HomeMy WebLinkAboutC-3100 - Master Equipment Lease-Purchase Agreement, Police Strategic Information Technology PlanRESOLUTION NO. 98 -80
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RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH AUTHORIZING THE EXECUTION AND
DELIVERY OF A MASTER EQUIPMENT LEASE/PURCHASE
AGREEMENT, AND RELATED INSTRUMENTS, AND
DETERMINING OTHER MATTERS IN CONNECTION
THEREWITH
WHEREAS, the City of Newport Beach ( "Lessee ") is a chartered city (a public body,
corporate and politic) duly created, established and authorized to transact business and
exercise its powers, all under and pursuant to the City Charter and the Constitution and laws of
the State of California; and
WHEREAS, the City Council of Lessee has determined that a true and very real need
exists for the equipment and other items (the "Equipment') consisting of a document imaging
system, certain digital radio equipment and components of the 800 megahertz police
communication system all as more fully described in the proposed Master Equipment
Lease /Purchase Agreement with Municipal Funding Group, together with an associated Escrow
Agreement, Tax Compliance Agreement and No Arbitrage Certificate (collectively, the
"Agreement") presented to this City Council; and
WHEREAS, the Lessee has taken the necessary steps, including those relating to any
applicable legal bidding requirements to arrange for the acquisition of the Equipment; and
WHEREAS, Lessee proposes to enter into the Agreement with Municipal Funding Group
and all other identified parties substantially in the form presented to this City Council; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Newport
Beach does hereby resolve, order, and determine as follows:
Section 1. It is hereby found and determined that the terms of the Agreement in the
form presented to this City Council and incorporated in this resolution are in the best interests
of Lessee for the acquisition of the Equipment.
Section 2. The Agreement is hereby approved. The City Manager of Lessee and any
other officer of Lessee who shall have power to execute contracts on behalf of Lessee be, and
each of them thereby is, authorized to execute, acknowledge and deliver the Agreement
(including the documents associated therewith referenced in the recitals hereto) with any
changes, insertions and omissions therein as may be approved by the officers who execute the
Agreement, such approval to be conclusively evidenced by such execution and delivery of the
Agreement. The City Manager of the lessee and any other officer of Lessee who shall have
power to do so be, and each of them hereby is, authorized to affix the official seal of Lessee to
the Agreement and attest the same.
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Section 3. The proper officers of Lessee be, and each of them hereby is, authorized
and directed to execute and deliver any and all papers, instruments, opinions, certificates,
affidavits and other documents to do or cause to be done any and all other acts and things
necessary or proper for carrying out this resolution and the Agreement.
Section 4. The Lessee further certifies that this resolution has not been repealed or
amended and remains in full force and effect and further certifies that the within Master
Equipment Lease /Purchase Agreement is the same as presented to said City Council of the
Lessee
Section 5. Stradling Yocca Carlson & Rauth, a Professional Corporation, is confirmed
to act as counsel to the City on the terms set forth in the letter on file with the Director of
Finance for the purpose of rendering certain opinions to the Lessor on behalf of the City, in
conjunction with the City Attorney.
Section 6. This resolution shall take effect immediately upon its adoption.
ADOPTED this 14th day of December 1998,
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Mayor, City of Newport Beach
ATTEST:
City Clerk, City of Newport Beach
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STATE OF CALIFORNIA }
COUNTY OF ORANGE
CITY OF NEWPORT BEACH }
I, LAVONNE M. HARKLESS, City Clerk of the City of Newport Beach, California, do
hereby certify that the whole number of members of the City Council is seven; that the foregoing
resolution, being Resolution No. 98 -80, was duly and regularly introduced before and adopted by the
City Council of said City at a regular meeting of said Council, duly and regularly held on the 14th day
of December, 1998, and that the same was so passed and adopted by the following vote, to wit:
Ayes: Adams, Glover, Thomson, Debay, Ridgeway, Noyes, Mayor O'Neil
Noes: None
Absent: None
Abstain: None
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
official seal of said City this 15e, day of December, 1998.
(Seal)
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City Clerk of the City of
Newport Beach, California
• December 14, 1998
Agenda Item # 5
• CITY OF NEWPORT BEACH
ADMINISTRATIVE SERVICES DEPARTMENT
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December 14,1998
TO: Honorable Mayor and City Council _i 4
FROM: Dick Kurth, Acting Administrative Services Director
SUBJECT: 800 MHz & DOCUMENT IMAGING LEASE /PURCHASE FINANCING
Discussion
The City has been considering lease /purchase financing for the 800 MHz, Digital Radio
Conversion Equipment and Document Imaging Systems. To that end, the City Council
approved Resolution 98 -65 in September which contained repayment provisions in the
event we selected to use lease /purchase financing for this equipment. The resolution
included specific language that enables us to exercise a repayment option up to one
year after service placement or three years after payment of the invoice. That, in
addition to the current low interest rate (4.74 %), makes it financially advantageous for
the City to pursue five year lease /purchase financing instead of continuing to pay cash
during the next two fiscal years. This appears to be the right opportunity to enter this
particular financial market.
After reviewing lease /purchase finance proposals from seven (7) firms, we recommend
accepting the proposal from Municipal Funding Group of Kearney, Missouri.
Municipal Funding Group has proposed to provide a total of $2,497,877.00 with five
annual payments of $546,884.23 at a 4.74% annual percentage rate. We have provided
Municipal Funding Group with a brief letter of intent to accept the terms and conditions
of their proposal pending Council approval.
At the time this year's budget was developed, it was anticipated that adjustments
would be needed when the final decision was made regarding the funding mechanism
for procurement and installation of the approved equipment. Since the most likely
possibility at that time appeared to be lease financing, the original budget contains
funds to support that. Therefore in the current year, there will actually be a surplus of
about $37,000 for the project if we proceed with the financing, due primarily to the
lower rate now available. However, had the lease opportunity been unattractive and
we therefore continued to make cash payments, we would have needed a $1.2M budget
amendment to keep up with actual cash outflow. Budgets for the next four years will
be developed to include funds for lease payments of $546,884.23, rather than actual
purchase expenses. Considering the City's average earnings rate (currently about
5.8 %), the net savings from the lease - purchase financing will be about $220,000 (present
value) over the five year period.
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Kurt Yeager of Stradling, Yocca, Carlson & Rauth worked directly with Municipal •
Funding Group to ensure that the lease documents contain appropriate language for the
City. His firm will render its formal, legal opinion at the time of funding. The actual
Agreement will be available for review in the City Clerk's office.
Recommendation
Approve the attached resolution and authorize the Acting City Manager to execute the
Master Equipment Lease /Purchase Agreement and related agreements referenced in
the resolution for the 800 MHz Radio System and Document Imaging Systems Project
with Municipal Funding Group.
Attachments
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RESOLUTION NO.
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RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH AUTHORIZING THE EXECUTION AND
DELIVERY OF A MASTER EQUIPMENT LEASE/PURCHASE
AGREEMENT, AND RELATED INSTRUMENTS, AND
DETERMINING OTHER MATTERS IN CONNECTION
THEREWITH
WHEREAS, the City of Newport Beach ( "Lessee ") is a chartered city (a public body,
corporate and politic) duly created, established and authorized to transact business and
exercise its powers, all under and pursuant to the City Charter and the Constitution and laws of
the State of California; and
WHEREAS, the City Council of Lessee has determined that a true and very real need
exists for the equipment and other items (the "Equipment ") consisting of a document imaging
system, certain digital radio equipment and components of the 800 megahertz police
communication system all as more fully described in the proposed Master Equipment
Lease /Purchase Agreement with Municipal Funding Group, together with an associated Escrow
Agreement, Tax Compliance Agreement and No Arbitrage Certificate (collectively, the
"Agreement") presented to this City Council; and
WHEREAS, the Lessee has taken the necessary steps, including those relating to any
applicable legal bidding requirements to arranga for the acquisition of the Equipment; and
WHEREAS, Lessee proposes to enter into the Agreement with Municipal Funding Group
and all other identified parties substantially in the form presented to this City Council; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Newport
Beach does hereby resolve, order, and determine as follows:
Section 1. It is hereby found and determined that the terms of the Agreement in the
form presented to this City Council and incorporated in this resolution are in the best interests
of Lessee for the acquisition of the Equipment.
Section 2. The Agreement is hereby approved. The City Manager of Lessee and any
other officer of Lessee who shall have power to execute contracts on behalf of Lessee be, and
each of them thereby is, authorized to execute, acknowledge and deliver the Agreement
(including the documents associated therewith referenced in the recitals hereto) with any
changes, insertions and omissions therein as may be approved by the officers who execute the
Agreement, such approval to be conclusively evidenced by such execution and delivery of the
Agreement. The City Manager of the lessee and any other officer of Lessee who shall have
power to do so be, and each of them hereby is, authorized to affix the official seal of Lessee to
the Agreement and attest the same.
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Section 3. The proper officers of Lessee be, and each of them hereby is, authorized
and directed to execute and deliver any and all papers, instruments, opinions, certificates,
affidavits and other documents to do or cause to be done any and all other acts and things
necessary or proper for carrying out this resolution and the Agreement.
Section 4. The Lessee further certifies that this resolution has not been repealed or
amended and remains in full force and effect and further certifies that the within Master
Equipment Lease /Purchase Agreement is the same as presented to said City Council of the
Lessee
Section 5. Stradling Yocca Carlson & Rauth, a Professional Corporation, is confirmed
to act as counsel to the City on the terms set forth in the letter on file with the Director of
Finance for the purpose of rendering certain opinions to the Lessor on behalf of the City, in
conjunction with the City Attorney.
Section 6. This resolution shall take effect immediately upon its adoption.
ADOPTED this day of 1998.
Mayor, City of Newport Beach
ATTEST:
City Clerk, City of Newport Beach
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STATE OF CALIFORNIA )
ss.
COUNTY OF ORANGE )
I hereby certify that the foregoing Resolution was duly and regularly adopted by the City
Council of the City of Newport Beach at a regular meeting thereof held on the day of
1998, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
City Clerk, City of Newport Beach
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RESOLUTION NO. 98 -65
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH REGARDING ITS INTENTION TO ISSUE
TAX- EXEMPT OBLIGATIONS
WHEREAS, the City Council of the City of Newport Beach (the 'Issuer") desires to
finance the costs of a document imaging system, certain digital radio equipment, and
components of the 800 MHz communication system all as more fully described in Exhibit A
attached hereto and incorporated herein (the "Project);
WHEREAS, the Issuer intends to finance the acquisition of the Project or portions of the
Project with the proceeds of the sale of obligations the interest upon which is excluded from
gross income for federal income tax purposes (the "Obligations "); and
WHEREAS, prior to the issuance of the Obligations the Issuer desires to incur certain
expenditures with respect to the Project from available monies of the Issuer which expenditures
are desired to be reimbursed by the Issuer from a portion of the proceeds of the sale of the
Obligations;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Newport
Beach does hereby resolve, order, and determine as follows:
Section 1. The Issuer hereby states its intention and reasonably expects to reimburse
Project costs incurred prior to the issuance of the Obligations with proceeds of the Obligations.
Exhibit A describes either the general character, type, purpose, and function of the Project, or
the fund or account from which Project costs are to be paid and the general functional purpose
of the fund or account.
Section 2. The reasonably expected maximum principal amount of the Obligations is
$3,000,000.
Section 3. This resolution is being adopted on or prior to the date (the "Expenditures
Date or Dates ") that the Issuer will expend monies for the portion of the Project costs to be
reimbursed from proceeds of the Obligations.
Section 4. Except as described below, the expected date of issue of the Obligations will
be within eighteen months of the later of the Expenditure Date or Dates and the date the
Project is placed in service; provided, the reimbursement may not be made more than three
years after the original expenditure is paid. For Obligations subject to the small issuer exception
of Section 148(f)(4)(D) of the Internal Revenue Code, the "eighteen -month limit" of the previous
sentence is changed to "three years" and the limitation of the previous sentence beginning with
"; provided, .. " is not applicable.
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Section 5. Proceeds of the Obligations to be used to reimburse for Project costs are
not expected to be used, within one year of reimbursement, directly or indirectly to pay debt
service with respect to any obligation (other than to pay current debt service coming due within
the next succeeding one year period on any tax - exempt obligation of the Issuer (other than the
Obligations)) or to be held as a reasonably required reserve or replacement fund with respect to
an obligation of the Issuer or any entity related in any manner to the Issuer, or to reimburse any
expenditure that was originally paid with the proceeds of any obligation, or to replace funds that
are or will be used in such manner.
Section 6. This resolution is consistent with the budgetary and financial circumstances
of the issuer, as of the date hereof. No monies from sources other than the Obligation issue
are, or are reasonably expected to be reserved, allocated on a long -term basis, or otherwise set
aside by the Issuer (or any related party) pursuant to their budget or financial policies with
respect to the Project costs. To the best of our knowledge, this City Council is not aware of the
previous adoption of official intents by the Issuer that have been made as a matter of course for
the purpose of reimbursing expenditures and for which tax - exempt obligations have been
issued.
Section 7. The limitations described in Section 3 and Section 4 do not apply to (a)
costs of issuance of the Obligations, (b) an amount not in excess of the lesser $100,000 or five
percent (5 %) of the proceeds of the Obligations, or (c) any preliminary expenditures, such as
architectural, engineering, surveying, soil testing, and similar costs other than land acquisition,
site preparation, and similar costs incident to commencement of construction, not in excess of
twenty percent (20 %) of the aggregate issue price of the Obligations that finances the Project
for which the preliminary expenditures were incurred.
• Section 8. This Resolution is adopted as official action of the Issuer in order to comply
with Treasury Regulation § 1.150 -2 and any other regulations of the Internal Revenue Service
relating to the qualification for reimbursement of Issuer expenditures incurred prior to the date
of issue of the Obligations, is part of the Issuer's official proceedings, and will be available for
inspection by the general public at the main administrative office of the Issuer.
Section 9. All the recitals in this Resolution are true and correct and this City Council so
finds, determines and represents.
ADOPTED this 28th day of September , 1998.
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i ewport Beach
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ATTEST: c
City Clerk, City of Newport Beach
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EXHIBIT A 0
DESCRIPTION OF PROJECT
The 800 MHz Radio system is a communications system which replaces the existing Public
Works Radio system. The 800 MHz Radio system provides dispatch and mobile equipment.
The system provides connectivity with other participating public safety agencies and
municipalities operating in Orange County, California. An additional portion of the required
funding is for the Fire and Marine Department emergency digital radio units required prior to
online use of the 800 MHz Radio system. The Document Imaging portion of this lease purchase
funding provides hardware, software, equipment, and connectivity for scanning stations located
in various City departments.
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STATE OF CALIFORNIA }
• COUNTY OF ORANGE } ss.
CITY OF NEWPORT BEACH }
I, LAVONNE M. HARKLESS, City Clerk of the City of Newport Beach, California, do
hereby certify that the whole number of members of the City Council is seven; that the foregoing
resolution, being Resolution No. 98 -65, was duly and regularly introduced before and adopted by the
City Council of said City at a regular meeting of said Council, duly and regularly held on the 28th
day of September, 1998, and that the same was so passed and adopted by the following vote, to wit:
Ayes: Thomson, Debay, O'Neil, Hedges, Glover, Noyes, Mayor Edwards
Noes: None
Absent: None
Abstain: None
PI WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
official seal of said City this 29th day of September, 1998.
