HomeMy WebLinkAbout0527.000I " r,
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Vctober 18. 1990
'!'HE HONORABLE CIl'\' COUNCIL
Palo Alto r California
Members of the Council:
Repo.rt. ia Brief
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'I'his report recommends Cou·ncil approval of a contract with
Transocean Fundinqr Incorporated for the lease/purchase financing
of vehicle equipment totalling $2.,346 .. 0:00.. The arranqement would
allow the city to finance expensive equipment purchases over five
years ratber than making one-time expenditures directly rrom City
reserves. Transocean 'Would place .funds with the Bank of California
to be used wben the city approves the purchase of specific vehicle
equipment~ The City would repay Transocean 'With resources from the
Equipment Replacement Fund" an· internal service fund established
for the purchase of replacement equipment ..
B.ckq.roun~
Staff revieWed the needs of the city for major equipment purchases
for 1990-91 and 1991-92. CUrrently it is estimated that 15 major
vebicle purchases will be needed at an estimated cost of
'$2,34Ej~OOO. The. Public Works Department staff revie ... 'ed the useful
life criteria (age and mileage or ~~s) established for each major
piece of equipMent and determined those parameters have been
exceeded. Staff also reviewed the ongoing maintenance cost and a
history of equipment do .... 'ntime information 'Which supports the
decision that these vehicles are dilapidated and ready for
replacement.
The Finance Department staff performed a p~eliminary reviev of the
equipment proposed for replacement ~ Finance staff agreed that
there was sufficient need to justify the equipment purchases.. A
more detaileci financial revieW' will be :made of each individual
piece of equipment and City Manager approva 1 .. ill be obtained prior
~o purch~sinq any equipment~
The purchase of major eq.uipment could 'be made either throu-gh
internal funding O~ external financing.. Internal funding inVOlves
a one-time expenditure of money .fro-m City reserves to buy the
equlpment~ External financing allo~s the City to lease/purchase
CHR:527:0
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equipment, spreading the payments over a five-year period~ statf
evaluate~ t~e alternatives of internal and external financing~ and
reoommenda an external lease/purchase finance agreement with
Transocean Funding, Incorporated.
Tbe concept of deferring expenses through some fOrll of financing is
not neW for tbe City. In June 1986, council approved a five-year
lease purchase rather than an outright ~urchase of the telepbone
system. This lease arrangement has ~orked very well.
t.t.rpal lUA4i»q
The Equipment Replacement FUnd vas established in fiscal year 1985-
86 as an internal service fund to secure a reserve from 'Which
replacement equipment could be purchased. City departments
~tribut~ annually to the fund based on the replacement value of
vehicles use and on a set replacement schedule. No-dollars 'Were
placed into the fund at its initiation, and there are not enough
funds for the specific purchase of many of the vehicles that are
now 'Worn and ready for replacement.. The fund cannot. cover the
direct purchase of the proposed equipment~ although future vehicle
replacements will be purchased or leased through this fund.
If internal funding 'Were to be used to purchase the proposed
equipment~ the balance required for replacement above 'What has been
contributed to date in the Equipment Replace:nent Fund would be
taken from the City's General# Refuse# Electric and Storm Drainage
Funds. Five pieces or street s\tIeeping and refuse eq·uipment costinq
$735,000 would require $211,000 from the Refuse Fundi rive pieces
of fire and tree trimming equipment costing $895,000 'Would require
$154#000 from the General Fund; four pieces of Utilities equipment
costinq $566,000 would require $314,0'0'0 from the Electric Fund and
a sewer truck costing $.150 .. 000 .... ould need $150,0.0'0 from the Storm
Drainage. Fund.
i'ha following chart demonstrates the amount of money accumulated in
the Equipment Replacement Fund and funding that would be required
from each of the city reserves to pay the net cost of the replace
lIent: equipment.
Accumulated Balance
in Equipment of
Funding Replacement Funding
ll.!M Required Fund Needed
RefUse $ 135,0'0,0 $518,000 $ :211,0'0'0
General 895., O,O{l 141., 0'0'0 754,000
Electric 566,0.00 252,0<)0 314,0.0,0
storm OrainagE 150.0.0'0 0 15·0,0,0'0
Total $2 .. 3461'000 $911.0'0,0 $1.,435., COO
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The advantase of internal funding is that it is easy and can be
completely controlled by the city. Only Council approval *ould be
necessary. Tbe disadvantaqe is that various reserves would be
deplete~ and those reserves ar~ zaintained for the city to use for
various purposes.
Staff conclooed that elCternal financing liould be preferable to
depleting City reserves. if a reasonable rate of financing could be
secured. Since new investments in the city portfolio yield just
over 8 percent 6 staff recommends that external financing at a rate
la.er than 8 percent would actually be profitable for the CitYa
Rather than depleting the City's reserves ~hich earn over 8 percent
interest. the city would borrow the funding at an interest rate cf
less than 8 percent, and the difference bet""een the two rates would
represent an increase in the City's investment earnings.
EXternal pinanelng
Staff investigated several options for external financing for the
equipment purchases. The two If'tOst viable alternatives appear to be
either partiCipating in an Association of Bay Area GoverlU!lents
(ASAG) program. or entering into a lease/purchase financing
arrangement with a financin9 company.
ABAG:
The Association of Bay Area Governments has created a leasing
program called the Pearl Pr09ram (Pooled, Exemp,t, Adjustable-Rate
Leases). Interest rates charged by ABAG in the Pearl Program are
variable, based on a published interest rate index-for tax-exempt
notes. Staff discussed the Pearl program with ABAG and determined
that the need for a reserve fund, capitalized and accrued interest
and expenses Would require procaeds of '$2.740, COlO to final"X:e
$2,346.00.0. Staff reviewed this option and decided the variable
rate left too much risk to ose the Pearl program. In addition to
the financing payments. there would be charges for other servicp.s
such as a trustee and a person to calculate any needed rebate to
the federal government for excessive earnings. The complexity of
tbe transaction and the additional expenses also added to staff's
concerns.
ABAG also offers other financing alternatives. However, even the
representatIve from ABAG agreed that Palo Alto could find a better
rate than ABAG could offer through another program.
FINANCING COMPANIES:
In order to evaluate the possibility of external financing, staff
issued a Request For Proposal (RFPJ on July 31, 1990 for lease
purcbase financing. (Part of the RFP is included as Attachment I.)
The RFP ~as mailed to 17 companies that had lndic3ted an interest
in this type of transaction. The City received S bids from:
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SUtr-o, Transocean Fundinq,. G. E. Capital, Municipal Leasing,
Pacific Corporation, Chrysler, Bateman Eichler And C.F.S.
staff reviewed the bids and eliminated bids that did not provide a
fixed price, bids that did not provide a simple structure __ with
equal payments., and bids 'With rates at or over 7 .. 7 percent. The
remaining successful bidders ... ere: Chrysler and Transocean
Funding.
chrysler offered a rate of 7 .. 64 percent, and a simple transaction
'Which would keep the city lease/purchase in Chrysler's portfoliO of
investments. The $2,346 .. 000 equipment cost -would be funded for
five years with sexi-annual payments of $2a6~655.. Chrysler has
been handlinq this type of transaction for over five years and
tbeir lIanager has twenty years experience in bankinq and lease
financing. Reference checks indicated tm~ Chrysler clients ~elt
that both the fir~ and the manager provided above-average service.
staff explored the possibility of a lease agreement with chrysler,
and our financing cou,nsel., Jones, Hall .. Hill and White., beld
discussions with Chrysler attorneys regarding the legalities of
ownership during such a lease. Based on issues that arose in these
meetings.. the City Attorney's office recommended that stafr not
pursue an agreement with chrysler.
Transocean Funding offered a slightly lower rate of 7.473 percent.
Althouqh the firm has been in operation for only 1.5 years, they
have focused on this particular type of fina!'lCing aqreement.
Reference cbecks for Transocean also indicated above-average client
satisfaction.. The Transocean staff appears quite knowledgeab!.e
regarding lease/purchase arrangements and has been helpful
throughout the negotiation process~ Transocean normally uses a
bank located near them, Barbary Coast N.B., to bold th",= funds~
After reviewing Barbary Coast N.B~., staff determined it would be
preferable to keep the funds in a larger# more profitable bank~
Transocean agreed to use the Bank of California as trustee for this
transact.ion.. staff has worked successfully with the Bank of
California, which currently acts as trustee for the city portfolio ..
This contract has been reviewed by the city Attorney's Office and
Jones, Hall, Hill and White~ Transocean Funding intends to take
the transaction from Palo Alto, create certificates of participa
tion, and sell the certificates to ~e or more investors.
staff recommends that the city Council app~ove.. and authorize the
Mayor and the City Manager o'r his designee to execute.. the
following attached documents:
{lJ the Equipment Lease/Purcl1ase Agreement 'With Transocean
Funding, Incorporated#
(2) the related Escrow Agreement with the Bank of California
and Transocean Funding. and
{3) the Resolution under 'Which the Council approves the
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-transaction and authorizes the city Attorney Zlnd staff to make
any necessary changes to the documents to effect the transac
tion and authoriz:es the Mayor and staff to execute the
documents.
Staff also recommends that council authorize the use of the
EqUipment Replacement Fund. budget for vehicle purchases to pay for
1990-91 leaee repayment costs.
Respectfully submitted.
GOROON B. FORD
Treasury ~anager
anager
Attachlllents:
GBF/EHj3F:djr
CHR:521:n
Attachment I -Proposal Requirements
Lease Purchase Financing
Equipment Lease/Purchase Agreement
Escrow Agreement
~esolution
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AHACHME~! I
CITY OF PALO ALTO
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"OJECT DESCRIHJOlll'. BE99IJEHENTS AND SUlIJlt:t';fPL INFO -PM.'l' III
CITV OF PALO ALTO
PROPOSAL REQUIREMENTS
LEAS E PURCfiAS E FINANe ING
The_ City of Palo Alto is located approximately 35 miles south
of San Francisco in Santa Clara County. and bas a population
ot 57.000. It is a part of th~ San Francisc:o Bay metropolitan
area~ ~ch has a population o£ five million. The City ~as
named ;for a tall redwood. 'tree under 'Wbich an early Spanish
exploratio-n party camped in 1769. The high technology·
·-industry.-.which bas made Santa Clara County famous. ha.s its
;'."< roots in-Pa10 alto. .. partly because of the presence 'Of stanford
Vniversity ad.jacent to the City. The City is a. major
employment center with. about 75,0'0-0 jobs. in addition to being
i!I un.ique residential community ... ·i tb. about 25.0'0'Q housing
units.
The City provides a full range of municipal services, in
additicn to operating its own municipal electric .. water~ gas ..
wastew-ater and refllse. utilities. Its schools" parks and
recreational facilities are outstanding. The City c!o,"ns 34
parks totalling more than 4.0'0'0 acres .. two community centers~
a lbunicipal swimming pool .. Cultural Center~ community Theatre~
Children"s Theatre l and Junior MUseum.
2. PESCRIPTION OF PROJECT
The City of Falo Alto plans to acquire equipment sbololn on
Attachment A" Sched·ule of Leased Equipment. This project is
to de.velop a lease Which ~ould allo~ the City of Palo Alto to
acquire such equipment at the time it is needed.
Please bid on the assusption that the. list on Attachment A is
accu~atel so that all proposals may be compared on a similar
basis.
The City may also c~ider additions or changes on the list.
Any refinancing of past purchases o~ changes to Attachment A
will be discussed with the selected vendor and should not be
considered when calculation numbers for this proposal. Any
additional comments regarding the ~dvisability or p~oblEms
associated with chanqes should be made in a separate secticn
of the proposal"
ClTY Of "AU At. TOrtrelll:S-rip/rlpluse. 1 13
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CITY OF PAW ALTO
paOJleI' PESCRIlTIOlI'. ll.EOOIltI:l!ENTB ltlfP 100KlnAJ. 'no -PAR'}' 11..l......-
J. YEFlICLt REPlACEMENT [WID
The City of Palo Alto bas established a vehicle replacement
fund.. A pro-rated portion of the replacement cost of vehicles
is budgeted each year in the operating budget of the
respective departments. The costs are allocated to each
department based on vehicle useful life and str-aigbt-line
depreciation, with an inflation factor.. rhis fund ~ill be the
source of payments under any lease entered into as a result of
this request tor proposal.. rhe Internal Service Fund ~ill C2
the source of payment for the debt, with a quarantee from the
Genera 1 Fund.
4.. TYPE OF LEASt
A Guide to Municipal Leasing published by the Municipal
Finance Officers Association of the United states and Canada
defines several lease types, incl'Odinq tr'.Je lease, lease
purchase agreement l tax-exempt Iease l capital and operaticnal
Ieases l finance lease I sales-leaseback l leveraqed lease, net
lease, net-net lease, service lease I master lease ..
certificates of participation lease and rental agreement.
Please explain ~hich and how these terms or others apply to
the lease you would recommend for this specific project.
