HomeMy Public PortalAbout058-2012 - Parks - WEST END BANK - golf cart lEQUIPMENT LEASE/PURCHASE AGREEMENT
This Equipment Lease/Purchase Agreement (the "Agreement) is entered into May 15,
2012 by and between West End Bank, S.B., a state banking association (`Lessor'), and City of
Richmond, Indiana, a public body existing under the laws of the State of Indiana, by and through
its Board of Parks and Recreation for the Richmond Parks Department ("Lessee').
WITNESSETH:
WHEREAS, Lessee desires to lease and acquire from Lessor certain Equipment
described in Exhibit A, subject to the terms and conditions of and for the purposes set forth in
this Lease; and
WHEREAS, Lessee is authorized under the laws of the State of Indiana to enter into this
Agreement for the purposes set forth herein.
Now, THEREFORE, in consideration of the terms and conditions set forth herein,
including the above stated recitals, the parties agree as follows:
ARTICLE I
Section 1.01. Definitions. The following terms will have the meanings indicated below
unless the context clearly requires otherwise:
"Acceptance Certificate " means a Certificate evidencing unconditional acceptance of the
Equipment subject to the Lease in the form of Exhibit E attached hereto.
"Acquisition Amount" means the amount specified in the Lease and represented by
Lessee to be sufficient to acquire all or the portion of the Equipment listed in such Lease.
"Acquisition Period" means, with respect to the Lease, that period stated in the Schedule
to such Lease during which the Lease Proceeds attributable to such Lease may be expended on
Equipment Costs.
"Agreement" means this Equipment Lease/Purchase Agreement, including the exhibits
hereto, together with any amendments and modifications to the Agreement pursuant to Section
13.04.
"Code " means the Internal Revenue Code of 1986, as amended. Each reference to a
Section of the Code herein shall be deemed to include the United States Treasury Regulations
proposed or in effect thereunder.
"Commencement Date" means, the date of this Lease, the date on which Lessee's
obligation to pay Rental Payments listed on Exhibit B commences.
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"Contract Rate " means the rate payable on this Lease, and as also identified on Exhibit
B as 2.490% per annum.
"Disbursement Payments" means the Disbursement Payments totaling approximately of
$76,890.00, as also set forth in Exhibits A and B.
"Equipment" means the property listed in Exhibit A and all replacements, repairs,
restorations, modifications and improvements thereof or thereto made pursuant to Section 8.01 or
Article V. Whenever reference is made in this Agreement to Equipment, such reference shall be
deemed to include all such replacements, repairs, restorations, modifications and improvements
of or to such Equipment.
"Equipment Costs" means the total cost of the Equipment, including soft costs such as
freight, installation and taxes paid up front by Lessor.
"Event of Default" means an Event of Default described in Section 12.01.
"Lease " means this Agreement.
"Lease Proceeds" means, with respect to the Lease, the total amount of money to be paid
by Lessor to Lessee and/or its Vendor(s) pursuant to the Disbursement Payments.
"Lease Term " means the Original Term and all Renewal Terms therein provided and for
this Agreement means the period from the date hereof until this Agreement is terminated.
"Lessee " means the entity referred to as Lessee in the first paragraph of this Agreement.
"Lessor" means (a) the entity referred to as Lessor in the first paragraph of this Agree-
ment or (b) any assignee or transferee of any right, title or interest of Lessor in and to the
Equipment under the Lease (including Rental Payments thereunder) pursuant to Section 11.01.
"Material Adverse Change " means (a) prior to the Utilization Period Expiration Date, a
downgrade in Lessee's external debt rating of two or more subgrades by either Moody's
Investors Service, mc, or Standard & Poor's Ratings Group or any equivalent successor credit
rating agency, or any downgrade by either such agency that would cause Lessee's credit rating to
be below investment grade, and (b) thereafter, any change in Lessee's creditworthiness that
could have a material adverse effect on (i) the financial condition or operations of Lessee, or (ii)
Lessee's ability to perform its obligations under this Agreement or the Lease.
`Maximum Equipment Cost" means the cumulative amount for all equipment specified in
the latest Schedule A executed under this Agreement, which amount is anticipated to be the sum
of $76,890.00.
2016.
"Original Term" means the period from the date of this Agreement through June 15,
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"Purchase Price " means, with respect to the Equipment listed on Exhibit A, the amount
that Lessee may pay to Lessor to purchase such Equipment as provided in this Lease.
"Rental Payments" means the basic rental payments payable by Lessee under this Lease
pursuant to Section 4.01, in each case consisting of a principal component and an interest
component.
"Schedule" means the Schedule of Property substantially in the form of Exhibit A hereto
together with the Rental Payment Schedule attached thereto substantially in the form of Exhibit
B hereto, as such Schedules may be adjusted from time to time pursuant to Section 4.01, and all
documents related thereto.
"State " means the State of Indiana.
"Utilization Period Expiration Date " means the date listed in Exhibit A by which Lessee
must deliver an Acceptance Certificate for the Equipment under the Lease.
"Vendor" means the manufacturer or supplier and any of their agents or dealers and any
other entity from or through which Lessee has acquired or financed the Equipment pursuant to
the Lease.
"Vendor Agreements" means each purchase agreement, contract and related
documentation entered into between Lessee and a Vendor.
ARTICLE II
Section 2.01. Representations and Covenants of Lessee. Lessee represents, covenants and
warrants for the benefit of Lessor on the date hereof and as of the Commencement Date of the
Lease as follows:
(a) Lessee is a political subdivision of the State within the meaning of Section 103(c)
of the Code, duly organized and existing under the constitution and laws of the State, with full
power and authority to enter into this Agreement and this Lease and the transactions
contemplated hereby and to perform all of its obligations hereunder and under this Lease.
