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Ordinance 4478
ORDINANCE NO. 4478 AN ORDINANCE AUTHORIZING THE EXECUTION AND-DELIVERY Ur A MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT HAVING A NOMINAL PRINCIPAL AMOUNT NOT TO EXCEED $5,000,000.00 FOR THE PURPOSE OF FINANCING THE COST OF ACQUIRING CERTAIN FIRE FIGHTING APPARATUS; AND PRESCRIBING OTHER MATTERS RELATING THERETO WHEREAS, the City Council of the City of Fayetteville, Arkansas has determined that there is a great need for a mechanism to finance the costs of acquisition of certain fire fighting apparatus to benefit the residents of the City; and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 78 to the Constitution of the State of Arkansas and the Local Government Short-Term Financing Obligations Act of 2001 , codified as Arkansas Code Annotated (2001 Supp.) Sections 14-78- 101 et seq. as from time to time amended, to enter into certain short-term lease/purchase arrangements to finance the costs of various capital improvements, which lease obligations shall constitute general obligations of the City under Amendment 78 and the Act; and WHEREAS, the City has made arrangements for the entry into a Master Equipment Lease/Purchase Agreement with Banc of America Leasing & Capital, LLC, a Delaware limited liability, in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS THAT: Section 1 . Under the authority of the Constitution and laws of the State of Arkansas, the Mayor is hereby authorized and directed to execute the Lease/Purchase Agreement, and the City Clerk is hereby authorized and directed to execute the Lcase/Purchase Agreement and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Lease/Purchase Agreement to be executed by Banc of America Leasing & Capital, LLC. The Lease/Purchase Agreement is hereby approved in substantially the form submitted to this meeting. The Mayor is hereby authorized to confer with with Banc of America Leasing & Capital, LLC and Kutak Rock LLP, Bond Counsel, in order to complete the Lease/Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Lease/Purchase Agreement, their execution to constitute conclusive evidence of such approval. Section 2. The nominal principal amount of the Lease/Purchase Agreement may not exceed $5,000,000.00 in the aggregate, the term of the Lease/Purchase Agreement shall expire no later than five years from the date of adoption of this ordinance, and the effective interest rate relating to the City's obligations under the Lease/Purchase Agreement shall not exceed the maximum rate prescribed by Arkansas law, including Amendment 78 and the Act. Section 3. It is affirmed that, pursuant to Amendment 78 and the Act, the payment obligations of the City under the Lease/Purchase Agreement shall constitute general obligations of the City, and the total annual payments owed by the City under the Lease/Purchase Agreement in each of the City's fiscal years shall be charged against and paid from the general revenues of the City for such fiscal years. Section 4. As required by Amendment 78 and the Act, the City hereby finds and determines that: (a) Each of the components to be financed under the Lease/Purchase Agreement has an average useful life in excess of one year; and (b) The aggregate nominal principal amount of all obligations of the City under Amendment 78 and the Act, including the Lease/Purchase Agreement, will at no time exceed five percent (5%) of the assessed value of the taxable real and personal property located within the City, as determined by the last tax assessment completed prior to the date hereof. Section 5. The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all things necessary to effect the execution and delivery of the Lease/Purchase Agreement, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. Section 6. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance. Section 7. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED this the 15`h day of April, 2003 . t ;, rEIJt !, APPROVED: By: �, ., r •} DA COODY, ayor By: Son ra Smith, City Clerk 2 � A/ MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT (AMENDMENT 78 LEASE) This Master Equipment Lease/Purchase Agreement (the "Agreement ") dated as of / 5tA CI , 2003, and entered into between Banc of America Leasing & Capital, LLC, a Delaware limited liability company ( "Lessor '), and City of Fayetteville, Arkansas, a body corporate and politic existing under the laws of the State of Arkansas ( "Lessee WITNESSETH: WHEREAS, Lessee desires to lease and acquire from Lessor certain Equipment described in each Schedule (as each such term is defined herein), subject to the terms and conditions of and for the purposes set forth in each Lease; and in the event of a conflict the terms of a Schedule prevail; and WHEREAS, the relationship between the parties shall be a continuing one and items of equipment may be added to the Equipment from time to time by execution of additional Schedules by the parties hereto and as otherwise provided herein; and WHEREAS, Lessee is authorized under the Constitution and laws of the State, including, particularly, Amendment 78 to the State Constitution and the Local Government Short-Term Financing Obligations Act of 2001 , as amended, codified as Arkansas Code Annotated Sections 14-78- 101 et seq. (2001 Supp.) (the "Act'), to enter into certain short-term general obligations, such as this Agreement and the Schedules hereto, for the purposes set forth herein; and WHEREAS, the City Council of the Lessor has authorized the execution and delivery of this Agreement and the Schedules hereto pursuant to Ordinance No. adopted and approved on * r,�, 2003 ; Now, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and in consideration of the premises hereinafter contained, the parties hereby agree as follows: ARTICLE I Section 1. 01. Definitions. The following terms will have the meanings indicated below unless the context clearly requires otherwise: "Acquisition Amount " means the amount specified in each Lease and represented by Lessee to be sufficient to acquire the Equipment listed in such Lease, which amount shall be not less than $ 100,000 for each Lease. "Acquisition Period " means, with respect to each Lease, that period stated in the Schedule to such Lease during which the Acquisition Amount attributable to such Lease may be expended on Equipment Costs. (Amendment 78 Lease) t "Act" means the Local Government Short-Term Financing Obligations Act of 2001 , as amended, codified as Arkansas Code Annotated Sections 14-78- 101 et seq. (2001 Supp). "Agreement " means this Master Equipment Lease/Purchase Agreement, including the exhibits hereto, together with any amendments and modifications to the Agreement pursuant to Section 13 .05 . "Code " means the Internal Revenue Code of 1986, as amended. Each reference to a Section of the Code herein shall be deemed to include the United States Treasury Regulations proposed or in effect thereunder. "Commencement Date " means, for each Lease, the date when Lessee's obligation to pay rent commences under such Lease, which date shall be the date on which the Equipment listed in such Lease is accepted by Lessee in the manner described in Section 5 .01 . "Equipment " means the property listed in each of the Leases and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to Section 8.01 or Article V. Whenever reference is made in this Agreement to Equipment listed in a Lease, such reference shall be deemed to include all such replacements, repairs, restorations, modifications and improvements of or to such Equipment. "Equipment Costs " means the total cost of the Equipment listed in each Lease, including all delivery charges, installation charges, capitalizable consulting and training fees approved by Lessor, legal fees, financing costs, and other costs necessary to vest full, clear legal title to the Equipment in Lessee, subject to the security interest granted to and retained by Lessor as set forth in each Lease, and otherwise incurred in connection with the financing provided by the lease- purchase of the Equipment as provided in each Lease; provided that in no event shall approved consulting and training fees or other non-capitalizable "soft" costs relating to the Equipment listed in any Lease which are to be financed by Lessor hereunder exceed 2% of the total cost of such Equipment as determined by Lessor; and provided further, that in no event shall capitalizable delivery charges, installation charges, taxes and similar capitalizable "soft costs" relating to such Equipment be included without Lessor's prior consent. "Event of Default " means an Event of Default described in Section 12.01 . "Lease " means a Schedule and the terms of this Agreement which are incorporated by reference into such Schedule. Each Schedule shall constitute a separate and independent Lease. "Lease Term " for each Lease means the Original Term and all Renewal Terms therein provided and for this Agreement means the period from the date hereof until this Agreement is terminated. "Lessee " means the entity referred to as Lessee in the first paragraph of this Agreement. "Lessor " means (a) the entity referred to as Lessor in the first paragraph of this Agree- ment or (b) any assignee or transferee of any right, title or interest of Lessor in and to the Equipment under a Lease or any Lease (including Rental Payments thereunder) pursuant to (Amendment 78 Lease) 2 Section 11 .01 , but does not include any entity solely by reason of that entity retaining or assuming any obligation of Lessor to perform under a Lease. "Maximum Equipment Cost " means, when aggregated with the Maximum Equipment Cost under a Master Equipment Lease/Purchase Agreement (Amendment 65 Lease) of even date herewith between Lessor and Lessee, an amount not to exceed $5,000,000. "Original Term " means the period from the Commencement Date for each Lease until the end of the fiscal year of Lessee in effect at such Commencement Date. "Purchase Price " means, with respect to the Equipment listed on a Lease, the amount that Lessee may pay to Lessor to purchase such Equipment as provided in such Lease. "Renewal Terms " means the renewal terms of each Lease, each having a duration of one year and a term coextensive with Lessee's fiscal year, as specified in the Schedule applicable thereto. "Rental Payments " means the basic rental payments payable by Lessee under each Lease pursuant to Section 4.01 , in each case consisting of a principal component and an interest component. "Schedule " means each separately numbered Schedule of Property substantially in the form of Exhibit A hereto together with a Rental Payment Schedule attached thereto substantially in the form of Exhibit A- 1 hereto. "State " means the State of Arkansas. "Utilization Period " means the date, by which Lessee must deliver an Acceptance Certificate for the Equipment under such Lease as indicated in Section 3 .05(b). " Vendor " means the manufacturer or supplier of the Equipment or any other person as well as the agents or dealers of the manufacturer or supplier from whom Lessor arranged Lessee's acquisition and financing of the Equipment pursuant to the applicable Lease. ARTICLE II Section 2. 01. Representations and Covenants of Lessee. Lessee represents, covenants and warrants for the benefit of Lessor on the date hereof and as of the Commencement Date of each Lease as follows: (a) Lessee is a political subdivision of the State within the meaning of Section 103(c) of the Code, duly organized and existing under the Constitution and laws of the State, including Amendment 78 to the State Constitution and the Act, with full power and authority to enter into this Agreement and each Lease and the transactions contemplated hereby and to perform all of its obligations hereunder and under each Lease. (b) Lessee has duly authorized the execution and delivery of this Agreement and each Lease by proper action of its governing body at a meeting duly called, regularly convened and (Amendment 78 Lease) 3 attended throughout by the requisite quorum of the members thereof, or by other appropriate official approval, and all requirements have been met and procedures have occurred in order to ensure the validity and enforceability of this Agreement and each Lease. (c) No event or condition that constitutes, or with the giving of notice or the lapse of time or both would constitute, an Event of Default exists at the date hereof. (d) Lessee will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a body corporate and politic. (e) Lessee has complied with such public bidding requirements as may be applicable to this Agreement and each Lease and the acquisition by Lessee of the Equipment as provided in each Lease. (f) During the Lease Term, the Equipment will be used by Lessee only for the purpose of performing essential governmental or proprietary functions of Lessee consistent with the permissible scope of Lessee's authority. Lessee does not intend to sell or otherwise dispose of the Equipment or any interest therein prior to the last Rental Payment (including all Renewal Terms) scheduled to be paid under each Lease. (g) Lessee shall keep its books and records in accordance with generally accepted accounting principles and practices consistently applied and shall deliver to Lessor (i) annual audited financial statements (including (1 ) a balance sheet, (2) statement of revenues, expenses and changes in fund balances for budget and actual, (3) statement of cash flows and notes, and (4) schedules and attachments to the financial statements), on August 1 of each year during the Lease Term, (ii) such other financial statements and information as Lessor may reasonably request, and (iii) its annual budget for the following fiscal year on or before February 1 of each year during the Lease Term. The financial statements described in subsection (i) shall be accompanied by an unqualified opinion of Lessee's auditor. Credit information relating to Lessee may be disseminated among Lessor and any of its affiliates and any of their respective successors and assigns. (h) Lessee has an immediate need for the Equipment listed on each Schedule and expects to make immediate use of the Equipment listed on each Schedule. Lessee's need for the Equipment is not temporary and Lessee does not expect the need for any item of the Equipment to diminish during the Lease Term to such item. (i) The payment of the Rental Payments or any portion thereof is not (under the terms of any Lease or any underlying arrangement) directly or indirectly (x) secured by any interest in property used or to be used in any activity carried on by any person other than a state or local governmental unit or payments in respect of such property; or (y) on a present value basis, derived from payments (whether or not to Lessee) in respect of property, or borrowed money, used or to be used in any activity carried on by any person other than a state or local governmental unit. The Equipment will not be used; directly or indirectly, in any activity carried on by any person other than a state or local governmental unit. No portion of the Equipment Costs for the Equipment will be used, directly or indirectly, to make or finance loans to any person other than Lessee. Lessee has not entered into any management or other service contract with respect to the use and operation of the Equipment. (Amendment 78 Lease) 4 (j) There is no pending litigation, tax claim, proceeding or dispute that may adversely affect Lessee's financial condition or impair its ability to perform its obligations hereunder. Lessee will, at its expense, maintain its legal existence in good standing and do any further act and execute, acknowledge, deliver, file, register and record any further documents Lessor may reasonably request in order to protect Lessor's security interest in the Equipment and Lessor's rights and benefits under this Lease. ARTICLE III Section 3. 01. Lease of Equipment. Subject to the terms of this Master Lease, Lessor agrees to provide the funds specified in each Lease to be provided by it to acquire the Equipment, up to an amount equal to the Maximum Equipment Cost. Upon the execution of each Lease, Lessor demises, leases, transfers and lets to Lessee, and Lessee acquires, rents and leases from Lessor, the Equipment as set forth in such Lease and in accordance with the terms thereof. The Lease Term for each Lease may be continued, solely at the option of Lessee, at the end of the Original Term or any Renewal Tenn for the next succeeding Renewal Term up to the maximum Lease Term set forth in such Lease (which total Lease Term may not exceed five years from the date of the ordinance authorizing each such Lease). At the end of the Original Term and at the end of each Renewal Term until the maximum Lease Term has been completed, Lessee shall be deemed to have exercised its option to continue each Lease for the next Renewal Term unless Lessee shall have terminated such Lease pursuant to Section 10.01 . The terms and conditions during any Renewal Term shall be the same as the terms and conditions during the Original Term, except that the Rental Payments shall be as provided in the applicable Lease. Section 3. 02. Continuation of Lease Term. Lessee intends, subject to Section 10.01 , to continue the Lease Term of each Lease through the Original Term and all Renewal Terms and to pay the Rental Payments thereunder. Lessee affirms that sufficient general revenues are available for the current fiscal year, and Lessee reasonably believes that an amount sufficient to make all Rental Payments during the entire Lease Term of each Lease can be obtained from legally available general revenues of Lessee. Lessee further intends to do all things lawfully within its power to obtain and .maintain general revenues sufficient and available to discharge its obligation to make Rental Payments due hereunder, including making provision for such payments to the extent necessary in each budget adopted in accordance with applicable provisions of law. Section 3. 03 [Intentionally omitted] . Section 3. 04. [Intentionally omitted] Section 3. 05. Conditions to Lessor 's Performance. (a) As a prerequisite to the performance by Lessor of any of its obligations pursuant to any Lease, Lessee shall deliver to Lessor the following: (i) A fully completed Schedule, executed by Lessee; (Amendment 78 Lease) 5 (ii) A Certificate executed by the Clerk or Secretary or other comparable officer of Lessee, in substantially the form attached hereto as Exhibit C, completed to the satisfaction of Lessor; (iii) A certified copy of an ordinance or other official action of Lessee's governing body authorizing the execution and delivery of this Lease and performance by Lessee of its obligations hereunder; (iv) An opinion of counsel to Lessee in substantially the form attached hereto as Exhibit D respecting such Lease and otherwise satisfactory to Lessor; (v) Evidence of insurance as required by Section 7.02 hereof, (vi) All documents, including financing statements, affidavits, notices and similar instruments, in form satisfactory to Lessor, which Lessor deems necessary or appropriate at that time pursuant to Section 6.02; (vii) Assignment of each performance bond, if any, as collateral security to Lessor pursuant to Section 7.02A hereof, (viii) A copy of a fully completed and executed Form 8038-G; and (ix) Such other items, if any, as are set forth in such Lease or are reasonably required by Lessor. (b) In addition, the performance by Lessor of any of its obligations pursuant to any Lease shall be subject to: (i) no material adverse change in the financial condition of Lessee since the date of this Lease, (ii) no Event of Default having occurred, and (iii) the Equipment must be accepted by Lessee no later than the date specified in the relevant Schedule (the "Utilization Period "). (c) Subject to satisfaction of the foregoing, Lessor will pay the Acquisition Amount for Equipment described in a Schedule to the Vendor (or will reimburse Lessee for the prior payment of any such Acquisition Amounts by Lessee to the Vendor) upon receipt of the documents described in Sections 5.01 (a) and (b). (d) This Agreement is not a commitment by Lessor to enter into any Lease not currently in existence, and nothing in this Agreement shall be construed to impose any obligation upon Lessor to enter into any proposed Lease, it being understood that whether Lessor enters into any proposed Lease shall be a decision solely within Lessor's discretion. (e) Lessee will cooperate with Lessor in Lessor's review of any proposed Lease. Without limiting . the foregoing, Lessee will provide Lessor with any documentation or information Lessor may reasonably request in connection with Lessor's review of any proposed Lease. Such documentation may include, without limitation, documentation concerning the Equipment and its contemplated use and location and documentation or information concerning the financial status of Lessee and other matters related to Lessee. (Amendment 78 Lease) 6 ARTICLE IV Section 4. 01. Rental Payments. Subject to Section 10.01 , Lessee shall promptly pay Rental Payments, in lawful money of the United States of America, to Lessor on the dates and in such amounts as provided in each Lease. LESSEE SHALL PAY LESSOR A CHARGE ON ANY RENTAL PAYMENT NOT PAID WITHIN 10 DAYS ON THE DATE SUCH PAYMENT IS DUE AT THE MAXIMUM RATE PERMITTED BY ARKANSAS LAW, FROM SUCH DATE. Lessee shall not permit the federal government to guarantee any Rental Payments under any Lease. Rental Payments consist of principal and interest payments as more fully detailed on each Schedule, the interest on which begins to accrue as of the Commencement Date for each such Schedule. Section 4. 02. Interest and Principal Components. A portion of each Rental Payment is paid as, and represents payment of, interest, and the balance of each Rental Payment is paid as, and represents payment of, principal. Each Lease shall set forth the principal and interest components of each Rental Payment payable thereunder during the Lease Term. Section 4. 03. Rental Payments to Constitute a General Obligation of Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments under each Lease shall constitute a general obligation of Lessee under the provisions of Amendment 78 and the Act. Section 4. 04. Rental Payments to be Unconditional. Except as provided in Section 10.01 , the obligations of Lessee to make Rental Payments and to perform and observe the other covenants and agreements contained in each Lease shall be absolute and unconditional in all events without abatement, diminution, deduction, set-off or defense, for any reason, including without limitation any failure of the Equipment, after it has been accepted by Lessee, any defects, malfunctions, breakdowns or infirmities in the Equipment or any accident, condemnation or unforeseen circumstances. Section 4. 05. Tax Covenant. Lessee agrees that it will not take any action that would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for federal income tax purposes, nor will it omit to take or cause to be taken, in timely manner, any action, which omission would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for federal income tax purposes. Section 4. 06. Event of Taxability. Upon the occurrence of an Event of Taxability, the interest component shall be at a Taxable Rate retroactive to the date as of which the interest component is determined by the Internal Revenue Service to be includible in the gross income of the owner or owners thereof for federal income tax purposes, and Lessee will pay such additional amount as will result in the owner receiving the interest component at the Taxable Rate identified in the related Lease. For purposes of this Section, "Event of Taxability " means a determination that the interest component is includible for federal income tax purposes in the gross income of the owner thereof due to Lessee's action or failure to take any action. (Amendment 78 Lease) 7 M Section 4. 07. [Intentionally omitted] ARTICLE V Section 5. 01. Delivery, Installation and Acceptance of Equipment. (a) Lessee shall order the Equipment, cause the Equipment to be delivered and installed at the location specified in the Leases and pay any and all delivery and installation costs and other Equipment Costs in connection therewith. When the Equipment listed in any Lease has been delivered and installed, Lessee shall promptly accept such Equipment and evidence said acceptance by executing and delivering to Lessor an acceptance certificate in the form attached hereto as Exhibit B. (b) Lessee shall deliver to Lessor original invoices and bills of sale (if title to such Equipment has passed to Lessee) relating to each item of Equipment accepted by Lessee. Lessor shall, upon receipt of an Acceptance Certificate from Lessee, prepare a Schedule of Property and Rental Payment Schedule in the forms attached hereto as Schedule A and A-1 . Lessee shall execute and deliver such Schedules to Lessor within 5 business days of receipt. Section 5. 02. Enjoyment of Equipment. Lessor shall provide Lessee with quiet use and enjoyment of the Equipment during the Lease Term, and Lessee shall peaceably and quietly have, hold and enjoy the Equipment during the Lease Term, without suit, trouble or hindrance from Lessor, except as otherwise expressly set forth in the related Lease. Lessor shall not interfere with such quiet use and enjoyment during the Lease Term so long as Lessee is not in default under the related Lease. Section 5. 03. Location; Inspection. Except in connection with normal operation and maintenance and repair, once installed, no item of the Equipment will be moved from the location specified for it in the Lease on which such item is listed without Lessor's consent, which consent shall not be unreasonably withheld. Lessor shall have the right at all reasonable times during regular business hours to enter into and upon the property of Lessee for the purpose of inspecting the Equipment. Section 5. 04. Use and Maintenance of the Equipment. Lessee will not install, use, operate, or maintain the Equipment improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by the related Lease. Lessee shall provide all permits and licenses, if any, necessary for the installation and operation of the Equipment. In addition, Lessee agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative, or judicial body relating to the installation, use, operation and maintenance of the Equipment; provided that Lessee may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the opinion of Lessor, adversely affect the interest (including the reversionary interest) of Lessor in and to the Equipment or its interest or rights under the Lease. (Amendment 78 Lease) 8 Lessee agrees that it will maintain, preserve, and keep the Equipment in good repair and working order, in accordance with manufacturer's recommendations. Lessor shall have no responsibility to maintain, repair or make improvements or additions to the Equipment. In all cases, Lessee agrees to pay any costs necessary for the manufacturer to re-certify the Equipment as eligible for manufacturer's maintenance upon the return of the Equipment to Lessor as provided for herein. Lessee shall not alter any item of Equipment or install any accessory, equipment or device on an item of Equipment if that would impair any applicable warranty, the originally intended function or the value of that Equipment. All repairs, parts, accessories, equipment and devices furnished, affixed to or installed on any Equipment, excluding temporary replacements, shall thereupon become subject to the security interest of Lessor. ARTICLE VI Section 6. 01. Title to the Equipment. During each Lease Term, and so long as no Event of Default has occurred and is continuing under Article XII hereof, all right, title and interest in and to each item of the Equipment shall be vested in Lessee immediately upon its acceptance of each item of Equipment, subject to the terms and conditions of the applicable Lease. Lessee shall at all times protect and defend, at its own cost and expense, its title in and to the Equipment from and against all claims, liens and legal processes of its creditors, and keep all Equipment free and clear of all such claims, liens and processes. Upon the occurrence of an Event of Default, full and unencumbered legal title to the Equipment shall pass to Lessor, and Lessee shall have no further interest therein. In addition, upon the occurrence of such an Event of Default or such termination, Lessee shall execute and deliver to Lessor such documents as Lessor may request to evidence the passage of such legal title to Lessor and the termination of Lessee's interest therein, and upon request by Lessor shall deliver possession of the Equipment to Lessor in accordance with Section 12.02. Upon purchase of the Equipment under a Lease by Lessee pursuant to Section 10.01 , Lessor's security interest or other interest in the Equipment shall terminate, and Lessor shall execute and deliver to Lessee such documents as Lessee may request to evidence the termination of Lessor's security interest in the Equipment subject to the related Lease. Section 6. 01. Security Interest. To secure the payment of all of Lessee's obligations under each Lease, upon the execution of such Lease, Lessee grants to Lessor a security interest constituting a first lien on (a) the Equipment applicable to such Lease, and (b) any and all proceeds of any of the foregoing. Lessee agrees to execute and authorizes Lessor to file such notices of assignment, chattel mortgages, financing statements and other documents, in form satisfactory to Lessor, which Lessor deems necessary or appropriate to establish and maintain Lessor's security interest in the Equipment and the proceeds thereof. Section 6. 03. Personal Property. The Equipment is and will remain personal property and will not be deemed to be affixed to or a part of the real estate on which it may be situated, notwithstanding that the Equipment or any part thereof may be or hereafter become in any manner physically affixed or attached to real estate or any building thereon. Upon the request of Lessor, Lessee will, at Lessee's expense, furnish a waiver of any interest in the Equipment from any party having an interest in any such real estate or building. (Amendment 78 Lease) 9 ARTICLE VII Section 7. 01. Liens, Taxes, Other Governmental Charges and Utility Charges. Lessee shall keep the Equipment free of all levies, liens, and encumbrances except those created by each Lease. The parties to this Agreement contemplate that the Equipment will be used for a govern- mental or proprietary purpose of Lessee and that the Equipment will therefore be exempt from all property taxes. If the use, possession or acquisition of any Equipment is nevertheless determined to be subject to taxation, Lessee shall pay when due all taxes and governmental charges lawfully assessed or levied against or with respect to such Equipment. Lessee shall pay all utility and other charges incurred in the use and maintenance of the Equipment. Lessee shall pay such taxes or charges as the same may become due; provided that, with respect to any such taxes or charges that may lawfully be paid in installments over a period of years, Lessee shall be obligated to pay only such installments as accrue during each Lease Term. Section 7. 02. Insurance. Lessee shall during each Lease Term maintain or cause to be maintained (a) casualty insurance naming Lessor and its assigns as additional insured and loss payee and insuring the Equipment against loss or damage by fire and all other risks covered by the standard extended coverage endorsement then in use in the State, and any other risks reasonably required by Lessor, in an amount at least equal to the then applicable Purchase Price of the Equipment; (b) liability insurance that protects Lessor from liability in all events in form and amount satisfactory to Lessor; and (c) worker's compensation coverage as required by the laws of the State; provided that, with Lessor's prior written consent, Lessee may self-insure against the risks described in clause (a). Lessee shall furnish to Lessor evidence of such insurance or self-insurance coverage throughout each Lease Term. Lessee shall not cancel or modify such insurance or self-insurance coverage in any way that would affect the interests of Lessor without first giving written notice thereof to Lessor at least 30 days in advance of such cancellation or modification. Section 7. 02A. Surety Bonds; Lessee to Pursue Remedies Against Contractors and Subcontractors and Their Sureties. Lessee has secured from each contactor directly employed by Lessee, in connection with the acquisition, construction, installation, improvement or equipping of the Equipment, payment and performance bonds executed by a surety company reasonably acceptable to Lessor and authorized to do business in the State in a sum equal to the entire amount to become payable under the contract with such contractor. Each bond was conditioned on the completion of the work in accordance with the plans and specifications for the Equipment and upon payment of all claims of subcontractors and suppliers. Lessee shall upon receipt of each bond from each contractor assign such bond as collateral security to Lessor. In the event of a material default of any contractor under any contract in connection with the acquisition, construction, improvement or equipping of the Equipment or in the event of a material breach of warranty with respect to any material, workmanship or performance guaranty, Lessee will promptly proceed to exhaust its remedies against the contractor, or supplier in default and against any surety for the performance of such contract with respect to the contractor. Lessee shall advise Lessor of the steps it intends to take in connection with any such default. Any amounts received by way of damages, refunds, adjustments or otherwise in connection with the foregoing shall be paid to Lessor and applied against Lessee's obligations hereunder, net of legal fees. (Amendment 78 Lease) 10 0 Section 7.03. Advances. In the event Lessee shall fail to keep the Equipment in good repair and working order, Lessor may, but shall be under no obligation to, maintain and repair the Equipment and pay the cost thereof. All amounts so advanced by Lessor shall constitute additional rent for the then current Original Term or Renewal Term and Lessee covenants and agrees to pay such amounts so advanced by Lessor with interest thereon from the due date until paid at the maximum rate permitted by Arkansas law. ARTICLE VIII Section 8.01. Damage, Destruction and Condemnation. Unless Lessee shall have exercised its option to purchase the Equipment pursuant to Section 10.01 by making payment of the Purchase Price as provided in the related Lease, if, prior to the termination of the applicable Lease Term, (a) the Equipment or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Equipment or any part thereof shall be taken under the exercise or threat of the power of eminent domain by any governmental body or by any person, firm or corporation acting pursuant to governmental authority, Lessee and Lessor will cause the Net Proceeds of any insurance claim or condemnation award or sale under threat of condemnation to be applied to the prompt replacement, repair, restoration, modification or improvement of the Equipment. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to Lessee. If Lessee elects to replace any item of the Equipment (the "Replaced Equipment") pursuant to this Section, the replacement equipment (the "Replacement Equipment") shall be of similar type, utility and condition to the Replaced Equipment and shall be of equal or greater value than the Replaced Equipment. Lessor shall receive a first lien security interest in any such Replacement Equipment. Lessee shall represent, warrant and covenant to Lessor that each item of Replacement Equipment is free and clear of all claims, liens, security interests and encumbrances, excepting only those liens created by or through Lessor, and shall provide to Lessor any and all documents as Lessor may reasonably request in connection with the replacement, including, but not limited to, documentation in form and substance satisfactory to Lessor evidencing Lessor's security interest in the Replacement Equipment. Lessor and Lessee hereby acknowledge and agree that any Replacement Equipment acquired pursuant to this paragraph shall constitute "Equipment" for purposes of this Master Equipment Lease and the related Lease. Lessee shall complete the documentation of Replacement Equipment on or before the next Rental Payment date after the occurrence of a casualty event, or be required to exercise the Purchase Option with respect to the damaged equipment. For purposes of this Article, the term "Net Proceeds" shall mean the amount remaining from the gross proceeds of any insurance claim or condemnation award or sale under threat of condemnation after deducting all expenses, including attorneys' fees, incurred in the collection thereof. Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to in Section 8.01, Lessee shall either (a) complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds,. or (b) pay or cause to be paid to Lessor the amount of the then applicable Purchase Price for the Equipment, (Amendment 78 Lease) 11 S • and, upon such payment, the applicable Lease Term shall terminate and Lessor's security interest in the Equipment shall terminate as provided in Section 6.01 hereof. The amount of the Net Proceeds, if any, remaining after completing such repair, restoration, modification or improvement or after purchasing such Equipment and such other Equipment shall be retained by Lessee. If Lessee shall make any payments pursuant to this Section, Lessee shall not be entitled to any reimbursement therefor from Lessor nor shall Lessee be entitled to any diminution of the amounts payable under Article IV. ARTICLE IX Section 9.01. Disclaimer of Warranties. Lessor makes no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for particular purpose or fitness for use of the Equipment, or any other warranty or representation, express or implied, with respect thereto and, as to Lessor, Lessee's acquisition of the Equipment shall be on an "as is" basis. In no event shall Lessor be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Agreement, any Lease, the Equipment or the existence, furnishing, functioning or Lessee's use of any item, product or service provided for in this Agreement or any Lease. Section 9.02. Vendor's Warranties. Lessor hereby irrevocably appoints Lessee its agent and attorney -in -fact during each Lease Term, so long as no Event of Default shall have occurred and be continuing under the related Lease, to assert from time to time whatever claims and rights (including without limitation warranties) relating to the Equipment that Lessor may have against Vendor. Lessee's sole remedy for the breach of such warranty, indemnification or representation shall be against Vendor of the Equipment, and not against Lessor. Any such matter shall not have any effect whatsoever on the rights and obligations of Lessor with respect to any Lease, including the right to receive full and timely Rental Payments under a Lease. Lessee expressly acknowledges that Lessor makes, and has made, no representations or warranties whatsoever as to the existence or the availability of such warranties relating to the Equipment. ARTICLE X Section 10.01. Purchase Option. Lessee shall have the option to purchase all of the Equipment listed in a Lease, at the following times and upon the following terms: (a) From and after the date specified in the related Schedule (the "Purchase Option Commencement Date"), on the Rental Payment dates specified in each Lease, upon not less than 30 days' prior written notice, and upon payment in full of the Rental Payments then due under such Lease plus the then applicable Purchase Price, which may include a prepayment premium on the unpaid balance as set forth in the applicable Schedule; or (b) In the event of substantial damage to or destruction or condemnation of substantially all of the Equipment listed in a Lease, on the day specified in Lessee's notice to Lessor of its exercise of the purchase option (which shall be the earlier of the next Rental (Amendment 78 Lease) 12 S Payment date or 60 days after the casualty event) upon payment in full to Lessor of the Rental Payments then due under such Lease plus the then applicable Purchase Price; or (c) Upon the expiration of the Lease Term, upon payment in full of all Rental Payments then due and all other amounts then owing under the Lease, and the payment of $1.00 to Lessor. After payment of the applicable Purchase Price, Lessee will own the related Equipment, and Lessor's security interests in and to such Equipment will be terminated. ARTICLE XI Section 11.01. Assignment by Lessor. Lessor's right, title and interest in and to Rental Payments and any other amounts payable by Lessee under any and all of the Leases, its security interest in the Equipment subject to each such Lease, and all proceeds therefrom may be assigned and reassigned in whole or in part to one or more assignees or subassignees by Lessor, without the necessity of obtaining the consent of Lessee; provided, however, that any such assignment, transfer or conveyance to a trustee for the benefit of owners of certificates of participation shall be made in a manner that conforms to any applicable State law and said certificates of participation shall be offered and sold in a private placement or limited offering only to investors whom Lessor reasonably believes are qualified institutional buyers or accredited investors within the meaning of the applicable federal securities laws. Nothing in this Section 11.01 shall be construed, however, to prevent Lessor from executing any such assignment, transfer or conveyance that does not involve funding through the use of certificates of participation within the meaning of applicable State law, including any such assignment, transfer or conveyance as part of a multiple asset pool to a partnership or trust, interests in which are offered and sold in a private placement or limited offering only to investors whom Lessor reasonably believes are qualified institutional buyers or accredited investors within the meaning of the applicable federal securities law; provided further, however, that in any event, Lessee shall not be required to make Rental Payments, to send notices or to otherwise deal with respect to matters arising under a Lease with or to more than one individual or entity. No assignment, transfer or conveyance permitted by this Section 11.01 shall be effective until Lessee shall have received a written notice of assignment that discloses the name and address of each such assignee; provided, however, that if such assignment is made to a bank or trust company as trustee or paying agent for owners of certificates of participation, trust certificates or partnership interests with respect to the Rental Payments payable under a Lease, it shall thereafter be sufficient that Lessee receives notice of the name and address of the bank or trust company as trustee or paying agent. During each Lease Term, Lessee shall keep, or cause to be kept, a complete and accurate record of all such assignments in form necessary to comply with Section 149 of the Code. Lessee shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees designated in such register. Lessee shall not have the right to and shall not assert against any assignee any claim, counterclaim or other right Lessee may have against Lessor or the Vendor. Assignments in part may include without limitation assignment of all of Lessor's security interest in and to the Equipment listed in a particular Lease and all rights in, to and under the Lease related to such Equipment. The option granted in this Section may be separately exercised from (Amendment 78 Lease) 13 time to time with respect to the Equipment listed in each Lease, but such option does not permit the assignment of less than all of Lessor's interests in the Equipment listed in a single Lease. Section 11.02. Assignment and Subleasing by Lessee. None of Lessee's right, title, and interest in, to and under any Lease or any portion of the Equipment may be assigned or encum- bered by Lessee for any reason. ARTICLE XII Section 12.01. Events of Default Defined. Any of the following events shall constitute an "Event of Default " under a Lease: (a) Failure by Lessee to pay any Rental Payment or other payment required to be paid under any Lease within 10 days of the date specified herein; (b) Failure by Lessee to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in subparagraph (a) above, for a period of 30 days after written notice specifying such failure and requesting that it be remedied is given to Lessee by Lessor, unless Lessor shall agree in writing to an extension of such time prior to its expiration; provided that, if the failure stated in the notice cannot be corrected within the applicable period, Lessor will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by Lessee within the applicable period and diligently pursued until the default is corrected; (c) Any statement, representation or warranty made by Lessee in or pursuant to any Lease or its execution, delivery or performance shall prove to have been false, incorrect, misleading, or breached in any material respect on the date when made; (d) Any default occurs under any other agreement for borrowing money or receiving credit under which Lessee may be obligated as borrower, if such default consists of (i) the failure to pay any indebtedness when due or (ii) the failure to perform any other obligation thereunder and gives the holder of the indebtedness the right to accelerate the indebtedness; (e) Lessee shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of Lessee, or of all or a substantial part of the assets of Lessee, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable federal bankruptcy law, or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or taking advantage of any insolvency law or any answer admitting the material allegations of a petition filed against Lessee in any bankruptcy, reorganization or insolvency proceeding; or (f) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator or Lessee or of all or a substantial part of the assets of Lessee, in each case without its application, approval or consent, and such order, judgment or decree shall continue unstayed and in effect for any period of 30 consecutive days. (Amendment 78 Lease) 14 Section 12.02. Remedies on Default. Whenever any Event of Default exists, Lessor shall have the right, at its sole option without any further demand or notice, to take one or any combination of the following remedial steps: (a) By written notice to Lessee, Lessor may declare all Rental Payments payable by Lessee pursuant to such Lease and other amounts payable by Lessee under such Lease to the end of the then current Original Term or Renewal Term to be due subject, however, to any limitations imposed by applicable Arkansas law; (b) With or without terminating the Lease Term under such Lease, Lessor may enter the premises where the Equipment listed in such Lease is located and retake possession of such Equipment or require Lessee at Lessee's expense to promptly return any or all of such Equipment to the possession of Lessor at such place within the United States as Lessor shall specify, and sell or lease such Equipment or, for the account of Lessee, sublease such Equipment, continuing to hold Lessee liable, but solely from legally available funds, for the difference between (i) the Rental Payments payable by Lessee pursuant to such Lease and other amounts related to such Lease or the Equipment listed therein that are payable by Lessee to the end of the then current Original Term or Renewal Term, as the case may be, and (ii) the net proceeds of any such sale, leasing or subleasing (after deducting all expenses of Lessor in exercising its remedies under such Lease, including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing such Equipment and all brokerage, auctioneer's and attorney's fees and to any limitations imposed by applicable Arkansas law). The exercise of any such remedies respecting any such Event of Default shall not relieve Lessee of any other liabilities under any other Lease or the Equipment listed therein; and (c) Lessor may take whatever action at law or in equity may appear necessary or desirable to enforce its rights under such Lease or as a secured party in any or all of the Equipment subject to such Lease. Section 12.