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(Seal)
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City Clerk of the City of
Newport Beach, California
! COUNCIL AGENDA
CITY OF NEWPORT BEACH NO'
ADMINISTRATIVE SERVICES DEPARTMENT
November 12, 1996 C
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY C.0U.NCIL
FROM: Dennis Danner, Administrative Services Director
SUBJECT: LEASE PURCHASE FINANCING
DISCUSSION:
NOV 12
C:k: " c,, 7 77r.7
In May, 1996, the City Manager directed staff to request lease /purchase finance proposal options
to fund $2.1M of the Police Department's Strategic Information Technology Plan. Initial
proposals included 4 year and 5 year terms; annual and semi - annual payment schedules with
payments at the beginning or end of each payment period. Due to the useful life of equipment of
this nature, we were concerned about extending the payment schedule beyond 5 years.
Therefore, we initially recommended acceptance of a $457,024 annual payment at a 4.99 annual
percentage rate over a 5 year term. However, since this payment schedule exceeded the
• $400,000 budgeted in the FY 1996 -97 capital project account, the City Manager asked for new
proposals which would not exceed this threshold.
Since we had approximately $300,000 available in the current year's capital project account for
this project, we requested new proposals aimed at using this remaining balance as a down
payment, thereby reducing the total amount to be financed to $1,759,561. Further, we requested
proposals wherein the first payment would not occur until after January 1, 1997 for cash flow
purposes. Given these considerations, the most favorable proposal received was from the
Municipal Funding Group (MFG) of Kearney, Missouri. MFG offered a five -year amortization
schedule to provide $1,759,561 at a 5.349 annual percentage rate. The annual payments of
$410,354.28 are scheduled to begin July 30, 1997.
Once our financial review of the MFG proposal was completed, we contacted Kurt Yeager of
Stradling, Yocca, Carlson & Rauth. Mr. Yeager worked directly with MFG to revise appropriate
language in the loan documents. His formal, legal opinion is attached. We were also able to stay
under the $5.0 million cap for small issuers (on a calendar year basis), so we will not be subject
to rebate regulations which simplifies other accounting issues.
RECOMMENDATION:
Approve the attached resolution and authorize the City Manager to execute the Master
Equipment Lease /Purchase Agreement with Municipal Funding Group.
STRATINEDOC 10/30196 10:06A \1
RESOLUTION NO.96-
. A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF NEWPORT BEACH AUTHORIZING THE
EXECUTION AND DELIVERY OF A MASTER
EQUIPMENT LEASE /PURCHASE AGREEMENT,
AND RELATED INSTRUMENTS, AND
DETERMINING OTHER MATTERS IN CONNECTION
THEREWITH.
WHEREAS, the City Council of the City of Newport Beach, hereinafter referred to
as ( "Lessee "), has determined that a true and very real need exists for the equipment,
hereinafter referred to as (the "Equipment') described in the proposed Master Equipment
Lease /Purchase Agreement with Municipal Funding Group, presented to this meeting and
attached to this Resolution as Exhibit "A ", (the "Agreement); and
WHEREAS, Lessee has taken the necessary steps, including those relating to any
applicable legal bidding requirements, to arrange for the acquisition of the Equipment;
and
WHEREAS, Lessee proposes to enter into the Agreement with Municipal Funding
• Group substantially in the form of Exhibit "A "; and
WHEREAS, Lessee reasonably anticipates that it and its subordinate entities will
not issue tax - exempt obligations in the face amount of more than $10,000,000 during the
current calendar year.
NOW, THEREFORE, IT IS HEREBY RESOLVED, by the City Council of the City
of Newport Beach as follows:
Section 1: It is hereby found and determined that the terms of the Agreement in
the form presented to this meeting and incorporated in this Resolution are in the best
interests of Lessee for the acquisition of the Equipment.
Section 2: The Agreement is hereby approved. The City is authorized to
execute, acknowledge and deliver, the Agreement in substantially the form presented in
Exhibit "A ", such approval to be conclusively evidenced by such execution and delivery of
the Agreement. The City Clerk is authorized to affix the official seal of Lessee to the
• Agreement and attest the same.
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Section 3: The City Manager is authorized and directed to execute and deliver
any and all papers, instruments, opinions, certificates, affidavits and other documents and
to do or cause to be done any and all other acts and things necessary or proper for
carrying out this Resolution and Agreement.
Section 4: Lessee hereby designates the Agreement as a "qualified tax - exempt
obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986,
as amended.
The undersigned further certifies that the above Resolution has not been repealed
or amended and remains in full force and effect and further certifies that the attached
Agreement is the same as presented at said meeting of the governing body of Lessee.
ADOPTED, this _ day of November, 1996.
ATTEST:
City Clerk
F: \calldebbie %resolutlaulheve.doc
11 -04.96
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STRADLING, YOCCA, CARLSON & RAUTH
A PROFESSIONAL CORPORATION
FRITZ A. STRADLING
CAROL L. LEw
ATTORNEYS AT LAW
NICK E. YOCCA
DENISE XARBAUGH XERING
C. CARLSON
JON E. GOET2
;;,CRAIG
ILL M R. RAUTX III
RUSSELL A. MILLER'
660 NEWPORT CENTER DRIVE. SUITE 1600
A. C. SCHAAF
J. MICHAEL VAUGHN
POST OFFICE BOX 7680
RICHARD C. GOODMAN
JOHN O. IRELAND
JOHN J. MURPHY
DAVID H. MANN
NEWPORT BEACH, CALIFORNIA 92660 -6441
THOMAS P. CLARK. JR.
DOUGLAS J. EVERTZ
BEN A. FRYOMAN
SEAN TIERNEY•
TELEPHONE (714) 725 -4000
DAVID R. MOEWEN
DARRYL S. GIBSON
PAULL. GALE
JEE RI PARK
FACSIMILE (714) 725 -4100
RUDOLPH C. SHEPARD
RICHARD T. NEEDHAM
ROBERT J. KANE
ROBERT C. WALLACE
BRUCE L STUART
JOHN R CANNON
E KURT YEAGER
DAVID A. HOFFER
ROBERT J. WNALEN
JOHN E. WOODNEAD IV
R00 ERT E. RICH
DOUGLAS P. FEICK
RANDALL J. HERMAN
BRUCE FEVCXTER
MARK L SKAI6T
MARK J. XVEB6CX
JEFFREY B. COYNE
DAVID G. CASNOCNA•
DAVID E. LAFITTE
KAREN A. ELLIS
ANDREAWEVITHU REEVES
November 4, 1996
6RUCE D. MAY
ANDREW F. PUZDER
JOHN D. VAUGHAN
DONALD J. HAMMAN
STEVEN M. HANLE
JOHN J. SWIG ART, JR,
MICHAEL H, MULROY
MICHAEL A. ZABLOCKI
MARY ANNE WAGNER
NEILA R. BERNSTEIN
MATTHEW NAOUEEN
CELESTE STAHL BRADY
HOLLY A. ELLI6
CHRISTOPHER J. KILPATRICK
WILLIAM E. GARRETT
DOUGLAS S. BROWN
CHRISTOPHER D. IVEY
JULIE MCCOY AKINS
H. LEE KOLODNY
LAWRENCE B. CORN
GERALD J. RAMIZA
STEPX EN T. FREEMAN
DANIEL M. GLASSMAN
NICHOL" J. VOCCA
DAVID E. OUTWATER
JULIE M. PORTER
JOY HELIER OTSUKI
MICR At L E. FLYNN
HUMAN J. SIDDIOI
GARY A. PEMBERTON
TERI N. HOLLANDER
'SAN FRANCISCO OFFICE
Mr. Dennis C. Danner,
Administrative Services Director
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92658 -8915
Dear Dennis:
JOHN E. BRECKENRIDGE
PEN C. STONE
DOUGLAS J. RO VENS
ROBERT J. MATTHEWS
Oa 00u.FEL
SAN FRANCISCO OFFICE
44 MONTGOMERY STREET. SUITE 2950
SAN FRANCISCO, CALIFORNIA 94104
TELEPHONE 14151 705.9180
FACSIMILE 14151 76S 9107
WRITER'S DIRECT DIAL:
(714) 725 -4169
Please find enclosed the financing documents for the computer equipment lease. They
were e- mailed to us Friday and are now on our system. The Lessor has made the changes which
we requested.
With these changes, we can confirm our view that the Lease will be valid under
California law and will be generally enforceable against the City. We have made it clear in the
documents that the Lease is subject to nonappropriation of annual lease payments by the City,
and for that reason should not violate the constitutional limit on incurring indebtedness. Also,
the interest component of the lease payments should be tax- exempt, and the City will be exempt
from arbitrage rebate provided it can meet the expenditure timing rules or the $5,000,000 small
issuer rules. We will be rendering an opinion to the City and the Lessor with respect to these
issues, if requested, which will describe the full nature of our opinion in more detail. We
assume Mr. Burnham will be rendering an opinion with respect to the due authorization,
execution and delivery of the documents.
We have acted as your special counsel in connection with the review of the Lessor's
financing documents. At your request, we have attempted to limit our review to fundamental
state law and federal tax limitations, and have not commented on or negotiated any substantive
business terms of the arrangement, nor do we have any opinion with regard to such business
• terms.
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Mr. Dennis Danner
November 4, 1996
Page 2
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Finally, this confirms our understanding that we will be compensated for our work in this
regard at the usual hourly rate of the attorneys involved. My hourly rate is $300 per hour and
that of Carol Lew is $250 per hour. I do not believe other attorneys will have devoted
significant time to this matter. Paralegal time will be billed at $90 per hour. In addition, we
will expect reimbursement for our out -of- pocket expenses including telecommunications,
document delivery services, and other items.
Darryl Jarman indicated to me by fax on Friday his desire to close this transaction by
Friday, November 8. Please give me a call on Monday or Tuesday so that we may discuss the
steps we need to take to finalize the transaction.
EKY:dm
cc: Carol Lew, Esq.
Pl1B1.:45035_1 1017122459.0004
Very truly yours,
STRADLIN , YOC CARLSON & RAUTH
E. Kurt Yeager •
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MASTER EQUIPMENT LEASE /PURCHASE AGREEMENT
THIS MASTER EQUI; MENT LEASE /PURCHASE AGREEMENT (the "Agreement ")
is dated as of July 30, 1996 and entered into between Municipal Funding Group ( "Lessor "), and
City of Newport Beach ( "Lessee ").
RECITALS
A. Lessor desires to lease the Equipment, as hereinafter defined, to Lessee and
Lessee desires to lease the Equipment from Lessor, subject to the terms and conditions of and for
the purposes set forth in this Agreement.
B. Lessee is authorized under the Constitution and laws of the State of California (the
"State ") to enter into this Agreement for the purposes and subject to the conditions set forth
herein.
C. This Agreement shall be implemented through one or more series of Acceptance
Certificates, Schedules of Payments and related documents with each series of the foregoing
constituting a single transaction subject to and entered into pursuant to this Agreement.
NOW THEREFORE, in consideration of the premises, and other good and valuable
consideration, the receipt and sufficiency of which is hereby mutually acknowledged, the parties
. hereby agree as follows:
ARTICLE I
Section 1.01. Lessee represents, covenants and warrants to Lessor as follows:
(a) Lessee is a state or political subdivision within the meaning of Section
103(c) of the Internal Revenue Code of 1986, as amended, (the "Code ") and will do or cause to
be done all things necessary to preserve and keep in full force and effect its existence as such.
(b) Lessee is authorized under the Constitution and laws of the State to enter
into this Agreement and the transactions contemplated hereby and to perform all of its obligations
hereunder.
(c) The execution and delivery of this Agreement by or on behalf of Lessee
has been duly authorized by all necessary action of the governing body of Lessee, and Lessee has
obtained such other approvals and consents as are necessary to consummate this Agreement.
Lessee further represents, covenants and warrants that all requirements have been met and
procedures have been followed in order to ensure the enforceability of this Agreement.
(d) Lessee has complied with such public bidding requirements as may be
applicable to this Agreement and the acquisition of the Equipment hereunder.
. (e) Lessee shall cause to be executed and delivered to Lessor an opinion of its
counsel and an incumbency certificate in form and substance satisfactory to Lessor.
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(f) Lessee has an immediate need for, and expects to make immediate use of,
all of the Equipment, which need is not temporary or expected to diminish during the term of this
is
Agreement.
(g) The execution, delivery and performance of this Agreement and
transactions contemplated herein will not violate any judgment, order, law or regulation
applicable to Lessee or result in any breach of, or constitute a default under, any indenture,
mortgage, deed of trust, bond, loan or credit agreement or other instrument to which Lessee is a
party or by which it is bound.
(h) There are no actions, suits or proceedings pending or, to the knowledge of
Lessee, threatened against or affecting Lessee in any court or before any governmental
commission, board or authority which, if adversely determined, would have a material adverse
effect on the ability of Lessee to perform its obligations hereunder.
(i) The Equipment is essential to and will be used only for the purpose of
performing one or more governmental functions of Lessee consistent with the scope of Lessee's
authority and will not be used in a trade or business of any person or entity. Lessee shall
execute and deliver to Lessor an Essential Use Letter in substantially the form attached hereto.
0) Subject to the qualification of section 7.01 hereof, the Equipment is, and
shall remain during the Term of this Agreement, personal property.
(k) Lessee will promptly and duly execute and deliver to Lessor such further •
documents, instruments and assurances and take such further action as Lessor may from time to
time reasonably request in order to carry out the intent and purpose of this Agreement and to
establish and protect the rights and remedies created or intended to be created in favor of Lessor
hereunder.
ARTICLE II
DEFINITIONS: IMPLEMENTATION
Section 2.01. The following terms will have the meanings indicated below unless the
context clearly requires otherwise:
"Acceptance Certificate" is the document, substantially in the form attached, which shall
be executed and delivered to Lessor as evidence of the acceptance of the Equipment by Lessee
and the date thereof.
"Agreement" means this Master Equipment Lease /Purchase Agreement including the
documents attached hereto.
"Commencement Date" is the date when the Lessee delivers an executed Acceptance
Certificate to Lessor or the date when Lessor deposits the anticipated acquisition price of the
Equipment in an escrow fund, whichever occurs first.
E
vusLA4985 11017122459.0004 2
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• "Equipment" means the personal property consisting of equipment and other items
described in the Equipment List, Essential Use Letter and one or more Acceptance Certificates
executed by Lessee and delivered to Lessor, or to be executed and delivered, pursuant hereto,
together with any and all additions, modifications, attachments, accessions, substitutions,
replacements and parts thereof.
"Purchase Price" shall mean the amount which Lessee can pay to Lessor to acquire the
Equipment outright on a Rental Payment due date, as set forth on the Schedule of Payments
executed by Lessee and applicable to such Equipment.
"Rental Payments" means the basic payments payable by Lessee pursuant to the
provisions of this Agreement during the Term which are payable in consideration of Lessor
permitting the Lessee to use the Equipment and by which Lessee may acquire ownership of the
Equipment. Rental Payments shall be payable by Lessee to the Lessor in the amounts and at the
times during the Term set forth in the Schedule of Payments.