(b) Lessee has duly authorized the execution and delivery of this Agreement and the
Lease by proper action of its governing body at a meeting duly called, regularly convened and
attended throughout by the requisite quorum of the members thereof, or by other appropriate
official approval, and all requirements have been met and procedures have occurred in order to
ensure the validity and enforceability of this Agreement and the Lease.
(c) No event or condition that constitutes, or with the giving of notice or the lapse of
time or both would constitute, an Event of Default exists at the date hereof
(d) Lessee will do or cause to be done all things necessary to preserve and keep in full
force and effect its existence as a public body.
(e) Lessee has complied with such public bidding requirements as may be applicable
to this Agreement/Lease and the acquisition by Lessee of the Equipment as provided in this
Lease.
(f) During the Lease Term, the Equipment will be used by Lessee only for the
purpose of performing essential governmental or proprietary functions of Lessee consistent with
the permissible scope of Lessee's authority. Lessee does not intend to sell or otherwise dispose
of the Equipment or any interest therein prior to the last Rental Payment scheduled to be paid
under this Lease.
(g) Lessee shall report its financial results on an annual basis in accordance with
accounting principles and practices generally accepted in the United States of America
applicable to governmental entities, and the standards contained in Government Auditing
Standards issued by the Comptroller General of the United States, and shall deliver to Lessor (i)
annual audited financial statements (including (1) a balance sheet, (2) statement of revenues,
expenses and changes in fund balances for budget and actual, (3) statement of cash flows and
notes, and (4) schedules and attachments to the financial statements) within 270 days of its fiscal
year end, (ii) such other financial statements and information as Lessor may reasonably request,
and (iii) its annual budget for the following fiscal year when approved but not later than 30 days
prior to its current fiscal year end. The financial statements described in subsection (i) shall be
accompanied by an unqualified opinion of Lessee's auditor. Credit information relating to Lessee
may be disseminated among Lessor and any of its affiliates and any of their respective
successors and assigns.
(h) Lessee has an immediate need for the Equipment listed on the Schedule and
expects to make immediate use of the Equipment listed on the Schedule. Lessee's need for the
Equipment is not temporary and Lessee does not expect the need for any item of the Equipment
to diminish during the Lease Term to such item.
(i) The payment of the Rental Payments or any portion thereof is not (under the
terms of the Lease or any underlying arrangement) directly or indirectly (x) secured by any
interest in property used or to be used in any activity carried on by any person other than a state
or local governmental unit or payments in respect of such property; or (y) on a present value
basis, derived from payments (whether or not to Lessee) in respect of property, or borrowed
money, used or to be used in any activity carried on by any person other than a state or local
governmental unit. The Equipment will not be used, directly or indirectly, in any activity carried
on by any person other than a state or local governmental unit. No portion of the Equipment
Costs for the Equipment will be used, directly or indirectly, to make or finance loans to any
person other than Lessee. Lessee has not entered into any management or other service contract
with respect to the use and operation of the Equipment.
0) There is no pending litigation, tax claim, proceeding or dispute that may
adversely affect Lessee's financial condition or impairs its ability to perform its obligations
hereunder. Lessee will, at its expense, maintain its legal existence in good standing and do any
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further act and execute, acknowledge, deliver, file, register and record any further documents
Lessor may reasonably request in order to protect Lessor's security interest in the Equipment and
Lessor's rights and benefits under this Lease.
(k) In order to qualify this Lease and all Exhibits ("the Initial Lease") as a "qualified
tax-exempt obligation" within the meaning of Section 265(b)(3) of the Code, Lessee further
represents, warrants and covenants the following for the benefit of Lessor:
(i) the obligations evidenced by this Lease are not "private activity bonds" as
defined in Section 141 of the Code;
(ii) Lessee hereby designates the principal payments on this Lease as
"qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code;
(iii) the reasonably anticipated amount of tax-exempt obligations (other than
private activity bonds, treating qualified 501(c)(3) bonds as not being private activity
bonds) which will be issued by Lessee (and all entities treated as one issuer with Lessee,
and all subordinate entities whose obligations are treated as issued by Lessee) during the
current calendar year will not exceed $30,000,000; and
(iv) not more than $30,000,000 of obligations issued by Lessee during the
current calendar year have been designated for purposes of Section 265(b)(3) of the
Code.
(1) Lessee is the fee owner of the real estate where the Equipment is and will be
located and has good and marketable title thereto and there exists no mortgage, pledge, lien,
security interest, charge or other encumbrance of any nature whatsoever on or with respect to
such real estate.
ARTICLE III
Section 3.01. Lease of Equipment. Subject to the terms of this Lease, Lessor agrees to
provide the funds specified to be provided by it to acquire the Equipment, up to an amount equal
to the Maximum Equipment Cost. Upon the execution of this Lease, Lessor demises, leases,
transfers and lets to Lessee, and Lessee acquires, rents and leases from Lessor, the Equipment as
set forth in Exhibit A and in accordance with the terms hereof.
