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HomeMy WebLinkAboutResolution - 2002-R0123 - Contract For Municipal Lease_Purchase - Kock Financial Corporation - 03_28_2002Resolution No. 2002-R 0123 March 28, 2002 Item No. 39 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock, a Contract for municipal lease/purchase of heavy equipment, by and between the City of Lubbock and Koch Financial Corporation of Scottsdale, Arizona and related documents. Said Contract is attached hereto and incorporated in this resolution as if fully set forth herein and shall be included in the minutes of the City Council. Passed by the City Council this 28th day of March , 2002. W NDY I ON, MAYOR ATTEST: P'o 0/-� ,4,. oc�� Rebe ca Garza, City Secretary APPROVED AS TO CONTENT: . VUiZIQ f�Q A&A� — Victor Kilm Purchasing Manager APPROVED AS TO FORM: r William de Haas Contract Manager/Attorney gs/ccdocs/Contract-Koch Financial Corp.res March 18, 2002 CITY OF LUBBOCK PURCHASING DEPARTMENT ( 8 0 6 ) 7 7 5 - 2 1 6 7 (806)775-2164 MEMO Attached are 5 Original Contracts to be signed for ITB # 045-02/RS Municipal Lease/Purchase of Heavy Equipment which will be going to the March 28, 2002 City Council Meeting. Please sign and pass on or call x2167 and I will get the contracts to the next person. Thank You! Brandy V/ Beverly Hodges Andy Burcham V Bill de Haas Mayor Sitto 1625 13TH STREET LUBBOCK, TEXAS 79401 Resolution No. 2002—RO123 March 28, 2002 Item No. 39 94KOCH KOCH FINANCIAL CORPORATION March 13, 2002 Ron Shuffield Lubbock, City of 1625 13th St. (79401), PO Box 2000 Lubbock, TX 79401 Re: Master Equipment Lease/Purchase Agreement Schedule of Property No. 1 Dear Mr Shuffield: Enclosed are the documents for the Master Equipment Lease/Purchase Agreement between City of Lubbock and Koch Financial Corporation. Please have the responsible parties execute the enclosed documents and return them by Monday, April 8, 2002, to Koch Financial Corporation, 17767 North Perimeter Drive Suite 101, Scottsdale, AZ 85255. Receipt of correctly executed originals of all documents by this date will allow us to fund on April 12, 2002. Please immediately send the following back to Koch, so that we may begin the credit review process while you are completing the document package. • Essential Use/Source of Funds Certificate. This attached form certifies that the Equipment purchased under this Schedule is essential to the government functions of Lessee, and addresses the availability of funds to make Rental Payments. Please complete and sign this form. • Your two most recent audited financial statements. To be completed and executed by an authorized representative of Sample Lessee: • Master Equipment Lease/Purchase Agreement. These are the terms and conditions which will control each Schedule executed under the Master Agreement. Please sign at the bottom. • Amendment No.1 This is an amendment to the Master Equipment Lease/Purchase Agreement specific to the State of Texas • Exhibit A: Schedule of Property No. 1. This is an itemization of the Equipment to be purchased under this Schedule, which incorporates the terms and conditions of the Master Agreement into the Schedule. Please verify the information is correct, and sign at the bottom. • Exhibit A-1: Rental Payment Schedule. This shows the date each payment is due, the amount of each payment, including the interest and principal components, and the purchase price. Please verify this information is correct and sign at the bottom. • Insurance Coverage Requirements/ Lease Payment Instructions. Please fill in the name, address and phone and fax numbers of the insurance agent in the top section. Please complete the Lease Payment Instructions, and include any invoicing requirements in order to ensure prompt and accurate payment of all amounts due under the Lease. Please sign at the bottom that all information contained in both sections is accurate. 17767 North Perimeter Drive ■ Suite 101 ■ Scottsdale, Arizona 85255 ■ 866/545-2327 FAX 480/419-3603 ■ Website www.kochfinancial.com Form 8038. This form is to be sent and filed with the IRS. Please follow the separate instructions for this form. To be executed by an authorized individual, OTHER THAN THE REPRESENTATIVE WHO EXECUTED THE ABOVE DOCUMENTS Certificate of Signature Authority. This document confirms that the person who has executed the above document is authorized to do so. THIS CANNOT BE EXECUTED BY THE SAME PERSON. Please forward this certificate, with the executed documents, to such person. To be executed by the attorney for Sample Lessee: • Exhibit C: Opinion of Counsel. Please forward the cover letter for your attorney, a copy of the documents, and Exhibit C to your attorney for execution. Your attorney can send the original directly to us, or deliver to you to be included with the rest of the package. We cannot fund prior to receipt of this letter. In addition to the documents listed above, please provide us, prior to funding, with the following: Advance Payment of $65,047.17 (invoice enclosed) must be returned with the documentation. The Insurance Certificate naming Koch Financial Corporation as loss payee/additional insured. If you have any questions, please call me at (480) 419-3914 or Cathy at (480) 585-3789. We look forward to completing this transaction with you. Sincerely, Elizabeth A. Santana Investment Coordinator Enclosures ESSENTIAL USE/SOURCE OF FUNDS CERTIFICATE Lubbock, City of 1625 13th St. (79401) PO Box 2000 Lubbock, TX 79457 Re: Master Equipment Lease/Purchase Agreement dated April 12, 2002, Schedule of Property No. l dated April 12, 2002 This certificate confirms and affirms that the Equipment described in the Agreement referenced above is essential to the functions of the 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. 