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to Lessor is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under a Lease now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Lessor to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice other than such notice as may be required in this Article. Section 12.04. Application of Moneys. Any net proceeds from the exercise of any remedy under this Agreement, including the application specified in Section 12.02(b)(ii) (after deducting all expenses of Lessor in exercising such remedies including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing Equipment and all brokerage, auctioneer's or attorney's fees), shall be applied as follows: (a) If such remedy is exercised solely with respect to a single Lease, Equipment listed in such Lease or rights thereunder, then to amounts due pursuant to such Lease and other amounts related to such Lease or such Equipment. (Amendment 78 Lease) 15 (b) If such remedy is exercised with respect to more than one Lease, Equipment listed in more than one Lease or rights under more than one Lease, then to amounts due pursuant to such Leases pro rata. ARTICLE XIII Section 13.01. Notices. All notices, certificates or other communications under any Lease shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, or delivered by overnight courier, or sent by facsimile transmission (with electronic confirmation) to the parties hereto at the addresses immediately after the signatures to this Agreement (or at such other address as either party hereto shall designate in writing to the other for notices to such party) and to any assignee at its address as it appears on the registration books maintained by Lessee. Section 13.02. Release and Indemnification. To the extent permitted by law, but only from legally available funds, Lessee shall indemnify, protect, hold harmless, save and keep harmless Lessor from and against any and all liability, obligation, loss, claim, tax and damage whatsoever, regardless of cause thereof, and all expenses in connection therewith (including, without limitation, counsel fees and expenses, and penalties connected therewith imposed on interest received) arising out of or as a result of (a) the entering into of this Agreement or any Lease by Lessee, (b) the ownership of any item of the Equipment, (c) the ordering, acquisition, use, operation, condition, purchase, delivery, rejection, storage or return of any item of the Equipment, (d) any accident in connection with the operation, use, condition, possession, storage or return of any item of the Equipment resulting in damage to property or injury to or death to any person, and/or (e) the breach of any covenant of Lessee in a Lease or any material misrepresentation by Lessee contained in a Lease. The indemnification arising under this paragraph shall continue in full force and effect notwithstanding the full payment of all obligations under all Leases or the termination of the Lease Term under all Leases for any reason. Section 13.03. Binding Effect. Each Lease shall inure to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns. Section 13.04. Severability. In the event any provision of any Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 13.05. Amendments, Changes and Modifications. Each Lease may only be amended by Lessor and Lessee in writing. Section 13.06. Execution in Counterparts. Each Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 13.07. Applicable Law. Each Lease shall be governed by and construed in accordance with the laws of the State. (Amendment 78 Lease) 16 Section 13.08. Captions. The captions or headings in this Agreement and in each Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement or any Lease. (Amendment 78 Lease) 17 IN WITNESS WHEREOF, Lessor and Lessee have caused this Agreement to be executed in their names by their duly authorized representatives as of the date first above written. LESSOR: LESSEE: Banc of America Leasing & Capital, LLC City of Fayetteville, Arkansas 555 California Street, 4th Floor 113 West Mountain Street CA5-705-04-01 Fayetteville, Arkansas 72701 San Francisco, California 94104 By By Title Title: Mayor (Seal) Attest: By Title: City Clerk (Amendment 78 Lease) 18 EXHIBIT A SCHEDULE OF PROPERTY NO. Re: Master Equipment Lease/Purchase Agreement, dated as of 2003, between Banc of America Leasing & Capital, LLC, as Lessor, and City of Fayetteville Arkansas, as Lessee 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above -referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment Lease"). 2. Equipment. The following items of Equipment are hereby included under this Schedule of the Master Equipment Lease. Quantity Description Serial No. Model No. Location 3. Payment Schedule. (a) Rental Payments. The Rental Payments shall be in such amounts and payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as Exhibit A-1. Rental Payments shall commence on the date on which the Equipment listed in this Schedule is accepted by Lessee, as indicated in an Acceptance Certificate substantially in the form of Exhibit B to the Master Equipment Lease. The Equipment must be accepted by Lessee no later than June 30, 2003. (b) Purchase Price Schedule. The Purchase Price on each Rental Payment date for the Lease of the Equipment listed in this Schedule shall be the amount set forth for such Rental Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule (including the Rental Payment shown on the same line in the Rental Payment Schedule). 4. Representations, Warranties and Covenants. Lessee hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Master Equipment Lease are true and correct as though made on the date of commencement of Rental Payments on this Schedule. Lessee further represents and warrants that no material adverse (Amendment 78 Lease) A-1 change in Lessee's financial condition has occurred since the date of the Master Equipment Lease. 5. The Lease. The terms and provisions of the Master Equipment Lease (other than to the extent that they relate solely to other Schedules or Equipment listed on other Schedules) are hereby incorporated into this Schedule by reference and made a part hereof. 6. Acquisition Amount. The Acquisition Amount for the Equipment described in this Schedule to be paid to the Vendor is $ 7. Lease Term. The Lease Term shall consist of the Original Term and consecutive Renewal Terms, with the final Renewal Term ending on 8. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease, the Purchase Option Commencement Date is Dated: LESSOR: Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 By_ Title LESSEE: City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, Arkansas 72701 (Seal) Attest: By__ 'r- r Counterpart No. of manually executed and serially numbered counterparts. To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial Code), no security interest herein may be created through the transfer or possession of any Counterpart other than Counterpart No. 1. all J::.... (Amendment 78 Lease) A-2 EXHIBIT A-1 RENTAL PAYMENT SCHEDULE Rental Payment Date Rental Payment Amount Interest Portion Principal Portion Purchase Price Prepayment Premium for purposes of Section 10.01(a) is 1.00%. For purposes of this Lease, "Taxable Rate, " with respect to the interest component of Rental Payments, means an annual rate of interest equal to LESSEE: City of Fayett ille, Arkansas By Title: Mayor (Amendment 78 Lease) A-1-1 EXHIBIT B ACCEPTANCE CERTIFICATE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. _, dated , to Master Equipment Lease/Purchase Agreement, dated as of , 2003, between Banc of America Leasing & Capital, LLC, as Lessor, and City of Fayetteville, Arkansas, as Lessee. Ladies and Gentlemen: In accordance with the Master Equipment Lease/Purchase Agreement (the "Agreement"), the undersigned Lessee hereby certifies and represents to, and agrees with Lessor as follows: 1. All of the Equipment (as such term is defined in the Agreement) listed in the above -referenced Schedule of Property (the "Schedule ") has been delivered, installed and accepted on the date hereof. 2. Lessee has conducted such inspection and/or testing of the Equipment listed in the Schedule as it deems necessary and appropriate and hereby acknowledges that it accepts the Equipment for all purposes. 3. Lessee is currently maintaining the insurance coverage required by Section 7.02 of the Agreement. 4. No event or condition that constitutes, or with notice or lapse of time, or both, would constitute, an Event of Default (as defined in the Agreement) exists at the date hereof. Date: LESSEE: Cit By Tit] (Se..., (Amendment 78 Lease) B -t • EXHIBIT C CERTIFICATE The undersigned, the duly elected and acting City Clerk of the City of Fayetteville ("Lessee") certifies as follows: A. The following listed persons are duly elected and acting officials of Lessee (the "Officials ") in the capacity set forth opposite their respective names below and that the facsimile signatures are true and correct as of the date hereof; B. The Officials are duly authorized, on behalf of Lessee, to negotiate, execute and deliver the Master Equipment Lease/Purchase Agreement dated as of , 2003 and the Schedule(s) thereunder and all future Schedule(s) (the "Agreements ") by and between Lessee and Banc of America Leasing & Capital, LLC and these Agreements are binding and authorized Agreements of Lessee, enforceable in all respects in accordance with their terms. Name of Official Dan Coody Title Mayor Dated // y 103 (The signer of this Certificate cannot be listed above as authorized to execute the Agreements.) f PYE Tb (Amendment 78 Lease) C -t C EXHIBIT D OPINION OF COUNSEL TO LESSEE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. _, dated , to Master Equipment Lease/Purchase Agreement, dated as of , 2003, between Banc of America Leasing & Capital, LLC, as Lessor, and City of Fayetteville, Arkansas, as Lessee Ladies and Gentlemen: As legal counsel to the City of Fayetteville, Arkansas ("Lessee"), I have examined (a) an executed counterpart of a certain Master Equipment Lease/Purchase Agreement, dated as of /3 t4 , 2003, and Exhibits thereto by and between Banc of America Leasing & Capital, LLC ("Lessor") and Lessee (the "Agreement") and an executed counterpart of Schedule of Property No. _, dated , by and between Lessor and Lessee (the "Schedule"), which, among other things, provides for the lease of certain property listed in the Schedule (the "Equipment"), (b) an executed counterpart of Ordinance No. 9 qg of Lessee adopted /5 , 2003, which, among other things, authorizes Lessee to execute the Agreement and the Schedule, and (c) such other opinions, documents and matters of law as I have deemed necessary in connection with the following opinions. The Schedule and the terms and provisions of the Agreement incorporated therein by reference, together with the Rental Payment Schedule attached to the Schedule, are herein referred to collectively as the "Lease". Based on the foregoing, I am of the following opinions: 1. Lessee is a public body corporate and politic, duly organized and existing under the laws of the State of Arkansas, and is a political subdivision of the State of Arkansas within the meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended (the "Code"), and the obligations of Lessee under the Agreement will constitute an obligation of Lessee within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code. 2. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 78 and Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp.) (the "Act"), Lessee has the requisite power and authority to lease and acquire the Equipment and to execute and deliver the Lease and to perform its obligations under the Lease. 3. The Lease has been duly authorized, approved, executed and delivered by and on behalf of Lessee and the Lease is a valid and binding general obligation of Lessee under Amendment 78 and the Act enforceable in accordance with its terms. (Amendment 78 Lease) D-1 4. The authorization, approval, execution and delivery of the Lease and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state or federal laws. 5. To the best of our knowledge, there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transactions contemplated by the Lease or the security interest of Lessor or its assigns, as the case may be, in the Equipment thereunder. 6. The portion of rentals designated as and constituting interest paid by Lessee and received by Lessor is excluded from Lessor's gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of Arkansas personal income taxes; and such interest is not a specific item for purposes of the federal individual or corporate alternative minimum taxes. [TO BE REVISED] All capitalized terms herein shall have the same meanings as in the Lease unless otherwise provided herein. Lessor and its successors and assigns, and any counsel rendering an opinion on the tax-exempt status of the interest components of the Rental Payments, are entitled to rely on this opinion. It is to be understood that the rights of Lessor and the enforceability of the Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting. creditors' rights heretofore or. hereafter enacted to the extent constitutionally applicable and that its enforcement may also be subject to the exercise of judicial discretion in appropriate cases. (Amendment 78 Lease) D-2 ESSENTIAL USE/SOURCE OF FUNDS CERTIFICATE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Master Equipment Lease/Purchase Agreement dated , 2003, between Banc of America Leasing & Capital, LLC and City of Fayetteville, Arkansas ("Lessee") and Schedule of Property No. dated This certificate confirms and affirms that the Equipment described in the Agreement referenced above is essential to the functions of Lessee or to the services Lessee provides its citizens. Further, Lessee has an immediate need for, and expects to make immediate use of, substantially all such Equipment, which need is not temporary or expected to diminish in the foreseeable future. Such Equipment will be used by Lessee only for the purpose of performing one or more of Lessee's governmental or proprietary functions consistent with the permissible scope of its authority. Lessee expects and anticipates adequate funds to be available r all future payments or rent due after the current budgetary period. A Signature Name u A ►J i 7rdy Titles { MICROFILM%% FAYETTtVILLE THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE 7-' Qaµc y HM�k�C/v TO: Mayor Coody FROM: Stephen Davis, Finance & Internal Services Director DATE: November I8, 2004 Subject: Amendment 78 Lease — Fire Apparatus Recommendation Staff recommends approval of this lease addendum with Banc of America Leasing, LLC. The execution of these documents will finalize the 2004 fire apparatus purchase. Background City Council authorized an additional fire apparatus in December 2003 with the understanding that the City intended to utilize the Banc of America (BOA) Amendment 78 Lease Program approved earlier in 2003. The City previously utilized $1,769,000 of this lease program to fund fire apparatus purchases. Discussion The fire apparatus arrived in early August and has been paid for. The City's credit line with BOA for Amendment 78 leases is $2.8 million; with this transaction the City will have utilized approximately $2.1 million of the master lease. After this transaction the City's remaining line -of -credit, from BOA, is $700,000. Prior to initiating this lease transaction Staff performed a cost/benefit analysis to determine if the lease program remains a positive option for the City. The cost/benefit analysis of each transaction on the use of the master lease agreement is consistent with commitments made for this fiscal tool. This additional lease of $347,000 after all direct expenses (interest expense and legal) will net the City less than $5,000 over the life of the lease. From a cash -flow perspective the lease transaction is still valid; however, it does indicate that this may be the last lease the City should enter into for the next few months. CC: chris Bosch Sondra Smith Kit Williams Marsha Farthing Kevin Springer Fire Chief City Clerk City Attorney Accounting Manager Budget Manager 4079 9 NAME OF FILE: Ordinance No. 4478 CROSS REFERENCE: Item # Date Document 1 04/15/03 Ord. 4478 w/Exhibits 2 04/01/03 Staff Review Form w/attachments: memo to City Council copy of Summary of Terms & Conditions Appendix A Appendix B Sample Amortization Schedule Sample Amortization Schedule 3 04/17/03 memo to Davis 4 04/19/03 Affidavit of Publication 5 04/19/03 memo to Davis NOTES: FAYETTEv�LLE THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE To: Steve Davis Finance & Internal Services From: Clarice Buffalohead-Pearman City Clerk Division Date: April 1Q, 2003 Re: Affidavit of Publication Attached is a copy of the above affidavit for Ordinance No.4478 regarding fire equipment lease/purchase agreement. The original will be filed with the original ordinance. If anything else is needed please let the clerk's office know. /cbp attachments nr �'- .r. AFFIDAVIT OF PUBLICATION I, /.%O.hr> l�, / , do solemnly swear that I am Lega Clerk of the Arkansas Democrat -Gazette newspaper, printed and published in Lowell, Arkansas, and that from my own personal knowledge' and reference to the files of said publication, the advertisement of: /9_®3 was inserted in the regular editions on ** Publication Charge: $ /9o. 54 - Subscribed and sworn to before -me this day of 1 X�J�` 2003. Notary Pu My Commission Expires: ** Please do not pay from Affidavit. An invoice will be sent. RECEIVED APR 21 2003 CITY OF FAYET7EVIi. CITY CLERK'S OFFICE 212 NORTH EAST AVENUE • P.O. BOX 1607 • FAYETTEVIIIE, ARKANSAS 72702 • (501) 442-1700 I 0 ORDINANCE NO. 4478 AN ORDINANCE AUTHORIZING THE EXECUTION AND DELIVERY OF A MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT HAVING A NOMINAL PRINCIPAL AMOUNT NOT TO EXCEED $5,000.000.00 FOR THE PURPOSE OF FINANCING THE COST OF ACQUIRING CERTAIN FIRE FIGHTING APPARATUS: AND PRESCRIBING OTHER �s��ara1 MATTERS RELATITH NG ERETO Ciof Fayeltevllie WHEREAS, the City Cousdl of the City of FeyetteNYe, Arkansas has determined that there is a great need for a medtarlsm to finance the costs of aCQUSSo n of Cartel, In fighting apparatus to benefit the residents of the City, and WHEREAS, the City a authorized and empowered tntler the pro4sbre of the Constitution and laws of the State of Arkansas, Including particularly Amendment 78 to the ConstitWon of the State of Arkansas and the Local Government Short -Term Rrencig Obligations Act of 2001, codified as Arkansas Code Annotated (2001 Stpp.) SBCeons 14-78-101 et seq. se from time to time amended, to enter Ma caneln Bind -term Iease/prchase amerngertene to finance the txats of vadan capital lnprovernenta which lease obligations shall constitute general obligations of the City under Amendment 7B and the Act: and WHEREAS, the City has made arrangements for the entry into a Master Equlprnent Lease/Purchase Agreement with Banc of America Leering & Capital, LLC, a Delaware liirted liability, In substantially the loom presented to and before this meeting: NOW, THEREFORE, BE R GROANED BY THE CITY COUNCIL OF THE CITY OF FAYETIEVILLE, ARKANSAS THAT . Section 1, Under the authority of the Corsi and lawws of the State of Arkansas, the Maya Is hereby authorized and directed to execute the Lease/Purchase Agreement, and the City Clerk Is hereby amedzed and directed to execute the. Loase/Frchase Agreement and to etc the seal of the City Uweto, and the Mayer and the Cit)3 Clerk are hereby authorized and directed to Case the Lease/Pischese Agmo msit to be executed by Banc of Amerce Leasing & Capital. LLC. The LeasePunctsse Agreement Is hereby approved In substanlialy the form abutted to Gds meting. The Mayor a hereby authorized to confer with with Banc of America Leasing & Capital, LLC and Kutak Rock LLP, Bond Counsel, In order to complete the Lease/Ptuchase Agreement N substantially the form mbmtted to this meeting, with such danger as and be approved by such persons executing the Loase/Pwthase Agreement, ,fret execution to constitute condusfe evidence of sod, appoval. Section 2. The risen al principal anou,t of the LeasefRxch se Agreement may not exceed $5,000,000.00 In the aggregate. the term of the Lease/Pahas ce Agreement shall epan he no later G five years from the date of adoption of the ordiance, and the effective Merest rate retethg to the Cltyb obligatiors under the LeaseArchose Agreement shall not exceed the maximum we prescribed by Arlorrsas law, 4x1fdug Amendmaut 78 and the Act. Section 3. It is affumed that. pusant to Amendment 78 and the Act. the payment oblgatons of the City tnler the LeasaPuchase Agreement shat costiMe general obligations of the City, and the total an4Hl payments owed by the Cry under the Lease/Purchase Agreement in each of the Otye Its years shall be charged against and paid from Me general revenues of the City forsuch fiscal years. Section 4. As requied by Amendment 78 and the Act, the City hereby finds and determines that: (a) Each of the components to be financed titer he Lease/Puchese Agreement has an average ,Beth rife in excess of one yea: and (b) The aggregate nominal principal annum of as obligations of the City trader Amendment 78 and the Act, bcleing the Lease/Purchase Agreement, will at no time exceed five percent (5%) of the assessed value. of the taxable real and personal property located wiNln the Gy as determined by the lest tax assessment compieted prior to the date hereof. Section 5. Tire Mayor end City Clerk for and on behalf of the City. am hereby authorized and directed to do any and a things necessary to effect the execution and decoy of the Lease/Purchase Agreement, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the Oily Clerk are further authorized and directed, for and on behalf of the City to execute all papers, documents, certificates and other inahtments that may be required for the carrying out of such authority or to evidence the exercise tlereol. Section B. The protons of this Ordnance ere,hereby declared to be severable, and i any section, phrase or prwkbn shall for any reason be declared to be Segal a Invalid, axi, declaration shall not affect the validity of the remainder of the sec ors, phrases or provisions of Nis Ordi ance. • Section?. All ordinances, resolution and parts thereof In con Tct herewith are hereby repealed to the • exert of audn confict. PASSED and APPROVED this the 15th day of April. 2003. APPROVED: By: DTATN�CCOODV, Mayor �A err Sondra Smith, City Clerk RECEIVED APR 21 2003 CI YOFFAYETTEVILLE iY MEAMS OFFICE FAYET I'EVILLE • THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDEN To: Steve Davis Finance & Internal Services From: Clarice Buffalohead-Pearman City Clerk Division Date: April 17, 2003 Re: Ord No. 4478 Attached is an executed copy of the above ordinance approved by the City Council on April 15, 2003, approving a master lease agreement with Banc of America Leasing & Capital, LLC providing the city the opportunity to utilize Amendment 78 to obtain fire apparatus vehicles. Also, the ordinance will be published in the NWA Times/Gazette on Saturday, April 19, 2003. Upon receipt of the Affidavit of Publication on Monday I will see that you get a copy. The original affidavit will be filed with the ordinance. I am returning to you a copy of the original contract which will be filed with the ordinance in the city clerk's office. If anything else is needed please let the clerk's office know. /cbp attachments cc:, Nancy Smith, Internal Auditor STAFF REVIEW FORM c /� -1 XX AGENDA REQUEST • • FIz•F lTP�XAr'c(TUs. CONTRACT REVIEW �Q,gs2. GRANT REVIEW /�-MeNdw�c.ht1S For the Fayetteville City Council Meeting of: April 15, 2003 Stephen Davis Name Finance & Internal Services Div. Division Finance & Internal Services Department .: .. . . u: COST tt CITYs No Cost At This Time Cost of this request Account Number $ $ Funds Used to Date Program Category./ Project Name Program / Project Category Name project Number Remaining Balance Fund Name S n RSVIEWs Budgeted Item Budget Adjustment Attached Budget Manager. Date CONTRACT/GRANT/LSA98 REVIEWI Accounting Manager. Date Internal Auditor - Date City Attorney Date Division Head Date Depa meat Director Date Pinnace is Internal Services Dir. Date `-1-03 of etrative Officer Date Mayor Purchasing Manager New Item: yes previous Ord/Res#: Orig. Contract Date• Orig. Contract Number No Date Staff Review Form - Page 2 Description • Meting Date Comments: Budget Manager Accounting Manager City Attorney Purchasing Manager ADA.Coordinator Internal Auditor Grants Coordinator Reference Comments: FAYETTEtILLE • THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE TO: Fayetteville City Council THROUGH: Dan Coody, Mayor gY ,? c Hugh Earnest, Chief Administrative Officer FROM: Stephen Davis, Finance & Internal Services DirectoKJ j DATE: March 27, 2003 v v SUBJECT: . Debt Management Program: Leasing Services Background City Council approved a Debt Management Policy (Policy) on November 5, 2002. The Debt Management Committee met after approval of the Policy and determined the City needed to seek statement of qualifications for bond counsel services and to seek requests for proposals for bond underwriter services and for leasing services. A professional selection committee was formed to: 1) provide oversight of the drafting of the request for qualifications for bond counsel services and the request for proposals for the bond underwriter services and leasing services; 2) review the responses to the request for qualification/proposals; conduct interviews of the selected respondents; and, 3) recommend service providers for leasing services and bond underwriter services. Current Status In mid -January 2003, the Professional Selection Committee (Committee) met, reviewed and approved the request for qualifications for bond counsel services and request for proposals for bond underwriter and leasing services. The Committee reviewed the responses, developed a short list to interview for each service to be provided and selected the firm or firms to provide the service. The firms selected to provide services under this set of request for qualifications and request for proposals are as follows: Bond Counsel Services - Gordon Wilboum ofKutak Rock LLP; Leasing Services - Banc of America Leasing & Capital, LLC, and, Bond Underwriter Services — (two firms were selected to provide bond underwriter services): Stephens, Inc and Crews & Associates. City Council, on March 18 and April 1, approved a Resolution of Intent to Reimburse and approved a bond counsel agreement with Kutak Rock. Staff has negotiated two master lease agreements with Banc of America Leasing & Capital, LLC. These master lease agreements provide a funding mechanism to leverage current and future City funds in acquiring solid waste residential collection vehicles and fire apparatus vehicles. K:\Steve Davis\Debt Financing\Leasing Services BOA_ 2003 Council Memo.doc There are two lease agreements submitted for approval because of the differences in revenues pledged to fund the lease payments. The revenue stream pledged for the solid waste vehicles is the solid waste fees collected and the debt is authorized under Amendment 65 of the Arkansas Constitution. The revenue stream pledged for the fire apparatus vehicles is the general revenues of the City and is authorized under Amendment 78 of the Arkansas Constitution. The payment terms under each of the lease agreements would be for a period of no more than sixty (60) months at a fixed interest cost'of 2.89%. Recommendation Staff recommends City Council approval of the two master lease agreements with Banc of America Leasing & Capital, LLC. K:\Steve Davis\Dcbt Financing\Leasing Services BOA_ 2003 Council Memo.doc SUMMARY OF TERMS AND CONDITIONS Date: December 3, 2002 Lessee: City of Fayetteville, Arkansas Lessor: Banc of America Leasing & Capital, LLC or its designee ("Lessor" Equipment: Various essential use equipment including, but not limited to, sanitation vehicles and receptacles, fire emergency response vehicles, specialized construction equipment such as paving machines, track hoes, and excavators (individually "Unit" and collectively "Equipment"). Maximum Purchase Price: The lower of $5,000,000 and the fair market value of the Equipment, which may with Lessor's prior consent include soft costs such as freight, installation and taxes paid up -front by Lessor not exceeding 20% of the Maximum Purchase Price. The Purchase Price for used Equipment may be subject to verification by an independent third party appraiser. Lease Structure: A lease intended as security transaction; under which all tax benefits will remain with Lessee. The lease will be a net financial lease, and all expenses, including (but not limited to) insurance, maintenance, and taxes, will be for the account of Lessee. Term: Lease Commencement Date: No later than February 14, 2003 Lease Term: 36, 48, or 60 months from funding. Interim Rental Term: The Interim Rental Term will be equal to the number of days from acceptance of the Equipment to the Lease Commencement Date. Rent will be charged at the daily equivalent of the Tax Exempt Interest Rate. Tax Exempt Interest Rate: Fixed Rate Options Option A: 3 -Year Fixed Rate: 2.53% Option B: 4 -Year Fixed Rate: 2.76% Option C: 5 -Year Fixed Rate: 2.89% The above rates will be held for 30 days from the date of this proposal. Subsequent to that date and subject to the economic yield maintenance requirements below, the Tax Exempt Interest Rate will be fixed at funding at an interest rate equal to the following equation: 3 -Year Term: 3 -Year H. 15 Constant Maturity x .65 + 85.3 basis points (bps) Year Term: 5 -Year H.15 Constant Maturity x .65 + 58.9 bps 5 -Year Term: 5 -Year H.15 Constant Maturity x .65 + 71.9 bps City of Fayetteville Page 12 of 15 Fixed Rate/Floatine Rate Options: Option D: (Four -Year Term) - Fixed rate for the first three (3) years; floating rate for the subsequent one (1) year Fixed Rate for Years One (1), Two (2) and Three (3) = 2.53% Floating Rate for Year Four (4) = 3 -Month LIBOR x .65 + 126.62 basis points (on December 3, 2002 the floating rate is 2.19% based on a 3 -Month LIBOR of 1.42125%) Option E: (Five -Year Term) — Fixed rate for the first three (3) years; floating rate for the subsequent two (2) years Fixed Rate for Years One (1), Two (2) and Three (3) = 2.53% Floating Rate for Years Four (4) and Five (5) = 3 -Month LIBOR x .65 + 137.62 bps (on December 3, 2002 the floating rate is 2.3 % based on a 3 -Month LIBOR of 1.42125%). Rent: Lessee shall make monthly, quarterly or semi-annual payments, payable in arrears. Index: Fixed Rate The index on which the Tax Exempt Fixed Interest Rate is based is the three and five-year H.15 Constant Maturity. As of November 27, 2002 the index was 2.58% for the three-year index and 3.34% for the five-year index.Index data may be found at www.federaireserve.-gov/releases/H15/Current/ Floating Rate The index on which the Tax Exempt Floating Rate is based is the three-month LIBOR. As of December 3, 2002 the Index was 1.42125%. .., ,, ,, ,fli Entity Lease: The Base Rent installments are calculated on the assumptions, and Lessee will represent, that Lessee is a state or political subdivision of a state within the meaning of Section 103(c) of the Internal Revenue Code (the "Code"), and that this transaction will constitute an obligation of Lessee within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code. Lessee shall provide Lessor with such evidence as Lessor may request to substantiate and maintain such tax status. Lessee shall comply with the filing ;requirements of Section 149(e) of the Code. Lessee will pay Lessor amounts calculated at a taxable rate sufficient to maintain Lessor's yield in the Lease, in City of Fayetteville Page 13 of 15 the event Lessor suffers a loss of Federal income tax. exemption of the interest portion of the rentals. Early Termination: Lessee may not prepay the Lease for the first one-half of the Lease Term. Thereafter, Lessee may on any rental payment date, upon 30days notice, prepay in full all amounts then outstanding under the Lease, including accrued interest, principal balance, other unpaid charges, and an amount equal to 1% of the then outstanding principal balance. End of Term: At the expiration of the Lease Term, Lessee will purchase all (but not less than all) the Equipment for SI.00("Purchase Price"). Expenses: Lessee and Lessor will each be responsible foi its own expenses incurred. in connection with the preparation, negotiation and closing of the lease documentation. Lease Documents: Lease documents in form and substance satisfactory to Lessor and its local counsel must be executed and delivered. Nonappropriation provisions, if any, must be satisfactory to Lessor. If Lessor requests, Lessee will also furnish duly executed landlord and mortgagee waivers and supporting information. Lessee will also provide board resolutions, incumbency certificates and other documentation required by Lessor. Opinion of Counsel: Lessee's counsel shall deliver an opinion to Lessor at closing in form and substance satisfactory to Lessor. The opinion of counsel will cover the following tax matters, in addition to other customary opinions: (a) the portion of Base Rent designated as and constituting interest paid by Lessee and received by Lessor is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from state personal income taxes; (b) such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes; and (c) counsel has examined, approved and attached the text of the enabling resolution of Lessee's governing body authorizing Lessee to enter into the Lease. Assignment by Lessor: The Lessor shall be entitled to assign its right, title and interest in the Lease and leased equipment on a private placement basis to qualified purchasers. In addition, Lessor shall be entitled to assign its right, title and interest in the Lease to a trustee for the purpose of issuing certificates of participation or other forms of certificates evidencing an undivided interest in such Lease, provided such certificates are sold only on a private placement basis (and not • pursuant to any "public offering") to a purchaser(s) who represent that (I) such purchaser has. sufficient knowledge and experience in financial and business matters to be able to evaluate the risks and merits of the investment (ii) such purchaser understands neither the Lease or certificates will be registered under the Securities Act of 1933; (iii) such purchaser is either an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933, or a qualified institutional buyer within the meaning of Rule 144A, and that it is the intention of such purchaser to acquire such certificates (A) for investment for its own account or (B) for resale in a transaction exempt from registration under the Securities Act of 1933. • City of Fayetteville Page 14 of 15 Escrow Account: Subject to compliance by Lessee with applicable regulations under the Code, including but not limited to arbitrage reporting, the proceeds of the Lease may be deposited into an escrow acceptable to Lessor, and disbursements made therefrom to pay for equipment upon execution and delivery of an acceptance certificate (and related documents by Lessee and approved by Lessor. Utilization Period Expiration Date: Multiple Year Utilization Period: Credit Due Diligence: The latest date for any funding will be one year from contract dated date. Multiple year lease financing lines will be subject to annual credit approval by Lessor.. In order to complete its credit due diligence, Lessor will require Lessee to submit: Three years of most recent financial statements; Most recent fiscal year budget; Insurance Certificate. City of Fayetteville Page l5 of 15 The proposer certifies it can and will provide and make available, at a minimum, all services set forth in this request for Short Term Leasing Services. Signature of Official: Name (typed): Title: VtGC Pf2CSii->eiT Firm: EjprNG pp P'S►aeP-'C,P< LcA61 NG k CA-PmASLm % LLG Date: - © P C N OTG l eiC 1.11 S Co M I- 1 p- '-'' 0a 0ce TO fl S. 6 r toPosf L. tS r -o1 cc eNsa • APPENDIX B • ':8 i1 A' 5::::►YYI A. Proposer warrants that it is willing and able to complywithState of Arkansas laws with respect to foreign (non -state of Arkansas) corporations. B. Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy providing a prudent amount of coverage for the willful or negligent acts, or omissions of any officers, employees or agents thereof. C. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the express prior written permission of the City of Fayetteville. D. Proposer warrants that all information provided by it in connection with this proposal is true and accurate. Signature of Official Name (typed): CL UZV— Title: Firm:. 1 C- 0l=. Date: { 2-30 Z o ir kN $ pc3o g 4y 7 QEQO1raet.e'15 Sample Amortization Schedule City of Fayetteville Fire Trucks: $1,769,865.49 debt service interest debt Date number 2.64000% principal service balance Apr -16-03 0 1,769,865.49 .May -16-03 1, 3,893.70 27,626.11 31,519.82 1,742,239.38 Jun -16-03 2 3,832.93 27,686.89 31,519.82 1,714,552.49 Jul -16-03 3 3,772.02 27,747.80 31,519.82 1,686,804..68 Aug -16-03 4 3,710.97 27,808.85 31,519.82 1,658,995.84 Sep -16-03 5 3,649.79 27,870.03 31,519.82 1,631,125.81 Oct -16-03 6 3,588.48 27,931.34 31,519.82 1,603,194.47 • Nov -16-03 7 3,527.03 27,992.79 31,519.82 1,575,201.68 Dec -16-03 8 3,465.44 28,054.37 31,519..82 1,547,147.31 Jan -16-04 9 3,403.72 28,116.09 31,519.82 1,519,031.22 Feb -16-04 10 3,341.87 28,177.95 31,519.82 1,490,853.27 Mar -16-04 11 3,279.88 28,239.94 31,519.82 1,462,613.33 Apr -16-04 12 3,217.75 28,302.07 31,519.82 1,434,311.26 May -16-04 13 3,155.48 28,364.33 31,519.82 1,405,946.93 Jun -16-04 14 3,093.08 28,426.73 . 31,519.82 1,377,520.19 Jul -16-04 15 3,030.54 28,489.27 31,519.82 1,349,030.92 Aug -16-04 16 2,967.87 28,551.95 31,519.82 1,320,478.97 Sep -16-04 17 2,905.05 28,614.76 31,519.82 1,291,864.21 Oct -16-04 18 2,842.10 28,677.72 31,519.82 1,263,186.49 Nov -16-04 19 2,779.01 28,740.81 31,519.82 1,234,445.68 Dec -16-04 20 2,715.78 . 28,804.04 31,519.82 1,205,641.65 Jan -16-05 21 2,652.41 28,867.41 31,519.82 1,176,774.24 Feb -16-05 22 2,588.90 28,930.91 31,519.82 1,147,843.33 Mar -16-05 23 2,525.26 28,994.56 31,519.82 1,118,848.77 Apr -16-05 24 2,461.47 29,058.35 31,519.82 1,089,790.42 May -16-05 25 2,397.54 29,122.28 31,519.82 1,060,668.14 Jun -16-05 26 2,333.47 29,186.35 31,519.82 1,031,481.79 Jul -16-05 27 2,269.26 29,250.56 31,519.82 1,002,231.23 Aug -16-05 28 2,204.91 29,314.91 31,519.82 972,916.33 Sep -16-05 29 2,140.42 29,379.40 31,519.82 943,536.92 Oct -16-05 30 2,075.78 . 29,444.04 31,519.82 914,092.89 Nov -16-05 31 - 2,011.00 29,508.81 31,519.82 884,584.08 Dec -16-05 32 1,946.08 29,573.73 31,519.82 855,010.34 Jan -16-06 33 1,881.02 29,638.79 31,519.82 825,371.55 Feb -16-06 34 1,815.82 29,704.00 31,519.82 795,667.55 Mar -16-06 35 1,750.47 29,769.35 31,519.82 765,898.20 Apr -16-06 36 1,684.98 29,834.84 31,519.82 736,063.36 May -16-06 37 1,619.34 29,900.48 31,519.82 706,162.88 Jun -16-06 38 1,553.56 29,966.26 31,519.82 676,196.62 Jul -16-06 39 1,487.63 30,032.18 31,519.82 646,164.44 Aug -16-06 40 1,421.56 30,098.26 31,519.82 616,066.18 Sep -16-06 41 1,355.35 30,164.47 31,519.82 585,901.71 Oct -16-06 42 1,288.98 30,230.83 31,519.82 555,670.88 Nov -16-06 43 1,222.48 30,297.34 31,519.82 525,373.54 Dec -16-06 44 1,155.82 30,364.00 31,519.82 495,009.54 Jan -16-07 45 1,089.02 30,430.80 31,519.82 464,578.75 Feb -16-07 46 1,022.07 30,497.74 31,519.82 434,081.00 Mar -16-07 47 954.98 30,564.84 31,519.82 403,516.16 Apr -16-07 48 887.74 30,632.08 31,519.82 372,884.08 May -16-07 49 820.34 30,699.47 31,519.82 342,184.61 Jun -16-07 50 752.81 30,767.01 31,519.82 Jul -16-07 51 685.12 30,834.70 31,519.82 Aug -16-07 52 617.28 30,902.53 31,519.82 Sep -16-07 53 549.30 30,970.52 31,519.82 Oct -16-07 54 481.16 31,038.66 31,519.82 Nov -16-07 55 412.88 31,106.94 31,519.82 Dec -16-07 56 344.44 31,175.38 31,519.82 Jan -16-08 57 275.86 31,243.96 31,519.82 Feb -16-08 58 207.12 31,312.70 31,519.82 Mar -16-08 59 138.23 31,381.59 31,519.82 Apr -16-08 60 69.19 31,450.63 31,519.82 T O T A L 121,323.54 1,769,865.49 1,891,189.03 aavaaa_-_aa vaaaaaavavv 311,417.60 280,582.90 249,680.36 218,709.84 187,671.19 156,564.25 125,388.87 94,144.91 62,832.21 31,450.63 0.00 Sample Amortization Schedule $1,178,928 Principal • debt service interest debt Date number 2.64000% principal service balance Apr -16-03 0 1,178,928.00 May -16=03 1 2,593.64 18,402.08 20,995.72 1,160,525.92 Jun -16-03 2 2,553.16 18,442.56 20,995.72 1,142,083.36 Jul -16-03 3 2,512.58 18,483.13 20,995.72 1,123,600.23 Aug -16-03 4 2,471.92 18,523.80 20,995.72 1,105,076.43 Sep -16-03 5 2,431.17 18,564.55 20,995.72 1,086,511.89 Oct -16-03 6 2,390.33 18,605.39 20,995.72 1,067,906.49 Nov -16-03 7 2,349.39 18,646.32 20,995.72 1,049,260.17 Dec -16-03 8 2,308.37 18,687.34 20,995.72 1,030,572.83 Jan -16-04 9 2,267.26 18,728.46 20,995.72 1,011,844.37 Feb -16-04 10 2,226.06 18,769.66 20,995.72 993,074.71 Mar -16-04 11 2,184.76 18,810.95 20,995.72 974,263.76 Apr -16-04 12 2,143.38 18,852.34 20,995.72 955,411.42 May -16-04 13 2,101.91. 18,893.81 20,995.72 936,517.61 Jun -16-04 14 2,060.34 18,935.38 20,995.72 917,582.23 Jul -16-04 15 2,018.68 18,977.04 20,995.72 898,605.20 Aug -16-04 16 1,976.93 19,018.79 20,995.72 879,586.41 Sep -16-04 17 1,935.09 19,060.63 20,995.72 860,525.78 Oct -16-04 18 1,893.16 19,102.56 20,995.72 841,423.22 Nov -16-04 19 1,851.13 19,144.59 20,995.72 822,278.64 • Dec -16-04 20 1,809.01 19,186.70 20,995.72 803,091.93 Jan -16-05 21 1,766.80 19,228.91 20,995.72 783,863.02. Feb -16-05 22 1,724.50 19,271.22 20,995.72 764,591.80 Mar -16-05 23 1,682.10 19,313.62 20,995.72 745,278.18, Apr -16-05 24 1,639.61 19,356.11 20,995.72 725,922.08 May -16-05 25 1,597.03 19,398.69 20,995.72 706,523.39 Jun -16-05 26 1,554.35 19,441.37 20,995.72 687,082.03 • Jul -16-05 27 1,511.58 .19,484.14 20,995.72 667,597.89 Aug -16-05 28 1,468.72 19,527.00 . 20,995.72 648,070.89 Sep -16-05 29 1,425.76 19,569.96 20,995.72 628,500.93 Oct -16-05 30 1,382.70 19,613.01 20,995.72 608,887.91 Nov -16-05 31 1,339.55 19,656.16 20,995.72 589,231.75 Dec -16-05 32 1,296.31 19,699.41 20,995.72 569,532.34 Jan -16-06 33 1,252.97 19,742.75 20,995.72 549,789.59 Feb -16-06 34 1,209.54 19,786.18 20,995.72 ,530,003.41 Mar -16-06 35 1,166.01 19,829.71 20,995.72 510,173.70 • Apr -.16-06 36 1,122.38 19,873.33 20,995.72 490,300.37 May -16-06 37 1,078.66 19,917.06 20,995.72 470,383.31 Jun -16-06 38 1,034.84 19,960.87 20,995.72 450,422.44 Jul -16-06 39 990.93 20,004.79 20,995.72 430,417.65 Aug -16-06 40 946.92 20,048.80 20,995.72. 410,368.85 Sep -16-06 41 902.81 20,092.91 20,995.72 390,275.95 Oct -16-06 42 858.61 20,137.11 20,995.72 370,138.84 Nov -16-06 43 814.31 20,181.41 20,995.72 349,957.43 Dec -16-06 44 769.91 20,225.81 20,995.72 329,731.62 Jan -16-07 45 725.41 20,270.31 20,995.72 309,461.31 Feb -16-07 46 680.81 20,314.90 20,995.72 289,146.41 Mar -16-07 47 636.12 20,359.59 20,995.72 268,786.81 Apr -16-07 48 591.33 20,404.39 20,995:72 248,382.43 May -16-07 49 546.44 20,449.28 20,995.72 227,933.15 Jun -16-07 .50 501.45 20,494.26 20,995.72 207,438.89 Jul -16-07 51 456.37 20,539.35 20,995.72 186,899.53 Aug -16-07 52 411.18 20,584.54 20,995.72 166,315.00 Sep -16-07 53 365.89 20,629.82 20,995.72 145,685.17 Oct -16-07 54 320.51 20,675.21 20,995.72 ,125,009.96 Nov -16-07 55 275.02 20,720.70 20,995.72 104,289.27 Dec -16-07 56 229.44 20,766.28 20,995.72 83,522.99 '. Jan -16-08 57 183.75 20,811.97 20,995.72 62,711.02 Feb -16-08 58 137.96 20,857.75 20,995.72 41,853.27 Mar -16-08 59 92.08 20,903.64 20,995.72 20,949.63 Apr -16-08 60 46.09 20,949.63 20,995.72 0.00 T O T A L 80,815.02 1,178,928.00 1,259,743.02 aaaaavaaan vnnasaaaaan aaanaaaanav September 3, 2003 MICR•FTWElY Bankof America. ' 5iCOo uoa Banc of America Leasing & Capital CAS -705-04-01 555 California Street, 4th Floor San Francisco, CA 941041VtFJJ, Tel 415,765.7300 �7 RECEIVED SEP 04 2003 CITY OF FAYETTEVILLE MAYOR'S OFFICE Attn: Stephen Davis Tel. No. (479) 575-8330 CITY OF FAYETI'EVILLE 113 West Mountain Street 1 Fayetteville, AR 72701 Re: Master Equipment Lease/Purchase Agreement (Amendment 78) Dear Steve: Enclosed please find fully executed copies of the Master Lease, Schedule of Property No. 1, Amendment No. 1 to Lease and Acquisition Fund Agreement for your records. If you have any questions, please give me a call at 415/765-7404. Sincerely, BANC OF AMERICA LEASING & CAPITAL, LLC lulu e 'le Panganib1LuiIj Assistant Vice President encls. RECEIVED SEP 052003 Girt OF FAYEITE1PJ F or, CLERICS OFFCE USA ]0003001 usa„mpkrz,rni PsWeevw AMENDMENT NO. 1 to Master Equipment Lease/Purchase Agreement (Amendment 78 Lease) and Schedule of Property No. 1 entered into as of July 10, 2003 between Banc of America Leasing & Capital, LLC, a Delaware limited liability company ("Banc of America") and City of Fayetteville, Arkansas, a body corporate and politic existing under the laws of the State of Arkansas ("City") with reference to the following: A. Banc of America and the City have entered into a Master Equipment Lease/Purchase Agreement and Schedule of Property No.1 dated as of June 25, 2003 respectively (the "Agreements"; all defined terms therein not otherwise defined herein being used with their meanings as defined therein); and B. Banc of America and the City now desire to amend the Agreements as hereinafter set forth: NOW, THEREFORE, the parties hereto agree as follows: 1. Section 1.01 of the Master Equipment Lease/Purchase Agreement entitled Definitions, is hereby amended as follows: A. The following definitions are hereby added "Acquisition Fund — means with respect to each Lease, the fund established and held by the Acquisition Fund Custodian pursuant to the related Acquisition Fund Agreement, if any. Acquisition Fund Agreement — means with respect to each Lease,•an Acquisition Fund Agreement in form and substance acceptable to and executed by the City, Banc of America and the Acquisition Fund Custodian, pursuant to which an Acquisition Fund is established and administered. Acquisition Fund Custodian — means the Acquisition Fund Custodian identified in any Acquisition Fund Agreement, and its successor and assigns. Lease Proceeds — means with respect to each Lease, the total amount of money to be paid by Banc of America to the Acquisition Fund Custodian for deposit and application in accordance with such Lease and the Acquisition Fund Agreement." B. The following definitions are hereby deleted in its entirety and replaced with the following: "Commencement Date — means, for each Lease, the date when City's obligation to pay rent commences under such Lease, which date shall be the earlier of (i) the date on which the Equipment listed in such Lease is accepted by City in the manner described in Section 5.01, and (ii) the date on which sufficient moneys to purchase the Equipment listed in each Lease are deposited for that purpose with an Acquisition Fund Custodian. Utilization Period — means the date (i) with respect to each Lease not funded under an Acquisition Fund Agreement, by which Lessee must deliver an Acceptance Certificate for the Equipment under each Lease as indicated in Section 3.05(b) , or (ii) with respect to each Lease funded under an Acquisition Fund Agreement, as specified in the relevant Schedule." LESSEE'S COPY #602276v1(Amendment 78 Lease) A -I 2. Section 3.05 (a) Conditions to Banc of America's Performance is amended to add the following: "(x) An Acquisition Fund Agreement, executed by the City and the Acquisition Fund Custodian, unless Banc of America pays 100 % of the Acquisition Amount directly to the Vendor upon execution of each Lease." 