Section 3.02. Continuation of Lease Term. Lessee intends, subject to Section 3.03, to
continue the Lease Term of the Lease through the Original Term and to pay the Rental Payments
thereunder. Lessee affirms that sufficient finds are available for the current fiscal year, and
Lessee reasonably believes that an amount sufficient to make all Rental Payments during the
entire Lease Term of the Lease can be obtained from legally available funds of Lessee. Lessee
further intends to do all things lawfully within its power to obtain and maintain funds sufficient
and available to discharge its obligation to make Rental Payments due hereunder, including
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making provision for such payments to the extent necessary in each budget or appropriation
request submitted and adopted in accordance with applicable provisions of law, to have such
portion of the budget or appropriation request approved and to exhaust all available reviews and
appeals in the event such portion of the budget or appropriation request is not approved.
Section 3.03. Nonappropriation. Lessee is obligated only to pay such Rental Payments
under the Lease as may lawfully be made from funds budgeted and appropriated for that purpose
during Lessee's then current fiscal year. Should Lessee fail to budget, appropriate or otherwise
make available funds to pay Rental Payments under the Lease following the then current
Original Term, such Lease or Leases shall be deemed terminated at the end of the then current
Original Term. Lessee agrees to deliver notice to Lessor of such termination promptly after any
decision to non -appropriate is made, but failure to give such notice shall not extend the term
beyond such Original Term. [If Lease is terminated in accordance with this Section, Lessee
agrees to peaceably deliver the Equipment to Lessor at the location(s) to be specified by Lessor.]
Notwithstanding this provision, Lessee shall make all good faith efforts to retain sufficient
appropriations to make payment herein.
Section 3.04. Conditions to Lessor's Performance.
(a) As a prerequisite to the performance by Lessor of any of its obligations pursuant
to the Lease, Lessee shall deliver to Lessor the following:
(i) A fully completed Exhibit A, executed by Lessee;
(ii) A Incumbency and Authorization Certificate executed by the Clerk or
Secretary or other comparable officer of Lessee, in substantially the form attached hereto
as Exhibit C, completed to the satisfaction of Lessor;
(iii) A certified copy of a resolution, ordinance or other official action of
Lessee's governing body authorizing the execution and delivery of this Agreement and
Lease and performance by Lessee of its obligations hereunder and thereunder;
(iv) An opinion of counsel for Lessee in substantially the form attached hereto
as Exhibit D respecting this Agreement and Lease and otherwise satisfactory to Lessor;
(v) Evidence of insurance as required by Section 7.02 hereof,
(vi) All documents, including financing statements, affidavits, notices and
similar instruments, in form satisfactory to Lessor, which Lessor reasonably deems
necessary or appropriate at that time pursuant to Section 6.02;
(vii) A copy of a fully completed and executed Form 8038-G;
(viii) Such other items, if any, as are set forth in this Lease or are reasonably
required by Lessor.
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(b) In addition, the performance by Lessor of any of its obligations pursuant to the
Lease shall be subject to: (i) no material adverse change in the financial condition of Lessee
since the date of this Lease, (ii) no Event of Default having occurred, and (iii) the Equipment
must be accepted by Lessee no later than the date listed as the Utilization Period Expiration Date
in the applicable Schedule.
(c) Subject to satisfaction of the foregoing, Lessor will pay the Acquisition Amount
for Equipment described in a Schedule to the Vendor or, if authorized by Lessee's governing
body, will reimburse Lessee for the prior payment of any such Acquisition Amounts by Lessee to
the Vendor, upon receipt of the documents described in Sections 5.01(a) and (b).
ARTICLE IV
Section 4.01. Rental Payments; Adjustments.
(a) Subject to Section 3.03, Lessee shall promptly pay Rental Payments, in lawful
money of the United States of America, to Lessor semi-annually beginning December 15, 2012
and then on the dates and in such amounts as provided in Exhibit B to this Lease. In addition,
Lessee shall pay Lessor a "late charge" on any Rental Payment not paid within 5 days of the date
such payment is due at a rate equal to the Contract Rate plus 5% per annum or the maximum
amount permitted by law, whichever is less, from such date. Lessee shall not permit the federal
government to guarantee any Rental Payments under the Lease. Rental Payments consist of
principal and interest payments and are more fully detailed in the Rental Payment Schedule
attached as Exhibit B. Interest at the Contract Rate shall accrue on the Disbursement Payment
indicated in the chart in the Schedule beginning on the date such disbursement is made. Lessee
shall be unconditionally obligated to pay to Lessor such interest as indicated in the chart in the
Schedule. On the Commencement Date, Lessee shall commence making Rental Payments in an
amount sufficient to amortize the Equipment Cost, including any capitalized interest, over the
Lease Term as indicated in Exhibit B thereto. If an Event of Default occurs during the
Acquisition Period, the aggregate amount of the Disbursement Payment together with any
accrued interest shall become immediately due and payable.
Section 4.02. Interest and Principal Components. A portion of each Rental Payment is
paid as, and represents payment of, interest, and the Balance of each Rental Payment is paid as,
and represents payment of, principal. The Schedule shall set forth the principal and interest
components of each Rental Payment payable thereunder during the Lease Term. In addition the
principal and interest components, Lessee shall pay to Lessor at the date of this Lease Agreement
a document preparation fee of $495.00.
Section 4.03. Rental Payments to Constitute a Current Expense of Lessee. Lessor and
Lessee understand and intend that the obligation of Lessee to pay Rental Payments under this
Lease shall constitute a current expense of Lessee payable solely from its general fund or other
funds that are legally available for that purpose and shall not in any way be construed to be a
debt of Lessee in contravention of any applicable constitutional or statutory limitation or
requirement concerning the creation of indebtedness by Lessee, nor shall anything contained
herein or in a Lease constitute a pledge of the general tax revenues, finds or moneys of Lessee.