1. Is the Equipment new, upgrade, additional or replacement? N e w 2. If replacement, how old is the existing equipment? N/A 3. Please fully explain the use of the Equipment including any specific department that may be its primary user. John Cobb — Landfill Supervisor City of Lubbock Compacting Truck and Debris at the City of Lubbock, Texas Landfill 4. If the Equipment is computer hardware or software, on what hardware will the software run and is the existing hardware owned or being leased? N/A 5. From which fund will lease payments be made? Solid Waste Fund 6. Will any loan or grant monies be used to make lease payments? No Lessee expects and anticipates adequate funds to be available for all future payments or rent due after the current budgetary period Signature: S-*rdIJ�yV _ 6^11, Name: J- MVV B095-A to Title: CAA44 � 0E8T MANA a,&A- Phone: g( 0 6 ) i-1 5-21 Please return this certificate with complete copies of your two most recent audited financial statements so we may begin our credit review process Thank you. Hoch Financial Corporation Lessee: City of Lubbock 1625 13th Street (79401), PO Box 2000 Lubbock, TX 79457 Attention: Mr. Ron Shuffield 03/ 13/2002 Invoice Number: #12862 Invoice Due Date: 04/12/2002 Amount Due: $65,047.17 Equipment Description: Caterpillar Landfill Compactor Customer Reference Number: Remit to: Payment Interest Principal Amount Number Portion Portion Due I Koch Financial Corporation Box 70072 Chicago, IL 60673-0072 Remit to: $0.00 $65,047.17 $65,047.17 Koch Financial Corporation 17767 N Perimeter Drive Scottsdale, AZ 85255 Attn: Elizabeth Santana Invoice Number: Advance Due Date: 04/12/02 Amount Due: $65,047.17 Amendment No. 1 (the "Amendment") to Master Equipment Lease Purchase Agreement dated April 12, 2002 ("Agreement") by and between Koch Financial Corporation ("Lessor") and City of Lubbock ("Lessee") This Amendment is entered into as of April 12, 2002 by and between Lessor and Lessee for the purpose of amending the above referenced Agreement. Lessor and Lessee hereby agree to amend the Agreement as follows: DELETE FROM the below Section the following: Section 6. Continuation of Lease Term. Lessee currently intends to do all things lawfully within its power to obtain and maintain funds from which the Rental Payments may be made, including making provision for such payments to the extent necessary in each budget or appropriation request submitted and adopted in accordance with applicable provisions of law. Notwithstanding the foregoing, the decision whether or not to budget and appropriate funds or to extend the applicable Schedule for any Renewal Term is within the discretion of the governing body of Lessee. All other terms and conditions of the Agreement remain unchanged and in full force and effect. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date first written above. LESSOR: Koch Financial Corporation By: Paul T. Haerle Title: Vice or6eide0t /000 Tx Counterpart No. of � manually execrated SCTlally numhere;l covntcrparls. To the extent tyat c t 4,at c:c,t?st>" .Itts c_�ttel paper (as defined in the Ur:i 01dr,", no security interest herein may b - e though tl4e tr2nsfCr far- possession of an counte 1 � cowiteipart NU. 1. Y � LESSEE: City of Lubbock r By: Title: WINDY SITTON, MAYOR ATTES ! By REBECCA)GARZA, CM S CRETAR and P-20VED/,AS TO' /C,03,TENT : VERLY IWWIES NANCE ECTOR APPR,OV,FeD AS TO FORM: W LLIAM dE HAAS CONTRACTS MANAGER/ATTORNEY 94KOCH KOCH FINANCIAL CORPORATION MASTER EQUI MENT No. 2002-8 0123 LEASE/PURCHASE AGREEMENT ment" dated April 12 LESSEE: City of Lubbock LESSOR: Koch Financial Corporation Street Address: 1625 13th St. BOX 2000 Street Address: 4111 East 37th Street North City / State / Zip: Lubbock, TX 79457 City / State / Zip: Wichita, Kansas 67220 1. Agreement. Lessee agrees to lease from Lessor certain "Equipment as described in each Equipment Schedule (Exhibit A), which together with a Rental Payment Schedule (Exhibit A-1) constitute a "Schedule", subject to the terms and conditions of and for the purposes set forth in each Lease. 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. Each Schedule and the terms and provisions of this Agreement (which includes all exhibits hereto, together with any amendments and modifications pursuant thereto) which are incorporated by reference into such Schedule shall constitute a separate and independent lease and installment purchase of the Equipment therein described and are referred to herein as a "Lease. 2. Term. The "Commencement Date" for each Lease is the date when interest commences to accrue under such Lease which date shall be the earlier of () the date on which the Equipment listed in such Lease is accepted by Lessee in the manner described in Section 11, or (ii) the date on which sufficient monies to purchase the Equipment listed in Such Lease are deposited for that purpose with an escrow agent, or (iii) the date Sufficient monies are set aside for acquisition of Equipment as evidenced In Exhibit D, if applicable. The "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. The "Original Term" means the period from the Commencement Date for each Lease until the end of Lessee's fiscal year or biennium (as the case may be) (the 'Fiscal Period') in effect at such Commencement Date. The "Renewal Term" for each Lease is each term having a duration that is coextensive with the Fiscal Period. 3. Reoresealations 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 public body corporate and politic duly organized and existing under the constitution and laws of the State with full power and authority under the constitution and laws of the state where the Lessee is located ("State') 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 and held in accordance with State law, or by other appropriate official approval, and all requirements have been met and procedures have occurred to ensure the validity and enforceability of this Agreement and each Lease; (c) 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; (d) 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; (e) during the Lease Term, the Equipment will be used by Lessee solely and exclusively for the purpose of performing essential governmental or proprietary functions of Lessee consistent with the permissible scope of Lessee's authority; (f) Lessee will annually provide Lessor with current financial statements, budgets, proof of appropriation for the ensuing Fiscal Period,.and such other financial information relating to the ability of Lessee to continue each Lease as may be requested by Lessor; and (g) 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. 