The City of Palo Alto is considering advance funding 'Where the
lessor will fund the transaction prior to final eglJiptlent
accepta.nce by placing the proceeds in an inte:--est bearing
escrow: account in a California institution. All interest
earnings d·urinq the escroW' period 'Will be for the aCCQunt of
the City of Palo Alto. The City viII be respol'lsible: for
arbitrage rebate calculations and reporting_
Tbe City of Palo Alto will consider as an alternative,. a
master lease where the funding occurs wben each piece of
equipment is acquired. However, any such proposal should
clearly state ~hy this is superior. Indic~te if this ~ill
avoid arbitrage, give a detail description of bow future rates
would bE: set including infonl.ation on any index, and show an
example comparing this to advance funding.
el1''I' Of PAll ~TQ/trelllS-rfp!rlplu~ 1
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CITY OF PALO ALTO
Tbe city vill consider other alternatives such as a
certificate of participation (COP) issue. Any propvsal must
clearly demonstrate wby the alternative is cost e~fective ana
will not create more ad~inistrative problems ..
BIPDEB"S poSITION IN THIS TRANSACTION ANP OTHER PARTIES
The City expects all tirms submitting p~oposals to thoroughly
understand the ~urrent laws of their field" and operate ~nd~~
the MuniCipal securities Rule-making Board (MSRB) rules~ Ea.ct.
~iQ should make specific reference to these ~les.
Please discuss in detail how the lease will be structured and
specifically if your firu "ill be an underwriter or broker" as
. well .as if any a5signment is intended~
What other parties are needed for this transaction? ~~o will
p~epare legal Qocuments? will the legal documents b~
struct.ured so tbat the lease-purchase paYlnents are obligations
for federal ta.x law purposes b\lt not debt under state a:'ld
local laws? Will there be a need to involve a t.rustee or
other par-ties? Be advised that tbe City Atto:r-ney -will certify
.or opine only that certain qualifying leases are bindiT~g
Obligations of the City. not that interest payable or imputed
thereunder is tax exempt under state or federal law~
6. LEASE YERS!1S PURCHASE
The Cit.y of Palo Alto is open t.o all proposals but .....-ould
prefer to see a financing pacKage vhich ~ill enable it to make
annual or semi-annual payments" in arrears. and receive full
ownership of the equipment at the end of the lease. The City
requires that all interest earned on fends being beld in any
escrow associated ~ith the proposed transactions be returned
to the City at the conclusion ot the es~row perlod~ The City
is self insured and, therefore. the City would prefer that any
insurance required for the equipment be part of the proposal
with_ any associated premiu~ stated separately for comparison
purposes.
At this time the City of Palo Alto is most interested in a
.ive year lease. Please provide a rate for a five year lease
and any additional periods you ~ogld reco:mena~
All -rates quo-ted should be qood for at least 90 da.ys" ~r
indicate the period Clf t.ime and how the" rate would change
d-urinq 1990.
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CITY OF PALO ALTO
PIlOJ!CT P!SCltI"P,.tQ1fr 'IPPI.pENT' NIP 8OB!Ul'TAl. IJITO -ppT III
Als.o provide a list and estizate of any additional expenses to
the city not cov~red by the annual or semi-annual payments.
These might include insurance premium trustee fees or legal
tees. Please state i~ all other expenses are covered by your
firm.
~he following information is re~ired where applicable:
1_
s.
Stated Interest Rate
Annual Percentage Rate
Buy-out cost of end of lease Annual or semi-annual payment ______________________________ ~
OTHER CITY Qf PALO ALto FINANCINGS
The City of Palo Alto is in the process of issuing $11 .. 20'0,00'0
of Utility Revenue Refunding Bonds. It is our understanding
that this utility financing will mean that tbe proposed lease
financing will be subject to arbitrage and will not be bank
eligible ..
PROPOSAL RFOOIRD!l:~
a. Provide advice on the timing. structure and method .of
lease.
b. Provide all necessary financing: documents and forms
thereo£ In advance.
c. Provide information on recent and past rates and offer
marketing advice regarding when to add purchases.
d. Assist in preparing contracts ~hich best meet the needs
of the City.
e. Assist the City of Palo Alto in developing the contracts
with any other pa~ties, such as trustees.
f. Assist with any required submissions and forms for the
I.R.S. or other aqencies.
9· If funds are held by a trustee. assist the City Qf Palo
Alto in arranqinq for investment 05 proceeds in tbe State
of Calltornia# in compliance with California la~
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CITY OF PALO ALTO
,ReJECT PESCltIP'rIOlf •• 'OOIJlRlnrrS AND 817BKITTJ&L IRO -.ART II!
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reqarding investment of public funds, the City~s
inves~ent policies, and tederal arbitraqe reqylations.
Make presentati.on to the City Council,
committees, and/or staff as needed.
Council
Provide other-services normally provided to clients 'Which
relate to lease tinancings.
j. Selected firm must be liilling to provide insurance as
shown on Attachment B.
'9. PROPOSAL SU2MITTAT, INFORMATION
a... . A 'Uiscussion of. the "experience and depth of your firm as
'it relates to this project alonq ,..ith similar
information regarding the individuals who would be
assigned to this account" both account manager and backup
personnel.
h.. Inforlllation on the location of offices and personnel that
would be assigned to this contract and the availability
of those resources.
c. Specific experience with lIunicipal leasing for equipment.
Please include a list of California cities which have
used your firm l as well as the dollar amount and
equipment financed ..
d. il:eferences on similar projects "Which your firm has
managed, with an indication of the su~cess achieved in
arranging financing programs.
e.. A list of the services 'Which you 'Would propose to
provide.
f. A standard contract tor services. Please include a copy
of all contracts needed for this transaction.
q. A statement of fees that 'Would be charged for the
services listed in this request for proposal along with
any factors .hich Would aodify those fees if qreater or
lesser services "Were required.
cIn OF ULI A1.TO/t~us-rl'p/rlp'1a5e,t 17
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CITY OF PALO ALTO
'ROJECT DESCRIPTION, REOOIRPJ:H'tS ltlm SVBM'IHAL INFO -PART ,Ill
h. Please indicate if your fira ~ill charge separately Cer
any travel or lodging e.xpenses or if these 'Will be
covered in the overall price.
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Sh-ov the current rate on a lease" the assUEptions on
payments" frequency of payments (semi-annual or other).
payments in advance or arrears" and any deposit or other
.factors that would effect the calculation. Also indicate
how long the rate would be honored and how changes would
be calculated if it is necessary to change the rate
duri~ the contract period.
A discussion of 'Whether this lease be elCempt fre:::!
Security and Exchange Commission (SEC) registration.
If your firm is in.terested in 'providing t.his servi·ce .. pleas~
submit a proposal and three copies no,t later than August 2a.
1990, 3:00 p.m~ Pacific Standard Time. Proposals and three
copies must be submitted to tile Purchasing Division loca'ted on
the first floor ot the civic Center at 250 Ra-milton Avenoe ..
Palo Alto .. California 9430L Your proposal should be i5ealed
in a package or envelope sb¢wing your fira's name and addre5s~
-LeaseJPurchase Financing-and the proposal due date~ Late
proposals viII bE rejected.
10. SELECTIO~ CRITERIA
The selection of the firm will be subject to review and
approval by the City Council and it will be based on the
following criteria.
a. Firm's experience with lease/purchase financing~
b~ Firm's experience in other financings.
c. Organization l size ... structure, and financial stability of
firm.
d. Agreement to points and compliance with the information
requested within the Iil'P.
e. The. proposed fee relative to the services to be proyided.
ttTy OF PAll ALT'lI\rus-rfp/"r "'~'i 1 18
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CITY OF PALO ALTO •
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"9.7J;C'I PlS CR IPTI08, REOOIUMnTS MD 8UBXlna.L I]IlO -pn'l' I I I
11. TENtATIVE SCHEpuLE
Request for proposal issued
Proposals due ..
Evaluation of Proposals~
Selection of f ira to recoeend
to council and finalIz.tion
of documents~
Council approval of selection~
July 1990
AU<J\lst. 1930
September 1990
September 1990
October 1990
The City of Palo Alto res~s the right to reject any
'. J and aU proposals .. nd to .. ccept the proposal wid!. in
~ ,'~' ::'J, its opinion .. best serves the public interest a It you
".; .have any questions reqarding this request or need more
..... inton>aUon.' plellse contact Go<-cSon Ford at H5J329-24H.
(llT OF IAlI ~TO/\ru.s-rfp/rfp"ftW'.1 19
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CITY OF PALO ALTO
.ROJECT PISCJt1IT1OX« aCOOlllEKplT' AlID ItT!IKITTAA IJlTO -PUT III
SCHEOOLE OF LEASE!) EQUIPMENT
BUDGET YEARS
PESCRIPTION '0-91 91-92 XIRCHASE COST TOTAL CO:;:r
4 Wheel Sweeper 1 $105,000 $105 .. 000
Leaf Truck 1 UiS .. 000 165~OOO
Refuse Leader 1 10'0 .. 000 100 .. 000
water Truck 1 125 .. 0'0'0 125,00'0
Sewer Truck 1 1S0 ,0-0,0 150 .. 000
Landfill Dozer 1 240,0-0<1 240,0-00
Fire Pumper 1 1 2000 .. 0'00 40-0 .. 0,00
Fire. Pumper 4x4 1 135 .. 0,0'0 135.,0·00
Fire Rescue 1 260,00'0 260,000
Digger Derrick I" 1 liS, COO 350.000
Tree Aerial l' lOO .. 0,0,0 10'0 .. 000
Material Aerial 1 130 .. 0'0'0 130 .. 0·QO
Van Aerial 1 86,00'0 86,.0'00
Totals 2,346,000
*Bids received and ordered
tin OF P"ll ~nu'trus-rl"plrfpl .. ne,l 20
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EQUIPMENT LEASE/pURCHASE AGREEMENT
cbJe<I .. of October 22, 1990
TRANSOCEA..1I; f1JNDING, INc.,
CI1Y OF PALO ALTO
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ARTICLE I
AGREEME", TO LEASE
REPRESE>o, A TIONS AND COVFJV.NTS
'\,
<'ITY OF PALO AL 1'0 fLc:~") req.uests TRANSOCEAN f"lJND{NG~ INC ("u-.'-Sor1 to acquire
pc:rson.at property .as mare fully described Oil Exhibit A hereto and inwrpocaled by refen::ncc: hCfern (Ibe
"Eqwpment"'). Lesse-e apees (0 kiL'i.(: die Equipmem from lessor and Less.or agIUS to lease the Equipment
llpou Mine. acceplance flereof signed at the U:ssoc-'.s principal office 'b:Y au autl!orized' officer opon !be terms
.and COllditiOrui of this EqwfmcDt LeaseJPurdase AgrtXmenJ: (the "Lease"). u-ss.ee represents., CO\I~nants and
warrant.", and as reqt1ested by Us.sor, ..-ill &rn.'et an OpUUOD of c:ounseI substantTan)' in tlJ.e form all adled as
Exhlbit D Welo to die dIed (i) tllar: II: is I Funy constituted po'[j[ica1 subd"r.isioll, duly organizeil and valldl'y
uisting anlkr the ta.....-s of the State of Caftfomi.a a.cd has fun power and autbority 10 ~cute and deIiveT tbi<.
Lease,. to enter into the tran:s;adjons C>.)clemplaled by this Lease arid to c.an:y oUl its ooGgati().O..!o lu:n::uod'er. and
(ii) that the Luse "has beCli du1) autnrnized,. executed and deIiYeJed by Lessee: and ronstltutt5 a \egal, ... aJld and
bInding agreement enforceable against Lessee in .accordance .itb "its k!Tm.... U:ssec agrees.. dedares and
covellants thai if. will do, cc aus.: [0 be dl'Ce, all things. necessary .1Lhin its power 10 p:-e&el\lc and ):eep tIJe
Lea';!: in full. force aad. cffect. Lessee further rel're.se'lfs, CJVC;aanl$ and "'aITaJ1ts tltat Lessee. shaD oomptJ lIoi.th
aD bidding requirements 'A'lIetC necessary and by due notificatiDQ presented lltis Lease for apptO\'a1 and
acJop60D .as _ ';'alid' obligation on is part;. thal: tb(: Equipmeol is necessary and essential 10 enable: the Lessee to
operate, maintain, and prmide governmental service5; and thai: fhe Leas.c: Pa,}ments during the Lease Term (!t5
soc). lernu an: defined below) are equivalent 10, and d'a Dot exceed. fair rental "aloe foc-the Equipment for .a
lease/purcltas.e oftEle Equipment by tht: U:~
ARllCU 11
LEASE 0< EQUIPMENT
Section 2,1 ~ Lesroc hereby Ie;c;es the Equipment lo lessee, and Us.see hereby leases the
Equipment from Le~Ot". upon t:be krms and cODdjrions sec forth ill this Lease.
Settion 2.2 F@.'iessioll and Enjmme:nL lessoc herebj' crn.cnan(s 10 prO'icJe U5SCe during the term or
chis Lease .. ,th the: quiet Woe and enjO)'ntenl of tbe Equipment, and lessee ~aD during t1Ie term of me I..case
peik::eably and quietly lIave and bold and eajoy th~ Equipmell{,. wilholll suit Of hindrance from Lessor I except as
c~res.sly set forth in lh~ lease. Lc:!J.'>QI" wilt, at me requesl cJ Les-<oee and it( Lcs.sec's cost, join "in an}' legal
.adio:l ill whidI Lessee asserts its right to suo possession and' eDioynu:n.t to me elttenI LeS!;Of lav.fllily may do
50.