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Section 4.04. Rental Payments to be Unconditional. Except as provided in Section 3.03,
the obligations of Lessee to make Rental Payments and to perform and observe the other
covenants and agreements contained in the Lease shall be absolute and unconditional in all
events without abatement, diminution, deduction, set-off or defense, for any reason, including
without limitation any failure of the Equipment, after it has been accepted by Lessee, any
defects, malfunctions, breakdowns or infirmities in the Equipment or any accident,
condemnation or unforeseen circumstances.
Section 4.05. Tax Covenant. Lessee agrees that it will not take any action that would
cause the interest component of Rental Payments to be or to become ineligible for the exclusion
from gross income of the owner or owners thereof for federal income tax purposes, nor will it
omit to take or cause to be taken, in timely manner, any action, which omission would cause the
interest component of Rental Payments to be or to become ineligible for the exclusion from gross
income of the owner or owners thereof for federal income tax purposes.
Section 4.06 Event of Taxability. Upon the occurrence of an Event of Taxability, the
interest component shall be at a Taxable Rate retroactive to the date as of which the interest
component is determined by the Internal Revenue Service to be includible in the gross income of
the owner or owners thereof for federal income tax purposes, and Lessee will pay such additional
amount as will result in Lessor or its successors or assigns receiving the interest component at
the Taxable Rate identified in the related Lease.
For purposes of this Section, "Event of Taxability" means a determination that the
interest component is includible for federal income tax purposes in the gross income of the
owner thereof due to Lessee's action or failure to take any action.
Section 4.07. Mandatory Prepayment if any Lease Proceeds are for any reason not paid
by the Utilization Period Expiration Date to a Vendor or to reimburse Lessee as part of the
Equipment Costs, such Lease Proceeds remaining on the Utilization Period Expiration Date shall
be applied by Lessor on the next Rental Payment date, pro rata, to the prepayment of the
principal component of the outstanding Rental Payments due under the applicable Schedule.
ARTICLE V
Section 5.01. Delivery, Installation and Acceptance of Equipment.
(a) Lessee shall order the Equipment, cause the Equipment to be delivered and
installed at the location specified, and pay any and all delivery and installation costs and other
Equipment Costs in connection therewith. When the Equipment listed in the Lease has been
delivered and installed, Lessee shall promptly accept such Equipment and evidence said
acceptance by executing and delivering to Lessor an Acceptance Certificate(s) in the form
attached hereto as Exhibit E.
(b) Lessee shall deliver to Lessor original invoices and bills of sale relating to each item
of Equipment accepted by Lessee. Lessor shall, immediately prior to making the first
Disbursement Payment under the Schedule, prepare a Schedule and Rental Payment Schedule in
the forms attached hereto as Exhibits A and B, respectively. Lessee shall execute and deliver
such Schedules to Lessor within 5 business days of receipt.
Section 5.02. Quiet Enjoyment of Equipment. So long as Lessee is not in default under
the related Lease, neither Lessor nor any entity claiming by, through or under Lessor, shall
interfere with Lessee's quiet use and enjoyment of the Equipment during the Lease Term.
Section 5.03. Location; Inspection. Once installed, no item of the Equipment will be
relocated from the base location specified for it in this Lease on which such item is listed without
Lessor's consent, which consent shall not be unreasonably withheld. Lessor shall have the right
at all reasonable times during regular business hours to enter into and upon the property of
Lessee for the purpose of inspecting the Equipment.
Section 5.04. Use and Maintenance of the Equipment. Lessee will not install, use,
operate, or maintain the Equipment improperly, carelessly, in violation of any applicable law or
in a manner contrary to that contemplated by the related Lease. Lessee shall provide all permits
and licenses, if any, necessary for the installation and operation of the Equipment. In addition,
Lessee agrees to comply in all respects with all applicable laws, regulations and rulings of any
legislative, executive, administrative, or judicial body; provided that Lessee may contest in good
faith the validity or application of any such law, regulation or ruling in any reasonable manner
that does not, in the opinion of Lessor, adversely affect the interest (including the reversionary
interest) of Lessor in and to the Equipment or its interest or rights under the Lease.
Lessee agrees that it will maintain, preserve, and keep the Equipment in good repair and
working order, in a condition comparable to that recommended by the manufacturer. Lessor shall
have no responsibility to maintain, repair or make improvements or additions to the Equipment.
In all cases, Lessee agrees to pay any costs necessary for the manufacturer to recertify the
Equipment as eligible for manufacturer's maintenance upon the return of the Equipment to
Lessor as provided for herein.
Lessee shall not alter any item of Equipment or install any accessory, equipment or
device on an item of Equipment if that would impair any applicable warranty, the originally
intended function or the value of that Equipment. All repairs, parts, accessories, equipment and
devices furnished, affixed to or installed on any Equipment, excluding temporary replacements,
shall thereupon become subject to the security interest of Lessor.