3. Section 3.05 (b) is amended by deleting "(iii)" and replacing it with the following: "(iii) if no Acquisition Fund has been established, the Equipment must be accepted by Lessee no later than the date specified in the relevant Schedule (the "Utilization Period")." 4. A new Section 4.07 is added as follows: "Section 4.07 — Mandatory Prepayment. If the Lease Proceeds are deposited into an Acquisition Fund, any funds remaining in the Acquisition Fund on or after the Acquisition Period and not applied to Equipment Costs, shall be applied by Banc of America on the next Rental Payment date, pro rata, to the prepayment of the principal component of the outstanding Rental Payments due under the Lease and applicable Schedule that funded such remaining funds." 5. Section 5.01 (b) is amended by adding the following at the beginning of the 2nd sentence of the section. "With respect to Equipment not purchased through an Acquisition Fund, " 6. Section 6.02 Security Interest is amended by replacing letter "(b)" with a "(c)" and adding a new "(b)" as follows: "(b) moneys and investments held from time to time in the Acquisition Fund and.0 7. Exhibit A to Master Equipment Lease Purchase Agreement entitled Schedule of Property No. 1 is hereby replaced by a new Exhibit A attached hereto and made a part hereof. C. Banc of America and City each hereby represents and warrants to the other that the execution and delivery of this Amendment and compliance by Lessor and Lessee, respectively, with all of the provisions of this Amendment (a) are within the powers and purposes of each; (b) have been duly authorized or approved by each; and (c) when executed and delivered by or on behalf of Lessor and Lessee, respectively, will constitute valid and binding obligations of each, enforceable in accordance with its terms. Lessor and Lessee each hereby reaffirms all of its respective obligations under the Lease, as amended to date and by this Amendment. D. If applicable, City will establish a rebate account and calculate and make, or cause to be calculated or made, payments of the rebate amount (as defined in Section 1.148-3(b) of the Federal Income Tax Regulations) in the amounts and at the times and in the manner provided in Section 148 (f) of the Code and applicable regulations, pursuant to the provisions of the Master Equipment Lease Purchase Agreement and any related Tax Compliance Certificate. Except as is herein specifically amended, all of the terms, covenants, and provisions of the Lease remain in full force and effect. #602276v1(Amendment 78 Lease) A-2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. I as of the day and year written above. Banc of America Leasing & Capital, LLC City of (Banc of America) (City) By: By: Title: istant Vie President Tide: By: By: Title: Title: r� r #602276v1(Amendment 78 Lease) A-3 EXHIBIT A SCHEDULE OF PROPERTY No. 1 Re: Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003and Amendment No. 1 to Master Lease/Purchase Agreement dated as of July 10, 2003 between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville Arkansas, as City 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above -referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment Lease"). 2. Equipment. The following items of Equipment are hereby included under this Schedule of the Master Equipment Lease. Quantity Description. Serial No. Model No. Location Payment Schedule. (a) Rental Payments. The Rental Payments shall be in such amounts and payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as Exhibit A-1. Rental Payments shall commence on the date on which the Equipment listed in this Schedule is accepted by City, as indicated in an Acceptance Certificate substantially in the form of Exhibit B to the Master Equipment Lease. The City agrees to accept the equipment as agreed to in Article V of the Master Lease Agreement dated June 25, 2003. (b) Purchase Price Schedule. The Purchase Price on each Rental Payment date for the Lease of the Equipment listed in this Schedule shall be the amount set forth for such Rental Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule (including the Rental Payment shown on the same line in the Rental Payment Schedule). #602276v1(Amendment 78 Lease) A-4 4. Representations, Warranties and Covenants. City hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Master Equipment Lease are true and correct as though made on the date of commencement of Rental Payments on this Schedule. City further represents and warrants that no material adverse change in City's financial condition has occurred since the date of the Master Equipment Lease. 5. The Lease. The terms and provisions of the Master Equipment Lease (other than to the extent that they relate solely to other Schedules or Equipment listed on other Schedules) are hereby incorporated into this Schedule by reference and made a part hereof. 6. Lease Proceeds. The Lease Proceeds which Banc of America shall pay to the Acquisition Fund Custodian in connection with this Schedule is $ 1,769,865.00. 7. Acquisition Period. The Acquisition Period applicable to this Schedule shall end at the conclusion of the 12th month following the date hereof. 8. Lease Term. The Lease Term shall consist of the Original Term and (4) consecutive Renewal Terms, with the final Renewal Term ending on August 1, 2008. 9. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease, the Purchase Option Commencement Date is March 1, 2006. Dated: BANG OF AMERICA: CITY: Banc of America Leasing & Capital, LLC City of Fayetteville, Arkansas 555 California Street, 4th Floor 113 West Mountain Street CA5-705-04-01 Fayetteville, Arkansas 72701 San Francisco, California 94104 By - Title By Title Mayor (Seal) Attest: By Title City Clerk Counterpart No. of manually executed and serially numbered counterparts. To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial Code), no security interest herein may be created through the transfer or possession of any Counterpart other than Counterpart No. 1. #602276v1(Amendment 78 Lease) A-5 MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT (AMENDMENT 78 LEASE) This Master Equipment Lease/Purchase Agreement (the "Agreement") dated as of June 25, 2003, and entered into between Banc of America Leasing & Capital, LLC, a Delaware limited liability company ("Banc of America"), and City of Fayetteville, Arkansas, a body corporate and politic existing under the laws of the State of Arkansas ("City"). WITNESSETH: WHEREAS, City desires to lease and acquire from Banc of America certain Equipment described in each Schedule (as each such term is defined herein), subject to the terms and conditions of and for the purposes set forth in each Lease; and in the event of a conflict the terms of a Schedule prevail; and WHEREAS, the relationship between the parties shall be a continuing one and items of equipment may be added to the Equipment from time to time by execution of additional Schedules by the parties hereto and as otherwise provided herein; and WHEREAS, City is authorized under the Constitution and laws of the State, including, particularly, Amendment 78 to the State Constitution and the Local Government Short -Term Financing Obligations Act of 2001, as amended, codified as Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp.) (the "Act'), to enter into certain short-term general obligations, such as this Agreement and the Schedules hereto, for the purposes set forth herein; and WHEREAS, the City Council of City has authorized the execution and delivery of this Agreement and the Schedules hereto pursuant to Ordinance No. 4478 adopted and approved on April 15, 2003; Now, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and in consideration of the premises hereinafter contained, the parties hereby agree as follows: ARTICLE I Section 1.01. Definitions. The following terms will have the meanings indicated below unless the context clearly requires otherwise: "Acquisition Amount" means the amount specified in each Lease and represented by City to be sufficient to acquire the Equipment listed in such Lease, which amount shall be not less than $100,000 for each Lease. "Acquisition Period" means, with respect to each Lease, that period stated in the Schedule to such Lease during which the Acquisition Amount attributable to such Lease may be expended on Equipment Costs. (Amendment 78 Lease) #599350v2 Lessee's Copy "Act" means the Local Government Short -Term Financing Obligations Act of 2001, as amended, codified as Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp). "Agreement" means this Master Equipment Lease/Purchase Agreement, including the exhibits hereto, together with any amendments and modifications to the Agreement pursuant to Section 13.05. "Banc of America" means (a) the entity referred to as Banc of America in the first paragraph of this Agreement or (b) any assignee or transferee of any right, title or interest of Banc of America in and to the Equipment under a Lease or any Lease (including Rental Payments thereunder) pursuant to Section 11.01, but does not include any entity solely by reason of that entity retaining or assuming any obligation of Banc of America to perform under a Lease. "City" means the entity referred to as City in the first paragraph of this Agreement. "Code" means the Internal Revenue Code of 1986, as amended. Each reference to a Section of the Code herein shall be deemed to include the United States Treasury Regulations proposed or in effect thereunder. "Commencement Date" means, for each Lease, the date when City's obligation to pay rent commences under such Lease, which date shall be the date on which the Equipment listed in such Lease is accepted by City in the manner described in Section 5.01. "Equipment" means the property listed in each of the Leases and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to Section 8.01 or Article V. Whenever reference is made in this Agreement to Equipment listed in a Lease, such reference shall be deemed to include all such replacements, repairs, restorations, modifications and improvements of or to such Equipment. "Equipment Costs" means the total cost of the Equipment listed in each Lease, including all delivery charges, installation charges, capitalizable consulting and training fees approved by Banc of America, legal fees, financing costs, and other costs necessary to vest full, clear legal title to the Equipment in City, subject to the security interest granted to and retained by Banc of America as set forth in each Lease, and otherwise incurred in connection with the financing provided by the lease -purchase of the Equipment as provided in each Lease; provided that in no event shall approved consulting and training fees or other non-capitalizable "soft" costs relating to the Equipment listed in any Lease which are to be financed by Banc of America hereunder exceed 2% of the total cost of such Equipment as determined by Banc of America; and provided further, that in no event shall capitalizable delivery charges, installation charges, taxes and similar capitalizable "soft costs" relating to such Equipment be included without Banc of America's prior consent. "Event of Default" means an Event of Default described in Section 12.01. "Lease" means a Schedule and the terms of this Agreement which are incorporated by reference into such Schedule. Each Schedule shall constitute a separate and independent Lease. (Amendment 78 Lease) 2 "Lease Term" for each Lease means the Original Term and all Renewal Terms therein provided and for this Agreement means the period from the date hereof until this Agreement is terminated. "Maximum Equipment Cost" means an amount not to exceed $2,800,000. "Original Term" means the period from the Commencement Date for each Lease until the end of the fiscal year of City in effect at such Commencement Date. "Purchase Price" means, with respect to the Equipment listed on a Lease, the amount that City may pay to Banc of America to purchase such Equipment as provided in such Lease. "Renewal Terms" means the renewal terms of each Lease, each having a duration of one year and a term coextensive with City's fiscal year, as specified in the Schedule applicable thereto. "Rental Payments" means the basic rental payments payable by City under each Lease pursuant to Section 4.01, in each case consisting of a principal component and an. interest component. "Schedule" means each separately numbered Schedule of Property substantially in the form of Exhibit A hereto together with a Rental Payment Schedule attached thereto substantially in the form of Exhibit A-1 hereto. "State" means the State of Arkansas. "Utilization Period" means the date, by which City must deliver an Acceptance Certificate for the Equipment under such Lease as indicated in Section 3.05(b). "Vendor" means the manufacturer or supplier of the Equipment or any other person as well as the agents or dealers of the manufacturer or supplier from whom Banc of America arranged City's acquisition and financing of the Equipment pursuant to the applicable Lease. ARTICLE II Section 2.01. Representations and Covenants of City. City represents, covenants and warrants for the benefit of Banc of America on the date hereof and as of the Commencement Date of each Lease as follows: (a) City is a political subdivision of the State within the meaning of Section 103(c) of the Code, duly organized and existing under the Constitution and laws of the State, including Amendment 78 to the State Constitution and the Act, with full power and authority to enter into this Agreement and each Lease and .the transactions contemplated hereby and to perform all of its obligations hereunder and under each Lease. (b) City has duly authorized the execution and delivery of this Agreement and each Lease by proper action of its governing body at a meeting duly called, regularly convened and (Amendment 78 Lease) attended throughout by the requisite quorum of the members thereof, or by other appropriate official approval, and all requirements have been met and procedures have occurred in order to ensure the validity and enforceability of this Agreement and each Lease. (c) No event or condition that constitutes, or with the giving of notice or the lapse of time or both would constitute, an Event of Default exists at the date hereof. (d) City will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a body corporate and politic. (e) City has complied with such public bidding requirements as may be applicable to this Agreement and each Lease and the acquisition by City of the Equipment as provided in each Lease. (f) During the Lease Term, the Equipment will be used by City only for the purpose of performing essential governmental or proprietary functions of City consistent with the permissible scope of City's authority. City does not intend to sell or otherwise dispose of the Equipment or any interest therein prior to the last Rental Payment (including all Renewal Terms) scheduled to be paid under each Lease. (g) City shall keep its books and records in accordance with generally accepted accounting principles and practices consistently applied and shall deliver to Banc of America (i) annual audited financial statements (including (1) a balance sheet, (2) statement of revenues, expenses and changes in fund balances for budget and actual, (3) statement of cash flows and notes, and (4) schedules and attachments to the financial statements), on August 1 of each year during the Lease Term, (ii) such other financial statements and information as Banc of America may reasonably request, and (iii) its annual budget for the following fiscal year on or before February 1 of each year during the Lease Term. The financial statements described in subsection (i) shall be accompanied by an unqualified opinion of City's auditor. Credit information relating to City may be disseminated among Banc of America and any of its affiliates and any of their respective successors and assigns. (h) City has an immediate need for the Equipment listed on each Schedule and expects to make immediate use of the Equipment listed on each Schedule. City's need for the Equipment is not temporary and City does not expect the need for any item of the Equipment to diminish during the Lease Term to such item. (i) The payment of the Rental Payments or any portion thereof is not (under the terms of any Lease or any underlying arrangement) directly or indirectly (x) secured by any interest in property used or to be used in any activity carried on by any person other than a state or local governmental unit or payments in respect of such property; or (y) on a present value basis, derived from payments (whether or not to City) in respect of property, or borrowed money, used or to be used in any activity carried on by any person other than a state or local governmental unit. The Equipment will not be used, directly or indirectly, in any activity carried on by any person other than a state or local governmental unit. No portion of the Equipment Costs for the Equipment will be used, directly or indirectly, to make or finance loans to any (Amendment 78 Lease) 4 person other than City. City has not entered into any management or other service contract with respect to the use and operation of the Equipment. (j) There is no pending litigation, tax claim, proceeding or dispute that may adversely affect City's financial condition or impair its ability to perform its obligations hereunder. City will, at its expense, maintain its legal existence in good standing and do any further act and execute, acknowledge, deliver, file, register and record any further documents Banc of America may reasonably request in order to protect Banc of America's security interest in the Equipment and Banc of America's rights and benefits under this Lease. ARTICLE III Section 3.01. Lease of Equipment. Subject to the terms of this Master Lease, Banc of America agrees to provide the funds specified in each Lease to be provided by it to acquire the Equipment, up to an amount equal to the Maximum Equipment Cost. Upon the execution of each Lease, Banc of America demises, leases, transfers and lets to City, and City acquires, rents and leases from Banc of America, the Equipment as set forth in such Lease and in accordance with the terms thereof. The Lease Term for each Lease may be continued, solely at the option of City, at the end of the Original Term or any Renewal Term for the next succeeding Renewal Term up to the maximum Lease Term set forth in such Lease (which total Lease Term may not exceed five years from the date of the ordinance authorizing each such Lease). At the end of the Original Term and at the end of each Renewal Term until the maximum Lease Term has been completed, City shall be deemed to have exercised its option to continue each Lease for the next Renewal Term unless City shall have terminated such Lease pursuant to Section 10.01. The terms and conditions during any Renewal Term shall be the same as the terms and conditions during the Original Term, except that the Rental Payments shall be as provided in the applicable Lease. Section 3.02. Continuation of Lease Term. City intends, subject to Section 10.01, to continue the Lease Term of each Lease through the Original Term and all Renewal Terms and to pay the Rental Payments thereunder. City affirms that sufficient general revenues are available for the current fiscal year, and City reasonably believes that an amount sufficient to make all Rental Payments during the entire Lease Term of each Lease can be obtained from legally available general revenues of City. City further intends to do all things lawfully within its power to obtain and maintain general revenues sufficient and available to discharge its obligation to make Rental Payments due hereunder, including making provision for such payments to the extent necessary in each budget adopted in accordance with applicable provisions of law. Section 3.03 [Intentionally omitted.] Section 3.04. [Intentionally omitted.] Section 3.05. Conditions to Banc of America's Performance. (a) As a prerequisite to the performance by Banc of America of any of its obligations pursuant to any Lease, City shall deliver to Banc of America the following: (Amendment 78 Lease) 5 (i) A fully completed Schedule, executed by City; (ii) A Certificate executed by the Clerk or Secretary or other comparable officer of City, in substantially the form attached hereto as Exhibit C, completed to the satisfaction of Banc of America; (iii) A certified copy of an ordinance or other official action of City's governing body authorizing the execution and delivery of this Lease and performance by City of its obligations hereunder; (iv) An opinion of counsel to City in substantially the form attached hereto as Exhibit D respecting such Lease and otherwise satisfactory to Banc of America; (v) Evidence of insurance as required by Section 7.02 hereof; (vi) All documents, including financing statements, affidavits, notices and similar instruments, in form satisfactory to Banc of America, which Banc of America deems necessary or appropriate at that time pursuant to Section 6.02; (vii) Assignment of each performance bond, if any, as collateral security to Banc of America pursuant to Section 7.02A hereof; (viii) A copy of a fully completed and executed Form 8038-G; and (ix) Such other items, if any, as are set forth in such Lease or are reasonably required by Banc of America. (b) In addition, the performance by Banc of America of any of its obligations pursuant to any Lease shall be subject to: (i) no material adverse change in the financial condition of City since the date of this Lease, (ii) no Event of Default having occurred, and (iii) the Equipment must be accepted by City no later than the date specified in the relevant Schedule (the "Utilization Period"). (c) Subject to satisfaction of the foregoing, Banc of America will pay the Acquisition Amount for Equipment described in a Schedule to the Vendor (or will reimburse City for the prior payment of any such Acquisition Amounts by City to the Vendor) upon receipt of the documents described in Sections 5.01(a) and (b). (d) This Agreement is not a commitment by Banc of America to enter into any Lease not currently in existence, and nothing in this Agreement shall be construed to impose any obligation upon Banc of America to enter into any proposed Lease, it being understood that whether Banc of America enters into any proposed Lease shall be a decision solely within Banc of America's discretion. (e) City will cooperate with Banc of America in Banc of America's review of any proposed Lease. Without limiting the foregoing, City will provide Banc of America with any documentation or information Banc of America may reasonably request in connection with Banc of America's review of any proposed Lease. Such documentation may include, without (Amendment 78 Lease) 6 limitation, documentation concerning the Equipment and its contemplated use and location and documentation or information concerning the financial status of City and other matters related to City. ARTICLE IV Section 4.01. Rental Payments. Subject to Section 10.01, City shall promptly pay Rental Payments, in lawful money of the United States of America, to Banc of America on the dates and in such amounts as provided in each Lease. CITY SHALL PAY BANC OF AMERICA A CHARGE ON ANY RENTAL PAYMENT NOT PAID WITHIN 10 DAYS OF THE DATE SUCH PAYMENT IS DUE AT THE MAXIMUM RATE PERMUTED BY ARKANSAS LAW, FROM SUCH DATE. City shall not permit the federal government to guarantee any Rental Payments under any Lease. Rental Payments consist of principal and interest payments as more fully detailed on each Schedule, the interest on which begins to accrue as of the Commencement Date for each such Schedule. Section 4.02. Interest and Principal Components. A portion of each Rental Payment is paid as, and represents payment of, interest, and the balance of each Rental Payment is paid as, and represents payment of, principal. Each Lease shall set forth the principal and interest components of each Rental Payment payable thereunder during the Lease Term. Section 4.03. Rental Payments to Constitute a General Obligation of City. Banc of America and City understand and intend that the obligation of City to pay Rental Payments under each Lease shall constitute a general obligation of City under the provisions of Amendment 78 and the Act. Section 4.04. Rental Payments to be Unconditional. Except as provided in Section 10.01, the obligations of City to make Rental Payments and to perform and observe the other covenants and agreements contained in each Lease shall be absolute and unconditional in all events without abatement, diminution, deduction, set-off or defense, for any reason, including without limitation any failure of the Equipment, after it has been accepted by City, any defects, malfunctions, breakdowns or infirmities in the Equipment or any accident, condemnation or unforeseen circumstances. Section 4.05. Tax Covenant. City agrees that it will not take any action that would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for federal income tax purposes, nor will it omit to take or cause to be taken, in timely manner, any action, which omission would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for federal income tax purposes. Section 4.06. Event of Taxability. Upon the occurrence of an Event of Taxability, the interest component shall be at a Taxable Rate retroactive to the date as of which the interest component is determined by the Internal Revenue Service to be includible in the gross income of the owner or owners thereof for federal income tax purposes, and City will pay such additional amount as will result in the owner receiving the interest component at the Taxable Rate identified in the related Lease. (Amendment 78 Lease) 7 For purposes of this Section, "Event of Taxability" means a determination that the interest component is includible for federal income tax purposes in the gross income of the owner thereof due to City's action or failure to take any action. Section 4.07. [Intentionally omitted.] ARTICLE V Section 5.01. Delivery, Installation and Acceptance of Equipment. (a) City shall order the Equipment, cause the Equipment to be delivered and installed at the location specified in the Leases and pay any and all delivery and installation costs and other Equipment Costs in connection therewith. When the Equipment listed in any Lease has been delivered and installed, City shall promptly accept, reject, or demand deficiencies be corrected in such Equipment in a reasonably prompt manner and evidence said acceptance by executing and delivering to Banc of America an acceptance certificate in the form attached hereto as Exhibit B. (b) City shall deliver to Banc of America original invoices and bills of sale (if title to such Equipment has passed to City) relating to each item of Equipment accepted by City. Banc of America shall, upon receipt of an Acceptance Certificate from City, prepare a Schedule of Property and Rental Payment Schedule in the forms attached hereto as Schedule A and A -l. City shall execute and deliver such Schedules to Banc of America within 5 business days of receipt. Section 5.02. Enjoyment of Equipment. Banc of America shall provide City with quiet use and enjoyment of the Equipment during the Lease Term, and City shall peaceably and quietly have, hold and enjoy the Equipment during the Lease Term, without suit, trouble or hindrance from Banc of America, except as otherwise expressly set forth in the related Lease. Banc of America shall not interfere with such quiet use and enjoyment during the Lease Term so long as City is not in default under the related Lease. Section 5.03. Location; Inspection. Except in connection with normal operation and maintenance and repair, once installed, no item of the Equipment will be moved from the location specified for it in the Lease on which such item is listed without Banc of America's consent, which consent shall not be unreasonably withheld. Banc of America shall have the right at all reasonable times during regular business hours to enter into and upon the property of City for the purpose of inspecting the Equipment. Section 5.04. Use and Maintenance of the Equipment. City will not install, use, operate, or maintain the Equipment improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by the related Lease. City shall provide all permits and licenses, if any, necessary for the installation and operation of the Equipment. In addition, City agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative, or judicial body relating to the installation, use, operation and maintenance of the Equipment; provided that City may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the (Amendment 78 Lease) 8 opinion of Banc of America, adversely affect the interest (including the reversionary interest) of Banc of America in and to the Equipment or its interest or rights under the Lease. City agrees that it will maintain, preserve, and keep the Equipment in good repair and working order, in accordance with manufacturer's recommendations. Banc of America shall have no responsibility to maintain, repair or make improvements or additions to the Equipment. In all cases, City agrees to pay any costs necessary for the manufacturer to re -certify the Equipment as eligible for manufacturer's maintenance upon the return of the Equipment to Banc of America as provided for herein. City shall not alter any item of Equipment or install any accessory, equipment or device on an item of Equipment if that would impair any applicable warranty, the originally intended function or the value of that Equipment. All repairs, parts, accessories, equipment and devices furnished, affixed to or installed on any Equipment, excluding temporary replacements, shall thereupon become subject to the security interest of Banc of America. ARTICLE VI Section 6.01. Title to the Equipment. During each Lease Term, and so long as no Event of Default has occurred and is continuing under Article XII hereof, all right, title and interest in and to each item of the Equipment shall be vested in City immediately upon its acceptance of each item of Equipment, subject to the terms and conditions of the applicable Lease. City shall at all times protect and defend, at its own cost and expense, its title in and to the Equipment from and against all claims, liens and legal processes of its creditors, and keep all Equipment free and clear of all such claims, liens and processes. Upon the occurrence of an Event of Default, full and unencumbered legal title to the Equipment shall pass to Banc of America, and City shall have no further interest therein. In addition, upon the occurrence of such an Event of Default or such termination, City shall execute and deliver to Banc of America such documents as Banc of America may request to evidence the passage of such legal title to Banc of America and the termination of City's interest therein, and upon request by Banc of America shall deliver possession of the Equipment to Banc of America in accordance with Section 12.02. Upon purchase of the Equipment under a Lease by City pursuant to Section 10.01, Banc of America's security interest or other interest in the Equipment shall terminate, and Banc of America shall execute and deliver to City such documents as City may request to evidence the termination of Banc of America's security interest in the Equipment subject to the related Lease. Section 6.02. Security Interest. To secure the payment of all of City's obligations under each Lease, upon the execution of such Lease, City grants to Banc of America a security interest constituting a first lien on (a) the Equipment applicable to such Lease, and (b) any and all proceeds of any of the foregoing. City agrees to execute and authorizes Banc of America to file such notices of assignment, chattel mortgages, financing statements and other documents, in form satisfactory to Banc of America, which Banc of America deems necessary or appropriate to establish and maintain Banc of America's security interest in the Equipment and the proceeds thereof. (Amendment 78 Lease) 9 Section 6.03. Personal Property. The Equipment is and will remain personal property and will not be deemed to be affixed to or a part of the real estate on which it may be situated, notwithstanding that the Equipment or any part thereof may be or hereafter become in any manner physically affixed or attached to real estate or any building thereon. Upon the request of Banc of America, City will, at City's expense, furnish a waiver of any interest in the Equipment from any party having an interest in any such real estate or building. ARTICLE VII Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges. City shall keep the Equipment free of all levies, liens, and encumbrances except those created by each Lease. The parties to this Agreement contemplate that the Equipment will be used for a govern- mental or proprietary purpose of City and that the Equipment will therefore be exempt from all property taxes. If the use, possession or acquisition of any Equipment is nevertheless determined to be subject to taxation, City shall pay when due all taxes and governmental charges lawfully assessed or levied against or with respect to such Equipment. City shall pay all utility and other charges incurred in the use and maintenance of the Equipment. City shall pay such taxes or charges as the same may become due; provided that, with respect to any such taxes or charges that may lawfully be paid in installments over a period of years, City shall be obligated to pay only such installments as accrue during each Lease Term. Section 7.02. Insurance. City shall during each Lease Term maintain or cause to be maintained (a) casualty insurance naming Banc of America and its assigns as additional insured and loss payee and insuring the Equipment against loss or damage by fire and all other risks covered by the standard extended coverage endorsement then in use in the State, and any other risks reasonably required by Banc of America, in an amount at least equal to the then applicable Purchase Price of the Equipment; (b) liability insurance as to which City agrees to add Banc of America as an additional insured on the City's liability policies for the Equipment financed hereunder and subject to any Lease; and (c) worker's compensation coverage as required by the laws of the State; provided that, with Banc of America's prior written consent, City may self - insure against the risks described in clause (a). City shall furnish to Banc of America evidence of such insurance or self-insurance coverage throughout each Lease Term. City shall not cancel or modify such insurance or self-insurance coverage in any way that would affect the interests of Banc of America without first giving written notice thereof to Banc of America at least 30 days in advance of such cancellation or modification. Section 7.02A. Surety Bonds; City to Pursue Remedies Against Contractors and Subcontractors and Their Sureties. City has secured from each contactor directly employed by City, in connection with the acquisition, construction, installation, improvement or equipping of the Equipment, payment and performance bonds executed by a surety company reasonably acceptable to Banc of America and authorized to do business in the State in a sum equal to the entire amount to become payable under the contract with such contractor. Each bond was conditioned on the completion of the work in accordance with the plans and specifications for the Equipment and upon payment of all claims of subcontractors and suppliers. City shall upon receipt of each bond from each contractor assign such bond as collateral security to Banc of America. (Amendment 78 Lease) 10 In the event of a material default of any contractor under any contract in connection with the acquisition, construction, improvement or equipping of the Equipment or in the event of a material breach of warranty with respect to any material, workmanship or performance guaranty, City will promptly proceed to exhaust its remedies against the contractor, or supplier in default and against any surety for the performance of such contract with respect to the contractor. City shall advise Banc of America of the steps it intends to take in connection with any such default. Any amounts received by way of damages, refunds, adjustments or otherwise in connection with the foregoing shall be paid to Banc of America and applied against City's obligations hereunder, net of legal fees. Section 7.03. Advances. In the event City shall fail to keep the Equipment in good repair and working order, Banc of America may, but shall be under no obligation to, maintain and repair the Equipment and pay the cost thereof. All amounts so advanced by Banc of America shall constitute additional rent for the then current Original Term or Renewal Term and City covenants and agrees to pay such amounts so advanced by Banc of America with interest thereon from the due date until paid at the maximum rate permitted by Arkansas law. ARTICLE VIII Section 8.01. Damage, Destruction and Condemnation. Unless City shall have exercised its option to purchase the Equipment pursuant to Section 10.01 by making payment of the Purchase Price as provided in the related Lease, if, priorto the termination of the applicable Lease Term, (a) the Equipment or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Equipment or any part thereof shall be taken under the exercise or threat of the power of eminent domain by any governmental body or by any person, firm or corporation acting pursuant to governmental authority, City and Banc of America will cause the Net Proceeds of any insurance claim or condemnation award or sale under threat of condemnation to be applied to the prompt replacement, repair, restoration, modification or improvement of the Equipment. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to City. If City elects to replace any item of the Equipment (the "Replaced Equipment") pursuant to this Section, the replacement equipment (the "Replacement Equipment") shall be of similar type, utility and condition to the Replaced Equipment and shall be of equal or greater value than the Replaced Equipment. Banc of America shall receive a first lien security interest in any such Replacement Equipment. City shall represent, warrant and covenant to Banc of America that each item of Replacement Equipment is free and clear of all claims, liens, security interests and encumbrances, excepting only those liens created by or through Banc of America, and shall provide to Banc of America any and all documents as Banc of America may reasonably request in connection with the replacement, including, but not limited to, documentation in form and substance satisfactory to Banc of America evidencing Banc of America's security interest in the Replacement Equipment. Banc of America and City hereby acknowledge and agree that any Replacement Equipment acquired pursuant to this paragraph shall constitute "Equipment" for purposes of this Master Equipment Lease and the related Lease. City shall complete the documentation of Replacement Equipment on or before the next Rental Payment date after the (Amendment 78 Lease) 11 occurrence of a casualty event, or be required to exercise the Purchase Option with respect to the damaged equipment. For purposes of this Article, the term "Net Proceeds" shall mean the amount remaining from the gross proceeds of any insurance claim or condemnation award or sale under threat of condemnation after deducting all expenses, including attorneys' fees, incurred in the collection thereof. Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to in Section 8.01, City shall either (a) complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) pay or cause to be paid to Banc of America the amount of the then applicable Purchase Price for the Equipment, and, upon such payment, the applicable Lease Term shall terminate and Banc of America's security interest in the Equipment shall terminate as provided in Section 6.01 hereof. The amount of the Net Proceeds, if any, remaining after completing such repair, restoration, modification or improvement or after purchasing such Equipment and such other Equipment shall be retained by City. If City shall make any payments pursuant to this Section, City shall not be entitled to any reimbursement therefor from Banc of America nor shall City be entitled to any diminution of the amounts payable under Article IV. ARTICLE IX Section 9.01. Disclaimer of Warranties. Banc of America makes no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for particular purpose or fitness for use of the Equipment, or any other warranty or representation, express or implied, with respect thereto and, as to Banc of America, City's acquisition of the Equipment shall be on an "as is" basis. In no event shall Banc of America be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Agreement, any Lease, the Equipment or the existence, furnishing, functioning or City's use of any item, product or service provided for in this Agreement or any Lease. Section 9.02. Vendor's Warranties. Banc of America hereby irrevocably appoints City its agent and attorney -in -fact during each Lease Term, so long as no Event of Default shall have occurred and be continuing under the related Lease, to assert from time to time whatever claims and rights (including without limitation warranties) relating to the Equipment that Banc of America may have against Vendor. City's sole remedy for the breach of such warranty, indemnification or representation shall be against Vendor of the Equipment, and not against Banc of America. Any such matter shall not have any effect whatsoever on the rights and obligations of Banc of America with respect to any Lease, including the right to receive full and timely Rental Payments under a Lease. City expressly acknowledges that Banc of America makes, and has made, no representations or warranties whatsoever as to the existence or the availability of such warranties relating to the Equipment. (Amendment 78 Lease) 12 I ARTICLE X Section 10.01. Purchase Option. City shall have the option to purchase all of the Equipment listed in a Lease, at the following times and upon the following terms: (a) From and after the date specified in the related Schedule (the "Purchase Option Commencement Date"), on the Rental Payment dates specified in each Lease, upon not less than 30 days' prior written notice, and upon payment in full of the Rental Payments then due under such Lease plus the then applicable Purchase Price, which may include a prepayment premium on the unpaid balance as set forth in the applicable Schedule; or (b) In the event of substantial damage to or destruction or condemnation of substantially all of the Equipment listed in a Lease, on the day specified in City's notice to Banc of America of its exercise of the purchase option (which shall be the earlier of the next Rental Payment date or 60 days after the casualty event) upon payment in full to Banc of America of the Rental Payments then due under such Lease plus the then applicable Purchase Price; or (c) Upon the expiration of the Lease Term, upon payment in full of all Rental Payments then due and all other amounts then owing under the Lease, and the payment of $1.00 to Banc of America. After payment of the applicable Purchase Price, City will own the related Equipment, and Banc of America's security interests in and to such Equipment will be terminated. ARTICLE XI Section 11.01. Assignment by Banc of America. Banc of America's right, title and interest in and to Rental Payments and any other amounts payable by City under any and all of the Leases, its security interest in the Equipment subject to each such Lease, and all proceeds therefrom may be assigned and reassigned in whole or in part to one or more assignees or subassignees by Banc of America, without the necessity of obtaining the consent of City; provided, however, that any such assignment, transfer or conveyance to a trustee for the benefit of owners of certificates of participation shall be made in a manner that conforms to any applicable State law and said certificates of participation shall be offered and sold in a private placement or limited offering only to investors whom Banc of America reasonably believes are qualified institutional buyers or accredited investors within the meaning of the applicable federal securities laws. Nothing in this Section 11.01 shall be construed, however, to prevent Banc of America from executing any such assignment, transfer or conveyance that does not involve funding through the use of certificates of participation within the meaning of applicable State law, including any such assignment, transfer or conveyance as part of a multiple asset pool to a partnership or trust, interests in which are offered and sold in a private placement or limited offering only to investors whom Banc of America reasonably believes are qualified institutional buyers or accredited investors within the meaning of the applicable federal securities law; provided further, however, that in any event, City shall not be required to make Rental Payments, to send notices or to otherwise deal with respect to matters arising under a Lease with or to more than one individual or entity. No assignment, transfer or conveyance permitted by this Section 11.01 shall be effective until City shall have received a written notice of assignment that (Amendment 78 Lease) 13 discloses the name and address of each such assignee; provided, however, that if such assignment is made to a bank or trust company as trustee or paying agent for owners of certificates of participation, trust certificates or partnership interests with respect to the Rental Payments payable under a Lease, it shall thereafter be sufficient that City receives notice of the name and address of the bank or trust company as trustee or paying agent. During each Lease Term, City shall keep, or cause to be kept, a complete and accurate record of all such assignments in form necessary to comply with Section 149 of the Code. City shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees designated in such register. City shall not have the right to and shall not assert against any assignee any claim, counterclaim or other right City may have against Banc of America or the Vendor. Assignments in part may include without limitation assignment of all of Banc of America's security interest in and to the Equipment listed in a particular Lease and all rights in, to and under the Lease related to such Equipment. The option granted in this Section may be separately exercised from time to time with respect to the Equipment listed in each Lease, but such option does not permit the assignment of less than all of Banc of America's interests in the Equipment listed in a single Lease. Section 11.02. Assignment and Subleasing by City. None of City's right, title, and interest in, to and under any Lease or any portion of the Equipment may be assigned or encum- bered by City for any reason. ARTICLE XII Section 12.01. Events of Default Defined. Any of the following events shall constitute an "Event of Default" under a Lease: (a) Failure by City to pay any Rental Payment or other payment required to be paid under any Lease within 10 days of the date specified herein; (b) Failure by City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in subparagraph (a) above, for a period of 30 days after written notice specifying such failure and requesting that it be remedied is given to City by Banc of America, unless Banc of America shall agree in writing to an extension of such time prior to its expiration; provided that, if the failure stated in the notice cannot be corrected within the applicable period, Banc of America will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by City within the applicable period and diligently pursued until the default is corrected; (c) Any material misstatement or misrepresentation made by City in any representation or warranty in this Agreement or any Lease or to obtain this Agreement or any Lease or any Equipment obtained through this Agreement or any Lease, if such statement or representation is intentionally false or incorrect at the time it is made. (d) Any default occurs under any other agreement for borrowing money or receiving credit under which City may be obligated as borrower, if such default consists of (i) the failure to pay any indebtedness when due or (ii) the failure to perform any other obligation thereunder and gives the holder of the indebtedness the right to accelerate the indebtedness; (Amendment 78 Lease) 14 (e) City shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of City, or of all or a substantial part of the assets of City, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable federal bankruptcy law, or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or taking advantage of any insolvency law or any answer admitting the material allegations of a petition filed against City in any bankruptcy, reorganization or insolvency proceeding; or (f) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator or City or of all or a substantial part of the assets of City, in each case without its application, approval or consent, and such order, judgment or decree shall continue unstayed and in effect for any period of 30 consecutive days. Section 12.02. Remedies on Default. Whenever any Event of Default exists, Banc of America 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 City, Banc of America may declare all Rental Payments payable by City pursuant to such Lease and other amounts payable by City under such Lease to the end of the then current Original Term or Renewal Term to be due, subject, however, to any limitations imposed by applicable Arkansas law; (b) With or without terminating the Lease Term under such Lease, Banc of America may enter the premises where the Equipment listed in such Lease is located and retake possession of such Equipment or require City at City's expense to promptly return any or all of such Equipment to the possession of Banc of America at such place within the United States as Banc of America shall specify, and sell or lease such Equipment or, for the account of City, sublease such Equipment, continuing to hold City liable, but solely from legally available funds, for the difference between (i) the Rental Payments payable by City pursuant to such Lease and other amounts related to such Lease or the Equipment listed therein that are payable by City to the end of the then current Original Term or Renewal Term, as the case may be, and (ii) the net proceeds of any such sale, leasing or subleasing (after deducting all expenses of Banc of America in exercising its remedies under such Lease, including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing such Equipment and all brokerage, auctioneer's and attorney's fees and to any limitations imposed by applicable Arkansas law). The exercise of any such remedies respecting any such Event of Default shall not relieve City of any other liabilities under any other Lease or the Equipment listed therein; and (c) Banc of America may take whatever action at law or in equity may appear necessary or desirable to enforce its rights under such Lease or as a secured party in any or all of the Equipment subject to such Lease. Section 12.