4. Tax and Arbitrage Representations. Lessee hereby represents as follows: (a) the estimated total costs of the Equipment listed in each Schedule will not be less than the total principal portion of the Rental Payments listed in such Rental Payment Schedule; (b) the Equipment listed in each Schedule has been ordered or is expected to be ordered within 6 months of the Commencement Date, and all amounts deposited in escrow to pay for the Equipment, and interest earnings, will be expended on costs of the Equipment and the financing within 3 years of Commencement Date; (c) no proceeds of arry Lease will be used to reimburse Lessee for expenditures made more than 60 days prior to the Commencement Date or, if earlier, more than 60 days prior to any official action taken to evidence an intent to finance; (d) Lessee has not created or established, and does not expect to create or establish, any sinking fund or similar fund (1) that is reasonably expected to be used to pay the Rental Payments, or (ii) that may be used solely to prevent a default in the payment of the Rental Payments; (e) the Equipment listed in each Schedule has not been and is not expected to be sold or otherwise disposed of by Lessee, either in whole or in part, prior to the last maturity of Rental Payments; (I) Lessee will comply with all applicable provisions of the Internal Revenue Code of 1986, as amended ("Code"), including without limitation Sections 103 and 148 thereof, and the applicable regulations of the Treasury Department to maintain the exclusion of the interest components of Rental Payments from gross income for purposes of federal income taxation; and (g) Lessee intends that each Lease not constitute a "true" lease for federal income tax purposes. 5. Lease of Eautoment. Upon the execution of each Lease, Lessor demises, leases, transfers, and lets to Lessee, and Lessee acquires, rents, leases and hires from Lessor, the Equipment 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 Term for the next succeeding Renewal Term up to the maximum Lease Term set forth in such Lease. At the end of the Original Term and at the end of each Renewal Term the Lease Term shalt be automatically extended upon the successive appropriation by Lessee's governing body of amounts sufficient to pay Rental Payments and other amounts payable under the related Lease during the next succeeding Rscai Period until all Rental Payments payable under such Lease have been paid in full, unless Lessee shall have terminated such Lease pursuant to Section 7 or Section 22, 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. & Continuation of Lease Term. Lessee currently intends, subject to Section 7, to continue the Lease Term of each Lease through the Original Term and all Renewal Terms and to pay the Rental Payments thereunder. Lessee reasonably believes that legally available funds in an amount sufficient to make all Rental Payments during the maximum Lease Term of each Lease can be obtained. Lessee currently intends to do all things lawfully within its power to obtain and maintain funds from which the Rental Payments may be made, including making provision for such payments to the extent necessary in each budget or appropriation request submitted and adopted in accordance with applicable provisions of law. Notwithstanding the foregoing, the decision whether or not to budget and appropriate funds or to extend the applicable Schedule for any Renewal Term is within the discretion of the governing body of Lessee. 7. Nonantirepriaiton. Lessee is obligated only to pay such Rental Payments under each Lease as may lawfully be made from funds budgeted and appropriated for that purpose. Should Lessee fail to budget, appropriate or otherwise make available funds to pay Rental Payments under any Lease following the then current Original Term or Renewal Term, such Lease or Leases shall be deemed terminated at the end of the then current Original Term or Renewal Term. Lessee agrees to deliver notice to Lessor of such termination at least 30 days prior to the end of the then current Original Term or Renewal Term, but failure to give such notice shall not extend the term beyond such Original Term or Renewal Term. If any Lease is terminated in accordance with this Section, Lessee agrees to peaceably deliver the Equipment to Lessor at the location(s) to be specified by Lessor. III. Conditions to Lessor's Performance. 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. Lessee will cooperate with Lessor in Lessor's review of any proposed Lease. Lessee understands that Lessor requires certain documentation and information necessary to enter into any Lease and Lessee agrees to provide Lessor with any documentation or information Lessor may 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. 9. Rental Payments. Lessee shall promptly pay "Rental Payments' as described in Exhibit A-1 to each Lease, exclusively from legally available funds, 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 on the date such payment LB due at the rate of 112% per annum or the maximum rate permitted by law, whichever is less, from such date until paid. Rental Payments consist of principal and interest portions. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments under each Lease shall constitute a current expense of Lessee and shall not in any way be construed to be a debt of Lessee in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by Lessee, nor shall anything contained herein or in a Lease constitute a pledge of the general tax revenues, funds or monies of Lessee. 