Section 23. Le~_QI" Access 10 Equipment. ussec agrees that l-essor .s!Ia1I :ba''O'e the rigbt at aD
rea$Oc .. ble times 10 examine lU'Id inspect the Equipment. ~ further agrees lila{ Leswr 'SlJaD 1Ia\'t. suca
rigbts of accef.S \0 tl1e Equipme.nt. as rna)' be 1ea!.OnaNy nettssary \0 caruc tlle proper ma;ll~enatJtt or the
Equipment:iD the event or failure b)-' Les~e to perfonn is obfigations "hereunder.
ARTICLE HI
us.so:r lIereby assigns to Le~e for and' during the. k:rm oC ~ Lease .tnd authorizes Lessee 1.0 enforce
in Its own Elame aD maDufad urer warranties ancJ guarante.es., eXllressed 01'" implied, issued 041 or apptlcabI.e {O
~ Equi{lroent.and Lessor author1.zcs les.se-e 10 obtain tlIe custom;)l)' serv>ces furni5.hed in conneaioa. \lith soclt
warranties.and guaranlees .. ~e':5 sole ape-c.sc:, LESSOR IS NOT A MAr'o'\)FACfURER OR SlJPPLlER
OF filE E(.)UlIPME}o.~. AND MAX.ES NO VrlAJUtANTtES ~lTH .RESPECT TO 1HE EQUlPMEJ\.I.
EITHER EXJ'RF.$S OR IMPLIED. INnL'DING IMPLIED WARRA-mES OF MERCHANTABILITY
OR FITNESS FOR PARTlC\Jl.A1l PURPOSE AND EXPRESS'-\' DlSCU.lMS THE SAME. EX~'£P1"
AS PROVIDED ABOVE, IF.sSOR SHALL R .. \'E NO UABIT.JTI( TO I.fSSEE FOR AN):' C1..AIM, LOSS
OR DAM4..r..E CAuseD OR ALlEGED TO 81: CAUSED DLREC.l Y, IND[RECTL Y. INCIDE""'-'TALl Y
OR OOl\'SE..Ql.TENTlALLY :BY 'tHE EQlJlFMEJtr",.. BY ANY lNADF.QUA(."'¥ THEREOf OR
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DEFICIENCY OR DQcr THEREIN, BY ANY INClDEI<T ~=VER IN CO~'ECT)():<
THEJ>E"'TIH AIlISlNG IN STRJCJ L1ABIUTY. FROM LESSEE'S NEGLIGENCE. OR OTHER'I>.1SE,
OR IN ANY WAY RELA no TO DR ARlSlNG OUT OF THIS LEASE AND EXPRESS!. Y DlSCl.A1"S
THE s,.v..rE. Lessor WumCI ao .rapoas.iblliI}l tor Pf,pmeDt. r.k:1iver)!, iDstallatiOD or-mamlC:I1aDCC and an
daims. of Leaet ,..ifll resp«I tUtela" whct.be:r Cor dell:)'. 4am.qc or OIhc~ dWI be made Igainsl th~
~pp'\jCl. Lel.sot agree$. that: ao.)' 01 mel cWms IIIZ)' be made by Leuec directly ~ I,Jpp!ie..;. Le.\JiCC
KbO\1lfe4ges and apus chi acilkt the cu.llf'ac:l:urCl", the suppficr, DOl' tD}' wC$maa." reprcscntalive or other
.nr olthc muwKtW'et or supplier,. Q, aaeDi ol.Lessor . .FotloMq KUplmte by the Le.s.se'::,l1:Ie obligation
01 Wsec 10 pay tJt.c l..u5e "aymellU A$ r!efuu~d ill Scctioa 42 below dian Dot be: alIat04.. impaired or rcdu-c~d
l>j< ,....,. clany <him> clll>e I..a.>t< with '<>I"'" Ie tl>e <0011;6", quality, _\m..w.;P. delivery, >hlpmen\
iDstaDatiol1o. defc:1:IS or cder m&nCB ~ Lhc: Equi,pmcDt.
n><M OF LEASE; LEASE PA YMENJ'S;
TITLE TO EQUIPMENT; SEaJJUTY INTEl!EST
SEC'JX)N 4...1 l&'3 Term.. .FoDowiaJ Lessee', exuuUOfl or we!' Lease:, this Lease: shaD becom e
dfcat\IC llpoc the Qt.CWioa ho:J-eoC b)' Wsor. The lenD d I.hts Leue ("1..u.soc: Tcrm1 slIa!J commcacc: 011 t11e
daTe the l..uY:: be-tomes. etreaivc lfId shall end oa JUDe: 30. 1991" IIJ:ld lherc:ahel shan be renel'o"abtc for .. N,'ch.c
mood period at tk eptiot\ of the l.cs&ec OIl Ju.1y 1 ol e.adr. year for • peOO4 of five yean. il and \0 tht. extent
Les.see"S City Copneil' appropr.a!es huI&. for l"he puryos.e cI mUio, 1c&sc paymeDts lIereunder and' ror OUlI:.f
ded'uJCi as stipufafed. un1e.s.s term i:nate4 prior llIerC10 as provided (Of weilL
SECfK)N 42 Wg PI\,mc;nt~
(aJ ~e agrees. 10 ~ IOC.tl1e.uc: pI)UIcau ("l.use 7.ymcatr)1C1 rorth in Exluba B re'~cttni 11I1:
specific sckdules of equipment t{l whid s:udI E..dubil Jehrc:&,. iDdud"mg inl er~ OD me d'ate.s a·.d' in
[fie unoual!. specifie4 ill Ea1Jibi: B, for acd' in coasidl:tilliot1 t;:l the ris!ll of' posses.sioa of, aDd' coatml)(:d
quiet nse and eujoymeDt of. the Equipmenl during cd paymcaJ pc=riod. Said Lease Payments ~a!I be
payable MtfJolIl notice: or d'ema.od II me office c:J llIe Bani or California. No A (l1Ie '"£sera-.." Aio,I:n:r)
on llIe l.Slh day ollhe month preceding the payment dalei w. ronll Ut Exhibit B for deposit lnl.c IX
I..ease Payment Fuad beld by lhe Esaow Agenl ,I)UnoUatlt 10 tbe EscrO\\' Agrecmecl, dated as of
0cI0ber 22, 1990,. by .and among Lessor,1.es.see ID4 £saO"" Agtnl Aoy Jloba, invoiciJlg. rurch.~
orJc~ q.uOlalioD c. OllIer Jonns Dr pnx:ed'lUcs rcqyired' by Less« as • c.oOOition precedent 10
payment shU be. funj' cxpb.ine4 ).Dr! pttMdell 10 l.e.uoc or its usigne.c suff"Kieully in advance of
paymcD{ due date for the eompktiOD thaeof by Lessor or its assignee prior 10 sucl payment dale.
Excrpe as prO\'ided m Seaioa 42(c) bator. Lease 'aymCtllS slWl be paid .bsofulcJ)" aed
llDCcndiuona11y in all cYCnu. and' without 85.!.CrtlOD of aDJ rl&ht 10 any .set--otJ, defense or COUll! ~rc:bi!!l.
CXCC:pC in tlIe ~eol of damage roc destroctiOa rendering the: Equipment tOl&lI)' unusable:.
(bJ Lessee reLiODably br'5eves Iha fuDds ..-ill be: ....,ailablt 10 maKe an uase Payml:n1s dUMB we
Lease Tum and' hereby Jepr~ tlIa( iI irlteltd's. 10 do all ching! b'llr.fuIly ..uhlll its po~ .. cr 10 ob<a!n,
lIlamtairi and properf)' reqU<%&t and pursue fur:ul5 from ..-bid 'tlIe Lease Payml:hts mal' be mack.
iDduamg m;aDnJ. prO\llsiOIl for sud paymeau in budgCl$ IUbmined (0 it.s. Cuy Council fOf 1111: pil~e
of obtainiIlg fufUfinB. asing ti booa fide bc51 e8'ons 10 bve sud! potIiOCl or the budect apprcr.ed bJ
Phausling aft a.vai\abtc. .dmUUstr~ reviews ud' ~ if &1)" 1m 'ilic C'o'tnt $\K\ pon}c~ of the
budget is DOl .ppr0ve4. I: is. t.essu •• iole9C 10 m.d:e Lusc: PoI}mems ror the ful! Lus.c T c:nn w we
...... i has Icgally .".;).bIc full"'-
(e) .. funds art DOl awopriate4loy LeSSC:e"1i City Council, CD 01' before July 1 01 eKII yeat' dllring lbe
ll.r:m of this Lease, this Lu:s.e :.lid iCrminatc .nd ~ C&tlcetle4 &Dd' the: Lessee Ihaft immedialI:1~~ lIpoll
tbe exhauszioa 01 the iuad'ina IlIl!Ioriwf lor I.ht the, CW'tcp.! fiscal' year. ,unClW!er pos.s.c-LSioc of the:
EquipmeDl,. or 11 t..es.sot., option. TCtUNI the EquipmcDi lD Lts.sor ~ ~ Les.stc', e:xpe1ll>C (mduding .1'1
Jreishl dwses). m tile samc CODCfItLoIl as w!lea de&.tert4 10 the: Les.s.cc,. reasonaNe ""car and Lear
uc.c:ptc.1. 10 sud pta«: or oa bovcl'~' carrie', ,packttl for Ibipping. as Lc~ may 5~Cify.
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If the p1''''~ons of this Seruon 4.2fc) are exercised b)' 1.: ~ LeloSeC IIgI'"ces Dot 10 pur~ lease, ~
or recl: equipment performing functions,. 01 obtaiD scrvi~ trom any person a<Jng eqwprncDt, similar to tbos.e
performed by I'hc Equl.pillCnI foe • period 01 thrOl'! !J.undred s.i:xry (360) d'a)'5 commenciog with the fIrst ~' of
the fuca! yea! fm whldt. suff"\cient fuo&.. l.av-e o~ bee .. appropcia.ted to pa}' the Lease Faymenls coming dlJe
~i.cg sud period.
uas.e paymeDb for cadi pa)'menJ period d'uring tIle term 01 this ~ase shall constirute the total
amounl dw:: for said p3}'II1Cnr. period., and' sl!aD. be. paid by ~e fix and in. eotasideration of (1) the right of
po.sscs.<.ioD 0( and tile coa!1ooe.d quiet use and CDjOytIl'-=M of lilt Equipment during cad. sud. payment period.
and' (Z) the OptiOD to prepay the Lease paymcDts .itb respect to the ~ujpmenl: by payment of 111.:: amount
~d in Article XI.
Le~or and' Lessee understand and intend that tM obtigatiOll of t..es.sce 10 pay Lease pij'mcnrs
bcreunder ~aD C<lnstitute a current expeDse or Lesse.e. and slIaD 1101 in any WiI)' be .construed to be a debt of
Lessee in COlIll"avenlion of any appIicahl.e CODstilutioDaT or statutory fimj"tatJoDS or requiremcnts concerning tbe
CTea1ion of indebtedru::s.s by Luo;.ee.
SEC110N 4.) Title '9 Equivment· Security [Dlaes: TIlle 10 the Equipmem is deemed to be in
Lessct'. To KCUI e all of its obfig.a6ons 'hereunder, l...es.see kfeb, gran~ 10 l..es.&or a security mteresl ill an)" .and
aD rig}>!. ticle and interest of Lessee in t1le E'lwpme Ill. agr.:.« that lhls t..eas.e may be filed as .. fi.cancir1g
statement C\ldP.ncing .,udt securily inta e~ and agTces to extant and deIiver .all financiDg statements; and' other
instrume:nls necessary or appropriate '0 rndena: SIld. security mlereSl. Lessee further .agrees dIal die Uniform
Commercial Code shaft .apply as betwetlil tfle parties ben:to aDd' assignees of ussor.
l.essee sba1llaave DO right, title or interest in the: EquipmenJ Of' an} additions., repairs.. repI.:..:emeols or
modifications tlJ.ereio ~pI as express!)' sel ror11l in me lLasc.
ARTICLE V
USE; REPAIRS, AI. TERATIOl<S
SECflON 5.1 JIg: Repairs.. uS5ee shall usc the Equipme-Ilf: in a careful' maJUlcr and s'fla!l COOllllj
Witb a1! la~'S, ordinances and regulati{J1lS relating '0.. and slI.all pay aD costs, claims,. damages. fees alld dlarges
arising out or. tile 1...easc-and' the Equipment. lLs.<;ec, aI ~ expcnse, shaD ier, me Equillment to good repair
and!urnist. an parts,. mvfJanbns and d'C'oices required therdor.
SECnON 52 ~eratiQ!k. Lesree s1IaD Dot malic an)' a'heratioos., additions Of imprcr.'emet1l.S \n the
Equipment wiLhoUl Le::;sor"s prior .. rinea consent tmles.s sud. aJtcJations,. .additions or improvements may be
mad'e withoUl diminishing l1le res.al'e ,'aluc of t1tc Equipment.
