Loading...
R2011-095 - 2011-08-22 RESOLUTION NO. R2011 -95 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AWARDING A LEASE /PURCHASE BID FOR THE PURCHASE OF CERTAIN CAPITAL EQUIPMENT. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That the City opened bids for lease /purchase financing of certain capital equipment, and such bids have been reviewed and tabulated. Section 2. That the City Council hereby awards the bid to Houston Community Bank, to finance up to $870,970.00 at a fixed rate of 2.15% for seven (7) years. Section 3. The City Manager or his designee is hereby authorized to execute any necessary documents for the Lease /Purchase of certain capital equipment. PASSED, APPROVED and ADOPTED this the 22 day of August, A.D., 2011. TOM REID MAYOR ATTEST: YOA G L.VF Tr /MC/ =� �..�` 'x= CI SEC TARY `' / \ si COS APPROVED AS TO FORM: 411. DARRIN M. COKER CITY ATTORNEY BID TABULATION: RFP FIXED INTEREST LEASE PURCHASE FINANCING BID OPENING DATE: THURSDAY, JULY 14, 2011 BID NUMBER: 0511-30 Vendor Rate-7 Year Rate-10 Year Houston Community Bank 2.150% 2.280% JPMorgan Chase Bank, NA 2.200% 2.650% Pinnacle Public Finance 2.350% 2.990% Regions Equipment Finance 2.450% 2.980% SunTrust Equipment Finance& 2.630% 3.050% Leasing Corp. Sovereign Leasing, LLC 2.680% 3.220% Wells Fargo Equipment Finance 2.990% No bid I. .. Dater • -7/14/Il HOUSTON COMMUNITY BANK NA Pager 1 Prepared For CITY OF PEARLAND Officer CBL •CSR R27CVASQUE Platform Type C91 Rate •2.1500% Payment 67,224.76 Term 84 Payment Day: Account # APR 2.1509% Interest 70,176.98 Payment Date Number Misc. Interest Principal PMI Ins. Total Balance Original Balance 870,970.00 1/15/12 1 .00 7,802.44 59,422.32 • .00 67,224.76 811,547.68 , 7/15/12 2 .00 8,724.14 58.,500.62 _ .00 67,224.76 73,047.06 1/15/13 3 .00 8,095.25 59,129.51 .00 67,224.76 693,917.55 . 7/15/13 4 • .00 7,459.62 59,765.14 .00 67,224.76 634,152.41 1/15/14 5 .00 6,817.14 60,407.62 .00 67,224.76 573,744.79 7/15/14 6 .00 6,167.75 61,057.01 .00 67,224.76 512,687.78 1/15/15 7 .00 5,511.40 61,713.36 .00 67,224.76 450,974.42 7/15/15 8 .00 4,847.97 62,376.79 .00 67,224.76 388,597.63 1/15/16 9 .00 4,177.42 63,047_34 .00 67,224.76 325,550.29 7/15/16 10 .00 3,495.67 63,725.09 _00 67,224.76 '261,825.20 1/15/17 11 . .00 • 2,814.62 64,410.14 .00 67,224.76 197,415.06 7/15/17 12 .00 2,122.21 65,102.55 .00 67,224.76 132,312.51 1/15/18 13 .00 1,422.36 65,802.40 .00 67,224.76 66,510.11 7/15/18 14 .00 714.99 66,510.11 .00 67,225.10 .00 Year 2018 .00 70,176.98 870,970.00 _00 941,146.98 Grand Total .00 70,176.98 870,970.00 .00 941,146.98 Multiple Disbursements MUNICIPAL LEASE AGREEMENT LESSEE: City of Pearland,Texas Name of Municipality or Public Entity 3519 Liberty Drive - Address Pearland Brazoria Texas 77581-5416 City County State Zip This Lease Agreement(the "Lease"), dated as of ,2011,establishes the general terms and conditions under which HOUSTON COMMUNITY BANK,N.A.,(the"Lessor"),whose address is 19855 Southwest Freeway,Suite 100,Sugar Land,TX 77479,Telefax Number(281)343-7700,may lease the equipment and other personal property to Lessee set forth in the Equipment Schedule attached hereto as Exhibit"A" and incorporated herein by reference(the"Equipment Schedule"). 1. LEASE. By execution and delivery by Lessee to Lessor of this Lease, and upon acceptance by Lessor and satisfaction by Lessee of all conditions precedent set forth herein, Lessor shall lease to Lessee, and Lessee shall hire from Lessor,the equipment and other personal property described in the Equipment Schedule,all on and subject to the terms and conditions set forth therein and herein. The equipment and other personal property described in the Equipment Schedule, together with all replacement parts, additions, modifications, repairs and accessories incorporated therein and/or attached thereto,is severally and collectively referred to herein as the"Equipment."This Lease shall not be cancelable or terminable by Lessee except as provided herein. Lessee hereby authorizes and empowers Lessor to unilaterally amend the Equipment Schedule from time to time by inserting information more fully identifying the Equipment or any part thereof and irrevocably constitutes and appoints Lessor its true and lawful attorney-in-fact for the purpose of executing and filing from time to time in Lessee's name such financing statements describing the Equipment or any part thereof as Lessor deems appropriate. 2. DELIVERY AND ACCEPTANCE OF EQUIPMENT. Upon completion of each item of Equipment and delivery thereof(and, if such item of Equipment requires installation, installation of such item of Equipment),Lessee will promptly, without unreasonable delay, inspect and test the Equipment and, if the Equipment is in good order and conforms with any applicable purchase order,Lessee will promptly,without unreasonable delay,accept delivery of the Equipment on behalf of Lessor and shall forthwith execute and deliver to Lessor a duly completed Certificate of Acceptance in form and content acceptable to Lessor, which shall set forth, among other things, the date that Lessee accepted delivery of the Equipment on behalf of Lessor (the "Certificate of Acceptance"). Upon Lessee's acceptance of the Equipment, Lessee's promises and covenants contained herein become irrevocable and independent. 3. CONDITIONS PRECEDENT. In no event shall Lessor have any obligation to purchase any Equipment and lease the same to Lessee until and unless Lessee shall have delivered or caused to be delivered to Lessor and Lessor shall have in its possession each of the following,in form and substance acceptable to Lessor: a. Such resolutions or authorizations and other documents relating to the authority of any person executing this Lease and/or any other document, instrument or agreement executed, delivered or undertaken on behalf of Lessee in connection with this Lease,as Lessor shall require; b. An originally executed copy of this Lease with all exhibits, schedules and attachments hereto fully completed; c. An Assignment of Purchase Order Agreement, a copy of all sale or purchase contracts regarding the Equipment entered into between Lessee and the manufacturer or vendor of the Equipment, a copy of all purchase orders regarding the Equipment issued by Lessee, the original invoices regarding the Equipment issued by such manufacturer or vendor to Lessor,and the original bill of sale,if any,issued by such manufacturer or vendor evidencing the transfer of title to such Equipment to Lessee; 1 d. A duly completed and executed Certificate of Acceptance regarding the Equipment which evidences, among other things,that Lessee has accepted delivery thereof on behalf of Lessor. e. Evidence of due compliance with the insurance provisions of Section 13 hereof; f. If the Equipment or any portion thereof is to be located at a location that is not owned by Lessee or that is owned by Lessee but is subject to a mortgage or deed of trust in favor