10. RENTAL PAYMENTS TO BE UNCONDITIONAL. EXCEPT AS PROVIDED IN SECTION 7, 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 TO BE DELIVERED OR INSTALLED, ANY DEFECTS, MALFUNCTIONS, BREAKDOWNS OR INFIRMITIES IN THE EQUIPMENT OR ANY ACCIDENT, CONDEMNATION OR UNFORESEEN CIRCUMSTANCES. 11. Dellverv_Installation: Acce tp ante. Lessee shall order the Equipment, cause the Equipment to be delivered and installed at the location Specified in each Lease and pay any and all delivery and installation costs in connection therewith. When the Equipment listed in any Lease has been delivered and installed, Lessee shall immediately accept such Equipment and evidence said acceptance by executing and delivering to Lessor an Acceptance Certificate (Exhibit 8). Lessor shall provide Lessee with quiet use and enjoyment of the Equipment during the Lease Term. 12. Location: Inspection. 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. 13, Use: Maiplerime. 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. Lessee agrees that it will, at Lessee's own cost and LESSOR AND LESSEE HAVE ENTERED INTO THIS AGREEMENT INTENDING To BE BOUND BY THE TERMS AND CONDITIONS SET FORTH ON THE FRONT AND BACK OF THIS AGREEMENT AND ON ALL SCHEDULES WHICH INCORPORATE THE TERMS AND CONDITIONS OF THIS AGREEMENT BY REFERENCE. LESSOR: Koch F(j�J'i prcit1%al Corpof On LESS Q Tubb k By Title Paul T. Haerle Td1e WINDY s TO R Date Senior Vice President Date March 28, 2002 11//1111 QV�..�\ (Seal) r qdeSt � mnna Y ��' i 1 v•�w _ of _ai!�r r..xt^ctt'c� ant! Sfri:?)I`✓ iltti (ri _.A C,lt'"?ICT�J^Tf ;, r6 ''' 'yl^:;i ,11By March }20U2 Ar' ,8'1C . (:U:1 ,...... . i:�1 °).:j;Cl'+,,,, r'•;1'iT :1 , 1 REBECCA GARZA Date-_ 1 Li LEI'' SECRETARY no ti * inrcrc.;- s,. tC_:rI:V .c ,. f', .i.:,, 'i,l:... ' APPROVED AS TO FORM: Oh T IBUTIDN: hYe-lessor on anal green-Ie �a �cov Canary -lessee copy. Plnk-copy, Goldenrob py� n / PS-3917 :1`trt Al t.Tc Tr -1.;fer or pussessi� Vol t�lll 130 TRACT hall Counwrnarl No. I. M A N a a F.R /ATTr)R mP.v 1 maintain its security interest in the Equipment. 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. 16. Liens, Taxes, Other Governmental Charges and ODIiri 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 governmental or proprietary purposes 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. 17. Insurance. At its own expense, Lessee shall during each Lease Term maintain (a) casualty insurance 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 as described in Exhibit A-1 of each Lease; (b) liability insurance that protects Lessee from liability in all events In form and amount satisfactory to Lessor; and (c) workers' compensation coverage as required by the laws of the State; provided that, with Lessors prior written consent, Lessee may sellAnsure against the risks described in clauses (a) and (b). Lessee shall furnish to Lessor evidence of such insurance or self-insurance coverage throughout each Lease Term. Lessee shall not materially modify or cancel such insurance or self-insurance coverage without first giving written notice thereof to Lessor at least 10 days in advance of such cancellation or modification. All such insurance described in clauses (a) and (b) above shall contain a provision naming Lessor as a loss payee and additional insured. 18. Adva0 . 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 agrees to pay such amounts so advanced by Lessor with interest thereon from the advance date until paid at the rate of 12 % per annum orthe maximum rate permitted by law, whichever is less. 19. Damace. Destruction and Condemnation. If (a) the Equipment or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) titre 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 to be applied to the prompt replacement, repair, restoration, modification or improvement of the Equipment to substantially the same condition as existed prior to the event causing such damage, destruction, or condemnation, unless Lessee shall have exercised its option to purchase the Equipment pursuant to Section 22. Any balance of the Net Proceeds remaining after such work has been completed shall be paid to Lessee. For purposes of this Section, the term "Net Proceeds" shall mean (y) the amount of insurance proceeds received by Lessee for replacing, repairing, restoring, modifying, or improving damaged or destroyed Equipment, or (z) the amount remaining from the gross proceeds of any condemnation award or sale under threat of condemnation after deducting all expenses, including attorneys' fees, incurred in the collection thereof. If the Net Proceeds are insufficient to pay in full the cost of any replacement, repair, restoration, modification or improvement referred to herein, 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) pursuant to Section 22 purchase Lessor's interest in the Equipment and in any other Equipment listed in the same Lease. The amount of the Net Proceeds, if any, remaining after completing such replacement, repair, restoration, modification or improvement or after purchasing Lessor's interest in the 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 Section 9. 20. 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 WARRANTY WITH RESPECT THERETO WHETHER EXPRESS OR IMPLIED, AND LESSEE ACCEPTS SUCH EQUIPMENT AS IS AND WITH ALL FAULTS. IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGE IN CONNECTION WITH OR ARISING OUT OF ANY LEASE OR THE EXISTENCE, FURNISHING, FUNCTIONING OR LESSEE'S USE OF ANY ITEM, PRODUCT OR SERVICE PROVIDED FOR IN ANY LEASE. 21. Vendor's Warranties. Lessor hereby irrevocably appoints Lessee as its agent and attorney -in -fact during each Lease Term, so long as Lessee shall not be in detauit 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. The term Vendor means any supplier or manufacturer of the Equipment as well as the agents or dealers of the manufacturer or supplier from whom Lessor purchased or is purchasing such Equipment. 