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to Banc of America is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under a Lease now or hereafter existing at law or (Amendment 78 Lease) 15 in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Banc of America to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice other than such notice as may be required in this Article. Section 12.04. Application of Moneys. Any net proceeds from the exercise of any remedy under this Agreement, including the application specified in Section 12.02(b)(ii) (after deducting all expenses of Banc of America in exercising such remedies including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing Equipment and all brokerage, auctioneer's or attorney's fees), shall be applied as follows: (a) If such remedy is exercised solely with respect to a single Lease, Equipment listed in such Lease or rights thereunder, then to amounts due pursuant to such Lease and other amounts related to such Lease or such Equipment. (b) If such remedy is exercised with respect to more than one Lease, Equipment listed in more than one Lease or rights under more than one Lease, then to amounts due pursuant to such Leases pro rata. ARTICLE XIII Section 13.01. Notices. All notices, certificates or other communications under any Lease shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, or delivered by overnight courier, or sent by facsimile transmission (with electronic confirmation) to the parties hereto at the addresses immediately after the signatures to this Agreement (or at such other address as either party hereto shall designate in writing to the other for notices to such party) and to any assignee at its address as it appears on the registration books maintained by City. Section 13.02. Release and Indemnification. To the extent permitted by law, City shall indemnify and defend Banc of America against any and all claims, actions, suits and other demands for damages related to any alleged lien holder liability arising out of City's selection, possession or use of any Equipment obtained by City under this Agreement and any Lease. This indemnification does not waive or reduce City's statutory immunity as to any third party claimants nor provide any third party beneficiary rights to any claimant or other person or entity. Section 13.03. Binding Effect. Each Lease shall inure to the benefit of and shall be binding upon Banc of America and City and their respective successors and assigns. Section 13.04. Severability. In the event any provision of any Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 13.05. Amendments, Changes and Modifications. Each Lease may only be amended by Banc of America and City in writing. (Amendment 78 Lease) 16 Section 13.06. Execution in Counterparts. Each Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 13.07. Applicable Law. Each Lease shall be governed by and construed in accordance with the laws of the State of Arkansas. Section 13.08. Captions. The captions or headings in this Agreement and in each Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement or any Lease. Section 13.09. Jurisdiction. The jurisdiction for this agreement is stipulated as Washington County, Arkansas. (Remainder of page intentionally left blank.) (Amendment 78 Lease) 17 S IN WITNESS WHEREOF, Banc of America and City have caused this Agreement to be executed in their names by their duly authorized representatives as of the date first above written. BANG OF AMERICA: Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 I. CITY: City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, Arkansas 72701 (Seal) Attest: AD., By Title: City Clerk (Amendment 78 Lease) 18 LESSEE'S COPY ExHIBIT A SCHEDULE OF PROPERTY NO. 1 Re: Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville Arkansas, as City 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above -referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment Lease "). 2. Equipment. The following items of Equipment are hereby included under this Schedule of the Master Equipment Lease. Quantity Description Serial No. Model No. Location Payment Schedule. (a) Rental Payments. The Rental Payments shall be in such amounts and payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as Exhibit A-1. Rental Payments shall commence on the date on which the Equipment listed in this Schedule is accepted by City, as indicated in an Acceptance Certificate substantially in the form of Exhibit B to the Master Equipment Lease. The City agrees to accept the equipment as agreed to in Article V of the Master Lease Agreement dated June 25, 2003. (b) Purchase Price Schedule. The Purchase Price on each Rental Payment date for the Lease of the Equipment listed in this Schedule shall be the amount set forth for such Rental Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule (including the Rental Payment shown on the same line in the Rental Payment Schedule). 4. Representations, Warranties and Covenants. City hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Master Equipment Lease are true and correct as though made on the date of commencement of Rental Payments on this Schedule. City further represents and warrants that no material adverse change in City's financial condition has occurred since the date of the Master Equipment Lease. (Amendment 78 Lease) A -I 0 5. The Lease. The terms and provisions of the Master Equipment Lease (other than to the extent that they relate solely to other Schedules or Equipment listed on other Schedules) are hereby incorporated into this Schedule by reference and made a part hereof. 6. Acquisition Amount. The Acquisition Amount for the Equipment described in this Schedule to be paid to the Vendor is $ 1,769,865.00. 7. Lease Term. The Lease Term shall consist of the Original Term and 60 consecutive Renewal Terms, with the final Renewal Term ending on 8. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease, the Purchase Option Commencement Date is Dated: BANC OF AMERICA: Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 By_ Title CITY: City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, Arkansas 72701 By Title: Mayor (Seal) Attest: By Title: City Clerk Counterpart No. of manually executed and serially numbered counterparts. To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial Code), no security interest herein may be created through the transfer or possession of any Counterpart other than Counterpart No. 1. (Amendment 78 Lease) A-2 EXHIBIT A-i RENTAL PAYMENT SCHEDULE Rental Payment Date Rental Payment Amount Interest Portion Principal Portion Purchase Price Prepayment Premium for purposes of Section 10.01(a) is 1.00%. For purposes of this Lease, "Taxable Rate," with respect to the interest component of Rental Payments, means an annual rate of interest equal to CITY: City of Fayetteville, Arkansas By_ Title: (Amendment 78 Lease) A-1-1 EXHIBIT B ACCEPTANCE CERTIFICATE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. 1, dated , to Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville, Arkansas, as City Ladies and Gentlemen: In accordance with the Master Equipment Lease/Purchase Agreement (the "Agreement"), the undersigned City hereby certifies and represents to, and agrees with Banc of America as follows: 1. All of the Equipment (as such term is defined in the Agreement) listed in the above -referenced Schedule of Property (the "Schedule ") has been delivered, installed and accepted on the date hereof. 2. City has conducted such inspection and/or testing of the Equipment listed in the Schedule as it deems necessary and appropriate and hereby acknowledges that it accepts the Equipment for all purposes. 3. City is currently maintaining the insurance coverage required by Section 7.02 of the Agreement. 4. No event or condition that constitutes, or with notice or lapse of time, or both, would constitute, an Event of Default (as defined in the Agreement) exists at the date hereof. Date: CITY: City of Fayetteville, Arkansas By_ Title: (Seal) (Amendment 78 Lease) B -t 0 EXHIBIT C CERTIFICATE The undersigned, the duly elected and acting City Clerk of the City of Fayetteville ("City") certifies as follows: A. The following listed persons are duly elected and acting officials of City (the "Officials") in the capacity set forth opposite their respective names below and that the facsimile signatures are true and correct as of the date hereof; B. The Officials are duly authorized, on behalf of City, to negotiate, execute and deliver the Master Equipment Lease/Purchase Agreement dated as of June 25, 2003 and the Schedule(s) thereunder and all future Schedule(s) (the "Agreements ") by and between City and Banc of America Leasing & Capital, LLC and these Agreements are binding and authorized Agreements of City, enforceable in all respects in accordance with their terms. Name of Official Title Dan Coody Mayor Dated June 25, 2003 By: IIM t-' Title: City Clerk (The signer of this Certificate cannot be listed above as authorized to execute the Agreements.) (Amendment 78 Lease) C -I EXHIBIT D OPINION OF COUNSEL TO CITY Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. 1, dated , to Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville, Arkansas, as City Ladies and Gentlemen: As legal counsel to the City of Fayetteville, Arkansas ("City"), I have examined (a) an executed counterpart of a certain Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003, and Exhibits thereto by and between Banc of America Leasing & Capital, LLC ("Banc of America ") and City (the "Agreement") and an executed counterpart of Schedule of Property No. 1, dated , by and between Banc of America and City (the "Schedule "), which, among other things, provides for the lease of certain property listed, in the Schedule (the "Equipment"), (b) an executed counterpart of Ordinance No. 4478 of City adopted April 15, 2003, which, among other things, authorizes City to execute the Agreement and the Schedule, and (c) such other opinions, documents and matters of law as I have deemed necessary in connection with the following opinions. The Schedule and the terms and provisions of the Agreement incorporated therein by reference, together with the Rental Payment Schedule attached to the Schedule, are herein referred to collectively as the "Lease". Based on the foregoing, I am of the following opinions: 1. City is a public body corporate and politic, duly organized and existing under the laws of the State of Arkansas, and is a political subdivision of the State of Arkansas within the meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended (the "Code"), and the obligations of City under the Agreement will constitute an obligation of City within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code. 2. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 78 and Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp.) (the "Act"), City has the requisite power and authority to lease and acquire the Equipment and to execute and deliver the Lease and to perform its obligations under the Lease. 3. The Lease has been duly authorized, approved, executed and delivered by and on behalf of City and the Lease is a valid and binding general obligation of City under Amendment 78 and the Act enforceable in accordance with its terms. (Amendment 78 Lease) D-1 4. The authorization, approval, execution and delivery of the Lease and all other proceedings of City relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state or federal laws. 5. To the best of our knowledge, there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transactions contemplated by the Lease or the security interest of Banc of America or its assigns, as the case may be, in the Equipment thereunder. 6. The portion of rentals designated as and constituting interest paid by City and received by Banc of America is excluded from Banc of America's gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of Arkansas personal income taxes; and such interest is not a specific item of tax preference for purposes of computing the alternative minimum tax imposed on individuals and corporations; it should noted, however, that such interest is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. All capitalized terms herein shall have the same meanings as in the Lease unless otherwise provided herein. Banc of America and its successors and assigns, and any counsel rendering an opinion on the tax-exempt status of the interest components of the Rental Payments, are entitled to rely on this opinion. It is to be understood that the rights of Banc of America and the enforceability of the Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that its enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Kutak Rock LLP (Amendment 78 Lease) D-2 i 0 ESSENTIAL USE/SOURCE OF FUNDS CERTIFICATE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Master Equipment Lease/Purchase Agreement dated June 25, 2003, between Banc of America Leasing & Capital, LLC and City of Fayetteville, Arkansas ("City") and Schedule of Property No. — dated This certificate confirms and affirms that the Equipment described in the Agreement referenced above is essential to the functions of City or to the services City provides its citizens. Further, City has an immediate need for, and expects to make immediate use of, substantially all such Equipment, which need is not temporary or expected to diminish in the foreseeable future. Such Equipment will be used by City only for the purpose of performing one or more of City's governmental or proprietary functions consistent with the permissible scope of its authority. City expects and anticipates adequate funds to be available for future pa ents or rent due after the current budgetary period. A Signature Name Da Title Mal, vi (Amendment 78 Lease) •• • ORDINANCE NO. 4478 AN ORDINANCE AUTHORIZING THE EXECUTION AND DELIVERY OF A MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT HAVING A NOMINAL PRINCIPAL AMOUNT NOT TO EXCEED $5,000,000.00 FOR THE PURPOSE OF FINANCING THE COST OF ACQUIRING CERTAIN FIRE FIGHTING APPARATUS; AND PRESCRIBING OTHER MATTERS RELATING THERETO WHEREAS, the City Council of the City of Fayetteville, Arkansas has determined that there is a great need for a mechanism to finance the costs of acquisition of certain fire fighting apparatus to benefit the residents of the City; and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 78 to the Constitution of the State of Arkansas and the Local Government Short -Term Financing Obligations Act of 2001, codified as Arkansas Code Annotated (2001 Supp.) Sections 14-78-101 et seq. as from time to time amended, to enter into certain short-term lease/purchase arrangements to finance the costs of various capital improvements, which lease obligations shall constitute general obligations of the City under Amendment 78 and the Act; and WHEREAS, the City has made arrangements for the entry into a Master Equipment Lease/Purchase Agreement with Banc of America Leasing & Capital, LLC, a Delaware limited liability, in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS THAT: . Section 1. Under the authority of the Constitution and laws of the State of Arkansas, the Mayor is hereby authorized and directed to execute the Lease/Purchase Agreement, and the City Clerk is hereby authorized and directed to execute the Lease/Purchase Agreement and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Lease/Purchase Agreement to be executed by Banc of America Leasing & Capital, LLC. The Lease/Purchase Agreement is hereby approved in substantially the form submitted to this meeting. The Mayor is hereby authorized to confer with with Banc of America Leasing & Capital, LLC and Kutak Rock LLP, Bond Counsel, in order to complete the Lease/Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Lease/Purchase Agreement, their execution to constitute conclusive evidence of such approval. Section 2. The nominal principal amount of the Lease/Purchase Agreement may not exceed $5,000,000.00 in the aggregate, the term of the Lease/Purchase Agreement shall expire no later than five years from the date of adoption of this ordinance, and the effective interest rate relating to the City's obligations under the Lease/Purchase Agreement shall not exceed the maximum rate prescribed by Arkansas law, including Amendment 78 and the Act. Section 3. It is affirmed that, pursuant to Amendment 78 and the Act, the payment obligations of the City under the Lease/Purchase Agreement shall constitute general obligations of the City, and the total annual payments owed by the City under the Lease/Purchase Agreement in each of the City's fiscal years shall be charged against and paid from the general revenues of the City for such fiscal years. Section 4. As required by Amendment 78 and the Act, the City hereby finds and determines that: (a) Each of the components to be financed under the Lease/Purchase Agreement has an average useful life in excess of one year; and (b) The aggregate nominal principal amount of all obligations of the City under Amendment 78 and the Act, including the Lease/Purchase Agreement, will at no time exceed five percent (5%) of the assessed value of the taxable real and personal property located within the City, as determined by the last tax assessment completed prior to the date hereof. Section 5. The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all things necessary to effect the execution and delivery of the Lease/Purchase Agreement, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. Section 6. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance. Section 7. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED this the 15'h day of April, 2003. t,AVL►!t By: SondraSond?i Smith, City APPROVED: By: 55-03 RESOLUTION NO. A RESOLUTION APPROVING THE ACQUISITION, PURSUANT TO A LEASE -TO -OWN AGREEMENT WITH BANC OF AMERICA LEASING AND CAPITAL, LLC, OF ONE (1) 95' TELESCOPING PLATFORM AERIAL UNIT AND THREE (3) FIRE ENGINE UNITS (PUMPERS) FROM LEECO, INC. FOR A TOTAL AMOUNT OF ONE MILLION SEVEN HUNDRED SIXTY-NINE THOUSAND EIGHT HUNDRED SIXTY-FIVE DOLLARS AND FORTY-NINE CENTS ($1,769,865.49) AND APPROVING A BUDGET ADJUSTMENT IN THE AMOUNT OF THIRTY-SEVEN THOUSAND ONE HUNDRED FORTY-FOUR DOLLARS ($37,144.00) FOR SAME. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas, hereby approves the acquisition, pursuant to a lease -to -own agreement with Banc of America Leasing and Capital, LLC, of One (1) 95' Telescoping Platform Aerial Unit and Three (3) Fire Engine Units (pumpers) from Leeco, Inc. for a total amount of One Million Seven Hundred Sixty -Nine Thousand Eight Hundred Sixty -Five Dollars and Forty -Nine Cents ($1,769,865.49) Section 2. That the City Council of the City of Fayetteville, Arkansas, hereby approves a budget adjustment in the amount of Thirty -Seven Thousand One Hundred Forty -Four Dollars ($37,144.00) for same. XASSED and APPROVED this 15th day of April, 2003. FY Li f t. APPROVED: , e T;,. DAN COODY, May At1fS1: By: /h., ti*2 Ant,{` SONDRA SMITH, City Clerk ' . • PO Box 341n nce Company iS S A F E C a Seattle, WA 98124-1528 PERFORMANCE BOND Bond .6191510 KNOW ALL BY THESE PRESENTS, That we, EMERGENCY ONE, INC., 3611 SW 20TH STREET, OCALA, FL 34474 AND LEECO INC. 1408 HWY 124 EAST, DAMASCUS, ARKANSAS 72039 (hereinafter called the Principal), as Principal, and SAFECO INSURANCE COMPANY OF AMERICA , a corporation duly organized under the laws of the State of Washington (hereinafter called the Surety), as Surety, are held and firmly bound unto FAYETTEVILLE FIRE DEPARTMENT 303 W. CENTER STREET, FAYETTEVILLE, ARKANSAS 72701 , (hereinafter called the Obligee), in the sum of One Million Seven Hundred Sixty Nine Thousand Eight Hundred Sixty Five and 49/100 - - - - - - - - - - - - - - - - - ($ 1,769,865.49 )Dollars, for the payment of which sum well and truly to be made, we, the said Principal and the said Surety, bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. Signed and sealed this 20TH day of June , 2003 WHEREAS, said Principal has entered into a written Contract with said Obligee, dated 06/05/2003 for EMERGENCY ONE FIRE APPARATUS in accordance with the terms and conditions of said Contract, which is hereby referred to and made a part hereof as if fully set forth herein: NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, That if the above bounden Principal shall well and truly keep, do and perform each and every, all and singular, the matters and things in said contract set forth and specified to be by said Principal kept, done and performed, at the times and in the manner in said contract specified, or shall pay over, make good and reimburse to the above named Obligee, all loss and damage which said Obligee may sustain by reason of failure or default on the part of said Principal so to do, then this obligation shall be null and void; otherwise shall remain in full force and effect. NO SUIT, ACTION OR PROCEEDING by the Obligee to recover on this bond shall be sustained unless the same be commenced within two (2) years following the date on which Principal ceased work on said Contract. EMERGENCY ONE, INC AND LEECO INC. • B � SAFECO INSURANCE COMPANY OF AMERICA By K J N . BELKE Attorney -in -Fact S-07571SAEF 10/99 ® A registered trademark of SAFECO Corporation FRP U SAFECOO 40 SAFECO Insurance Company PO Box 34526 Seattle, WA 98124-1526 LENDER'S DUAL OBLIGEE RIDER TO PERFORMANCE BOND WHEREAS, Heretofore, on or about the 5TH day of as Contractor entered into a written agreement Bond 6191510 June 2003 as Owner for the construction of EMERGENCY ONE FIRE APPARATUS and WHEREAS, the Contractor and SAFECO INSURANCE COMPANY OF AMERICA a Washington corporation, as Surety, executed and delivered to the Owner their joint and several Performance Bond, and WHEREAS, the Owner has arranged for a loan for the exclusive purpose of payment for the performance of said Contract and has requested the Contractor and Surety to join with the Owner in the execution and delivery of this Rider, and the Contractor and Surety have agreed so to do upon the conditions herein stated. NOW THEREFORE, in consideration of one dollar and other good and valuable consideration, receipt of which is acknowledged, the undersigned agree that the said Performance Bond shall be, and is, amended as follows: 1. The name of BANC OF AMERICA LEASING & CAPITAL LLCI 555 CALIFORNIA ST., SAN FRANCISCO, CA 91404 as Lender shall be added to said bond as a named Obligee. 2. The rights of the Lender as a named Obligee shall be subject to the condition precedent that the Owner's obligations under the contract be performed. 3. The aggregate liability of the Surety under said bond to the Owner and the Lender, as their interests may appear, is limited to the penal sum of the said bond. 4. The Surety may, at its option, make any payment under said bond by check issued jointly to the Owner and the Lender. 5. Except as herein modified, said Performance Bond shall be and remain in full force and effect. Signed and sealed this (Seal if corporation) Attest (Seal if corporation) Attest 20TH day of June 2003 FAYETTEVILLE FIRE DEPARTMENT Owner EMERGENCY ONE, INC and LEECO, INC. Contractor By BA SARA KEELER-A/R SUPERVISOR SAFECO INSURANCE COMPANY OF AMERICA By Attorney -in -Fact S-0780/SAEF 10/99 ® A registered trademark of SAFECO Corporation FR? F S A F E C O" POWER GElIINSURANCCC MPAN OF AMERIA GE L INSURANCE COMPANY AMERICA ATTORNEY HOME OFFICE: SAFECO PLAZA SEATTLE, WASHINGTON 98185 No. 10179 KNOW ALL BY THESE PRESENTS: That SAFECO INSURANCE COMPANY OF AMERICA and GENERAL INSURANCE COMPANY OF AMERICA, each a Washington corporation, does each hereby appoint ••••••••••'•'••••••••'••••ELENA M. CYRUS; JEAN K. BELKE; WILLIAM T. SULLIVAN; PATRICIA DELEONARDIS; Chicago, Blinois•••'••••'•••••""'•'••'••'•" Its true and lawful attorney(s)-in-fact, with full authority to execute on its behalf fidelity and surety bonds or undertakings and other documents of a similar character Issued in the course of its business, and to bind the respective company thereby. IN WITNESS WHEREOF, SAFECO INSURANCE COMPANY OF AMERICA and GENERAL INSURANCE COMPANY OF AMERICA have each executed and attested these presents this 2nd day of /LL- kca CHRISTINE MEAD, SECRETARY MIKE MCGAVICK, PRESIDENT CERTIFICATE Extract from the By -Laws of SAFECO INSURANCE COMPANY OF AMERICA and of GENERAL INSURANCE COMPANY OF AMERICA: 2003 "Article V, Section 13. - FIDELITY AND SURETY BONDS ... the President, any Vice President, the Secretary, and any Assistant Vice President appointed for that purpose by the officer in charge of surety operations, shall each have authority to appoint individuals as attorneys -In -fact or under other appropriate titles with authority to execute on behalf of the company fidelity and surety bonds and other documents of similar character issued by the company in the course of its business... On any instrument making or evidencing such appointment, the signatures may be affixed by facsimile. On any instrument conferring such authority or on any bond or undertaking of the company, the seal, or a facsimile thereof, may be impressed or affixed or in any other manner reproduced; provided, however, that the seal shall not be necessary to the validity of any such Instrument or undertaking." Extract from a Resolution of the Board of Directors of SAFECO INSURANCE COMPANY OF AMERICA and of GENERAL INSURANCE COMPANY OF AMERICA adopted July 28, 1970. "On any certificate executed by the Secretary or an assistant secretary of the Company setting out, (I) The provisions of Article V, Section 13 of the By -Laws, and (ii) A copy of the power -of -attorney appointment, executed pursuant thereto, and (iii) Certifying that said powerofattomey appointment is in full force and effect, the signature of the certifying officer may be by facsimile, and the seal of the Company may be a facsimile thereof." I, Christine Mead, Secretary of SAFECO INSURANCE COMPANY OF AMERICA and of GENERAL INSURANCE COMPANY OF AMERICA, do hereby certify that the foregoing extracts of the By -Laws and of a Resolution of the Board of Directors of these corporations, and of a Power of Attorney issued pursuant thereto, are true and correct, and that both the By -Laws, the Resolution and the Power of Attorney are still in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the facsimile seal of said corporation this 20th day of June , 2003 y� E COMp� SEAL W SEAL x 1953 'Or o6af11fa1� CHRISTINE MEAD, SECRETARY S-0974ISAEF 2101 ® A registered trademark of SAFECO Corporation 0V022003 PDF SAFECO' • SAFECO Insurance Company PO Box 34525 Seattle, WA 98124-1520 ACKNOWLEDGMENT BY SURETY STATE OF ILLINOIS COOK ss. County of JJJ On this 20th day of June JEAN K. BELKE 2003 , before me personally be the Attorney -in -Fact of me to , known to, or p;t tome ,the IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, at my office in the aforesaid County, the day and year in this certificate first above written. •eee•••eeee•••••••e••ee••••• "OFFICIAL SEAL" ELENA M. CYRUS Notary Public, State of Illinois My Commission Expires 4/30/07 : No Public in the State of (Seal) e••eeeeeeeee•••ee•eee••e•••• C untyof COOK I-0230/SAEF 10/99 ® A registered trademark of SAFECO Corporation FRP 26.52.4](I TAXA'T'ION RESEARCH REFERENCES IJALR L.J. Legislative Survey,- Tax:.. lion. 8 UALR L.J. 601. CASE NOTES One -Year Period. The language "at the time of sulw.. yuent sale" in subsection to refers on)v to those aircraft sold during the one-year holding period. Weiss v. Central Flying Sen.. inc.. 326 Ark. 685. 934 S.W.2d 211 0996,. This section provides that the gross reeeipt.s tax on the purchase ohm airplan • used lot- rental or charter service and held for more than one year without resale mustbe paid immediately after the lapse of one year from the date of purchase, not when the airplane is actually sold after the lapse of one year. Weiss v. Central Flying Sen.. Inc.. 326 Ark. 685, 934 S.W.2d 21] 41996). 26.52.410. Motor vehicles sold to political subdivisions and schools. (a) No tax shall be levied or collected upon gross receipts derived from the sale of motor vehicles t.o municipalities and counties or to st.ate•support.ed colleges and universities or to public school districts in this state. (b) No tax shall be levied or collected upon the gross receipts derived from the sale of school buses t.o school districts of Arkansas. (c) No tax shall be levied or collected upon the gross receipts derived from the sale of school buses if at the time of sale the school bus purchaser has contracted with an Arkansas school district to provide school bus service for the school district, the school buses purchased are used exclusively in providing such service, and the obligation to pay any taxes related t.o the school buses is contractually assumed by the school district. This exemption shall apply only to school buses which are equipped in accordance with t; 6 -]9 -117(a) -(d). History. Acts 1947. No. 339. $ 1: 197). No. 49. § 1: A.S.A. 1947, §?: 84-1904.9. 84•]905: Acts 1997, No. 1303, S 1. Amendments, The 1997 amendment added (c). 26-52.411. Admission tickets sold by municipalities. The gross receipts or gross proceeds derived by municipalities of this state from the sale of tickets or admissions to places of amusement or to athletic, ent.ert.ainment, or recreational events: or fees for the privilege of having access to or the use of amusement, entertainment, athletic, or recreational facilities, including free or complimentary passes, tickets, admissions, dues, or fees, such free or complimentary passes, tickets, dues, or fees hereby being declared to have a value equivalent to the sale price of tickets, passes, admissions, fees, or dues of like kind, shall be exempt from the Arkansas gross receipts tax levied by the Arkansas Gross Receipts Act, § 26-52-101 et seq. S SS REGISTRATION AND LICENSING — GENERALLY 27-14-212 capable, generally, of sustaining themselves as beams between the supporting connections. History. Acts 1949. No. 142. § 4: A.S.A. 1947, § 75.104. 27-14.211. Special mobile equipment. "Special mobile equipment" means every vehicle not designed or used primarily for the transportation of persons or property and inci• dentally operated or moved over the highways, including farm tractors. road construction or maintenance machinery. ditch -digging apparatus, well -boring apparatus, and concrete mixers. This enumeration shall he deemed partial and shall not operate to exclude other such vehicles which are within the general terms of this section. History. Acts 1949. No. 142. § 8: A.S.A. 1947. § 75.10F. CASE NOTES A NAI.VSIF Applicability. Mowers. Applicability. The exemption provided for in this sec- tion is an exemption in the vehicle regis- nation and licensing provisions and is not applicable to the provisions of §§ 27.35- 101 - 27.35.103 pertaining to weight limitations on vehicles driven on high- ways. Stuart. v. State, 263 Ark. 54, 567 S.W.2d 398 U978). Mowers. Mowers and other vehicles not desicnsl for transportation are special mobil': equipment and exempt from regist.rstr.:•. Cousins v. Dennis, 298 Ark. 310, hi': S.W.2d 296 11989). 27.14-212. Implements of husbandry. "Implements of husbandry" means every vehicle designed and adapted exclusively for agricultural, horticultural, or livestock raising operations, or for lifting or carrying an implement of husbandry, and. in either case. not subject to registration if used upon the highways. History. Acts 1949, No. 142, § 7: 1959. No. 307, § 3; A.S.A. 1947, § 75.101. ANAI.YSIs Applicability Tractors. CASE NOTES Applicability. The exemption provided for in this sec- tion is an exemption to the vehicle regi>- tration and licensing provisions and is not applicable to the provisions of §§ 27.35- 101 - 27-35.103 pertaining to weight. limitations on vehicles driven on high• ways. Stuart v. State, 263 Ark. 54. 563 S.W.2d 398 119781. 'Il actors. A tractor is an implement of hus- bandry. and is not subject to registration. EXHIBIT A SCHEDULE OF PROPERTY No. I Re: Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003and Amendment No. 1 to Master Lease/Purchase Agreement dated as of July 10, 2003 between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville Arkansas, as City 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above -referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment Lease"). 2. Equipment. The following items of Equipment are hereby included under this Schedule of the Master Equipment Lease. Quantity Description Serial No. Model No. Location Fire Engine, E -One 1500 1 Pumper #1 Gallon per Unit #33 Minute Pumper Fire Engine E -One 1500 1 Pumper #2 Gallon per Unit #34 Minute Pumper Fire Engine E -One 1500 1 Pumper #3 Gallon per Unit #35 Minute Pumper Aerial Unit -95' Telescoping 95' Telescoping I Aerial Aerial Platform Unit #36 Payment Schedule. (a) Rental Payments. The Rental Payments shall be in such amounts and payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as Exhibit A-1. Rental Payments shall commence on the date on which the Equipment listed in this Schedule is accepted by City, as indicated in an Acceptance Certificate substantially in the form of Exhibit B to the Master Equipment Lease. The City agrees to accept the equipment as agreed to in Article V of the Master Lease Agreement dated June 25, 2003. (b) Purchase Price Schedule. The Purchase Price on each Rental Payment date for the Lease of the Equipment listed in this Schedule shall be the amount set forth for such Rental Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule (including the Rental Payment shown on the same line in the Rental Payment Schedule). LESSEE'S COPY #602276v1(Amendment 78 Lease) A-4 4. Representations, Warranties and Covenants. City hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Master Equipment Lease are true and correct as though made on the date of commencement of Rental Payments on this Schedule. City further represents and warrants that no material adverse change in City's financial condition has occurred since the date of the Master Equipment Lease. 5. The Lease. The terms and provisions of the Master Equipment Lease (other than to the extent that they relate solely to other Schedules or Equipment listed on other Schedules) are hereby incorporated into this Schedule by reference and made a part hereof. 6. Lease Proceeds. The Lease Proceeds which Banc of America shall pay to the Acquisition Fund Custodian in connection with this Schedule is $ 1,769,865.00. 7. Acquisition Period. The Acquisition Period applicable to this Schedule shall end at the conclusion of the 12th month following the date hereof. 8. Lease Term. The Lease Term shall consist of the Original Term and (4) consecutive Renewal Terms, with the final Renewal Term ending on August 1, 2008. 9. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease, the Purchase Option Commencement Date is March 1, 2006. Dated: July 10, 2003 BANC OF AMERICA: CITY: Banc of America Leasing & Capital, LLC City of Fayetteville, Arkansas 555 California Street, 4th Floor 113 West Mountain Street . CA5-705-04-01 Fayetteville, Arkansas 72701 San Francisco, California 94104 By By A Titl sistant Vie esident Title Ma or /.t-. ► r, ,&_• x (Seal) Ii Attest: �/� �: { ♦ ti By �OVVI/Ld! ?1J/t4J , • P Title City Clerk 11 i A !*m I_ - Counterpart No. 2 of 2 manually executed and serially numbered counterparts. To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial Code), no security interest herein may be created through the transfer or possession of any Counterpart other than Counterpart No. 1. #602276v1(Amendment 78 Lease) A-5 EXHIBIT A-1 Rental Interest Principal Rental Purchase Payment Portion Portion Payment Price Date (2.72100%) Amount Aug -01-03 0 1,769,865.00 Aug -25-03 1 3,210.54 28,857.92 32,068.45 1,741,007.08 Sep -25-03 2 3,947.73 28,120.72 32,068.45 1,712,886.36 Oct -25-03 3 3,883.97 28,184.48 32,068.45 1,684,701.88 Nov -25-03 4 3,820..06 28,248.39 32,068.45 1,656,453.49 Dec -25-03 5 3,756.01 28,312.45 32,068.45 1,628,141.04 Jan -25-04 6 3,691.81 28,376.64 32,068.45 1,599,764.40 Feb -25-04 7 3,627.47 28,440.99 32,068.45 1,571,323.41 Mar -25-04 8 3,562.98 28,505.48 32,068.45 1,542,817.93 Apr -25-04 9 3,498.34 28,570.11 32,068.45 1,514,247.82 May -25-04 10 3,433.56 28,634.90 32,068.45 1,485,612.92 Jun -25-04 11 3,368.63 28,699.83 32,068.45 1,456,913.09 Jul -25-04 3,303.55 28,764.90 32,068.45 1,428,148.19 Aug -25-04 ,12 13 3,238.33 28,830.13 32,068.45 1,399,318.06 Sep -25-04 14 3,172.95 28,895.50 32,068.45 1,370,422.56 Oct -25-04 15 3,107.43 28,961.02 32,068.45 1,341,461.54 Nov -25-04 16 3,041.76 29,026.69 32,068.45 1,312,434.85 Dec -25-04 17 2,975.95 29,092.51 32,068.45 1,283,342.34 Jan -25-05 18 2,909.98 29,158.47 32,068.45 1,254,183.87 Feb -25-05 19 2,843.86 29,224.59 32,068.45 1,224,959.28 Mar -25-05 20 2,777.60 29,290.86 32,068.45 1,195,668.42 Apr -25-05 21 2,711.18 29,357.28 32,068.45 1,166,311.14 May -25-05 22 2,644.61 29,423.84 32,068.45 1,136,887.30 Jun -25-05 23 2,577.89 29,490.56 32,068.45 1,107,396.74 Jul -25-05 24 2,511.02 29,557.43 32,068.45 1,077,839.31 Aug -25-05 25 2,444.00 29,624.45 32,068.45 1,048,214.85 Sep -25-05 26 2,376.83 29,691.63 32,068.45 1,018,523.23 Oct -25-05 27 2,309.50 29,758.95 32,068.45 988,764.28 Nov -25-05 28 2,242.02 29,826.43 32,068.45 958,937.84 Dec -25-05 29 2,174.39 29,894.06 32,068.45 929,043.78 Jan -25-06 30 2,106.61 29,961.85 32,068.45 899,081.94 Feb -25-06 31 2,038.67 30,029.79 32,068.45 869,052.15 Mar -25-06 32 1,970.58 30,097.88 32,068.45 838,954.27 Apr -25-06 33 1,902.33 30,166.12 32,068.45 808,788.15 May -25-06 34 1,833.93 30,234.53 32,068.45 778,553.62 Jun -25-06 35 1,765.37 30,303.08 32,068.45 748,250.54 Jul -25-06 36 1,696.66 30,371.80 32,068.45 717,878.74 Aug -25-06 37 1,627.79 30,440.66 32,068.45 687,438.08 Sep -25-06 38 1,558.77 30,509.69 32,068.45 656,928.39 Oct -25-06 39 1,489.59 30,578.87 32,068.45 626,349.52 Nov -25-06 40 1,420.25 30,648.21 32,068.45 595,701.32 Dec -25-06 41 1,350.75 30,717.70 32,068.45 564,983.61 Jan -25-07 42 1,281.10 30,787.35 32,068.45 534,196.26 Feb -25-07 43 1,211.29 30,857.16 32,068.45 503,339.10 Mar -25-07 44 1,141.32 30,927.13 32,068.45 472,411.96 Apr -25-07 45 1,071.19 30,997.26 32,068.45 441,414.71 May -25-07 46 1,000.91 31,067.55 32,068.45 410,347.16 Jun -25-07 47 930.46 31,137.99 32,068.45 379,209.17 Jul -25-07 48 859.86 31,208.60 32,068.45 348,000.57 Aug -25-07 49 789.09 31,279.36 32,068.45 316,721.21 Sep -25-07 50 718.17 31,350.29 32,068.45 285,370.92 Oct -25-07 51 647.08 31,421.38 32,068.45 253,949.55 Nov -25-07 52 575.83 31,492.62 32,068.45 222,456.92 Dec -25-07 53 504.42 31,564.03 32,068.45 190,892.89 Jan -25-08 54 432.85 31,635.60 32,068.45 159,257.29 (Amendment 78 Lease) A-1-1 • Feb -25-08 55 361.12 -31,707.34 32,068.45 127,549.95 Mar -25-08 56 289.22 31,779.23 32,068.45 95,770.71 Apr -25-08 57 217.16 31,851.29 32,068.45 63,919.42 May -25-08 58 144.94 31,923.52 32,068.45 31,995.90 Jun -25-08 59 72.55 31,995.90 32,068.45 0.00 Prepayment Premium for purposes of Section 10.01(a) is 1.00%. For purposes of this Lease, "Taxable Rate, " with respect to the interest component of Rental Payments, means an annual rate of interest equal to 4.263%. (Amendment 78 Lease) A-1-2 ACQUISITION FUND AGREEMENT This Acquisition Fund Agreement, dated as of July 10,2003, by and among Banc of America Leasing & Capital, LLC, a Delaware limited liability company (hereinafter referred to as "Lessor"), City of Fayetteville, a political subdivision of the state of Arkansas (hereinafter referred to as "Lessee") and Arvest Trust Company, National Association (hereinafter referred to as "Acquisition Fund Custodian"). Reference is made to that certain Master Equipment Lease/Purchase Agreement dated as of June 25, 2003 and Amendment No. 1 to Master Equipment Lease/Purchase Agreement dated July 10, 2003 between Lessor and Lessee (hereinafter referred to as the "Lease"), covering the acquisition and lease of certain Equipment described therein (the "Equipment"). It is a requirement of the Lease that the Equipment Cost of the Equipment (an amount not to exceed $1,769,865.00) be deposited into an escrow under terns satisfactory to Lessor, for the purpose of fully funding the Lease, and providing a mechanism for the application of such amounts to the purchase of and payment for the Equipment. The parties agree as follows: 1. Creation of Acquisition Fund. (a) There is hereby created a special trust fund to. be known as the "City of Fayetteville Amendment 78 Acquisition Fund" (the "Acquisition Fund") to be held in trust by the Acquisition Fund Custodian for the purposes stated herein, for the benefit of Lessor and Lessee, to be held, disbursed and returned in accordance with the terms hereof. (b) The Acquisition Fund Custodian shall invest and reinvest moneys on deposit in the Acquisition Fund in Qualified Investments in accordance with written instructions received from Lessee. Lessee shall be solely responsible for ascertaining that all proposed investments and reinvestments are Qualified Investments and that they comply with federal, state and local laws, regulations and ordinances governing investment of such funds and for providing appropriate notice to the Acquisition Fund Custodian for the reinvestment of any maturing investment. Accordingly, neither the Acquisition Fund Custodian nor Lessor shall be responsible for any liability, cost, expense, loss or claim of any kind, directly or indirectly arising out of or related to the investment or reinvestment of all or any portion of the moneys on deposit in the Acquisition Fund, and Lessee agrees to and does hereby release the Acquisition Fund Custodian and Lessor from any such liability, cost, expenses, loss or claim. Interest on the Acquisition Fund shall become part of the Acquisition Fund, and gains and losses on the investment of the moneys on deposit in the Acquisition Fund shall be borne by the Acquisition Fund. For purposes of this agreement, "Qualified Investments" means any investments which meet the requirements of State of Arkansas ACT 1341 of 1999. (c) Unless the Acquisition Fund is earlier terminated in accordance with the provisions of paragraph (d) below, amounts in the Acquisition Fund shall be disbursed by the Acquisition Fund Custodian in payment of amounts described in Section 2 hereof upon receipt of written authorization(s) from Lessor, as is more fully described in Section 2 hereof. If the amounts in the Acquisition Fund are insufficient to pay such amounts, Lessee shall provide any balance of the funds needed to complete the acquisition of the Equipment. Any moneys I90584v4 LESSEE'S COPY remaining in the Acquisition Fund after July 10, 2004 (the "Acquisition Period") shall be applied as provided in Section 4 hereof. (d) The Acquisition Fund shall be terminated at the earliest of (i) the final distribution of amounts in the Acquisition Fund or (ii) written notice given by Lessor of the occurrence of a default. (e) The Acquisition Fund Custodian may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine and may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument. The Acquisition Fund Custodian shall not be liable in any manner for the sufficiency or correctness as to form, manner of execution, or validity of any instrument nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the receipt of such moneys, instruments or other documents received by it as the Acquisition Fund Custodian, and for the disposition of the same in accordance herewith. (f) Unless the Acquisition Fund Custodian is guilty of gross negligence or willful misconduct with regard to its duties hereunder, Lessee agrees to and does hereby release and indemnify the Acquisition Fund Custodian and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or any other expense, fees or charges of any character or nature, which it may incur or with which it may be threatened by reason of its acting as Acquisition Fund Custodian under this agreement; and in connection therewith, does to the extent permitted by law indemnify the Acquisition Fund Custodian against any and all expenses; including reasonable attorneys' fees and the cost of defending any action, suit or proceeding or resisting any claim. The Acquisition Fund Custodian shall be vested with a lien on and is hereby granted a security interest in all property deposited hereunder, for indemnification, for reasonable attorneys' fees, court costs, for any suit, interpleader or otherwise, or any other expense, fees or charges of any character or nature, which may be incurred by the Acquisition Fund Custodian by reason of disputes arising between Lessee and Lessor as to the correct interpretation of the Lease and instructions given to the Acquisition Fund . Custodian hereunder, or otherwise, with the right of Acquisition Fund Custodian, regardless of the instructions aforesaid, to hold the said property until and unless said additional expenses, fees and charges shall be fully paid. (g) If Lessee and Lessor shall be in disagreement about the interpretation of the Lease, or about the rights and obligations, or the propriety of any action contemplated by the Acquisition Fund Custodian hereunder, the Acquisition Fund Custodian may, but shall not be required to, file an appropriate civil action to resolve the disagreement. The Acquisition Fund Custodian shall be reimbursed by Lessee for all costs, including reasonable attorneys' fees, in connection with such civil action, and shall be fully protected in suspending all or part of its activities under the Lease until a final judgment in such action is received. (h) The Acquisition Fund Custodian may consult with counsel of its own choice and shall have full and complete authorization and protection with the opinion of such counsel. The Acquisition Fund Custodian shall otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or omissions of any kind unless caused by its willful misconduct. 