"Schedule of Payments" means the document(s) which sets forth the terms and provisions
of Lessee's payment obligation with respect to the Equipment and which shall include an
amortization table showing the principal and interest component of each payment.
"Term" means the term provided for in this Agreement under Section 3.01.
"Vendor" means the manufacturer of the Equipment as well as the agents or dealers of
. the manufacturer from whom Lessor purchased or will purchase the Equipment.
2.02. Implementation of Escrow Funded Transaction. Escrow funded transactions
entered into hereunder shall be implemented by Lessee executing and delivering to Lessor (a) a
Schedule of Payments; (b) an Escrow Agreement; and (c) upon acceptance of the Equipment, an
Acceptance Certificate with respect thereto.
2.03. Implementation of Non - Escrow Funded Transactions. Non - escrow funded
transactions entered into hereunder shall be implemented by Lessee executing and delivering to
Lessor, upon acceptance of the Equipment, an Acceptance Certificate with respect thereto to
which shall be attached the related Schedule of Payments.
2.04. General. Each transaction implemented and entered into hereunder shall be
deemed to be a separate and distinct legal and binding obligation of Lessee with this Agreement
being applicable thereto independent of additional transactions which may be entered into by
Lessor and Lessee hereunder.
ARTICLE III
TERM
Section 3.01. Term of Agreement. This Agreement shall be effective as of the date of
execution hereof and shall remain in effect until Lessee has paid all Rental Payments and other
amounts due hereunder, subject to Section 3.02 below.
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Section 3.02. Termination of Term. The Term will terminate upon the earliest of any of
the following events: is
(a) the nonappropriation of funds and termination of this Agreement pursuant
to Section 5.06;
(b) the exercise by Lessee of the option to purchase the Equipment under the
provisions of Article VIII or X of this Agreement;
(c) a default by Lessee and Lessor's election to terminate this Agreement
under Article XII; or
(d) the payment by Lessee of all Rental Payments and all other sums required
to be paid by Lessee hereunder.
ARTICLE IV
ENJOYMENT OF EQUIPMENT
Section 4.01. Quiet Enjoyment. So long as Lessee is not in default hereunder, as to
claims of Lessor or persons claiming under Lessor, Lessor hereby covenants that Lessee shall
peaceably and quietly have, hold, possess, use, and enjoy the Equipment, without suit, trouble or
hindrance from Lessor, subject to the terms and provisions hereof. Lessor shall have the right at
all reasonable times during business hours to enter into and upon the property of Lessee for the .
purpose of inspecting the Equipment.
ARTICLE V
RENTAL PAYMENTS
Section 5.01. Rental Payments Not to Constitute a Full Faith and Credit Obligation of
Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental
Payments hereunder constitutes a current expense of Lessee and not a debt in contravention of
constitutional or statutory limitations nor a pledge of the full faith and credit or the general tax
revenues, funds or monies of Lessee. The obligation of the Lessee to make Rental Payments and
other amounts payable hereunder does not constitute an obligation of the Lessee for which the
Lessee is obligated to levy or pledge any form of taxation of for which the Lessee has levied of
pledged any form of taxation.
Section 5.02. Payment of Rental Payments. Lessee shall pay Rental Payments
exclusively from legally available funds in lawful money of the United States of America to
Lessor at the address set forth on the execution page hereof in the amounts and on the dates set
forth in the Schedule of Payments.
Section 5.03. Interest and Principal Components. As set forth on the Schedule of
Payments, a portion of each Rental Payment is paid as, and represents payment of, interest and
the balance is paid as, and represents payment of, principal. •
PUBLA49851 1017122459.0004 4
Section 5.04. Rental Payments to be Unconditional. Subject to Section 5.06 hereof, the
obligation of Lessee to make payment of the Rental Payments required under this Article V and
to perform and observe the other covenants and agreements contained herein shall be absolute
and unconditional in all events except as expressly provided under this Agreement.
Notwithstanding any dispute between Lessee and Lessor, any Vendor or any other person, or any
defects, breakdowns or malfunctions in the Equipment, Lessee shall pay all Rental Payments
when due and shall not withhold any Rental Payments or assert any right of set -off or
counterclaim against its obligation to make any payments under this Agreement. Lessee's
obligation to make Rental Payments shall not be abated through accident or unforeseen
circumstances.
Section 5.05. Continuation of Term by Lessee. Lessee intends, subject to the provisions
of Section 5.06, to pay all Rental Payments hereunder and reasonably believes that legally
available funds in an amount sufficient to pay all Rental Payments during the Term will be
available. Lessee further intends to do all things lawfully within its power to obtain and maintain
funds from which all Rental Payments and payments for all necessary insurance and maintenance
on the Equipment may be made.
Section 5.06. Nonappropriation. The obligation of Lessee to make the Rental Payments
coming due in any particular fiscal year hereunder shall be absolutely subject in all respects to
the Lessee having duly budgeted and appropriated funds sufficient to pay the Rental Payments
coming due in such fiscal year. The Lessee shall have no obligation to budget and appropriate in
any fiscal year, but shall have the right, to be exercised in its sole and absolute discretion, to fail
. for any reason to budget and appropriate such funds.
Lessee's staff shall include an appropriation for all Rental Payments due in the related
fiscal year in its recommendations for the proposed budget for such fiscal year. If the Lessee for
any reason fails to duly budget and appropriate funds sufficient to pay all Rental Payments
coming due in a fiscal year in its proposed or final budget, then this Agreement shall terminate,
without penalty to the Lessee, such termination to be effective as of 12:01 a.m. (California time)
on, with respect to a failure to appropriate in the proposed budget, the first day for which funds
were not appropriated and, with respect to a failure to appropriate in the final budget only, on the
date of adoption of such final budget, and this Agreement shall thereupon be rendered null and
void and of no further force of effect; provided that notwithstanding any such termination, the
Lessee shall remain obligated to:
1. pay any Rental Payments arising or accruing prior to the effective time of
such termination and remaining unpaid as of the effective time of such termination, and the rights
of the Lessor to enforce such obligation shall continue; and
2, perform its other obligations and liabilities under this Agreement arising or
accruing prior to the effective time of such termination, and the rights of Lessor to enforce such
obligations and liabilities shall continue.
Lessee agrees to give Lessor written notice of such termination at least sixty (60) days
prior to the end of the then current fiscal year or, if nonappropriation has not occurred by that
• date, immediately upon nonappropriation. If this Agreement is terminated under this Section
5.06, Lessee, subject to the limitations of Section 7.01 hereof, agrees peaceably to deliver the
rus1.:44985_11017122459.0004 5
•
Equipment to Lessor, at any location within fifty (50) miles of the City of Newport Beach,
California, at Lessee's sole cost and expense and in the condition required by Section 7.01 .
hereof, together with such documents and assurances as Lessor may reasonably request.
Section 5.07. Nonsubstitution. To the extent lawful and permitted by public policy,
Lessee agrees that in the event that it terminates this Agreement pursuant to Section 5.06, it will
not, during its next succeeding fiscal year, expend or commit any funds for the purchase or use
of other equipment performing functions or having a purpose similar to the Equipment.
ARTICLE VI
TITLE TO EOUIPMENT: SECURITY INTEREST
Section 6.01. Title to the Equipment. During the Term of this Agreement, title to the
Equipment shall rest in Lessee subject to the rights of Lessor under this Agreement. Immediately
upon the occurrence of an event of default by Lessee hereunder or the termination of this
Agreement under Section 3.02(a) or (c), title to the Equipment shall revert to Lessor, free and
clear of any right, title or interest of Lessee, without the necessity of any further action by the
parties. In the event that title reverts to Lessor as described above, Lessee shall peaceably
deliver the Equipment to Lessor at any location within fifty (50) miles of the City of Newport
Beach, California, at Lessee's sole cost and expense and in the condition required by Section
7.01 hereof, together with such documents and assurances as Lessor may reasonably request.
Section 6.02. Security Interest. To secure all obligations of Lessee hereunder, Lessee
hereby grants to Lessor a security interest in and to all of Lessee's right, title and interest in and
to the Equipment including substitutions and replacements thereof or thereto, and all proceeds
(cash and non - cash), including the proceeds of insurance, thereof. Lessee agrees to provide such
identification markings on the Equipment, in form satisfactory to Lessor, as Lessor deems
necessary or appropriate to give notice of Lessor's security interest in the Equipment and, upon
assignment, the interest of any assignee of Lessor in the Equipment. In the case of escrow
funded transactions, as further security Lessee hereby grants to Lessor a first priority security
interest in the cash and negotiable instruments from time to time comprising the Escrow Fund (as
such term is defined in that certain Escrow Agreement by and among Lessor, Lessee and the
financial institution acting as escrow agent dated as of the date hereof) and all proceeds (cash and
non -cash) thereof. Lessee further agrees that with respect to the Equipment and, if applicable,
the Escrow Fund, Lessor shall have all of the rights and remedies of a secured parry under the
Uniform Commercial Code as in effect in the State.
Section 6.03. Personal Property. The Equipment is, and shall at all times remain,
personal property.
Section 6.04. Liens. Lessee shall not directly or indirectly create, incur, assume or
suffer to exist any mortgage, pledge, lien, charge, security interest, encumbrance or claim on or
with respect to the Equipment or any interest therein or, if applicable, the Escrow Fund.
•
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• ARTICLE VII
MAINTENANCE: TAXES:
INSURANCE: MODIFICATIONS: LOCATION
Section 7.01. Maintenance of Equipment by Lessee. (a) Lessee agrees that at all times
during the Term, Lessee will, at its own cost and expense, preserve and keep the Equipment in
good repair, working order and condition, ordinary wear and tear excepted. Lessee will from
time to time make or cause to be made all necessary and proper repairs and replacements.
Lessor shall have no responsibility in any of these matters or for the making of improvements or
additions to the Equipment. If requested by Lessor, Lessee will, at its sole cost and expense,
enter into a maintenance contract for the Equipment with Vendor or other appropriate parry
during the Term hereof and provide a copy of such contract to Lessor.
(b) Anything to the contrary in this Agreement notwithstanding, Lessor
recognizes the Equipment consists of computer and information hardware, software and related
items and some services, not all of which comprise personal property, and some of which
comprise intellectual property which is not assignable or transferable by Lessee by its terms. In
the event this Lease is terminated for any reason, including pursuant to Section 5.06
(nonappropriation), Lessee's obligation to marshal and return the Equipment to Lessor in the
condition required by Section 7.01 or otherwise shall be subject in all respects to (i) any limits on
Lessee's ability to do so pursuant to the terms of any license agreements or other restrictions on
transfer applicable thereto, (provided Lessee shall exercise best efforts to receive Vendor's
• consent to an assignment to Lessor and in no event shall Lessee use such Equipment following
termination of the Lease), and (ii) practical limits on Lessee's ability to remove wiring or other
minor items of equipment from the locations at which the Equipment is located.
Section 7.02. Taxes. Other Governmental Charges and Utility Charges. The parties to
this Agreement contemplate that the Equipment will be used for a governmental purpose of
Lessee and, therefore, that the Equipment will be exempt from all taxes presently assessed and
levied with respect to personal property. In the event that the use, possession or acquisition of
the Equipment is found to be subject to taxation in any form (except for net income taxes of
Lessor), Lessee will pay during the Term, as the same respectively become due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied
against or with respect to the Equipment, together with any interest or penalty thereon, as well as
all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep
of the Equipment, subject to Lessee's right to contest in good faith any such taxes or other
charges. With respect to any governmental charges that may lawfully be paid in installments
over a period of years, Lessee shall be obligated to pay only such installments as are accrued
during such time as this Agreement is in effect.
Section 7.03. Insurance. Lessee shall cause casualty, public liability and property
damage insurance to be carried and maintained with respect to the Equipment to protect Lessor
from liability in all events. All insurance proceeds from casualty losses shall be payable as
hereinafter provided. Lessee shall, at Lessor's request, furnish to Lessor certificates evidencing
such coverage throughout the Term. With Lessor's prior consent, Lessee may self- insure the
. Equipment by means of an adequate insurance fund set aside and maintained for that purpose
which must be fully described in a letter delivered to Lessor.
euaL:44985_1 1017122459.0004 7
• •
Lessee shall carry worker's compensation insurance covering all employees working on, •
in, near, or about the Equipment, or demonstrate to the satisfaction of Lessor that adequate
self - insurance is provided, and shall require any other person or entity working on, in, near or
about the Equipment to carry such coverage throughout the Term.
All insurance policies required pursuant hereto shall be so written or endorsed as to make
losses, if any, payable to Lessee and Lessor, or its assignees, as their respective interests may
appear, shall name Lessor and its assignees as additional insured, and shall be in form and
amount and with insurance companies reasonably satisfactory to Lessor. Each insurer shall
agree, by endorsement upon the policy or policies issued by it or by independent instrument
furnished to Lessor, that (a) it will give Lessor thirty (30) days' prior written notice of the
effective date of any material alteration or cancellation of such policy; and (b) insurance as to the
interest of any named additional insured or loss payee other than Lessee shall not be invalidated
by any actions, inactions, breach of warranty or conditions or negligence of Lessee with respect
to such policy or policies. The Net Proceeds (as defined in Section 8.01) of the insurance
required in this Section 7.03 shall be applied as provided in Section 8.01 and 8.02 hereof.
In the event Lessee shall fail to maintain the full insurance coverage required by this
Agreement or shall fail to keep the Equipment in good repair and operating condition, Lessor
may (but shall be under no obligation to) purchase the required policies of insurance and pay the
premiums therefor or may make such repairs or replacements as are necessary and provide for
payment thereof; and all amounts so advanced by Lessor shall be payable on the next succeeding
Rental Payment due date together with interest thereon from the date of advance by Lessor at the
rate of 15% per annum (or, if such rate is in excess of the maximum rate permitted by law, the •
maximum rate permitted by law).
Section 7.04. Location of Equipment. Lessee shall notify Lessor of the location at or
within which the Equipment is being or is to be regularly located or stored promptly upon
acceptance and shall thereafter inform Lessor of any change in that location.
Section 7.05. Modifications. Without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, Lessee shall not make any alterations, modifications, or
attachments to the Equipment which cannot be removed without materially damaging the
functional capabilities or economic value of the Equipment. Upon return of the Equipment, at
Lessor's request, Lessee, at its sole cost and expense, will remove all alterations, additions and
attachments and repair the Equipment as necessary to return the Equipment to the condition in
which it was furnished, ordinary wear and tear excepted.
ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION:
USE OF NET PROCEEDS
Section 8.01. Damage, Destruction and Condemnation. If prior to the termination of the
Term (a) the Equipment or any portion thereof is destroyed (in whole or in part) or 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 of the power of eminent domain by any governmental body or •
by any person, firm or corporation acting under governmental authority, then, provided the
euaL:44985 1 1017122459.0004 8
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• Equipment is not deemed a total loss, Lessee and Lessor shall cause the Net Proceeds of any
insurance claim or condemnation award to be applied to the prompt replacement, repair or
restoration of the Equipment. Any balance of the Net Proceeds remaining after such work has
been completed shall be paid to Lessee. In the event of total destruction of or damage to the
Equipment, Lessor and Lessee shall cause the Net Proceeds to be paid to Lessor for application
against the Purchase Price applicable for the next succeeding Rental Payment due date plus a pro
rata allocation of interest, at the rate utilized to establish the Rental Payments, from the due date
of the immediately preceding Rental Payment with respect to which the Rental Payment due on
such date has been paid until the date of the payment.
For purposes of Section 7.03 and this Article VIII, the term "Net Proceeds" shall mean
the amount remaining from the gross proceeds of any insurance claim or condemnation award
after deducting all expenses (including attorney's fees) incurred in the collection of such claim or
award.
Section 8.02. Insufficiency of Net Proceeds. Subject to Section 5.06 hereof
(nonappropriation), if the Net Proceeds are insufficient to pay in full the cost of any replacement,
repair, restoration or the Purchase Price referred to in Section 8.01 hereof, Lessee shall, as
applicable, either (a) complete the work and pay any cost in excess of the amount of the Net
Proceeds (Lessee agrees that, if by reason of such insufficiency of the Net Proceeds, Lessee shall
incur expenses, it shall not be entitled to any reimbursement therefor from Lessor nor shall
Lessee be entitled to any diminution of the amounts payable under Article V hereof); or (b) pay
to Lessor the amount by which the sum of the then applicable Purchase Price and accrued interest
• thereon exceeds the Net Proceeds (which shall be retained by Lessor) and, upon such payment,
the Term shall terminate and title to the Equipment shall be conveyed by Lessor to Lessee as
provided in Article X of this Agreement.
ARTICLE IX
DISCLAIMER OF WARRANTIES: VENDOR'S WARRANTIES
USE OF THE EQUIPMENT
Section 9.01. Disclaimer of Warranties. (a) LESSOR, NOT BEING A SELLER OF
THE EQUIPMENT (AS SUCH TERM IS USED IN THE UNIFORM COMMERCIAL CODE
AS ENACTED IN THE STATE) NOR A SELLER'S AGENT, HEREBY EXPRESSLY
DISCLAIMS, AND 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 WITH RESPECT THERETO AND, AS TO LESSOR,
LESSEE PURCHASES THE EQUIPMENT AS IS. In no event shall Lessor be liable for any
loss or damage, including incidental, indirect, special or consequential damage, in connection
with or arising out of this Agreement or the existence, furnishing, functioning or Lessee's use of
the Equipment.
(b) Each execution of an Acceptance Certificate shall constitute
acknowledgment by (and as to (i) and (ii), a representation of) Lessee that: (i) the Equipment is
• of a size, design, capacity and manufacture selected by Lessee; (ii) Lessee is satisfied that the
Equipment is suitable for its purpose; (iii) Lessor is not a vendor or a manufacturer or dealer in
PueL:44985_1 1017122459.0004 9
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property of such kind; and (iv) Lessor has disclaimed any representation or warranty or covenant
as set forth in Section 9.01(a) above. •
Section 9.02. Vendor's Warranties. Lessor hereby irrevocably appoints Lessee its agent
and attorney -in -fact during the Term, so long as Lessee shall not be in default hereunder, for the
purpose of asserting from time to time whatever claims and rights which Lessor may have against
the Vendor, including warranty claims with respect to the Equipment, but for no other purpose
whatsoever. Lessee's sole remedy for the breach of a warranty shall be against the Vendor of
the Equipment, and not against Lessor, nor shall such matters have any effect whatsoever on this
Agreement, including Lessee's obligation to make timely Rental Payments hereunder. Lessee
expressly acknowledges that Lessor makes, and has made, no representation or warranties
whatsoever as to the existence or availability of such warranties from the Vendor of the
Equipment.
Section 9.03. Use of the Equipment. Lessee will not install, use, operate or maintain the
Equipment improperly, carelessly, in violation of any applicable law or regulations or in a
manner contrary to that contemplated by this Agreement. Lessee shall obtain and maintain all
permits and licenses necessary for the installation and operation of the Equipment.
ARTICLE X
CONSUMMATION OF PURCHASE
Section 10.01. Consummation of Purchase. At the request of Lessee, Lessor's interest in •
the Equipment will be transferred, conveyed and assigned permanently to Lessee and this
Agreement shall terminate:
(a) at the end of the Term, upon payment in full of all Rental Payments due
hereunder and all other sums required to be paid hereunder; or
(b) on any Rental Payment due date, upon payment by Lessee of the Rental
Payment due on such date, the then applicable Purchase Price as set forth in the Schedule of
Payments, and all other sums required to be paid hereunder.
Upon the occurrence of either of the above, Lessor shall deliver to Lessee a confirmatory
Bill of Sale transferring permanently its full remaining right, title and interest to the Equipment to
Lessee free and clear of all liens and encumbrances created by or arising through Lessor, with
special warranty and warranty of further assurances but without other warranties.
ARTICLE XI
ASSIGNMENT. SUBLEASING. INDEMNIFICATION
MORTGAGING AND SELLING
Section 11.01. Assignment by Lessor. This Agreement, Lessor's interest in the
Equipment and right of Lessor to receive payments hereunder may be assigned and reassigned in
whole to an assignee or subassignee by Lessor at any time without the necessity of obtaining the •
consent of Lessee, provided, Lessee is put to no greater burden or expense thereby (other that
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• related to book entry records described below in Section 11.03 However, no assignment or
reassignment of any of Lessor's right, title or interest in this Agreement or the Equipment shall
be effective unless and until Lessee shall have received a notice of assignment. Upon receipt of
the notice described above, Less: a agrees to make all payments to the assignee designated in the
assignment, and shall, if so requested, acknowledge the assignment in writing, but such
acknowledgment shall in no way be deemed necessary to make the assignment effective. Lessee
agrees to establish and maintain a book -entry record of ownership of this Agreement. Lessee
agrees to execute all documents, including notices of assignment and chattel mortgages or
financing statements which may be reasonably requested by Lessor or its assignee to protect their
interests in the Equipment and in this Agreement
Lessor shall comply with all applicable state and federal law, including securities laws, in
connection with any such assignment, and shall indemnify, defend and hold hamless Lessee and
its officers and agents to the maximum extent permitted by law against any claims, suits of
regulatory proceedings arising out of any such assignment. In no event shall this Lease be
assigned so as to become a part of any participation pool of securities or in a way in which
fractional beneficial interest therein are created without the prior written consent of Lessee, to be
granted or withheld in Lessee's sole discretion.
Section 11.02. Assignment and Subleasing by Lessee. This Agreement and the interest
of Lessee in the Equipment may not be sold, leased, pledged, assigned or otherwise encumbered
by Lessee for any reason without the express prior written consent of Lessor.
• Section 11.03. Release and Indemnification Covenants. Lessee shall, to the extent
permitted by applicable law, indemnify, protect, hold harmless, save and keep harmless Lessor
from and against any and all liabilities obligations, losses, claims and damages whatsoever,
regardless of cause thereof, and expenses in connection therewith, including, without limitation,
counsel fees and expense, penalties and interest arising out of or as the result of the Equipment,
including the ownership of any item of the Equipment, the ordering, acquisition, manufacture,
use, operation, condition, purchase, delivery, rejection, storage or return of any item of the
Equipment or 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 or death to any
person, unless the loss shall have been caused by the acts or omissions of Lessor, its officers,
employees or agents. The indemnification obligation arising hereunder shall continue in full
force and effect notwithstanding the full payment of all obligations under this Agreement or the
termination of the Term for any reason.
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
Section 12.01. Events of Default Defined. The following shall be "events of default"
under this Agreement and the terms "event of default" and "default" shall mean, whenever they
are used in this Agreement, any one or more of the following events:
(a) Failure by Lessee to pay any Rental Payment or other payment required to
• be paid hereunder at the time and manner specified herein; or
PUBL:44985_110 1 7122459.0004 11
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(b) Failure by Lessee to observe and perform any other covenant, condition or
agreement on its part to be observed or performed, hereunder for a period of thirty (30) days •
after written notice to Lessee by Lessor, specifying such failure and requesting that it be
remedied, provided Lessor shall agree in writing to an extension of such time prior to its
expiration for the time necessary to remedy such failure, upon receipt of reasonable evidence that
such failure is capable of cure; without damaging the Equipment or subjecting it to further loss or
damage and Lessee diligently pursues such remedy until completion; or
(c) Any certificate, statement, representation, warranty or audit contained
herein or heretofore or hereafter furnished with respect hereto by or on behalf of Lessee proving
to have been false in any material respect at the time as of which the facts therein set forth were
stated or certified, or having omitted any substantial contingent or unliquidated liability or claim
against Lessee; or
(d) Commencement by Lessee of a case or proceeding under the Federal
bankruptcy laws or filing by Lessee of any petition or answer seeking reorganization,
arrangement, composition, readjustment, liquidation, moratorium or similar relief under any
existing or future bankruptcy, insolvency or other similar laws, the filing by Lessee of an answer
admitting or not contesting the material allegations of a petition filed against Lessee in any such
proceeding, or the failure to file an answer to such a petition within forty-five (45) days from the
filing thereof.
Section 12.02. Remedies on Default. Whenever any event of default referred to in
Section 12.01 hereof shall have happened and be continuing, 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, declare an amount equal to the Purchase Price
applicable to the immediately preceding Rental Payment due date with respect to which the Rental
Payment due on such date has been paid, as set forth in the Schedule of Payments, immediately
due and payable;
(b) With or without terminating this Agreement, retake possession of the
Equipment and sell, lease, or sublease it, or any item thereof, for the account of Lessee, holding
Lessee liable for (i) all payments due up to the effective date of such selling, leasing, or
subleasing; and (ii) the difference, if any, between the purchase price, rental and other amounts
paid by the lessee or sublessee pursuant to such sale, lease or sublease and all amounts payable
by Lessee hereunder, including the Purchase Price applicable to the immediately preceding Rental
Payment due date with respect to which the Rental Payment due on such date has been paid.
Provided that, in case of Section 12.02 (a) or (b) so long as Lessee has returned the
Equipment in accordance with the terms hereof, in no event shall Lessee's monetary liability
hereunder exceed the aggregate amount of unpaid Rental Payments due in the fiscal year of
Lessee in which the default occurs;
(c) Require Lessee to deliver the Equipment to Lessor at any location within
fifty (50) miles of the City of Newport Beach, California at Lessee's sole risk, cost and expense •
and in the condition required by Section 7.01 hereof; or
PUBU44995_1 1017122459.0004 12
0
0
(d) Take whatever other action at law or in equity may appear necessary or
desirable to collect the payments then due and thereafter to become due, or to enforce
performance and observance of any obligation, agreement or covenant of Lessee under this
Agreement.
In addition, Lessee will remain liable for all legal fees and other costs and
expenses, including court costs, incurred by Lessor with respect to the enforcement of any of the
remedies listed above or any other remedy available to Lessor. In the event of any dispute
between Lessor and Lessee hereunder, the prevailing party shall be entitled to reasonable
attorneys' fees and costs and other reasonable costs incurred in defending or pursuing such
action.
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 this Agreement or 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
and power may be exercised from time to time and as often as may be deemed expedient.
ARTICLE XIII
TAX INDEMNIFICATION
• Section 13.01. Covenants. The parties assume that Lessor can exclude the interest
component of the Rental Payments from Federal gross income under Section 103 of the Code.
Lessee covenants and agrees that it will (i) if the transaction is escrow funded, rebate an amount
equal to excess earnings on the Escrow Fund to the Federal Government if required by, and in
accordance with, Section 148(f) of the Code, and make the annual determinations, and maintain
the records required by and otherwise comply with the regulations applicable thereto; (ii) use a
book entry system to register the owner of this Agreement so as to meet the applicable
requirements of Section 149(a)(3) of the Code; (iii) timely file a Form 8038 -G (or, if the invoice
price of the Equipment is less than $100,000, a Form 8038 -GC) with the Internal Revenue
Service in accordance with Section 149(e) of the Code; (iv) not permit the Equipment to be
directly or indirectly used for a private business use within the meaning of Section 141 of the
Code; and (v) comply with all provisions and regulations applicable to excluding interest from
Federal gross income pursuant to Section 103 of the Code.
Section 13.02. Indemnification. If Lessor either (i) receives notice, in any form under
Section 103 of the Internal Revenue Code of 1996, as amended, from the Internal Revenue
Service; or (ii) reasonably determines, based on an opinion of independent tax counsel selected
by Lessor and approved by Lessee, which approval Lessee shall not unreasonably withhold, that
Lessor may not exclude any interest paid hereunder from Federal gross income because Lessee
breached a covenant contained herein, then Lessee shall pay to Lessor, within thirty (30) days
after Lessor notifies Lessee of such determination, an amount which, with respect to Rental
Payments previously paid and taking into account all penalties, fines, interest and additions to tax
(including all federal, state and local taxes imposed on the interest component of all Rental
• Payments due through the date of such event), will restore to Lessor its after -tax yield (assuming
tax at the highest marginal tax rate and taking into account the time of receipt of payments and
rve1.:44985_1 1017122459,0004 13
0 9
reinvestment at the after -tax yield rate) on the transaction evidenced by this Agreement through
the date of such payment. Additionally, Lessee agrees that upon the occurrence of such an event, •
it shall pay as additional rent to Lessor on each succeeding Rental Payment due date such amount
as will maintain such after -tax yield to Lessor. Provided, in no event shall Lessee be liable for
indemnity under this Section 13.02 where such loss arises by reason of any change of law, and
Lessee does not warrant to Lessor the ongoing tax status of the interest component of Rental
Payments hereunder.
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices. All notices, certificates or other communications hereunder shall
be sufficiently given and shall be deemed given when delivered or mailed by registered mail,
postage prepaid, to the parties at the addressees set forth on the signature page hereof.
Section 14.02. Binding Effect. This Agreement shall inure to the benefit of, and shall be
binding upon, Lessor and Lessee and their respective successors and assigns. The parties intend
no third party beneficiaries be created hereby or hereunder.
Section 14.03. Severabiliiy /Survival. In the event any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof. The obligations of Lessee under
Section 5.07, 7.02, 11.03 and 13.02 which accrue during the Term shall survive termination of •
this Agreement.
Section 14.04. Amendments. Changes and Modifications. This Agreement may be
amended only by written agreement of Lessor and Lessee.
Section 14.05. Execution in Counterparts. This Agreement 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 14.06. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State.
Section 14.07. Captions. The captions or headings in this Agreement are for
convenience only and in no way define, limit or describe the scope or intent of any provisions or
sections of this Agreement.
Section 14.08. Waiver. No covenant or condition of this Agreement can be waived
except by the written consent of Lessor. Any failure of Lessor to require strict performance by
Lessee or any waiver by Lessor of any terms, covenants or agreements herein shall not be
construed as a waiver of any other breach of the same or any other term, covenant or agreement
herein.
•
PURL:44985_11017122459.0004 14
Section 14.09. Entire Agreement. This Agreement, together with the documents attached
• hereto and other agreements referred to herein, constitutes the entire agreement between the
parties.
Section 14.10. Time. Time is of the essence of this Agreement.
IN WITNESS WHEREOF, Lessor has executed this Agreement in its corporate name
with its corporate seal hereunto affixed and attested by its duly authorized officers, and Lessee
has caused this Agreement to be executed in its corporate name with its corporate seal hereunto
affixed and attested by its duly authorized officers. All of the above occurred as of the date first
above written.
ATTEST:
By:
• Delores M. Taylor
•
(SEAL)
ATTEST /WITNESS:
Dennis C. Danner
Administrative Services Director
(SEAL)
LESSOR: Municipal Funding Group
131 East Washington
P.O. Box 624
Kearney, MO 64060
Darrell G. Jarman
LESSEE: City of Newport Beach
Newport Beach, CA
vue1.:44985_1 1017122459.0004 15
am
Kevin Murphy
City Manager
0
RIDER NO. 1
•
[$10,000,000 Small Issuer]
Attached to and made a part of that certain Master Equipment Lease /Purchase Agreement
(the "Agreement ") dated as of July 30, 1996], by and between Municipal Funding Group, as
Lessor, and City of Newport Beach, CA as Lessee.
1. Lessee has not issued, and reasonably anticipates that it and its subordinate entities
will not issue, tax- exempt obligations (including the Agreement) in the amount of more than
$10,000,000 during the current calendar year; hereby designates the Agreement as a "qualified
tax- exempt obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code "); and agrees that it and its subordinate entities will not designate
more than $10,000,000 of their obligations as "qualified tax- exempt obligations" during the
current calendar year.
2. The parties assume and intend that the Agreement will qualify as a "qualified tax -
exempt obligation" within the meaning of Section 265(b)(3)(B) of the Code. In the event that
Lessor either (i) receives notice from the Internal Revenue Service; or (ii) reasonably determines,
based on an opinion of independent tax counsel selected by Lessor and approved by Lessee,
which approval Lessee shall not unreasonably withhold, that the otherwise applicable exception
set forth in Section 265(b)(3) of the Code is not available by reason of action of Lessee in
violation of Section 13.02 of the Agreement, then Lessee shall pay to Lessor within thirty (30)
days after receiving notice from Lessor of such event, the amount which, with respect to Rental
Payments previously paid and taking into account all penalties, fines, interest and additions to tax
(including all federal, state and local taxes imposed or the interest component of all Rental
Payments due through the date of such event), will restore the after -tax yield (assuming tax at the
highest marginal tax rate and taking into account the time of receipt of payment and reinvestment
at the after -tax yield rate) on the transaction evidenced by the Agreement to that which it would
have been had such exception been available, and pay as additional rent on succeeding Rental
Payment due dates such amount as will maintain such after -tax yield to Lessor.
3. The obligations of Lessee hereunder which accrue during the term of the
Agreement shall survive termination of the Agreement.
4. The parties agree that this Rider is an integral part of the Agreement.
DATE:
City of Newport Beach
LESSEE
By:
Kevin Murphy
City Manager
Municipal Funding Group
LESSOR
•
•
By:
Darrell G. Jarman
Executive Vice President .
•
•
•
0 0
[$5,000,000 Small Governmental Issuer]
RIDER NO. 2
Attached to and made a part of that certain Master Equipment Lease /Purchase Agreement
(the "Agreement ") dated as of July 30, 1996 by and between Municipal Funding Group, as
Lessor, and City of Newport Beach, CA as Lessee.
1. Lessee represents and warrants that is has general taxing powers and reasonably
expects that it and its subordinate units will not issue tax exempt obligations in aggregate face
amount of more than $5,000,000 during the current calendar year.
2. The parties agree that this Rider is an integral part of the Agreement.
DATE:
City of Newport Beach
LESSEE
Kevin Murphy
City Manager
2
Municipal Funding Group
LESSOR
0
Darrell G. Jarman
Executive Vice President
• •
INCUMBENCY CERTIFICATE
•
I do hereby certify that I am the duly elected or appointed and acting Administrative
Services Director of City of Newport Beach, CA, a political subdivision duly organized and
existing under the laws of the State of California, that I have custody of the records of such
entity, and that, as of the date hereof, the individuals named below are the duly elected or
appointed officers of such entity holding the offices set forth opposite their respective names. I
further certify that (i) the signatures set opposite their respective names and titles are their true
and authentic signatures and (ii) such officers have the authority on behalf of such entity to enter
into that certain Master Equipment Lease /Purchase Agreement dated as of July 30, 1996 between
such entity and Municipal Funding Group
NAME
TITLE
Kevin Murphy City Manager
City Clerk
Dennis C. Danner Administrative Services
Director
1996.
SIGNATURE
IN WITNESS WHEREOF, I have duly executed this certificate as of November _
Dennis Danner, Deputy City Clerk
3 •
0 •
• (Letterhead of Lessee)
ESSENTIAL USE LETTER
Municipal Funding Group
131 East Washington
P.O.Box 624
Kearney, MO 64060
Gentlemen:
Reference is made to that certain Master Equipment Lease /Purchase Agreement, dated as
of July 30. 1996 (the "Agreement "), between Municipal Funding Group, as Lessor, and the
undersigned, as Lessee. The Equipment, as such term is defined in the Agreement, can be
generally described as follows:
This confirms and affirms that the Equipment is essential to the governmental functions of
Lessee.
• Further, Lessee has an immediate need for, and expects to make immediate use of,
substantially all the Equipment, which need is not temporary or expected to diminish in the
foreseeable future. The Equipment will be used by Lessee for the purpose of performing one or
more of Lessee's governmental functions consistent with the permissible scope of Lessee's
authority and not in any trade or business carried on by any person other than Lessee.
Specifically, the Equipment was selected by Lessee to be used as follows:
Date: City of Newport Beach
LESSEE
By
Kevin Murphy, City Manager
• vusL:44985_1 1017122459.0004 4
0
(Escrow Funded) •
EQUIPMENT LIST
A list of the Equipment to be subject to that certain Master Equipment Lease /Purchase
Agreement dated as of July 30, 1996 by and between Municipal Funding Group, as Lessor, and
City of Newport Beach, as Lessee, follows:
(per attached master lease equipment list)
u
PUBL:44985_11017122459.0004 5 •
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0
ACCEPTANCE CERTIFICATE
NO.
(Escrow Funded)
THIS ACCEPTANCE CERTIFICATE is issued pursuant to that certain Master
Equipment Lease /Purchase Agreement dated as of July 30,1996 (the "Agreement ") between
Municipal Funding Group ( "Lessor ") and City of Newport Beach, CA ( "Lessee "). All terms not
defined herein shall have their meanings described in the Agreement.
1. The undersigned, as Lessee under the Agreement, acknowledges delivery,
installation and receipt in good condition, and hereby accepts, all of the Equipment described on
the attached Description of Equipment this day of , 199_.
2. A present need exists for the Equipment described on the Description of
Equipment which need is not temporary or expected to diminish in the near future. Such
Equipment is essential to and will be used by Lessee only for the purpose of performing one or
more governmental functions of Lessee consistent with the permissible scope of Lessee's
authority.
3. Lessee confirms that it will make all Rental Payments required by and in
accordance with Article V of the Agreement, and that sufficient funds have been appropriated to
• make all such payments for its current fiscal year. Lessee expects and anticipates that sufficient
funds will be available to make all Rental Payments due in subsequent fiscal years.
4. The Equipment described on the Description of Equipment is covered by
insurance in the types and amounts required by the Agreement and is located at the location(s) set
forth in the attached Equipment List.
5. No event of default, as such term is defined in the Agreement, and no event which
with the giving of notice of lapse time, or both, would become an event of default, has occurred
and is continuing on the date hereof.
6. Attached are (a) a Payment Request executed by Lessee with respect to the
payment being sought; (b) true and complete copies of all invoices with respect to which payment
is being sought; (c) financing statements and /or lien certificates evidencing Lessor's security
interest in the Equipment, as necessary or appropriate; and (d) if an invoice has been paid by
Lessee prior to the date of escrow funding of the Agreement and Lessee is seeking
reimbursement for such payment, evidence of such payment by Lessee and evidence of
compliance with Treasury Regulation §1.150 -2 in accordance with the Tax Compliance
Agreement and No Arbitrage Certificate of Lessee dated as of the date of the Agreement.
7. Lessee hereby authorizes and directs Lessor to approve the payment of the
acquisition cost of the Equipment, as set forth on the attached Description of Equipment, to the
isPosL:44985_1 1017122459.0004 6
n
Vendor(s), or Lessee in reimbursement for its previous payment of such amount, by executing .
and delivering the attached Payment Request to the Escrow Agent. Lessee certifies that upon the
submittal of the Payment Request to the Escrow Agent, Lessor will have fully and satisfactorily
performed all of its covenants and obligations under the Agreement with respect to the Equipment
described on the Description of Equipment other than its covenant of quiet enjoyment.
ATTEST /WITNESS:
Un
Dennis C. Danner
Administrative Services Director
LESSEE: City of Newport Beach
Newport Beach, CA
0
Kevin Murphy
City Manager
•
PUBL:44985_11017 22459.0004 7 •
6 0
PAYMENT REQUEST FORM
•
The Escrow Agent is herby requested to pay from the Acquisition Fund established by
the Escrow Agreement dated as of November _, 1996 by and among the Escrow Agent, Lessee
and Lessor, to the person or corporation designated below as Payee, the sum set forth below in
payment (of all / or a portion) of the Acquisition Costs described below. The amount shown
below is due and payable under a purchase order or contract with respect to the Equipment
described below and has not formed the basis of any prior request for payment.
Payee:
Amount:
Description of Equipment Item Cost:
19
• City of Newport Beach
LESSEE
BY: Kevin Murphy, City Manager
Municipal Funding Group
LESSOR
BY: Darrell Jarman
(Attach duplicate original of Payee's statement)
PU9L:44985_11017J22459.0004 8
• •
DESCRIPTION OF EQUIPMENT
Attached to and made a part of
Acceptance Certificate No.
MODEL
QUANTITY MFG. NO. L
LOCATIONS(S):
SERIAL
? NO. INVOICE AMOUNT
CJ
•
PURL:44985_11017122459.0004 9 0
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*SCHEDULE OF PAYMENTS •
(Escrow Funded)
Pertaining to that certain Master Equipment Lease /Purchase Agreement dated as of
July 30, 1996 (the "Agreement "), between Municipal Funding Group ( "Lessor ") and City of
Newport Beach, CA ( "Lessee "). All terms not defined herein have their meanings described in
the Agreement.
A. RENTAL PAYMENTS, TERM, TRANSPORTATION AND DELIVERY
COSTS.
As set forth on the Amortization Schedule attached hereto and made a part hereof, the
Rental Payments required under the Agreement for the Equipment described on the Equipment
List attached to the Agreement and to be described on one or more Descriptions of Equipment to
be attached to Acceptance Certificates executed by Lessee and delivered to Lessor, will be
$410.354.28, paid annually for a term of five years. A portion of each Rental Payment is paid
as and represents payment of interest as set forth on the Amortization Schedule. Lessee agrees to
and shall pay all transportation and /or delivery costs, if any.
B. LAST ACCEPTANCE DATE.
The Equipment to be subject to the Agreement must be accepted by the Lessee within
eighteen (18) months from the date hereof.
C. LATE PAYMENTS.
There will be a late charge to Lessee of 2% of the delinquent amount per month, or the
highest legal rate allowed if less, on the amount of any Rental Payment which remains unpaid for
ten (10) days after the due date, which charge Lessee agrees to pay.
D. BUDGETARY PERIOD.
Lessee's budgetary period is from July I to June 30.
THE TERMS GOVERNING THIS SCHEDULE OF PAYMENTS ARE CONTAINED
IN THE AGREEMENT REFERENCED ABOVE AND APPLY WITH THE SAME FORCE
AND EFFECT AS IF SET FORTH FULLY HEREIN.
City of Newport Beach Municipal Funding Group
LESSEE LESSOR
La
Kevin Murphy
City Manager
Date:
0
Pueu 44985_ I 1 0171 22459.0004
L
Date:
Darrell G. Jarman
Executive Vice President
0 0
(FORM OF LESSEE'S COUNSEL OPINION)
(To be typed on Counsel's Letterhead) •
Municipal Funding Group
131 East Washington
P.O.Box 624
Kearney, MO 64060
Gentlemen:
As counsel for City of Newport Beach, CA ( "Lessee "), we have examined a duly
executed original of the Master Equipment Lease /Purchase Agreement dated as of July 30,1996,
(the "Agreement "), between Lessee and Municipal Funding Group ( "Lessor "), and the
proceedings taken by Lessee to authorize and execute the Agreement. Based upon such
examination of law and fact as we have deemed necessary or appropriate for purposes of the
opinions set forth below, we are of the opinion that:
1. Lessee is a state or political subdivision thereof within the meaning of
Section 103(c) of the Internal Revenue Code of 1986, as amended.
2. The Agreement has been duly authorized, executed and delivered by
Lessee pursuant to all necessary Constitutional, statutory and governing body approval.
3. The Agreement is a legal, valid and binding obligation of Lessee,
enforceable against Lessee in accordance with its terms.
4. Any applicable public bidding requirements have been met.
5. There are no pending actions or proceedings to which Lessee is a party,
and there are no other pending or threatened actions or proceedings of which Lessee has
knowledge, before any public body, court, arbitrator or administrative agency, which, either
individually or in the aggregate, would materially adversely affect the transaction contemplated
by the Agreement or the ability of Lessee to perform its obligations under the Agreement, or
question the validity of the approval thereof. Further, Lessee is not in default under any material
obligation for the payment of borrowed money, for the deferred purchase price of property or for
the payment of any rent under any lease agreement which, either individually or in the aggregate,
would have the same such effect.
6. Except to the extent described in the Agreement, the Equipment leased
pursuant to the Agreement constitutes personal property and when subjected to use by Lessee will
not be or become fixtures under applicable law.
vusu44985_1 1017122459.0004 11 0
F
0
This opinion is for the sole benefit of, and may be relied upon only by, you and any
•. permitted assignee or subassignee of Lessor, under the Agreement, provided that we understand
and agree that this opinion may be relied upon by special tax counsel if one is retained to render
an opinion as to the exemption irom federal income taxation of the interest component of
payments to be made by Lessee pursuant to the Agreement.
Sincerely,
is
• vueL:44985_1 1017122459.0004 12
•
0
DATE:
TO: •
(Insurance Agent Name & Address)
Gentlemen:
City of Newport Beach, CA has entered into a Master Equipment Lease /Purchase Agreement
dated as of July 30, 1996 with Municipal Funding Group.
INSURED:
PROPERTY:
LOCATION:
The following coverage is required:
Comprehensive Fire & Extended Coverage: $ Liability - Bodily Injury: $
Liability - Property Damage: $
Upon issuance of the coverage outlined above, please mail a certificate of insurance to
Municipal Funding Group, 131 East Washington, box 624, Kearny, MO 64060, a Certificate of .
Insurance.
Your courtesy in issuing and forwarding the requested certificate at your earliest
convenience will be appreciated.
Very truly yours,
By:
Title:
Date:
vueL:44985_1 1017122459.0004 13 0
0 0
• [TO BE TYPED ON LESSEE'S LETTERHEAD]
[DATE]
Municipal Funding Group
131 East Washington
P.O.Box 624
Kearney, MO 64060
RE: Master Equipment Lease /Purchase Agreement dated as of July 30, 1996 by and
between Municipal Funding Group, as lessor, and City of Newport Beach,CA as
lessee - Self- Insurance
Gentlemen:
Under the above - referenced Agreement, City of Newport Beach, CA, as Lessee, is
required to maintain certain insurance policies with respect to the Equipment subject thereto,
provided that insurance policies are not required if Lessee has an adequate self - insurance
program. This letter is for the purpose of describing Lessee's self - insurance program.
[Describe self - insurance program for property damage - whether a self - insurance fund or
• contingency fund is maintained; and whether there is an excess policy in which case an insurance
authorization letter must be attached.]
[Describe self - insurance program for public liability risks - whether a self- insurance fund
or contingency account is maintained; whether the Lessee's public liability exposure is capped
pursuant to a Tort Claims Act; and whether the Lessee maintains an excess liability policy, in
which case an insurance authorization letter must be attached.]
Please do not hesitate to contact me if you have any questions concerning this letter.
Very truly yours,
Accepted and Approved
Municipal Funding Group
PUBL:44985_1 1017122459.0004 14
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[Escrow]
TAX COMPLIANCE AGREEMENT AND NO ARBITRAGE CERTIFICATE •
This Tax Compliance Agreement and No Arbitrage Certificate is issued in connection
with that certain Master Equipment Lease /Purchase Agreement dated as of July 30,1996, by and
between Municipal Funding Group, as lessor ( "Lessor "), and City of Newport Beach, CA, as
lessee ( "Lessee ").
In General.
1.1. This Certificate is executed for the purpose of establishing the reasonable
expectations of Lessee as to future events regarding the financing of certain equipment by Lessee
as described in the Master Equipment Lease /Purchase Agreement dated as of July 30, 1996 (the
"Lease ") between Lessor and Lessee and all related documents executed pursuant thereto and
contemporaneously herewith with respect to the financing of the acquisition of $1,759,561.001 of
equipment (the "Equipment ") by Lessor for Lessee (the Lease and such other documents are
hereinafter collectively referred to as the "Financing Documents ").
1.2. The individual executing this Certificate on behalf of Lessee is an officer of
Lessee delegated with the responsibility of reviewing and executing the Financing Documents.
1.3. To the best of the undersigned's knowledge, information and belief, the
expectations contained in this Certificate are reasonable. •
1.4. Lessee has never been notified of any listing or proposed listing of it by the
Internal Revenue Service as an issuer whose certifications as to arbitrage may not be relied upon.
1.5. The rental payments due under the Financing Documents will be made with
monies retained in Lessee's general operating fund (or an account or subaccount therein). No
sinking, debt service, reserve or similar fund or account will be maintained for the payment of
the rental payments due under the Financing Documents or pledged as security therefor.
1.6. If any other governmental obligations were or are being issued by or on behalf of
Lessee within fifteen (15) days of the date of issuance of the Financing Documents, such
obligations either (i) were not or are not being issued or sold pursuant to a common plan of
financing with, or (ii) will not be paid out of substantially the same source of funds as, the
financing pursuant to the Financing Documents.
E
i
•
2. Purpose of the Financing Documents.
• 2.1. The Financing Documents are being entered into for the purpose of providing
funds for financing the cost of acquiring, equipping and installing the Equipment which is
essential to the governmental functions of Lessee, which Equipment is described in the
Description of the Equipment executed and delivered by Lessee pursuant to the Lease. The
principal amount represented by the Financing Documents, or $1,759,561.00, will be deposited
in escrow by Lessor on the date of issuance of the Financing Documents and held by Fifth Third
Leasing Co., 38 Fountain Square Plaza, Cincinnati, OH 45263, as escrow agent (the "Escrow
Agent ") pending acquisition of the Equipment under the terms of that certain Escrow Agreement
dated as of November 1, 1996 (the "Escrow Agreement "), by and between Lessor and Escrow
Agent.
2.2. No portion of the principal amount represented by the Financing Documents will
be used as a substitute for other funds which were otherwise to be used as a source of financing
for the Equipment, or will be used, directly or indirectly, to replace funds used by Lessee to
acquire investments which produce a yield materially higher than the yield to Lessor under the
Financing Documents.
2.3. Lessee does not expect to sell or otherwise dispose of the Equipment, in whole or
in part, at a date which is earlier than the final rental payment due under the Financing
Documents.
• 3. Source and Disbursement of Funds.
3.1. The principal amount represented by the Financing Documents does not exceed
the amount necessary for the governmental purpose for which the Financing Documents were
entered into. Such funds are expected to be needed and fully expended for payment of the costs
of acquiring, equipping and installing the items of Equipment.
•
3.2. It is contemplated that the entire amount deposited in escrow will be used to pay
the acquisition cost of Equipment to the vendors or manufacturers thereof, provided that a portion
of the principal amount may be paid to Lessee as reimbursement for acquisition cost payments
already made by it so long as the conditions set forth in Section 3.3 below are satisfied.
3.3. Lessee shall not request that it be reimbursed for Equipment acquisition cost
payments already made by it unless the following conditions have been satisfied:
(a) Lessee made a declaration of its reasonable intention to reimburse the
acquisition cost payment sought to be reimbursed with the proceeds of a borrowing not later than
sixty (60) days after the date on which it made the payment, which declaration satisfies the
"Official Intent Requirement" set forth in Treas. Reg. § 1.150 -2;
(b) The reimbursement being requested will be made by a written allocation
before the later of eighteen (18) months after the acquisition cost payment was made or eighteen
(18) months after the items of Equipment to which such payment relates were placed in service;
PUBL:44985_11017122459.0004 2
0
•
(c) Except with respect to a minor portion not exceeding $50,000 in value, the
entire payment with respect to which reimbursement is being sought is a capital expenditure, •
being a cost of a type properly chargeable to a capital account under general federal income tax
principles; and
(d) Lessee will use any reimbursement payment for general operating expenses
and not in a manner which could be construed as an artifice or device under Treas. Reg. §
1.148 -10 by, virtue of, among other things, use to refund, or to create or increase a reserve or
replacement fund with respect to, any other obligations issued by it.
4. TemDorary Period.
4.1. Lessee expects, within six months from the date of issuance of the Financing
Documents, (a) to have had disbursed from escrow an amount in excess of the lesser of 2 1/2%
of the amount deposited by escrow in Lessor or $100,000, or (b) to enter into binding obligations
with third parties obligating Lessee to spend such amount.
4.2. The ordering and acceptance of the items of Equipment will proceed with due
diligence to the date of final acceptance of the Equipment.
4.3. The items of Equipment being acquired by Lessee will be delivered at various
times from June of 1996 to December, 1997. At least 15% of the amount deposited in escrow
will be used to pay the acquisition price of items of Equipment within six months from the date
of issuance of the Financing Documents; at least 60% of the amount deposited in escrow will be •
used to pay the acquisition cost of items of Equipment within 12 months from the date of
issuance of the Financing Documents; and 100% of the amount deposited in escrow and interest
earnings thereon will be used to pay the acquisition cost of items of Equipment prior to 18
months from the date of issuance of the Financing Documents. It is anticipated that all
Equipment will be delivered and accepted, and all funds provided by Lessor and interest earnings
thereon expended, prior to November 1, 1999.
4.4 The total acquisition cost of the Equipment is not required to be paid to the
vendors or manufacturers thereof until the Equipment has been accepted by Lessee.
Escrow Account.
The Financing Documents provide that the monies deposited in escrow shall be invested
until payments to the vendor(s) or manufacturer(s) of the Equipment are due. Lessee will ensure
that such investment will not result in Lessee's obligations under the Financing Documents being
treated as an "arbitrage bond" or a "federally guaranteed bond" within the meaning of Section
148(a) or Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code "),
respectively. Any monies which are earned from the investment of these funds shall be labeled
as interest earned. All such monies will be disbursed on or promptly after the date that Lessee
accepts the Equipment.
•
PUBL:44985_1 1017122459.0004
0
r
6. Exempt Use.
• 6.1. No part of the proceeds of the Financing Documents or the Equipment will be
used in any "private business use" within the meaning of Section 141(b)(6) of the Internal
Revenue Code of 1986, as amended.
6.2. No part of the proceeds of the Financing Documents will be used, directly or
indirectly, to make or finance any loans to non - governmental entities or to any governmental
agencies other than Lessee.
7. No Federal Guarantee.
7.1. Payment of the principal or interest due under the Financing Documents is not
directly or indirectly guaranteed, in whole or in part, by the United States or an agency or
instrumentality thereof.
7.2. No portion of the proceeds under the Financing Documents shall be (i) used in
making loans the payment of principal or interest of which are to be guaranteed, in whole or in
part, by the United States or any agency or instrumentality thereof, or (ii) invested, directly or
indirectly, in federally insured deposits or accounts if such investment would cause the financing
under the Financing Documents to be "federally guaranteed" within the meaning of Section
149(b) of the Code.
• 8. Miscellaneous.
8.1. Lessee agrees to comply with the rebate requirement set forth in Section 148(f) of
the Code in the event that for any reason it is applicable to the financing pursuant to Financing
Documents.
•
8.2. Lessee shall keep a complete and accurate record of all owners or assignees of the
Financing Documents in form and substance satisfactory to comply with Section 149(a) of the
Code unless Lessor or its assignee agrees to act as Lessee's agent for such purpose.
8.3. Lessee shall maintain complete and accurate records establishing the expenditure
of the proceeds of the Financing Documents and interest earnings thereon for a period of five
years after payment in full under the Financing Documents.
vueL:44985_11017122459.0004 4
0
0
IN WITNESS WHEREOF, this Tax Compliance Agreement and No Arbitrage Certificate
has been executed on behalf of Lessee as of the date set forth below. •
City of Newport Beach, CA
Lessee
By: Kevin Murphy
Title: City Manager
•
•
rueL:44985_1 101722459.0004 5
C1
ESCROW AGREEMENT
0
THIS ESCROW AGREEMENT ( "Escrow Agreement "), made and entered into as of
November 1, 1996, by and among Fifth Third Leasing Co. ( "Escrow Agent ") with an address of
38 Fountain Square Plaza, Cincinnati, OH, a corporation duly organized and existing under the
Constitution and laws of the State of Ohio and Municipal Funding Group (Lessor) with an
address of 131 East Washington, Box 624, Kearny MO 64060, and City of Newport Beach, CA
( "Lessee "), a duly constituted political subdivision of the State of California ( "State ") with an
address of 3300 Newport Blvd., Box 1768, Newport Beach, CA 92658
WITNESSETH
WHEREAS, Lessee and Lessor have entered into a Master Equipment Lease / Purchase
Agreement dated as of July 30,1996, ( "Agreement "), a duplicate original of which has been
furnished to each of the parties, whereby Lessor has agreed to acquire certain equipment
described therein ( "Equipment "), and to lease /sell the Equipment to Lessee, and Lessee has
agreed to lease /purchase the Equipment from Lessor, in the manner and on the terms set forth in
the Agreement; and
WHEREAS, the Equipment has or will be ordered from the Vendor (as hereinafter
defined), and there is expected to be a delay in delivery of the Equipment to Lessee; and
WHEREAS, Lessee has requested Lessor to set aside in escrow with Escrow Agent,
pursuant to the terms hereof, the anticipated purchase price of the Equipment; and
WHEREAS, Lessee, as agent for Lessor, will cause the Equipment to be acquired from
Vendor in accordance with the purchase orders or contracts therefor, and neither Lessor nor
Escrow Agent shall be obligated to assume or perform any obligation of Lessee or Vendor with
respect thereto or under the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
0 0
ARTICLE I
APPOINTMENT OF ESCROW AGENT: DEFINITIONS
Section 1.01. Appointment of Escrow Agent. Lessor and Lessee hereby appoint and
employ Escrow Agent to receive, hold, invest and disburse the moneys to be paid to it pursuant
to this Escrow Agreement and the Agreement and to perform certain other functions, all as
hereinafter provided. By executing and delivering this Escrow Agreement, Escrow Agent accepts
the duties and obligations of Escrow Agent provided herein, but only upon the terms and
conditions set forth.
Section 1.02. Definitions. The terms defined in this Section shall, for all purposes of
this Escrow Agreement have the meanings specified below. Any capitalized term not defined
below shall have the meaning ascribed in the Agreement.
"Agreement" means the Master Equipment Lease /Purchase Agreement, dated as of July
30.1996 by and between Lessee and Lessor, and any duly authorized and executed amendment
thereto, the terms of which are incorporated herein by reference.
"Acquisition Costs" means, with respect to the Equipment, the contract price paid or to
be paid to Vendor thereof upon acquisition or delivery of any portion of the Equipment in
accordance with the purchase order or contract therefor. Acquisition Costs may include the
administrative, engineering, legal, financial and other costs incurred by the Lessee in connection
with the acquisition, delivery and financing of the Equipment, if approved by Lessor. .
"Acceptance Certificate" means an acceptance certificate in the form attached to the
Agreement.
"Acquisition Fund" means the fund by that name established and held by Escrow Agent
pursuant to Article II of this Escrow Agreement.
"Closing Date" means the day when Lessor deposits with Escrow Agent the moneys
required to be deposited pursuant to Article II.
"Equipment" means the personal property described in the Essential Use Letter and the
Acceptance Certificate executed pursuant to the Agreement, together with any and all
modifications, additions and alterations thereto, to be acquired from the moneys held in the
Acquisition Fund.
"Escrow Agent" means Signet Bank, or any successor thereto acting as Escrow Agent
pursuant to this Escrow Agreement.
"Escrow Agreement" means this Escrow Agreement and any duly authorized and
executed amendment thereto.
•
Pu¢LA4985_1 1017[22459.0004 2
9 0
. "Independent Counsel" means an attorney duly admitted to the practice of law before the
highest court of the State in which he maintains an office and who is not an employee of Lessor,
Escrow Agent or Lessee.
"Lessee Representative" means the representative of Lessee or a person authorized by
Lessee to act on its behalf under or with respect to this Agreement.
"Lessor Representative" means the President, any Vice President or Assistant Vice
President of Lessor, or any person authorized to act on behalf of Lessor under or with respect to
this Agreement, as evidenced by a certificate conferring such authorization executed by the
President, any Vice President or Assistant Vice President of Lessor, given to the Lessee or the
Lessee Representative.
"Payment Date" means the date upon which any Rental Payment under the Agreement is
due and payable, as set forth in the Schedule of Payments.
"Payment Request Form" means the document substantially in the form attached hereto as
Exhibit A to be executed by Lessee and Lessor and submitted to Escrow Agent to authorize
payment of Acquisition Costs.
"Prepayment Date" means any date on which the Lessee may exercise its option to
purchase the Equipment pursuant to the terms of the Agreement.
• "Qualified Investments" means (i) direct general obligations of the United States of
America; (ii) obligations guaranteed by the United States; (iii) general obligations of the agencies
and instrumentalities of the United States; or (iv) certificates of deposit, time deposits or demand
deposits with any bank or savings institution qualified as a depository of public funds in the State
of Maryland, provided that such certificates of deposit, time deposits or demand deposits, if not
insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation, are fully secured by obligations described in Clauses (i), (ii), or (iii). In no event
shall "Qualified Investments" include any investments other than those which are laws of
investmenst for Lessee.
•
"Rental Payments" means the basic payments payable by Lessee to Lessor pursuant to the
provisions of the Agreement during the term thereof which are payable in consideration of
Lessee's right to use the Equipment during the then current portion of the term of the Agreement.
"Term of the Agreement" means the time during which the Agreement is in effect, as
provided in Article III of the Agreement.
"Unpaid Principal Balance" means the unpaid principal amount of all Rental Payments.
"Vendor" means the manufacturer of the Equipment as well as the agents or dealers of
the manufacturer from whom Lessor purchased, will purchase or has ordered the Equipment or
with whom Lessor has contracted for the acquisition of the Equipment.
PUBL:44985_11017122459.0004
Section 1.03. Authorization. Each of the parties hereby represents and warrants that it •
has full legal authority and is duly empowered to enter into this Agreement, and has taken all
actions necessary to authorize the execution of this Agreement by the officers and person signing
it.
ARTICLE II
ACQUISITION FUND
Section 2.01. Acquisition Fund. Escrow Agent shall establish a special fund designated
as the "Acquisition Fund "; shall keep such fund separate and apart from all other funds and
moneys held by it; and shall administer such fund as expressly provided hereunder. Escrow
Agent shall create and maintain both a Principal Account and Interest Account in the Acquisition
Fund.
Section 2.02. DDe osit of Moneys by Lessor. On the Closing Date, Lessor shall deposit
with Escrow Agent the amount of $1,759,561.00. Escrow Agent shall credit said amount to the
Principal Account of the Acquisition Fund established and to be held, applied and disbursed as
herein provided.
Section 2.03. Purpose of Principal Account: Payment of Acquisition Costs. The
Principal Account of the Acquisition Fund shall be expended for the Acquisition Costs of the
Equipment. Escrow Agent shall pay from the Principal Account of the Acquisition Fund the
Acquisition Costs of the Equipment upon receipt of Payment Request Forms executed by Lessor
and Lessee.
Section 2.04. Purpose of Interest Account: Payments from Interest Account. Any
income received on the investment of moneys held by Escrow Agent in the Principal Account or
Interest Account of the Acquisition Fund shall be credited to the Interest Account of the
Acquisition Fund. Any moneys in the Interest Account of the Acquisition Fund as of the due
date of any Rental Payment under the Agreement shall be paid by Escrow Agent to Lessee as of
that date for use by Lessee in connection with paying the Rental Payment due on such date.
With Lessor's prior written consent, Lessee shall be entitled to direct Escrow Agent to transfer
monies in the Interest Account to the Principal Account for use in connection with paying the
Acquisition Costs of the Equipment.
Section 2.05. Transfers Upon Completion. Upon the first to occur of (a) payment of all
Acquisition Costs with respect to the Equipment, or (b) the eighteen (18) month anniversary of
the Closing Date, Escrow Agent shall pay all remaining moneys in the Acquisition Fund to
Lessor or its assignee for application as a prepayment of the Unpaid Principal Balance unless
such monies are less than the sum of the interest component of the next two (2) Rental Payments
becoming due under the Agreement in which case such moneys shall be applied against the
interest component of such Rental Payments. In the case of a prepayment of the Unpaid
Principal Balance in accordance with the foregoing, the remaining Rental Payments shall be
recomputed based on the reduced Unpaid Principal Balance, the Schedule of Payments shall be
•
PUBL:44995_11017122459.0004 4
• amended to reflect such prepayment of principal, and Lessor and Lessee shall execute a revised
Schedule of Payments to acknowledge such change.
Section 2.06. Termination. If this Escrow Agreement is terminated by Lessor as
authorized under Article VII of the Agreement, all monies in the Acquisition Fund shall be paid
to Lessor or its assignees for application against moneys due to Lessor under the Agreement.
ARTICLE III
MONEYS IN FUNDS: INVESTMENTS: TERMINATION
Section 3.01. Held in Trust. The moneys and investments held by Escrow Agent under
this Escrow Agreement are irrevocably held in trust for the benefit of Lessee and for the
purposes herein specified, subject however to Lessor's security interest in the Acquisition Fund.
Escrow Agent agrees to act as Lessor's security agent for the limited purpose of enabling
perfection of Lessor's security interest in the Acquisition Fund. Such moneys, and any income
or interest earned thereon, shall be expended only as provided in this Escrow Agreement, and
shall not, to the extent permitted by applicable law, as otherwise expressly provided herein, be
subject to levy or attachment or lien by or for the benefit of any creditor of either Lessor or
Lessee.
Section 3.02. Investments Authorized. Moneys held by Escrow Agent hereunder shall
be invested by Escrow Agent in Qualified Investments at the written direction of Lessee. Such
• investments shall be registered in the name of Escrow Agent and held by Escrow Agent which
may act as a purchaser or agent in making or disposing thereof. Such investments and
reinvestments shall be made giving full consideration for the time when funds will be required to
be available for acquisition.
Section 3.03. Accounting. Escrow Agent shall furnish to Lessee and Lessor, no less
than quarterly, an accounting of all investments made by Escrow Agent. Escrow Agent shall not
be responsible or liable for any loss suffered in connection with any investment of funds made by
it in accordance with this Escrow Agreement.
Section 3.04. Valuation and Disposition of Investments. For the purpose of determining
the amount in the Acquisition Fund, all Qualified Investments credited to such fund shall be
valued at cost (exclusive of accrued interest after the first interest payments following purchase).
Escrow Agent may sell at the best price obtainable, or present for redemption, any Qualified
Investment so purchased by Escrow Agent, whenever it shall be necessary in order to provide
moneys to meet any required payment, transfer, withdrawal or disbursement from the Acquisition
Fund to which such Qualified Investment is credited and Escrow Agent shall not be liable or
responsible for any loss resulting from such investment.
Section 3.05. Deposit of Moneys in Acquisition Fund. All moneys held by Escrow
Agent in the Acquisition Fund established pursuant to this Agreement, except such moneys which
are at the time invested as herein provided, shall be deposited in demand or time deposits (which
may be represented by time certificates of deposit) in any bank or trust company authorized to
•
PURL:44985_11017122459.0004 5
0 9
accept deposits of public funds (including the banking department of Escrow Agent), and, as and
to the extent required by law, shall be secured at all times by obligations which are eligible by .
law to secure deposits of public moneys. Such obligations shall be deposited with such bank or
banks as may be selected by Escrow Agent, and held by or for the account of Escrow Agent as
security for such deposits.
Section 3.06. Termination. Unless earlier terminated pursuant to Article VII, this
Escrow Agreement shall terminate upon the final distribution of all moneys in the Acquisition
Fund.
ARTICLE IV
ESCROW AGENT
Section 4.01. Removal of Escrow Agent. Lessee and Lessor, by written agreement
between themselves, may by written request, at any time and for any reason, remove Escrow
Agent and any successor thereto, and shall thereupon appoint a successor or successors thereto,
but any such successor shall have capital (exclusive of borrowed capital) and surplus of at least
Ten Million Dollars ($10,000,000), and be subject to supervision or examination by federal or
state authority. If such bank or trust company publishes a report of condition at least annually,
pursuant to statute or the requirements of any federal or state supervising or examining authority,
then for the purposes of this Section the combined capital and surplus of such bank or trust
company may be conclusively established for the purposes hereby in its most recent report of
condition so published. •
Section 4.02. Resignation of Escrow Agent. Escrow Agent or any successor may at any
time resign by giving written notice to Lessee and Lessor of its intention to resign and of the
proposed date of resignation, which shall be a date not less than 60 days after such notice, unless
an earlier resignation date and the appointment of a successor Escrow Agent shall have been or
thereafter are approved by Lessee and Lessor. Upon receiving such notice of resignation, Lessee
and Lessor shall promptly appoint a successor Escrow Agent by an instrument in writing;
provided however, that in the event the Lessee and Lessor fail to appoint a successor Escrow
Agent within 30 days following receipt of such written notice of resignation, Lessor may appoint
a successor Escrow Agent, and in the event that Lessor fail to appoint a successor Escrow Agent
with 30 days following the expiration of such initial 30-day period, the resigning Escrow Agent
may petition the appropriate court having jurisdiction to appoint a successor Escrow Agent. Any
resignation or removal of Escrow Agent shall become effective only upon acceptance of
appointment by the successor Escrow Agent.
Section 4.03. Appointment of Agent. Escrow Agent may appoint an agent acceptable to
Lessee and Lessor to exercise any of the powers, rights or remedies granted to Escrow Agent
under this Escrow Agreement, and to hold title to property or to take any other action which may
be desirable or necessary.
Section 4.04. Merger or Consolidation. Any company into which Escrow Agent may be
merged or converted, or with which it may be consolidated, or any company resulting from any
•
vueL:44985_1 101722459.0004 6
0 •
• merger, conversion or consolidation to which it shall be a party, or any company to which
Escrow Agent may sell or transfer all or substantially all of its corporate trust business (provided
that such company shall be eligible under Section 4.01) shall be the successor to Escrow Agent
without the execution or filing of any paper or further act, anything herein to the contrary
notwithstanding.
Section 4.05. Protection and Rights of Escrow Agent. Escrow Agent shall be protected
and shall incur no liability in acting or proceeding in good faith upon any resolution, notice,
telegram, request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or
other paper or document which it shall in good faith believe to be genuine and to have been
passed or signed by the proper board or person or to have been prepared and furnished pursuant
to any of the provisions of this Escrow Agreement, and Escrow Agent shall be under no duty to
make any investigation or inquiry as to any statements contained or matters referred to in any
such instrument, but may accept and rely upon the same as conclusive evidence of the truth and
accuracy of such statements. Escrow Agent may consult with Independent Counsel who may be
counsel to Lessor or Lessee, with regard to legal questions, and the opinion of such counsel shall
be full and complete authorization and protection in respect of any action taken or suffered by it
hereunder in good faith in accordance therewith.
Whenever in the administration of its duties under this Escrow Agreement, Escrow Agent
shall deem it necessary or desirable that a matter be proved or established prior to taking or
suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed), shall be deemed to be conclusively proved and established by the
. certificate of the Lessee Representative or the Lessor Representative and such certificate shall be
full warranty to Escrow Agent for any action taken or suffered under the provisions of this
Escrow Agreement upon the faith thereof, but in its Escrow Agent may, in lieu thereof, accept
other evidence of such matter or may require such additional evidence as to it may seem
reasonable.
•
The recitals, statements and representations by Lessee and Lessor contained in this
Agreement shall be taken and construed as made by and on the part of Lessee and Lessor, as the
case may be, and not by Escrow Agent, and Escrow Agent does not assume, and shall not have,
any responsibility or obligation for the correctness of any thereof.
Escrow Agent may execute any of the trusts or powers hereof and perform the duties
required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to
advice of counsel concerning all matters of trust and its duty hereunder, and Escrow Agent shall
not be answerable for the default or misconduct of any such attorney, agent, or receiver selected
by it with reasonable care. Escrow Agent shall not be answerable for the exercise of any
discretion or power under this Escrow Agreement or for anything whatsoever in connection with
the funds and accounts established hereunder, except only for its own willful misconduct or gross
negligence.
aueL:44985_11017 22459.0004 7
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ARTICLE V
ASSIGNMENT: AMENDMENTS •
Section 5.01. Assignment. Except as expressly herein provided to the contrary, the
rights and duties of each of the parties under this Escrow Agreement shall not be assignable to
any person or entity without the written consent of all of the other parties. Notwithstanding the
above, Lessor may freely assign all or any part of its interest in this Agreement and the
Acquisition Fund established hereunder in connection with and to the extent of, an assignment by
Lessor of the Agreement, subject to the provisions contained therein.
Section 5.02. Amendments. This Escrow Agreement may be amended in writing by
agreement among all of the parties.
ARTICLE VI
FURTHER ASSURANCES
Section 6.01. Further Assurances. Lessor and Lessee will make, execute and deliver any
and all such further resolutions, instruments and assurances as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance of this Escrow Agreement, and
for better assuring and confirming the rights and benefits provided herein.
ARTICLE VII •
DEFAULT
Section 7.01. Default.
(a) Lessor shall have the right to terminate this Escrow Agreement upon an
Event of Default under the Agreement, which right shall not be exercised less than 15 days after
Lessor shall have given Lessee written notice of such default. Upon receipt of notice of
termination from Lessor, Escrow Agent shall pay to Lessor, or its assignee, all moneys in the
Acquisition Fund in accordance with Section 2.06.
(b) In the event of the failure by any party hereto to observe and perform any
covenant, condition or agreement on its part to be observed or performed under this Escrow
Agreement, any non - defaulting party hereto shall have all of the rights and remedies now or
hereafter existing at law or in equity against the defaulting party.
(c) No delay or omission to exercise any such right or power accruing upon
any default 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.
•
aueL:44985_11017122459.0004 8
9 0
• ARTICLE VIII
LIMITATION OF LIABILITY
Section 8.01. Limited Liability of Escrow Agent. Escrow Agent shall have no obligation
or liability to any of the other parties under this Escrow Agreement for the failure or refusal of
any other party to perform any covenant or agreement made by any of it hereunder or under the
Agreement, but shall be responsible solely for the business -like performance of the duties
expressly imposed upon Escrow Agent hereunder. The recitals of facts, covenants and
agreements herein contained pertaining to Lessee and Lessor shall be taken as statement,
covenants and agreements of the Lessee or Lessor (as the case may be), and Escrow Agent
assumes no responsibility for the correctness of the same, or makes any representations as to the
validity or sufficiency of this Escrow Agreement, or shall incur any responsibility in respect
thereof, other than in connection with the duties or obligations herein imposed upon it. Escrow
Agent shall not be liable in connection with the performance of its duties hereunder except for its
own negligence or willful default.
Section 8.02. Indemnification. To the extent permitted by applicable law, Lessee agrees
to indemnify and save Escrow Agent harmless from and against all claims, suits and actions
brought against it, or to which it is made a party, and from all losses and damages, including
without limitation, reasonable attorneys fees and court costs suffered by it as a result thereof,
where such claim, suit or action arises in connection with this Escrow Agreement, the
transactions described herein and in the Agreement or Escrow Agent's employment as an escrow
• agent by Lessee and Lessor. Notwithstanding the foregoing, such indemnification shall not
extend to claims, suits and actions brought against Escrow Agent for failure to perform and carry
out the duties specifically imposed upon and to be performed by it pursuant to this Escrow
Agreement and claims, suits or actions arising from events solely and directly attributable to acts
of Lessor. Escrow Agent shall have a lien on all property deposited hereunder for reasonable
attorneys' fees, court costs, and any other expenses, fees or charges of any character or nature,
which may be incurred by Escrow Agent by reason of disputes arising between Lessor and
Lessee as to the correct interpretation of this Escrow Agreement and instructions given to Escrow
Agent hereunder, or otherwise, with Escrow Agent having the right, regardless of the instructions
received, to hold such property until and unless such additional expenses, fees and charges shall
be paid. In the event Lessee is required to indemnify Escrow Agent as herein provided, Lessee
shall be subrogated to the rights of Escrow Agent to recover such losses or damages from any
other person or entity.
•
Section 8.03. Discretion of Escrow Agent to File Civil Action in the Event of Dispute.
If Lessor or Lessee are in disagreement about the interpretation of this Escrow Agreement, or
about the rights and obligations of, or the propriety of any action contemplated by, Escrow Agent
hereunder, Escrow Agent may, but shall not be required to, file an appropriate civil action to
resolve the disagreement. Escrow Agent shall be indemnified by Lessee in accordance with
Section 8.02 for all costs in connection with such civil action, and shall be fully protected in
suspending all or part of its activities under this Escrow Agreement until a final judgment in such
action is received.
rueL:44985_11017122459.0004 9
0 0
Section 8.04. Opinion of Counsel. Before being required to take any action, Escrow
Agent may require (i) an opinion of Independent Counsel acceptable to Escrow Agent, and which •
opinion shall be made available to the other parties hereto, or (ii) a verified certificate of any
party hereto, or (iii) both (i) and(ii), concerning the proposed action. Escrow Agent shall be
absolutely protected in relying thereon if it does so in good faith.
Section 8.05. Limitation of Rights to Parties. Nothing in this Escrow Agreement,
expressed or implied, is intended or shall be construed to give any person other than Lessee,
Lessor and Escrow Agent any legal or equitable right, remedy or claim under or in respect of
this Agreement or any covenant, condition or provision hereof; and all such covenants,
conditions and provisions are and shall be for the sole and exclusive benefit of Lessee, Lessor
and Escrow Agent.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Records. Escrow Agent shall keep complete and accurate records of all
moneys received and disbursed under this Escrow Agreement, which shall be available for
inspection by Lessee, Lessor, or the agent of either of them, at any time during regular business
hours.
Section 9.02. Notices. All written notice to be given under this Escrow Agreement shall
be given by mail to the party entitled thereto at the address set forth above, or at such address as •
the party may provide to the other parties in writing from time to time. Any such notice shall be
deemed to have been received 72 hours after deposit in the United States mail in registered or
certified form, with postage fully prepaid.
Section 9.03. Governing Laws. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio
Section 9.04. Partial Invalidity. Any provision of this Escrow Agreement found to be
prohibited by law shall be ineffective only to the extent of such prohibition, and shall not
invalidate the remainder of this Escrow Agreement.
Section 9.05. Binding Effect: Successors. This Escrow Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and assigns. Whenever in
this Escrow Agreement any party hereto is named or referred to, such references shall be deemed
to include permitted successors or assigns thereof, and all covenants and agreements contained in
this Escrow Agreement by or on behalf of any parry hereto shall bind and inure to the benefit of
permitted successors and assigns thereof whether or not so expressed.
Section 9.06. Execution in Counterparts. This Escrow Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but one
and the same agreement.
F- 1
LJ
rueL:44985_1 1017122459.0004 10
. • w
. Section 9.07. Headings. The headings or titles of the several Articles and Sections
hereof, and any tables of contents appended to copies hereof, shall be solely for convenience of
reference and shall not affect the meaning, construction or effect of this Escrow Agreement. All
references herein to "Articles ", "Sections ", and other subdivisions are to the corresponding
Articles, Sections, or subdivisions of this Escrow Agreement; and the words "herein ", "hereof",
"hereunder" and other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or subdivision hereof.
•
is
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the
date and year first above written.
Fifth Third Leasing Co.
AS ESCROW AGENT
By:
Title:
Municipal Funding Group
AS LESSOR
By: Darrell G. Jarman
Title: Executive Vice President
City of Newport Beach, CA
AS LESSEE
By: Kevin Murphy
Title: City Manager
PUBL:44985_11017122459.0004 11
0
EXHIBIT A
PAYMENT REQUEST FORM
9
The Escrow Agent is hereby requested to pay from the Acquisition Fund established by
the Escrow Agreement dated as of November 1, 1996 by and among the Escrow Agent, Lessee
and Lessor, to the person or corporation designated below as Payee, the sum set forth below in
payment (of all /of a portion) of the Acquisition Costs described below. The amount shown
below is due and payable under a purchase order or contract with respect to the Equipment
described below and has not formed the basis of any prior request for payment.
Payee:
Description of Equipment Item Cost:
Dated:
City of Newport Beach, CA
LESSEE
By: Kevin Murphy, City Manager
Municipal Funding Group
LESSOR
By: Darrell Jarman, Executive Vice President
(Attach duplicate original of Payee's statement)
rueu44985_1 1017122459.0004 I2
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0 0 DRAFT
STRADLING, YOCCA, CARLSON & RAUTH
A PROFESSIONAL CORPORATION
FRITZ R. STRADLING C
CAROL L. LEw A
ATTORNEYS AT LAW
NICK E. C
DENISE NARBAUGH HFRING
CARL D
JOSE. co.M 6
660 NEWPORT CENTER DRIVE. SUITE 1600
RC RAUTH J
A. MILLER'
A C. SC R
J. MICR A
POST OFFICE BOX 7680
HSC"AAF J
JOHN D. V
UGOODMAN J
DOUGLAS J
NEWPORT BEACH, CALIFORNIA 92660.6441
J. EV N
City of Newport Beach
Newport Beach, California
Municipal Funding Group
Kearny, Missouri
• Re: $
Ladies and Gentlemen:
JOHN E.BRECKENRIDGE
REN1 C. STONE
DO US LAS J. R O V ENS
ROBERT . AT HEWS
SAN FRANCISCO OFFICE
•A MONTGOMERY STREET, SUITE 2960
SAN FRANCISCO, CALIFORNIA 9AIO•
TELEPHONE I41S1 766 -9190
FACSIMILE PISI 765 19167
WRITER'S DIRECT DIAL:
City of Newport Beach Master Equipment Lease
We have reviewed the Constitution and the laws of the State of California and
certain proceedings taken by the City of Newport Beach (the "City") in connection with the
execution and delivery by the City of its $ Master Equipment Lease to Municipal Fund
Group, as Lessor (the "Lessor "). We have also reviewed that certain Master Equipment
Lease /Purchase Agreement dated as of July 30, 1996, between the City and the Lessor, together
with an associated Escrow Agreement, Tax Compliance Agreement and No Arbitrage Certificate
(collectively, the "Agreement "), and such other information and documents as we consider
necessary to render this opinion. In rendering our opinion, we have relied upon certain
representations of fact and certifications made by the City, the Lessor and others. We have not
undertaken to verify through independent investigation the accuracy of the representations and
certifications relied upon by us. We have assumed without investigation, the due authorization
and execution of the Agreement by the parties thereto other than the City and the validity and
enforceability of the Agreement against the parties thereto other than the City.
The Agreement has been delivered pursuant to the City Charter and the California
Government Code, and an authorizing resolution adopted by the City on , 1996
(the "Resolution ") approving the Agreement. The Agreement is being entered into by the City
• and the Agreement is being delivered by the City in order to finance the lease /purchase of the
equipment and other items (the "Equipment ") . All terms not defined herein have the meaning
ascribed to those terms in the Agreement.
•
City of Newport Beach
Municipal Funding Group
November , 1996
Page 2
0
Based upon and subject to the foregoing, and in reliance thereon, we are of the
following opinions:
1. The Agreement has been duly and validly authorized by the City and is the
legal, valid and binding special obligation of the City. The Agreement is enforceable in
accordance with its terms and the terms of the Agreement, except to the extent that enforceability
may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws
affecting creditors' rights generally or by the exercise of judicial discretion in accordance with
general principles of equity or otherwise in appropriate cases.
2. The Agreement has been duly authorized, executed and delivered and
constitutes the legal, valid and binding agreement of the City enforceable in accordance with its
terms except to the extent that enforceability may be limited by moratorium, bankruptcy,
reorganization, insolvency or other similar laws affecting creditors' rights generally or by the
exercise of judicial discretion in accordance with general principles of equity or otherwise in
appropriate cases.
LJ
3. The Agreement creates a valid pledge of that which the Agreement
purports to pledge, subject to the provisions of the Agreement, except to the extent that the •
enforceability of the Agreement may be limited by moratorium, bankruptcy, reorganization,
insolvency or other laws affecting creditors' rights generally or by the exercise of judicial
discretion in accordance with general principles of equity or otherwise in appropriate cases.
4. Under existing statutes, regulations, rulings and judicial decisions, the
interest component of Rental Payments payable with respect to the Agreement are excluded from
gross income for federal income tax purposes and are not an item of tax preference for purposes
of calculating the federal alternative minimum tax imposed on individuals and corporations;
however, it should be noted that, with respect to corporations, such interest may be included as
an adjustment in the calculation of alternative minimum taxable income, which may affect the
alternative minimum tax liability of corporations.
5. Interest components of Rental Payments payable with respect to the
Agreement are exempt from present State of California personal income taxes.
The opinions expressed herein as to the exclusion from gross income of the
interest components of Rental Payments payable with respect to the Agreement are subject to the
condition that the City comply with all requirements of the Internal Revenue Code of 1986, as
amended (the "Code "), that must be satisfied subsequent to the delivery of the Agreement to
assure that such interest components payable with respect to the Agreement will not become
includable in gross income for federal income tax purposes. Failure to comply with such
requirements of the Code might cause interest components on Rental Payments payable with
respect to the Agreement on the Agreement to be included in gross income for federal income tax •
PUBL:45029 11017122459.0004
City of Newport Beach
Municipal Funding Group
• November _, 1996
Page 3
purposes retroactive to the date of delivery of the Agreement. The City has covenanted to
comply with all such requirements.
ID
The opinions expressed herein may be affected by actions taken (or not taken) or
events occurring (or not occurring) after the date hereof. We have not undertaken to determine,
or to inform any person, whether any such actions or events are taken or do occur.
Other than as expressly stated herein, we express no other opinion regarding tax
consequences of the Agreement, the state of the City's title to the property which is the subject of
the Agreement, or the value or lien priority thereof, as to which we have made no independent
investigation.
The opinions expressed herein are based upon our analysis and interpretation of
existing laws, regulations, rulings and judicial decisions and cover certain matters not directly
addressed by such authorities.
POE L:45029_11017122459.0004
Respectfully submitted,
E
0
w
[FORM OF CITY ATTORNEY OPINION)
November , 1996
Municipal Funding Group
Kearny, Missouri
Stradling, Yocca, Carlson & Rauth
Newport Beach, California
Re: $ City of Newport Beach Master Equipment Lease
Ladies and Gentlemen:
• I have served as City Attorney to the City of Newport Beach (the "City") in
connection with the execution and delivery of the City's $ Master Equipment Lease to
Municipal Fund Group, as Lessor (the "Lessor "). As such counsel, I have examined and am
familiar with (i) those documents relating to the existence, organization, and operation of the
City; (ii) all necessary documentation of the City relating to the authorization, execution, and
delivery of a Master Equipment Lease /Purchase Agreement dated as of July 30, 1996, between
the City and the Lessor, together with an associated Escrow Agreement, Tax Compliance
Agreement and No Arbitrage Certificate (collectively, the "Agreement ").
I am of the opinion that:
1. The City is a chartered city, duly created, organized, and existing under
the laws of the State of California.
2. The City has the authority and right to execute, deliver, and perform the
Agreement, and the City has complied with the provisions of applicable law in all matters
relating to the transactions contemplated by the Agreement.
3. The Agreement have been duly authorized, executed, and delivered by the
City, are in full force and effect; and, assuming that the City has all the requisite power and
authority and has taken all necessary action to execute and deliver the Agreement, constitute the
legal, valid, and binding agreements of the City enforceable against it in accordance with their
terms, subject in each case to laws relating to bankruptcy, insolvency, or other laws affecting the
• enforcement of creditors' rights generally and to the application of equitable principles if
equitable remedies are sought.
E
Municipal Funding Group
Stradling, Yocca, Carlson & Rauth
November _, 1996
Page 2
4. No approval, consent, or authorization of any governmental or public
agency, authority, or person is required for the execution and delivery by the City of the
Agreement, or the performance by the City of its obligations thereunder, or the assignment of the
Agreement to the Assignee.
5. The execution and delivery of the Agreement by the City and compliance
with the provisions thereof will not conflict with or constitute a breach of, or default under, any
instrument relating to the organization, existence, or operation of the City, any commitment,
agreement, or other instrument to which the City is a party or by which it or its property is
bound or affected, or any ruling, regulation, ordinance, judgment, order, or decree to which the
City (or any of its officers, in their respective capacities as such) is subject, or any provision of
the laws of the State of California relating to the City and its affairs.
6. There is no action, suit, proceeding, inquiry, or investigation at law or in
equity, or before any court, public board or body, pending or, to the best of my knowledge,
threatened against or affecting the City or any entity affiliated with the City, or any of its officers
in their respective capacities as such (nor to the best of my knowledge, is there any basis
therefor), which questions the powers of the City referred to in paragraph 2, or the validity of the
proceedings taken by the City in connection with the authorization, execution, or delivery of the
Agreement, or which, in any way, would adversely affect the validity or enforceability of the
Agreement, or, in any material respect, the ability of the City to perform its obligations under the
Agreement.
PUBL:45030_11017122459.0004
Respectfully submitted,
r AL
• •
RESOLUTION NO. 96- 92
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF NEWPORT BEACH AUTHORIZING THE
EXECUTION AND DELIVERY OF A MASTER
EQUIPMENT LEASEIPURCHASE AGREEMENT,
AND RELATED INSTRUMENTS, AND
DETERMINING OTHER MATTERS IN CONNECTION
THEREWITH.
WHEREAS, the City Council of the City of Newport Beach, hereinafter referred to
as ( "Lessee "), has determined that a true and very real need exists for the equipment,
hereinafter referred to as (the "Equipment') described in the proposed Master Equipment
Lease /Purchase Agreement with Municipal Funding Group, presented to this meeting and
attached to this Resolution as Exhibit "A ", (the "Agreement); and
WHEREAS, Lessee has taken the necessary steps, including those relating to any
applicable legal bidding requirements, to arrange for the acquisition of the Equipment;
"ITI
WHEREAS, Lessee proposes to enter into the Agreement with Municipal Funding
Group substantially in the form of Exhibit "A "; and
WHEREAS, Lessee reasonably anticipates that it and its subordinate entities will
not issue tax - exempt obligations in the face amount of more than $10,000,000 during the
current calendar year.
NOW, THEREFORE, IT IS HEREBY RESOLVED, by the City Council of the City
of Newport Beach as follows:
Section 1: It is hereby found and determined that the terms of the Agreement in
the form presented to this meeting and incorporated in this Resolution are in the best
interests of Lessee for the acquisition of the Equipment.
Section 2: The Agreement is hereby approved. The City is authorized to
execute, acknowledge and deliver, the Agreement in substantially the form presented in
Exhibit "A ", such approval to be conclusively evidenced by such execution and delivery of
the Agreement. The City Clerk is authorized to affix the official seal of Lessee to the
Agreement and attest the same.
1-
9 Res. No. 96 -92
Section 3: The City Manager is authorized and directed to execute and deliver
any and all papers, instruments, opinions, certificates, affidavits and other documents and
to do or cause to be done any and all other acts and things necessary or proper for
carrying out this Resolution and Agreement.
Section 4: Lessee hereby designates the Agreement as a "qualified tax - exempt
obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986,
oil, - 'towel
The undersigned further certifies that the above Resolution has not been repealed
or amended and remains in full force and effect and further certifies that the attached
Agreement is the same as presented at said meeting of the governing body of Lessee.
ADOPTED, this 12th day of November, 1996.
ATTEST:
City Clerk ?; :•
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MAYOR