ARTICLE VI
Section 6.01. Title to the Equipment. During the Lease Term, and so long as Lessee is not
in default under Article XII hereof, all right, title and interest in and to each item of the
Equipment shall be vested in Lessee immediately upon its acceptance of each item of
Equipment, subject to the terms and conditions of the applicable Lease. Lessee shall at all times
protect and defend, at its own cost and expense, its title in and to the Equipment from and against
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all claims, liens and legal processes of its creditors, and keep all Equipment free and clear of all
such claims, liens and processes. Upon the occurrence of an Event of Default or upon
termination of a Lease pursuant to Section 3.03 hereof, full and unencumbered legal title to the
Equipment shall pass to Lessor, and Lessee shall have no further interest therein. In addition,
upon the occurrence of such an Event of Default or such termination, Lessee shall execute and
deliver to Lessor such documents as Lessor may request to evidence the passage of such legal
title to Lessor and the termination of Lessee's interest therein, and upon request by Lessor shall
deliver possession of the Equipment to Lessor in accordance with Section 12.02. Upon purchase
of the Equipment under the Lease by Lessee pursuant to Section 10.01, Lessor's security interest
or other interest in the Equipment shall terminate, and Lessor shall execute and deliver to Lessee
such documents as Lessee may request to evidence the termination of Lessor's security interest
in the Equipment subject to the Lease.
Section 6.02. Security Interest. To secure the payment of all of Lessee's obligations
under this Lease, Lessee grants to Lessor a security interest constituting a first lien on (a) the
Equipment, (b) the Vendor Agreements, and (c) any and all proceeds of any of the foregoing.
Lessee agrees to execute and authorizes Lessor to file such notices of assignment, chattel
mortgages, financing statements and other documents, in form satisfactory to Lessor, which
Lessor deems reasonably necessary or appropriate to establish and maintain Lessor's security
interest in the Equipment and the proceeds thereof.
Section 6.03. Personal Property. Lessee shall not create, incur, assume or permit to exist
any mortgage, pledge, lien, security interest, charge or other encumbrance of any nature
whatsoever on any of the real estate where the Equipment is or will be located without the prior
consent of Lessor; provided, that if Lessor or its assigns is furnished with a waiver of interest in
the Equipment acceptable to Lessor or its assigns in its discretion from any party taking an
interest in any such real estate prior to such interest taking effect, such consent shall not be
unreasonably withheld.
ARTICLE VII
Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges. Lessee
shall keep the Equipment free of all levies, liens, and encumbrances except those created by this
Lease. The parties to this Agreement contemplate that the Equipment will be used for a govern-
mental or proprietary purpose of Lessee and that the Equipment will therefore be exempt from
all property taxes. If the use, possession or acquisition of any Equipment is nevertheless
determined to be subject to taxation, Lessee shall pay when due all taxes and governmental
charges lawfully assessed or levied against or with respect to such Equipment. Lessee shall pay
all utility and other charges incurred in the use and maintenance of the Equipment. Lessee shall
pay such taxes or charges as the same may become due; provided that, with respect to any such
taxes or charges that may lawfully be paid in installments over a period of years, Lessee shall be
obligated to pay only such installments as accrue during the Lease Term.
Section 7.02. Insurance. Lessee shall during the Lease Term maintain or cause to be
maintained (a) casualty insurance naming Lessor and its assigns as loss payee and insuring the
Equipment against loss or damage by fire and all other risks covered by the standard extended
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coverage endorsement then in use in the State, and any other risks reasonably required by Lessor,
in an amount at least equal to the then applicable Purchase Price of the Equipment; (b) liability
insurance naming Lessor as additional insured that protects Lessor from liability in all events in
form and amount satisfactory to Lessor; and (c) worker's compensation coverage as required by
the laws of the State; provided that, with Lessor's prior written consent, Lessee may self -insure
against the risks described in clause (a). Lessee shall furnish to Lessor evidence of such
insurance or self-insurance coverage throughout the Lease Term. Lessee shall not cancel or
modify such insurance or self-insurance coverage in any way that would affect the interests of
Lessor without first giving written notice thereof to Lessor at least 30 days in advance of such
cancellation or modification.
Section 7.03. Risk of Loss. Whether or not covered by insurance or self-insurance, Lessee
hereby assumes all risk of loss of, or damage to and liability related to injury or damage to any
persons or property arising from the Equipment from any cause whatsoever, and no such loss of
or damage to or liability arising from the Equipment shall relieve Lessee of the obligation to
make the Rental Payments or to perform any other obligation under this Lease. Whether or not
covered by insurance or self-insurance, Lessee hereby agrees to reimburse Lessor (to the fullest
extent permitted by applicable law, but only from legally available funds) for any and all
liabilities, obligations, losses, costs, claims, taxes or damages suffered or incurred by Lessor,
regardless of the cause thereof and all expenses incurred in connection therewith (including,
without limitation, counsel fees and expenses, and penalties connected therewith imposed on
interest received) arising out of or as a result of (a) entering into this Agreement or any of the
transactions contemplated hereby, (b) the ordering, acquisition, ownership use, operation,
condition, purchase, delivery, acceptance, rejection, storage or return of any item the Equipment,
(c) any accident in connection with the operation, use, condition, possession, storage or return of
any item of the Equipment resulting in damage to property or injury to or death to any person,
and/or (d) the breach of any covenant of Lessee in connection with this Lease or any material
misrepresentation provided by Lessee in connection with this Lease. The provisions of this
paragraph shall continue in fill force and effect notwithstanding the full payment of all
obligations under this Lease or the termination of the Lease Term under the Lease for any
reason.
Section 7.04. Advances. In the event Lessee shall fail to keep the Equipment in good
repair and working order, Lessor may, but shall be under no obligation to, maintain and repair
the Equipment and pay the cost thereof. All amounts so advanced by Lessor shall constitute
additional rent for the then current Original Term and Lessee covenants and agrees to pay such
amounts so advanced by Lessor with interest thereon from the due date until paid at a rate equal
to the Contract Rate plus S% per annum or the maximum amount permitted by law, whichever is
less.