190584v4 . 2 (i) Lessee shall reimburse the Acquisition Fund Custodian for all reasonable costs and expenses, including those of the Acquisition Fund Custodian's attorneys, agents and employees incurred for extra -ordinary administration of the Acquisition Fund and the performance of the Acquisition Fund Custodian's powers and duties hereunder in connection with any Event of Default under the Lease, or in connection with any dispute between Lessor and Lessee concerning the Acquisition Fund. 2. Acquisition of Proyertv. (a) Acquisition Contracts. Lessee will arrange for, supervise and provide for, or cause to be supervised and provided for, the acquisition of the Equipment, with moneys available in the Acquisition Fund. Lessee represents the estimated costs of the Equipment are within the funds estimated to be available therefor, and Lessor makes no warranty or representation with respect thereto. Lessor shall have no liability under any of the acquisition or construction contracts. Lessee shall obtain all necessary permits and approvals, if any, for the acquisition, equipping and installation of the Equipment, and the operation and maintenance thereof. (b) - Authorized Acquisition Fund Disbursements. Disbursements from the Acquisition Fund shall be made for the purpose of paying (including the reimbursement to Lessee for advances from its own funds to accomplish the purposes hereinafter described) the cost of acquiring the Equipment. (c) Requisition Procedure. No disbursement from the Acquisition Fund shall be made unless and until Lessor has approved such requisition. Prior to disbursement from the Acquisition Fund there shall be filed with the Acquisition Fund Custodian a requisition for such payment in the form of Disbursement Request attached hereto as Schedule 1, stating each amount to be paid and the name of the person, fine or corporation to whom payment thereof is due. Each such requisition shall be signed by an authorized representative of Lessee (an "Authorized Representative") and by Lessor, and shall be subject to the following: . 1. Delivery to Lessor of a certificate of Lessee to the effect that: (i) an obligation in the stated amount has been incurred by Lessee, and that the same is'a proper charge against the Acquisition Fund for costs relating to the Equipment identified in the Lease, and has not been paid; (ii) the Authorized Representative has no notice of any vendor's, mechanic's or other liens or rights to liens, chattel mortgages, conditional sales contracts or security interest which should be satisfied or discharged before such payment is made; (iii) such requisition contains no item representing payment on account, or any retained percentages which Lessee is, at the date of such certificate, entitled to retain; and (iv) the Equipment is insured in accordance with the Lease. 2. Delivery to Lessor of an Acceptance Certificate executed by Lessee, together with any Purchase Agreement Assignment or bill of sale and invoice therefor as required by Section 3.05 of the Lease; 19o584v4 3 3. The disbursement shall occur during the Acquisition Period set forth in the Schedule applicable to such Equipment; 4. There shall exist no Event of Default (nor any event which, with notice or lapse of time or both, would become an Event of Default); and 5. No material adverse change in Lessee's or any guarantor's financial condition shall have occurred since the date of the Lease. 3. Deposit to Acquisition Fund. Upon satisfaction of the conditions specified in Section 3.05 of the Lease, Lessor will cause the Lease Proceeds to be deposited in the Acquisition Fund. Lessee agrees to pay any costs with respect to the Equipment in excess of amounts available therefor in the Acquisition Fund. 4. Excessive Acquisition Fund. Following the final disbursement from the Acquisition Fund at the end of the Acquisition Period, or termination of the Acquisition Fund as otherwise provided herein, the Acquisition Fund Custodian shall transfer any remainder from the Acquisition Fund to Lessor for application to amounts owed under the Lease in accordance with Section 4.07 of the Lease. 5. Security Interest. The Acquisition Fund Custodian and Lessee acknowledge and agree that the Acquisition Fund and all proceeds thereof are being held by Acquisition Fund Custodian for disbursement or return as set forth herein. Lessee hereby grants to Lessor a first priority perfected security interest in the Acquisition Fund, and all proceeds thereof, and all investments made with any amounts in the Acquisition Fund. If the Acquisition Fund, or any part thereof, is converted to investments as set forth in this agreement, such investments shall be made in the name of Acquisition Fund Custodian and the Acquisition Fund Custodian hereby agrees to hold such investments as bailee for Lessor so that Lessor is deemed to have possession of such investments for the purpose of perfecting its security interest. 6. * Miscellaneous. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Lease. This agreement may not be amended except in writing signed by all parties hereto. This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument and each shall have the force and effect of an original and all of which together constitute, and shall be deemed to constitute, one and the same instrument. Notices hereunder shall be made in writing and shall be deemed to have been duly given when personally delivered or when deposited in the mail, first class postage prepaid, or delivered to an express carrier, charges prepaid, or sent by facsimile with electronic confirmation, addressed to each party at its address below: If to Lessor: Banc of America Leasing & Capital, LLC 2059 North Lake Parkway, 4th Floor Tucker, GA 30084 Attn: Contract Administration Fax: (415)765-7373 190584v4 - 4 If to Lessee: City of Fayetteville 113 West Mountain Street Fayetteville, Arkansas 72701 Attn: Dan Coody, Mayor Fax: 479-575-8257 If to Acquisition Fund Custodian: Arvest Trust Company, National Association P.O. Box 1327 Fayetteville, AR 72701 Attn: Carin Mahan Phone: 479-575-1129 Fax: 479-575-1116 In Witness Whereof, the parties have executed this Acquisition Fund Agreement as of the date first above written. Banc of America Leasing & Capital, LLC, as Lessor By: Title: Assistant Vice President Arvest Trust Company, National Association As Acquisition Fund Custodian By: Q,r&Y% -__ - Title: V City of Fayetteville, as Lessee By: Title: LESSEE'S COPY 190584v4 5 SCHEDULE 1 FORM OF DISBURSEMENT REQUEST Re: Master Equipment Lease/Purchase Agreement dated as of June 25, 2003 and Amendment No. 1 to Master Equipment Lease/Purchase Agreement dated as of July 10, 2003 by and between Banc of America Leasing & Capital, LLC, as Lessor and City of Fayetteville, as Lessee (the "Lease") In accordance with the terms of the Acquisition Fund Agreement, dated as of July 10, 2003 (the "Acquisition Fund Agreement") by and among Banc of America Leasing & Capital, LLC ("Lessor"), City of Fayetteville ("Lessee") and Arvest Trust Company, National Association, Fayetteville branch (the "Acquisition Fund Custodian"), the undersigned hereby requests the Acquisition Fund Custodian pay the following persons the following amounts from the Acquisition Fund created under the Acquisition Fund Agreement (the "Acquisition Fund") for the following purposes. Payee's Name and Address Invoice Number Dollar Amount Purpose The undersigned hereby certifies as follows: (i) An obligation in the stated amount has been incurred by Lessee, and the same is a proper charge against the Acquisition Fund for costs relating to the Equipment identified in the Lease, and has not been paid. Attached hereto is the original invoice with respect to such obligation. (ii) The undersigned, as Authorized Representative, has no notice of any vendor's, mechanic's or other liens or rights to liens, chattel mortgages, conditional sales contracts or security interest which should be satisfied or discharged before such payment is made. (iii) This requisition contains no item representing payment on account, or any retained percentages which Lessee is, at the date hereof, entitled to retain. (iv) The Equipment is insured in accordance with the Lease. (v) No Event of Default, and no event which with notice or lapse of time, or both, would become an Event of Default, under the Lease has occurred and is continuing at the date hereof. 190584v4 (vi) The disbursement shall occur during the Acquisition Period set forth in the Schedule applicable to such Equipment. (vii) No material adverse change in Lessee's financial condition shall have occurred since the date of the Lease. Dated: CITY OF FAYETTEVILLE By: Authorized Representative Disbursement of funds from the Acquisition Fund in accordance with the foregoing Disbursement Request hereby is authorized BANC OF AMERICA LEASING & CAPITAL, LLC (as Lessor under the Lease) By: Title: 190584v4 2 ORDINANCE NO. 4478 AN ORDINANCE AUTHORIZING THE EXECUTION AND DELIVbKY Ur A MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT HAVING A NOMINAL PRINCIPAL AMOUNT NOT TO EXCEED $5,000,000.00 FOR THE PURPOSE OF FINANCING THE COST OF ACQUIRING CERTAIN FIRE FIGHTING APPARATUS; AND PRESCRIBING OTHER MATTERS RELATING TI IERETO WHEREAS, the City Council of the City of Fayetteville, Arkansas has determined that there is a great need for a mechanism to finance the costs of acquisition of certain fire fighting apparatus to benefit the residents of the City; and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 78 to the Constitution of the State of Arkansas and the Local Government Short -Term Financing Obligations Act of 2001, codified as Arkansas Code Annotated (2001 Supp.) Sections 14-78-101 ei seq. as from time to time amended, to enter into certain short-term lease/purchase arrangements to finance the costs of various capital improvements, which lease obligations shall constitute general obligations of the City under Amendment 78 and the Act; and WHEREAS, the City has made arrangements for the entry into a Master Equipment Lease/Purchase Agreement with Banc of America Leasing & Capital, LLC, a Delaware limited liability, in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF T11F. CITY OF FAYETTEVILLE, ARKANSAS THAT: Section 1. Under the authority of the Constitution and laws of the State of Arkansas, the Mayor is hereby authorized and directed to execute the Lease/Purchase Agreement, and the City Clerk is hereby authorized and directed to execute the Lease/Purchase Agreement and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Lease/Purchase Agreement to be executed by Banc of America Leasing & Capital, LLC. The Lease/Purchase Agreement is hereby approved in substantially the form submitted to this meeting. The Mayor is hereby authorized to confer with with Banc of America Leasing & Capital, LLC and Kutak Rock LLP, Bond Counsel, in order to complete the Lease/Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Lease/Purchase Agreement, their execution to constitute conclusive evidence of such approval. Section 2. The nominal principal amount of the Lease/Purchase Agreement may not exceed $5,000,000.00 in the aggregate, the term of the Lease/Purchase Agreement shall expire no later than five years from the date of adoption of this ordinance, and the effective interest rate relating to the City's obligations under the Lease/Purchase Agreement shall not exceed the maximum rate prescribed by Arkansas law, including Amendment 78 and the Act. Section 3. It is affirmed that, pursuant to Amendment 78 and the Act, the payment obligations of the City under the Lease/Purchase Agreement shall constitute general obligations C CITY OF FAYETTEVILLE, ARKANSAS MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT (AMENDMENT 78) TRANSCRIPT OF PROCEEDINGS J Transaction I: Dated as of August 1, 2003 Transaction 2: Dated as of December 1, 2004 Prepared By: C J 10-51103.2 KUTAK ROCK LLP 425 West Capitol, Suite 1100 Little Rock, Arkansas 72201 • City of Fayetteville, Arkansas Master Equipment Lease/Purchase Agreement (Amendment 78) INDEX Item No. Transaction 1 Closing Certificate of the City (Amendment 78 Lease/Purchase Agreement) Exhibit A - Ordinance No. 4478 adopted April 15, 2003, authorizing execution and delivery of the Lease/Purchase Agreement 2 Exhibit B — Minutes of City Council meeting held April 15, 2003 adopting Ordinance No. 4478 • Exhibit C — Proof of Publication of Ordinance No. 4478 in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on April 19, 2003 City's Non -Arbitrage Certificate Master Equipment Lease/Purchase Agreement 6 Amendment No. 1 to Master Equipment Lease/Purchase Agreement 7 Acquisition Fund Agreement 8 Opinion of Bond Counsel 9 Form 8038-G and Proof of Mailing to Internal Revenue Service 10 Transaction 2 Closing Certificate of the City (Amendment 78 Lease/Purchase Agreement) II Exhibit A — Ordinance No. 4478 adopted April 15, 2003, authorizing execution and delivery of the Lease/Purchase • Agreement 12 10-51103.2 • • Item No. Exhibit B — Minutes of City Council meeting held April 15, 2003 adopting Ordinance No. 4478 13 Exhibit C — Proof of Publication of Ordinance No. 4478 in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on April 19, 2003 14 City's Non -Arbitrage Certificate 15 Schedule of Property No. 2 16 Acceptance Certificate 17 1 Essential Use/Source of Funds Certificate 18 Opinion of Bond Counsel 19 Form 8038-G and Proof of Mailing to Internal Revenue Service 20 Transcripts Delivered to: City of Fayetteville, Attn: Mr. Steve Davis (1 Bound) Banc of America Leasing & Capital, LLC, Attn: Ms. Tessie G. Panganiban/ Bridgett Arnold (1 Bound) Arvest Bank, Attn: Ms. Carin Mahan (I Bound) Fayetteville City Attorney, Attn: Kit Williams, Esq. (1 Bound) Kutak Rock LLP (I Bound) 10-51103.2 3 i• i• • a • CLOSING CERTIFICATE OF THE CITY (Amendment 78 Lease/Purchase Agreement) The undersigned Mayor and City Clerk of the City of Fayetteville, Arkansas, a duly organized municipality and political subdivision of the State of Arkansas (the "City"), do hereby certify, represent, covenant and request as follows: 1. The undersigned are the duly elected, qualified, and acting Mayor and City Clerk of the City, and as such officials have in their possession or have access to the official books and corporate records of the City. This Certificate is executed and delivered in connection with the execution and delivery of the Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), dated as of June 25, 2003, as amended by Amendment No. I to Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), together with the Schedule of Property No. 1, each dated as of July 10, 2003 (as amended, the "Lease/Purchase Agreement"), by and between the City and Banc of America Leasing & Capital, LLC, a Delaware limited liability company ("Banc of America"). 2. Attached hereto as Exhibit A is a true, complete and correct copy of Ordinance No. 4478 (the "Authorizing Ordinance"), duly adopted by a majority of the City Council of the City at a duly called regular meeting of the City Council, open to the public, held April 15, 2003. The Authorizing Ordinance authorizes the execution and delivery of the Lease/Purchase Agreement, and the Authorizing Ordinance is in full force and effect and has not been altered, amended or repealed as of the date hereof. • No petition or petitions to refer the Authorizing Ordinance to the people under Amendment No. 7 to the Constitution of the State of Arkansas have been filed as of the date hereof, and the City Council has not referred the Authorizing Ordinance to the people for adoption or rejection. Attached hereto as Exhibit B is a true, complete and correct copy of the minutes of a meeting of the City Council held April 15, 2003, showing adoption of the Authorizing Ordinance, as said minutes appear in the official records of the City. At said meeting a quorum was present and acted throughout. Attached hereto as Exhibit C is a true, complete, and correct copy of a publisher's affidavit showing publication of the Authorizing Ordinance in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on April 19, 2003. No authority or proceeding in connection with the execution and delivery of the Lease/Purchase Agreement has been repealed, revoked or rescinded. 3. The persons named below were on the date of execution of the Lease/Purchase Agreement, and are on the date hereof, the duly qualified and acting incumbents of the offices of the City set opposite their respective names. The undersigned, or their successors in office, are the authorized representatives of the City for all purposes of the Lease/ Purchase Agreement and the Authorizing Ordinance. • 10-51109.1 • Title Name Mayor Dan Coody City Clerk Sondra Smith 4. The undersigned Mayor of the City did manually execute the Lease/Purchase Agreement and the undersigned City Clerk of.the City did manually attest the Lease/Purchase Agreement. 5. The City has duly adopted the Authorizing Ordinance and has duly authorized, executed and delivered the Lease/Purchase Agreement by all necessary action under the Constitution and laws of the State of Arkansas, including particularly Amendment 78 to the Constitution and Arkansas Code Annotated Sections 14-78-101 et seq. (the "Authorizing Legislation"). As of the date hereof, the Authorizing Ordinance and the Lease/Purchase Agreement are in full force and effect and each constitutes the valid, binding and enforceable obligation of the City, except to the extent their enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally, or by the availability of equitable remedies, and the City is entitled to the benefits of the same. The City has complied in all respects with the provisions of the Authorizing Legislation and has full legal right, power and authority to enter into the Lease/Purchase Agreement for the purpose stated in the Authorizing Legislation, to adopt the Authorizing Ordinance, and to carry out and consummate all other transactions contemplated by the Lease/Purchase Agreement and the Authorizing Ordinance. • 6. For purposes of complying with the provisions of Amendment 78 and the Authorizing Legislation: (a) the equipment to be financed under the Lease/Purchase Agreement has a useful life of greater than one (1) year; and (b) the aggregate outstanding and unpaid principal amount of all "short-term financing obligations" (as defined in Amendment 78) as of the date hereof, including obligations under the Lease/Purchase Agreement, does not exceed five percent (5%) of the assessed value of all taxable property located within the City as determined in the latest available property tax assessment. 7. Any certificate signed by any official of the City (including this certificate) delivered in connection with the Lease/Purchase Agreement shall be deemed a representation and warranty by the City as to the statements made therein (and herein). 8. The seal affixed to this certificate is the legally adopted, proper and only official seal of the City, and has been duly affixed to the Lease/Purchase Agreement. 9. The meeting of the City Council of the City referred to in paragraph 2 hereof was open to the public in compliance with the provisions of Section 25-19-106 of the Arkansas Code Annotated (2002 Repl.), as amended and supplemented. The authorization, approval, execution and delivery of the Lease/Purchase Agreement and all proceedings of the City relating to the • transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state and federal laws. 1031109.1 2 • 10. The present officials of the City and their respective terms are as follows: Date of Expiration Name Office of Term Dan Coody Mayor 12-31-04 Sondra Smith City Clerk 12-31-04 Kit Williams City Attorney 12-31-06 Kyle Cook Alderman 12-31-06 Bob Davis Alderman 12-31-04 Lioneld Jordan Alderman 12-31-04 Shirley Lucas Alderman 12-31-06 Don Man Alderman 12-31-04 Robert Reynolds Alderman 12-31-06 Robert Rhoades Alderman 12-31-06 Brenda Thiel Alderman 12-31-04 11. The authorized representative of the City for all purposes of the Lease/Purchase Agreement is Dan Coody, Mayor, whose signature appears on page 4. Until further written notice to you, any instrument authorized by the Lease/Purchase Agreement to be signed by an authorized representative of the City is to be honored if it contains the manual signature of this individual. • 12. The City has not and will not engage in any activity which might result in the portion of the rentals constituting interest under the Lease/Purchase Agreement becoming taxable to it or any of said interest on the Bonds becoming taxable to the recipients thereof under the Federal income tax laws. 13. The City is a city of the first class pursuant to Title 14, Subtitle 3, Chapter 43 of the Arkansas Code Annotated. The City is operating under the major -council form of government pursuant to Title 14. 14. The City has not adopted any by-laws or rules of procedure relating to the conduct of its City Council meetings. 15. There is no action, suit, proceeding, inquiry or investigation involving the City before or by any court or public board or body pending or, to the knowledge of the undersigned, threatened wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City or the titles of its officials to their respective offices, (ii) enjoin or restrain the execution or delivery of the Lease/Purchase Agreement, or (iii) in any way question or affect any authority for the authorization, execution or delivery of the Lease/Purchase Agreement or the validity or enforceability of the Lease/Purchase Agreement or the Authorizing Ordinance. 16. In the City, the time for filing a referendum petition is fixed at 31 days after the publication of the measure upon which the referendum is sought. • 10-51109.1 • 17. The adoption of the Authorizing Ordinance and the execution and delivery of the Lease/Purchase Agreement, and compliance with the provisions thereof under the circumstances contemplated thereby does not and will not in any material respect conflict with, or constitute on the part of the City a breach or default under, any agreement or other instrument to which the City is a party, or any existing law, administrative regulation, court order or consent decree to which the City is subject. 18. The Equipment (as defined in the Lease/Purchase Agreement) is essential to the functions of the City or to services the City provides to its citizens. Further, the City has an immediate need for, and expects to make immediate use of, substantially all of such Equipment, which need is not temporary or expected to diminish in the foreseeable future. 19. The City's employer tax identification number is 71-6018462. 20. Dan Coody, Mayor, hereby certifies that the signature of Sondra Smith, City Clerk, affixed hereto is her true and correct signature, and Sondra Smith, City Clerk, hereby certifies that the signature of Dan Coody, Mayor, affixed hereto is his true and correct signature. IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of August 1, 2003. CITY OF FAYETTEVILLE, ARKANSAS • I. 3j By: 4 QAA Sondra Smith, City Clerk 10-51109.1 4 ORDINANCE NO. 4478 • AN ORDINANCE AUTHORIZING THE EXECUTION AND DELIVERY OF A MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT HAVING A NOMINAL PRINCIPAL AMOUNT NOT TO EXCEED $5,000,000.00 FOR THE PURPOSE OF FINANCING THE COST OF ACQUIRING CERTAIN FIRE FIGHTING APPARATUS; AND PRESCRIBING OTHER MATTERS RELATING THERETO WHEREAS, the City Council of the City of Fayetteville, Arkansas has determined that there is a great need for a mechanism to finance the costs of acquisition of certain fire fighting apparatus to benefit the residents of the City; and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 78 to the Constitution of the State of Arkansas and the Local Government Short -Term Financing Obligations Act of 2001, codified as Arkansas Code Annotated (2001 Supp.) Sections 14-78-101 et seq. as from time to time amended, to enter into certain short-term lease/purchase arrangements to finance the costs of various capital improvements, which lease obligations, shall constitute general obligations of the City under Amendment 78 and the Act; and WHEREAS, the City has made arrangements for the entry into a Master Equipment Lease/Purchase Agreement with Banc of America Leasing & Capital, LLC, a Delaware limited • liability, in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS THAT: Section 1. Under the authority of the Constitution and laws of the State of Arkansas, the Mayor is hereby authorized and directed to execute the Lease/Purchase Agreement, and the City Clerk is hereby authorized and directed to execute the Lease/Purchase Agreement and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Lease/Purchase Agreement to be executed by Banc of America Leasing & Capital, LLC. The Lease/Purchase Agreement is hereby approved in substantially the form submitted to this meeting. The Mayor is hereby authorized to confer with with Banc of America Leasing & Capital, LLC and Kutak Rock LLP, Bond Counsel, in order to complete the Lease/Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Lease/Purchase Agreement, their execution to constitute conclusive evidence of such approval. Section 2. The nominal principal amount of the Lease/Purchase Agreement may not exceed $5,000,000.00 in the aggregate, the term of the Lease/Purchase Agreement shall expire no later than five years from the date of adoption of this ordinance, and the effective interest rate relating to the City's obligations under the Lease/Purchase Agreement shall not exceed the maximum rate prescribed by Arkansas law, including Amendment 78 and the Act. •Section 3. It is affirmed that, pursuant to Amendment 78 and the Act, the payment obligations of the City under the Lease/Purchase Agreement shall constitute general obligations of the City, and the total annual payments owed by the City under the Lease/Purchase Agreement • in each of the City's fiscal years shall be charged against and paid from the general revenues of the City for such fiscal years. Section 4. As required by Amendment 78 and the Act, the City hereby finds and determines that: (a) Each of the components to be financed under the Lease/Purchase Agreement has an average useful life in excess of one year; and (b) The aggregate nominal principal amount of all obligations of the City under Amendment 78 and the Act, including the Lease/Purchase Agreement, will at no time exceed five percent (5%) of the assessed value of the taxable real and personal property located within the City, as determined by the last tax assessment completed prior to the date hereof. Section 5. . The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all things necessary to effect the execution and delivery of the Lease/Purchase Agreement, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. •Section 6. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance. Section 7. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED this the 15'h day of April, 2003. t;.YE/r APPROVED: c • By_ � a By: Son Smith, City Clerk • 3 City Council Mating April 15, 2003 Page l ofl0 • MINUTES OF A MEETING OF THE CITY COUNCIL APRIL 15, 2003 A meeting of the Fayetteville City Council was on April 15, 2003 at 6:00 p.m. in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Alderman Thiel, Cook, Marr, Rhoads, Davis, Lucas, Jordan, Mayor Coody, City Attorney Kit Williams, City Clerk Sondra Smith, Staff, Press, and Audience. Alderman Reynolds was absent. Mayor Coody read the Earth Day Proclamation Alderman Davis moved to add two items to the new business section of the agenda, a Juvenile Accountability Incentive Block Grant and a Drug Law Enforcement Grant. Alderman Jordan seconded. Upon roll call the motion passed unanimously. CONSENT: • Approval Of The Minutes: Approval of the March 18, 2003 meeting minutes and approval of the April 1, 2003 meeting minutes. Black & Veatch: A resolution to award an engineering services contract to Black & Veatch in the amount of $126,300.00 for a comprehensive study and rehabilitation recommendations for the existing 36 inch water transmission line from Beaver Water District into/through the City of Fayetteville. Approval of a project contingency in the amount of $20,000.00 is also requested. RESOLUTION 47-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Black & Veatch: A resolution approving Contract Amendment Number 3 with Black & Veatch for continuing services associated with the 2002/2003 Water and Sewer Rate study. Approval of a project contingency in the amount of $5,000.00 is also requested. RESOLUTION 48-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Community Development Block Grant 1.5 FTE: A resolution to approve 1.5 FTE for the Community Development Block Grant. RESOLUTION 49-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. • City Council Meeting April 15, 2003 Page 2 of 10 • Community Development Block Grant Allocation: A resolution to approve the acceptance on the 2003 Community Development Block Grant (CDBG) partial allocation in the amount of $217,000.00. RESOLUTION 50-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. ADM 03-2.00 Master Street Plan 46th Street: A resolution to amend the Master Street Plan to include changing 46th Street to a Local Street from a Collector Street and to add Broyles Avenue extension as a Collector Street. RESOLUTION 51-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. ADM 03-11.00 Master Street Plan Bridgewater Lane: A resolution to amend the Master Street Plan to relocate Bridgewater Lane and an unnamed minor arterial street, as well as accept a lesser dedication for the unnamed minor arterial. Alderman Thiel had a correction to the March 18, 2003 minutes. She requested the minutes be amended. RESOLUTION 52-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Alderman Thiel asked for a correction to the March 18, 2003 minutes. . Alderman Davis asked to pull the April 1, 2003 minutes; he did not have a chance to read them. Alderman Marr moved to approve the Consent Agenda as read with the amendments as stated above. Alderman Jordan seconded. Upon roll call the motion carried unanimously. OLD BUSINESS: Compactor and Dropbox Business Expansion: A resolution approving a budget adjustment in the amount of one million one hundred seventy-three thousand two hundred eight dollars ($1,173,208.00) to allow the Solid Waste and Recycling Division to implement a new commercial drop box program. The resolution was tabled at the March 18, 2003 City Council meeting. Alderman Thiel moved to table indefinitely. Alderman Marr seconded. Upon roll call the motion to table indefinitely passed unanimously. New Commercial Compactor And Drop Box Program: A resolution authorizing the hiring of seven (7) additional full time employees to implement a new commercial compactor and drop box program. The resolution was tabled at the March 18, 2003 City Council meeting. Alderman Thiel moved to table indefinitely. Alderman Marr seconded. Upon roll call the • motion to table indefinitely passed unanimously. City Council Meeting April 15, 2003 Page 3 of 10 • Alderman Davis moved to table indefinitely. Alderman Marr seconded. Upon roll call the motion to table indefinitely passed unanimously. NEW BUSINESS: R-PZD 03-1.00 (Jackson Place): Planned Zoning District Jackson Place: An ordinance establishing a Residential Planned Zoning District titled Jackson Place (R-PZD 03-1.00) located south of Skillern Road and east of Crossover Road; amending the official zoning map of the City of Fayetteville. Mr. Williams read the ordinance. THE ORDINANCE WAS LEFT ON THE FIRST READING. VAC 03-4.00 (Bencore): An ordinance approving VAC 03-4.00 to vacate and abandon a portion of a 12' alley in Block Ten (10) of Ferguson's Addition to the City of Fayetteville, Washington County, Arkansas as described on the attached map and legal description. Mr. Williams read the ordinance. Alderman Davis moved to suspend the rules and go. to the second reading. Alderman Thiel • seconded. Upon roll call the motion passed unanimously. Mr. Williams read the ordinance. Alderman Thiel voiced her support of this ordinance. Alderman Thiel moved to suspend the rules and go to the third and final reading. Alderman Jordan seconded. Upon roll call the motion passed unanimously. Mr. Williams read the ordinance. Shall the ordinance pass. Upon roll call the ordinance passed unanimously. ORDINANCE 4477AS RECORDED IN THE OFFICE OF THE CITY CLERK. Public Hearing on Raze and Removal at 1233 S. Washington Avenue: A resolution to approve the raze and removal of 1233 S. Washington. Mayor Coody opened a Public Hearing to hear the raze and removal of 1233 S. Washington Avenue. Hugh Earnest, Chief Administrative Officer presented a slide presentation on the property. • City Attorney, Kit Williams asked if either of these houses are being lived in. City Council Meeting April 15, 2003 Page 4 of 10 • Mr. Earnest answered no. Alderman Davis moved to approve the resolution. Alderman Jordan seconded. Upon roll call the motion passed unanimously. RESOLUTION 53-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Public Hearing on Raze and Removal at 525 S. Lytton Avenue: A resolution to approve the raze and removal of 525 S. Lytton Avenue. Mayor Coody opened a Public Hearing to hear the raze and removal of 525 S. Lytton Avenue. Alderman Jordan moved to approve the resolution. Alderman Lucas seconded. Upon roll call the motion passed unanimously. RESOLUTION 54-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Banc of America Leasing Agreement Amendment 78: An ordinance to approve a master Lease agreement with Banc of America Leasing & Capital, LLC: The leasing agreement provides the opportunity for the City to utilize, Amendment 78 to obtain fire apparatus vehicles. • Mr. Williams read the ordinance Alderman Marr stated he was on the RFP Selection Committee and he thinks it is ,a great financing option to us. Alderman Marr moved to suspend the rules and go to the second reading. Alderman Jordan seconded. Upon roll call the motion passed unanimously. O Mr. Williams read the ordinance. Alderman Jordan moved to suspend the rules and go to the third and final reading. Alderman Davis seconded. Upon roll call the motion passed unanimously. Mr. Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the motion, carried unanimously. ORDINANCE 4478 AS RECORDED IN THE OFFICE OF THE CITY CLERK. • City Council Meeting April 15, 2003 Page 5 of 10 • LEECO's Fire Equipment: A resolution authorizing the City to accept the low bid from LEECO Fire Equipment to purchase two replacement pumpers, one replacement aerial ladder unit and one expansion pumper for Fire Station 7 in the amount of $1,769,865.49 and to authorize the city to execute the necessary agreements the necessary agreements with Banc of America Leasing and Capital, LLC for a lease to own lease agreement for the fire apparatus units. Chris Bosch, Fire Chief gave a presentation on the condition of the present equipment, replacement of present equipment, apparatus down time, price controlling, proactive preventive maintenance program and the maintenance cost on the current apparatus. Mayor Coody said if this bid waiver is approved we can still go out for bids in the future. Chief Bosch said the average age of our fleet today is seven years and the average life span of a front line apparatus is 5-7 years. The benefit of this resolution is the initiation of a standardized fleet, reduction of maintenance cost, reduction of apparatus down time and improvement of our service delivery. The additional benefits are increased availability of reserve apparatus, reduction of the insurance service offices fire defensive rating as based on the quality of your reserve and first line fleet, and it will assist the fire department in achieving some of the Council's guiding principles. Alderman Rhoads asked about the down time and how it rates with other cities similar to our • size. Chief Bosch said he did not have that information but he can get it. Alderman Rhoads asked the request to waive the bid process why can't you bid all the equipment out in the aggregate and therefore have several companies give you the same program. Chief Bosch said we did go out for bid the bid specifications were sent out to the four major single component manufacturers across the country. There are four primary sole source manufacturers and we bid with all four of them. Alderman Jordan said if we are going to continue to grow this city we have to build the infrastructure to match that growth. We have to provide proper public safety in this city. I think the equipment that has been bought in the past probably has not been as top grade as we are proposing to buy and I think that is going to save us money in the long run. Alderman Jordan thanked the Fire Department and the Police Department for the response to a fire in his neighborhood. The fire truck responded within two minutes and they saved that structure. Alderman Jordan moved to approve the resolution. Alderman Lucas seconded. Upon roll call the motion passed unanimously. RESOLUTION 55-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. City Council Meeting April 15, 2003 Pagc 6 of 10 • Emergency One Fire Apparatus & LEECO Fire Equipment, Inc.: An ordinance to waive further competitive bidding granting the City the authority to enter into a fifteen (15) year purchasing agreement with Emergency One Fire Apparatus and Leeco Fire Equipment, Inc. Mr. Williams read the ordinance. Alderman Davis said when you read this it gives the impression that for 15 years we can not have anyone else bid our fire apparatus, is that correct. Chief Bosch said what this does is it allows us to work collectively with Leeco and Emergency One so when we need a fire apparatus we can pick up the phone and call them without bidding. Council will have the final approval. We are trying to maintain consistency in our fleet. We retain the right if need be to go out for bid. Alderman Jordan said so we are not locked in. Chief Bosch said that is correct. Alderman Rhoads asked what is the significance of the 15 years. Chief Bosch said the 15 years establishes a long term working agreement between the City and • the vendor. It also reduces the need to draft specifications every time we go out for a new purchase. It also helps us to maintain warranty and working relationships. Alderman Marr asked what is the rational behind the 15 years or staying with the vendor, is it to accomplish the consistency in equipment purchase? When this originally went out for request for proposal, were all of the suppliers made aware that we were looking at a long term replacement of our entire fleet. Chief Bosch answered yes to both questions. Alderman Davis said we will put the responsibility on the Chief to make sure that in the event that these individuals are beginning to get out of sink with what the actual cost is, per fire apparatus, to make sure the tax payers are not paying too much for equipment. Chief Bosch said that is why we plugged in a cost control mechanism. If we maintain this long term purchasing agreement with them we will have a mechanism for controlling those cost, so that we don't get caught up in the market and the cost increase that can come when jumping from vendor to vendor. Alderman Jordan said so if anything gets out of wack you can rein it in. Alderman Rhoads said so after year one, if we decide we are not happy we can walk away. C' City Council Meeting April 15,2003 Page 7 of 10 • Chief Bosch said we retain the right to write a letter and let them know that we are not happy with the process and then we can come back to Council to let them know we are not happy and what we think we need to do at that time and then we can step away. The only people we are committed to is the leasing company, because it is a five year leasing plan, but with the vendor no. Alderman Rhoads said would you have to use the leasing company for new equipment. Chief Bosch said yes. Steve Davis, Finance & Internal Services Director said the 15 year procurement cycle program is a bid waiver that is valid for a 15 year time period, neither Lecco or Emergency One has asked us to sign anything. This just gives us the ability to not have to competitively bid future fire apparatus. If the future equipment purchases exceed the inflation amount excluding changes made by National Fire Standards, we would be in a position to negotiate that price back down or go to an alternate vendor. Alderman Marr moved to suspend the rules and go to the second reading. Alderman Jordan seconded. Upon roll call the motion passed unanimously. Mr. Williams read the ordinance. • Alderman Jordan moved to suspend the rules and go to the third and final reading. Alderman Davis seconded. Upon roll call the motion passed unanimously. Mr. Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the motion carried unanimously. ORDINANCE 4479 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Cato Springs Road and Highway 45 Land Exchange: A resolution to approve a land exchange between the Water and Sewer Fund and the General Fund. The Water and Sewer Fund is exchanging land owned by the utility on Cato Springs Road and Highway 45 East plus $105,000.00 for approximately 61 acres in the South Industrial Park owned by the General Fund. Approval of a budget adjustment is also requested in order to appropriately record the exchange. Alderman Davis asked why we didn't look at the Paul Noland plant. Greg Boettcher, Water and Wastewater Director said the part that is adjacent to Fox Hunter Road is taken up by flood plain. There is a lot of ground on the other side of the White River, in looking at the, site, although we have a lot of land the distance from the center part of town, the • distance from our fleet operations where we have to have our equipment serviced, the driving times and traveling times we think it would be very inconvenient and it would slow responses. City Council Meeting April 15, 2003 Page 8 of 10 . There are no sanitary sewer services on the far side of the White River. We feel although there is an abundance of ground it would be very inconvenient for the operations to be that far east on that property. Alderman Marr asked how would we fund the raze and removal or cleanup of the current site. Mr. Boettcher said we would budget the raze and removal to take that building down when we see the route of that site. It would probably be the first part of 2006 before we would do that. We would certainly budget to clean the site up because we wouldn't want it to be an eye sore or worse than it is now. Alderman Thiel said we may be able to sell that property with the buyers cleaning it up, so it may be something we would not have to bear the cost for. Jeff Erf, a Fayetteville resident said he had a concern about the land in the Industrial Park. It is land that we wouldn't be collecting tax from and there wouldn't be any businesses out there, hiring employees and generating tax dollars for the City of Fayetteville. Have you considered the impact of tying up that land for city use rather than for profit use? Mayor Coody said the location out there is advantageous for this use because it is next to existing city buildings and this would help consolidate our operations. It is a good central location with easy access. • Mr. Boettcher said the property on Cato Springs could be freed for a higher and better use that might cancel out the other. The Fayetteville Water and Wastewater operations is a 15 million dollar a year business with 70 employees and I think finding a suitable home for them is equally important. Mr. Erf asked if the $105,000 from the Gulley Road property is going to be used to fund the transaction. Steve Davis, Finance & Internal Services Director said we are giving up, out of the Water and Sewer Fund, $1,116,000 worth of real estate and the General Fund is selling the Water and Sewer Fund $1,221.000. The difference will be taken out of the cash reserves that the Water and Sewer Fund has. We have not closed on the sale with Ozarks Electric so that money is not money that we are transferring over. Mr. Erf asked is the total project over $4 million for the building, land preparation and utilities. Mr. Boettcher said the current budget for the project is $3.25 million for the construction and professional fees. The rest is trading land equities. Mr. Erf said we are selling it to ourselves rather than to a business so that is an opportunity lost. • Mayor Coody said we are also putting land into circulation that is not in circulation that probably has a higher value to it. City Council Meeting April 15, 2003 Page 9 of I0 • Mr. Erf said I went through the 2002 CIP and I couldn't find any mention of the operations center. Mr. Davis said this was originally planned in the 1992 CIP as a potential project and was funded in 1997 and has been postponed many times since then as a carry forward project. Alderman Marr moved to approve the resolution. Alderman Thiel seconded. Upon roll call the motion passed unanimously. RESOLUTION 56-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Cromwell Architects Engineers, Inc.: A resolution approving a contract with Cromwell Architects Engineers, Inc. in the amount of $237,490.00, a 9.5% contingency of $22,510.00 for a total budget authorization of $260,000.00. The contract addresses architectural design, construction and additional services to construct a Water and Wastewater Operations Center at South Industrial. Alderman Jordan moved to approve the resolution. Alderman Lucas seconded. Upon roll call the motion passed unanimously. RESOLUTION 57-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. The following two items were added to the agenda at the beginning of the Council meeting. Juvenile Accountability Incentive Block Grant: A resolution authorizing the Fayetteville Police Department to apply for and accept a Juvenile Accountability Incentive Block Grant in the amount of $30,562.00 to fund D.A.R.E. and D.A.R.E. Plus programming; Gang Resistance Training, software and training to conduct threat assessments for the school population. Rick Hoyt, Chief of Police gave the Council information on the grant. Chief Hoyt said we have money in our 2003 budget to match this; it is a 10% match. Alderman Jordan moved to approve the resolution. Alderman Marr seconded. Upon roll call the motion passed unanimously. RESOLUTION 58-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Edward Byrne State and Local Law Enforcement Assistance: A resolution authorizing the Fayetteville Police Department to apply for an Edward Byrne State and Local Law Enforcement Assistance and formula grant from U.S. Department of Justice to assist in funding the Fourth Judicial District Drug Task Force. Chief Hoyt said we have had a drug grant since 1991, we are the lead agency in this area, we • manage the grant, and there are others that participate in the drug grant. This is a 75/25 matching grant and we have the matching share in our budget. City Council Meeting April 15, 2003 Page 10 of 10 • Alderman Jordan moved to approve the resolution. Alderman Davis seconded. Upon roll call the motion passed unanimously. RESOLUTION 59-03 AS RECORDED IN THE OFFICE OF THE CITY CLERK. Alderman Cook challenged folks to pick up trash; he is going to pick up trash as he walks to the Council meetings for next few meetings. He will bring the trash collected to the Council meeting to see how much is collected. Theie will be a ribbon cutting at the new hangar tomorrow afternoon at the airport Meeting adjourned at 7:10 PM • AFFIDAVIT OF PUBLICATION , do solemnly swear that I am Lega Clerk of the Arkansas Democrat -Gazette newspaper, printed and published in Lowell, Arkansas, and that from my own personal knowledge and reference to the files of said publication, the advertisement of: h''S� %P was inserted in the regular editions on /9-03 ** Publication Charge: $ 190. 