of a beneficiary other than Lessor,a landlord/lienholder's acknowledgment and waiver duly executed by the landlord/lienholder thereof; g. Duly executed and completed UCC-1 Financing Statement(s)that describes the Equipment; and h. Such other documents and instruments as Lessor shall reasonably require,which may include,but shall not be limited to, an opinion of legal counsel to Lessee acceptable to Lessor as to such matters as Lessor shall require. If Lessee shall fail or refuse to satisfy all of the conditions precedent set forth herein and in the Equipment Schedule and to the extent permitted by law,then(a)Lessor may,at its option,terminate the lease of the Equipment to Lessee under this Lease;and(b)if such lease is terminated by Lessor,then,without further act(i)Lessee will thereupon be assigned all rights and shall assume all obligations as purchaser of such Equipment and shall,to the extent allowed by law,indemnify and hold Lessor harmless from and against any and all claims of the manufacturer,vendor,transporter or any other person in connection with the purchase, delivery and failure or refusal to accept such Equipment, (ii)Lessee shall have all rights as the purchaser of such Equipment and be entitled to pursue any and all remedies that may be available against the manufacturer,vendor,transporter or any other person for any failure or breach in connection with the manufacture,shipment and delivery of the Equipment,and (iii)if Lessee shall fail or refuse to accept delivery of the Equipment even though such Equipment is in good order and in substantial conformance with any applicable purchase order,Lessee shall,to the extent allowed by law,be liable to Lessor for, and shall indemnify Lessor against,all direct and consequential damages and/or costs incurred by Lessor in connection with such failure or refusal. 4. TERM,RENT AND EARLY TERMINATION. The term of this Lease,and the respective rental amounts,divided into principal and interest components,and the payment dates,are set forth in the Equipment Schedule. Overdue installments shall bear interest at the lesser of(a)a rate of interest equal to the prime rate announced by Houston Community Bank,N.A. from time to time plus five percent(5%)which rate shall change when and as such prime rate changes or(b)the maximum lawful rate allowable by law(the"Overdue Rate")and shall be due and payable immediately without notice for each installment of rent not paid when due and payable. The Overdue Rate shall in no event exceed fifteen percent(15%)per annum. Notwithstanding anything contained in this Lease to the contrary,all the financial obligations of the Lessee pursuant to this Lease are subject to appropriations for each budget year during the term of this contract. In the event no funds or insufficient funds are appropriated or budgeted for the intended use of the Equipment,the Lease Payments due under this Lease, or any other financial obligation of Lessee pursuant to the Lease, then, the Lessee will immediately notify the Lessor or its assignee of such occurrence and this Lease shall terminate on the last day of the fiscal period for which appropriations were received,except as to the portions of Lease Payments herein agreed upon for which funds shall have been so appropriated and budgeted. To the extent permitted by law,Lessee may not terminate the Lease in order to purchase,rent or lease property performing functions similar to those performed by the Equipment, and agrees not to permit functions similar to those performed through the use of the Equipment to be performed by its own employees or by any agency or entity affiliated with or hired by Lessee. 5. RENTAL PAYMENTS. Lessee's obligation to make installment payments hereunder for each fiscal year for the term of this municipal lease shall be absolute and unconditional and shall not be subject to any contractual defenses,offsets, counterclaims,or withholdings based upon disputes or claims that Lessee may have against Lessor,whether arising under this Lease or otherwise. A portion of each rental payment hereunder is paid as, and represents payment of, interest, and Schedule B of Exhibit"A"hereto sets forth the interest component of each rental payment. 2 6. OWNERSHIP;GRANT OF SECURITY INTEREST. The Equipment shall be registered in the name of Lessee and,if applicable,title thereto shall be evidenced by a certificate(s)of title,or such other instrument(s)as may be required by or utilized under the laws of the State(as hereinafter defined)to demonstrate ownership(the"Certificate(s)"). Such Certificate(s) shall be held at all times during the term of this Lease by Lessor and shall expressly state thereon(a)that Lessor holds a lien on the Equipment,(b)that Lessee's possession of the Equipment is subject to this Lease,and(c)any other information required by applicable law and that may be necessary to establish Lessor's rights, title and interest as the first secured lienholder of the Equipment. With respect to replacement parts,additions,modifications,repairs and accessories hereafter incorporated in and/or attached to the Equipment,Lessor shall have a secured interest therein upon such incorporation or attachment to the Equipment and lien-free title thereto(not including the lien of Lessor)shall be transferred to Lessor,without compensation to Lessee,upon termination of this Lease,except as otherwise expressly provided herein. Lessee does hereby grant to Lessor a security interest in all of its right, title and interest in, to and arising hereunder,the Equipment described herein and the proceeds of both to secure the payment and performance by Lessee of all of its liabilities and obligations arising hereunder and,in addition,all other obligations or liabilities of Lessee to Lessor, of any kind or character,direct or indirect,contingent or absolute,whether now existing or hereafter arising or incurred. This Agreement constitutes a security agreement and/or pledge agreement which pledges the Equipment to the Lessor to secure performance of this Agreement by Lessee. Lessor shall have all of the rights and remedies of a secured party under the Uniform Commercial Code of the State of Texas(the"State")and other applicable law in addition to all of its rights and remedies under the terms and conditions hereof. Lessee agrees to execute and file Uniform Commercial Code Financing Statements and any and all other documents and instruments necessary to perfect Lessor's interest in this Lease,the Equipment and the payments due hereunder. Upon termination of this Lease,subject to the exercise by Lessee of any purchase option, if any, hereunder, Lessee shall, without charge to Lessor, take all actions necessary and reasonably requested by Lessor to transfer ownership of the Equipment to Lessor,including,without limitation,transfer of title under the Certificate(s). 7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE. Lessee represents, warrants and covenants to Lessor as follows: a. Lessee is and will remain,to the extent within Lessee's control,a body corporate and politic,duly organized and existing as a political subdivision under the Constitution and laws of the State. b. Lessee is fully authorized and permitted, and has received all authorizations, consents and approvals of governmental bodies or agencies necessary,if any,to enter into this Lease and to execute any and all documentation required herein,to lease the Equipment upon the terms set forth herein and to perform the terms of this Lease and all other documents executed in connection herewith, none of which conflicts with any provisions of the Constitution or laws of the State, regulations, ordinances,judgments or orders of public authorities applicable to Lessee. c. The governing body of Lessee has heretofore adopted the resolution attached hereto as Exhibit"B" and incorporated herein by reference authorizing the appropriate officials of Lessee to execute and deliver this Lease and all other documents relating hereto. d. This Lease,and all other documents executed or delivered in connection herewith are,and throughout the term of this Lease shall remain,valid and binding and enforceable legal obligations of Lessee,in accordance with its terms. e. The execution,delivery and performance by Lessee of this Lease and all other documents relating hereto will not result in any breach of the terms or conditions of any agreement or instrument under which Lessee is a party or is obligated,and Lessee is not in default in the performance or observance of any obligations,covenants or conditions of any such agreement or instrument. f. No actions, suits or proceedings are pending or threatened against Lessee, nor, to the best of Lessee's knowledge, is there any basis therefor, that might adversely affect the payment by Lessee of the rental payments under this Lease, the performance by Lessee of its other obligations arising hereunder or under any documents executed in connection herewith,or the financial condition,business or operations of Lessee except as otherwise may be noted in Exhibit"D"attached. 3 g. All financial statements and budgets, if any,previously given and at any time hereafter given by or on behalf of Lessee are and shall be true, complete and correct as of the date thereof and do and shall fairly present Lessee's financial condition as of the date thereof,and there has been no material adverse change in the creditworthiness,fmancial condition or the results of the operations of Lessee since the date of the latest financial statements of Lessee,if any,given to Lessor. h. In addition to notices required herein,Lessee shall immediately give notice in writing to Lessor of(i)the occurrence of an Event of Default,or any condition,event or act which with the giving of notice,failure to cure,the passage of time,or all of the foregoing would constitute such an Event of Default;and(ii)any change in the name or nature of Lessee,any change in its form, management or organizational structure and any change in Lessee's address of principal location(s) of business or location(s)of the Equipment. i. To the extent allowed by law,Lessee shall defend Lessor's right,title and interest in the Equipment against, and keep the Equipment free of, all levies, liens, claims and encumbrances of every kind and description, and however and whenever arising, except those,if any,which Lessor has created or to which Lessor has consented in writing. j. Lessee has never failed to appropriate funds or defaulted under any bond,note,warrant,debt obligation. Lessee anticipates having sufficient moneys in the general fund of Lessee to pay, and that will be available and used for the payment of the lease payment for the remainder of the current fiscal year of Lessee. k. Lessee has complied with all applicable procedures and requirements,including,without limitation,any legal bidding requirements,prior to the execution of this Lease. 1. The representations made in the opinion of Lessee's counsel attached hereto as Exhibit"C" and incorporated herein by reference are,to the best knowledge of Lessee, true and correct. m. To the best knowledge of Lessee,the certifications made in the General Certificate and Certificate of No Litigation,attached hereto as Exhibit"D"and incorporated herein by reference,and the information contained in the Essential Use Certificate, and attached as Exhibit"F"are true and correct. n. Lessee has caused or will cause to be timely completed and filed with the United States Internal Revenue Service(the "IRS"), Form 8038-G or Form 8038-GC (for issues with an issue price under$100,000.00), as appropriate, in substantially the form attached hereto as Exhibit"E". The representations,warranties and covenants set forth in this Section are in addition to any other representations, warranties and covenants contained in the other provisions of this Lease. Lessee shall be deemed to have made all of the foregoing representations,warranties and covenants as of the date hereof and as of the"Rent Commencement Date," as defined in the Equipment Schedule. 8. EQUIPMENT PURCHASE ACCOUNT. Lessor shall establish, as escrow agent for Lessee, an account to be known as the"Equipment Purchase Account,"(the Account). On the date hereof,Lessor shall deposit an amount equal to the "Total Original Cost",as set forth in the Equipment Schedule,into the Account which shall be used by Lessee to purchase the Equipment under the terms and conditions set forth herein. Funds held in the Account shall be invested as directed by Lessee, in accordance with the terms of this Lease and applicable laws of the State, in investments that will mature no later than the date(s)on which the Equipment or any portion thereof,as applicable,is expected to be purchased. Investment earnings derived from the investment of funds in the Account shall be retained therein and used as provided in this Section. The Account shall be a separate account at the Lessor's offices and the investments therein shall be owned by the Lessee subject to Lessor's security interest therein. Upon receipt from Lessee of a completed Certificate of Acceptance in substantially the fonn set forth as Schedule A of the Equipment Schedule,together with such other documentation as is set forth in Section 3 (c)of the Agreement and as Lessor may hereafter reasonably require,Lessor shall draw funds from the Account sufficient to pay the amount for the portion of the Equipment described therein as set forth in Exhibit"A"of the Equipment Schedule and pay such amount to the vendor thereof on behalf of Lessee;provided,Lessor shall be under no obligation to make any such payment if the Account shall have been terminated,as provided herein,prior to the request and processing of such payment. 4 • The Account shall terminate upon the earlier to occur of(a)the purchase of all of the Equipment pursuant to the terms and conditions set forth herein, (b)the occurrence of an Event of Default that continues through the cure period,if any,set forth herein,(c)the failure of Lessee to budget funds necessary to pay each installment of rent for Lessee's next succeeding fiscal year, or(d)except as otherwise provided in this Section,the date which is six(6)months from the date hereof Any amount remaining in the Account after termination thereof pursuant to clauses(a)or(d)of this paragraph shall be used by Lessor to prepay rental installments, or portion(s)thereof,to the extent of moneys available,that will be due for the then current fiscal year of Lessee in inverse order of installment maturity. Any amount remaining in the Account after termination thereof pursuant to clauses(b)or(c)of this paragraph shall be immediately paid to Lessor and shall be treated for purposes of this Lease as a prepayment,to the extent of moneys available,of the rental installments next becoming due,and in no event shall such amount be deemed the property of Lessee. In the event that all of the Equipment shall not have been purchased by such date,if Lessor shall receive an opinion satisfactory to Lessor from legal counsel acceptable to Lessor with nationally recognized standing in matters pertaining to tax-exempt obligations to the effect that extending the duration of the Account will not adversely affect the tax-exempt status of interest payable under this Lease, then Lessor will consider extending said lease subject to economic conditions and subject to formal credit approval. 9. NO WARRANTIES BY LESSOR; MAINTENANCE; COMPLIANCE WITH LAWS. LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSEE ACKNOWLEDGES THAT LESSOR, NOT BEING THE MANUFACTURER OR VENDOR OF THE EQUIPMENT,NOR MANUFACTURER'S OR VENDOR'S AGENT, AND HAVING NO FAMILIARITY WITH THE EQUIPMENT WHATSOEVER, MAKES NO WARRANTY OR REPRESENTATION,EITHER EXPRESS OR IMPLIED,AS TO THE FITNESS FOR A PARTICULAR PURPOSE, USE, VALUE, QUALITY, DESIGN, CONDITION, DURABILITY, CAPACITY, SUITABILITY, MERCHANTABILITY OR PERFORMANCE OF THE EQUIPMENT OR OF THE MATERIAL OR WORKMANSHIP THEREOF. IT IS AGREED THAT LESSOR LEASES AND LESSEE HIRES THE EQUIPMENT "WHERE IS," "AS IS" AND "WITH ALL FAULTS," INCLUDING, WITHOUT LIMITATION, PATENT OR LATENT DEFECTS, AND THAT ALL SUCH RISKS, AS BETWEEN THE LESSOR AND THE LESSEE, INCIDENT THERETO ARE TO BE BORNE BY THE LESSEE AT ITS SOLE RISK AND EXPENSE. LESSEE AGREES NOT TO ASSERT ANY CLAIM WHATSOEVER AGAINST THE LESSOR BASED THEREON, INCLUDING, WITHOUT LIMITATION, CLAIMS BASED ON ANY BREACH OF VENDOR'S OR MANUFACTURER'S WARRANTIES OR ANY MALFUNCTIONING OF OR DEFECT OR DEFICIENCY IN THE EQUIPMENT OR PATENT INFRINGEMENT OR SIMILAR CLAIMS OR LESSEE'S DISSATISFACTION WITH THE EQUIPMENT. HOWEVER, LESSEE PRESERVES ALL RIGHTS AND REMEDIES AGAINST THE WARRANTIES OF THE MANUFACTURER OF VENDOR OF THE EQUIPMENT. LESSEE FURTHER AGREES NOT TO ASSERT ANY CLAIM WHATSOEVER AGAINST THE LESSOR FOR LOSS OF ANTICIPATORY PROFITS OR OTHER ACTUAL, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES. LESSOR SHALL NOT AT ANY TIME BE REQUIRED TO INSPECT THE EQUIPMENT OR ANY PART THEREOF NOR SHALL ANY INSPECTION BY LESSOR BE DEEMED TO AFFECT OR MODIFY THE PROVISIONS OF THIS SECTION. No oral agreement, guaranty, promise, condition, representation or warranty contrary to the foregoing shall be binding. All prior conversations, agreements or representations related to this Lease and/or to the Equipment are integrated herein. Lessor makes no warranty whatsoever regarding the characterization of this Lease for tax,accounting or other purposes. Lessor shall have no obligation to install, erect, test, adjust or service the Equipment. Lessee agrees, unless otherwise expressly agreed to by Lessor in advance and in writing, at Lessee's own cost and expense: (a)to pay all shipping charges and other expenses incurred in connection with the shipment of the Equipment by the vendor thereof to Lessee;(b)to pay all charges and expenses in connection with the installation,deinstallation,use,operation and maintenance of each item of Equipment; (c)to comply with the Equipment manufacturer's operating procedures, with all insurance and warranty requirements, and with all governmental laws, ordinances, regulations, requirements and rules with respect to the use, maintenance and operation of each item of Equipment;(d)to make all repairs and replacements required to be made to maintain the Equipment in good condition and repair,reasonable wear and tear excepted;and(e)to make no alterations in or to,and to affix no attachments,accessories or additions to,the Equipment without Lessor's prior written consent. The Equipment shall be used and serviced in accordance with the instructions of the manufacturer and shall take such actions as necessary to preserve and maintain in effect all warranties of the manufacturer and/or vendor of the Equipment. The Equipment shall not be used by 5 unqualified operators nor for purposes other than those for which it has been designed,nor shall it be serviced or repaired by persons not authorized to do so by the manufacturer thereof,if authorized persons are reasonably available. 10. NET LEASE. It is understood and agreed that this Lease is a net lease,and that,as between Lessor and Lessee, Lessee shall be responsible for all costs and expenses of every nature whatsoever arising out of or in connection with or related to this Lease and/or the Equipment. Lessee's obligation to pay all rental and other payments hereunder shall be absolute and unconditional and shall not be affected by any circumstances whatsoever, including, without limitation (a)any set off, counterclaim, recoupment, defense or other right which Lessee may have against Lessor or any other person for any reason whatsoever,(b)any defect in the title,condition,design,operation or fitness for use of,or any damage to or loss or destruction of, the Equipment, or any interruption or cessation in the use or possession thereof by Lessee for any reason whatsoever including any termination of any license agreement for software,or(c)any other circumstance,happening or event whatsoever, whether or not similar to the foregoing. Lessee does not intend to terminate,cancel,quit or surrender this Lease. 11. INDEMNITY. To the extent permitted by law,Lessee shall indemnify Lessor against,and hold Lessor harmless from,any and all claims,actions,suits,proceedings,costs,expenses,damages and liabilities,at law or in equity of whatsoever kind and nature,in contract or tort,including attorneys'fees,arising out of,relating to,connected with,or resulting from this Lease or the Equipment, including, without limitation, the manufacture, selection, purchase, delivery, acceptance (or lack thereof),possession,condition,use,operation or return of the Equipment. Specifically,without limiting the foregoing,Lessee shall indemnify and hold Lessor harmless from and against all claims, to the extent applicable, of trademark, patent and copyright infringement,and of the wrongful use of trade secrets or proprietary information in any form,against all claims for property damage, personal injury or wrongful death, and against all claims that the Equipment or any part thereof is or has become a fixture with respect to any real property. Lessee's obligations hereunder will survive the expiration of this Lease with respect to events occurring or alleged to have occurred prior to the return of the Equipment to Lessor at the end of the term • hereof, if Lessee does not purchase the same. Lessee shall promptly notify Lessor of any claim or action subject to the provisions of this Section that is brought or threatened against Lessee. Lessor shall have the right,at Lessor's sole discretion,to intervene in any such claim or action and to be defended with legal counsel of Lessor's choice. 12. FINANCIAL REPORTING REQUIREMENTS. Lessee shall maintain a standard,modern system of accounting that reflects the application of generally accepted accounting principles consistently applied. Lessee shall furnish to Lessor within one hundred eighty(180)days of the close of each fiscal year,Lessee's audited financial statements. Lessee shall furnish Lessor such additional financial information, including,but not limited to,budgets, from time to time specified by Lessor in such form and with such certifications as Lessor may require. 13. INSURANCE. Throughout the term of this Lease,and until Lessor has received possession of the Equipment upon its return to Lessor or until Lessee purchases the Equipment if and as permitted under the terms set forth herein and in the Equipment Schedule,Lessee,at its expense,shall(a)keep the Equipment insured against collision(if applicable)loss,damage, fire and theft, with extended or combined additional coverage, in such amounts as Lessor may from time to time specify; (b)maintain liability insurance in amounts satisfactory to Lessor concerning any property damage,personal injury or fatality that may result from the possession,use or operation of the Equipment;and(c)keep the Equipment insured against such other risks in such amounts as Lessor may from time to time specify. All such insurance policies shall name Lessor as an additional insured. Lessee shall, on request of Lessor, deliver to Lessor the policies or other evidence of such insurance satisfactory to Lessor,with a standard(non-attribution)long form endorsement attached thereto or indicated therein,showing loss proceeds,if any,payable directly to Lessor,all in form satisfactory to Lessor,together with receipts for the paid premiums thereunder. The loss proceeds of such insurance,to the extent permitted by law,shall be paid directly to Lessor and such proceeds,less any costs and expenses incurred or paid by Lessor in the collection thereof,shall be applied,at the election of Lessor,either toward repair or replacement of the Equipment damaged, destroyed, lost or stolen or to payment of any rental payment or other amount payable by Lessee hereunder(including,but not limited to,any"Casualty Payment,"as defined below),whether or not then due. For purposes of this Section, participation in the Texas Municipal League Intergovernmental Risk Pool shall constitute coverage. Lessee will carry workmen's compensation insurance covering all employees working on,in or about the Equipment. Lessee shall cause all insurance policies required under the terms of this Section to(a)provide by endorsement on the policies that no cancellation, alteration,change, lapse or expiration thereof shall be effective as to Lessor for thirty(30)days after receipt by Lessor of written notice thereof; (b)provide that the insurers shall hold harmless and waive any rights of subrogation against Lessor; (c)be primary without right of contribution from any other insurance which is carried by Lessor; 6 (d)waive any rights of set off,counterclaim or other deduction against Lessor;(e)provide that Lessor shall have no obligation or liability for premiums, commissions, assessments or calls in connection with such insurance; and (f)provide that such policies will not be invalidated by any act or omission of Lessee or any other additional insured,and shall insure Lessor and its assigns,regardless of any breach or violation of any warranty,declaration,condition or covenant contained in such policies by Lessee or any other additional insured. 14. LOSS,DAMAGE OR DESTRUCTION OF EQUIPMENT. Lessee shall bear all risk of damage,destruction,loss of possession or theft of the Equipment or any part thereof,and no such event shall cause any abatement or release whatsoever in Lessee's liability to pay rent or to perform other covenants as provided herein. In the event that any Equipment is lost,stolen, condemned by any governmental authority,if applicable,totally destroyed, damaged beyond repair or permanently rendered unfit for use(each an"Event of Loss"),then Lessee shall promptly notify Lessor of the occurrence of such Event of Loss and shall pay or cause to be paid to Lessor,not later than the earlier to occur of(a)the date that is ninety(90)days subsequent to the date such Event of Loss occurred or(b)the date of receipt of insurance proceeds in respect of such Event of Loss,a"Casualty Payment"(defined below)in respect of the Equipment as to which there has occurred such Event of Loss. In addition,Lessee shall continue to pay all rental payments that become due and payable on such Equipment after the date that such Event of Loss has occurred and prior to the date that the Casualty Payment thereon is actually received by Lessor. If Lessee shall have timely paid all such rental payments on such Equipment,all rental payments thereon that became due and payable prior to the date such Event of Loss occurred,and the Casualty Payment that is due and payable with respect thereto,then the liability of the Lessee to pay rent for such Equipment shall be discharged. For purposes of this Lease, "Casualty Payment"means,with respect to any item of Equipment as to which an Event of Loss has occurred, a payment in an amount equal to the"Stipulated Loss Value" (defined below)of such Equipment determined as of the date such Casualty Payment is due and payable less the net amount of recovery,if any,actually received by Lessor on or prior to the date such Casualty Payment is due and payable from insurance or otherwise in respect of such Event of Loss. In the event that the Equipment or any portion thereof is damaged,but not in a manner that constitutes an Event of Loss under this Lease,then Lessee shall promptly notify Lessor of the occurrence of such damage and shall pay or cause to be paid to Lessor all insurance proceeds,if any,received by Lessee and'payable as a result of such damage,not later than the earlier of (a)the date that is sixty(60) days subsequent to the date such damage occurred or (b)the date of receipt of the insurance proceeds. Lessee shall thereafter or simultaneously therewith submit to Lessor a written cost estimate to repair any damaged item of Equipment to a condition equal to the condition of the Equipment before the damage occurred,from a repair facility selected by Lessee, and Lessor shall disburse to Lessee, or directly to such repair facility, at Lessor's discretion, from the insurance proceeds the amount necessary to effect the repair. In the event that the costs thereof are paid by Lessor directly to Lessee,then all costs of such repair shall be promptly paid by Lessee and Lessee shall not permit any liens to attach or remain attached to such Equipment. 15. TAXES. Lessee shall pay promptly,when the same become due,and shall,to the extent allowed by law,indemnify and hold harmless Lessor from and-against payment of,all license fees,registration fees,assessments,and sales,use,property, excise and other taxes now or hereafter imposed by any federal,state or local government on or against the Equipment based on the ownership,lease,rental,sale,possession or use of the Equipment,whether the charge is assessed against Lessor or Lessee, as well as any related penalties or interest, and Lessee will do everything required of Lessor in connection with said fees, assessments and taxes. Notwithstanding anything to the contrary in this Lease,the Lessee and Lessor agree the Equipment is exempt from taxation in accordance with the laws of the State of Texas, and that Lessee shall have the full right to administratively or judicially challenge any tax or assessment levied or attempted to be levied on the Equipment. Save and except to the extent it becomes necessary to pay any tax or assessment to protect the property and security interests of the Lessee,Lessor and Assignee, the Lessee may,in its sole discretion,elect not to pay any tax or assessment until such time as the tax or assessment is determined to be due and owing on the Equipment by a final and unappealed judgment issued by a court of competent jurisdiction. 16. LESSEE'S FAILURE TO PAY TAXES,INSURANCE,ETC. If Lessee fails to make any payment or to do any act required hereunder,then Lessor shall have the right,but not the obligation,to make the payment or do the act,without notice to or demand on Lessee,and without releasing Lessee from any contract obligation,and to pay,purchase,contest or compromise any encumbrance, charge or lien which Lessor judges to affect the Equipment or Lessor's rights therein. 7 17. TAX MATTERS. Lessee hereby represents,warrants, covenants and agrees that: a. Lessee is a public entity of the State, the interest on whose obligations of indebtedness is exempt from federal and state income taxation. b. Lessee will take no action that would cause the interest portion of the rental payments that will become due under this Lease (the "Interest Portion") to become subject to federal or State income taxation, and will take or cause its officials,officers,employees and agents to take all action lawfully within its powers necessary to cause the Interest Portion to remain so tax-exempt. Should the IRS disallow the tax-exempt status of the Interest Portion as a result of any act or omission by Lessee, including,but not limited to,Lessee's ceasing to be a tax-exempt entity,then,to the extent permitted by law,Lessee shall be required to pay additional sums to the Lessor or its assignees so as to bring the after-tax yield to the same level as the Lessor or its assignees would attain if the Interest Portion continued to be tax-exempt. c. Lessee hereby designates this Lease as a"qualified tax-exempt obligation"as defined in Section 265(b)(3) of the Internal Revenue Code of 1986,as amended(the"Code"). To preserve the validity of such designation,Lessee(i)will take no action or not fail to take action if such action so taken or not taken,respectively,would cause this Lease to be a"private activity bond"as defined in Section 141 of the Code;(ii)reasonably expects that the aggregate face amount of all tax-exempt obligations issued or to be issued by Lessee and all subordinate entities thereof during the calendar year in which this Lease is dated,including this Lease,will not exceed$10,000,000.00(excluding(A)"private activity bonds"as defined in Section 141 of the Code,except qualified 501(c)(3)bonds as defined in Section 145 of the Code,and(B)current refunding obligations,to the extent that the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation); and (iii)Lessee will not designate more than$10,000,000.00 of obligations issued by Lessee and all subordinate entities thereof as "qualified tax exempt obligations" for purposes of Section 265(b)(3)of the Code. d. 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 Lease will not at any time be a"private activity bond"; (iii)ninety-five percent (95%) or more of the net proceeds under this Lease will be used for local governmental activities of Lessee as described in Section 148(f)of the Code;and(iv)anything in this Lease to the contrary notwithstanding,including,without limitation,the provisions of subsection(c)of this Section,the aggregate face amount of all tax-exempt obligations,not including obligations that,when issued, are and are intended to be "private activity bonds," that are reasonably expected(based on Lessee's prior experience and all other relevant factors)to be issued by Lessee and all subordinate entities thereof during the calendar year in which this Lease is dated is not intended to exceed$5,000,000.00. Neither Lessee nor any subordinate entity thereof intends to issue any tax-exempt obligations during the calendar year in which this Lease 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"iv"above) will be in excess of$5,000,000.00 unless,prior to such issuance,Lessee, for itself and on behalf of 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. e. Lessee will assure that the proceeds of the Lease are not so used as to cause the Lease to satisfy the private loan fmancing test of Section 141 (c)of the Code. f. 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 the Lease to be"federally guaranteed" within the meaning of Section 149(b)of the Code. g. Lessee will not take,or permit or suffer to be taken,any action with respect to the proceeds of the Lease which,if such action had reasonably expected to have been taken,or had been deliberately and intentionally taken,on the date of this Lease would have caused this Lease to be an"arbitrage bond" within the meaning of Section 148 of the Code. h. Inasmuch as the proceeds of this Lease have all been expended on the date hereof for the purpose set forth herein,Lessee is not required to provide an issuer's certification pursuant to Treasury Regulation 1.148-2(b)(i)(ii)(A). 8 i. Lessee will ensure that proceeds of the Lease are not used to reimburse expenditures previously paid by Lessee,except in compliance with the requirements of Treasury Regulation£1.03-18. 18. LOCATION. Lessee will not,without the prior written consent of Lessor specifying a new location,permit the Equipment or any part thereof to be removed from the location shown in(a)the Equipment Schedule, or(b)any such prior consent. 19. INSPECTION AND NOTICE. Lessor shall have the right to inspect the Equipment at any time during business hours. Lessee shall give Lessor immediate notice of any attachment,garnishment,levy or other judicial process affecting any of the Equipment and shall advise the Lessor,upon Lessor's request,of the location of any Equipment. 20. ASSIGNMENT BY LESSOR. Lessor may transfer or assign all or any part of Lessor's right,title and interest in, under or to the Equipment,or any portion thereof,and/or this Lease,and any or all sums due or to become due hereunder,for any reason to any third party(the"Assignee"). Assignee may re-assign and transfer,and such transferee shall also be referred to as the"Assignee." Lessee agrees that upon receipt of written notice from Lessor of such assignment,together with a copy of a written agreement duly executed by Lessor evidencing any such assignment,Lessee shall perform all of its obligations relating to such assigned Lease for the benefit of Assignee and,if so directed in writing,shall pay all sums due or to become due under this Lease directly to Assignee or to any other party designated in writing by Assignee. Subject to Section 4,Lessee hereby waives and agrees not to assert against Assignee any defense, set off, recoupment claim or counterclaim which Lessee has against Lessor for any reason whatsoever. For purposes of this Lease,the term"Lessor" shall include any Assignee. Upon receipt of notice of any such assignment, Lessee agrees to execute and deliver to Lessor, if requested, such documentation as Assignee may reasonably require. Lessee hereby acknowledges and affirms that the obligations set forth in the terms and covenants contained in this Lease shall survive any such assignment. Nothing contained in such documentation required by Assignee shall be in derogation of any of the rights granted to Lessee hereunder. No such assignment shall relieve Lessor of its obligations arising under this Lease or interfere with Lessee's right to quiet possession of the Equipment. 21. RESTRICTIONS ON ASSIGNMENT BY LES SEE. Lessee shall not,unless Lessee shall have obtained the prior written consent from Lessor: (a)assign,transfer,pledge,hypothecate or grant or suffer to exist any lien or security interest in this Lease,the Equipment,or any part thereof,or any interest therein,(b)sublet or purport to sell or lend the Equipment or any portion thereof,or (c)permit the Equipment or any portion thereof to be used by anyone other than Lessee's employees or for any non-governmental purpose. 22. RETURN OF EQUIPMENT. Subject to Lessee's purchase option,if any,set forth in the Equipment Schedule, when this Lease expires or otherwise terminates,in whole or in part,or,at Lessor's option,upon the occurrence of any Event of Default(as defined below),Lessee shall return all(or,at Lessor's option,any part of)the Equipment leased hereunder to Lessor in good repair and condition,excepting ordinary wear and tear resulting from its proper use,by deinstalling,packaging,and loading such Equipment,at Lessee's cost,on a carrier specified by Lessor and shipping it,fully insured,at Lessee's expense, freight prepaid by Lessee,to a site designated by Lessor. 23. DEFAULT. The occurrence of any of the following events or conditions shall constitute an event of default(each is referred to herein as an"Event of Default"):(a)Lessee shall fail to pay any rental payment required hereunder when and as due and payable; (b)Lessee shall fail to pay any other sum required to be paid by Lessee hereunder when and as due and payable;(c)Lessee shall fail to carry and maintain in effect insurance in accordance with Section 12 hereof;(d)Lessee shall fail to timely perform or observe any other term, covenant or condition of this Lease or any document executed in connection herewith, and either (i)such failure cannot be remedied, or (ii)such failure can be remedied, but such failure continues unremedied for a period of ten(10)days after it occurs;(e)the filing by Lessee(or against Lessee to which Lessee acquiesces or which is not dismissed within forty-five(45)days after the filing thereof)of any proceeding under the federal bankruptcy laws now or hereafter existing or any other similar statute now or hereafter in effect;the entry of an order for relief under such laws with respect to Lessee;or the appointment of a receiver,trustee,custodian or conservator of all or any part of the property of Lessee; (f)the insolvency of Lessee; or the execution by Lessee of an assignment for the benefit of its creditors; or the convening by Lessee of a meeting of its creditors, or any class thereof, for the purpose of effecting a moratorium upon or extension or composition of its debt;or the failure of Lessee to pay its debts as they mature;or if Lessee is generally not paying its debts as they mature; or the admission in writing by Lessee that it is unable to pay its debts as they mature or that it is generally not paying its debts as they mature;(g)the merger,consolidation or dissolution of Lessee;(h)the occurrence of any 9 r • default that remains uncured after any applicable grace or cure period under any document executed and delivered by Lessee in connection with any other obligation or indebtedness of Lessee to Lessor,of any kind or character,direct or indirect,contingent or absolute, and whether now existing or hereafter arising or incurred; or(i)the occurrence of any material change in the financial condition of Lessee that Lessor,in its sole discretion,deems material,or if Lessor in good faith shall believe that the prospect of payment or performance by the Lessee hereunder is impaired. 24. REMEDIES. If any Event of Default shall occur,Lessor,at its option,without notice or demand on Lessee(except as expressly provided in clause(f)below),in addition to any and all other remedies available to Lessor under applicable law, may,to the extent permitted by applicable law,do any or all of the following:(a)terminate this Lease and/or Lessee's rights of possession and use of all or any portion of the Equipment hereunder;(b)take possession of all or any portion of the Equipment, wherever located,or render the same unusable;(c)require Lessee to assemble and return all or any portion of the Equipment to Lessor(as more fully specified in Section 22 hereof);(d)retain,hold,sell,lease or otherwise dispose of all or any portion of the Equipment, in a public or private transaction, without demand upon or notice to Lessee, and any such sale, lease or other disposition shall be free and clear of any rights of Lessee; (e)Lessee will,without cost to Lessor, allow Lessor a reasonable place for a reasonable period of time for the purpose of storing,displaying,selling,leasing or otherwise disposing of all or any portion of the Equipment; and(f)subject to Section 4, recover other and further damages, which shall include, but not be limited to,payment by Lessee immediately upon demand of the following,each bearing interest until paid in full at the Overdue Rate from the earlier of(i)the date such demand is made,or(ii)the date otherwise due and payable:(A)all accrued and unpaid rent payments payable hereunder and all other costs,charges,fees and amounts payable hereunder;(B)all of Lessor's costs and expenses in connection with Lessee's breach of this Lease;or the enforcement of this Lease(including reasonable attorneys'fees and expenses),or associated with the repossession,reconditioning and sale,lease or other disposition of the Equipment;and (C)payment of any and all amounts payable by Lessee hereunder. Lessor's remedies hereinabove specified are cumulative,and may be exercised by Lessor in any order or manner,as to all or any part of the provisions of this Lease and/or the Equipment,all as Lessor shall determine in its sole discretion. No exercise of any remedy available to Lessor shall constitute any election foreclosing Lessor from the subsequent exercise of any other remedy. Lessor's remedies hereunder are limited by the understanding of the parties that Lessor shall be responsible for mitigating any damages resulting from Lessee's Default. In furtherance of its remedies,Lessor may and is hereby irrevocably authorized by Lessee(and Lessee,at its sole cost and expense, shall cause Lessor to be duly authorized by all necessary parties) to enter without trespass or liability upon any premises on which the Equipment or any portion thereof may be located. In the event that Lessor,at its option,shall give Lessee notice of any proposed sale or other disposition of the Equipment or any part thereof,Lessee hereby agrees that written notice given to Lessee in accordance with the terms of this Lease at least ten(10)days prior to any such sale or other disposition shall be and be deemed to be commercially reasonable notice. 25. OFFSET. Lessee hereby waives all existing and future claims and offsets against any rental or other payment that becomes due and payable hereunder, and agrees that its obligations and liabilities for the payment of all rental and other payments that become due and payable hereunder shall be, except as expressly provided otherwise herein, absolute and unconditional. 26. NO THIRD PARTY BENEFICIARIES. This Lease and all other documents executed in connection herewith are for the sole and exclusive protection and benefit of the Lessor, any Assignees of Lessor, and Lessee, and no other person or entity shall have any right of action hereon. 27. APPLICABLE LAW. This Lease shall be governed by and construed in accordance with the laws of the State of Texas applicable to contracts made and to be performed entirely within the State of Texas. 28. NOTICES. All notices required or permitted to be given hereunder shall be in writing and may be given in person (including express or courier service) or by United States mail, delivery service, or electronic transmission to the telecopier number set forth above. Any notice directed to a party hereunder shall become effective upon the earliest of the following: (a)actual receipt by that party; (b)delivery to the address of that party first set forth above(or to such other address as such party may from time to time designate in writing);(c) if given by United States mail,forty-eight(48)hours after deposit with the United States Postal Service, postage prepaid, addressed to the address of that party first set forth above (or to such other address as such party may from time to time designate in writing);or(d)if sent by telecopier,immediately upon transmission. 10 , 29. HEADINGS. The headings or captions of sections in this Lease are for convenience of reference only,and in no way define,limit or describe the scope or intent of this Lease or the provisions of such sections. 30. NO ORAL AGREEMENTS AND MODIFICATION. THIS WRITTEN AGREEMENT,THE EQUIPMENT SCHEDULE AND THE INSTRUMENTS AND 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 NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All modifications,consents,amendments or waivers of any provisions of this Lease, or consent to any departure by Lessee therefrom,shall be effective only if the same shall be in writing and signed by Lessor. 31. WAIVER. No failure to exercise, and no delay in exercising, on the part of Lessor, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other further exercise thereof or the exercise of any other right. The rights of Lessor hereunder shall be in addition to all other rights provided at law or equity. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand. 32. ATTORNEY FEES. In the event of any arbitration proceeding,bankruptcy proceeding, action at law or suit in equity in relation to this Lease,the prevailing party will be entitled to a reasonable sum for its attorneys'fees. 33. CHOICE OF FORUM;CONSENT TO PROCESS AND JURISDICTION. Any suit,action or proceeding with respect to this Lease and/or the Equipment(or any portion thereof)or any judgment entered by any court in respect thereof,shall be brought in the district courts of the State of Texas,Harris County,or in the United States District Court for the jurisdiction applicable to the State of Texas. 34. INVALID PROVISIONS. If any provision of this Lease is held to be illegal, invalid or unenforceable under present or future laws during the term hereof, such provision shall be fully severable, and this Lease shall be construed and enforced as if such illegal,invalid or unenforceable provision had never comprised a part hereof,and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal,invalid or unenforceable provision or by its severance herefrom. Furthermore,in lieu of each such illegal,invalid or unenforceable provision there shall be added as part hereof a provision mutually agreeable to Lessor and Lessee as similar in terms to such illegal,invalid or unenforceable provision as may be possible and be legal,valid and enforceable. 35. FURTHER ASSURANCES. Lessee hereby agrees,at any time and from time to time,upon the request of Lessor, to execute and deliver or cause to be executed and delivered,such further documents and to do such other acts and things as Lessor may reasonably request in order fully to effect the purposes of this Lease. 36. COUNTERPARTS. This Lease may be executed in any number of original counterparts,all of which when taken together shall constitute one and the same instrument. The undersigned agree to all terms and conditions set forth herein,and in witness whereof,they hereby execute this Lease as of the date first set forth hereinabove. LESSOR: LESSEE: HOUSTON COMMUNITY BANK,N.A. CITY OF PEARLAND,TEXAS By: By: Title: Title: Attest and Countersign: By: Title: 11