ARTICLE VIII
Section 8.01. Damage, Destruction and Condemnation. Unless Lessee shall have
exercised its option to purchase the Equipment by making payment of the Purchase Price as
provided in this Lease, if - prior to the termination of the Lease Term - (a) the Equipment or any
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portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b)
title to, or the temporary use of, the Equipment or any part thereof shall be taken under the
exercise or threat of the power of eminent domain by any governmental body or by any person,
firm or corporation acting pursuant to governmental authority, Lessee and Lessor will cause the
Net Proceeds of any insurance claim or condemnation award or sale under threat of
condemnation to be applied to the prompt replacement, repair, restoration, modification or
improvement of the Equipment. Any balance of the Net Proceeds remaining after such work has
been completed shall be paid to Lessee.
If Lessee elects to replace any item of the Equipment (the "Replaced Equipment')
pursuant to this Section, the replacement equipment (the "Replacement Equipment') shall be of
similar type, utility and condition to the Replaced Equipment and shall be of equal or greater
value than the Replaced Equipment. Lessor shall receive a first priority security interest in any
such Replacement Equipment. Lessee shall represent, warrant and covenant to Lessor that each
item of Replacement Equipment is free and clear of all claims, liens, security interests and
encumbrances, excepting only those liens created by or through Lessor, and shall provide to
Lessor any and all documents as Lessor may reasonably request in connection with the
replacement, including, but not limited to, documentation in form and substance satisfactory to
Lessor evidencing Lessor's security interest in the Replacement Equipment. Lessor and Lessee
hereby acknowledge and agree that any Replacement Equipment acquired pursuant to this
paragraph shall constitute "Equipment" for purposes of this Agreement and the related Lease.
Lessee shall complete the documentation of Replacement Equipment on or before the next
Rental Payment date after the occurrence of a casualty event, or be required to exercise the
Purchase Option with respect to the damaged equipment.
For purposes of this Article, the term "Net Proceeds" shall mean the amount remaining
from the gross proceeds of any insurance claim or condemnation award or sale under threat of
condemnation after deducting all expenses, including attorneys' fees, incurred in the collection
thereof.
Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in
full the cost of any repair, restoration, modification or improvement referred to in Section 8.01,
Lessee shall either (a) complete such replacement, repair, restoration, modification or
improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) pay
or cause to be paid to Lessor the amount of the then applicable Purchase Price for the Equipment,
and, upon such payment, the Lease Term shall terminate and Lessor's security interest in the
Equipment shall terminate as provided in Section 6.01 hereof. The amount of the Net Proceeds,
if any, remaining after completing such repair, restoration, modification or improvement or after
purchasing such Equipment and such other Equipment shall be retained by Lessee. If Lessee
shall make any payments pursuant to this Section, Lessee shall not be entitled to any
reimbursement therefor from Lessor nor shall Lessee be entitled to any diminution of the
amounts payable under Article IV.
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ARTICLE IX
Section 9.01. Disclaimer of Warranties. Lessor makes no warranty or representation,
either express or implied, as to the value, design, condition, merchantability or fitness for
particular purpose or fitness for use of the Equipment, or any other warranty or representation,
express or implied, with respect thereto and, as to Lessor, Lessee's acquisition of the Equipment
shall be on an "as is" basis. In no event shall Lessor be liable for any incidental, indirect, special
or consequential damage in connection with or arising out of this Agreement, the Lease, the
Equipment or the existence, furnishing, functioning or Lessee's use of any item, product or
service provided for in this Agreement or the Lease.
Section 9.02. Vendor's Agreements; Warranties. Lessee hereby collaterally assigns to
Lessor, to the extent assignable, each Vendor purchase agreement, contract and related
documentation ("Vendor Agreements"). Lessee covenants that it shall not amend, modify,
rescind or in any way alter any Vendor Agreements without the prior written consent of Lessor.
Lessor hereby irrevocably appoints Lessee its agent and attorney -in -fact during the Lease Term,
so long as Lessee shall not be in default under the Lease, to assert from time to time whatever
claims and rights (including without limitation warranties) relating to the Equipment that Lessor
may have against Vendor. Lessee's sole remedy for the breach of such warranty, indemnification
or representation shall be against the applicable Vendors of the Equipment, and not against
Lessor. Any such matter shall not have any effect whatsoever on the rights and obligations of
Lessor with respect to the Lease, including the right to receive full and timely payments under a
Lease. Lessee expressly acknowledges that Lessor makes, and has made no representations or
warranties whatsoever as to the existence or the availability of such warranties relating to the
Equipment.
ARTICLE X
Section 10.01. Purchase Option. Lessee shall have the option to purchase all of the
Equipment listed in this Lease, at the following times and upon the following terms:
(a) From and after the date specified in the Schedule shown as Exhibit A (the "Purchase
Option Commencement Date'), on the Rental Payment dates specified in this Lease, upon not
less than 30 days' prior written notice, and upon payment in full of the Rental Payments then due
under the Lease plus the then applicable Purchase Price, which may include a prepayment
premium on the unpaid balance as set forth in the Schedule; or
(b) In the event of substantial damage to or destruction or condemnation of substantially
all of the Equipment listed in a Lease, on the day specified in Lessee's notice to Lessor of its
exercise of the purchase option (which shall be the earlier of the next Rental Payment date or 60
days after the casualty event) upon payment in full to Lessor of the Rental Payments then due
under the Lease plus the then Purchase Price; or
(c) Upon the expiration of the Lease Term, upon payment in full of all Rental
Payments then due and all other amounts then owing under the Lease, and the payment of $1.00
to Lessor.