54 • • Subscribed and sworn to before me this day of ` , 2003. Notary Pu My Commission Expires: t• Please do not pay from Affidavit An invoice will be sent �P3AP Jo���W��``A5r My RECEIVED APR 212003 CITY OF FAYMEVILLE CITY CLERICS OFFICE 212 NORTH EAST AVENUE • P.O. 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RECEIVED APR 21 2003 CitvOFFAYEMrVILLF CR1'CLEAK•8OrFIC; 51 I • CITY'S NON -ARBITRAGE CERTIFICATE 1. General 1.1. The undersigned is the Mayor of the City of Fayetteville, Arkansas (the "City") and certifies the statements in this certificate. 1.2. This certificate is executed for the purpose of setting forth the facts, estimates and expectations of the City on the date hereof as to future events regarding the City's obligations under the Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), dated as of June 25, 2003, as amended by Amendment No. 1 to Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), dated as of July 10, 2003 (as amended, the "Lease/Purchase Agreement"). The City has not been notified of any listing or proposed listing of the City by the Internal Revenue Service as an issuer that may not certify its bonds. 1.3. The undersigned is the officer of the City delegated with the responsibility of executing the Lease/Purchase Agreement and is familiar with the facts, estimates and expectations set forth herein. 1.4. To the best of the undersigned's knowledge, information and belief, the expectations contained in this certificate are reasonable. 1.5. Various representations by Banc of America Leasing & Capital, LLC (the • "Lessor") regarding certain facts and expectations are contained herein. The City is aware of no facts or circumstances that would cause it to question the accuracy of such representations. To the best of the knowledge, information and belief of the undersigned, such representations are reasonable and there are no facts, estimates or circumstances of which the undersigned is aware that would materially affect such representations. 2. Purpose of the Lease/Purchase Agreement 2.1. The purpose of entering into the Lease/Purchase Agreement is to obtain financing for the acquisition of certain firefighting equipment (the "Equipment). 2.2. The lease payment obligations under the Lease/Purchase Agreement are general obligations of the City. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Lease/Purchase Agreement. 3. Source and Disbursement of Funds 3.1. In consideration of the execution of the Lease/Purchase Agreement by the City, the Lessor is depositing $1,769,865.00, the agreed purchase price of the Equipment, in an Acquisition Fund (the "Acquisition Fund") established with Arvest Trust Company, National Association ("Arvest"), pursuant to the provisions of an Acquisition Fund Agreement dated as of July 10, 2003 (the "Acquisition Fund Agreement"), among the City, the Lessor and Arvest. • Upon the acceptance of the Equipment by the City, amounts in the equal to the purchase price of the Equipment will be disbursed for such purpose. Following the purchase of the Equipment, 10-5 1329. • any remaining amounts in the Acquisition Fund will be utilized as soon as possible for the making of payments due under the Lease/ Purchase Agreement. 4. Security 4.1. The City's obligations under the Lease/Purchase Agreement are general obligations of the City. On or before the 25th day of each month, commencing August 25, 2003, the City shall transfer to the Lessor the lease payments detailed in the Lease/Purchase Agreement. Such payments shall be made from the general revenues of the City, and the City has established no special fund from which to make said payments. 5. Investment of Funds 5.1. The Acquisition Fund will be initially funded with $1,769,865.00 constituting all of the proceeds of the Lease/Purchase Agreement. Moneys in the Acquisition Fund will be used to pay costs associated with the acquisition of the Equipment. 5.2. Binding contracts obligating expenditures for the acquisition of the Equipment, totaling not less than $88,494.25 (5% of net sale proceeds), have been entered into by the City. 5.3. Acquisition of the Equipment will proceed with due diligence to completion, which is expected to be on or about bcc.zsclm t i , 2003, and not less than eighty-five percent • (85%) of the net sale proceeds will be expended on or before August 1, 2006. 5.4. The amount borrowed for the purpose of acquiring the Equipment does not exceed the estimated maximum total cost of the Equipment, less all other funds of the City reasonably available for such purpose. 5.5. The Equipment is not expected during the term of the Lease/Purchase Agreement to be sold or otherwise disposed of for a consideration. 5.6. Until August 1, 2006, the net sale proceeds of the Bonds deposited in the Acquisition Fund may be invested until such proceeds are expended in obligations that bear a yield that is materially higher than the yield of the Lease/Purchase Agreement. The earnings on such investments will be subject to the rebate requirements described in Section 7 of this Certificate unless the City qualifies under one of the rebate exemptions set forth in the Code and the Regulations promulgated thereunder. 6. Yield of the Lease/Purchase Agreement and Acquired Obligations 6.1. When used herein, the term "yield," when used in connection with the Lease/Purchase Agreement, refers to that discount rate which, when used in computing the present worth of all lease payments of principal and interest thereunder, produces an amount equal to the amount disbursed thereunder, including accrued interest, if any. The Lessor has represented the yield on the Lease/Purchase Agreement to be 2.72 10%. • 2 10-51329.1 • 7. Rebate 7.1. The City hereby represents that it will annually determine the amount, if any, required to be rebated to the United States under Section 148(f) of the Code. The City further represents that it will, not later than sixty (60) days after the final maturity of the Lease/Purchase Agreement, pay to the United States one hundred percent (100%) of the amount required to be rebated under Section 148(f) of the Code. Each payment required to be paid to the United States pursuant to the Indenture is required to be filed with the Internal Revenue Service Center, Ogden, Utah 84201. Each payment is required to be accompanied by a copy of Form 8038-T from the City and, if necessary, a statement summarizing the determination of the amount to be paid to the United States. 8. Miscellaneous 8.1. There are, no funds or accounts in existence or that will be established in addition to Acquisition Fund that the City reasonably expects will be available to pay the principal of or interest on the Lease/Purchase Agreement. 8.2. No portion of the amounts received under the Lease/Purchase Agreement will be used as a substitute for other funds which have been or will be used to acquire, directly or indirectly, obligations producing a yield in excess of the yield on the Lease/Purchase Agreement. 8.3. The Lease/Purchase Agreement is not and will not be part of a transaction or • series of transactions that attempt to circumvent the provisions of Section 148 of the Code, enabling the City to exploit the difference between tax-exempt and taxable interest rates to gain a material financing advantage, or increasing the burden on the market for tax-exempt obligations. 8.4. This certificate is intended to be, and may be relied upon as, a certificate described in Section 1.148-2(b)(2) of the Regulations. 8.5. This certificate is dated August 1, 2003. CITY OF FAYETTEVILLE, ARKANSAS • 3 10-51329.1 • MASTER EQUIPMENT LEASEIPURCHASE AGREEMENT (AMENDMENT 78 LEASE) This Master Equipment Lease/Purchase Agreement (the "Agreement") dated as of June 25 2003, and entered into between Banc of America Leasing & Capital, LLC, a Delaware limited liability company ("Banc of America"), and City of Fayetteville, Arkansas, a body corporate and politic existing under the laws of the State of Arkansas ("City"). WITNESSETH: WHEREAS, City desires to lease and acquire from Banc of America certain Equipment described in each Schedule (as each such term is defined herein), subject to the terms and conditions of and for the purposes set forth in each Lease; and in the event of a conflict the terms of a Schedule prevail; and WHEREAS, the relationship between the parties shall be a continuing one and items of equipment may be added to the Equipment from time to time by execution of additional Schedules by the parties hereto and as otherwise provided herein; and WHEREAS, City is authorized under the Constitution and laws of the State, including, particularly, Amendment 78 to the State Constitution and the Local Government Short -Term Financing Obligations Act of 2001, as amended, codified as Arkansas Code Annotated Sections • 14-78-101 et seq. (2001 Supp.) (the "Act'), to enter into certain short-term general obligations, such as this Agreement and the Schedules hereto, for the purposes set forth herein; and WHEREAS, the City Council of City has authorized the execution and delivery of this Agreement and the Schedules hereto pursuant to Ordinance No. 4478 adopted and approved on April 15, 2003; Now, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and in consideration of the premises hereinafter contained, the parties hereby agree as follows: ARTICLE I Section 1.01. Definitions. The following terms will have the meanings indicated below unless the context clearly requires otherwise: "Acquisition Amount" means the amount specified in each Lease and represented by City to be sufficient to acquire the Equipment listed in such Lease, which amount shall be not less than $100,000 for each Lease. "Acquisition Period" means, with respect to each Lease, that period stated in the Schedule to such Lease during which the Acquisition Amount attributable to such Lease may be • expended on Equipment Costs. (Amendment 78 Lease) #599350v2 1 Lessee's Copy • "Act" means the Local Government Short -Term Financing Obligations Act of 2001, as amended, codified as Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp). "Agreement" means this Master Equipment Lease/Purchase Agreement, including the exhibits hereto, together with any amendments and modifications to the Agreement pursuant to Section 13.05. "Banc of America" means (a) the entity referred to as Banc of America in the first paragraph of this Agreement or (b) any assignee or transferee of any right, title or interest of Banc of America in and to the Equipment under a Lease or any Lease (including Rental Payments thereunder) pursuant to Section 11.01, but does not include any entity solely by reason of that entity retaining or assuming any obligation of Banc of America to perform under a Lease. "City" means the entity referred to as City in the first paragraph of this Agreement. "Code" means the Internal Revenue Code of 1986, as amended. Each reference to a Section of the Code herein shall be deemed to include the United States Treasury Regulations proposed or in effect thereunder. "Commencement Date" means, for each Lease, the date when City's obligation to pay rent commences under such Lease, which date shall be the date on which the Equipment listed in such Lease is accepted by City in the manner described in Section 5.01. • "Equipment" means the property listed in each of the Leases and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to Section 8.01 or Article V. Whenever reference is made in this Agreement to Equipment listed in a Lease, such reference shall be deemed to include all such replacements, repairs, restorations, modifications and improvements of or to such Equipment. "Equipment Costs" means the total cost of the Equipment listed in each Lease, including all delivery charges, installation charges, capitalizable consulting and training fees approved by Banc of America, legal fees, financing costs, and other costs necessary to vest full, clear legal title to the Equipment in City, subject to the security interest granted to and retained by Banc of America as set forth in each Lease, and otherwise incurred in connection with the financing provided by the lease -purchase of the Equipment as provided in each Lease; provided that in no event shall approved consulting and training fees or other non-capitalizable "soft" costs relating to the Equipment listed in any Lease which are to be financed by Banc of America hereunder exceed 2% of the total cost of such Equipment as determined by Banc of America; and provided further, that in no event shall capitalizable delivery charges, installation charges, taxes and similar capitalizable "soft costs" relating to such Equipment be included without Banc of America's prior consent. "Event of Default" means an Event of Default described in Section 12.01. - "Lease" means a Schedule and the terms of this Agreement which are incorporated by • reference into such Schedule. Each Schedule shall constitute a separate and independent Lease. (Amendment 78 Lease) 2 • "Lease Term" for each Lease means the Original Term and all Renewal Terms therein provided and for this Agreement means the period from the date hereof until this Agreement is terminated. "Maximum Equipment Cost" means an amount not to exceed $2,800,000. "Original Term" means the period from the Commencement Date for each Lease until the end of the fiscal year of City in effect at such Commencement Date. "Purchase Price" means, with respect to the Equipment listed on a Lease, the amount that City may pay to Banc of America to purchase such Equipment as provided in such Lease. "Renewal Terms" means the renewal terms of each Lease, each having a duration of one year and a term coextensive with City's fiscal year, as specified in the Schedule applicable thereto. "Rental Payments" means the basic rental payments payable by City under each Lease pursuant to Section 4.01, in each case consisting of a principal component and an interest component. "Schedule" means each separately numbered Schedule of Property substantially in the form of Exhibit A hereto together with a Rental Payment Schedule attached thereto substantially in the form of Exhibit A -I hereto. • "State" means the State of Arkansas. "Utilization Period" means the date, by which City must deliver an Acceptance Certificate for the Equipment under such Lease as indicated in Section 3.05(b). "Vendor" means the manufacturer or supplier of the Equipment or any other person as well as the agents or dealers of the manufacturer or supplier from whom Banc of America arranged City's acquisition and financing of the Equipment pursuant to the applicable Lease. ARTICLE II Section 2.01. Representations and Covenants of City. City represents, covenants and warrants for the benefit of Banc of America on the date hereof and as of the Commencement Date of each Lease as follows: (a) City is a political subdivision of the State within the meaning of Section 103(c) of the Code, duly- organized and existing under the Constitution and laws of the State, including Amendment 78 to the State Constitution and the Act, with full power and authority to enter into this Agreement and each Lease and .the transactions contemplated hereby and to perform all of its obligations hereunder and under each Lease. • (b) City has duly authorized the execution and delivery of this Agreement and each Lease by proper action of its governing body at a meeting duly called, regularly convened and (Amendment 78 Lease) • attended throughout by the requisite quorum of the members thereof, or by other appropriate official approval, and all requirements have been met and procedures have occurred in order to ensure the validity and enforceability of this Agreement and each Lease. (c) No event or condition that constitutes, or with the giving of notice or the lapse of time or both would constitute, an Event of Default exists at the date hereof. (d) City will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a body corporate and politic. (e) City has complied with such public bidding requirements as may be applicable to this Agreement and each Lease and the acquisition by City of the Equipment as provided in each Lease. (f) During the Lease Term, the Equipment will be used by City only for the purpose of performing essential governmental or proprietary functions of City consistent with the permissible scope of City's authority. City does not intend to sell or otherwise dispose of the Equipment or any interest therein prior to the last Rental Payment (including all Renewal Terms) scheduled to be paid under each Lease. (g) City shall keep its books and records in accordance with generally accepted accounting principles and practices consistently applied and shall deliver to Banc of America (i) annual audited financial statements (including (1) a balance sheet, (2) statement of revenues, • expenses and changes in fund balances for budget and actual, (3) statement of cash flows and notes, and (4) schedules and attachments to the financial statements), on August 1 of each year during the Lease Term, (ii) such other financial statements and information as Banc of America may reasonably request, and (iii) its annual budget for the following fiscal year on or before February 1 of each year during the Lease Term. The financial statements described in subsection (i) shall be accompanied by an unqualified opinion of City's auditor. Credit information relating to . City may be disseminated among Banc of America and any of its affiliates and any of their respective successors and assigns. (h) City has an immediate need for the Equipment listed on each Schedule and expects to make immediate use of the Equipment listed on each Schedule. City's need for the Equipment is not temporary and City does not expect the need for any item of the Equipment to diminish during the Lease Term to such item. (i) The payment of the Rental Payments or any portion thereof is not (under the terms of any Lease or any underlying arrangement) directly or indirectly (x) secured by any interest in property used or to be used in any activity carried on by any person other than a state or local governmental unit or payments in respect of such property; or (y) on a present value basis, derived from payments (whether or not to City) in respect of property, or borrowed money, used or to be used in any activity carried on by any person other than a state or local governmental unit. The Equipment will not be used, directly or indirectly, in any activity carried on by any person other than a state or local governmental unit. No portion of the Equipment • Costs for the Equipment will be used, directly or indirectly, to make or finance loans to any (Amendment 78 Lease) 4 • person other than City. City has not entered into any management or other service contract with respect to the use and operation of the Equipment. 0) There is no pending litigation, tax claim, proceeding or dispute that may adversely affect City's financial condition or impair its ability to perform its obligations hereunder. City will, at its expense, maintain its legal existence in good standing and do any further act and execute, acknowledge, deliver, file, register and record any further documents Banc of America may reasonably request in order to protect Banc of America's security interest in the Equipment and Banc of America's rights and benefits under this Lease. ARTICLE III Section 3.01. Lease of Equipment. Subject to the terms of this Master Lease, Banc of America agrees to provide the funds specified in each Lease to be provided by it to acquire the Equipment, up to an amount equal to the Maximum Equipment Cost. Upon the execution of each Lease, Banc of America demises, leases, transfers and lets to City, and City acquires, rents and leases from Banc of America, the Equipment as set forth in such Lease and in accordance with the terms thereof. The Lease Term for each Lease may be continued, solely at the option of City, at the end of the Original Term or any Renewal Term for the next succeeding Renewal Term up to the maximum Lease Term set forth in such Lease (which total Lease Term may not exceed five years from the date of the ordinance authorizing each such Lease). At the end of the Original Term and at the end of each Renewal Term until the maximum Lease Term has been • completed, City shall be deemed to have exercised its option to continue each Lease for the next Renewal Term unless City shall have terminated such Lease pursuant to Section 10.01. The terms and conditions during any Renewal Term shall be the same as the terms and conditions during the Original Term, except that the Rental Payments shall be as provided in the applicable Lease. Section 3.02. Continuation of Lease Term. City intends, subject to Section 10.01, to continue the Lease Term of each Lease through the Original Term and all Renewal Terms and to pay the Rental Payments thereunder. City affirms that sufficient general revenues are available for the current fiscal year, and City reasonably believes that an amount sufficient to make all Rental Payments during the entire Lease Term of each Lease can be obtained from legally available general revenues of City. City further intends to do all things lawfully within its power to obtain and maintain general revenues sufficient and available to discharge its obligation to make Rental Payments due hereunder, including making provision for such payments to the extent necessary in each budget adopted in accordance with applicable provisions of law. Section 3.03 [Intentionally omitted.] Section 3.04. [Intentionally omitted.] Section 3.05. Conditions to Banc of America's Performance. (a) As a prerequisite to the performance by Banc of America of any of its obligations • pursuant to any Lease, City shall deliver to Banc of America the following: (Amendment 78 Lease) 5 • (i) A fully completed Schedule, executed by City; (ii) A Certificate executed by the Clerk or Secretary or other comparable officer of City, in substantially the form attached hereto as Exhibit C, completed to the satisfaction of Banc of America; (iii) A certified copy of an ordinance or other official action of City's governing body authorizing the execution and delivery of this Lease and performance by City of its obligations hereunder; (iv) An opinion of counsel to City in substantially the form attached hereto as Exhibit D respecting such Lease and otherwise satisfactory to Banc of America; (v) Evidence of insurance as required by Section 7.02 hereof; (vi) All documents, including financing statements, affidavits, notices and similar instruments, in form satisfactory to Banc of America, which Banc of America deems necessary or appropriate at that time pursuant to Section 6.02; (vii) Assignment of each performance bond, if any, as collateral security to Banc of America pursuant to Section 7.02A hereof; (viii) A copy of a fully completed and executed Form 8038-G; and • (ix) Such other items, if any, as are set forth in such Lease or are reasonably required by Banc of America. (b) In addition, the performance by Banc of America of any of its obligations pursuant to any Lease shall be subject to: (i) no material adverse change in the financial condition of City since the date of this Lease, (ii) no Event of Default having occurred, and (iii) the Equipment must be accepted by City no later than the date specified in the relevant Schedule (the "Utilization Period"). (c) Subject to satisfaction of the foregoing, Banc of America will pay the Acquisition Amount for Equipment described in a Schedule to the Vendor (or will reimburse City for the prior payment of any such Acquisition Amounts by City to the Vendor) upon receipt of the documents described in Sections 5.01(a) and (b). (d) This Agreement is not a commitment by Banc of America to enter into any Lease not currently in existence, and nothing in this Agreement shall be construed to impose any obligation upon Banc of America to enter into any proposed Lease, it being understood that whether Banc of America enters into any proposed Lease shall be a decision solely within Banc of America's discretion. (e) City will cooperate with Banc of America in Banc of America's review of any proposed Lease. Without limiting the foregoing, City will provide Banc of America with any • documentation or information Banc of America may reasonably request in connection with Banc of America's review of any proposed Lease. Such documentation may include, without (Amendment 78 Lease) 6 • limitation, documentation concerning the Equipment and its contemplated use and location and documentation or information concerning the financial status of City and other matters related to City. ARTICLE IV Section 4.01. Rental Payments. Subject to Section 10.01, City shall promptly pay Rental Payments, in lawful money of the United States of America, to Banc of America on the dates and in such amounts as provided in each Lease. CITY SHALL PAY BANC OF AMERICA A CHARGE ON ANY RENTAL PAYMENT NOT PAID WITHIN 10 DAYS OF THE DATE SUCH PAYMENT IS DUE AT THE MAXIMUM RATE PERMITTED BY ARKANSAS LAW, FROM SUCH DATE. City shall not permit the federal government to guarantee any Rental Payments under any Lease. Rental Payments consist of principal and interest payments as more fully detailed on each Schedule, the interest on which begins to accrue as of the Commencement Date for each such Schedule. Section 4.02. Interest and Principal Components. A portion of each Rental Payment is paid as, and represents payment of, interest, and the balance of each Rental Payment is paid as, and represents payment of, principal. Each Lease shall set forth the principal and interest components of each Rental Payment payable thereunder during the Lease Term. Section 4.03. Rental Payments to Constitute a General Obligation of City. Banc of • America and City understand and intend that the obligation of City to pay Rental Payments under each Lease shall constitute a general obligation of City under the provisions of Amendment 78 and the Act. • Section 4.04. Rental Payments to be Unconditional. Except as provided in Section 10.01, the obligations of City to make Rental Payments and to perform and observe the other covenants and agreements contained in each Lease shall be absolute and unconditional in all events without abatement, diminution, deduction, set-off or defense, for any reason, including without limitation any failure of the Equipment, after it has been accepted by City, any defects, malfunctions, breakdowns or infirmities in the Equipment or any accident, condemnation or unforeseen circumstances. Section 4.05. Tax Covenant. City agrees that it will not take any action that would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for federal income tax purposes, nor will it omit to take or cause to be taken, in timely manner, any action, which omission would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for federal income tax purposes. Section 4.06. Event of Taxability. Upon the occurrence of an Event of Taxability, the interest component shall be at a Taxable Rate retroactive to the date as of which the interest component is determined by the Internal Revenue Service to be includible in the gross income of • the owner or owners thereof for federal income tax purposes, and City will pay such additional amount as will result in the owner receiving the interest component at the Taxable Rate identified in the related Lease. (Amendment 78 Lease) 7 • For purposes of this Section, "Event of Taxability" means a determination that the interest component is includible for federal income tax purposes in the gross income of the owner thereof due to City's action or failure to take any action. Section 4.07. [Intentionally omitted.] ARTICLE V Section 5.01. Delivery, Installation and Acceptance of Equipment. (a) City shall order the Equipment, cause the Equipment to be delivered and installed at the location specified in the Leases and pay any and all delivery and installation costs and other Equipment Costs in connection therewith. When the Equipment listed in any Lease has been delivered and installed, City shall promptly accept, reject, or demand deficiencies be corrected in such Equipment in a reasonably prompt manner and evidence said acceptance by executing and delivering to Banc of America an acceptance certificate in the form attached hereto as Exhibit B. (b) City shall deliver to Banc of America original invoices and bills of sale (if title to such Equipment has passed to City) relating to each item of Equipment accepted by City. Banc of America shall, upon receipt of an Acceptance Certificate from City, prepare a Schedule of Property and Rental Payment Schedule in the forms attached hereto as Schedule A and A -l. City • shall execute and deliver such Schedules to Banc of America within 5 business days of receipt. Section 5.02. Enjoyment of Equipment. Banc of America shall provide City with quiet use and enjoyment of the Equipment during the Lease Term, and City shall peaceably and quietly have, hold and enjoy the Equipment during the Lease Term, without suit, trouble or hindrance from Banc of America, except as otherwise expressly set forth in the related Lease. Banc of America shall not interfere with such quiet use and enjoyment during the Lease Term so long as City is not in default under the related Lease. Section 5.03. Location; Inspection. Except in connection with normal operation and maintenance and repair, once installed, no item of the Equipment will be moved from the location specified for it in the Lease on which such item is listed without Banc of America's consent, which consent shall not be unreasonably withheld. Banc of America shall have the right at all reasonable times during regular business hours to enter into and upon the property of City for the purpose of inspecting the Equipment. Section 5.04. Use and Maintenance of the Equipment. City will not install, use, operate, or maintain the Equipment improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by the related Lease. City shall provide all permits and licenses, if any, necessary for the installation and operation of the Equipment. In addition, City agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative, or judicial body relating to the installation, use, operation • and maintenance of the Equipment; provided that City may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the (Amendment 78 Lease) 8 opinion of Banc of America, adversely affect the interest (including the reversionary interest) of Banc of • America in and to the Equipment or its interest or rights under the Lease. City agrees that it will maintain, preserve, and keep the Equipment in good repair and working order, in accordance with manufacturer's recommendations. Banc of America shall have no responsibility to maintain, repair or make improvements or additions to the Equipment. In all cases, City agrees to pay any costs necessary for the manufacturer to re -certify the Equipment as eligible for manufacturer's maintenance upon the return of the Equipment to Banc of America as provided for herein. City shall not alter any item of Equipment or install any accessory, equipment or device on an item of Equipment if that would impair any applicable warranty, the originally intended function or the value of that Equipment. All repairs, parts, accessories, equipment and devices furnished, affixed to or installed on any Equipment, excluding temporary replacements, shall thereupon become subject to the security interest of Banc of America. ARTICLE VI Section 6.01. Title to the Equipment. During each Lease Term, and so long as no Event of Default has occurred and is continuing under Article XII hereof, all right, title and interest in and to each item of the Equipment shall be vested in City immediately upon its acceptance of each item of Equipment, subject to the terms and conditions of the applicable Lease. City shall • at all times protect and defend, at its own cost and expense, its title in and to the Equipment from and against all claims, liens and legal processes of its creditors, and keep all Equipment free and clear of all such claims, liens and processes. Upon the occurrence of an Event of Default, full and unencumbered legal title to the Equipment shall pass to Banc of America, and City shall have no further interest therein. In addition, upon the occurrence of such an Event of Default or such termination, City shall execute and deliver to Banc of America such documents as Banc of America may request to evidence the passage of such legal title to Banc of America and the termination of City's interest therein, and upon request by Banc of America shall deliver possession of the Equipment to Banc of America in accordance with Section 12.02. Upon purchase of the Equipment under a Lease by City pursuant to Section 10.01, Banc of America's security interest or other interest in the Equipment shall terminate, and Banc of America shall execute and deliver to City such documents as City may request to evidence the termination of Banc of America's security interest in the Equipment subject to the related Lease. Section 6.02. Security Interest. To secure the payment of all of City's obligations under each Lease, upon the execution of such Lease, City grants to Banc of America a security interest constituting a first lien on (a) the Equipment applicable to such Lease, and (b) any and all proceeds of any of the foregoing. City agrees to execute and authorizes Banc of America to file such notices of assignment, chattel mortgages, financing statements and other documents, in form satisfactory to Banc of America, which Banc of America deems necessary or appropriate to establish and maintain Banc of America's security interest in the Equipment and the proceeds thereof. • (Amendment 78 Lease) 9 Section 6.03. Personal Property. The Equipment is and will remain personal property and will not be deemed to be affixed to • or a part of the real estate on which it may be situated, notwithstanding that the Equipment or any part thereof may be or hereafter become in any manner physically affixed or attached to real estate or any building thereon. Upon the request of Banc of America, City will, at City's expense, furnish a waiver of any interest in the Equipment from any party having an interest in any such real estate or building. ARTICLE VII Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges. City shall keep the Equipment free of all levies, liens, and encumbrances except those created by each Lease. The parties to this Agreement contemplate that the Equipment will be used for a govern- mental or proprietary purpose of City and that the Equipment will therefore be exempt from all property taxes. If the use, possession or acquisition of any Equipment is nevertheless determined to be subject to taxation, City shall pay when due all taxes and governmental charges lawfully assessed or levied against or with respect to such Equipment. City shall pay all utility and other charges incurred in the use and maintenance of the Equipment. City shall pay such taxes or charges as the same may become due; provided that, with respect to any such taxes or charges that may lawfully be paid in installments over a period of years, City shall be obligated to pay only such installments as accrue during each Lease Term. Section 7.02. Insurance. City shall during each Lease Term maintain or cause to be • maintained (a) casualty insurance naming Banc of America and its assigns as additional insured and loss payee and insuring the Equipment against loss or damage by fire and all other risks covered by the standard extended coverage endorsement then in use in the State, and any other risks reasonably required by Banc of America, in an amount at least equal to the then applicable Purchase Price of the Equipment; (b) liability insurance as to which City agrees to add Banc of America as an additional insured on the City's liability policies for the Equipment financed hereunder and subject to any Lease; and (c) worker's compensation coverage as required by the laws of the State; provided that, with Banc of America's prior written consent, City may self - insure against the risks described in clause (a). City shall furnish to Banc of America evidence of such insurance or self-insurance coverage throughout each Lease Term. City shall not cancel or modify such insurance or self-insurance coverage in any way that would affect the interests of Banc of America without first giving written notice thereof to Banc of America at least 30 days in advance of such cancellation or modification. Section 7.02A. Surety Bonds; City to Pursue Remedies Against Contractors and Subcontractors and Their Sureties. City has secured from each contactor directly employed by City, in connection with the acquisition, construction, installation, improvement or equipping of the Equipment, payment and performance bonds executed by a surety company reasonably acceptable to Banc of America and authorized to do business in the State in a sum equal to the entire amount to become payable under the contract with such contractor. Each bond was conditioned on the completion of the work in accordance with the plans and specifications for the Equipment and upon payment of all claims of subcontractors and suppliers. City shall upon • receipt of each bond from each contractor assign such bond as collateral security to Banc of America. (Amendment 78 Lease) 10 • In the event of a material default of any contractor under any contract in connection with the acquisition, construction, improvement or equipping of the Equipment or in the event of a material breach of warranty with respect to any material, workmanship or performance guaranty, City will promptly proceed to exhaust its remedies against the contractor, or supplier in default and against any surety for the performance of such contract with respect to the contractor. City shall advise Banc of America of the steps it intends to take in connection with any such default. Any amounts received by way of damages, refunds, adjustments or otherwise in connection with the foregoing shall be paid to Banc of America and applied against City's obligations hereunder, net of legal fees. Section 7.03. Advances. In the event City shall fail to keep the Equipment in good repair and working order, Banc of America may, but shall be under no obligation to, maintain and repair the Equipment and pay the cost thereof. All amounts so advanced by Banc of America shall constitute additional rent for the then current Original Term or Renewal Term and City covenants and agrees to pay such amounts so advanced by Banc of America with interest thereon from the due date until paid at the maximum rate permitted by Arkansas law. ARTICLE VIII Section 8.01. Damage, Destruction and Condemnation. Unless City shall have exercised its option to purchase the Equipment pursuant to Section 10.01 by making payment of the Purchase Price as provided in the related Lease, if, priorto the termination of the applicable • Lease Term, (a) the Equipment or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Equipment or any part thereof shall be taken under the exercise or threat of the power of eminent domain by any governmental body or by any person, firm or corporation acting pursuant to governmental authority, City and Banc of America will cause the Net Proceeds of any insurance claim or condemnation award or sale under threat of condemnation to be applied to the prompt replacement, repair, restoration, modification or improvement of the Equipment. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to City. If City elects to replace any item of the Equipment (the "Replaced Equipment") pursuant to this Section, the replacement equipment (the "Replacement Equipment") shall be of similar type, utility and condition to the Replaced Equipment and shall be of equal or greater value than the Replaced Equipment. Banc of America shall receive a first lien security interest in any such Replacement Equipment. City shall represent, warrant and covenant to Banc of America that each item of Replacement Equipment is free and clear of all claims, liens, security interests and encunibrances, excepting only those liens created by or through Banc of America, and shall provide to Banc of America any and all documents as Banc of America may reasonably request in connection with the replacement, including, but not limited to, documentation in form and substance satisfactory to Banc of America evidencing Banc of America's security interest in the Replacement Equipment. Banc of America and City hereby acknowledge and agree that any Replacement Equipment acquired pursuant to this paragraph shall constitute "Equipment" for purposes of this Master Equipment Lease and the related Lease. City shall complete the • documentation of Replacement Equipment on or before the next Rental Payment date after the (Amendment 78 Lease) It • occurrence of a casualty event, or be required to exercise the Purchase Option with respect to the damaged equipment. For purposes of this Article, the term "Net Proceeds" shall mean the amount remaining from the gross proceeds of any insurance claim or condemnation award or sale under threat of condemnation after deducting all expenses, including attorneys' fees, incurred in the collection thereof. Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to in Section 8.01, City shall either (a) complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) pay or cause to be paid to Banc of America the amount of the then applicable Purchase Price for the Equipment, and, upon such payment, the applicable Lease Term shall terminate and Banc of America's security interest in the Equipment shall terminate as provided in Section 6.01 hereof. The amount of the Net Proceeds, if any, remaining after completing such repair, restoration, modification or improvement or after purchasing such Equipment and such other Equipment shall be retained by City. If City shall make any payments pursuant to this Section, City shall not be entitled to any reimbursement therefor from Banc of America nor shall City be entitled to any diminution of the amounts payable under Article IV. ARTICLE IX • Section 9.01. Disclaimer of Warranties. Banc of America makes no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for particular purpose or fitness for use of the Equipment, or any other warranty or representation, express or implied, with respect thereto and, as to Banc of America, City's acquisition of the Equipment shall be on an "as is" basis. In no event shall Banc of America be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Agreement, any Lease, the Equipment or the existence, furnishing, functioning or City's use of any item, product or service provided for in this Agreement or any Lease. Section 9.02. Vendor's Warranties. Banc of America hereby irrevocably appoints City its agent and attorney -in -fact during each Lease Term, so long as no Event of Default shall have occurred and be continuing under the related Lease, to assert from time to time whatever claims and rights (including without limitation warranties) relating to the Equipment that Banc of America may have against Vendor. City's sole remedy for the breach of such warranty, indemnification or representation shall be against Vendor of the Equipment, and not against Banc of America. Any such matter shall not have any effect whatsoever on the rights and obligations of Banc of America with respect to any Lease, including the right to receive full and timely Rental Payments under a Lease. City expressly acknowledges that Banc of America makes, and has made, no representations or warranties whatsoever as to the existence or the availability of such warranties relating to the Equipment. • (Amendment 78 Lease) 12 • ARTICLE X Section 10.01. Purchase Option. City shall have the option to purchase all of the Equipment listed in a Lease, at the following times and upon the following terms: (a) From and after the date specified in the related Schedule (the "Purchase Option Commencement Date"), on the Rental Payment dates specified in each Lease, upon not less than 30 days' prior written notice, and upon payment in full of the Rental Payments then due under such Lease plus the then applicable Purchase Price, which may include a prepayment premium on the unpaid balance as set forth in the applicable Schedule; or (b) In the event of substantial damage to or destruction or condemnation of substantially all of the Equipment listed in a Lease, on the day specified in City's notice to Banc of America of its exercise of the purchase option (which shall be the earlier of the next Rental Payment date or 60 days after the casualty event) upon payment in full to Banc of America of the Rental Payments then due under such Lease plus the then applicable Purchase Price; or (c) Upon the expiration of the Lease Term, upon payment in full of all Rental Payments then due and all other amounts then owing under the Lease, and the payment of $1.00 to Banc of America. After payment of the applicable Purchase Price, City will own the related Equipment, and Banc of America's security interests in and to such Equipment will be terminated. • ARTICLE XI Section 11.01. Assignment by Banc of America. Banc of America's right, title and interest in and to Rental Payments and any other amounts payable by City under any and all of the Leases, its security interest in the Equipment subject to each such Lease, and all proceeds therefrom may be assigned and reassigned in whole or in part to one or more assignees or subassignees by Banc of America, without the necessity of obtaining the consent of City; provided, however, that any such assignment, transfer or conveyance to a trustee for the benefit of owners of certificates of participation shall be made in a manner that conforms to any applicable State law and said certificates of participation shall be offered and sold in a private placement or limited offering only to investors whom Banc of America reasonably believes are qualified institutional buyers or accredited investors within the meaning of the applicable federal securities laws. Nothing in this Section 11.01 shall be construed, however, to prevent Banc of America from executing any such assignment, transfer or conveyance that does not involve funding through the use of certificates of participation within the meaning of applicable State law, including any such assignment, transfer or conveyance as part of a multiple asset pool to a partnership or trust, interests in which are offered and sold in a private placement or limited offering only to investors whom Banc of America reasonably believes are qualified institutional buyers or accredited investors within the meaning of the applicable federal securities law; provided further, however, that in any event, City shall not be required to make Rental Payments, • to send notices or to otherwise deal with respect to matters arising unaer a Lease wun or to more than one individual or entity. No assignment, transfer or conveyance permitted by this Section 11.01 shall be effective until City shall have received a written notice of assignment that (Amendment 78 Lease) 13 • discloses the name and address of each such assignee; provided, however, that if such assignment is made to a bank or trust company as trustee or paying agent for owners of certificates of participation, trust certificates or partnership interests with respect to the Rental Payments payable under a Lease, it shall thereafter be sufficient that City receives notice of the name and address of the bank or trust company as trustee or paying agent. During each Lease Term, City shall keep, or cause to be kept, a complete and accurate record of all such assignments in form necessary to comply with Section 149 of the Code. City shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees designated in such register. City shall not have the right to and shall not assert against any assignee any claim, counterclaim or other right City may have against Banc of America or the Vendor. Assignments in part may include without limitation assignment of all of Banc of America's security interest,in and to the Equipment listed in a particular Lease and all rights in, to and under the Lease related to such Equipment. The option granted in this Section may be separately exercised from time to time with respect to the Equipment listed in each Lease, but such option does not permit the assignment of less than all of Banc of America's interests in the Equipment listed in a single Lease. Section 11.02. Assignment and Subleasing by City. None of City's right, title, and interest in, to and under any Lease or any portion of the Equipment may be assigned or encum- bered by City for any reason. • ARTICLE XII Section 12.01. Events of Default Defined. Any of the following events shall constitute an "Event of Default" under a Lease: (a) Failure by City to pay any Rental Payment or other payment required to be paid under any Lease within 10 days of the date specified herein; (b) Failure by City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in subparagraph (a) above, for a period of 30 days after written notice specifying such failure and requesting that it be remedied is given to City by Banc of America, unless Banc of America shall agree in writing to an extension of such time prior to its expiration; provided that, if the failure stated in the notice cannot be corrected within the applicable period, Banc of America will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by City within the applicable period and diligently pursued until the default is corrected; (c) Any material misstatement or misrepresentation made by City in any representation or warranty in this Agreement or any Lease or to obtain this Agreement or any Lease or any Equipment obtained through this Agreement or any Lease, if such statement or representation is intentionally false or incorrect at the time it is made. (d) Any default occurs under any other agreement for borrowing money or receiving • credit under which City may be obligated as borrower, if such default consists of (i) the failure to pay any indebtedness when due or (ii) the failure to perform any other obligation thereunder and gives the holder of the indebtedness the right to accelerate the indebtedness; (Amendment 78 Lease) 14 • (e) City shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of City, or of all or a substantial part of the assets of City, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable federal bankruptcy law, or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or taking advantage of any insolvency law or any answer admitting the material allegations of a petition filed against City in any bankruptcy, reorganization or insolvency proceeding; or (f) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator or City or of all or a substantial part of the assets of City, in each case without its application, approval or consent, and such order, judgment or decree shall continue unstayed and in effect for any period of 30 consecutive days. Section 12.02. Remedies on Default. Whenever any Event of Default exists, Banc of America 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 City, Banc of America may declare all Rental Payments payable by City pursuant to such Lease and other amounts payable by City under such Lease to the end of the then current Original Term or Renewal Term to be due, subject, however, to any • limitations imposed by applicable Arkansas law; (b) With or without terminating the Lease Term under such Lease, Banc of America may enter the premises where the Equipment listed in such Lease is located and retake possession of such Equipment or require City at City's expense to promptly return any or all of such Equipment to the possession of Banc of America at such place within the United States as Banc of America shall specify, and sell or lease such Equipment or, for the account of City, sublease such Equipment, continuing to hold City liable, but solely from legally available funds, for the difference between (i) the Rental Payments payable by City pursuant to such Lease and other amounts related to such Lease or the Equipment listed therein that are payable by City to the end of the then current Original Term or Renewal Term, as the case may be, and (ii) the net proceeds of any such sale, leasing or subleasing (after deducting all expenses of Banc of America in exercising its remedies under such Lease, including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing such Equipment and all brokerage, auctioneer's and attorney's fees and to any limitations imposed by applicable Arkansas law). The exercise of any such remedies respecting any such Event of Default shall not relieve City of any other liabilities under any other Lease or the Equipment listed therein; and (c) Banc of America may take whatever action at law or in equity may appear necessary or desirable to enforce its rights under such Lease or as a secured party in any or all of the Equipment subject to such Lease. Section 12.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to • Banc of America is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under a Lease now or hereafter existing at law or (Amendment 78 Lease) 15 • in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Banc of America to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice other than such notice as may be required in this Article. Section 12.04. Application of Moneys. Any net proceeds from the exercise of any remedy under this Agreement, including the application specified in Section 12.02(b)(ii) (after deducting all expenses of Banc of America in exercising such remedies including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing Equipment and all brokerage, auctioneer's or attorney's fees), shall be applied as follows: (a) If such remedy is exercised solely with respect to a single Lease, Equipment listed in such Lease or rights thereunder, then to amounts due pursuant to such Lease and other amounts related to such Lease or such Equipment. (b) If such remedy is exercised with respect to more than one Lease, Equipment listed in more than one Lease or rights under more than one Lease, then to amounts due pursuant to such Leases pro rata. ARTICLE XIII • Section 13.01. Notices. All notices, certificates or other communications under any Lease shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, or delivered by overnight courier, or sent by facsimile transmission (with electronic confirmation) to the parties hereto at the addresses immediately after the signatures to this Agreement (or at such other address as either party hereto shall designate in writing to the other for notices to such party) and to any assignee at its address as it appears on the registration books maintained by City. Section 13.02. Release and Indemnification. To the extent permitted by law, City shall indemnify and defend Banc of America against any and all claims, actions, suits and other demands for damages related to any alleged lien holder liability arising out of City's selection, possession or use of any Equipment obtained by City under this Agreement and any Lease. This indemnification does not waive or reduce City's statutory immunity as to any third party claimants nor provide any third party beneficiary rights to any claimant or other person or entity. Section 13.03. Binding Effect. Each Lease shall inure to the benefit of and shall be binding upon Banc of America and City and their respective successors and assigns. Section 13.04. Severability. In the event any provision of any Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. • Section 13.05. Amendments, Changes and Modifications. Each Lease may only be amended by Banc of America and City in writing. (Amendment 78 Lease) 16 • Section 13.06. Execution in Counterparts. Each Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 13.07. Applicable Law. Each Lease shall be governed by and construed in accordance with the laws of the State of Arkansas. Section 13.08. Captions. The captions or headings in this Agreement and in each Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement or any Lease. Section 13.09. Jurisdiction. The jurisdiction for this agreement is stipulated as Washington County, Arkansas. (Remainder of page intentionally left blank.) • (Amendment 78 Lease) 17 IN WITNESS WHEREOF, Banc of America and City have caused this Agreement to be • executed in their names by their duly authorized representatives as of the date first above written. BANG OF AMERICA:. CITY: Banc of America Leasing & Capital, LLC City of Fayetteville, Arkansas 555 California Street, 4th Floor 113 West Mountain Street CA5-705-04-01 Fayetteville, Arkansas 72701 San Fr cisco, Calif 'a 94104 By Tit A§ istant Vice resident Title. a or Attest: By du .t✓ AM!'"' Title: City Clerk • • 471131' (Amendment 78 Lease) 18 LESSOR'S COPY EXHIBIT A SCHEDULE OF PROPERTY No. 1 Re: Master Equipment Lease/Purchase Agreement, dated as of June 25 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville Arkansas, as City 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above -referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment Lease "). 2. Equipment. The following items of Equipment are hereby included under this Schedule of the Master Equipment Lease. Quantity Description Serial No. Model No. Location Payment Schedule. (a) Rental Payments. The Rental Payments shall be in such amounts and payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as Exhibit A -l. Rental Payments shall commence on the date on which the Equipment listed in this Schedule is accepted by City, as indicated in an Acceptance Certificate substantially in the form of Exhibit B to the Master Equipment Lease. The City agrees to accept the equipment as agreed to in Article V of the Master Lease Agreement dated June 25, 2003. (b) Purchase Price Schedule. The Purchase Price on each Rental Payment date for the Lease of the Equipment listed in this Schedule shall be the amount set forth for such Rental Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule (including the Rental Payment shown on the same line in the Rental Payment Schedule). 4. Representations, Warranties and Covenants. City hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Master Equipment Lease are true and correct as though made on the date of commencement of Rental Payments on this Schedule. City further represents and warrants that no material adverse change • in City's financial condition has occurred since the date of the Master Equipment Lease. (Amendment 78 Lease) A -I . 5. The Lease. The terms and provisions of the Master Equipment Lease (other than to the extent that they relate solely to other Schedules or Equipment listed on other Schedules) are hereby incorporated into this Schedule by reference and made a part hereof. 6. Acquisition Amount. The Acquisition Amount for the Equipment described in this Schedule to be paid to the Vendor is $ 1,769,865.00. Lease Term. The Lease Term shall consist of the Original Term and 60 consecutive Renewal Terms, with the final Renewal Term ending on 8. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease, the Purchase Option Commencement Date is Dated: • BANC OF AMERICA: Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 By_ Title CITY: City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, Arkansas 72701 By Title: Mayor (Seal) Attest: By Title: City Clerk Counterpart Na. of • manually executed and serially numbered counterparts. To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial Code), no security interest herein may be created through the transfer or possession of any Counterpart other than Counterpart No. 1. (Amendment 78 Lease) A-2 EXHIBIT A•1 • RENTAL PAYMENT SCHEDULE Rental Rental Interest Principal Purchase Payment Payment Portion Portion Price Date Amount Prepayment Premium for purposes of Section 10.01(a) is 1.00%. For purposes of this Lease,, "Taxable Rate," with respect to the interest component of Rental Payments, means an annual rate of interest equal to • Crr': City of Fayetteville, Arkansas By Title: Mayor (Amendment 78 Lease) A-1-1 • EXHIBIT B ACCEPTANCE CERTIFICATE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. 1, dated , to Master Equipment Lease/Purchase Agreement, dated as of June 25. 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville, Arkansas, as City Ladies and Gentlemen: In accordance with the Master Equipment Lease/Purchase Agreement (the "Agreement"), the undersigned City hereby certifies and represents to, and agrees with Banc of America as follows: 1. All of the Equipment (as such term is defined in the Agreement) listed in the above -referenced Schedule of Property (the "Schedule ") has been delivered, installed and • accepted on the date hereof. 2. City has conducted such inspection and/or testing of the Equipment listed in the Schedule as it deems necessary and appropriate and hereby acknowledges that it accepts the Equipment for all purposes. 3. City is currently maintaining the insurance coverage required by Section 7.02 of the Agreement. 4. No event or condition that constitutes, or with notice or lapse of time, or both, would constitute, an Event of Default (as defined in the Agreement) exists at the date hereof. Date: CITY: City of Fayetteville, Arkansas By_ Title: (Seal) • (Amendment 78 Lease) B -1 • EXHIBIT C CERTIFICATE The undersigned, the duly elected and acting City Clerk of the City of Fayetteville ("City") certifies as follows: A. The following listed persons are duly elected and acting officials of City (the "Officials") in the capacity set forth opposite their respective names below and that the facsimile signatures are true and correct as of the date hereof; B. The Officials are duly authorized, on behalf of City, to negotiate, execute and deliver the Master Equipment Lease/Purchase Agreement dated as of June 25 2003 and the Schedule(s) thereunder and all future Schedule(s) (the "Agreements") by and between City and Banc of America Leasing & Capital, LLC and these Agreements are binding and authorized Agreements of City, enforceable in all respects in accordance with their terns. • • Name of Official Title Dan Coody Mayor Dated June 25, 2003 By: ,�MdA_& ., tt -1 Title: City Clerk (The signer of this Certificate cannot be listed above as authorized to execute the Agreements.) (Amendment 78 Lease) C -I • EXHIBIT D OPINION OF COUNSEL TO CITY Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. 1 dated , to Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville, Arkansas, as City Ladies and Gentlemen: As legal counsel to the City of Fayetteville, Arkansas ("City"), I have examined (a) an executed counterpart of a certain Master Equipment Lease/Purchase Agreement, dated as of June 25 2003, and Exhibits thereto by and between Banc of America Leasing & Capital, LLC ("Banc of America") and City (the "Agreement") and an executed counterpart of Schedule of Property No. 1 dated ___________,by and between Banc of America and City (the "Schedule"), which, among other things, provides for the lease of certain property listed. in the Schedule (the • "Equipment"), (b) an executed counterpart of Ordinance No. 4478 of City adopted April 15. 2003, which, among other things, authorizes City to execute the Agreement and the Schedule, and (c) such other opinions, documents and matters of law as I have deemed necessary in connection with the following opinions. The Schedule and the terms and provisions of the Agreement incorporated therein by reference, together with the Rental Payment Schedule attached to the Schedule, are herein referred to collectively as the "Lease". Based on the foregoing, I am of the following opinions: 1. City is a public body corporate and politic, duly organized and existing under the laws of the State of Arkansas, and is a political subdivision of the State of Arkansas within the meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended (the "Code"), and the obligations of City under the Agreement will constitute an obligation of City within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code. 2. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 78 and Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp.) (the "Act"), City has the requisite power and authority to lease and acquire the Equipment and to execute and deliver the Lease and to perform its obligations under the Lease. 3. The Lease has been duly authorized, approved, executed and delivered by and on behalf of City and the Lease is a valid and binding general obligation of City under Amendment • 78 and the Act enforceable in accordance with its terms. (Amendment 78 Lease) D-1 4. The authorization, approval, execution and delivery of the Lease and all other • proceedings of City relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state or federal laws. 5. To the best of our knowledge, there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transactions contemplated by the Lease or the security interest of Banc of America or its assigns, as the case may be, in the Equipment thereunder. 6. The portion of rentals designated as and constituting interest paid by City and received by Banc of America is excluded from Banc of America's gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of Arkansas personal income taxes; and such interest is not a specific item of tax preference for purposes of computing the alternative minimum tax imposed on individuals and corporations; it should noted, however, that such interest is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. All capitalized terms herein shall have the same meanings as in the Lease unless otherwise provided herein. Banc of America and its successors and assigns, and any counsel rendering an opinion on the tax-exempt status of the interest components of the Rental Payments, are entitled to rely on this opinion. • It is to be understood that the rights of Banc of America and the enforceability of the Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that its enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Kutak Rock LLP I� u (Amendment 78 Lease) D-2 • 17� • ESSENTIAL USE/SOURCE OF FUNDS CERTIFICATE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Master Equipment Lease/Purchase Agreement dated June 25. 2003, between Banc of America Leasing & Capital, LLC and City of Fayetteville, Arkansas ("City") and Schedule of Property No. — dated This certificate confirms and affirms that the Equipment described in the Agreement referenced above is essential to the functions of City or to the services City provides its citizens. Further, City has an immediate need for, and expects to make immediate use of, substantially all such Equipment, which need is not temporary or expected to diminish in the foreseeable future. Such Equipment will be used by City only for the purpose of performing one or more of City's governmental or proprietary functions consistent with the permissible scope of its authority. City expects and anticipates adequate funds to be available for due after the current budgetary period. Signature Name Da Title Mati future navments or rent (Amendment 78 Lease) AMENDMENT NO. 1 to Master Equipment Lease/Purchase Agreement • (Amendment 78 Lease) and Schedule of Property No. 1 entered into as of July 10, 2003 between Banc of America Leasing & Capital, LLC, a Delaware limited liability company ("Banc of America") and City of Fayetteville, Arkansas, a body corporate and politic existing under the laws of the State of Arkansas ('City") with reference to the following: A. Banc of America and the City have entered into a Master Equipment Lease/Purchase Agreement and Schedule of Property No.1 dated as of June 25, 2003 respectively (the "Agreements'; all defined terms therein not otherwise defined herein being used with their meanings as defined therein); and B. Banc of America and the City now desire to amend the Agreements as hereinafter set forth: NOW, THEREFORE, the parties hereto agree as follows: 1. Section 1.01 of the Master Equipment Lease/Purchase Agreement entitled Definitions, is hereby amended as follows: A. The following definitions are hereby added: "Acquisition Fund — means with respect to each Lease, the fund established and held by the Acquisition Fund Custodian pursuant to the related Acquisition Fund Agreement, if any. Acquisition Fund Agreement — means with respect to each Lease, an Acquisition Fund Agreement in form and substance acceptable to and executed by -the City, Banc of America and the Acquisition Fund Custodian, pursuant to which an Acquisition Fund is • established and administered. Acquisition Fund Custodian — means the Acquisition Fund Custodian identified in any Acquisition Fund Agreement, and its successor and assigns. Lease Proceeds — means with respect to each Lease, the total amount of money to be paid by Banc of America to the Acquisition Fund Custodian for deposit and application in accordance with such Lease and the Acquisition Fund Agreement" B. The following definitions are hereby deleted in its entirety and replaced with the following: "Commencement Date — means, for each Lease, the date when City's obligation to pay rent commences under such Lease, which date shall be the earlier of (I) the date on which the Equipment listed in such Lease is accepted by City in the manner described In Section 5.01. and (ii) the date on which sufficient moneys to purchase the Equipment listed in each Lease are deposited for that purpose with an Acquisition Fund Custodian. Utilization Period — means the date (i) with respect to each Lease not funded under an Acquisition Fund Agreement, by which Lessee must deliver an Acceptance Certificate for the Equipment under each Lease as indicated in Section 3.05(b) , or (ii) with respect to each Lease funded under an Acquisition Fund Agreement, as specified in the relevant Schedule." • LESSEE'S COPY #602276v1(Amendment 78 Lease) A -I • 2. Section 3.05 (a) Conditions to Banc of America's Performance is amended to add the following: '(x) An Acquisition Fund Agreement, executed by the City and the Acquisition Fund Custodian, unless Banc of America pays 100 % of the Acquisition Amount directly to the Vendor upon execution of each Lease." 3. Section 3.05 (b) is amended by deleting °(iii)" and replacing it with the following: "(iii) if no Acquisition Fund has been established, the Equipment must be accepted by Lessee no later than the date specified in the relevant Schedule (the 'Utilization Period")." 4. A new Section 4.07 is added as follows: 'Section 4.07 — Mandatory Prepayment If the Lease Proceeds are deposited into an Acquisition Fund, any funds remaining in the Acquisition Fund on or after the Acquisition Period and not applied to Equipment Costs, shall be applied by Banc of America on the next Rental Payment date, pro rata, to the prepayment of the principal component of the outstanding Rental Payments due under the Lease and applicable Schedule that funded such remaining funds." 5. Section 5.01 (b) is amended by adding the following at the beginning of the 2n° sentence of the section. With respect to Equipment not purchased through an Acquisition Fund, ". • 6. Section 6.02 Security Interest is amended by replacing letter "(b)' with a "(c)" and adding a new "(b)" as follows: "(b) moneys and investments held from time to time in the Acquisition Fund and.' 7. Exhibit A to Master Equipment Lease Purchase Agreement entitled Schedule of Property No. 1 is hereby replaced by a new Exhibit A attached hereto and made a part hereof. C. Banc of America and City each hereby represents and warrants to the other that the execution and delivery of this Amendment and compliance by Lessor and Lessee, respectively, with all of the provisions of this Amendment (a) are within the powers and purposes of each; (b) have been duly authorized or approved by each; and (c) when executed and delivered by or on behalf of Lessor and Lessee, respectively, will constitute valid and binding obligations of each, enforceable in accordance with its terms. Lessor and Lessee each hereby reaffirms all of its respective obligations under the Lease, as amended to date and by this Amendment D. If applicable, City will establish a rebate account and calculate and make, or cause to be calculated or made, payments of the rebate amount (as defined in Section 1.148-3(b) of the Federal Income Tax Regulations) in the amounts and at the times and in the manner provided in Section 148 (f) of the Code and applicable regulations, pursuant to the provisions of the Master Equipment Lease Purchase Agreement and any related Tax Compliance Certificate. Except as is herein specifically amended, all of the terms, covenants, and provisions of the Lease • remain in full force and effect #602276v1(Amendment 78 Lease) A-2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. I as of the day • and year written above. • Banc of America Leasing & Capital, LLC (Banc of America) By: Titre: istant Vie President By: Title: #602276v1(Amendment 78 Lease) A-3 • • • EXHIBIT A SCHEDULE OF PROPERTY No. 1 Re: Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003and Amendment No. I to Master Lease/Purchase Agreement dated as of July 10, 2003 between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville Arkansas, as City 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above -referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment Lease"). 2. Equipment. The following items of Equipment are hereby included under this Schedule of the Master Equipment Lease. Quantity Description Serial No. Model No. Location Fire Engine E -One 1500 1 Pumper #1 Gallon per Unit #33 Minute Pumper Fire Engine E -One 1500 1 Pumper #2 Gallon per Unit #34 Minute Pumper Fire Engine E -One 1500 Pumper #3 Gallon per Unit #35 Minute Pumper Aerial Unit — 95' Telescoping 95' Telescoping Aerial Aerial Platform Unit #36 Payment Schedule. (a) Rental Payments. The Rental Payments shall be in such amounts and payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as Exhibit A-1. Rental Payments shall commence on the date on which the Equipment listed in this Schedule is accepted by City, as indicated in an Acceptance Certificate substantially in the form of Exhibit B to the Master Equipment Lease. The City agrees to accept the equipment as agreed to in Article V of the Master Lease Agreement dated June 25, 2003. (b) Purchase Price Schedule. The Purchase Price on each Rental Payment date for the Lease of the Equipment listed in this Schedule shall be the amount set forth for such Rental Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule (including the Rental Payment shown on the same line in the Rental Payment Schedule). LESSEE'S COPY #602276v1(Amendment 78 Lease) A-4 • 4. Representations, Warranties and Covenants. City hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Master Equipment Lease are true and correct as though made on the date of commencement of Rental Payments on this Schedule. City further represents and warrants that no material adverse change in City's financial condition has occurred since the date of the Master Equipment Lease. 5. The Lease. The terms and provisions of the Master Equipment Lease (other than to the extent that they relate solely to other Schedules or Equipment listed on other Schedules) are hereby incorporated into this Schedule by reference and made a part hereof. Lease Proceeds. The Lease Proceeds which Banc of America shall pay to the Acquisition Fund Custodian in connection with this Schedule is $ 1,769,865.00. • 7. Acquisition Period. The Acquisition Period applicable to this Schedule shall end at the conclusion of the 12th month following the date hereof. 8. Lease Term: The Lease Term shall consist of the Original Term and (4) consecutive Renewal Terms, with the final Renewal Term ending on August 1, 2008. 9. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease, the Purchase Option Commencement Date is March 1, 2006. Dated: July 10, 2003 BANC OF AMERICA: Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 By_________ Titl A istant Vie esident CITY: City of Fayetteville, Arkansas 113 West Mountain Street . Fayetteville, Arkansas 72701 By — Title (Seal) Attest: By — Title Counterpart No. 2 of 2 manually executed and serially numbered counterparts. To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial Code), no security interest herein may be created through the transfer or possession of any Counterpart other than Counterpart No. 1. #602276v1(Amendment 78 Lease) A-5 • Rental Payment Date Aug -01-03 Aug -25-03 Sep -25-03 Oct -25-03 Nov -25-03 Dec -25-03 Jan -25-04 Feb -25-04 Mar -25-04 Apr -25-04 May -25-04 Jun -25-04 Jul -25-04 Aug -25-04 Sep -25-04 Oct -25-04 Nov -25-04 Dec -25-04 Jan -25-05 Feb -25-05 Mar -25-05 Apr -25-05 May -25-05 • Jun -25-05 Jul -25-05 Aug -25-05 Sep -25-05 Oct -25-05 Nov -25-05 Dec -25-05 Jan -25-06 Feb -25-06 Mar -25-06 Apr -25-06 May -25-06 Jun -25-06 Jul -25-06 Aug -25-06 Sep -25-06 Oct -25-06 Nov -25-06 Dec -25-06 Jan -25-07 Feb -25-07 Mar -25-07 Apr -25-07 May -25-07 Jun -25-07 Jul -25-07 Aug -25-07 Sep -25-07 Oct -25-07 Nov -25-07 • Dec -25-07 Jan -25-08 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 EXHIBIT A-1 Interest Principal Rental Purchase Portion Portion Payment Price (2.72100%) Amount 1,769,865.00 3,210.54 28,857.92 32,068.45 1,741,007.08 3,947.73 28,120.72 32,068.45 1,712,886.36 3,883.97 28,184.48 32,068.45 1,684,701.88 3,820..06 28,248.39 32,068.45 1,656,453.49 3,756.01 28,312.45 32,068.45 1,628,141.04 3,691.81 28,376.64 32,068.45 1,599,764.40 3,627.47 28,440.99 32,068.45 1,571,323.41 3,562.98 28,505.48 32,068.45 1,542,817.93: 3,498.34 28,570.11 32,068.45 1,514,247.82 3,433.56 28,634.90 32,068.45 1,485,612.92 3,368.63 28,699.83 32,068.45 1,456,913.09 3,303.55 28,764.90 32,068.45 1,428,148.19 3,238.33 28,830.13 32,068.45 1,399,318.06 3,172.95 28,895.50 32,068.45 1,370,422.56 3,107.43 28,961.02 32,068.45 1,341,461.54 3,041.76 29,026.69 32,068.45 1,312,434.85 2,975.95 29,092.51 32,068.45 1,283,342.34 2,909.98 29,158.47 32,068.45 1,254,183.87 2,843.86 29,224.59 32,068.45 1,224,959.28 2,777.60 29,290.86 32,068.45 1,195,668.42 2,711.18 29,357.28 32,068.45 1,166,311.14 2,644.61 29,423.84 32,068.45 1,136,887.30 2,577.89 29,490.56 32,068.45 1,107,396.74 2,511.02 29,557.43 32,068.45 1,077,839.31 2,444.00 29,624.45 32,068.45 1,048,214.85 2,376.83 29,691.63 32,068.45 1,018,523.23 2,309.50 29,758.95 32,068.45 988,764.28 2,242.02 29,826.43 32,068.45 958,937.84 2,174.39 29,894.06 32,068.45 929,043.78 2,106.61 29,961.85 32,068.45 899,081.94 2,038.67 30,029.79 32,068.45 869,052.15 1,970.58 30,097.88 32,068.45 838,954.27 1,902.33 30,166.12 32,068.45 808,788.15 1,833.93 30,234.53 32,068.45 778,553.62 1,765.37 30,303.08 32,068.45 748,250.54 1,696.66 30,371.80 32,068.45 717,878.74 1,627.79 30,440.66 32,068.45 687,438.08 1,558.77 . 30,509.69 32,068.45 656,928.39 1,489.59 30,578.87 32,068.45 626,349.52 1,420.25 30,648.21 32,068.45 595,701.32 1,350.75 30,717.70 32,068.45 564,983.61 1,281.10 30,787.35 32,068.45 534,196.26 1,211.29 30,857.16 32,068.45 503,339.10 1,141.32 30,927.13 32,068.45 472,411.96 1,071.19 30,997.26 32,068.45 441,414.71 1,000.91 31,067.55 32,068.45 410,347.16 930.46 31,137.99 32,068.45 379,209.17 859.86 31,208.60 32,068.45 348,000.57 789.09 31,279.36 32,068.45 316,721.21 718.17 31,350.29 32,068.45 285,370.92 647.08 31,421.38 32,068.45 253,949.55 575.83 31,492.62 32,068.45 222,456.92 504.42 31,564.03 32,068.45 190,892.89 432.85 31,635.60 32,068.45 159,257.29 (Amendment 78 Lease) A-1-1 Feb -25-08 55 361.12 ,31,707.34 32,068.45 127,549.95 • Mar -25-08 56 289.22 31,779.23 32,068.45 95,770.71 Apr -25-08 57 217.16 31,851.29 32,068.45 63,919.42 May -25-08 58 144.94 31,923.52 32,068.45 31,995.90 Jun -25-08 59 72.55 31,995.90 32,068.45 0.00 Prepayment Premium for purposes of Section 10.01(a) is 1.00%. For purposes of this Lease, "Taxable Rate," with respect to the interest component of Rental Payments, means an annual rate of interest equal to 4.263%. Crrr: City of F tteville, nsas . H BY Title a or i • (Amendment 78 Lease) A-1-2 ACQUISITION FUND AGREEMENT • This Acquisition Fund Agreement, dated as of July 10,2003, by and among Banc of America Leasing & Capital, LLC, a Delaware limited liability company (hereinafter referred to as "Lessor"), City of Fayetteville, a political subdivision of the state of Arkansas (hereinafter referred to as "Lessee") and Arvest Trust Company, National Association (hereinafter referred to as "Acquisition Fund Custodian"). Reference is made to that certain Master Equipment Lease/Purchase Agreement dated as of June 25, 2003 and Amendment No. 1 to Master Equipment Lease/Purchase Agreement dated July 10, 2003 between Lessor and Lessee (hereinafter referred to as the "Lease"), covering the acquisition and lease of certain Equipment described therein (the "Equipment"). It is a requirement of the Lease that the Equipment Cost of the Equipment (an amount not to exceed $1,769,865.00) be deposited into an escrow under terms satisfactory to Lessor, for the purpose of fully funding the Lease, and providing a mechanism for the application of such amounts to the purchase of and payment for the Equipment. The parties agree as follows: 1. Creation of Acquisition Fund. (a) There is hereby created a special trust fund to be known as the "City of • Fayetteville Amendment 78 Acquisition Fund" (the "Acquisition Fund") to be held in trust by the Acquisition Fund Custodian for the purposes stated herein, for the benefit of Lessor and Lessee, to be held, disbursed and returned in accordance with the terms hereof. (b) The Acquisition Fund Custodian shall invest and reinvest moneys on deposit in the Acquisition Fund in Qualified Investments in accordance with written instructions received from Lessee. Lessee shall be solely responsible for ascertaining that all proposed investments and reinvestments are Qualified Investments and that they comply with federal, state and local laws, regulations and ordinances governing investment of such funds and for providing appropriate notice to the Acquisition Fund Custodian for the reinvestment of any maturing investment. Accordingly, neither thee Acquisition Fund Custodian nor Lessor shall be responsible for any liability, cost, expense, loss or claim of any kind, directly or indirectly arising out of or related to the investment or reinvestment of all or any portion of the moneys on deposit in the Acquisition Fund, and Lessee agrees to and does hereby release the Acquisition Fund Custodian and Lessor from any such liability, cost, expenses, loss or claim. Interest on the Acquisition Fund shall become part of the Acquisition Fund, and gains and losses on the investment of the moneys on deposit in the Acquisition Fund shall be borne by the Acquisition Fund. For purposes of this agreement, "Qualified Investments" means any investments which meet the requirements of State of Arkansas ACT 1341 of 1999. (c) Unless the Acquisition Fund is earlier terminated in accordance with the provisions of paragraph (d) below, amounts in the Acquisition Fund shall be disbursed by the Acquisition Fund Custodian in payment of amounts described in Section 2 hereof upon receipt of • written authorization(s) from Lessor, as is more fully described in Section 2 hereof. If the amounts in the Acquisition Fund are insufficient to pay such amounts, Lessee shall provide any balance of the funds needed to complete the acquisition of the Equipment. Any moneys t9o584v4 LESSEE'S COPY remaining in the Acquisition Fund after July 10, 2004 (the "Acquisition Period") shall be applied • as provided in Section 4 hereof. (d) The Acquisition Fund shall be terminated at the earliest of (i) the final distribution of amounts in the Acquisition Fund or (ii) written notice given by Lessor of the occurrence of a default. (e) The Acquisition Fund Custodian may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine and may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument. The Acquisition Fund Custodian shall not be liable in any manner for the sufficiency or correctness as to form, manner of execution, or validity of any instrument nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the receipt of such moneys, instruments or other documents received by it as the Acquisition Fund Custodian, and for the disposition of the same in accordance herewith. (f) Unless the Acquisition Fund Custodian is guilty of gross negligence or willful misconduct with regard to its duties hereunder, Lessee agrees to and does hereby release and indemnify the Acquisition Fund Custodian and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or any other expense, fees or charges of any character or nature, which it may incur or with which it may be threatened by reason of its acting as Acquisition Fund Custodian under this agreement; and in connection therewith, does to the extent permitted by law indemnify the Acquisition Fund Custodian against • any and all expenses; including reasonable attorneys' fees and the cost of defending any action, suit or proceeding or resisting any claim. The Acquisition Fund Custodian shall be vested with a lien on and is hereby granted a security interest in all property deposited hereunder, for indemnification, for reasonable attorneys' fees, court costs, for any suit, interpleader or otherwise, or any other expense, fees or charges of any character or nature, which may be incurred by the Acquisition Fund Custodian by reason of disputes arising between Lessee and Lessor as to the correct interpretation of the Lease and instructions given to the Acquisition Fund Custodian hereunder, or otherwise, with the right of Acquisition Fund Custodian, regardless of the instructions aforesaid, to hold the said property until and unless said additional expenses, fees and charges shall be fully paid. 0 (g) If Lessee and Lessor shall be in disagreement about the interpretation of the Lease, or about the rights and obligations, or the propriety of any action contemplated by the Acquisition Fund Custodian hereunder, the Acquisition Fund Custodian may, but shall not be required to, file an appropriate civil action to resolve the disagreement. The Acquisition Fund Custodian shall be reimbursed by Lessee for all costs, including reasonable attorneys' fees, in connection with such civil action, and shall be fully protected in suspending all or part of its activities under the Lease until a final judgment in such action is received. (h) The Acquisition Fund Custodian may consult with counsel of its own choice and shall have full and complete authorization and protection with the opinion of such counsel. The Acquisition Fund Custodian shall otherwise not be liable for any mistakes of fact • or errors of judgment, or for any acts or omissions of any kind unless caused by its willful misconduct. 190584v4 2 (i) Lessee shall reimburse the Acquisition Fund Custodian for all reasonable • costs and expenses, including those of the Acquisition Fund Custodian's attorneys, agents and employees incurred for extra -ordinary administration of the Acquisition Fund and the performance of the Acquisition Fund Custodian's powers and duties hereunder in connection with any Event of Default under the Lease, or in connection with any dispute between Lessor and Lessee concerning the Acquisition Fund. 2. Acquisition of Property. (a) Acquisition Contracts. Lessee will arrange for, supervise and provide for, or cause to be supervised and provided for, the acquisition of the Equipment, with moneys available in the Acquisition Fund. Lessee represents the. estimated costs of the Equipment are within the funds estimated to be available therefor, and Lessor makes no warranty or representation with respect thereto. Lessor shall have no liability under any of the acquisition or construction contracts. Lessee shall obtain all necessary permits and approvals, if any, for the acquisition, equipping and installation of the Equipment, and the operation and maintenance thereof. (b) - Authorized Acquisition Fund Disbursements. Disbursements from the Acquisition Fund shall be made for the purpose of paying (including the reimbursement to Lessee for advances from its own funds to accomplish the purposes hereinafter described) the cost of acquiring the Equipment. • (c) Requisition Procedure. No disbursement from the Acquisition Fund shall be made unless and until Lessor has approved such requisition. Prior to disbursement from the Acquisition Fund there shall be filed with the Acquisition Fund Custodian a requisition for such payment in the form of Disbursement Request attached hereto as Schedule 1, stating each amount to be paid and the name of the person, firm or corporation to whom payment thereof is due. Each such requisition shall be signed by an authorized representative of Lessee (an "Authorized Representative") and by Lessor, and shall be subject to the following: 1. Delivery to Lessor of a certificate of Lessee to the effect that: (i) an obligation in the stated amount has been incurred by Lessee, and that the same is -a proper charge against the Acquisition Fund for costs relating to the Equipment identified in the Lease, and has not been paid; (ii) the Authorized Representative has no notice of any vendor's, mechanic's or other liens or rights to liens, chattel mortgages, conditional sales contracts or security interest which should be satisfied or discharged before such payment is made; (iii) such requisition contains no item representing payment on account, or any retained percentages which Lessee is, at the date of such certificate, entitled to retain; and (iv) the Equipment is insured in accordance with the Lease. 2. Delivery to Lessor of an Acceptance Certificate executed by Lessee, together with any Purchase Agreement Assignment or bill of sale and • invoice therefor as required by Section 3.05 of the Lease; 3 3. The disbursement shall occur during the Acquisition Period set forth in the • Schedule applicable to such Equipment; 4. There shall exist no Event of Default (nor any event which, with notice or lapse of time or both, would become an Event of Default); and No material adverse change in Lessee's or any guarantor's financial condition shall have occurred since the date of the Lease. 3. Deposit to Acquisition Fund. Upon satisfaction of the conditions specified in Section 3.05 of the Lease, Lessor will cause the Lease Proceeds to be deposited in the Acquisition Fund. Lessee agrees to pay any, costs with respect to the Equipment in excess of amounts available therefor in the Acquisition Fund. 4. Excessive Acquisition Fund. Following the final disbursement from the Acquisition Fund at the end of the Acquisition Period, or termination of the Acquisition Fund as otherwise provided herein, the Acquisition Fund Custodian shall transfer any remainder from the Acquisition Fund to Lessor for application to amounts owed under the Lease in accordance with Section 4.07 of the Lease. 5. Security Interest. The Acquisition Fund Custodian and Lessee acknowledge and agree that the Acquisition Fund and all proceeds thereof are being held by Acquisition Fund Custodian for disbursement or return as set forth herein. Lessee hereby grants to Lessor a first • priority perfected security interest in the Acquisition Fund, and all proceeds thereof, and all investments made with any amounts in the Acquisition Fund. If the Acquisition Fund, or any part thereof, is converted to investments as set forth in this agreement, such investments shall be made in the name of Acquisition Fund Custodian and the Acquisition Fund Custodian hereby agrees to hold such investments as bailee for Lessor so that Lessor is deemed to have possession of such investments for the purpose of perfecting its security interest. 6. Miscellaneous. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Lease. This agreement may not be amended except in writing signed by all parties hereto. This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument and each shall have the force.and effect of an original and all of which together constitute, and shall be deemed to constitute, one and the same instrument. Notices hereunder shall be made in writing and shall be deemed to have been duly given when personally delivered or when deposited in the mail, first class postage prepaid, or delivered to an express carrier, charges prepaid, or sent by facsimile with electronic confirmation, addressed to each party at its address below: If to Lessor: Banc of America Leasing & Capital, LLC 2059 North Lake Parkway, 4th Floor Tucker, GA 30084 Attn: Contract Administration Fax: (415) 765-7373 190584v4 C' • • If to Lessee: City of Fayetteville 113 West Mountain Street Fayetteville, Arkansas 72701 Attn: Dan Coody, Mayor Fax: 479-575-8257 If to Acquisition Fund Custodian: Arvest Trust Company, National Association P.O. Box 1327 Fayetteville, AR 72701 Attn: Cat -in Mahan Phone: 479-575-1129 Fax: 479-575-1116 In Witness Whereof, the parties have executed this Acquisition Fund Agreement as of the date first above written. Banc of America Leasing & Capital, LLC, as Lessor City of Fayetteville, as Lessee By:By: Title: 4AsstLant Vice President Title: Arvest Trust Company, National Association As Acquisition Fund Custodian By: �' .o :_ Title: V LESSEE'S COPY I90584v4 SCHEDULE 1 [1 FORM OF DISBURSEMENT REQUEST Re: Master Equipment Lease/Purchase Agreement dated as of June 25, 2003 and Amendment No. 1 to Master Equipment Lease/Purchase Agreement dated as of July 10, 2003 by and between Banc of America Leasing & Capital, LLC, as Lessor and City of Fayetteville, as Lessee (the "Lease") In accordance with the terms of the Acquisition Fund Agreement, dated as of July 10, 2003 (the "Acquisition Fund Agreement") by and among Banc of America Leasing & Capital, LLC ("Lessor"), City of Fayetteville ("Lessee") and Arvest Trust Company, National Association, Fayetteville branch (the "Acquisition Fund Custodian"), the undersigned hereby requests the Acquisition Fund Custodian pay the following persons the following amounts from. the Acquisition Fund created under the Acquisition Fund Agreement (the "Acquisition Fund") for the following purposes. Payee's Name and Address Invoice Number Dollar Amount Purpose The undersigned hereby certifies as follows: (i) An obligation in the stated amount has been incurred by Lessee, and the same is a proper charge against the Acquisition Fund for costs relating to the Equipment identified in the Lease, and has not been paid. Attached hereto is the original invoice with respect to such obligation. (ii) The undersigned, as Authorized Representative, has no notice of any vendor's, mechanic's or other liens or rights to liens, chattel mortgages, conditional sales contracts or security interest which should be satisfied or discharged before such payment is made. (iii) This requisition contains no item representing payment on account, or any retained percentages which Lessee is, at the date hereof, entitled to retain. (iv) The Equipment is insured in accordance with the Lease. (v) No Event of Default, and no event which with notice or lapse of time, or both, would become an Event of Default, under the Lease has occurred and is continuing at the date • hereof. 190584v4 • • (vi) The disbursement shall occur during the Acquisition Period set forth in the Schedule applicable to such Equipment. (vii) No material adverse change in Lessee's financial condition shall have occurred since the date of the Lease. Dated: Disbursement of funds from the Acquisition Fund in accordance with the foregoing Disbursement Request hereby is authorized BANG OF AMERICA LEASING & CAPITAL, LLC (as Lessor under the Lease) By: Title: 2 CITY OF FAYETTEVILLE By: Authorized Representative 190584v4 KUTAK ROCK LLP ATLANTA CHICAGO • SUITE 1100 DENVERnVER 425 WEST CAPITOL AVENUE DES MOINES PAYETTEVILLE NORTHWEST ARKANSAS OFFICE LITTLE ROCK, ARKANSAS 72201-3409 IRVINE KINEwa CITY THE THREE SISTERS BUILDING 501-975-3000 LINCOLN 214 WEST DICKSON STREET FACSIMILE 501 -975-3001 OKLAHOMA CITY RAYETTEVILLE. ARKANSAS 72701-6221 OMAHA 479.972-4200 www.kutakrock.com PASADENA RICHMOND August 1, 2003 SCOTTSDALE WASHINGTON Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. 1, dated July 10, 2003, to Master Equipment Lease/Purchase Agreement dated as of June 25, 2003, as amended by Amendment No. 1 to Master Equipment Lease/Purchase Agreement, dated July 10, 2003, each by and between Banc of America Leasing & Capital, LLC, as lessor, and City of Fayetteville, Arkansas, as lessee • Ladies and Gentlemen: As legal counsel to the City of Fayetteville, Arkansas (the "City"), we have examined (a) an executed counterpart of that certain Master Equipment Lease/Purchase Agreement dated as of June 25, 2003, as amended by that certain Amendment No. I to Master Equipment Lease/Purchase Agreement, dated July 10, 2003, and the Exhibits thereto (collectively, the "Agreement"), each by and between Banc of America Leasing & Capital, LLC ("Banc of America") and the City, and an executed counterpart of Schedule of Property No. 1, dated July 10, 2003 (the "Schedule"), by and between Banc of America and the City, which, among other things, provides for the lease of certain property listed in the Schedule (the "Equipment"), (b) an executed counterpart of Ordinance No. 4478 of City adopted on April 15, 2003 (the "Authorizing Ordinance"), which, among other things, authorizes the City to execute the Agreement and the Schedule, and (c) such other opinions, documents, certified proceedings and matters of law as we have deemed necessary in connection with the following opinions. The Schedule and the terms and provisions of the Agreement incorporated therein by reference, together with the Rental Payment Schedule attached to the Schedule, are herein referred to collectively as the "Lease". As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Authorizing Ordinance and the Lease and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. • 10 -Sit It.! KUTAK ROCK LLP Approving Opinion • August 1, 2003 Page 2 Based upon the foregoing, we are of the opinion, under existing law, that: 1. The City is a public body corporate and politic, duly organized and existing under the laws of the State of Arkansas, and is a political subdivision of the State of Arkansas within the meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended (the "Code"), and the obligations of the City under the Agreement will constitute an obligation of the City within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code. 2. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 78 and Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp.) (the "Act"), the City has the requisite power and authority to lease and acquire the Equipment and to execute and deliver the Lease and to perform its obligations under the Lease. 3. The Lease has been duly authorized, approved, executed and delivered by and on behalf of the City, and the Lease is a valid and binding obligation of the City under Amendment 78 and the Act enforceable in accordance with its terms. 4. The authorization, approval, execution and delivery of the Lease and all other • proceedings of City relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state or federal laws. 5. To the best of our knowledge, there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transactions contemplated by the Lease or the security interest of Banc of America or its assigns, as the case may be, in the Equipment thereunder. 6. The portion of rentals designated as and constituting interest paid by City and received by Banc of America is excluded from Banc of America's gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of Arkansas personal income taxes; and such interest is not a specific item of tax preference for purposes of computing the alternative minimum tax imposed on individual and corporations; it should be noted, however, that such interest is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. It is to be understood that the rights of Banc of America and the enforceability of the Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that its enforcement may also be subject to the exercise of judicial discretion in appropriate cases. All capitalized terms herein shall have the same meanings as set forth in the Lease unless otherwise provided herein. • Banc of America and its successors and assigns, and any counsel 10-51111.1 KUTAK ROCK LLP Approving Opinion • August 1, 2003 Page 3 rendering an opinion on the tax-exempt status of the interest components of the Rental Payments, are entitled to rely on this opinion. Except to the extent specifically set forth above, this opinion is being rendered to you solely for your use and benefit and may not be relied upon in any manner, nor used, by any other person. Very truly yours, 10-51111.1 10 • • Form 8038-G I Information Return for Tax -Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) (Rev. November 2000) ► See separate Instructons oep01uner" or ma Tress'^' Caution: B the issue price is under $100,000, use Form 8038 -GC. OMB No. 1545.0720 1 issuer's name - • .e. a w.ry.vw............a...,„ nu.nw. City of Fayetteville, Arkansas 71-6018462 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 113 West Mountain 3 03 5 City, town, or post office, state. and ZIP code 6 Date of issue Fayetteville, AR 72701 8-1-03 7 Name of issue 8 CUSIP number Master Equipment Lease/Purchase Agreement (Amendment 78 Lease) None 9 Name and title of officer or legal representative whom the IRS may call for more information 10 ralaphona numtw of amcer or legal repro,. tauw Gordon M. Wilbourn, Kutak Rock LLP, Bond Counsel 501-975-3000 Part 11 Type of Issue (check applicable box(es) and enter the issue price) See instructions and attach schedule 11 ❑ Education .......................................... _... 11 12 ❑ Health and hospital........................................t�.)!!.__.... . 12 13 ❑ Transportation.............................................................13 . 14 1 769 865 14 ® Public safe;f..........................................CM-AUG 08 N 15 ❑ Environment (including sewage bonds) ........................15 16 ❑ Housing ............................... ....V 16 17 ❑ Utilities.................................................................. 17 18 ❑ Other. Describe ► 18 19 If obligations are TANS or RANs, check box ► ❑ If obligations are BANS, check box ...... ► ❑ 20 If obligations are in the form of a lease or installment sale, check box ................. Is. ❑x 22 23 24 25 26 27 28 29 30 31 32 33 (c) Stated (a) Final maturity date (b) Issue price I vrice at (d) weighted I (e) Yield verage maturity 6-25-08 $ 1,769,865l$ 1,769,8651 2.537 year lvi Uses of Proceeds of Bond Issue (including underwriters' discount) Proceeds used for accrued interest ............................................... .. . Issue price of entire issue (enter amount from line 21, column (b)) .......................... Proceeds used for bond issuance costs (including underwriters' discount) 24 0 Proceeds used for credit enhancement ........................... 25 0 Proceeds allocated to reasonably required reserve or replacement fund .. 26 0 Proceeds used to currently refund prior issues ..................... 27 0 Proceeds used to advancerefund prior issues ..................... 28 0 Total (add lines 24 through 28) ..................................................... Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) ....... . t VI Description of Refunded Bonds (Complete this part only for refunding bonds.) Enter the remaining weighted average maturity of the bonds to be currently refunded ........... ► Enter the remaining weighted average maturity of the bonds to be advance refunded ........... ► Enter the last date on which the refunded bonds will be called ............................ ► Enter the date(s) the refunded bonds were issued ► Part VII Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) ......... 35 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) .... 36a b Enter the final maturity date of the guaranteed investment contract ► 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units ........... 37a b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the issuer ► and the date of the issue ► 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(Ill) (small issuer exception), check box ............ ► 39 If the issuer has elected to pay a penaltyin lieu of arbitrage rebate, check box .................................. ► If the issuer has identified a hedge, check box ........................................ .................. ► Under penaitieySsiur I declar I have exa ned this return and accompanying sUedules and statements, and to the best of my knowledge and be they are true, orr and compl Sign ij. . •Here 1 30 1,769,865 years years Date of the Instructions. ISA Dan Coody, Mayor Type or print name and title For Paperwork Reduction Act Notice, see SW FED6,o3F Form 8038-G (Rev. 11.2000) • • • • Complete Items 1, 2, and 3. Also complete Item 4 if Restricted Delivery is desired. • Print your name and address on the reverse so that we can return the card to you. • Attach this card to the back of the mallplece, or an the front if space permits. 1. Article Addressed to: Internal Revenue Service Center Ogden, Utah 84201 A Received by (Please Pant cleeAy) I B. Date of Delivery D. Signature AUG .?2.20C3 X ❑ Agent ❑ Addressee D. Is delivery address di fn a hen Item 1? ❑ Yes if YES, enter delivery address below: ❑ No IRS - OSC 3. Se Merchandise 4. Restricted Delivery? (Erna Fee) ❑ Yes 2. Article Number 7099 3400 0015 8354 5674 (Transfer horn se,t label) PS Form 3811, March 2001 Domestic Return Receipt t025esof 441424 KUTAK ROCK LLP ATLANTA CHICAGO SUITE 1100 DENyef • 425 WEST CAPITOL AVENUE 055 MOINES FAY PArETTEvILaLe NORTHWEST ARKANSAS OFFICE LITTLE ROCK, ARKANSAS 72201-3409 IRVINE KANSAS CITY THE THREE SISTERS BUILDING 501-975-3000 LINCOLN 214 WEST DICKSON STREET FACSIMILE 501-075-3001 OKLAHOMA CITY PAYerFEVILLE• ARKANSAS 72701-1221 OMAHA 470-073.4200 www.kutakrock.com PASADENA RICHMOND SCOTTSDALE WASHINGTON GORDON M. WILB0URN August 6, 2003 Swdoawilb0Um a@bfl 0ctwm (501)975-7101 VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED Receipt#70993400001583545674 Internal Revenue Service Center Ogden, Utah 84201 City of Fayetteville, Arkansas Master Equipment Lease/Purchase Agreement • (Amendment 78 Lease) Ladies and Gentlemen: I have enclosed for filing an original and one copy of Form 8038-G, with respect to the above -captioned matter. Please return the copy, showing your file mark, in the enclosed prepaid, self-addressed envelope. Very truly yours, (j(� Gordon M. Wilbourn Enclosures 10.51112.1 • CITY OF FAYETTEVILLE, ARKANSAS MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT (AMENDMENT 78) TRANSCRIPT OF PROCEEDINGS • Dated as of August 1, 2003 Prepared By: • 10-51103.1 KUTAK ROCK LLP 425 West Capitol, Suite 1100 Little Rock, Arkansas 72201 • City of Fayetteville, Arkansas Master Equipment Lease/Purchase Agreement (Amendment 78) INDEX Item No. Closing Certificate of the City (Amendment 78 Lease/Purchase Agreement) I Exhibit A - Ordinance No. 4478 adopted April 15, 2003, authorizing execution and delivery of the Lease/Purchase Agreement 2 Exhibit B — Minutes of City Council meeting held April 15, 2003 adopting Ordinance No. 4478 3 Exhibit C — Proof of Publication of Ordinance No. 4478 in the Northwest Arkansas edition of the Arkansas Democrat -Gazette • on April 19, 2003 4 No -Arbitrage Certificate 5 Master Equipment Lease/Purchase Agreement 6 Amendment No. I to Master Equipment Lease/Purchase Agreement 7 Acquisition Fund Agreement 8 Opinion of Bond Counsel 9 Form 8038-G and Proof of Mailing to Internal Revenue Service 10 Transcripts Delivered to: City of Fayetteville, Attn: Mr. Steve Davis (1 Bound; 1 CD Rom) Banc of America Leasing & Capital, LLC, Attn: Ms. Tessie G. Panganiban (1 Bound) Arvest Bank, Attn: Ms. Carin Mahan (1 Bound) Fayetteville City Attorney, Attn: Kit Williams, Esq. (1 Bound) Kutak Rock LLP (1 Bound; I CD Rom) • 10-51103.1 1 • I I I I I 11 • I i I I EXECUTION COPY • CLOSING CERTIFICATE OF THE CITY (Amendment 78 Lease/Purchase Agreement) The undersigned Mayor and City Clerk of the City of Fayetteville, Arkansas, a duly organized municipality and political subdivision of the State of Arkansas (the "City"), do hereby certify, represent, covenant and request as follows: 1. The undersigned are the duly elected, qualified, and acting Mayor and City Clerk of the City, and as such officials have in their possession or have access to the official books and corporate records of the City. This Certificate is executed and delivered in connection with the execution and delivery of the Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), dated as of June 25, 2003, as amended by Amendment No. 1 to Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), together with the Schedule of Property No. 1, each dated as of July 10, 2003, and as amended by the Schedule of Property No. 2, dated as of December 1, 2004 (as amended, the "Lease/Purchase Agreement"), by and between the City and Banc of America Leasing & Capital, LLC, a Delaware limited liability company ("Banc of America"). •2. Attached hereto as Exhibit A is a true, complete and correct copy of Ordinance No. 4478 (the "Authorizing Ordinance"), duly adopted by a majority of the City Council of the City at a duly called regular meeting of the City Council, open to the public, held April 15, 2003. The Authorizing Ordinance authorizes the execution and delivery of the Lease/Purchase • Agreement, and the Authorizing Ordinance is in full force and effect and has not been altered, amended or repealed as of the date hereof. No petition or petitions to refer the Authorizing Ordinance to the people under Amendment No. 7 to the Constitution of the State of Arkansas have been filed as of the date hereof, and the City Council has not referred the Authorizing Ordinance to the people for adoption or rejection. Attached hereto as Exhibit B is a true, complete and correct copy of the minutes of a meeting of the City Council held April 15, 2003, showing adoption of the Authorizing Ordinance, as said minutes appear in the official records of the City. At said meeting a quorum was present and acted throughout. Attached hereto as Exhibit C is a true, complete, and correct copy of a publisher's affidavit showing publication of the Authorizing Ordinance in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on April 19, 2003. No authority or proceeding in connection with the execution and delivery of the Lease/Purchase Agreement has been repealed, revoked or rescinded. 3. The persons named below were on the date of execution of the Lease/Purchase; Agreement, and are on the date hereof, the duly qualified and acting incumbents of the offices ofi the City set opposite their respective names. The undersigned, or their successors in office, are', the authorized representatives of the City for all purposes of the Lease/ Purchase Agreement and • the Authorizing Ordinance. 10-69406.2 Title Name • Mayor Dan Coody City Clerk Sondra Smith 4. The undersigned Mayor of the City did manually execute the Lease/Purchase Agreement and the undersigned City Clerk of the City did manually attest the Lease/Purchase Agreement. i 5. The City has duly adopted the Authorizing Ordinance and has duly authorized, executed and delivered the Lease/Purchase Agreement by all necessary action under the Constitution and laws of the State of Arkansas, including particularly Amendment 78 to the Constitution and Arkansas Code Annotated Sections 14-78-101 et seq. (the "Authorizing Legislation"). As of the date hereof, the Authorizing Ordinance and the Lease/Purchase Agreement are in full force and effect and each constitutes the valid, binding and enforceable obligation of the City, except to the extent their enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally, or by the availability of equitable remedies, and the City is entitled to the benefits of the same. The City has complied in all respects with the provisions of the Authorizing Legislation and has full legal right, power and authority to enter into the Lease/Purchase Agreement for the purpose stated in the Authorizing Legislation, to adopt the Authorizing Ordinance, and to carry out and consummate all other transactions contemplated by the Lease/Purchase Agreement and the Authorizing Ordinance. 1 6. For purposes of complying with the provisions of Amendment 78 and the • Authorizing Legislation: (a) the equipment to be financed under the Lease/Purchase Agreement has a useful life of greater than one (1) year; and (b) the aggregate outstanding and unpaid principal amount of all "short-term financing obligations" (as defined in Amendment 78) as of the date hereof, including all obligations under the Lease/Purchase Agreement, does not exceed five percent (5%) of the assessed value of all taxable property located within the City as determined in the, latest available property tax assessment. 7. Any certificate signed by any official of the City (including this certificate)I delivered in connection with the Lease/Purchase Agreement shall be deemed a representation and warranty by the City as to the statements made therein (and herein). i 8. The seal affixed to this certificate is the legally adopted, proper and only official seal of the City, and has been duly affixed to the Lease/Purchase Agreement. 9. The meeting of the City Council of the City referred to in paragraph 2 hereof was open to the public in compliance with the provisions of Section 25-19-106 of the Arkansas Code Annotated (2002 Repl.), as amended and supplemented. The authorization, approval, execution and delivery of the Lease/Purchase Agreement and all proceedings of the City relating to the • transactions contemplated thereby have been performed in accordance with all open meeting laws, public bidding laws and all other applicable state and federal laws. 10-69406.2 2 10. The authorized representative of the City for all purposes of the Lease/Purchase • Agreement is Dan Coody, Mayor, whose signature appears on page 4. Until further written notice to you, any instrument authorized by the Lease/Purchase Agreement to be signed by an authorized representative of the City is to be honored if it contains the manual signature of this individual. 11. The City has not and will not engage in any activity which might result in the portion of the rentals constituting interest under the Lease/Purchase Agreement becoming taxable to it or any of said interest on the Bonds becoming taxable to the recipients thereof under the Federal income tax laws. 12. The City is a city of the first class pursuant to Title 14, Subtitle 3, Chapter 43 Hof the Arkansas Code Annotated. The City is operating under the major -council form of government pursuant to Title 14. 1 13. The Authorizing Ordinance has been adopted in conformance with the City's rules of procedure relating to the conduct of its City Council meetings. 14. There is no action, suit, proceeding, inquiry or investigation involving the City before or by any court or public board or body pending or, to the knowledge of the undersigned, threatened wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City or the titles of its officials to their respective offices, (ii) enjoin or restrain the execution or delivery of the Lease/Purchase Agreement, or • (iii) in any way question or affect any authority for the authorization, execution or delivery of the Lease/Purchase Agreement or the validity or enforceability of the Lease/Purchase Agreement or the Authorizing Ordinance. 15. In the City, the time for filing a referendum petition is fixed at 31 days after the publication of the measure upon which the referendum is sought. 16. The adoption of the Authorizing Ordinance and the execution and delivery of the Lease/Purchase Agreement, and compliance with the provisions thereof under the circumstances contemplated thereby does not and will not in any material respect conflict with, or constitute on the part of the City a breach or default under, any agreement or other instrument to which the City is a party, or any existing law, administrative regulation, court order or consent decree to which the City is subject. 17. The Equipment (as defined in the Lease/Purchase Agreement) is essential to the functions of the City or to services the City provides to its citizens. Further, the City has an immediate need for, and expects to make immediate use of, substantially all of such Equipment, which need is not temporary or expected to diminish in the foreseeable future. 18. The City's employer tax identification number is 71-6018462. • 10-69406.2 3 19. Dan Coody, Mayor, hereby certifies that the signature of Sondra Smith, City • Clerk, affixed hereto is her true and correct signature, and Sondra Smith, City Clerk, hereby certifies that the signature of Dan Coody, Mayor, affixed hereto is his true and correct signature. IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of December 1, 2004. CITY OF F&YETTEVILLE, ARKANSAS Dan Coody, Mayor By: Smith, City • • 10-69406.2 P1 • I. u f • • • See Tab No. 2 u1 • Ll • 13 • • See Tab No. 3 • • C 14 to n i • See Tab No. 4 • 1• 15 i• • • • EXECUTION COPY CITY'S NON -ARBITRAGE CERTIFICATE I. General I.I. The undersigned is the Mayor of the City of Fayetteville, Arkansas (the "City") and certifies the statements in this certificate. 1.2. This certificate is executed for the purpose of setting forth the facts, estimates and expectations of the City on the date hereof as to future events regarding the City's obligations under Schedule of Property No. 2 dated December 1, 2004 ("Schedule 2") to the Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), dated as of June 25, 2003, as amended by Amendment No. I to Master Equipment Lease/Purchase Agreement (Amendment 78 Lease), dated as of July 10, 2003 (as amended, the "Lease/Purchase Agreement"). The City has not been notified of any listing or proposed listing of the City by the Internal Revenue Service as an issuer that may not certify its bonds. 1.3. The undersigned is the officer of the City delegated with the responsibility of executing the Lease/Purchase Agreement and is familiar with the facts, estimates and expectations set forth herein. 1.4. To the best of the undersigned's knowledge, information and belief, the expectations contained in this certificate are reasonable. 1.5. Various representations by Banc of America Leasing & Capital, LLC (the "Lessor") regarding certain facts and expectations are contained herein. The City is aware of no facts or circumstances that would cause it to question the accuracy of such representations. To the best of the knowledge, information and belief of the undersigned, such representations are reasonable and there are no facts, estimates or circumstances of which the undersigned is aware that would materially affect such representations. 2. Purpose of the Lease/Purchase Agreement 2.1. The purpose of entering into the Lease/Purchase Agreement is to obtain financing for the acquisition of certain firefighting equipment listed in Schedule 2 (the "Equipment"). 2.2. The lease payment obligations under the Lease/Purchase Agreement are general! obligations of the City. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Lease/Purchase Agreement. 3. Source and Disbursement of Funds 3.1. In consideration of the execution of the Lease/Purchase Agreement by the City, the Lessor will reimburse the City for the purchase price of the Equipment and take legal title thereto. 10-69408.2 4. Security • 4.1. The City's obligations under the Lease/Purchase Agreement are general obligations of the City. On or before the 1st day of each month, commencing January 1, 2005, the City shall transfer to the Lessor the lease payments detailed in the Lease/Purchase Agreement. Such payments shall be made from the general revenues of the City, and the City has established no special fund from which to make said payments. 5. Investment of Funds 5.1. The amount borrowed for the purpose of reimbursing the City for the cost of the Equipment does not exceed the estimated maximum total cost of the Equipment, less all other funds of the City reasonably available for such purpose. 5.2. The Equipment is not expected during the term of the Lease/Purchase Agreement to be sold or otherwise disposed of for a consideration. 6. Yield of the Lease/Purchase Agreement and Acquired Obligations 6.1. When used herein, the term "yield," when used in connection with the Lease/Purchase Agreement, refers to that discount rate which, when used in computing the present worth of all lease payments of principal and interest thereunder, produces an amount equal to the amount disbursed thereunder, including accrued interest, if any. The Lessor has represented the yield on the Lease/Purchase Agreement to be 3.2000% and the weighted average maturity of the City's obligations thereunder as 1.738 years. I 7. Miscellaneous 7.1. Other than general revenues, there are no other funds or accounts in existence or that will be established that the City reasonably expects will be available to pay the principal of or interest on the Lease/Purchase Agreement. 7.2. No portion of the amounts received under the Lease/Purchase Agreement will be used as a substitute for other funds which have been or will be used to acquire, directly or indirectly, obligations producing a yield in excess of the yield on the Lease/Purchase Agreement. 7.3. The Lease/Purchase Agreement is not and will not be part of a transaction or series of transactions that attempt to circumvent the provisions of Section 148 of the Code; enabling the City to exploit the difference between tax-exempt and taxable interest rates to gain a material financing advantage, or increasing the burden on the market for tax-exempt obligations. 7.4. This certificate is intended to be, and may be relied upon as, a certificate described in Section 1. 148-2(b)(2) of the Regulations. C 10-69408.2 2 7.5. This certificate is dated December 1, 2004. • CITY OF FAYETTEVILLE, ARKANSAS le • m w I0-69408.2 3 EXHIBIT A • SCHEDULE OF PROPERTY No. 2 Re: Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville Arkansas, as City 1. Defined Terms. All terms used herein have the meanings ascribed to them in the above -referenced Master Equipment Lease/Purchase Agreement (the "Master Equipment Lease"). 2. Equipment. The following items of Equipment are hereby included under this Schedule of the Master Equipment Lease. Quantity Description Vin/Serial No. Model No. Location 1 Fire Engine Pumper 4EN3AAA8141008550 E -One 1500 Gallon per Minute Pumper 113 West Mountain Rd, Fayetteville, AR 72701 Payment Schedule. • (a) Rental Payments. The Rental Payments shall be in such amounts and payable on such dates as set forth in the Rental Payment Schedule attached to this Schedule as Exhibit A-1. Rental Payments shall commence on the date on which the Equipment listed in this Schedule is accepted by City, as indicated in an Acceptance Certificate substantially in the form of Exhibit B to the Master Equipment Lease. The City agrees to accept the equipment as agreed to in Article V of the Master Lease Agreement dated June 25, 2003. (b) Purchase Price Schedule. The Purchase Price on each Rental Payment date for the Lease of the Equipment listed in this Schedule shall be the amount set forth for such Rental Payment date in the "Purchase Price" column of the Rental Payment Schedule attached to this Schedule. The Purchase Price is in addition to all Rental Payments then due under this Schedule•(including the Rental Payment shown on the same line in the Rental Payment Schedule). 4. Representations, Warranties and Covenants. City hereby represents, warrants and' covenants that its representations, warranties and covenants set forth in the Master Equipment Lease are true and correct as though made on the date of commencement of Rental Payments on this Schedule. City further represents and warrants that no material adverse change in City's financial condition has occurred since the date of the Master Equipment Lease. • #597436v2 BofA Legal: 11 /23/04 5. The Lease. The terms and provisions of the Master Equipment Lease (other than . to the extent that they relate solely to other Schedules or Equipment listed on other Schedules) are hereby incorporated into this Schedule by reference and made a part hereof. 6. Acquisition Amount. The Acquisition Amount for the Equipment described in this Schedule to be paid to the Vendor is $347,645.83. 7. Lease Term. The Lease Term shall consist of the Original Term and 4 consecutive Renewal Terms, with the final Renewal Term ending on April 1, 2008. 8. Purchase Option Commencement Date. For purposes of Section 10.01 of the Lease, the Purchase Option Commencement Date is September 1, 2006. • • #597436v2 BofA Legal: 11/23/04 • • Dated: December 1.2004 BANC OF AMERICA: Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 By Title 61d -@At CITY: City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, Arkansas 72701 By Tit] (Se Att, By Tit] Counterpart No. of manually executed and serially numbered counterparts., To the extent that this Lease constitutes chattel paper (as defined in the Uniform Commercial I Code), no security interest herein may be created through the transfer or possession of any I Counterpart other than Counterpart No. 1. • #597436v2 •r BofA Legal: 11/23/04 • EXHIBIT A-1 RENTAL PAYMENT SCHEDULE Purchase Price Rental Rental Interest Rental (excluding Payment Payment Portion Principal Payment prepayment Date Number 3.20% Portion Amount premium) Dec -01-04 0 0.00 0.00 0.00 347,645.83 Jan -01-05 1 928.76 8,246.63 9,175.39 339,399.20 Feb -01-05 2 906.74 8,268.65 9,175.39 331,130.55 Mar -01-05 3 884.64 8,290.75 9,175.39 322,839.80 Apr -01-05 4 862.49 8,312.90 9,175.39 314,526.90 May -01-05 5 840.28 8,335.11 9,175.39 306,191.79 Jun -01-05 6 818.02 8,357.37 9,175.39 297,834.42 Jul -01-05 7 795.69 8,379.70 9,175.39 289,454.72 Aug -01-05 8 773.30 8,402.09 9,175.39 281,052.63 Sep -01-05 9 750.86 8,424.53 9,175.39 272,628.10 Oct -01-05 10 728.34 8,447.05 9,175.39 264,181.05 Nov -01-05 11 705.78 8,469.61 9,175.39 255, 711.44 Dec -01-05 12 683.16 8,492.23 9,175.39 247,219.21 • i Jan -01-06 13 660.46 8,514.93 9,175.39 238,704.28 Feb -01-06 14 637.72 8,537.67 9,175.39 230,166.61 Mar -01-06 15 614.91 8,560.48 9,175.39 221,606.13 Apr -01-06 16 592.04 8,583.35 9,175.39 213,022.78 May -01-06 17 569.11 8,606.28 9,175.39 204,416.50 Jun -01-06 18 546.11 8,629.28 9,175.39 195,787.22 Jul -01-06 19 523.06 8,652.33 9,175.39 187,134.89 Aug -01-06 20 499.95 8,675.44 9,175.39 178,459.45 Sep -01-06 21 476.77 8,698.62 9,175.39 169,760.83 Oct -01-06 22 453.52 8,721.87 9,175.39 161,038.96 Nov -01-06 23 430.23 8,745.16 9,175.39 152,293.80 Dec -01-06 24 406.87 8,768.52 9,175.39 143,525.28 Jan -01-07 25 383.44 8,791.95 9,175.39 134,733.33 Feb -01-07 26 359.95 8,815.44 9,175.39 125,917.89 Mar -01-07 27 336.40 8,838.99 9,175.39 117,078.90 Apr -01-07 28 312.78 8,862.61 9,175.39 108,216.29 May -01-07 29 289.11 8,886.28 9,175.39 99,330.01 Jun -01-07 30 265.37 8,910.02 9,175.39 90,419.99 Jul -01-07 31 241.56 8,933.83 9,175.39 81,486.16 Aug -01-07 32 217.70 8,957.69 9,175.39 72,528.47 Sep -01-07 33 193.76 8,981.63 9,175.39 63,546.84 Oct -01-07 34 169.77 9,005.62 9,175.39 54,541.22 • Nov -01-07 35 145.71 9,029.68 9,175.39 45,511.54 Dec -01-07 36 121.59 9,053.80 9,175.39 36,457.74 1 • Jan -01-08 37 97.40 9,077.99 9,175.39 27,379.75 Feb -01-08 38 73.14 9,102.25 9,175.39 18,277.50 Mar -01-08 39 48.83 9,126.56 9,175.39 9,150.94 Apr -01-08 40 24.45 9,150.94 9,175.39 0.00 Prepayment Premium for purposes of Section 10.01(a) is Lessee may not prepay for the first half of the lease term. Thereafter, upon 30 days written notice, Lessee may prepay the entire outstanding principal balance plus accrued interest and any other unpaid charges plus a premium of 1% of the then outstanding principal balance on any rental payment date. For purposes of this Lease, "Taxable Rate,' with respect to the interest component of Rental Payments, means an annual rate of interest equal to 5.00% • is 2 ExIIIBIT B • ACCEPTANCE CERTIFICATE Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. 2, dated December 1, 2004, to Master Equipment Lease/Purchase Agreement, dated as of June 25, 2003, between Banc of America Leasing & Capital, LLC, as Banc of America, and City of Fayetteville, Arkansas, as City Ladies and Gentlemen: In accordance with the Master Equipment Lease/Purchase Agreement (the "Agreement ), the undersigned City hereby certifies and represents to, and agrees with Banc of America as follows: 1. All of the Equipment (as such term is defined in the Agreement) listed, in the above -referenced Schedule of Property (the "Schedule ") has been delivered, installed and accepted on the date hereof. • ! 2. City has conducted such inspection and/or testing of the Equipment listed in the Schedule as it deems necessary and appropriate and hereby acknowledges that it accepts the Equipment for all purposes. 3. City is currently maintaining the insurance coverage required by Section 7.02 of the Agreement. 4. No event or condition that constitutes, or with notice or lapse of time, or both, would constitute, an Event of Default (as defined in the Agreement) exists at the date hereof. Date: December 1. 2004 • (Amendment 78 Lease) CITY: Cit By Till (Sep., IS E 18 S ESSENTIAL USE/SOURCE OF FUNDS CERTIFICATE • Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Master Equipment Lease/Purchase Agreement dated June 25, 2003, between Banc of America Leasing & Capital, LLC and City of Fayetteville, Arkansas ( "City ") and Schedule of Property No. 2 dated December 1, 2004 This certificate confirms and affirms that the Equipment described in the Agreement referenced above is essential to the functions of City or to the services City provides its citizens. Further, City has an immediate need for, and expects to make immediate use of, substantially all such Equipment, which need is not temporary or expected to diminish in the foreseeable future. Such Equipment will be used by City only for the purpose of performing one or more of City's governmental or proprietary functions consistent with the permissible scope of its authority. City expects and anticipates adequate funds to be available for alll'uture payments or rent due after the current budgetary period. / I • (Amendment 78 Lease) Signature Name__ Title 19 1 KUTAK ROCK LLP ATLANTA SUITE 1100 DENVER 1 425 WEST CAPITOL AVENUE DES MOINES FAYETTEVILLE NORTHWEST ARKANSAS OFFICE LITTLE ROCK, ARKANSAS 72201-3409 ' IRVINE THE THREE SISTERS BUILDING 501-975-3000 KANSAS CITY 214 WEST DICKSON STREET LOS ANGELES FACSIMILE 501-975-3001 I FAYETTEVILLE, ARKANSAS ]2]B1-6221 OKLAHOMA CITY oo-o]a-42oo www.kutakrock.com OMAHA December 1, 2004 WICH Banc of America Leasing & Capital, LLC 555 California Street, 4th Floor CA5-705-04-01 San Francisco, California 94104 Re: Schedule of Property No. 2, dated December 1, 2004, to Master Equipment Lease/Purchase Agreement dated as of June 25, 2003, as amended by Amendment No. 1 to Master Equipment Lease/Purchase Agreement, dated July 10, 2003, each by and between Banc of America Leasing & Capital, LLC, as lessor, and City of Fayetteville, Arkansas, as lessee • Ladies and Gentlemen: As legal counsel to the City of Fayetteville, Arkansas (the "City"), we have examined (a) an. executed counterpart of that certain Master Equipment Lease/Purchase Agreement dated as of June 25, 2003, as amended by that certain Amendment No. I to Master Equipment Lease/Purchase Agreement, dated July 10, 2003, and the Exhibits thereto (collectively, the "Agreement"), each by and between Banc of America Leasing & Capital, LLC ("Banc of America") and the City, and an executed counterpart of Schedule of Property No. 2, dated December 1, 2004 (the "Schedule"), by and between Banc of America and the City, which, among other things, provides for the lease of certain property listed in the Schedule (the "Equipment"), (b) an executed counterpart of Ordinance No. 4478 of City adopted on April 15, 2003 (the "Authorizing Ordinance"), which, among other things, authorizes the City to execute the Agreement and the Schedule, and (c) such other opinions, documents, certified proceedings and matters of law as we have deemed necessary in connection with the following opinions. The Schedule and the terms and provisions of the Agreement incorporated therein by reference together, with the Rental Payment Schedule attached to the Schedule, are herein referred to collectively as the "Lease". As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Authorizing Ordinance and the Lease and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same • by independent investigation. 10-69407.1 KUTAK ROCK LLP Approving Opinion • December 1, 2004 Page 2 Based upon the foregoing, we are of the opinion, under existing law, that 1. The City is a public body corporate and politic, duly organized and existing under the laws of the State of Arkansas, and is a political subdivision of the State of Arkansas within the meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended (the "Code"), and the obligations of the City under the Agreement will constitute an obligation of the City within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code. I 2. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 78 and Arkansas Code Annotated Sections 14-78-101 et seq. (2001 Supp.) (the "Act"), the City has the requisite power and authority to lease and acquire the Equipment and to execute and deliver the Lease and to perform its obligations under the Lease. I 3. The Lease has been duly authorized, approved, executed and delivered by and on behalf of the City, and the Lease is a valid and binding obligation of the City under Amendment 78 and the Act enforceable in accordance with its terms. 4. The authorization, approval, execution and delivery of the Lease and all other proceedings of City relating to the transactions contemplated thereby have been performed in • accordance with all open meeting laws, public bidding laws and all other applicable state or federal laws. 5. To the best of our knowledge, there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transactions contemplated by the Lease or the security interest of Banc of America or its assigns, as the case may be, in the Equipment thereunder. 6. The portion of rentals designated as and constituting interest paid by City and received by Banc of America is excluded from Banc of America's gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of Arkansas personal income taxes; and such interest is not a specific item of tax preference for purposes of computing the alternative minimum tax imposed on individual and corporations; it should be noted, however, that such interest is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. It is to be understood that the rights of Banc of America and the enforceability of the Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that its enforcement may also be subject to the exercise of judicial discretion in appropriate cases. • All capitalized terms herein shall have the same meanings as set forth in the Lease unless otherwise provided herein. Banc of America and its successors and assigns, and any counselt 10-69407. I • KUTAK ROCK LLP Approving Opinion • December 1. 2004 Page 3 rendering an opinion on the tax-exempt status of the interest components of the Rental Payments, are entitled to rely on this opinion. Except to the extent specifically set forth above, this opinion is being rendered to you solely for your use and benefit and may not be relied upon in any manner, nor used, by any other person. Very truly yours, Lf 10-69407.1 • • I 20i • Fot7t :8038.G information Return for Tax -Exempt Governmental Obligations • (Rev. November 2000) ► Under Internal Revenue Code section 149(o) I OMB No, 1645.0720 D.p nwa tl tlw T. ► See separate Instructions. `vent It a scree CautiOM 8 the issue prices under 6100.0000 use Form 80,18 -GC. • 1 Issuers name City of Fayetbville, Arkansas 3 Number and street (a P.O. tax it mail is not delivered to sweet address) 113 West Mountain S City, town or post o(fae. state. and ZIP code FayeereVula, AR 72701 7 Name of issue Master Equipment Lease/Purehaso Agtaament (Amendment 78 Lease) 9 Name and tide of officer or legal representative whom the IRS may call for more kV, Gordon M. Wilboum, Ktrtak Rock LLP, Bond Counsel 2 Iswrs erttpklysr itlerWecsd 71 6018462 RoomJsjit 4 10 Teieplve naMa d Mxtx a k9rl n ( 501 )9754000 --- -- — — —••..,...,Q maun rice see Ir. 11 0 Education 12 0 Health and hospital 13 0 Transportation 14 ® Public safety. 1S 0 Environment (including sewage bonds) 16 0 Housing . . . . 17 0 Utilities . ' . . . . 18 ❑' Other. Describe ► . . ' . . ' . 19 If obligations are TANS or RANs, check box ► ❑ if obligations are BANS, Check box ► 20 It obligations are in the form of a lease nr insfan,nant e1., W Fires mattrity dale I W Issue price (e) Stated redemption I (d) v✓eiglxe0 -o at massy average'nanny I (a)'/oid 22 Proceeds used for accrued interest 22 j 0 23 Issue price of entire issue (enter amount from line 21, column (b)) 23 347,646 24 Proceeds used for bond Issuance costs (Inckiding underwriters' discount) 24 0 25 Proceeds used for credit enhancement . . 25 0 26 Proceeds allocated to reasonably required reserve or replacement fund 26 0 27 Proceeds used to currently refund prior issues 27 0 28 Proceeds used to advance refund prior issues 28 0 29 Total (add lines 24 through 28) 29 30 Nonrelundin proceeds of the issue subtract line 29 from line 23 and enter amount here. 30 0 Description of Refunded Bonds (Complete this art only for refundin bonds.)347,846 31 Enter the remaining weighted average maturity of the bonds to be currently refunded ► ,rears 32 Enter the remaining weighted average maturity of the bonds to be advance refunded ► s ed 33 Enter the last date on which the refundbonds will be called --- years 34 Enter the date(s) the refunded bonds were issued ► . ' ' " . ' ► Miscellaneous 35 Enterthe amount of the state volume cap allocated to the issue under section 141(D)(5) . 35 0 36a Enter the amount of gross proceeds invested or to be invested b a anteed investment 9 contract (see sauct o s) 36a b Enter the final maturity date of the guaranteed investment contract ► 37 Pooled firiancings: a Proceeds of this issue that are to be used to make bans to other governmental units I 37a D If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► 0 and enter the name of the issuer ► and the date of the issue ► 38 If the issuer has designated the issue under section 265(b)(3X8)(i)pIq (small issuer exception), check box 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ► ❑ 40 If the issuer has) entlfied a hedoe, check hnv ► ❑ UnM of permy, t declare rut and . t era vue, SC!. and Sign • Here mush and accompxnymg 12-1-04 For Paperwork Reduction Act Notice see peg 2 oOfhe Instructions. scned,dea and statements, and to the eosl of my knowledge _'Dan Coolly, Mayor . type w pew name and taw Cat. No. 637135 Form 8038-G (Rae. t1.2oo0) KUTAK ROCK LLP • NORTHWEST ARKANSAS OFFICE THE THREW SISTERS BUILDING 214 WEST DICKSON STREET FAYETTEVILLE. ARKANSAS 72701.!421 470.070-200 GORDON M. WILSOURN gardon wi1bGuni©Iyb91L� (5011973-3101 SUITE 1100 425 WEST CAPITOL AVENUE LITTLE ROCK, ARKANSAS 72201-3409 $01-975-3000 FACSIMILE 501-975-3001 W Ww.kutak rook. GOBI VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED Receipt#70993400001583545582 Internal Revenue Service Center Ogden, Utah 84201 December 1, 2004 ATLANTA CHICAGO DENVER r DES MOINES FAYETTEVILLE IRVINE KANSAS CITY LOB ANGELES OKLAHOMA CITY OMAHA PASADENA RICHMOND SCOTTSDALE WASHINGTON WICHITA City of Fayetteville, Arkansas Master Equipment Lease/Purchase Agreement (Amendment 78 Lease) • Ladies and Gentlemen: I have enclosed for filing an original and one copy of Form 8038-G, with respect to the above -captioned matter. Please return the copy, showing your file mark, in the enclosed prepaid, self-addressed envelope. Very truly yours, pa) don M. Wilbourn Enclosures • 10-69872.1