UTICLE ''''
lOSS; !JU<EPARABLE DAMAGE
Lessee shaft bear the c.ntll-e riU of loss Of dcmag~ \0 the Eq,uiproenl. from 1Ul)' cause .. ~a~r. and
110 sud. foss or damage 10 or cond'emnatioa of tJle Equipmeuf DOl' d.::fea tlu-reill DOl unfitness Dr obso1cs.ceoce
d\ereof s.&aD relieve Lessee 01 t11e obr~tioD ll' maXe ua,>,C P<l}menls or an)' other obUgallOQ Ilnder this Lc~,
c.xcepe: as provided m Sllbparagrapll (bJ below. la tM event of damage 10 allJ acm 01 Equipment, us.sce shan
immediately place the &arne in good repair ... Lessor delcImiroes [bat any item of Equtpmem. is Io<;t, stote1L,
destroyed' or damaged beyond' repair, or condemned, UIi.<.CC aI its optioll s1un:
(a) repfact tbe same With like equipment m Jood' rep.lir, or
(b) pay Lessor fTom its insurana re~ or Q(hc:r IcgaDy svai!able amounts in ~& (i) all amourus
t:ka owed in sudI fiscal year ~ u;.see 10 1~S!0I' IlDder this. Lease., and (i) an amOWll equal to thar:
poruOll or tbe: total' acqUis.itiOD cost ~ [be ir:em or Equipment paid for b)' Les .. sor plus an} apprK:<ihIc
premiums, 1l0D-ltS...q>:I certifical e fimd'ed' amounts and C0Sl5 "incurred by Lessor in re-.icv.in% rue. DOU-
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.rtp!.au:mcDt lc:s.s Oprinclpal eompoDeDl 0( l1l.t: Leas:: ,.ymell,2dt for IiUd! iccm or .Equ)'pmenl as
dc:lp'1Ili:Dc4 by Lts.sor prior 10 p.I)'IbCIPt cI Jud: ,porti02l oI1he J'lCp.I}'mcnt Price rLll Exhihil BJ bJ
Lcuec (the "PrCpaymCD.t Ptic:e").. Upoo. t.cs.wc"5 rw:.ipt at sud. paym.eut,. Lence shan be. ut:i.tt:4. to
~le\IeI' mltrC5t Lessa 111-1)' lave ill Aid item,. ill iu tbe. eoaditiOD ADd' locatioa. .~out ""arran!)
expres:d or im.,c;clf;. ud ill the evellt 01 pl)'QlcDt 01 .u~ Prc:paymcm .Price, &:he portioo ol Le~
'oI,YDlc:nt5 rclatiag to 1k ~d or (:oru!em~ ilcal" ia the lUll 0lI.DI: 4c:termi:Ded by Lc~-. Clan be
aba1e4.
l11c Nl of IoN; aDd' dam",e thai lhc Leuee aerU5 la assume aDcJer this Seetioo lbaD be: imurcd
I:pimZ Wldu Sectioo 'J bcbN respectia& iruuraDct:. From l..c.s,s.ee"s iDsuraoa: pt~ Car other funds l
Lesset hreadles its obIiptIc. [0 insure), dtt t..es.see iii obUeated' 10 repair l:be EqwpmeDl.,. or it repair is Dot
po:sIIbJe,.IO cRhc.r replace the EquipmetW: or pa,)' the t.es.s.or die VI1uc oI'"l:hc porUoa 01 EquipmcaJ !lot replaced'
~ 10 the procd'urc for the Pr-=paymeal Price s.tl tor\lI above.
'WlIel tlae PJep&)'meDI Price is paid' 10~. tlJc: portio«! or t!lI: [..use faymeD! equivaJelll 10 the 1051
or 1fe!>tr~e4 Eq,uipmem. for w!Ud. tbc l'~nl Ptic:e ~ pa3d, s!r.all be a'bated.
AJtTJC'L£ Vl.
I...es.see sha:J1,. durin& tk: tum ollhis Lease.. insure all Equipmeat II.zuScr this Lease ;apinst usuah)'
occurrences., i:KTolfiDs: tIN: perils of firt,. Jigl1tniDg. 1rindstonn,. bl. explosion. aircraft,. vehldes,. smoke. riO(, a."iI
.commotion.. strikcs, loded-out worimell or theft. burglary ud 'Walet damage: in UI amount equal (0 un: higllet
of klCaJ Icquhitiot! tOSl If: that timc or Iltt cost of ICp1ac.etDtDl of aD EqwptDcQ.[ &DrS s1la%I inslU'c pub5c: tabw!}
ana propc:ft) 4amase iiwu-ance sufficietli to proted Les.sor from IilbiIlry ill. all eveD1S. 1llSurancc sl:;a1' be .. uk
standard UullJ"CQ and me l...e£s.ee 1lIa13 give die l.c:Mor thir1]I da)1i lIotic.e of c:uceDatioa or .lloa·re~<:""'a1. or such
insW'aIltc shaD be: provided through scJ!~insuranu: 'Jl tbe Le~c_
.All ~cnu. I'm playsic:al damage 10 EquipmC:1lI slWl be p.tyabk to the Lessor or other assignee as
Iddltional insureds as Iheir mlen:SI may .ppcar I1llder !he Eerms ~4 cooditions or the: Lc:asc. Upotl acttptance
of. me Equipment and upoa ~ insutancc re!l(. .... ~ 4at~ lA;5oKC sh.all detr-.u \0 USMlf Of its assignee, duly
.uthCDricaled' ~t3tc C'\i:dcDcicg sud inswana or ,lener from Lessee"s RisI: MaDager evidencing SUell sdf
insurance. In the cvent 01 0111)· Joss.. damag<:,. iz:IJwy or lcci4eD{ iz:I\Qkm, me EquipmcDt,. LcSiCC .s!IaIl promptJ!
prcMcfe Lessor '&'ith viaea IlOtke thereat and :maJ,;c available l<l Lc5.5Ol'" aD information ar.d documcntalioc
rclatitlg tl:lCletO.
AilncL£'1n
llTh'S A"'D TAXES
Less.ec slI.alI lup the Equipm c~ fi-ec: and' cle.ar of aD ~ liens aDd' t'XUnI'bra:u::es. Leuec shaD pay •
.. 1lc. d~ all' charges aod lues (local, Slate and" fc4eraT) incfu~ bul IlOI limiie:f 10 saTes.. I1SC.. c~ oll1 d
property l&.'lC. IIId pcuJtics and' werest &m.'UoCC4 lllpoa bcblf or the Lcutc ~ mal BOW or metcaJier be
icp0sc4 llJlOD tk ~p. lnsiog. rc:aul,. glc. purdlue. posses.sloo or w.c of tAt: Equipmcrn. excluding.
IIOWC'VC1. an tal(es 011 or lI1usuml by Lega-". Del w:aNc 'islcomc. tf l.c.sse4:: fails 10 pay wd char~ and" I~s.
..t.c. d~ Lcaor daft :bve the: right. btJI wI! .~ be ooTl.JIltd,. lO pay said eIIargeio ucS (a:cu. til thl: C\·C"DJ (nC"
I.eisor Us. paid .wd c:b:g.es. ~ tuc.sr.. Less« '-'&15 p~ wmt4ia\U)' l..c:ssoI 6c amolml .4'.'atlttd 'Qpcm bebalf d
(he. Lessee.
Lcs.sor agrees, tQ ICOOpCt.l.tc willi. the: Lc.u.ee iD. pufotmln& all ad, rcasoubl.)' »eceUlt)' or IppHlpna.ie
10 seoue &IUS ltlaintaiD IID)' .PT0fCrt)' lax ucmpliOCl for tic Equipment,. iDcl'u~ bill" .01. limilc iI 10, Article
XlII. SeetioD ]: (OJ of die CaIifonaia CoasUtutiOD. I( reqlJCSlcd. Leuot .,..ees. to rue uy atfida .. it!i or olhu
iDstrwI'ICllts wit. die Coonry Ass.cuor or IUd 0IJt.e: d'uly ,ulh0riu4 or d'e5iana.tc4 md'"~vidual' rc.specting
8UCSSJIIl:nI d pt1sonal' propc:tty or Olha limi1ar (axes. "';11titI no Ilays of tb.c commcDCtmclU of the' Leuc,
idc:nli!)ina thU I.eas.c aDd ltIc EquiplIICnI k:.ased ber~ .. n4er ItS ,ubjed 10 this "ka:s.e-pu.tchuc· .rT.ing~mCnl and
Yerityina. tile harpZl Dr IW'DliAaJ Of sim itar type of ,purclla~ ope:ioa protoidel [J,.(' Le~ 1c:reundcr.
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AIlTICU IX
INDEMNIflCA noN
Lessee shaD indemnit:y Lcs.<.or against .and hold Le~ Ilarmles.s from any and aD claims.,. actions,
proceedinp, Clq)eDSes.,. damages. liabilities.,. costs Of' similar dlarges. of wha!ever uture, includIng anorneys' fees,
Wing out 01 or connectloo. -..i1h the Equi'pmcnt, including. wiI1IoU1 mnita6o!1, its manufacture, selection,
purchase. delivery:, PO&&ewo~ us.e. operation or return and the J"ccovery of d.:Ums un~er msuran«: poIicies or
througla self-insurance tk:reon.
l..e:ssee shaD mdelIlllif) l..es>or and holds. Le~ harmk:~ against any and .an claims, acti'JDS,
proceedings,. e;t;peD..'ioCS" liabilities., damagel'., co&! or similar cbrges or .. ha!ever .nature. indudIcg attorneys' fees.,.
in COllIl!!cUOD wiIII any property or sal'es rnes ."hid ma, be a.o;s.essed against the Equipment: oc the transactiOll
c::ontemplate4 by this uase.
~ shaII and hereby azrees to indemni.fJ and' save llIe Lessee and its offic.crs. a&ellts, successors and
assigns hann1es.s from and against an claims., losses and' dam~ inclt:d"mg legal fe~ and expenses, arising out
of any bread. or defauh OD tile part of the U.\Wr in the pe.rfonnance of any of its obUgations under 'lhis
Agreement and by [be Lessor in rill: offering, ptacemelll: cc sal'e of Jeasc. participatioD certificates representing
mterests m the Le-asc Payments or any OLber sud e'oideocc of interests in ~ Scase pil)mCllts to be made
weuolkr.
Lessee repn:sents, warrants and' CO\'enants 1&11( tfuooghQur the term of this Lease it will Dot tale or
permil any of its officen;, employees or agents 10 tale .any .action 1Io'hidI would came the tax-ac-mpC Balun: of
the obIigariOllS ervdenced 'by this. Lease 10 be coolestel, chanengeiJ or !knie!! by applicable gO\'ciumental
authorities. In rIte event any SDd actioc by Les.o;.ee resuhs m [~ denIal (l(" revoca60D of c1le w:-exemp( sl.atus of
sud obligations. Les.sce &hal be .rec;pom!ble for au: ta;u:s., penalties. and inter~ arising in coanection t1ICINlrh
to Lessor or any assignee.
AIlTICU X
ASSIGNMENT A'ill SUBLEASING
S«tiOD 10.1. Assignment by 4s.wr. This Lease" and the obligations of Lessee [0 mah payments
lIueundcr. may be assigned and' reassigned in 'Io'!lok or in part to one or more a.o;,signees or subowlgnees b)'
Les:5or at any time s.ubsequent 10 this a«utian, prmid'ed, 'hov.-ever, thal no sud! assignment or reassignmcm
shaft be efferul,ie unless and ontil Le5..SeC and" Es.cro',., Agec.t ~a!l :h~e Fecen.ed notice of I:h( assignment or
reassignment disclosing the Ilame afld addre!iS of tlle assignee or S\,IIJdSslgnee and Lessee shall have consented
10 such assignment err reassignment, .. flick cocsenI ~lIa~ 'Dol be u:\J'easonab!)' "'l1hlleld. trpca recc::ipf Dr notice
of assignment.. Lessee agrees to re!k-Cl m an)" o<het e-.ideoce of inlerests in the Lease payments to be made
lIcrc:under or '0 b-.:e the &crow Agem reflect m • 0001 CDtry' (be assignee designated ill sud notice of
assignment.lmd 10 mue aD pajments 10 the ass3"gnee de~ignared in llt.e notkc of assignment. 1I0Nirhstanding
~ dai:m.. defense, set·off or counte:Fcl'aim wllat..<;()("VCf (...t.cd".er arisirlg fi"om .. bread of t:his. Agreement or
o<he.rvri5e) cna( Lessee may from time lD rime: "ave again.'iI "U=ss.or, or the assignee. ~ agrees to oecute an
dOClr.:nents, iDduding Botices or a.s5lgnmCnt and' chane1 mortgages. or financicg statements "ihidt may be
l"USOIlably .requeste4 by LeShlW' Of" irs assignec to prated !:heir inlerest!;. in we Equipment and in this
Agreemect Upon assignment by t'he LeSSQf"~ Lc~e shan male payments. onJy to aiS"ignu oc • de~ignatcd
agenr of assignee.
In the eveol tl!e L.essru "Goderta\:es 10 assiga, tran~ra or participOltC" aoy interest under crus LeM,C in a
public of'fe.t'ing pursuam 10 an official 5tatemc Dl, ~ Less.or shan: prO\1d'e dtc l.eut"-e with a copy of sock off'x:ial
stalemeD[ at 1eaSl two weeks prior 10 &W sale ill order 10 permit Less.c:e to review and approve the krms of
sud! oiflCial.statemeot prior 1o ~ sate..
In the event ~ l.es.sor Ilndertal;cs 10 assign., transfer Of participate anJ interest under lhis Lease 10 •
transaction otlla tlJan .. puNic otrering. and pursuant 10 the terms of che paragr.::!pl:. ~ I'orth above, the offering
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Ihc: ",".IJlRCliOD s.},alI set fortlJ 011. b covel paF. m 'bold !au capital lc:tten,.limilar 10 the wger type ~ace Oil tlIe
~ tle lon~, statemc:Dt:
nc Cq of Palo AlIo ... DOt p;artki"patcd iD dle preparation. procfuctioo or di.ssemmatioa or the
i6tormlriOD (OD.!ai0e4 ill daA JDcmarlDcfum 01 off'acW SlatemeDf~ an" tile City cI Palo Aha, CJl.Ccpt ror
1pCcir~ factual informatica ad' desaiptioClS orl1le ~ cSoc.s aot tHe ID)' rc.poa.s.ibiIily for its coo\(o'-.
and the Cit)! clis.daims IDJ respoDSi"bili:y or iabilit). 'De Cir)I .. DOt a party to the aUlhentiCalioc.,
4etivety or ksuanc:e cl tlte Iusc intcrc.sb 5Cl forth lIerciD..
Ia'the cveDt tll11: Cd)' of hl'o Alr:o objects 10 the d4d0s;u-c vrood'ed iD aray off'lciaJ 51alcmCDI submittcl2
to • (or .reView pursuam: to [be lenZIs IIcreof. die: otric:ia1lh1tcmci1[ &haJf (ODtam sitni1ar languilie as pro\ided'
above (to< pm>" plo=o,,,,,).
SectiOD to..2 Nq SaTc; AWgpmcn! PI $pblCMing 0:~. THIS LEASE: AND THE ~"TEREST OF
llSSU IN THE EQIJIPMENJ MAY NO"f BE SOU>. ASSIONEl>, SUBLEASED OR ENCUMBERED
BY LESSEE "WITHOUT THE PRIOR WlUTI"EN CONSENT OF LESSOR. SUCH CO!>'SE"'T SHALL
NO"f BE UNREASONABLY WI1HHELD BY LESSOR ANI> SHALL BE SUBJECT TO ASSUMPTIOS
BY 1l<E NF1I\' ASSIGNEE. OR SUBLESSEE OF LESSU OF ALL TERMS OF THIS LEASE, A.'-'D
COMPLIANCE WITH !'HE iERMS TlfUEOF. ANY SUBLEASE SHALL BE SUBORDL"<ATE TO
THIS LEASE AND SHALL NO"f AFFECT ANY OBLIGATIONS OF LESSEE HERElJl-o'DER, A.''D
LESSEE SHALL EXEClJ'fE AJo/D fll.E SUCH EVIDENCES OF ASSIONMEI-oT AS ~SABLY
IlEQCESTED BY LESSOR.
.... 11CLEXI
OPIXlN TO PIlEPAY
Lessee shaD Ilave llIe (lPOOO to purdue-an [he ~pmeDl OD r..c Eshibi: A or sdacduTc of EqUipment
commencm.g O~ the firsl. ~ hymet1l Da\e f« sud!. Exhibit. ClI" saed'1.l1e ana on cadi wc.:uding Lu~
P.ymCIlI Dale at IlK .mrtea re.quest 01 tM: Lessee,. d"eJh.'ered to the corporate offices of tlle Lessor DiDC~ (90)
days prior 10 die Lease '~eDl Date on .bkh Lc~e mtenc!s 10 cxerdo.c: il5 prepayme III opiion, at a price
equal 10 lIIe Prcpa)'Dlem Price set forth ill EJc!ubit B. TlIe Prepayment Priu set IOT\ll m Exhibit B assumes I:h~
Lease PaymeDl due: oa dlc same !late bs beta paid. Upoa pa}'DIcm oldie Prc1I3)'melll" Price set rom m
ExlIibit B and any ~ Payments due. a.cd upoa sat.WactlOli. or Lessor dial Lessee is DO( 00 !ud. dal e in
!Sc:fault pursuant 10 a.cy wrm of [his. Lease.. t..euor shalf d'eYivcr 10 Lessee a full: rclea..s.e of Lcss«""s righl u,Je or
interest of ~ in. ud to the Equipment.
AII11CLE XII
EVENTS OF DEF AlJLT AND IlEMEDIES
Section 121 Evrru $ of [)clault AD C"VeDl of defaulll ("ElleDl of DcJauh; ul'lder the u-ase Ul eallS l1u::
~ 01 u.y O!le or 410ft r;llhe foDowiD& C"'o'ClJIs:
L
(a) Lcs.su fails 10 DlUC In)" l...easc P'.j-"meDl: (01" aDy cc.her paymem) as .. becomes due ill accordance
"';1..11 ate lerms oflhis Lease.. aDd' III)' Iud faJ,ure CODt..i.rIues for In (10) tla)s &fie.-the duc dJle Ibaeof;
(b) ~ fal"'klC) perform Of ~ IDyOCkt eovclW)(. CODdiliOD,. or agreemenr 10 he-performed' or
~ b)-.ir: hereuDdcr 01 DDckr lIIe Leme aM' ,LId! raiturc is Dol CW"cd .-irhiD thir1)l (30) days afteJ
"Wrina aoIic.c: thcrcol' by t..ess.or~
(e) The disc.overy by I.euor lIaar: any ma! cNt sr.Temc::Dl.. rtpcestDtilitioa,. 01" QrTanI)' made 1-) uSS( e ill
Ibt Lusc Of HI. all, wriLinc ever delivered' by Le:s.sec: pursUmI kl or ill conJ]Cct!oD ";lh the Lea~ is
f.als.e.. mWeadln& or trTODWUS m aD}' material r~ or
(If) Lcs.s.c:e becomeJ. m~ Of ad'miu ia ..,itin& ir:s. inabiliry to pa)" its debl.!i as t:J,c")' mature or artJies
ror. COClSCtUs 10.. 01 acquie5cc:s. ill the .ppoiDlmer&l of a trust". retd\'~r or C\J~odiao rOf the Lessee oc I:
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subsl:an!iat part 01 its Equipmel3t.; or il'l the absence 0( such 3ppOCatiO.o. consent Ill' acquie!.Cenc:e, a
b'ustee,. receiver or CUSlodiMl is appOinted (or Lt:s.<.ee or • substwtlaJ pan of its Equipment and' 6 nO(
discharged within thirty (30) days; or any flanlruptc)' reorganizatioD,. debt 3ITlL"lge-ment, moratorium,
or any proceeding under any banlruptq or insotvelK)' la",~ or any diss.olutlo!l or liqwdatioll
proceedings. is instituttd by or against Lessee and, l" instituted apInst Lessee,. is consented to or
<Kquiesced ill by ~ OC' is Dol dismissed' wiLh..in thirty (3(J) days..
Sectioo U.2 Rcmea!ef.. Upon the occurrtPc.e of an Event of Odault IUlder Sectlon 12.1 of tne Lease
and as loeg as sud! E"ent of Default is (olltinuicg. Lessor m3y~ ar: its {'!pcion,. exercise any OD.C: or more of tile
tOllowiJlg remedies.:
(a) By v.rlUCB notice to Us.!.ee., dect.re an amount equal to aD amounts becoming due and payable
under tnt Lease thrOgg1:l the d'ate otcbe Evcnl of Default to be: immediately due and p<I}'ab!e or &clare
an r~mainiIla: Lease Pa)'Incnts due during the UIl$\.': term to be immed'tareJy due ~d payable to the
~eBl. pe!mitted. by State 1a .... ~ or due md' pajable as liquidated damages., V<'1:!.ereupoa the ume dlJ.H
berome immediately due and' payable;
(b) B.y wrir;eJ1 notk:c (0 Lesse~. requesl I...ess« 10, and Lessee agrees tltar: i. wiD, promptl]' surrender
possession cl chc Eqwpmenl to Lessoc and permit l...essor DC all)! part} des.ignated by l.ess.ot quiet
enjoyment 3Dd use at the Equipment;,
{c) By writtea 1I0tice 10 ussee, request l.essee 10, and' Lessee agree.s tl:taI ir: will. pad the Equiplllen1:
and ship it, freight prep.a.ld and: insured 1;0 any locaiion in tbe coD11nental \Jnitoo States designate ~ 0,
Les.!;.or 01 is assignee;
(4) Eocer Lessee~s. property.and take immediate ~.w-Oll uland remO'VC" tbe Equipment;.
(e) Sell 01" lease the Equipment ror !he account of Lessee or subre.ase t1Ie Equ"i)lmem lOt llte account of
Lessee, :holding Lc::!o&CC iable rOt all Leas4: Payments and" othel paymcDts duc rOt the remaining Lease
Term; and'
if) Exen::i:.e any ot:ber right, remc.dj' or pmikge ",,'hid may be .... ..uabYc: 10 if under applicable la'l*l'S or
die Si:ale 01 CaIifornia or an)' other appfic.able law, or proceed by approprial e court adiOll to eaTon:e
!:be &erms of tlle Lease PI" (0 Fecover damages tor lIte breadl of the Lease. Of 10 rescind t1Ie uase as to
aJJY or all of me Equipocnt_
ARTJCU:XJII
Section 13.1 Tax Cmienams.. Lessee co-.'enants tltal iI: ",,-i:D Ilal tlle or permit any of its officers,
employees or agents 10 me any ad.ioll. with rcspea ~ the Lease or the: IEqwpmcnl as described m Edu"bil A
(meJ':.Iding artowicg sud: equipmc:DI to be 1I5ecl ia: any prl\'3[e busmeS! use).. whid would cause lfu: Leas.: 10 be
dassiILed! as I "prn'2te acti-.1ty bond" or at! "arbitrage-bond" ~ "'fcderaIly guaranree.t wi1hl:n the mea~ of
Sectioc.s 141, 148 and 149 respectively of the JntcrnaJ :Revenue Cooe or 29S6,. as amended or su~ded (tJ:.e
"Code'"). and .any reguJati"oru. &mn time lO time adoplecJ t:hcreunlfa 01" .bkil would cause the interest portioa. or
lhe lease Payments lo become includ'ahk PI grass income onder the Code, and me Lessee covenants thai: iI: -aiD
take all aaioDS I1ecessary So maintaio ruGi acIusioo &om gross income um!er the Code. In addicUln, the
Lts:r.ee hereby represent!. ilIaI: • is • go\o-erumental' tlnit "'~lb genera! taring powers and rna! an or the act
proo:e& of Che Lea!.e are to be u.o;e4' for local' f,O'<e:rument:ll adl\iti.es 0{ t:hc U~e. The t...es~~ further
Wl'Cnants thar: if wiD comply .il:b the-information r.::porting requrrcments of Section 149(e) of the Code,
iDduding tWng of Form IlJ38-G or 8038··GC -o.ub re~ped lo the Leas.:!.
Seaion 13.2 Exps=cta.t~I(!ls.. ~c ,ep1"~1'it!., v.m-anlS ana CC'lVe1lams as {onQW'& wit"h regard to lhe
Lea5.e,. 10 its bo::st: infarmat~n, i.nowtcdge aod belief::
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{al t..euu las ,n~ ialQ. coalndlo lust .,ill! option to pUfdas.e the EquipmenL The acquis.iriotl.
of ch< Eq";pm.D1 wr P<0cu4 .... h due dffis<<><<.
(b) [...ease PaymeDtJ..,.;]I be paid diteet1y 10 the E.!aow Aieot,. nidi AalI p.1)' sucla 1e.ase Payment 10
the Lcuor or its A$sipIec...
(e) No e$O"OW fund. J"C$CJ'"o'C. fwld' or similar fuoe! has bee. or MlI be cstabGs.bed by Lcs.5ce ... itb re.~peCl
10 lhe Le.uc:.
(d) Lesse<: Us ... ..ub1lshe4 .,,1 does ... exped I. ","bhl .oy ww..a "'"' rrc", whld. 1.<""
PaymCDt& IIDdcr the Lc:ase wiD be paid or an)' fund (or 1to'hicl mere iI reasoubtc assutlllCC that
aDl(KLDtI. tkreiD ~ be ....-aUab1e 10 pi)' 5UdI Lease PlymeDlS ~ I...eM« enrounten. finaDdal diffjp.ulics...
(e) LeSKe lias DritlIer nctive4 JlOIk.e t'hJ: iIs ttrtif'acatlOll may Dot be 7tllea vpon ...u1l. re5pCd 10 iu
obligations, lIot bee. advised that: 1l.C)' advc:rs.e action by the Commttsroncr ollnlUtlal Rr\oc;cue is.
CODlemplalel 'IlIith re~pcd iJJer~o_
DEUVJ;RYOl'J<E~TED DOCUMENTS
Lessee will ex.eeutc or p70'0idc., as required by t..esscr, me rotlowiDg documents and information
satW"aoory \0 Le!.l~.
(el Uoifonn COdlmcr.Qal Code flnancln.g statements;
(d) Certirw:.atei or insurance: or • Sc:rtu frorn Lesscc+s .Risk Ma.cager statmg lhat Ibc Lessee is s.elf
insute4 under its Funded d insurance program,. as is. acceptable 10 Lc~t
(e) fnvoicing instructions.;
(I) Current fin;wcia! statcmC71ts aad copies ol trudge! slIowing appropriations-.
tJ:) Ccrtific;ate of incumbency.
Or} ResoTutio.c of Lcs.s.cc approving this Le~;
(i) AdDowledgmc.c.z apd COOSCDf 10 As.Slgnment;. ancJ
(j) Otllo dlXllmeflts as reasonabt), requested by Lessor.
5eetjop 15.] ~ :beeF' .. bert. anot'hu form of 'aotite is. specifitJ,!I) autboriud. in • Sll:cUon of th~
Lc.ase. illI noUc.es 10 be sivc:a IlD4er am. Least: sAaD be made ill wntitlg an::! m.aDc:d: by c:c:rtified mail,. reI una
ruelpc. nq»esttt. 1o the.O'bu party at its address set forth ben:U!. nc-at SQC\ ~dres.s. ~ the pvt} ma) p1rJ'.id,=
m ..-riIi:q: f10ft1 time 10 time. AJ.ry S\d Bo(iu sloall be d'eeme410 have bee. Tt"c:a..cd 5ve {5) days slibsc:quet1l 10
.aiIinJ-
Secr.iou. 15.2 Xcticm H;dinc-A! section head'it\p. contained .crc-iu ~f fvf c:ouvenieDCC' or rderence
oaJy .and' arc. DOl: mlccded" 10 c!efil)C 01 imil t-hc. scope of In} pr~isioas or this Lease: .
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Sectioa 15.3 c..msmi~.I!' Law nis lea.sc-slIall be governed by~ and constrUed in accordance: "'ilh. lAc
:aM cl the State of California.
Sectiol1.15.C lIm;nrpry: RrgigrariQp" Lessee: shaD maintai:n I detailed -m .... enlory of e.adI i:~m of
EquiprneDl, ",flidI mventOJ)' sb.a.D tdcnLi.fy the: item ti b!;:ing k:ased from Lc:s.s0f' pursua& to this Lease.
Sectio.>a u.s AmcndmC;Il!S· Modjfiglipns.:: I.qs<;e WaMn. .AI amendmeDts or modifications or tlIe
terms of lhe Lease m usa be auee4 to m writing in advance b,y Lessee and: uUQJ or U asSignee; provided,
lwwe'o'ef, thai JlO a.mendmeDi of this Lease mall operate 10 reduce or delay anI Lease: PaytIlems 10 be made
'heJ-e\i.Dda without <-CD5enl or l..tssar ana its asslgn«,. if an)i. 1111. the t!me or sucl amendme.nt. The partiel do
!lot intend that Article: 2A to the U~OlID Commerd.31 Code apply 10 this Lease; pCovldcd' rltat if Article 2A
applies a.nd to the extent permine4 by ta\tt'~ t..essee wa'[.,t=.!io aD rights and remcdie~ conferred by Sectlons lA.-508
l:hrouglJ 2A-SZ2 of Article 2A of lll.e Uoifoflll Commercial Code (codified as Commercial Code Seruons ]0508
through 10522 m c.Iiforn!a).
Les.sc(:'s initEa1s:: ____ _
SedloD. 15,6 .E:rtire AgrumCDt: W.fyer. This Lease a.cd the odIer attachmeDts, documents or
instruments eKcuted b, I...es.s.ee and' Lessor m counedion WtWh, indudins Exhibits A through G
(ancorporated by Fefcreoce lIerein).. constitute the entire agreemeDi betwc-ea tne p~ ~ resped. 10 t1It:
EqwpmeDl. There i! 00 ande.r;Ja.llding or agreeltlcnt. Ol"al or 'lW-rln.ea,. wa is not set fmt:h 'herein. The "''an"er
by Le55Ol' of any bread! by Lessee of ary rerm., ~nam Of conditloD lIel'eof shaft l:Iot operate .as ..... -aiver of aDY
sumeq,ueal bred tlaueof.
Sectlon 15.1 ENrrutlpn in CpuD!e.maUf.. ~ Lcas.e mily 'be. QeCJle4 m iltlJ number r:.l CO\U1tecparts...
each at ... 'hKk sElaft be .an origjl:lal' and an of...tOCJ. shan constitule bill on~ and the unlt: msu-umeDt
Section 15,8 Seyeratnlity Oau.'ie. rn the ~ m or o! di!.putc.. -centrovets;' or Iiliga60a arising ondeJ-rhis
Agrecmcot, the p!evailil'lg part)' shan be entitled to r-easooabIe anorneys' fees. hi the e\elll: any prO\is.ion,
pfuasc Of' term of this AgreeGl(:Dt shall be deemed' un~nfl')J'c.e-abte~ sud 11Il~l1forceabi!ity shall noI affect any of
t&e other te:.--DlS hereof .an.d this Agreement s!laD be (.Onsted thereafter as incloding aD pr~ons baeof
ac.c~ the provisioQ or lenn held Q[l('nfarCf"able.
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IN WITNESS .. QEOf. die Less.or las CI~d this Le.asc Q c.xecw!ed! in its Dame by w. dw)'
autb0rize4 otri~ IlId llIe Lc~ 'as gw.cd this Lease to be eltcuted in iu Dame: by its duly ~ut'borizt c!
orr><=, as olthe.rat .... fDflllI>cIow.
0. .. , _______ _
aTY OF PALO ALTO,
.. 1.=.
ATTEST:
Al'PROVJ:D AS TO FORM:
B~.~~ _______________ __
Cd)' Attornc:y, _______________ _
APPROVJ:Do
B~.-c_~~---------------D~~(WorFm~' _______________ _
APPROVJ:Do
!>at" _________ _
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EXHIBITA-J
SClIED1.M Of EOtJJpME."IT
The Equipment 'tIhkh is. t.'be su.bject pi the attached' Equipment uaseJPurc.lIase Agreement is as
fo1lo~s:
DescriptiO!
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11o.f> EoI>lb~ .PI'~ '" """'J>O>t'II ... """" OD Eoluolr .... 1
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EXHIBITC
CfRIlFlCATE QfAOCEfT~
1. tIle undersigned, "hereby c:ertify tlIaI: I am the: duly quafifiCd a.i.ld DiredOf' of r1tW:la: of th~ City of
para Aha ("Lt.:ssc:c"); aDd,. with respect lO the Equipment Luy:/pw-clJase Agreement date" as or Odober 22.
1990, (the "Lease"). by and betw<eal.=e< and T,==an Fw>cfing. lao. (1.<""'"). tbat:
1. The equipmc:ol de.scibed iD die Lease on Exhibii: A·1 (the "EqwpmC:nI") b beea delivered' and
instaDc:d in 2COJ1'"clanc:c: willi I...esset's specifK"3!ions (as tlIat: term is d'e:rrnc-d 10 the Lease) and has bee. accepted
by Lessee.
2 The lease ~ymenls provided for on EdllbiI B-LJ (0 the Lease (tM: "'l..use Payments') s.&aD be
due and 'payable 011 ,--• .-1 aDd i ] of eaclt year thereaftet'* through and including
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3. Lessee las appropriate4 and/or taha Olhe.r ta'lllfut actions Deces..s&r)' 10 provide monies sufficient (0
pay an Lease Paymcdts .require\!' to be 'paid undo the lease c!ur1ng the currenl fi.scaI}car of Less.ee. and suclL
monres ",ill be appl1ed iiD payment of aD Le.ase Paymem.s due and payable during suclI .current fiscal }'eat.
Less.ee .iII budget tor. request,. oIppropriate, prQ\i:de and' odlerwis.e obtain and ma'le .vaiJabk sufficient mOnJes
to pay a1I. ~ Payments requlrc4lobe 'p,ud under the lLase during tX Lease Term (as tlW phrase is d'erlllc(f
in the 1..use). and.snd monies wiD be applk4' m ,Pa)'tnenl of'sud. Lusc Payments.
4. During the U.aJ.C Term,. the Equipment ....;:n be u.o;ed by l..e$sec to perfonn only 'tlIc: es.se.ntiaJ
governmenta1 fu.nctions specitle4 in thc: Lease.
5. To the be.sllnowlt:dBe 01 the Le&see. mere is DO fitigation, actiOn, sui!: or proceeding pending or
before any coort,. administrative agency, arbUnitor or govc:rnmc:ntal ~. thai dl..anenges the organizalion Of"
existence of Ler.see; tlIe authority of .its off"tcUS; the proper aulhori2atIon:. apprO\'3l' wI! exerutlOIl of the Lease,
die Exhibits and odIa documents contemplated' che.reby; the appropnatioll of moDies., or any olkt actlon talta
by l.e£.see 10 prO\lidc: momcs suff,ocDl to male Lease Paymellls coming due Wlder lhe Lease; the performance
by Les.see of all its oblig2tions UDder the Lra.se; llH: enforceahultJ and enfmcemenl of tJle uase against ~e;
Of' rile ahilitj' of Lessee odierwise to perfo.rm :b obrlgalions UDder the Leas.:= and' die tTaruacUODS coDtemptat~d
tbere~
'-The Lease Paj'IDcnts OIl .te.as.e to purd~ basts (wifh a nominal buyout) for Ole Equipment under
the !.ease and during the Lease Term do Dot exceed" lhe fair EeDlaJ vdlue for the 1ease/purda~ of the
Equipment by tI>e Lease.
Datelf: _________ .19 ___ _
LESSEE· OTYOFrALOALTD
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[XHIBIT D
orMON Of rot INSEt.
eJ1I Le~/Pw'~ Agrtemcut &bred as of Odober 22, 1990, by .all d'
~~><>< ... Funding, loc. fLes.sor1l.Z1d C.iIy of raJo Aho ('1.es..c;e eO)
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I am rbe City Anorney of me C of F~o A1Io and luve fcer:ive4 !a pat on III cpiruol1 of JODes., Han.
HiD aud "''hile in acti.cg as COLWoclIO the: $.SC't 'IlIl[h resped to the. Equipment Leas.e/pw-cl1ase A&recm en!
des.cribe4 above. (che "1..eas.e"') and' various lale4 manU'S., a.cd in this capxity ba"t TC"\ic:\1.ed I dupEcalc:
originaJ DC certified tOJ!3I of lllt Lcas.e aDd the WLU attaCkd tlIereta. Btiea llpoll t!le cxaminatioc of 11:e.sc
aod sud! otkr dOCUmtc(J as r deem relc\1Dt, • is y opmioll tl:.ar.:
1 Le.s..see is. ItlLUucipa! COl'pCf"ati"oa and . iCI1 stlbdhisioa of tlo.c: S:att of Califonlia (t~ "&altJ,
duJy organized. c::zil>Img and operalln,g under die COliS:: The Lessee is organized
Wlaer aDd purStlanl 10 lM COnsWUriOIl oflhc Sra1~ of Cal I el seq: ).
2. Lessee i!. aut'lloriu:4 and ha:i5. tm: pov.v llJ)d'er Sta taw to cD[U in,.,) the UtiC., and' to can: Oln its
ooJigations IlIcrc:lIlKfer and du: tr~OD5-contemplatel dll:re
J. The Lc.as.c lias 'beea duly aU1l!orizd. appra.>ed, ueculc nd delr.'Crcd bj'.and" oc behalf of Leu.e~
alld 15 I vaIld and bindin! COCLTad oIl.euee cafarcc.abIc iD accor cc: wirt. irs terms., e1Cep< 10 llle tlllen!
&mile:d by Stale and Federal' b.1il.'S aff«.'tin. rc:MediCS iIfId banlr.n.aptcy. r rgal:lizatl<JD 01' other laVo'S of g~neu.l
apptk:atiOll rcla!m, ID or afi"ecill8 the-enforcemel:l.l 01 O"ediH)rs' rig!lts..
4. The alltl!orizalioD, approval and e.uutiOll of the Le~ and' an och
to tk tra.ns.actiOD coDtemplau:4 thereby ha\!( beea performed ill accordance
law!.. ruks and' regtllafions appIK.ab1.c 10 t&e ~ssc:c.
S. Tr> lfIe best ol OW' bowIcdg~ !here is DO lili:gation, aaioa,. sui! or proceedi ~1:Id'inl! or before a!1}
CClUl, ad'minisLraG\tC agent)'.. arbilralOl' or lovcmmeD1aJ body.. tllar dlaJknges. the org lion or ~X:SI~Dr(' of
Lc.u.ee; I:he authoril)' 01 its of'rK:Cr.ii ~c propa autllorizatioll, apprO\'ala.cd/Of' ~jo of Ihc: UI5C:, tlIe
'E;:Woit!. and otber document! COI11~pla,cd thereby. the appr-oprialioll of %Donies. or an,)' och actioD talc:. b}
l..e$$U 10 proridc: morucs suffIcient (0 mue Lease Paymcll.n UrlW t1Jc: Lus.c; [be performantt \.' ~~C' of an
is obligations 1lDd'cr the ~~ the_ cnfo:rcubWI) and enfo:ruDJeDl: of l1Ie Lease ap'insl: me liC('; or the-
abWty cl LHsee otherwise 10 perform iU obligatioll5 lIIr1da rbe Lu.SC' aDd the transact~ [cmptalf'd
I:hueby.
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IEXH[BlT[
<:ERTlflCATE OF ESSENTt'L IJ5E
T'he u:n&ersrgned' .. Les.!.Ce or City of PaJo Mo (!be ~ase·), IIcreby certirteS that tltc Equipment
~ibe4 ia. the Equipment Lc.asefPurdlas.e Agreement .. it& Traru.ocear. Fuodlng. rza.c.. dated as of October 22..
1990 (tbe "Lease1 is essenltai to [be functiOIlS cI the Lessee 01" (0 tht: se.J'\<)ces llte Lessee provides its citizens..
Further. the Lessee has an. itnJnt;diafe Dee4 for. aDd CxpcCb to make: ilnmcdiatc ar.e of, &.!! sudl
Equtpmeot,. the II.ee4 b-~ is tlOt kmporary or ~I(:d 10 diminish ill the foreseeable fi.nurc:. Sud
Equipmem: will be as.ec! by the ~c only for dlc purpose of performtng one or more &O\ierunlCDtal or
proprietary fundioos. consiStent wil!t the pertnlssibte scope of IUtl!.'.l!"1ty. Specifically., such Equipmcnl "''as
selected by th l..cs.s« (0 be u.'ied roc-lIIe fonowing go-;'crnmcntaJ purposes::
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CITY OF PALO ALTO. ,,1.<=
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EXHIBITG
GENERAL llESOLlTIlON
(TO BE SUPPUED BY THE CITYJ
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ESCROW AGREEMENT
THIS AGREEMENT. ~I~e Ind ectere~ into IS of october 12.
1990~ by and among Bank of California~ N.A.~ a national
bankin~ assoeiati~n (tbe -Escrow Agent-). Transocean Funding~
Inc •• a corporation duly organized and existing under tbe
llws of the atate of California (the -Lessor-) and the City
of Palo Alto •• ~unicipal corporation of tbe State of
California (the -Lessee-).
WITNESSETH THAT. in the jOint and muteal ezercise of
their powers, and in eonsi~eration of the mutual covenants
herein ~ontaine~. the parties hereto recite and agree as
follows:
Section l~ Recitals.
1.01. Lessor and Lessee have entered into an Equipment
Lease/Purchase Agreement date~ as of October 22~ 1990 (the
-Lease-), a ~uplicate original of which bas been furcisbe~ to
the Escrow Agent~ whereby Lessor has agreed to lease and sell
certain perlonal property described tberein (the -Equipment-)
to Lessee~ and Lessee bas I~reed to lease and purcbase the
Equipment from Lessor~ in the manner and on the terms set
forth in the Lease.
1.02. Tbis Agreement is not intended to alter or change
in Iny way the rights aDd ebligations of Lessor aDd Lessee
under the Lease~ but is entirely supplemental tbereto.
1.03. The terms capitalized in tbis Agreement but Dot
defined herein shall have the meanings given to them in the
Lease.
1.04. Wit~in 5 days after the execution of the Lease and
this Agreement Ind the satisfaction of the conditions of
fundin9~ Lessor is reguire~ to deposit or caose to be
deposited with the Escrow Agent the sum of $2.346,000. which
is required to be credited to the Equipment Acquisition Fund
Ind used to pay the Equipment Cost of the items of Equipment.
and 6 to the eztent not needed for ~his p~rpose~ is required
to be repaid to Lessee; all as he~~inafter provided.
1.05. Under the Lease. either Lessor or Lessee will
cause each item of Equipment to be ordered by the vendor
therefor. The Eguipoent Cost to be paid to the vendor
supplying the item of Equipment .ball be paid solely from the
lmount depozite& with tbe Escrow Agent as described in
Sectio·n 1.04 hereof. in accordance with this Agreement.
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1.06. Subject to such control by Lessee as is provi~ed
for herein~ Lessor and Lessee Igree to employ tbe Escrow
Agent to receive. hold. invest and ~isburse the moneys to be
pa1~ to the Escrow Agent by Lessor as describe~ in Section
1.04~ all IS hereinafter provided; however, the Escrow Agent
shall not be obligated to aSsume or perform any obligation of
Lessee or Lessor or any vendor with respect thereto or u~de[
the Lease by reason of anything contained in thjs AgreemeDt~
1.07. Each of the parties bas authority to enter into
this Agreement. and has taken all actions necessary to
authorize the eIecution of this Agreement by the officers
whose signatures are affized hereto.
Section 2. ~ment_ Aeguisitlpn rYnd.
2.01. Tbe Escrow Aqent sball establisb a special esc [OW
fund deSignated as the -Equipment Acquisition Fund-(the
Equipment Acquisition Fund), shall keep such Fund separate
.and: apart from all other fuDds and lI'tO·neys held by itl and
shall bindle such Fund as directed by LeSSOr and Lessee and
as provided in this Section and Secti~n 3 bereof.
2.02.. All mo·neys paid to the Escrow Ac;ent 'by Lessor
purs~ant to Section 1.04 of tbis Agreement shall be credited
to the Equipment Acquisition Fun~.. The Esc~ow Agent shall
~se the ~neys in the Equipment Acquisition Fund to pay th~
Equipment Cost of each item of Equipment subject to the
Lease l as specified by Lessee in I Certificate of Acceptance
and a Disbursement Request Form (attached hereto as
E~hibit A).. Upon receipt of a Disbursement Request Form with
respect to any item of Equipment. an amount equal to the
Equipment Cost as shown therein shall be paid directly to the
person or entity entitled to payment as specified therein .
. 2.03~ Lessee sball furnish to the Escrow Agent as soon
as available, a copy of the order for all Equipment ordered
pursuant to tbe Lease. sbowing the Equipment Cost and the
estimated delivery date. Following the later of the last day
for acceptance or three years from the date of the Lease. the
Escrow Agent shall pay Lessee any unallocated funds in such
account~
2.04. The Es~row Agent shall be responsible for
retention of tbe moneys held in the Equipment Acquisition
Fund. the disbursement thereof in accor~ance with this
Section, and for the investment of any moneys as directed by
Lessee. The Escrow Agent shall not be responsible for the
authenticity or accuracy of documents as suhmitted by Lessee.
the appJ icatio·n of amounts paid pursuant to such d.ocumel'lts by
the persons or entities to which they are paid, or the
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aufficieney of the mo·neys credited to the Equipment
Acquisition Fund to make the payments herein [equi[e~.
Escrow Agent shell pay the .~nies to the persons specified in
I Payment Request Form~ the form of which is attlchea hereto
IS Exhibit A. wben 4irecte~ by the Lessee and cQnsented to by
the Lessor.
Section 3. MQneys in Equipment Acquisition Fund;
Inyestment.
3.01. The moneys and investments held by the Escrow
Agent under this Agreement are irrevocably held for the
benefit of Lessee and Lessor. and such mo·neys, togetber with
Iny income or interest earned tbere~n, shall be e%pen~ed only
IS provi~ed in this Agteement. and shall not be subject to
levy or attachment Of lien by or for tbe benefit of any
creditor of either Lessee or Lessor~
3402. Moneys held by the Escrow A~ent bereon~er shall be
invested and reinvested by the Escrow Agent upo·n order of
Lessee only in a day-to-day money market account at the
ESCLOW Agent and provided investment throu·gh such accQ·unt is
permitted under applicable law. Such investments shall be
registered in the name of the Escrow Agent solely and
specifically for purposes of the escrow hereunder and shall
be beld by the Escrow A~~~t_ Wit~ ~he 'PPLoval of Lessee~
the Escrow Agent may purchase or sell to itself or any
affiliate, as principal or agent, investments auth¢Iized by
this Sectio·n~ Such icvestments and reinvestments shall be
made qivin9 full consideration for tbe time at wbich funds
ale required to be available.
3.03~ The Escrow Agent sblll~ with~ut further direction
from Lessee, sell such investments as and when require~ to
ma~e any payment from the Equipment Acquisition Fund. Any
income receiveO 00 such investments shall be paid moathly to
the Lessee.
3.04. Tbe Escrow Ageot shill furnish to Lessee and
Lessor an accounting of all investments. The Escrow Agent
Sb311 not be responsible or liable for aoy loss suffered in
connection with lay invest~ent of moneys made by it in
.ccordance ~ith tbis Section~
Section". LeiSe Payments; Lease PlyT:n~nJ Fund 4
... 01 lUn.i.ionment of Rights in Lease Aoreement. The
Lessor hereby trlnsfers~ assigns Ind sets over to the Escrow
Agent tbe Lessor·! Eights to receive and collect all of the
Lease Payments and all other amounts required to be deposited
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in the Lease Payment F~nd purs~ant to the Lease ot pursuant
hereto. All Lease iayments and sucb other amount! to which
the Lessor may at any time be entitled shall be paid 4irectly
to the Escrow Agent ~nd all of the Lease Payments collected
or receige~ by the Lessor shall be deemed to be held and to
have been collected or received by tbe Lessor as the agent of
the Escrow Agent. an~ if received by the Lessor at any time
shall be deposited by the Lessor with the Escrow Agent within
one Susiness Day aftet the receipt thereof~ and all such
Lease Payments and such otber amo·unts shall be forthwith
~eposited by the Escro~ Agent upon the receipt thereof in the
Lease Payment Funda
4.02. Establishment of Lease payment lund. The Escrow
Agent shall establisb a special fund designated as the -Lease
Pa.yment Fund.-All mo-neys at. any time deposited by the
Escrow Agect in the Lease Payment Fund shall be held by the
Escrow Agent in trust for the benefit of the Lessor, or
assignees of the Lessor. So locg as any certificates of
participation in the Lease are outstanding. the Lessee shall
not have any beneficial rigbt or interest in tbe Lease
Payme::nt Fund or the mo·ney deposited therein .. and such moneys
shall be used and applied by the Escrow Agent as hereinafter
set forth.
4.03. Deposits. There shall be deposited in the Lease
Payment Fund all Lease Payments received by the Escrow Agent.
including any moneys received by the Escrow Aqe~t .
.(.04. App] ic:at ion of Mo.neys. AJJ lmo,uats in the Lease
Payment Fund sball be ~sed and withdrawn by the Escrow Agent
solely for the purpose of paying the principa1 6 interest and
prepayment (if any) to Lessor. or assignees of the Lessor,
with respect to the Lease Paywents or any certificates of
participation in the Lease as the same sball become due Bnd
payable.
4.054 Sorplu3. Any surplus remainicg in the Lease
Payment Fund. after prepayment and payment of all Lease
Payments Ind certificates of participation in the Lease (if
any), and paymect of any applicable fees and expenses to the
Escrow Agent 6 or provision for such prepayment or payment
having been made to the satisfaction of the Escrow Agent 6
shall be withdrawn by the Escrow Agent and remitted to the
Lessee4
Section 5. ~Q_~_e __ l"J_t·s AuthQrity ..
S.Ol~ The Escrow Aqent may act i~ reli,nce ~p¢n any
writing OJ instrument or signature which it, in qood faith.
believes to be genuine. may assume tbe validity and accuracy
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of Iny Itetement or assertioD contline~ in such I vliting or
instrument .. and may assume that ICY perso·n purporting to give
any writing .. notice. advice 01 instructions in connection
with the provisions hereof bas been duly authoIize~ to do
.O~ the Escrow Aqent aball not be liable in any manner for
the suffieiency UE correctness as to fOIm~ manner Iud
ezecution, or •• li~ity of lOY instrument deposited witb it.
nor IS to the identity, authority ~[ right of any person
•• eeucing tbe I.me; and its ~uties hereunder shall be limitea
to those speeifically provide~ herein.
5.02. If Lessee or Lessor sball be in disagreement about
the interpretation of tbe Lease or this Aqreement. or about
the rights .n~ obliqations. or the propriety of any action
contempllte~ by the Escrow A;ent heteun~erl the Escrow Agent
may. but shill not be require" to. file In Ip,propriate civil
Ictio,n to :z:esolve t.he c5isagreement. Tbe .E:sCIOW Agent sball
be indemnifie~ for III costs. inclcding reasonable attorneys
fees, in connection with such civil Iction~ end shall be
fully protected in sU5pen~ing III or pert of its actiYities
'Under this Agreement ~nti 1 • final jud9ment in su-cb act io,n is
received:~
5.03. The Escrow A;ent ~ay consul~ with ~~unsel of its
own choice an~ shall bave f~ll and complete authorization and
protection with the opinion of such counsel. The Escrow
Agent shall otherwise not be lilble for any ~ista~es of facts
or errors of jutl9meDt~ or for any acts or orni ssio,n5 of any
kind unless caused by its willful misconduct or qross
neqligence~
Section 6 .. ,scrow Acept"" CQmpensent..i.2.:I!.
Lessee hereby agrees to pay tbe Escrow Agent iti fees for
the services to be rendered bereun~er. and will pay and/or
reimburse the Escrow Agent upon request for all ezpenses.
~isbursements end a~9ance5. inclu~ing reasonable attorneys
fees. incurred or made by it in connection with carrying out
its ~uties bereunder.