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After payment of the applicable Purchase Price, Lessee will own the Equipment, and
Lessor's security interests in and to such Equipment will be terminated and Lessor shall release
any security liens or security filings.
ARTICLE XI
Section IL 01. Assignment by Lessor.
(a) Lessor's right, title and interest in this Lease, and to Rental Payments and any
other amounts payable by Lessee under this Lease, its security interest in the Equipment subject
to the Lease, and all proceeds therefrom may be assigned and reassigned in whole or in part to
one or more assignees or sub -assignees by Lessor, without the necessity of obtaining the consent
of Lessee; provided, that any such assignment, transfer or conveyance to a trustee for the benefit
of owners of certificates of participation shall be made in a manner that conforms to any
applicable State law. Nothing in this Section 11.01 shall be construed, however, to prevent
Lessor from executing any such assignment, transfer or conveyance that does not involve
funding through the use of certificates of participation within the meaning of applicable State
law, including any such assignment, transfer or conveyance as part of a multiple asset pool to a
partnership or trust; provided such certificates are sold only on a private placement basis (and not
pursuant to any "public offering") to a purchaser(s) who represent that (i) such purchaser has
sufficient knowledge and experience in financial and business matters to be able to evaluate the
risks and merits of the investment, (ii) such purchaser understands neither the Lease nor
certificates will be registered under the Securities Act of 1933, (iii) such purchaser is either an
"accredited investor" within the meaning of Regulation D under the Securities Act of 1933, or a
qualified institutional buyer within the meaning of Rule 144A, and (iv) it is the intention of such
purchaser to acquire such certificates (A) for investment for its own account or (B) for resale in a
transaction exempt from registration under the Securities Act of 1933; provided further, that in
any event, Lessee shall not be required to make Rental Payments, to send notices or to otherwise
deal with respect to matters arising under a Lease with or to more than one individual or entity.
(b) Unless to an affiliate controlling, controlled by or under common control with
Lessor, no assignment, transfer or conveyance permitted by this Section 11.01 shall be effective
until Lessee shall have received a written notice of assignment that discloses the name and
address of each such assignee; provided, that if such assignment is made to a bank or trust
company as trustee or paying agent for owners of certificates of participation, trust certificates or
partnership interests with respect to the Rental Payments payable under the Lease, it shall
thereafter be sufficient that Lessee receives notice of the name and address of the bank or trust
company as trustee or paying agent. During the Lease Term, Lessee shall keep, or cause to be
kept, a complete and accurate record of all such assignments in form necessary to comply with
Section 149 of the Code. Lessee shall retain, all such notices as a register of all assignees and
shall make all payments to the assignee or assignees designated in such register. Lessee shall not
have the right to and shall not assert against any assignee any claim, counterclaim or other right
Lessee may have against Lessor or the Vendor. Assignments in part may include without
limitation assignment of all of Lessor's security interest in and to the Equipment and all rights in,
to and under this Lease related to such Equipment. The option granted in this Section may be
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separately exercised from time to time with respect to the Equipment listed in the Lease, but such
option does not permit the assignment of less than all of Lessor's interests in the Equipment
listed.
(c) If Lessor notifies Lessee of its intent to assign this Lease, Lessee agrees that it shall
execute and deliver to Lessor a Notice and Acknowledgement of Assignment within five (5)
business days after its receipt of such request.
Section 11.02. Assignment and Subleasing by Lessee. None of Lessee's right, title, and
interest in, to and under this Lease or any portion of the Equipment may be assigned or encum-
bered by Lessee for any reason.
ARTICLE XII
Section 12.01. Events of Default Defined. Any of the following events shall constitute an
"Event of Default" under this Lease:
(a) Failure by Lessee to pay any Rental Payment or other payment required to be paid
under this Lease within 10 days of the date when due as specified herein;
(b) Failure by Lessee to observe and perform any covenant, condition or agreement
on its part to be observed or performed, other than as referred to in subparagraph (a) above, for a
period of 30 days after written notice specifying such failure and requesting that it be remedied is
given to Lessee by Lessor, unless Lessor shall agree in writing to an extension of such time prior
to its expiration; provided that, if the failure stated in the notice cannot be corrected within the
applicable period, Lessor will not unreasonably withhold its consent to an extension of such time
if corrective action is instituted by Lessee within the applicable period and diligently pursued
until the default is corrected;
(c) Any statement, representation or warranty made by Lessee in or pursuant to this
Lease or its execution, delivery or performance shall prove to have been false, incorrect,
misleading, or breached in any material respect on the date when made;
(d) Any default occurs under any other agreement for borrowing money, lease
financing of property or otherwise receiving credit under which Lessee is an obligor under which
there is outstanding, owing or committed an aggregate amount of at least 10% of Lessee's
aggregate current long- and short-term indebtedness, if such default consists of (i) the failure to
pay any indebtedness when due or (ii) the failure to perform any other obligation thereunder and
gives the holder of the indebtedness the right to accelerate the indebtedness;
(e) Lessee shall (i) apply for or consent to the appointment of a receiver, trustee,
custodian or liquidator of Lessee, or of all or a substantial part of the assets of Lessee, (ii) be
unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii)
make a general assignment for the benefit of creditors, (iv) have an order for relief entered
against it under applicable federal bankruptcy law, or (v) file a voluntary petition in bankruptcy
or a petition or an answer seeking reorganization or an arrangement with creditors or taking
15
advantage of any insolvency law or any answer admitting the material allegations of a petition
filed against Lessee in any bankruptcy, reorganization or insolvency proceeding; or
(f) An order, judgment or decree shall be entered by any court of competent
jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator or
Lessee or of all or a substantial part of the assets of Lessee, in each case without its application,
approval or consent, and such order, judgment or decree shall continue unstayed and in effect for
any period of 30 consecutive days.
