest component of the Rental Payments. However, if all or substantially all of the assets of Lessee, including Lessee's interest in this Agreement and the Equipment, are acquired in any manner by another entity, Lessee may be required, at the direction of Lessor to prepay in whole the Purchase Price, plus any other amounts then due from Lessee hereunder. 5.5. Eminent Domain by Lessee. Lessee expressly agrees that in connection with any exercise of its eminent domain powers, the fair market value of the Equipment shall be the sum of all remaining Rental Payments. SECTION 6. RESPONSIBILITIES OF LESSEE. 6.1. Care and Use of Equipment. Lessee shall use the Equipment in a careful and proper manner, in compliance with all applicable laws and regulations, and at its sole cost and expense, service, repair and maintain the Equipment so as to keep the Equipment in good condition, repair, appearance and working order for the purposes intended, ordinary wear and tear excepted, and shall replace any part of the Equipment as may from time to time become #765703v1 (BAPCC/Texas Lease Template) 8 worn out, lost, stolen, destroyed or damaged or is unfit for use. Subject to the terms of Section 6.5 hereof, any and all such additions to or replacements of the Equipment and all parts thereof shall constitute accessions to the Equipment and shall be subject to all the terms and conditions of this Agreement and included in the term"Equipment" as used in this Agreement or in any Schedule A hereunder. If requested by Lessor, Lessee shall enter into or cause to be entered into, and maintained in full force and effect during the term of this Agreement, standard maintenance contracts satisfactory to Lessor covering the Equipment and shall comply with all its obligations thereunder. Lessee shall furnish evidence to Lessor of such signed maintenance agreement at or prior to the date of this Agreement and the payment of all charges and premiums therefor. Substitute maintenance may be used if necessary and if first approved by Lessor in writing. Upon the early termination of this Agreement pursuant to Section 12.2, Lessee shall return the Equipment at its sole expense to.Lessor at a place designated by Lessor in the same condition as originally received, ordinary wear and tear excepted, and in a condition which will permit Lessor to be eligible for such standard maintenance contract without incurring any expense to repair or rehabilitate the Equipment. 6.2. Inspection. Lessor shall have the right upon reasonable prior notice to Lessee to enter onto and upon the premises where the Equipment is located to inspect the Equipment and observe its use during normal business hours. 6.3. Utilities. Lessee shall pay all charges for gas, water, steam, electricity, light, heat or power, telephone or other utility service furnished to or used on or connection with the Equipment during the Lease Term. There shall be no abatement of Rental Payments on account of interruption of any such services. 6.4. Taxes. Lessee agrees to pay when due any and all taxes relating to the Equipment and Lessee's obligations hereunder, including but not limited to, all license or registration fees, gross receipts tax, sales and use tax, if applicable, license fees, documentary stamp taxes, rental taxes, assessments, charges, ad valorem taxes, excise taxes, and all other taxes licenses and charges imposed on the ownership, possession or use of the Equipment by any governmental body or agency, together with any interest and penalties, whether the taxes assessed are assessed against Lessor or Lessee, other than taxes on or measured by the net income of Lessor. 6.5. Alterations. Without the prior written consent of Lessor, which consent shall not be unreasonably withheld, Lessee shall not make any alterations, modifications or attachments to the Equipment which cannot be removed without materially damaging the functional capabilities or economic value of the Equipment. Upon return of the Equipment and at Lessor's request, Lessee at its sole cost and expense, will remove all alterations, additions and attachments and repair the Equipment as necessary to return the Equipment to the condition in which it was furnished, ordinary wear and tear excepted. 6.6. Transportation and Installation Charges. Lessee shall be responsible for all charges relating to the transportation of the Equipment to Lessee's location and the installation at such location. Lessor may at its option either prepay such charges and invoice Lessee or forward invoices to Lessee as they are received and Lessee shall remit payment within ten(10) days upon Lessee's receipt of same. (Does this last sentence need to be here? Does it conflict with the Siemen's agreement?) #765703v1 (BAPCC/Texas Lease Template) 9 6.7. Insurance. Lessee shall during each Lease Term maintain or cause to be maintained (a) casualty insurance naming Lessor and its assigns as additional insured and loss payee and insuring the.Equipment against loss or damage by fire and all other risks covered by the standard extended coverage endorsement then in use in the State, and any other risks reasonably required by Lessor, in an amount at least equal to the Purchase Price of the Equipment and with such deductibles as Lessor.may require in its sole discretion; (b) liability insurance that protects Lessor from liability in all events in form and amount satisfactory to Lessor; and (c)worker's compensation coverage as required by the laws of the State;provided that, with Lessor's prior written consent, Lessee may self-insure against the risks described in clause (a). Lessee shall furnish to Lessor evidence of such insurance or self-insurance coverage throughout each Lease Term. Lessee shall not cancel or modify such insurance or self-insurance coverage in any way that would affect the interests of Lessor without first giving written notice thereof to Lessor at least thirty(30) days in advance of such cancellation or modification. 6.8. Risk of Loss. Lessee shall bear all risk of loss to the Equipment, after delivery of the Equipment to Lessee, and in the event of loss or damage thereto, Lessee shall as its option either (i) continue to make the Rental Payments due hereunder and repair or replace the Equipment as mutually agreed between Lessee and Lessor, or(ii)purchase the Equipment for the Purchase Price. 6.9. Performance by Lessor of Lessee's Responsibilities. Any performance required of Lessee or any payments required to be made by Lessee may, if not timely performed or paid, be performed or paid by Lessor, and in that event, Lessor shall be immediately reimbursed as Additional Rents payable under Section 4.7 by Lessee for such payments and for any costs and expense, legal or otherwise associated with the payments or other performance by Lessor, with interest per annum thereon at the Lease Term Interest Rate plus 5.0% or the maximum rate for governmental obligations under Chapter 1204, Texas Government Code, as amended (or other applicable laws in effect as of the date such Additional Rents are incurred), whichever is less. 6.10. Financial Statements. Lessee shall keep its books and records in accordance with generally accepted accounting principles. Lessee agrees that it will furnish Lessor: (a) Lessee's current audited financial statements within 270 days of each fiscal year end including (i) a balance sheet, (ii) statement of revenues, expenses and changes in fund balances, (iii) statement of cash flows, (iv) operating fund budget analysis, and (v) appropriate notes, schedules and attachments to the fmancial statements; (b)when approved but not later than 30 days prior to its current fiscal year end a copy of the annual budget for the following fiscal year; and (c) such other financial information relating to the ability of Lessee to continue performing hereunder (as submitted or approved) as Lessor may from time to time reasonably request, and permit Lessor or its agents and representatives to inspect Lessee's books and records and make extracts therefrom. Lessee represents and warrants to Lessor that all financial statements which have been delivered to Lessor fairly and accurately reflect Lessee's financial condition and there has been no Material Adverse Change in Lessee's financial condition as reflected in the statements since the date thereof. 