Section 7.· Chenge of Escrow Agent.
7.01. A national banAin; association located in the
State of California. or I state bank or9anized under the laws
of the Stlte of C.liforEi.~ qualifie~ as a ~epositoty of
public funds~ mlY be substituted to Ict IS Escrow Agent ~nder
this Agreement. upon 89reement of the psxties bereto. Such
lubstitatioft sball not be deemed to affect the rights or
obliq'tions of the pa Ities ~ Upon Iny sucb substi tutio,n. the
Escrow Agent agrees to assign to such substitute Escrow Agent
its rigbts under tbi. Agreement.
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7.02. The Escrow A;ent or any successor may at aDy time
resign by qiying maile~ notice to Lessee or Lessor of its
intention to resiqn end of tbe proposed date of Iesi9nation,
which shall be a date not less than 60 days afte% such notice
il deposited in tbe United States mail with postage folly
prepaid; unless In earlier resignation date and tbe
appointment of I successor Escrow Agent eball have been or
Ire approved by Lessee or Lessor.
7.03. The Escrow Agent may I~point an agent to ezercise
any of the powers. rights or remedies grlnted to the Escrow
Agent Qn~er this Agreement; and to hold title to property or
to take any other actio,n wbich may be desirable or necessary,
Sectio,n 8. Mimi pi$trj!ltiye Pt.Q.Yll1Q:M..
S.Ol. The Escrow Agent shall keep complete and accurate
recor~s of all moneys received and disbursed under this
Agreement .. which shall be available for iJ"l.spection by Lessee
and Lessor .. or the agent of either of them .. at any time
duting regular business boers.
8402. All written notices to be given under this
Agreement .hall be given hy mail to the party entitled
tbereto It its address set forth in tbe attacbed E~bibit B ..
or at sucb address as tbe party may provide to the ether
parties hereto in writing from time to time. Any such notice
s~all be deemed to have been received 48 hours after deposit
in tbe United States mail in registered form .. with postage
fully prepaid ..
8.03. This Agreement shall be co·nstrued by and 9'·overned
in accordance with the laws of the State of California.
8.04. Any provision of this Agreement found to ba
probibited by law shall be ineffective only to the extent of
such prohibition .. end sball not invalidate the remainder of
this Agreement.
8~05. This Agreement sball be bindiDg cpo~ and inure to
tbe benefit of tbe parties and their respective successors
and assi!ilns. Specifically .. as used herein the term -Less·or
as used herein means aDY pers~n 0% entity to ~h~m Lessor has
assigned its right to receive Lease Payments ~nder the Lease
Ind eny payments due to Lessor hereunder from and after the
date wben I duplicate original of such ~ssignment is filed
with the Escrow Agent.
'.05. Tbis Agreement may be simultaneously executed in
sever.l counterperts .. each of whicb shall be an original and
all of wbich shall constitute but ~ne and the same Agreement.
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1.07. This A;reement sball terminate upon the earlier to
OCCu% of payment of the final lease payment payable ~ursuact
to the Lease or term!nation of the LeIse pursuant to the
provisions thereof.
IB WITNESS WHEREOF. tbe parties hive execute~ tbis
Agr.ement IS of the day and year first written ebove.
BANK OF CALIFORNIA
Escrow Agent
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By:
TRANSOCEAN FUNDING. INC.
Lessor
By:
CITY OF PALO ALTO
Lessee
By:
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EXHIBIT A
Payment F;eguest J.'2.m
Bank of California ••. A .• Escrow Agent under en Escrow
Agreement date~ as of OCtober 22. 1990 1 by and amoog the said
Escrow Agent. Tracsocean Funding, Inc. (-Lessor-), and the
City of Palo Alto (-LeSsee-), is hereby requested to pay,
teom the Equipment Acquisition Fund held under said Escrow
Aqreement. to tbe persons. firms or corporations designated
below as payee. the amount set forth opposite each such
perso·n"s. firm·s or corporation"s name .. in payment of the
Equipment Cost (as defined in said Escrow Agreement) of the
Equipment desc~ibed on the attache~ page(s) designated
opposite 5u~b Payee·s name and account.
Amoupt Eqyipment
The undersigned bereby certifies that attached bereto is a
duplicate original or certified copy Qf tbe following
documents [elatin9 to tbe order. delivery and acceptanee of
the Equipment described in tbe attached peges: (1) an
Equipment ¢rder form; (2) a manufacturer·s or dealer's
invoice; and (3) Lessee·s acceptance certificate relating to
the Equipment in tbe form prescribed by the Lease/Purcbase
Agreement described im the Escrow Aqreement.
Dated:
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CITY OF PALO ALTO
By: -----Emily Harl"ison
Director of Finance
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EXHIBIT B
Bank of California, 5,A.
4~O California Street
San FraneiseG_ California '.104
Attention: }L~y Jerem;
Vice Prescident
'!'tllnsocean.. Fun"iog tl InG.& (Lessor)
(25 California Street. 19th Floor
San Ffaneisco~ California 9410~
Attention, ~us.ell J. Lombar~
(tIS) t82-8202 ot '82-5252
City of palo Alto {Lessee)
City Han
150 Hamilton Ayenue
PaID Alto, California 94301
Attention, City Clerk
(415) 319-2571
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ARBITRAGE CERIIFlCAT~
14 Emily Harrison. bereby certify that J am ~he duly
qu.lifle~ Director of Finance of the City of Palo Alto.
California (the -Lessee-). and that in my official capacity
IS such officer I am responsible lor executinq and
delivering. on behalf of the Lessee. the Lease/Purchase
Agreement dated as of ~tober 22. 1990 (the ·L~ase·). This
Certificate is being issue~ pursuant to Section 149 of the
Internal Revenu~_~~e of 1986 (the ·Code-). and Treasury
Rei~lations. Sections 1.103-13. 1.103-1. and 1.103-15
plomu19ate~ thereunder (tbe -Regulations·) to certify certain
facts an6 ezpectations regarding tbe Lease. We certify that
the Lessee bas not been notified of the listin9 or proposed
listing of it by the Internal Revenue se~vice as an issuer
wbose arbitrage certificates; may not be relied upo-n.
1. Under the Lease .. tbe Lessor is requi red to acqul re
and install certain equipment 4escribe~ in the pages of Lease
Exhibit A (the -Equipment-). and to lease tbe Equipment to
the Lessee; and the Lessee is required to lease the £quipment
from Lessor pursuant to the Lease by paying rent with respect
thereto .. comprisin9 principal and interest, on tbe dates and
in the amounts set forth in the pages of Lease Exhibit B-1.
2. Pursuant to the Lease and for the purpose of rr,eeticg
its obligations thereunder and assuring the Lessee of the
availability of .money needed to pay the cost of the Equipment
wben due.. the Lessor and the Lessee have entered into an
Escrow Agreement dated as of October 22, 1990 (the -Escrow
Agreement-) with Bank of California, N.A. (the -Escrow
Agent") •
3. The obligations of the Lessee under the Lease with
respect to the Equipment described on Lease Exhibit A
commence on the date tbe Lessor deposits the arno-unt requi["ed
by tbe Lease ($2,3.6,00-0) ietc tbe Equipment Acq:uisition Fund
created pursoant to the Escrow Agreement. Such amouct will
be used, toqetber wi th interest earnings thereo,n, to pay the
cost of the EquipmeDt, Which is estimated to be $2,346.000,
and the interest portion of the rent due durin~ the
acquisition period.
... Pursuant to the Leise, the l,essee or the Lessor
will, within three years of the date hereof, enter into
contracts providing for the Icquisitio-n and installation of
the Equipment in ac ag-gregate amount of not less than
$2.345.000.
5. The Lessee or the Lessor will ptoceeo tG Icquire and
install tbe £quipment with due diliqen~e and. based upon the
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prOV1Slons cf the contracts describe~ in par.;r.ph
tbe Equipment will be acquired and installe~ on or
October __ • 1991.
4 hereof.
before
'-AH of
.spenderS ()n the
rent c5urillg the
the date of tbe
the spendable procee~s of the Lea.e viII be
Jquipment and the interest portion of the
acquilition period within three years from
depomit referred to in paragraph 3 hereof.
7. The oriqin.l proeee~s of the Lease an~ tbe interest
tQ be earne~ thereon 40 not e:l:cee~. or in any event do not
ezeee~ by more than 5\. the amount necessaty for the
90vernmental purpose for which the Lease is entered into.
8. 50 linking fun~ will be maintained for the payment
of tbe rent due under the Lease.
9. The Equipment has not been. and is not e:l:pEcte~
during the term of the Lease to be~ sold or otherwise
dispose~ of by tbe Lessee.
10. If Lessee issues more than $S~OOO~OO of obligations
beating interest wbich is eIempt from federal income taIation
under the Code durin; the current cale~ar rear~ Ind the
proceeds of the Lease deposite~ in the Equipment Acquisition
Fund are not expenCed within SiI months of the date of
deposit referred to in paragraph 3 hereof. the Lessee will
comply with the requirements of lection lC8(f) of the Code
and will rebate to the United States of America any
i~vestment earnings on the Equipme~t ACquisition Fund in
excess of the amount which would bave been earned if the
money in such fund ba~ been invested at I yield equal to the
yield 00 the LeISe.
WITNESS my bInd as of tbis 220d day of OCtober. 1~90.
CITY OF PALO ALTO, CALIFORNIA
By:
Emily Harrison
Director of Finance
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RESOWTION NO.
RESOWTION OF THE COUNCIL Of THE CITY OF PALO ALTO
AUTHOPIZING THE LE"-SE OF EQ<iIPIIENT AND AUTHORIZING
AND DIRECTING EXECUTtON OF AN EQ<iIPMENT LEASEI
P!lRCHASE AGREEMENT AND AN ESCROW AGREEMENT WD
AUTHORIZING OFFICIAL ACTION
WHEREAS, the City is a chartered city and lCunicipal
corporation organized and existing under the constitution and la".'s
of the state of Calirornia and is duly empowered as a chartered
city to exercise the powers reserved to it under said constitution
with respect to municipal affairs: and
WHEREAS, as an exercise .of such po .... ers tbe City bas
heretofore adopted the provisions of Chapter 2 .. 30 (Contracts and
Purchasing Procedures) of the Palo Alto Municipal Code (the "LaW-)
~icb authorizes the city, ~aen the public interest and necessity
.require, to purcbase equip~ent to be used in the furtherance of
municipal affairs: and
WHEREAS~ the City, after due investigation and delibera
tion, has determined that it is in toe public interest of the ci~y
at this time to authorize the purchase of certain equipment to be
used in the furtberance of muniCipal affairs (the -Equipment-); and
WHEREAS, the Council ~ishes at this ti~e to authOrize the
execution .of such documents and the performance of such acts as may
be necessary or desirable to effect the purchase of the Equipment
herein provided:
NOW~ THEREFORE~ the council of the City of Palo Alto does
hereby RESOLVE as follows:
SECTION 1. Approy.<:il of Equipment Lease/Purchase Agreem§!_pJ;_.
Tbe leasing of thE' Equipment pursuant to the provisions of the
Equipment Lease/Purchase Agreement is hereby authorized. The
Equipment Lease/Purchase Agreement~ in substantially the form on
file with the City Cler~ and made a part hereof as though set forth
in full hereIn~ is :bereby approved by the Council.. The Mayor .. City
Manager and the City Clerk are bereby authorized and directed~ for
and in the name of the City, to execute and deliver the Eq~ipment
Lease/PUrchase Agreement in such a form together .. ith such changes~
insertions and omissions as may be approved by the City Attorney,
and the officers executing the Equipment Lease/Agreement~ such
execution to be conclusive evidence ~f such approval~ and the City
Clerk is ~ereby authorized and djrect~d to attest such Equipment
Lease/Purchase Agreement and affix the seal of the City thereto~
The Council hereby authorizes the delivery and performance of the
Equipment Lease/Purcease Agreement.
• SECTION 2. Aooroval ___ o..f Esc.J;:OW Agreement. The Escrow
Agreement .. in substantially the form on file wIth the city Clerk
and made a part bereof as though set forth in full herein~ is
bereby approved by the Council .. The Mayer or the City Manager are
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each hereby autho~ized and directed, for and in the name of the
city, to exec~te and deliver the Escrow Agreement in such form,
together 'With such changes.. insertions and omissions vhich are
approved by the City Attorney and the officer or officers executing
such agreement, such execution to be conclusive evidence of su~h
approval: and the City Clerk is hereby authorized and directed to
attest such Escrov Aqreement. The Council hereby authorizes the
delivery and performance of the Escrow Agreement~
SECTION 3. Further Authority. The officers of the City
are hereby authorized and directed to execute all documents, and
take such actions as they may deem necessary or advisable In order
to carry out and perform the purposes of this Resolution .. and the
execution or taking of such action shall tJe conclusive evidence of
such necessity or advi6ability~
THE FOREGOING RESOLUTION 'Was d·uly and regularly adopted
a regular meeting of the Council of the City of Palo Alto held
the 22nd day of October, 1990.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: APPROVED:
city Clerk Mayor
APPROVED AS TO FORM:
City Manager
Assistant City Attorney
Director of Finance
APPROVED AS TO CONTENT:
Treasury Manager
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