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 or obligations of Lessor with respect to any Lease, including the right to receive full and timely payments under a Lease. Lessee expressly acknowledges that Lessor makes, and has made, no representations or warranties whatsoever as to the existence or the availability of such warranties by Vendor of the Equipment. 22. Purchase Option. Lessee shall have the option to purchase Lessor's interest in all of the Equipment listed in any Lease, upon giving written notice to Lessor at least 60 days before the date of purchase, at the following times and upon the following terms: (a) on the Rental Payment dates specified in each Lease, upon payment in full of the Rental Payments then due under such Lease plus the then applicable Purchase Price as referenced in Exhibit A-1; 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 upon payment in full to Lessor of the Rental Payments then Equipment. I he option gramea in this Section maybe separately exercised trom 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 all of the Equipment listed in a single Lease Lessee hereby agrees that Lessor may, without notice to Lessee, sell, dispose of, or assigr this Agreement or any particular Lease or Leases through a pool, trust, limited partnership or other similar entity, whereby one or more interests are created in this Agreement or in s Lease or Leases, or in the Equipment listed in or the Rental Payments under a particular Lease or Leases. None of Lessee's right, tide and interest in, to and under any Lease or any portion of the Equipment listed in each Lease may be assigned, subleased, or encumbered by Lessee to any reason without obtaining prior written consent of Lessor. 24. Events of Debuft. 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 tc be paid under a Lease at the time specified therein; (b) failure by Lessee to observe ant 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; (c any statement, representation or warranty made by Lessee in or pursuant to any Lease shal prove to have been false, incorrect, misleading or breached in any material respect on the date when made; or (it) Lessee institutes any proceedings under any bankruptcy, insolvency reorganization or similar law or a receiver or similar official is appointed for Lessee or any o its property. 25. 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 Renta 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 immediately due and payable; (b) with or without terminating the Lease Term under suct Lease, Lessor may enter the premises where the Equipment listed in such Lease is locates 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 o Lessee, sublease such Equipment, continuing to hold Lessee liable for the difference betweer (i) the Rental Payments payable by Lessee pursuant to such Lease and other amounts relates to such Lease of the Equipment listed therein that are payable by Lessee to the end of the ther current Original Term or Renewal Term, as the case may be, and (ii) the net proceeds of an} such sale, leasing or subleasing (after deducting all expenses of Lessor in exercising iti remedies under such Lease, including without limitation all expenses of taking possession storing, reconditioning and selling or leasing such Equipment and all brokerage, auctioneer; and attorney's fees), subject, however, to the provisions of Section 7 hereof. The exercise o any such remedies in respect of arry such Event of Default shall not relieve Lessee of any othe 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 right: under such Lease or as a secured party in arry or all art the Equipment. Any net proceeds fror the exercise of any remedy under a Lease (after deducting all costs and expenses reference( in the Section) shall be applied as follows: (1) if such remedy is exercised solely with respec 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; or (ii; 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 suet Leases pro-rata. 26. No Remedy Exclusive. No remedy herein conferred upon or reserved to Lessor le intended to be exclusive and every such remedy shall be cumulative and shall be in additior to every other remedy given under a Lease now or hereafter existing at law or in equity. 27. Notices. All notices or other communications under any Lease shall be sufficiently giver and shall be deemed given when delivered or mailed by registered mail, postage prepaid, t( the parties hereto at the addresses listed below (or at such other address as either party hereto shall designate in writing to the other for notices to Such parry), or to any assignee a its address as it appears on the registration books maintained by Lessee. 28, Release and Indemnification. To the extent permitted by State law, and subject tc Section 7, Lessee shall indemnify, release, protect, hold harmless, save and keep harmless Lessor from and against arty and all liability, obligation, loss, claim, tax and damage whatsoever, regardless of cause thereof, and all expenses in connection therewith (including Without limitation, attorneys fees and expenses, penalties connected therewith imposed or interest received) arising out of or as result of (a) entering into any Lease, (b) the ownershit of any item of Equipment, (c) the ordering, acquisition, use, operation, condition, purchase delivery, rejection, storage or return of any item of Equipment, (d) any accident in connection with the operation, use, condition, possession, storage or return of any item of Equlpmer resulting in damage to property or injury to or death to any person, and/or (e) the breach o any covenant or any material representation contained in a Lease. The indemnification arising under this Section shall continue in full force and effect notwithstanding the full payment o; all obligations under all Leases or the termination of the Lease Term under all Leases for any reason. 29. Miscellaneous Provisions. Each Lease shall inure to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns. References herein tc "Lessor shall be deemed to include each of its assignees and subsequent assignees from ant after the effective date of each assignment as permitted by Section 23. In the event any provision of any Lease shall be held invalid or unenforceable by any court of competeni jurisdiction, such holding shall not invalidate or render unenforceable any other provisior thereof. Each Lease may be amended by mutual written consent of Lessor and Lessee. Eact Lease may be simultaneously executed in several counterparts, each of which shall be ar original and all of which shall constitute but one and the same instrument The captions of headiogs 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 an) Lease, This Agreement and each Lease shall be governed by and construed in accordance with the laws of the State. t_WNI ITM1". Resolution No. 2002—R0123 SCHEDULE OF PROPERTY NO. 1 RE: MASTER EQUIPMENT LEASE/PURCHASE AGREEMENT entered into as of April 12, 2002, ("Agreement"), between Koch Financial Corporation ("Lessor") and Lubbock, City of ("Lessee"). All terms used and not otherwise defined herein have the meanings ascribed to them in the Agreement. The following items of Equipment are hereby included under this Schedule to the Agreement. DESCRIPTION OF EQUIPMENT uanti Description Model No. Serial No. 1 Caterpillar Landfill Compactor 816F Lessee hereby represents, warrants and covenants that its representations, warranties and covenants set forth in the Agreement are true and correct as though made on the Commencement Date of Rental Payments under this Schedule. The terms and provisions of the Agreement (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. Dated: April 12, 2002 Les e bock, `a' of essor: By Ai Name WINDY ITTON Title MAYOR Date: March 28, 2002 ATTESIN By REBECCA GARZA CITY SECRETARY Koch Financia orp1orraatio`n Name Paul T. Haerle Senior Vice PreSi en Title Date:gI lR (D 2 Counterpart No 3_ of --- manually executed and COU.'!-tcrpartS. To the (;Xkem that th35 a'1,� rr°F i.,ii'', Ft +'(i?j t .:.if(%ti i„"'�;:ii ! )n" •! Fica .� !+ .' ''nri C:r,,t::::=�'6�';;tl "AKIe ), no sec-rity interest !herein may be c:reatled through the Uznsfer or possession of any Counterpart other than Counterpart No. 1. Resolution No. 2002—RO123 EXHIBIT A-1 RENTAL PAYMENT SCHEDULE Payment Payment Purchase Pmt # Date Amount Interest Principal Price 411L/UZ 1 In Advance $65,047.17 $0.00 $65,047.17 2 4/12/03 $65,047.17 $8,639.69 $56,407.48 $185,433.30 3 4/12/04 $65,047.17 $6,593.79 $58,453.38 $125,810.85 4 4/12/05 $65,047.17 $4,473.69 $60,573.48 $64,025.89 5 4/12/06 $65,047.17 $2,276.69 $62,770.48 -$0.00 Totals: $325,235.85 $21,983.85 $303,252.00 COMMENCEMENT DATE: April 12, 2002 Lubbolk, City of Title ANDY BURCHAM CASH & EBIT MANAGER Date ni EXHIBIT B PLEASE COMPLETE EITHER FINAL OR PARTIAL ACCEPTANCE, AS RELEVANT FINAL ACCEPTANCE CERTIFICATE Re: Schedule of Property No.1, dated April 12, 2002, to Master Equipment Lease/Purchase Agreement, dated as ofkpril 12, 2002, between Koch Financial Corporation, as Lessor, and Lubbock, City of, as Lessee. 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 17 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. LESSEE Lubbock, Acceptance Date: Department of Human Resources P.O. Box 2000 • 1625 13th Street Lubbock, Texas 79457 (806) 775-2311 • Fax: (806) 775-3316 CERTIFICATE OF SELF-INSURANCE The undersigned officer of the City of Lubbock, Texas, a Texas home rule municipality, hereby certifies that the City of Lubbock is self -insured for workers' compensation, auto liability, and general liability in accordance with the laws of the State of Texas and that the current balance of the self-insurance fund is $4,529,015.00. The existing cash asset balance is $10,547,008.00 as of the date stated below. Leisa Hutcheson Date: September 30, 2001 Risk Management Coordinator INSURANCE COVERAGE REQUIREMENTS LESSOR: KOCH FINANCIAL CORPORATION LESSEE: Lubbock, City of 1. In accordance with Section 17 of the Agreement, we have instructed the insurance agent named below: (Please fill in name, address and telephone number). LEISA HUTCHINSON Telephone: 8( 06) 775-2277 RISK MANAGEMENT COORDINATOR Fax: 8f 06)775-3316 PO BOX 2000 To issue: IUBBOCK TX 79457 a. All Risk Physical Damage Insurance on the leased equipment evidenced by a Certificate of Insurance and Long Form Loss Payable Clause naming Koch Financial Corporation and/or its assigns, as loss payee. Coverage Required: Full Replacement Value b. Public Liability Insurance evidenced by a Certificate of Insurance namingKoch Financial Corporation and/or its assigns as Additional Insured. Minimum Coverage Required: $500,000.00 per person; $500,000.00 aggregate bodily injury liability; $100,000.00 property damage liability OR 2. Pursuant to Section 17 of the Agreement, we are self -insured for all risk, physical damage, and public liability and will provide proof of such self-insurance in letter form together with a copy of the statute authorizing this form of insurance. 3. Proof of insurance coverage will be provided prior to the time the Equipment is delivered to us. LEASE PAYMENT INSTRUCTIONS Pursuant to the Master Equipment Lease/Purchase Agreement dated April 12, 2002 (the "Agreement'), Schedule of Property No. 1, dated April 12, 2002, between Koch Financial Corporation (the "Lessor") and Lubbock, City of (the "Lessee"), Lessee hereby acknowledges the obligations to make Rental Payments promptly when due, in accordance with Exhibit A -I to the Agreement. LESSEE NAME: INVOICE MAILING ADDRESS: Mail invoices to the attention of: TAX ID#: Phone! ) Fax Approval of Invoices required by: Phone Accounts Payable Contact: Phone Processing time for Invoices: Approval: Checks: Do you have a Purchase Order Number that you would like included on the invoice? No Yes PO# Do your Purchase order numbers change annually? No Yes Processing time for new purchase orders: LESSEE: Lubbock, City of By: Title: ANDY BURCHAM CASH & EBIT MANAGER Date: P.O. Sox 2000 Lubbock, Texas 79457 (806) 775-2167 • Fax (806) 775-2164 EXEMPTION CERTIFICATE Office of Purchasing (For use by United States, Territories, or political subdivisions thereof, or of the District of Columbia.) March 18, 2002 The undersigned hereby certifies that he is Purchasing Manager of the CITY OF LUBBOCK, TEXAS, and that he is authorized to execute this certificate and that the article or articles specified in the accompanying order or on the reverse side hereof, are purchased from KOCH FINANCIAL CORPORATION for the exclusive use of the CITY OF LUBBOCK, TEXAS, Municipality Tax Exempt No. I- 75-6000590-6. It is understood that the exemption from tax in the case of sales of articles under this exemption certificate to the United States, States, etc., is limited to the sale of articles purchased for their exclusive use, and it is agreed that if articles purchased tax-free under this exemption certificate are used otherwise or are sold to employees or others, such fact must be reported to the manufacturer of the article or articles covered by this certificate. It is also understood that the fraudulent use of this certificate to secure exemption will subject the undersigned and all guilty parties to a fine of not more than $10,000, or to imprisonment for not more than five years, or both, together with costs of prosecution. CITY OF LUBBOCK VICTOR KILMAN PURCHASING MANAGER rdf 8638-G information Return for Tax -Exempt Governmental Obligations (Rev. May 1999) ► Under Internal Revenue Code Section 149 (e) 1' See separate instructions Department of the Treasury Caution: Use Form 8038-GC if the issue price is under $100,000 Internal Revenue service 12862 OMB No. 1545-0720 1 Issuer's name - 2 Issuer's employer Identification I uhhnc:k ('itv of 1 i 5 kr'�)T-) if � 7� -mot, - ? 3 Number and street (or P. O. box if mail is not delivered to Street address) Room/suite 4 Report number 1625 13th St. 79401 PO Box 2000 G 2001- 10 5 City, town, or post office, state, and ZIP code 6 Date of Issue Lubbock, TX 79457 4/12/02 7 Name of issue 8 CUSIP number Schedule of Property No. 1 dated 4112102 to the Master Equipment Lease/Purchase Agreement dated 4112102 None 9 Name and title of office or le al re `resentative whom th IR may call 10 Telephone number of officer or legal representative 1-7S -- ZA type or Issue (cnecx appncame oox(es) ana enter the rssue price) see instructions ana attacn scneaule 11 12 13 14 15 16 17 18 19 20 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transportation . . . . . . . . . . . . . . . .. . . . . . . . .. .. . . . . . . . . . . . . . . . . . . . . . Public safety . . . . . . . . . . . . . . . .. . . . . . . . . . .. . . . . . . . . . . .. .. . . . . . . . . Environment (including sewage bonds) . . . . . . . . . . . . . . . .. . . . . . . . . . . . .. . . . . . Housing .................................................... Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ® Other. Describe (see instructions) ► Caterpillar Model 816F Landfill Compactor If obligations are TANs or RANs, check box If obligations are BANs, check box If obligations are in the form of a lease or installment sale, check box Lai 11 12 13 14 15 16 17 18 $ 303,252.00 Description of Obligations Com fete for the entire issue for which this form is being filed 7704/12/06 Final Maturity date (b) Issue Price ( c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield $ 303,252.00 $ n/a 4 years 3.627°/n JUBM Uses of Proceeds of Bonds Issue(including underwriters' discount 22 Proceeds used for accrued interest . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . . . .. . . . .. . 22 23 Issue Price of entire issue (Enter amount from line 21, column (b) . . . . . . . . . . . .. . . . . . . . . . . 23 24 Proceeds used for bond issuance costs (including underwriters' discount) . . . . . . . . . . . . . 24 25 Proceeds used for credit enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 26 Proceeds allocated to reasonably require reserve or replacement fund . . . . . . . . . . . . . . 26 27 Proceeds used to currently refund prior issues . . . . . . . . . . . . . . . . . . . ... . . . . . 27 28 Proceeds used to advance refund prior issues . . . . .. . . . . . . . . . . . . . . . . . . . . . 28 29 Total (add lines 24 through 28) .. .. 29 30 Nonrefundin proceeds of the issue (subtract line 29 from line 23 and enter amount here) ................. 30 IMP.= Description of Refunded Bonds (Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . . . . . . . . . . . . . . . . years 32 Enter the remaining weighted average maturity of the bonds to be advanced refunded . . . . . . . . . . . . . . . . . years 33 Enter the last date on which the refunded bonds will be called . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 34 Enter the dates(s) the refunded bonds were issued ll� 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 11� 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 39 40 If the issuer has designated the issue under section 265 (b)(3)(13)(i)(III) (smaller issuer exception), check box . .. . . . . . . . . . . .. . If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . If the issuer has identified a hedge, check box ................................................ Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct and complete. Please Sign Here oa ANDY BURCHAM r CASH & DEBIT Signature of Issu s authorized representative Dat Type or print name and title For Paperwork Reduction Act Notice, see page 2 of the Instructions. Cat. No. 63773S Form 8038-G (Rev. 5-99) CERTIFICATE OF SIGNATURE AUTHORITY OF LESSEE April 12, 2002, Koch Financial Corporation 17767 North Perimeter Drive Scottsdale, Arizona 85255 RE: Master Equipment Lease/Purchase Agreement dated April 12, 2002, ("Agreement'), by and between Lubbock, City of (" Lessee') and Koch Financial Corporation, C Lessor'l. Dear Koch Financial Corporation, I, the undersigned, do hereby certify (i) that the officer of Lessee Windy S i t t o n , who executed the foregoing Agreement on behalf of Lessee and whose genuine signature appears thereon, is the duly qualified and acting officer of Lessee as stated beneath his or her signature and has been authorized to execute the foregoing Agreement on behalf of Lessee, and (ii) that the budget year of Lessee is from Oct . 1 , 2001 to Sept . 20 , 2002 DIRECTOR The Certificate of Signature Authority of Lessee should be executed by an authorized individual confirming the ;ecutioner of the remaining documents is authorized. This document cannot be signed by the person signing the :ase documents. Resolution No. 2002—RO123 K,GKGCH KOCH FINANCIAL CORPORATION PLEASE FORWARD TO YOUR ATTORNEY To: Attorney for Lubbock, City of, as Lessee Re: Exhibit C, Opinion of Counsel, to Schedule of Property No. 1, dated April 12, 2002, to Master Equipment Lease/Purchase Agreement dated as of April 12, 2002, between Koch Financial Corporation, as Lessor, and Lubbock, City of, as Lessee. To Whom It May Concern: Attached is our standard Opinion of Counsel. Please review the representations and qualifications, print the letter on your firm letterhead, and execute the letter. Please return the letter either directly to us at 17767 North Perimeter Drive, Scottsdale, Arizona 85255,or to the Lessee for delivery to us. If you cannot sign this letter in its current form, please contact our Contract Manager, at 480-4193622 or 480- 585-3789 to discuss any changes prior to making them. Please keep any requested changes to a minimum. Our receipt of an opinion that does not meet our requirements will slow down the funding process. We will not be able to fund the transaction contemplated by the above documents without the representations contained in the attached opinion letter. Thank you for your prompt attention to this matter. We look forward to completing this transaction. Sincerely, �—:-4 4� Elizabeth A. Santana Investment Coordinator Enclosures 17767 North Perimeter Drive ■ Suite 101 ■ Scottsdale, Arizona 85255 ■ 866/545-2327 FAX 480/419-3603 ■ Website www.kochfinancial.com P.O. BOX 2000 Lubbock, Texas 79457 (806) 775-2167 • Fax (806) 775-2164 EXHIBIT C Koch Financial Corporation 17767 North Perimeter Drive Scottsdale, AZ 85255 Office of Purchasing Re: Schedule of Property No. 1, dated April 12, 2002, to Master Equipment Lease/Purchase Agreement dated as of April 12, 2002, between Koch Financial Corporation, as Lessor, and Lubbock, City of, as Lessee. Ladies and Gentlemen: As legal counsel to Lubbock, City of, (the "Lessee"), I have examined (a) an executed counterpart of a certain Master Equipment Lease/Purchase Agreement, dated as of April 12, 2002, and Exhibits thereto by and between Koch Financial Corporation (the "Lessor") and Lubbock, City of, (the "Agreement") and an executed counterpart of Schedule of Property No. 1, dated April 12, 2002, by and between Lessor and Lessee (the "Schedule"), which, among other things, provides for the lease with option to purchase to the Lessee of certain property listed in the Schedule (the "Equipment"), (b) an executed counterpart of the ordinances or resolutions of Lessee which, among other things, authorize 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 opinion. 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". In rendering this opinion, we have assumed without inquiry: (a) The authenticity of all documents submitted to us as copies of the originals, and the conformity of such copies to the originals as they are finally executed and delivered by Lessee and Lessor; (b) That the Lease has been or will be duly authorized, executed and delivered by Lessor; (c) That the Lease constitutes valid, legal and binding obligations of Lessor enforceable against Lessor in accordance with its terms; and (d) That the Lease accurately describes and contains the mutual understandings of the parties, and that there are not oral or written statements or agreements that modify, amend or vary, or purport to modify, amend or vary, any of the terms thereof. Based on the foregoing I am of the following opinion: (1) Lessee is a public body corporate and politic, duly organized and existing under the laws of the State, or has a substantial amount of one of the following sovereign powers: (1) the power to tax, (b) the power of eminent domain, or (c) police power; (2) The name of the lessee contained in the Lease is the correct legal name of the Lessee; (3) Lessee has the requisite power and authority to lease and acquire the Equipment with an option to purchase and to execute and deliver the Lease and to perform its obligations under the Lease; (4) The Lease has been duly authorized, approved, executed, and delivered by and on behalf of Lessee and the Lease is a legal, valid and binding obligation of Lessee enforceable in accordance with its terms, subject to (i) all applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium and other similar laws; (ii) the qualification that certain waivers, restrictions and remedies provided for in this Lease, including without limitation certain indemnification obligations, may be wholly or partially unenforceable under TX law; and (iii) general principles of equity. (5) 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 laws; and (6) To the best of my 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. All of the opinions set forth above are also subject to the following qualifications, limitations and exceptions: (a) The opinions expressed herein are limited to matters governed by the laws of the State of TX. No opinion is expressed regarding the laws of any other jurisdiction. (b) The opinions expressed herein are based upon the law in effect on the date hereof, and we assume no obligation to revise or supplement them if the law is changed by legislative action, judicial decision or otherwise. All capitalized terms herein shall have the same meanings as in the Lease unless otherwise provided herein. Lessor, its successors and assigns, and any counsel rending an opinion on the tax-exempt status of the interest components of the Rental Payments, are entitled to rely on this opinion. Printed Name 1 ld / )/' " ""` 61e' % I VI_ Lt- J Signature /� A--