6.11. Purchase Agreement; Installation Contract. Lessee shall provide to Lessor a copy of any Purchase Agreement, installation contract and the projected installation schedule and #765703v1 (BAPCC/Texas Lease Template) . 10 any amendments thereto entered into for the Equipment being financed pursuant to this Agreement. 6.12. 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 costs thereof. All amounts so advanced by Lessor shall constitute Additional Rent for the Lease Term and Lessee agrees to pay such amounts so advanced by Lessor with interest thereon from the date of the advance until paid at the Lease Term Interest Rate plus 5.0% or the maximum interest rate allowed under Chapter 1204, Texas Government Code, as amended, whichever is less. 6.13. Rates and Charges. Lessee will, at all times while this Agreement and any Schedule A issued hereunder are outstanding, establish, fix, prescribe and collect rates and charges for the services produced or furnished by Lessee which are reasonably expected to yield income sufficient to satisfy the Rental Payments due thereunder. SECTION 7. DAMAGE, DESTRUCTION AND CONDEMNATION. 7.1. Damage, Destruction and Condemnation. Unless Lessee shall have exercised its option to purchase the Equipment by making payment of the Purchase Price and any other amounts then due from Lessee hereunder, as provided in this Agreement and the related Schedule A, 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 (as hereinafter defined) 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. Notwithstanding the foregoing, Lessee may elect to replace the Equipment. 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. 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 Schedule A. Lessee shall notify Lessor as soon as possible of its election to replace Equipment in accordance with the foregoing, and in any event, Lessee shall complete the documentation of Replacement Equipment on or before the next Rental Payment date after the occurrence of a #765703v1 (BAPCC/Texas Lease Template) 11 casualty event, or be required to exercise the purchase option with respect to the damaged Equipment. For purposes of this Section, 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. 7.2. 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 7.1, Lessee shall either (a) complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b)pay or cause to be paid to Lessor the amount of the Purchase Price for the Equipment, plus any other amounts then due from Lessee hereunder, and, upon such payment, the applicable Lease Term shall terminate and Lessor's security interest in the Equipment shall terminate as provided in Section 3 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 Section 4 hereof. SECTION 8. TITLE TO EQUIPMENT; SECURITY INTEREST. 8.1. Title. During the Lease Term, legal title to the Equipment governed by Schedule A shall, so long as no Event of Default has occurred and is continuing under such • Schedule A and hereunder, be in Lessee. The Equipment shall be registered in the name of Lessee and, if applicable, title thereto shall be evidenced by a certificate of title, or such other instrument as may be required by or utilized by the laws of the State to demonstrate ownership. Such certificate shall be held at all times during the term of this Agreement by Lessor and shall expressly state thereon that (a) Lessor holds a lien on the Equipment (Lessor's name and address shall appear on such certificate as "Banc of America Public Capital Corp, 2059 Northlake Pkwy., 4th Floor, Mail Code GA3-003-04-01, Tucker, GA 30084"), (b) Lessee's possession of the Equipment is subject to this Agreement, and (c) any other information required by applicable law and that may be necessary or convenient, as determined by Lessor, to establish Lessor's rights, title and interest as the first secured lienholder of the Equipment. Lessee shall at all times protect and defend, at its own cost and expense, its title to the Equipment from and against all claims, liens and legal processes of creditors of Lessee, and keep all Equipment free and clear of all such claims, liens and processes. The Equipment is and shall remain personal property. Upon the occurrence of an Event of Default under this Agreement or upon the termination of this Agreement; other than pursuant to Sections 3.2(b), 3.2(d) or 6.8 hereof, and Lessor's termination thereof(i) full and unencumbered legal title to the Equipment shall pass and revert to Lessor and Lessee shall have no further interest therein; (ii) Lessee shall execute and deliver to Lessor such documents as Lessor may request to evidence the passage of Lessee's title and interest therein; and (iii) upon request by Lessor, Lessee shall deliver possession of the Equipment to Lessor. Upon termination pursuant to Sections 3.2(b), 3.2(d) or 6.8 hereof, full and unconditional title to the applicable Equipment shall pass to Lessee, and Lessor's security interest in the applicable Equipment shall terminate, and Lessor shall execute and deliver to Lessee such documents as #765703v1 (BAPCC/Texas Lease Template) 12 Lessee may request to evidence the termination of Lessor's security or other interest in such Equipment. 8.2. Security Agreement. Anything in Section 8.1 hereof to the . contrary notwithstanding, Lessee hereby grants to Lessor, as security for all of the obligations of Lessee hereunder, a security interest in any and all of Lessee's right, title and interests in and to this Agreement the Equipment, all additions, attachments, accessions, substitutions and replacements thereto, and Rental Payments due or to become due hereunder, and any and all proceeds thereof, including without limitation, the proceeds of insurance thereon and any amounts of Lease Proceeds on deposit in the Equipment Acquisition Account, and all investments and proceeds thereof. Lessee agrees to execute and deliver all documents, instruments and financing statements necessary or appropriate to perfect or maintain the security interest granted hereby. At the request of Lessor, Lessee will keep and maintain a conspicuous marking or tag on the Equipment that a security interest therein is held by Lessor. It is the intention of the parties hereto that the relationship between such parties created herein is that Lessor be the equivalent of a secured party under Article 9 of the UCC as in effect from time to time and that Lessee be the equivalent of a debtor under such Article 9. To that end, the parties hereto agree that this Agreement shall be governed by Article 9 as if such Article 9 were applicable hereto and that Lessor and Lessee have the rights and obligations of a secured party and debtor, respectively, under such Article 9. 8.3. Personal Property. The Equipment is, and shall at all times be and remain, personal property notwithstanding that the Equipment or any part thereof may now be, or hereafter become, in any manner affixed or attached to, or embedded in, or permanently resting upon, real property or any building thereon or any fixtures, or attached in any manner to what is permanent by any means of cement, plaster, nails, bolts, screws or otherwise. Upon request of Lessor, Lessee shall obtain, as to any place where the Equipment is located, a waiver from the landlord and mortgagee thereof with respect to any rights they may have in and to the Equipment of the rights of levy or distraint thereon. 8.4. Liens. Lessee shall not directly create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, security interest, encumbrance or claim on or with respect to the Equipment or any interest therein, except for the lien and security interest of Lessor therein. Lessee shall promptly, at its own expense, take such action as may be necessary to duly discharge any such mortgage, pledge, lien, security interest, charge, encumbrance or claim if the same shall arise at any time. 8.5. Inspection, Acceptance and Written Notice of Defects. Immediately, or as soon as practicable to provide time for testing, upon receipt and installation of the Equipment, Lessee shall inspect the Equipment. Unless Lessee gives Lessor written notice of each defect or other proper objection to the Equipment before the execution of the Acceptance Certificate, it shall be conclusively presumed,.as between Lessor and Lessee, that Lessee has fully inspected and acknowledged that the Equipment is in good condition and repair, has been properly installed and is performing satisfactorily, and that Lessee is satisfied with and has accepted the Equipment in such good condition and repair. Lessor shall not make or provide payment to any Vendor(or reimbursement to Lessee pursuant to the requirements of Section 9.2(f) hereof) of the Total Contract Price, or any portion thereof, for the Equipment, or any portion thereof, until #765703v1 (BAPCC/Texas Lease Template) 13 it Lessor shall have received a duly executed Acceptance Certificate of lessee in accordance with Section 14.3 hereof. 8.6. Change in Name, Corporate Structure or Principal Place of Business. Lessee shall maintain its existence as a political subdivision of the State and Lessee shall provide to Lessor written notice of any change in its name, structure, or principal place of business thirty (30) days in advance of the date that such change is planned to take effect. This Section shall also apply to any of Lessee's assignees or subassignees permitted under Section 13.1 hereof. 8.7. Location. The Equipment shall be located in the place(s) designated in the related Schedule A pertaining thereto. SECTION 9. REPRESENTATIONS,WARRANTIES AND COVENANTS OF LESSEE. 9.1. Lessee's Representations, Warranties and Covenants. Lessee warrants and represents to Lessor(all such representations and warranties being continuing), as follows: (a) Lessee has or will budget and appropriate for the initial fiscal year during the Lease Term of this Agreement unobligated funds in an amount equal to the sum of the Rental Payments due during such initial fiscal year and any other amounts due under this Agreement; (b) Lessee is a state or a duly organized and validly existing body corporate and politic and a political subdivision or agency thereof within the meaning of section 103 of the Internal Revenue Code of 1986, as amended, and the related regulations and rulings thereunder (the "Code"); (c) Lessee will exercise its best efforts to preserve and keep in full force and effect its existence as a body corporate and politic; (d) Lessee is authorized under the Act and laws of the State to enter into this Agreement and the transactions contemplated hereby and to perform all of its obligations hereunder; (e) Lessee has duly authorized the execution and delivery of this Agreement under the terms and provisions of the resolution of its City Council or by other appropriate official approval, and further represents, covenants and warrants that all requirements have been met and procedures have occurred in order to ensure the enforceability of this Agreement against Lessee, and that this Agreement is a legal, valid and binding obligation of Lessee, enforceable in accordance with its terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to effecting the enforcement of creditors' rights, and acknowledges that Lessee has granted to Lessor a security interest in the Equipment; and that Lessee has complied with any applicable public bidding/proposal requirements with respect to this Agreement and the Equipment; (f) Lessee is not in breach of or in default under any constitutional provision, applicable law or administrative rule or regulation of the State, the United States, or of any department, division, agency or instrumentality of either thereof or any applicable court or #765703v1 (BAPCC/Texas Lease Template) 14 administrative decree or order, or any loan agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument to which Lessee is a party or to which Lessee or any property or assets of Lessee is otherwise subject or bound which in any material way, directly or indirectly, affects Lessee's entering into this Agreement, or the validity thereof, the validity or adoption of the resolution authorizing Lessee to.enter into this Agreement, the execution and delivery of this Agreement or other instruments contemplated thereby to which Lessee is a party, and compliance with the provisions of each thereof will not conflict with or constitute a breach of or default under any constitutional provision, applicable law or administrative rule or regulation of the State, the United States, or of any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order, or any loan agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument to which Lessee is a party or to which Lessee or any of the property or assets of Lessee is otherwise subject or bound; (g) Lessee shall cause to be executed and delivered in connection with each Schedule A an opinion of its counsel and an applicable IRS Form 8038-G (or, if the Total Contract Price of the Equipment is less than $100,000 an IRS Form 8038-GC) in form and substance satisfactory to Lessor and its counsel; provided, however, that Lessor shall have the sole responsibility to cause such IRS Form 8038-G (or, if applicable, IRS Form 8038-GC) to be filed with the Internal Revenue Service not later than the fifteenth (15th) day of the second month following the end of the calendar quarter during which this Agreement and any Schedule A hereunder was issued; (h) Lessee has been fully authorized to execute and deliver this Agreement under the resolution of its City Council, and by any other appropriate official approval, and further represents, warrants and covenants that all requirements have been met, and all procedures have taken place, in order to ensure the enforceability of this Agreement, has complied with all applicable public bidding/proposal requirements, if any, with respect to this Agreement, including the lease and the acquisition by Lessee of the Equipment hereunder; (i) The Equipment is, and during the period this Agreement is in force will remain,personal property and, when subjected to use by Lessee hereunder,will not be or become fixtures; (j) During the Lease Term, except as otherwise permitted by this Agreement, the Equipment shall be used by Lessee only for the purpose of performing services related to its status as a political subdivision of the Sate, and consistent with the permissible scope of Lessee's authority and will not be used in an unrelated trade or business of Lessee or in the trade or business of any person or entity other than Lessee; (k) Lessee assumes full responsibility for the safety and any consequences of lack of safety with respect to the operation and maintenance of the Equipment while Lessee has the right to possession or control of the Equipment; however Lessee preserves all rights and remedies against Siemens, manufacturers or third parties for the safety and any consequences of lack of safety with respect to the operation and maintenance of the Equipment. #765703v1 (BAPCC/Texas Lease Template) 15 (1) Lessee acknowledges that Lessor is acting as a financing source only with respect to the Equipment which has been selected, and the related specifications developed, by Lessee; • (m) Lessee shall promptly and duly execute and deliver to Lessor such further documents, instruments and assurances and take such further action as Lessor may from time to time reasonably request in order to carry out the intent and purpose of this Agreement and any Schedule A hereunder and to establish and protect the rights and remedies created or intended to be created in favor of Lessor hereunder. Lessor will prepare at Lessee's expense such documents or instruments for execution by Lessee; (n) Lessee will use its best efforts to budget and appropriate for each fiscal year during the Lease Term of this Agreement unobligated funds in an amount equal to the sum of the Rental Payments due during such fiscal year and any other amounts due under this Agreement; (o) Lessee's obligations under this Agreement are obligations payable from Lessee's budget and are obligations of the general fund; (p) 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 (i).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 government unit or payments in respect of such property; or (ii) 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 government unit. No portion of the Contract Price 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; (q) The representations above shall be deemed to be made on and as of the beginning date. of the Original Lease Term and each Renewal Lease Term, if any, of each Schedule A hereunder; (r) There is no pending litigation; tax claim, proceeding or dispute that may adversely affect Lessee's financial condition or impairs its ability to perform its obligations hereunder; and (s) The Equipment is essential to the functions of Lessee or to the services Lessee provides its citizens. 9.2. Tax Matters. (a) It is the intention of the parties hereto that the interest portion of the Rental Payments received by Lessor under this Agreement and any Schedule A hereunder be and remain excludable from gross income for purposes of federal income taxation. #765703v1 (BAPCC/Texas Lease Template) 16 (b) Lessee covenants that, with respect to the law of federal income taxation, it will not intentionally perform any act that shall have the effect of terminating such exclusion from gross income of the interest portion of the Rental Payments for federal income tax purposes. (c) For purposes of section 148(f) of the Code, which exempts obligations of certain "small governmental units" from the arbitrage rebate requirements of the Code, Lessee hereby declares that (i) Lessee is a political subdivision of the State, is a governmental unit with general powers of taxation, and is not a subordinate entity of any other political subdivision or other governmental unit of the State; (ii)this Agreement will not at any time be a "private activity bond"; and (iii) ninety-five percent (95%) or more of the net proceeds under this Agreement will be used for local governmental activities of Lessee as described in section 148(f) of the Code. Neither Lessee nor any subordinate entity thereof'will issue any tax-exempt obligations during the calendar year in which this Agreement is dated that, when added to the face amount of all other tax-exempt obligations so issued in such year (not including `private activity bonds" as.described in clause"ii" above) will be in excess of$5,000,000.00 unless,prior to such issuance, Lessee, for itself and on behalf or its subordinate entity, if appropriate, shall have obtained an opinion of legal counsel acceptable to and for the benefit of Lessor, with nationally recognized standing in matters pertaining to tax-exempt obligations, to the effect that such issuance will not result in Lessee being ineligible for the arbitrage rebate exemption described above. (d) It is the intention of the parties hereto that during the term of this Agreement, Lessee be the sole beneficial and legal owner of the Equipment, and will report on such basis for financial accounting, federal income tax, and all other purposes. Lessor shall not take any action inconsistent with Lessee's ownership of the Equipment for federal income tax purposes except pursuant to the exercise of remedies under Section 12.2 hereof. (e) The weighted average maturity (defined in accordance with the Code) of any Schedule A will not exceed one hundred twenty percent (120%) of the weighted average reasonably expected economic life in the hands of Lessee of the Equipment financed by Lease Proceeds derived from such Schedule A. (f) Lessee will not use the proceeds of any Schedule A under this Agreement to reimburse expenditures previously paid by Lessee, except in compliance with the requirements of Treas. Reg. 1.150-2. (g) Lessee will assure that the proceeds of any Schedule A under this Agreement are not so used as to cause this Agreement and any Schedule A hereunder to satisfy the private loan financing test of section 141(c) of the Code. (h) Lessee will not take or permit or suffer to be taken any action to be taken if the result of the same would be to cause this Agreement and any-Schedule A hereunder to be "federally guaranteed"within the meaning of section 149(b) of the Code. (i) Lessee will not take, or permit or suffer to be taken, any action with respect to the Lease Proceeds which, if such action had reasonably expected to have been taken, #765703v1 (BAPCC/Texas Lease Template) 17 or had been deliberately and intentionally taken, on the date of this Agreement would have caused this Agreement and any Schedule A hereunder to be an "arbitrage bond" within the meaning of section 148 of the Code. (j) If the Lease Proceeds of any Schedule under this Agreement (i)have all been expended on the date hereof for the purpose set forth herein, or (ii) do not exceed $1,000,000.00, Lessee shall not be required to provide an issuer's certification pursuant to Treasury Regulation I.148-2(b)(2)(ii)(A) or(B),respectively. (k) In the event that Lessee does not spend the moneys in the Equipment Acquisition Account within six (6) months of the date the deposit is made pursuant to Section 14.2 hereof, Lessee will, if required by section 148(f) of the Code to pay rebate: (i)establish a Rebate Account and deposit the Rebate Amount.(as defined in Section 1.148-3(b) of the Federal Income Tax Regulations) not less frequently than once per year after the Lease Commencement Date; (ii) shall rebate to the United States, not less frequently than once every five (5) years after the Lease Commencement.Date, an amount equal to at least 90% of the Rebate Amount and within 60 days after payment of all Rental Payments or the optional prepayment price calculated pursuant to Section 5.2 hereof(the "Optional Prepayment Price") 100% of the Rebate Amount, as required by the Code and any regulations promulgated thereunder. Lessee shall determine the Rebate Amount, if any, at least every year and upon payment of all Rental Payments or the Optional Prepayment Price and shall maintain such determination, together with any supporting documentation required to calculate the Rebate Amount, until six (6) years after the date of the final payment of the Rental Payments or the Optional Prepayment Price. (1) The representations above shall be deemed to be made on and as of the beginning date of the Original Lease Term and each Renewal Lease Term, if any, of each Schedule A hereunder. SECTION 10. INDEMNIFICATION. TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS OF THE STATE, LESSEE HEREBY AGREES TO INDEMNIFY, PROTECT, AND SAVE LESSOR HARMLESS FROM ALL LIABILITY, OBLIGATIONS, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, PROCEEDINGS, COSTS AND .EXPENSES, INCLUDING REASONABLE ATTORNEY'S FEES, ARISING OUT OF, CONNECTED WITH, OR • RESULTING DIRECTLY OR INDIRECTLY FROM THIS AGREEMENT AND THE EQUIPMENT, INCLUDING WITHOUT LIMITATION, THE MANUFACTURE, SELECTION, DELIVERY, POSSESSION, CONDITION, LEASE, USE, OPERATION OR RETURN OF THE EQUIPMENT. NOTWITHSTANDING ANYTHING STATED IN SECTION 3 HEREOF OR IN ANY OTHER PROVISION HEREOF, THE INDEMNIFICATION ARISING UNDER THIS SECTION SHALL CONTINUE IN FULL FORCE AND EFFECT NOTWITHSTANDING THE FULL PAYMENT OF ALL OBLIGATIONS UNDER THIS AGREEMENT OR ANY SCHEDULE A HEREUNDER. #765703v1 (BAPCC/Texas Lease Template) 18 SECTION 11. DISCLAIMER OF WARRANTIES. 11.1. Disclaimer of Warranties. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, TITLE OR FITNESS FOR USE OF THE EQUIPMENT, OR ANY COMPONENT THEREOF OR ANY OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT THERETO AND, AS TO LESSOR, LESSEE'S LEASE AND PURCHASE OF THE EQUIPMENT SHALL BE ON AN "AS IS" BASIS. All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without limiting the foregoing Lessor shall have no responsibility or liability to Lessee or any other person with respect to any of the following: (i) any liability, loss or damage caused or alleged to be caused directly or indirectly by the Equipment, any inadequacy thereof, any deficiency or defect (latent or otherwise) therein, or any other circumstances in connection therewith; (ii)the use, operation or performance of the Equipment or any risks relating thereto; (iii) any interruption of service, loss of business or anticipated profits or consequential damages; or (iv) the delivery, operation, servicing, maintenance, repair, improvement or replacement of the Equipment. If, and so long as, no Event of Default has occurred and is continuing under this Agreement and the related Schedule A, Lessee shall be, and hereby is, authorized during the term of such Schedule A to assert and enforce, at Lessee's sole cost and expense, from time to time, in the name of and for the account of Lessor and/or Lessee, as their interests may appear, whatever claims and rights Lessee or Lessor may have against the Vendor or any prior title holder or possessor of the Equipment. In no event shall Lessor be liable for any loss or damage in connection with or arising out of this Agreement, any Schedule A, the Equipment, or the existence, furnishing, functioning or Lessee's use of any item or products or services provided for in this Agreement. 11.2. Vendor's Warranties. Lessor hereby irrevocably appoints Lessee its agent and attorney-in-fact during the Lease Term, so long as no Event of Default shall have occurred and be continuing hereunder, to assert from time to time whatever claims and rights including warranties of the Equipment which Lessor may have against the Vendor. Any amounts that Lessor is entitled to pursuant to this section shall be limited by the amounts owed by Lessee and shall not include additional recoveries Lessee may be entitled to. Lessee's sole remedy for the breach of warranties, indemnification or representations shall be against the Vendor of the Equipment and any other entities involved in the chain of production and distribution of the Equipment, and not against Lessor, nor shall such matter have any effect whatsoever on the rights and obligations of Lessor with respect to this Agreement, including the right to receive full and timely payments under this Agreement. LESSEE EXPRESSLY ACKNOWLEDGES THAT IN LESSOR'S CAPACITY AS LESSOR HEREUNDER, LESSOR MAKES, AND HAS MADE HEREUNDER, NO REPRESENTATION OR WARRANTY WHATSOEVER AS TO THE EXISTENCE OR AVAILABILITY OF SUCH WARRANTIES OF THE VENDOR OF THE EQUIPMENT. #765703v1 (BAPCC/Texas Lease Template) 19 SECTION 12. DEFAULT AND REMEDIES. 12.1. Definition of Default. Lessee shall be deemed to be in default hereunder upon the happening of any of the following events of default("Events of Default"): (a) Lessee shall fail to make any Rental Payment when due or any other sum within 10 days of becoming due; or (b) Lessee shall fail to perform or observe any term or condition or covenant of this Agreement or any Schedule A hereto (other than those covenants referred to in subparagraphs (e), (f), (g), or (h) below), for a period of 15 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; or (c) Proceedings under any bankruptcy, insolvency, reorganization or similar legislation shall be instituted by or against Lessee, or a receiver, custodian or similar officer shall be appointed for Lessee or any of its property, and such proceedings or appointments shall not be vacated, or fully stayed, within twenty(20) days after the institution or occurrence thereof; or (d) Any representation, warranty or covenant made by Lessee is found to be incorrect or misleading in any material respect on the date made; or (e) Any insurance carrier cancels any insurance on the Equipment without Lessee first providing replacement coverage; or (f) Lessee sells, assigns, subleases, or otherwise transfers or encumbers all or any part of its interest in this Agreement or the Equipment without Lessor's prior written consent; or (g) Lessee permits a change in ownership or management control of Lessee without the prior written consent of Lessor that Lessor in good faith deems disadvantageous to Lessor; or (h) Any default occurs under any other agreement 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 at 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. #765703v1 (BAPCC/Texas Lease Template) 20 12.2. Remedies on Default. Upon the occurrence of any Event of Default, Lessor may exercise any one or more of the following remedies as Lessor in its sole discretion shall elect: (a) To declare the entire amount of Rental Payments hereunder immediately past due and payable as to any or all items of Equipment without any further notice or demand to Lessee; (b) Proceed by appropriate court action to enforce performance by Lessee of the applicable covenants of this Agreement or to recover for the breach thereof including the payment of Rental Payments due or to become due hereunder or any deficiency thereof following disposition of the Equipment; (c) With or without terminating this Agreement, enter and take possession of the Equipment wherever situated,without any court order or other process of law and without liability for entering the premises, and sell, lease, sublease or make other disposition of the same in a commercially reasonable manner for the account of Lessee, and apply the proceeds of any such sale, lease, sublease, or other disposition, after deducting all costs and expenses, including court costs and attorney's fees, incurred with the recovery, repair, storage and other sale, lease,sublease or other disposition costs, toward the balance due under this Agreement; (d) Terminate this Agreement as to all or any part of the Equipment and use, operate, lease or hold the Equipment as Lessor in its sole discretion may decide; (e) Require Lessee to deliver or assemble the Equipment at a place reasonably convenient to Lessee and use or operate the Equipment for the purpose of preserving it; (f) Proceed by appropriate court action to enforce performance by Lessee of the applicable covenants of this Agreement or to recover for the breach thereof, including the payment of all amounts due from Lessee, in which event Lessee shall pay or repay to Lessor all costs of such action or court action including without limitation, reasonable attorneys' fees and expenses; and/or (g) Take whatever action at law or in equity may appear necessary or desirable to enforce its rights with respect to the Equipment, in which event Lessee shall pay or repay to Lessor all costs of such action or court action, including, without limitation, reasonable attorneys' fees and disbursements. 12.3. Further Remedies; No Remedy Exclusive. A termination hereunder shall occur only upon notice by Lessor to Lessee and only with respect to such part of the Equipment as Lessor specifically elects to terminate in such notice. Except as to those parts of the Equipment with respect to which there is a termination, this Agreement shall remain in full force and effect and Lessee shall be and remain liable for the full performance of all its obligations hereunder. All remedies of Lessor are cumulative and may be exercised concurrently or separately and shall survive the termination of this Agreement. The exercise of any one remedy shall not be deemed an election of such remedy or preclude the exercise of any other remedy. #765703v1 (BAPCC/Texas Lease Template) 21 12.4. Return of Equipment. If an Event of Default has occurred and is continuing,• Lessee shall allow Lessor to recover the Equipment at a place reasonably convenient to Lessor at Lessee's sole cost and expense, including, without limitation, all costs of transportation. The cost of all transportation of Equipment of any nature prior to the expiration or prior termination of an Agreement will be at Lessee's sole expense. In the event that Lessee makes modifications to a site after any Equipment has been installed therein and such modifications impede the removal of the Equipment, the cost of removing the impediments and restoring the site shall be the sole expense of Lessee. SECTION 13. ASSIGNMENT, SUBLEASING AND SELLING. 13.1. No Sale,Assignment or Subleasing by Lessee. Lessee agrees not to sell, assign, lease, sublease, pledge or otherwise encumber or suffer a lien or encumbrance upon or against any interest in this Agreement or the Equipment (except for the. lien and security interest of Lessor therein) or to remove the Equipment from its place of installation without Lessor's prior written consent which shall not be unreasonably withheld. 13.2. Assignment by Lessor. Lessor's right, title and interest in and to Rental Payments and any other amounts payable by Lessee under this Agreement and any Schedule A, its security interest in the Equipment subject to each such Schedule A, and all proceeds therefrom may be assigned and reassigned in whole or in part to one or more assignees by Lessor, without the necessity of obtaining the consent of Lessee; provided, however, that any such assignment, transfer or conveyance to a trustee for the benefit of owners of certificates of participation shall be made with notice to Lessee and in a manner that conforms to any applicable State law. Nothing in this Section 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, interests in which are offered and sold in a private placement or limited offering only to investors whom Lessor reasonably believes are qualified institutional buyers or accredited investors within the meaning of the applicable federal securities law; provided further, however, that in any event, Lessee shall not be required to make Rental Payments, to send notices or to otherwise deal with respect to matters arising under a lease with or to more than one individual or entity. No assignment, transfer or conveyance permitted by this Section shall be effective until Lessee shall have received a written notice of assignment that discloses the name and address of each such assignee; provided, however, that if such assignment is made to a bank or trust company as trustee or paying agent for owners of certificates of participation, trust certificates or partnership interests with respect to the Rental Payments payable under this Agreement and any Schedule A, it shall thereafter be sufficient that Lessee receives notice of the name and address of the bank or trust company as trustee or paying agent. During the Lease Term, Lessee shall keep, or cause to be kept, a complete and accurate record of all such assignments in form necessary to comply with section 149 of the Code. Lessee shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees designated in such register. Lessee shall not have the right to and shall not assert against any assignee any claim, counterclaim or other right Lessee may have against Lessor or the Vendor. Assignments in part may include, without limitation, assignment of all of Lessor's security interest in and to the Equipment listed in a particular Schedule A and all rights in,to and #765703v1 (BAPCC/Texas Lease Template) 22 under the Schedule A 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 Schedule A, but such option- does not permit the assignment of less than all of Lessor's interests in the Equipment listed in a single Schedule A. SECTION 14. APPLICATION OF LEASE PROCEEDS; ACCEPTANCE. 14.1. Application of Lease Proceeds. At the Closing of each Schedule A hereunder, Lessor shall pay or provide the Lease Proceeds in the amount specified in such Schedule to the Vendor of the applicable Equipment or, if agreed by Lessor and Lessee, to Lessee for deposit into an Equipment Acquisition Account. 14.2. Equipment Acquisition Account. Lessor and Lessee agree that in order to ensure that moneys sufficient to pay the Total Contract Price of the Equipment under any Schedule A hereto will be available for the purpose of acquiring such Equipment when required, on or before the Lease Term Commencement Date, Lessor shall, subject to section 2.1 hereof, deposit or cause to be deposited into the Equipment Acquisition Account established pursuant to the Acquisition Fund Agreement executed in connection herewith the sum set forth on such Schedule A. The moneys on hand from time to time in the Equipment Acquisition Account shall be held in trust for the benefit of Lessee and Lessor and invested at the written direction of Lessee in Permitted Investments in accordance with the provisions of the Acquisition Fund Agreement. Any balance remaining in the Equipment Acquisition Account after disbursement of the Total Contract Price or after an Event of Default has occurred, or this Agreement is terminated for non-appropriation of funds in accordance with Section 15 hereof, shall be applied as a prepayment to the Rental Payments. 14.3. Completion of Acquisition of the Equipment. Lessee shall cause the Equipment to be acquired and installed free of any liens or claims of others except for this Agreement. Completion of the acquisition and installation of the Equipment identified by a particular Schedule A shall be evidenced by Lessee's filing with Lessor an Acceptance Certificate. Lessor shall and is hereby directed by Lessee to disburse Lease Proceeds from the Equipment Acquisition Account to pay the Vendor the purchase price, or any portion thereof, for the Equipment, or any portion thereof, only upon the receipt by Lessor of a fully executed Acceptance Certificate of Lessee and the satisfaction of the other conditions in the Acquisition Fund Agreement. At such time, Lessee and Lessor shall execute and deliver such documents or assurances, including UCC filings or amendments thereto, as may be necessary to reflect accurately the items of Equipment financed by the Lease Proceeds derived from such Schedule A. SECTION 15. TERMINATION ON ACCOUNT OF NON-APPROPRIATION OF FUNDS. 15.1. Lessee's Termination. Notwithstanding any contrary provision in this Agreement, Lessee shall be deemed to have elected not to renew this Agreement and a Schedule A hereunder as to all (but not less than all) of the Equipment that is the subject of this Agreement pursuant to such Schedule A, and this Agreement and related Schedule A shall terminate as of the end of the fiscal year, if all the following events shall have occurred: #765703v1 (BAPCC/Texas Lease Template) 23 (a) Funds were not appropriated for the next succeeding fiscal year during the term of this Agreement in an amount equal to sum of the Rental Payments due during such fiscal year for the acquisition of services and functions which in whole or in part are essentially the same services and functions for the performance of which the Equipment was leased and the Termination Fee pursuant to Section 15.3 hereof; (b) Written notice thereof was given to Lessor at least ninety (90) days prior to the end of the Original Lease Term or the then current Renewal Lease Term, as the case may be; (c) Lessee has paid all Rental Payments due during the fiscal year immediately preceding the fiscal year for which sufficient funds were not appropriated. 15.2. Return of Equipment Upon Termination. If this Agreement is terminated because of non-appropriation of funds in accordance with the provisions of this Section, Lessee shall return the Equipment to Lessor at Lessee's sole cost and expense, together with such documents and assurances as Lessor may reasonably request, and thereupon, any and all interest Lessee may have in the Equipment shall immediately revert to Lessor, without any further act of conveyance, free and clear of any right, title or interest of Lessee unless Lessor elects otherwise, and all payment obligations of Lessee as to such Schedule A shall cease. SECTION 16. MISCELLANEOUS. 16.1. Waiver. No covenant or condition of this Agreement can be waived except by the written consent of Lessor. Any failure of Lessor to require strict performance by Lessee or any waiver by Lessor of any terms, covenants or agreements herein shall not be construed as a waiver of any other breach of the same or of any other term, covenant or agreement herein. 16.2. Severability. In the event any portion of this Agreement shall be determined to be invalid under any applicable law, such provision shall be deemed void and the remainder of this Agreement shall continue in full force and effect. 16.3. Governing Law and Venue. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State. Venue for any legal proceeding relating to this Agreement shall lie in Brazoria County, Texas. 16.4. Notice. All notices made or required to be given pursuant to this Agreement shall be in writing and shall be deemed duly served if and when mailed, certified or registered mail, postage prepaid, return receipt requested, to the other party at its address set forth in each related Schedule A hereunder or at such other address as such party shall hereafter designate in writing. 16.5. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Agreement. 16.6. Entire Agreement. This Agreement, together with the schedules hereto, constitutes the entire agreement between the parties and this Agreement shall not be modified, amended, altered or changed except by written agreement signed by the parties. #765703v1 (BAPCC/Texas Lease Template) 24 16.7. Binding Effect. Subject to the specific provisions of this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. 16.8. Time. Time is of the essence of this Agreement and each and all of its schedules and provisions. 16.9. Notice of Final Agreement. THIS WRITTEN AGREEMENT AND ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL_ AGREEMENTS OF THE PARTIES. THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. [Remainder of page intentionally left blank.] #765703v1 (BAPCC/Texas Lease Template) 25 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. BANC OF AMERICA PUBLIC CAPITAL CORP, as Lessor By: Name- - Title: CITY OF PEARLAND, TX, as Lessee By: Name: _ Title: ATTEST: By: Name: Title: (SEAL) #765703v1 (BAPCC/Texas Lease Template) 26 MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT By and Between BANC OF AMERICA PUBLIC CAPITAL CORP as Lessor, and CITY OF PEARLAND, TX as Lessee Dated as of , 20_ CLOSING INDEX 1. Master Equipment Lease/Purchase Agreement 2. Schedule A No. [ 1 3. Acceptance Certificate 4. Certificate of Appropriation . 5. General Certificate 6. Signature and No-Litigation Certificate 7. Opinion of Counsel to Lessee 8. Resolution of Lessee 9. Financing Statement 10. Information Report on Form 8038-G(or 8038-GC) 11. Cross-Receipt 12. No-Arbitrage Certificate 13. Acquisition Fund and Account Control Agreement #765703v1 (BAPCC/Texas Lease Template) MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT By and Between BANC OF AMERICA PUBLIC CAPITAL CORP as Lessor, and CITY OF PEARLAND, TX as Lessee Dated as of , 20 #765703v1 (BAPCC/Texas Lease Template) • SUMMARY OF TERMS AND CONDITIONS Date: May 31,2007 Citv/ • Lessee: City of Pearland,TX Lessor: Banc of America Public Capital Corp,or its designee Equipment • Description: (individually"Unit"and collectively"Equipment") Maximum Purchase Price:. $1,068,116(approximate)or the fair.market value.of the Equipment or project,which may include soft costs such as freight,installation,costs of issuance,and any taxes paid up-frontby Lessee subject to credit.department approval. Equipment will be mutually acceptable to Lessee and Lessor. If requested,.the actual amount financed can be less due to:the utilization of a'net funding'escrow account. It is anticipated that the Maximum Purchase Price will be allocated for the following. project: Siemens Building Technology Energy Performance Contracting-Project Term: Commencement Date: It is estimated that the financing will commence prior to August 1-5;2007. Term: Approximately twelve years comprised of level semi-annual payments in arrears. ' Tax-Exempt . Current Rate: Term(Years) Payment Mode Fixed Rate 12: Semi-annual 4.24% Index: If the proposal is accepted.prior to the proposal acceptance date listed,on the cover letter, the above fixed interest rates will be held constant for funding through August 15,2007. Lease • Structure: Tax-exempt Master Equipment Lease/Purchase Agreement;all tax benefits will-remain with Lessee; the lease will be a net financial lease,and all expenses,including(but:not limited to)insurance,maintenance,and taxes,will be for the account of Lessee. The lease will be subject to appropriation and Texas law. Governmental Entity Lease: The rental payment installments are calculated on the assumptions,and:Lessee will represent,thatLessee is a state or political subdivision of a state within the meaning of Section 103(c)of the Internal Revenue Code(the"Code")and that this transaction will constitute an obligation of Lessee within the meaning of Section 103(a)of.the Code. Lessee shall provide Lessor with such evidence as Lessor may request to_substantiate and maintain such tax status. Lessee will indemnify Lessor,on a lump-sum,after-tax basis,against any loss of Federal income:tax.exemption of the interest portion of the. rentals and against any penalties and interest imposed by the Internal Revenue Service on Lessor in connection therewith. • #130006v4-6/1/07[1198 vers.] • • The lease will provide that: • 1) Lessee will provide,at its expense,casualty insurance(with such deductibles as Lessor may approve). 2) If a casualty renders the Equipment a total loss,Lessee will either replace the Equipment,in which case Lessor will convey the-damaged Equipment to Lessee,or pay Lessor an amount-equal to the unpaid balance of the lease. In either case Lessee's obligations will be payable from and to the extent of insurance proceeds or lawfully available funds appropriated for such purpose and rent will cease to accrue under the, lease. 3) If Lessee fails to make any rent payment when due,provide any required insurance or perform any of its other obligations-under the lease, Lessor may terminate the lease and:repossess the Equipment. 4) Upon any Early Termination of the lease, (a) Lessee may purchase the Equipment by paying Lessor the unpaid balance of the lease and (b) unless Lessee so purchases the Equipment, Lessee will, at its expense, promptly return the Equipment to Lessor. Early • Termination: With at least 30 days notice,Lessee.may prepay the entire balance of any schedule at a price of 101%of the outstanding principal balance assuming there are no related past due payments. Assignment: Subject to the requirements of state law, Lessor shall be entitled to assign its right, title and interest in the contract to a another party including a trustee for the.purpose of issuing certificates of participation or other forms of certificates evidencing an undivided interest in such contract, 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 contract or certificates will be registered under the Securities Act of'1933,(iii) such purchaser is either an "accredited investor" within.the meaning of Regulation D under the.Securities Act of I933,or a qualified institutional buyer within the meaning of Rule 144A, and(iv)that 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. • • Escrow Account: For construction or delayed vendor payment projects and subject to compliance with applicable regulations under the Internal Revenue Code, including, but not limited to arbitrage regulations, the proceeds of the contract will be deposited in an escrow acceptable to Lessor and disbursements made therefrom to pay for Equipment upon the execution and delivery of a disbursement request`form and/or an acceptance certificate (and related documents)by Lessee and approved by Lessor. Escrow Custodian: Deutsche Bank National Trust Company. See attached sheet.for recommended money market escrow investment. if I 30006v4-6/1/07.(U98 vers.J Net Funding Escrow: If requested a "net funded" escrow analysis can be prepared for the financing. It. is understood that in the event that a net funded transaction is preferred by the Lessee, respective net funded language will be added to lease documents. outlining Lessee's obligation to cover any shortfalls in the escrow account to pay for the installation/construction of the project, and Lessee acknowledges that the proposed escrow investment will be a variable rate money market fund. ALL ESCROW EARNINGS WILL GO FOR THE BENEFIT OF THE LESSEE. Financing Documents: Financing documents in form and substance•satisfactory to Lessor must be executed and delivered. If Lessor requests, Lessee will also furnish duly executed landlord, and mortgagee waivers and supporting information. Lessee will also provide board resolutions, incumbency certificates and other documentation required by Lessor. Lessor will also require a copy of the vendor's energy services agreement and other related vendor contracts for the project. Opinion of Counsel: Lessee's counsel shall deliver an opinion to Lessor at closing,in form and substance satisfactory to Lessor. The opinion of counsel will provide that; (a) the portion of payment designated as and constituting interest paid.by Lessee and received by Lessor is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986; (b) counsel has examined, .approved and attached the text of the enabling resolution of Lessee's governing body-authorizing Lessee to enter into: the contract. Expenses: Lessor will be responsible for its own costs of legal review and documentation,and Lessee will be responsible for its own costs of legal review and documentation in the negotiation and execution of the contract. There are no direct accountsetup costs or • ongoing costs for the escrow account Performance Bond: A payment and performance bond acceptable to Lessor and.listing Lessor as co-obligee • will be required for the project. Credit Due Diligence: In order to complete its credit due diligence, Banc of America Public Capital Corp will need you to provide: Copy of vendor contract Most recent fiscal year's•budget Insurance Certificate Utilization Period Expiration Date: The latest date for closing the transaction under the proposed terms will be August 15, 2007. Non-Bank • Qualified: It is understood that the transaction will he considered"Non-Bank Qualified"and that the Lessee plans to issue more than$10 million in tax-exempt obligations this calendar.year. ;l 130006v4-G/I/07[1/98 vers.] • Qualifications of Banc of America Public Capital Corp: Banc of America Public Capital Corp is one of the largest tax-exemptleasing firms in the nation and last year our group funded an industry leading.S1.2 Billion in tax-exempt equipment lease transactions nationwide including several hundred million dollars in tax- exempt financings for energy management performance contracting transactions. Our group has a large list of tax-exempt leasing references nationwide including large and small municipal clients. Key Contact Personnel: Geoffrey R,Culm—Senior Vice President Geoff is a Senior Vice President of BAPCC responsible for energy service and energy related tax-exempt and taxable equipment financing transactions-in the.Central US. Geoff works directly with issuers including cities,counties,school districts,community college districts,state governments and agencies,metropolitan and other special districts, and 501(c)(3) institutions to structure unique solutions to finance energy equipment and energy efficiency projects. Mr.Culm has over thirteen years of experience in the tax- exempt leasing industry and has worked on many private placement structures with state and local government entities,bond counsels,financial advisors,vendors,and bond underwriters in the municipal and 501(c)(3)industry. Mr.Culm currently serves on the Board of Directors as Chairman of the Executive Committee for the Association for Governmental Leasing&Finance(AGL&F). Contact information: Geoffrey R.Culm Senior Vice President Banc of America Public Capital Corp 231 S.LaSalle Street,Suite 07-28 Chicago,IL 60604 Phone:80 0.294.7272.Ext.6 Fax:312.974.9083 Email:geoffiey.r.culm@bankofamerica.coni Laura Pritchett,Assistant Vice President—Energy Lease Contracts Laura has in excess of 6 years of lease support experience with Banc of America Public Capital Corp/Banc of America Leasing. Laura directs all contractual support activities for Energy Services transactions. Contact information: Laura Pritchett Assistant Vice President Banc of America Public Capital Corp 2059 Northlake Parkway,4'd'Floor South Tucker,GA 30084 Phone:770.270.8448 Fax: 770.270.8454 Email: laura.pritchett@bankofarnerica.com /1 130006v4-6/1/07[I198 vers.] TX Lease Purchase Experience: The following is just a sample list of regional government tax-exempt lease purchase transactions,with the approximate total master lease line of credit amounts to the entities: State of Louisiana-$120 Mln,Master Tax-Exempt Lease Purchase Agreement City of San Antonio, TX - $45 Mln, Master Tax-Exempt Lease Purchase Agreement Capital Metropolitan Transportation Authority(Austin),TX-$35 Mln,.Master Tax Exempt Lease Purchase Agreement City of Lubbock,TX-$40 Mln Master Tax-Exempt Lease Purchase Agreement City of El Paso,TX-$10M1n Master Tax-Exempt Lease Purchase Agreement • References: STATE OF LOUISIANA,LA Attn:Tammy Toups—Dept.of Administration 1201 N.3'd Street,Suite 2-160 . Baton Rouge,LA 70804 Phone: 225.342.8039 Email:tammy.toups@la.gov CI-TY OF SAN ANTONIO,TX Attn:Jamecca Marshall—Finance Department 100 Military Plaza. San Antonio,TX 78205 Phone;210.207.8776 Email:Jamecca.Marshall@sanantonio.gov • CAPITAL METROPOLITAN TRANSPORTATION AUTHORITY,TX Attn:Pam Laine,Controller 29.10 E 5i'Street Austin,TX 78702 Phone:512.389.7564 Email:Pamela.laine@capmetro.org CITY OF LUBBOCK,TX Attn:Oxana Moreno Finance Analyst 1625 13'l'Street Lubbock,TX 79457 Phone:806.775.2985 omoreno@mail.ci.lubbock.tx.us • CITY OF EL PASO,TX Attn:Carmen Arrieta Treasurer • 2 Civic Center Plaza El Paso,TX 79901 Phone:915.541.4293 arrietacx@elpasotexas.gov Timeline: The following is a list of the sequence of events for closing a lease purchase transaction: #130006v4-6/1/07[IiPS vers.] Lessee Bid: 3 Weeks to bid,collect,and review bid responses • Lease Award: Lessee selects a Lessor(2-3 days) Lessor Documents Reviewed: Lessee reviews Lessor's documents and provides comments. It is typical'forthis process to take 1-2 weeks,depending on the Lessee's document review time Lessee Passes Resolution: Lessee passes a resolution awarding the Iease financing(time depends on City Council meeting requirements) Lessor prepares and distributes final documents:3 days. Lessee signs final:documents and faxes and sends documents(including insurance information,performance bonds,Acquisition Fund Agreement)to Lessor: 2-3 days Lessor funds into escrow: typically the day after receiving the final documents via fax or the originals in the mail. • • • • 130006v4-6/1/07(1198 vers.J BANC OF AMERICA PUBLIC CAPITAL CORP Sample Amortization Schedule for Pearland TX For$1,068,116 Funding Amount Interest Total Payment Payment Principal Debt Outstanding Prepayment Date Number 4.24% Payment Service Balance Amount 7/1/2007 0 - - - 1,068,116.00 1,078,797.16 1/1/2008 1 22,644.06 34,598.99 57,243.05 1,033,517.01 1,043,852.18 7/1/2008 2 21,910.56 35,332.49 57,243.05 998,184.52 1,008,166.37 . 1/1/2009 3 21,161.51 36,081.54 57,243.05 962,102.99 971,724.02 7/1/2009 4 20,396.58 36,846.46 57,243.05 925,256.53 934,509.09, 1/1/2010 5 19,615.44 37,627.61 57,243.05 887,628.92 896,505.21 7/1/2010 6 18,817.73 38,425.31 57,243.05 849,203.60 857,695.64 1/1/2011 7 18,003.12 39,239.93 57,243.05 809,963.67 818,063.31 7/1/2011 8 17,171.23 40,071.82 57,243.05 769,891.85 777,590.77 1/1/2012 9 16,321.71 40,921.34 57,243.05 728,970.51 736,260.22 7/1/2012 10 15,454.17 41,788.87 57,243.05 687,18 .64 694,053.46. 1/1/2013 11 14,568.25 42,674.80 57,243.05 644,506.84 650,951,91 7/1/2013 12 13,663.55 43,579.50 57,243.05 600,927.34 606,936.62 1/1/2014 13 12,739.66 44,503.39 57,243.05 556,423.95 561,988.19 7/1/20114 14 11,796.19 45,446.86 57,243.05 510,977.09 516,086.87 1/1/2015 15 10,832.71 46,410.33 57,243.05 464,566.76 469,212.43 7/1/2015 16 9,848.82 47,394.23 57,243.05 417,172.53 421,34425 1/1/2016 17 8,844.06 48,398.99 57,243.05 368,773.54 372,461.27 7/1/2016 18 7,818.00 49,425.05 57,243.05 319,348.49 322,541.98 1/1/2017 19 6,770.19 50,472.86 57,243.05 268,875.63 271,564,39- 7/1/2017 20 5,700.16 51,542.88 57,243.05 217,332.75 219,506.08 1/1/201.8 21 4,607.45 52,635.59 57,243.05 164,697.15 166,344.13 7/1/2018 22 3,491.58 53,751.47 57,243.05 110,945.69 112,055.14 1/1/2019 23 2,352.05 54,891.00 57,243.05 56,054.69 56,615.23 7/1/2019 24 1,188.36 56,054.69 57,243.05 0..00 0.00 TOTAL 305,717.14 1,068,116.00 1,373,833.14 BID TABULATION: RFP FIXED INTEREST LEASE PURCHASE FINANCING BID OPENING DATE: THURSDAY, JUNE 7, 2007 BID NUMBER:. 2007-035 Vendor Rate Semi-Annual Expiration of Prepayment Option Amount Payment Offered Rate Bank of America 4.240% $57,243.05 8/15/2007 101% Chase Equipment Leasing 4.285% $57,388.18 8/7/2007 102% during years 1 -5 101% during years 6-10 100%Thereafter All Points Public Funding 4.290% $57,404.32 8/6/2007 102% Siemens Financial Services 4.300% $58,678.03 8/4/2007 102% Municipal Services Group 4.330% $57,713.43 7/1/2007 Not Stated First Security Leasing 4.370% $57,662.87 8/13/2007 102% Per termination value listed in amortization schedule National City Municipal Financing 4.389% $57,964.06 8/7/2007 (exceeds principal) Wachovia 4.460% $57,764.72 8/7/2007 Prepayment allowed at Par Wells Fargo Brokerage Services 4.614% $58,455.43 30 Days At Principal Balance DeLage Landen 4.710% $58,776.58 60 Days from 5/31/07 101%