Section 12.02. Remedies on Default. Whenever any Event of Default exists, Lessor shall
have the right, at its sole option without any further demand or notice, to take one or any
combination of the following remedial steps:
(a) By written notice to Lessee, Lessor may declare all Rental Payments payable by
Lessee pursuant to the Lease and other amounts payable by Lessee under this Lease to the end of
the then current Original Term or Renewal Term to be due;
(b) With or without terminating the Lease Term under the Lease, Lessor may enter
the premises where the Equipment listed in this Lease is located and retake possession of such
Equipment or require Lessee at Lessee's expense to promptly return any or all of such
Equipment to the possession of Lessor at such place within the United States as Lessor shall
specify, and sell or lease such Equipment or, for the account of Lessee, sublease such
Equipment, continuing to hold Lessee liable, but solely from legally available funds, for the
difference between (i) the Rental Payments payable by Lessee pursuant to such Lease and other
amounts related to such Lease or the Equipment listed therein that are payable by Lessee to the
end of the then current Original Term or Renewal Term, as the case may be, and (ii) the net
proceeds of any such sale, leasing or subleasing (after deducting all expenses of Lessor in
exercising its remedies under such Lease, including without limitation all expenses of taking
possession, storing, reconditioning and selling or leasing such Equipment and all brokerage,
auctioneer's and attorney's fees), subject, however, to the provisions of Section 3.03. The
exercise of any such remedies respecting any such Event of Default shall not relieve Lessee of
any other liabilities under any other Lease or the Equipment listed therein; and
(c) Lessor may take whatever action at law or in equity may appear necessary or
desirable to enforce its rights under this Lease or as a secured party in any or all of the
Equipment subject to such Lease.
Section 12.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to
Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in
addition to every other remedy given under a Lease now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver thereof, but any such right or power may
be exercised from time to time and as often as may be deemed expedient. In order to entitle
Lessor to exercise any remedy reserved to it in this Article it shall not be necessary to give any
notice other than such notice as may be required in this Article.
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Section 12.04. Application of Moneys. Any net proceeds from the exercise of any remedy
under this Agreement, including the application specified in Section 12.02(b)(ii) (after deducting
all expenses of Lessor in exercising such remedies including without limitation all expenses of
taking possession, storing, reconditioning and selling or leasing Equipment and all brokerage,
auctioneer's or attorney's fees), shall be applied as follows:
(a) If such remedy is exercised solely with respect to this single Lease, Equipment
listed in such Lease or rights thereunder, then to amounts due pursuant to such Lease and other
amounts related to such Lease or such Equipment.
(b) If such remedy is exercised with respect to more than one Lease, Equipment listed
in more than one Lease or rights under more than one Lease, then to amounts due pursuant to
such Leases pro rata.
ARTICLE XIII
Section 13.01. Notices. All notices, certificates or other communications under the Lease
shall be sufficiently given and shall be deemed given when delivered or mailed by registered
mail, postage prepaid, or delivered by overnight courier, or sent by facsimile transmission (with
electronic confirmation) to the parties hereto at the addresses immediately after the signatures to
this Agreement (or at such other address as either party hereto shall designate in writing to the
other for notices to such party) and to any assignee at its address as it appears on the registration
books maintained by Lessee.
Section 13.02. Binding Effect. The Lease shall inure to the benefit of and shall be binding
upon Lessor and Lessee and their respective successors and assigns.
Section 13.03. Severability. In the event any provision of the Lease shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof
Section 13.04. Amendments, Changes and Modifications. This Agreement and the Lease
may only be amended by Lessor and Lessee in writing.
Section 13.05. Execution in Counterparts. This Agreement and the Lease may be
simultaneously executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 13.06 Applicable Law. This Agreement and the Lease shall be governed by and
construed in accordance with the laws of the State.
Section 13.07. Captions. The captions or headings in this Agreement and in the Lease are
for convenience only and in no way define, limit or describe the scope or intent of any provisions
or sections of this Agreement or the Lease.
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IN WITNESS WHEREOF, Lessor and Lessee have caused this Agreement to be
executed in their names by their duly authorized representatives as of the date first above written,
although signatures may be affixed on a different date.
LESSOR:
West End Bank, S.B.
34 South 7th Street
Richmond, IN 47374
Attention: Timothy R. Frame, Senior V.P
Fax No.: (765) 935-7281
By: S/S Timothy R. Frame
Name: Timothy R. Frame
Title: Senior Vice President
List of Exhibits
LESSEE:
City of Richmond Parks Department
50 North 5th Street
Richmond, IN 47374
Attention: Gary Turner, President
Fax No.: (765) 983-7212
By: S/S Gary Turner
Name: Gary Turner
Title: President, Park Board
(Seal)
Attention: City Controller, Financing Office
Attest:
By: S/S Tammy Glenn
Name: Tammy Glenn
Title: City Controller
Attention: Richmond City Mayor
Approved:
By: S/S Sarah L. Hutton
Name: Sarah L. Hutton
Title: Mayor
Exhibit A
Equipment List and Schedule
Exhibit B
Rental Payment Schedule
Exhibit C
Incumbency and Authorization Certificate
Exhibit D
Opinion of Counsel Form
Exhibit E
Acceptance Certificate
I: