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HomeMy WebLinkAboutRes1988-042 . . . Sponsored by: Schaefermeyer CITY OF SEWARD, ALASKA RESOLUTION NO. 88-042 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE EXECUTION OF AN EQUIPMENT LEASE/PURCHASE AGREEMENT BY AND BETWEEN THE CITY AND RAINIER BANK ALASKA, N.A.; AND PROVIDING FOR RELATED MATTERS WHEREAS, the city of Seward, Alaska (the "City"), is a home rule city and under Section 11 of Article X of the Alaska Constitution may exercise all legislative power not prohibited by law or by the Charter of the City, and it has been determined that the matters set forth in this Resolu- tion are not prohibited by law or the Charter; and WHEREAS, the City desires to lease certain equipment, described in Exhibit A hereto (the "Equipment") from Rainier Bank Alaska, N.A. (the "Bank"), and the Bank desires to lease the Equipment to the City; and WHEREAS, the City considers that the acquisition and leasing of the Equipment from the Bank is in the best interest, and will promote the public purposes, of the City; and WHEREAS, there have been presented to the City the form of an Equipment Lease/Purchase Agreement (the "Agreement") which the City proposes to enter into in connection with the leasing of the Equipment; and WHEREAS, it appears that the Agreement, which now is before the City, is in appropriate form and is an appropri- ate instrument for the purposes intended; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The leasing by the City of the Equipment from the Bank under the Agreement is hereby approved. The aggregate principal component of rent payable under the Agreement shall not exceed $202,132, and said amount shall bear interest at a rate per annum not exceeding 8.08%. Section 2. The form and content of the Agreement be and the same hereby are in all respects authorized, approved and confirmed and the Mayor, Manager or Deputy City Manager be and each hereby is authorized, empowered and directed to execute and deliver said document to the counterparty for and on behalf of the City in substantially the form and -1- . . . CITY OF SEWARD, ALASKA RESOLUTION NO. 88-042 content now before this meeting but with such changes, modifications, additions and deletions therein as shall to them seem necessary, desirable and appropriate, the exe- cution thereof to constitute conclusive evidence of the approval of any and all changes, modifications, additions or deletions therein from the form and content of the said document now before this meeting, and that, from and after the execution and delivery of the said document, the Mayor, Manager, Deputy City Manager and the Clerk of the City are hereby authorized, empowered and directed to do all such acts and things and to execute all documents as may be necessary to carry out and comply with the provisions of the document as executed. Section 3. The Mayor, Manager, Deputy City Manager and the Clerk of the City or any other person authorized by the City be and each hereby is authorized to execute and deliver for and on behalf of the City any and all additional certif- icates, documents, opinions or other papers and perform all other acts as they may deem necessary or appropriate in order to implement and carry out the intent and purposes of this Resolution. Section 4. The City covenants that it will not use any of the proceeds of the Agreement in such manner, or take or omit to take any other action in such manner, as to impair the exemption of the interest component of rent payable under the Agreement from federal income taxation. The Agreement is hereby designated as a "qualified tax exempt obligation" in accordance with Section 265 (b) (3) of the Internal Revenue Code of 1986 (the "Code"). The City further covenants that no part of the proceeds of the Agreement or any other funds of the City shall at any time be used directly or indirectly to acquire securities or obligations, the acquisition of which would cause the Agreement to be or become an "arbitrage bond" as defined in Section 148 of the Code. The City shall not permit any of the proceeds of the Agreement, or any products purchased wi th such proceeds, to be used in any manner that would cause the Agreement to constitute a "private activity bond" within the meaning of Section 141 of the Code. Section 5. The provisions of this Resolution are hereby declared to be separable and if any section, phrase or provision shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions. Section 6. Upon adoption of this Resolution, the Clerk of the City shall cause a true copy of same to be posted on -2- . . . CITY OF SEWARD, ALASKA RESOLUTION NO. 88-042 the City Hall bulletin board, as provided in Seward City Code Section 2-70(d). Section 7. This Resolution shall become effective upon passage and approval in accordance with Seward City Code Section 2-73 (c) . PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, this ~ day of April , 19 88 AYES: NOES: ABSENT: ABSTAIN: ATTEST: THE CITY OF SEWARD, ALASKA ~C:~ HARR . GIESELER, MAYOR DUNHAM, GIESELER, HILTON, NOLL, O'BRIEN & SIMUTIS NONE MEEHAN NONE APPROVED AS TO FORM: HUGHES, THORSNESS, GANTZ, POWELL & BRUNDIN, Attorneys for the City of Seward, AK (City Seal) 7~J flI~ Fred B. Arvidson City Attorney -3- . EQUIPMENT LEASE/PURCHASE AGREEMENT . This Equipment Lease/Purchase Agreement dated as of the 1st day of April, 1988, is entered into between Rainier Bank Alaska, N.A, ("Lessor") and the City of Seward, Alaska ("Lessee"), a home rule municipal corporation organ- ized and existing under the laws of the State of Alaska, WIT N E SSE T H: WHEREAS, Lessor desires to lease the Equipment, as hereinafter defined, to Lessee, and Lessee desires to lease the Equipment from Lessor subject to the terms and conditions of and for the purposes set forth in this Lease; and WHEREAS, Lessee is authorized under the Constitution and laws of the State of Alaska to enter into this Lease for the purposes set forth herein; NOW THEREFORE, for and in consideration of the premises hereinafter contained, the parties hereby agree as fo11ows: ARTICLE I Covenants of Lessee Lessee represents, covenants and warrants for the benefit of Lessor and its assigns as follows: . . A. Lessee is a home rule city duly organized and existing under the Constitution and laws of the state of Alaska. B. Lessee is authorized under the Constitution and laws of the State of Alaska and under the charter and ordinances of Lessee to enter into this Lease and the transactions contemplated hereby, and it intends to perform all of its obligations hereunder. C. Lessee has been duly authorized to execute and deliver this Lease and all requirements have been met and procedures have occurred in order to ensure the validity of . this Lease. D. Lessee will make no use of the proceeds of this Lease which wil1 cause this Lease to be "arbitrage bonds" subject to Federal income taxation by reason of Section 148 of the Internal Revenue Code of 1986 (the "Code"). To that end, so long as this Lease is outstanding, the Lessee, with respect to the proceeds of this Lease, shall comply with all requirements of said Section 148 and of all regulations of the United States Department of the Treasury applicable thereto, Lessee will not permit any of the proceeds of this Lease to be used in any manner that would cause the Lease to become a "private activity bond" within the meaning of the Code, The Lease is hereby . designated as a "qualified tax exempt obligation" in mUIPMENT LEASE/PURCHASE AGREEMENT Page 2 A10251FMS accordance with Section 265(b)(3) of the Code. Lessee does hereby represent and warrant that it does not anticipate the issuance of more than $10,000,000 in aggregate principal amount of qualified tax exempt obligations in the year 1988 as such obligations are defined by Section 265(b)(3) of the Code. ARTICLE II Definitions The following terms will have the meanings indicated below unless the context clearly requires otherwise: A. "Corporate Tax Rate" shal1 mean the highest marginal rate at which Federal Corporate Income Taxes are payable by Lessor. B. "Emergency" means a situation requiring action necessary for the immediate preservation of the public peace, health, safety or general welfare, C, "Equipment" means the property which is the subject of this Lease, identified in schedules attached to this Lease from time to time, D. "Lease" means this Equipment Lease/Purchase Agreement, including the schedules attached hereto, E. "Lessee" means the City of Seward, F. "Lessor" means (1) Rainier Bank Alaska, N.A., ~UIPMENT LEASE/PURCHASE AGREEMENT Page 3 A10251FMS . acting as Lessor hereunder, and (2) any surviving, resulting or transferee corporation or an assignee of all or any portion of Lessor's interest under this Lease, G. "Option Purchase Price" means the total unpaid principal balance with respect to an item of Equipment under this Lease plus accrued interest on that principal balance to the date of purchase, calculated under Article VII. H, "Principal Amount" means the portion of the Project Cost to be repaid under this Lease, I, "Project Cost" means the contract price for an item of Equipment to be paid to a Vendor or Vendors in . accordance with the purchase orders or contracts therefor, any additional amount due any Vendor by reason of change orders thereto approved by Lessor; and administrative, engineering, legal, financial and other costs incurred by Lessor or Lessee in connection with the acquisition, installation, delivery and financing of that item of Equipment. J. "Rental Payments" mean the amounts payable by Lessee under this Lease during the Lease term in considera- tion of the right of Lessee to use the Equipment during the then current portion of the Lease term, Rental Payments shall be payable by Lessee to Lessor or its assignee in the amounts and at the times during the Lease term set forth in . Article VII of this Lease. EQUIPMENT LEASE/PURCHASE AGREEMENT Page 4 Al0251FMS . K, "Vendor" with respect to an item of Equipment means the manufacturer of 'that item of Equipment and any agent or dealer of the manufacturer, or any other person or entity from whom Lessor or Lessee purchased or is purchasing that item of Equipment. ARTICLE I II Equipment Acquisition Section 3,01 Cn~di t Advances. Subj ect to the terms and conditions hereof, Lessor agrees to make available, from time to time, for Lessee's use to acquire . Equipment under this Lease and upon the written request of Lessee in accordance with Section 3.02, advances in an aggregate amount which shall not exceed $202,132.00; provided that no such advances shall be made after the earliest of (i) August 1, 1988; (ii) the occurrence of an Event of Default; and (iii) the occurrence of an event which but for the passage of time or the giving of notice, or both, would constitute an Event of Default. Section 3.02 Acquisition of the Equipment, Upon receipt of a request for an advance from the Lessee (i) identifying in a manner satisfactory to Lessor one or more items of Equipment; and (ii) stating the Project Cost that Lessee expects to pay with respect to that item or items of . Equipment; Lessor, subject to the limit on the aggregate mUIPMENT LEASE/PURCHI>.SE AGREEMENT Page 5 A10251FMS . amount of advances in Section 3.01, shall purchase the Equipment from Vendors selected by Lessee, Lessee shall notify Lessor in writing that the Equipment has been delivered and installed to its satisfaction. Lessor shall pay the Project Cost for the Equipment upon written certifi- cation by the Lessee in a form satisfactory to Lessor. Lessor shall pay the Project Cost directly to the payee specified in the certification by the Lessee, Section 3.03 Arnninistration of Contracts, Lessor hereby appoints Lessee as its agent to carry out all phases of any acquisition and installation of the Equipment. . Lessee will have full responsibility for preparing, administering, amending and enforcing all contracts for the acquisition and installation of the Equipment and litigating or settling claims thereunder and will be entitled to all warranties, guaranties and indemnities provided under the contracts and by law. The failure of any Vendor to perform according to the terms of any contract or purchase order shall not affect the Lessee's obligation to make any Rental Payment in accordance with Section 7,04, Section 3,04 Lessor's Responsibilities Limited. Lessor shall be responsible for the payment of monies in accordance with this Article, and shall not be responsible for the authenticity or accuracy of the certifications, or . mQUIPMENT LEASE/PURCHASE AGREEMENT Page 6 AI0251FMS . the application of amounts paid pursuant to such certifica- tions by the persons or en.tities to which they are paid. ARTICLE IV Agreement to Lease Lessor hereby leases to Lessee, and Lessee leases from Lessor, the Equipment in accordance with this Lease. The Equipment is leased as an entire package, Lessee shall lease and pay for all of the Equipment whether or not it is used by Lessee. . ARTICLE V Lease Term Section 5.01 Commencement of Lease Term, The term of this Lease shall commence on the date of execution of this Lease. Section 5,02 Termination of Lease Term, This Lease will terminate upon the earliest of the following events: A, the expiration of the term of this Lease with respect to all items of Equipment under this Lease; B. damage to or the destruction of the Equipment as provided in Section 10.02; C. a default by Lessee and Lessor's election to . terminate this Lease under Article XII; EQUIPMENT LEASE/PURCHASE AGREEMENT Page 7 A10251FMS . D, the payment by Lessee of all Rental Payments authorized or required to be paid by Lessee hereunder; E, at the option of Lessee upon a breach of Section 6.01; F. the non-appropriation of funds as provided in Section 7,07; or G. payment of the Option Purchase Price with respect to all items of Equipment under this Lease. If this Lease is terminated as to part of the Equipment, this Lease shall remain in full force and effect as to the remaining Equipment. . Section 5.03 Length of Lease Term. The term of this Lease with respect to an item of Equipment under this Lease shall be five (5) years. ARTICLE VI Enioyment of Equipment Section 6.01 Use Covenant. During the Lease term and for so 10ng as Lessee is not in default under this Lease, Lessor hereby covenants to provide Lessee with quiet use and enjoyment of the Equipment. Section 6,02 Lessor's Inspection. At all reasonable times during business hours, Lessor or its nominees may enter into and upon the property of Lessee to . inspect the Equipment, EQUIPMENT LEASE/PURCHASE AGREEMENT Page 8 A10251FMS . ARTICLE VII Rental Payment and Purchase Option Section 7.01 Rental Payments to Constitute a Current Expense of Lessee. Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments hereunder 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 constitute a pledge of the general tax revenues, funds or . monies of Lessee. Section 7,02 Payment of Rental Payments. A. Lessee shall pay Rental Payments monthly in arrears, and each Rental Payment for a calendar month shall be due and payable no later than the first day of the month, with the first Rental Payment due on the first day of the month immediately following the first month in which an advance is made hereunder. Rental Payments shall be paid solely from legally available funds of the Lessee in lawful money of the United States to Lessor or its assignee at such location as may be designated in writing to Lessee from time to time by Lessor, B. Each Rental Payment shall consist of . principal and interest cO~Jonents, The principal component EQUIPMENT LEASE/PURCHASE AGREEMENT Page 9 AI0251FMS . of each Rental Payment shall be the aggregate of the monthly amounts necessary to amortize the amount due with respect to each item of Equipment over the term of this Lease with respect to that item of Equipment in approximately equal monthly payments. The interest component of each Rental Payment shall be equal to the interest on unpaid principal at the applicable interest rate. Interest shall accrue on unpaid principal at a rate of 8.08% per annum, Interest shall be subject to adjustment as provided in Section 7.03. Section 7.03 Adiustment of Interest. Lessee covenants and agrees that if at any time (whether before or . after maturity, redemption or other payment or prepayment of this Lease or any sale or other transfer of this Lease to any other person, firm or corporation), as a result of a change in the Internal Revenue Code of 1986, as amended (the "Code") or any administrative or judicial interpretation thereof, (a) any payment of interest or principal or any amount in respect of or measured in whole or in part by reference to interest on or principal of this Lease or any amount of interest on indebtedness attributable or deemed to be attributable directly or indirectly to the purchase or carrying of this Lease, is, in the opinion of counsel for Lessor, subject to or affected by a preference tax, an excess profits tax or other Federal tax which changes the . basis of taxation of the payments of interest on or EQUIPMENT LEASE/PURCHASE AGREEMENT Page 10 AI0251FMS . principal of this Lease, or interest on indebtedness attributable or deemed to be attributable directly or indirectly to the purchase or carrying of this Lease, to Lessor, or affects any method used or calculation involved in determining any Federal tax, or (b) the deductibility or other tax treatment of any amount attributable or deemed to be attributable, directly or indirectly, to the purchasing or carrying of this Lease is adversely affected, then, upon written notice to such effect from Lessor to Lessee, which notice shall set forth the date as of which any payment or amount may have become subject to such preference, excess . profits or other Federal tax or such deductibility or other tax treatment shall have been affected, the Lessee shall pay to Lessor additional interest which, after reduction by the amount of all taxes, if any, attributable to the inclusion of such additional interest in the gross income of Lessor under the laws of any Federal, state or local governmental or other taxing authority (computed on the assumption that Federal taxes are payable by Lessor at the Corporate Tax Rate (after taking into account deductions attributable to the imposition of state and local taxes) and that state and local taxes are payable by Lessor at the highest marginal statutory rates then applicable to banking corporations without allocation or apportionment to any other . jurisdiction) shall be equal to the amount of any such EQUIPMENT LEASE/PURCHASE AGREEMENT Page 11 A10251FMS . preference, excess profits or other Federal taxes and any interest, penalties and additions to tax which are payable by Lessor as a consequence of such change (computed on the assumption that Federal taxes are payable by Lessor at the Corporate Tax Rate) it being the intent and purpose of the parties hereto that the profit of Lessor with respect to the payment of interest to it on this Lease shall not be diminished by any such change in the Code or any administrative or judicial interpretation thereof (whether through or as a result of direct or indirect Federal taxation of the interest on or principal of this Lease, the . disallowance of a deduction or otherwise). Notwithstanding the foregoing provisions, no payment by Lessee shall be required in respect to a preference, excess profits or other Federal tax to which the foregoing provisions relate to the extent that such tax is imposed and computed without regard to whether interest on this Lease is or may be exempt from tax under the provisions of Section 103 of the Code, any other provision of law or any successor provisions thereto, Section 7.04 Rental Payments to be Unconditional. The obligation of Lessee to make the Rental Payments required under this Article VII and other sections hereof and to perform and observe the other covenants and . agreements contained herein shall be absolute and EQUIPMENT LEASE/PURCHASE AGREEMENT Page 12 A10251FMS . unconditional in all events, except as expressly provided under this Lease, Notwithstanding any dispute between Lessee and Lessor, any Vendor, or any other person, Lessee shall, so 10ng as Lessee's use of the Equipment is not disturbed by Lessor, make all Rental Payments when due and shall not withhold any Rental Payments pending final resolution of such dispute, nor shall Lessee assert any right of set-off or counter-claim against its obligation to make Rental Payments under this Lease, Lessee's obligation to make Rental Payments during the Lease Term shall not be abated through accident or unforseen circumstances, Lessee . agrees not to withhold or abate any portion of the payments required pursuant to this Lease by reason of any defects, malfunctions, breakdowns or infirmities of the Equipment. Section 7,05 Continuation of Lease by Lessee. Lessee intends to continue this Lease and to pay the Rental Payments hereunder, Lessee represents that legally available funds of an amount sufficient to make all Rental Payments during the Lease term with respect to each item of Equipment can be obtained. Section 7,06 Indemnification. Lessee shall indemnify, save and keep harmless Lessor and its assigns from and against any and all liability, obligations, penalties, losses, claims and damages whatsoever, regardless . of the cause thereof, and expenses in connection herewith, EQUIPMENT LEASE/PURCHASE AGREEMENT Page 13 A10251FMS . including, but not limited to counsel fees, costs and interest, arising out of or resulting from the execution or performance of this Lease, the ownership of any item of the Equipment by Lessor, or the acquisition, use, operation, condition, or purchase by Lessee of any item of the Equipment, resulting in damage to property or injury or death to any person. The indemnification arising under this Section shall continue in full force and effect notwithstanding the full payment of all obligations under this Lease or the termination of this Lease, Section 7,07 Non-appropriation. If sufficient . funds are not appropriated to make Rental Payments required under this Lease, and if Lessee has no funds available for Rental Payments from other sources, this Lease shall terminate and Lessee shall not be obligated to make Rental Payments under this Lease beyond the then current fiscal year for which funds have been appropriated, Lessor shall, upon the occurrence of such nonappropriation, have all rights and remedies to take possession of the Equipment. Lessee shall notify Lessor and its assignee in writing within seven (7) days after the failure of the City Council of Lessee to appropriate funds sufficient for the payment of the Rental Payments. Lessee has an immediate need for and expects to make immediate use of substantially all the . Equipment, which need is not temporary or expected to EQUIPMENT LEASE/PURCHASE AGREEMENT Page 14 AI0251FMS . diminish in the forseeable future; specifically, Lessee will not give priority or parity in the appropriation of funds for the acquisition of any property or services for purposes or functions which would replace those fulfilled by the Equipment. If the City Council fails to appropriate funds for Rental Payments under this Lease for an item of equipment, for the remainder of the Lease term for that item of Equipment Lessee shall not expend any funds for the purchase or use of equipment similar to that item of Equipment, other than for an Emergency, . Section 7.08 ~tion to Purchase, Lessee shall have the option to purchase the Equipment in whole or in part upon thirty (30) days written notice to Lessor by paying Lessor the Option Purchase Price with respect to the Equipment to be purchased. ARTICLE VIII Title to Equipment; Persona 1 Property; Security Interest; Transfer or Retirement of Equipment Section 8.01 Title to the Equipment. During the term of this Lease with respect to an item of Equipment, ownership of that item of Equipment and any and all . additions, repairs, replacements or modifications will be ~UIPMENT LEASE/PURCHASE AGREEMENT Page 15 AI0251FMS . Lessor's, except that solely for the mutual convenience of the parties, Equipment subject to registration of title may be registered in the name of Lessee, In the event of default as set forth in Article XII, Lessee will surrender possession of the Equipment to Lessor or its assignee, Upon payment of all the Rental Payments for an item of Equipment over the term of this Lease or upon payment of the Option Purchase Price for that item of Equipment, the title for said Equipment shall be transferred to Lessee and Lessor shall execute such documen'ts as are necessary to convey title to Lessee free and clear of all liens and encumbrances . created by or arising through Lessor, Section 8,02 Personal Property. The Equipment is, and shall at all times be and remain, personal property notwithstanding that the Equipment or any part thereof may be, or may hereafter become, in any manner affixed or attached to or imbedded in, or permanently resting upon, real property or any buildings thereon or any fixtures, or attached in any manner to what is permanent, by means of cement, plaster, nails, bolts, screws or otherwise, Section 8.03 Security Interest. A. To secure the performance of all of Lessee's obligations under this Lease, Lessee grants to Lessor and its assignees a security interest constituting a first lien . on Lessee's interest in the Equipment and in all additions, EQUIPMENT LEASE/PURCHASE AGREEMENT Page 16 A10251FMS . attachments, alterations and accessions to the Equipment and on any proceeds of the Equipment, The security interest shall cover all property which the Lessee acquires during the Lease term with respec.t to an item of Equipment to replace or substitute for that item of Equipment. B, Lessee shall execute any additional documents, including affidavits, notices and similar instruments, in a form satisfactory to Lessor, which Lessor deems necessary or appropriate to establish and maintain a security interest in the Equipment for Lessor or any assignee of Lessor, Section 8,04 Transfer or Retirement of Equipment. . Lessee shall not transfer any interest in any item of Equipment during the term of this Lease with respect to that Equipment without the written consent of Lessor, Lessee may retire an item of Equipmen't from service during the Lease term only if the current market value of: (1) the Equipment thereafter remaining in service, and (2) any other property of Lessee in which Lessor has accepted a security interest under this Lease, exceeds the Option Purchase Price for the Equipment thereafter remaining in service, . EQUIPMENT LEASE/PURCHASE AGREEMENT Page 17 A10251FMS . ARTICLE IX Maintenance; Taxes; Insurance and Other Charqes Section 9,01 Maintenance, Taxes, Other Expenses, Lessee shall keep and maintain the Equipment in good condition and working order, shall use, operate and maintain the Equipment in conformity with all laws and regulations concerning the Equipment's ownership, possession, use and maintenance, shall keep the Equipment free and clear of all liens and claims, shall pay all taxes and other charges related to the Equipment, shall pay all utility charges incurred in the use and maintenance of the Equipment, and . shall pay all costs and expenses of every kind occasioned by or arising out of the use and maintenance of the Equipment. If any taxes are assessed on the Equipment, Lessee promptly shall notify Lessor in writing of the assessment and provide proof of payment or protest under proper procedures not involving any danger of sale, forfeiture or loss of the Equipment. Section 9,02 Insurance, At its own expense, Lessee shall maintain policies of casualty, public liability and property damage insurance covering the Equipment, or if Lessee self insures similar property, demonstrate to the satisfaction of Lessor tha't the Equipment is covered by equivalent self insurance. The insurance shall be . sufficient to protect the full insurance value of the ~UIPMENT LEASE/PURCHASE AGREEMENT Page 18 Al0251FMS . Equipment, and to protect Lessor from liability in all events. Lessee shall provide Lessor with certificates evidencing the insurance coverage required by this Section, and provide Lessor with certificates evidencing a renewal of the insurance for each annual period of the Lease term with respect to any item of Equipment. Any insurance policy provided under this Section shall be written or endorsed to make losses payable to Lessee and Lessor as their respective interests may appear. The net proceeds of the insurance required in this Section shall be applied as provided in Sections 10.01 and 10.02. . Each insurance policy provided under this Section shall provide that the insurance company shall not cancel the policy or modify it materially except after giving ten days written notice to Lessor. ARTICLE X Damage, Destruction and Use of Net Proceeds Section 10,01 Damage or Destruction. If an item of Equipment or any portion thereof is destroyed or damaged by fire or other casualty during the Lease term with respect to that item of Equipment, Lessee and Lessor wil1 apply the net proceeds of any insurance claim to the prompt repair or restoration of that item of Equipment, Any balance of the . net proceeds remaining after payment for such work shall be EQUIPMENT LEASE/PURCHASE AqREEMENT Page 19 AI0251FMS . paid to Lessee. For purposes of Section 9.02 and this Article, the term "Net Proceeds" shall mean the amount remaining from the gross proceeds of any insurance claim after deducting all expenses, including costs and attorney's fees, incurred in the collection of such claim. Section 10.02 Insufficiency of Net Proceeds, If the Net Proceeds are insufficient to pay the full cost of repair or restoration under Section 10,01, Lessee shall either (a) complete the work and pay any cost in excess of the amount of the Net Proceeds, or (b) pay to Lessor the . amount of the Option Purchase Price for the affected Equipment, and upon such payment this Lease as to the affected Equipment shall terminate and Lessor shall release its interest in the Equipment to Lessee, No payment by Lessee under Section 10.02(a) shall relieve Lessee of its obligation to make Rental Payments in accordance with Article VII. The amount of Net Proceeds in excess of the Option Purchase Price paid under Section 10.02(b) may be retained by Lessee. Lessee's obligations under this Section are subject to the availability of funds lawfully appropriated therefor. . gQUIPMENT LEASE/PURCHASE AGREEMENT Page 20 A10251FMS 4 . ARTICLE XI Vendor's Warranties Lessor hereby appoints Lessee its agent and attorney-in-fact during the Lease term, so long as Lessee shall not be in default hereunder, to assert from time to time whatever claims and rights, including warranties of the Equipment, which Lessor may have against any Vendor of the Equipment, Lessee's sole remedy for the breach of such warranty, indemnification or representation shall be against the Vendor of the Equipment, and not against Lessor, Lessee acknowledges and agrees that the Equipment is of size, . design, and capacity selected by Lessee, that Lessor is neither a manufacturer nor a vendor of such Equipment, and that Lessor has not made, and does not hereby make, any representation, warranty, or covenant, express or implied, with respect to the merchantability, condition, quality, durability, design, operation, fitness for use, or suitability of the Equipment in any respect whatsoever or in connection with or for the purposes and uses of Lessee, or any other representation, warranty, or covenant of any kind or character, express or implied, with respect thereto, and Lessor shall not be obligated or liable for actual, incidental, consequential, or other damages of or to Lessee or any other person or entity arising out of or in . EQUIPMENT LEASE/PURCHASE AGREEMENT Page 21 AI0251FMS . . . connection with the use or performance of the Equipment and the maintenance thereof, ARTICLE XII Events of Default and Remedies Section 12.01 Events of Default Defined. The fo11owing shall be events of default under this Lease and the terms "Events of Default" and "Default" shall mean, whenever they are used in this Lease, anyone or more of the fo11owing events: A. Failure by Lessee to make any Rental Payment or other payment as required by this Lease. B. Failure by Lessee to observe and perform any covenant, condition or agr.:!ement on its part to be observed or performed, other than as referred to in Section l2.01(A), for a period of thirty (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, however, if the failure stated in the notice cannot be corrected within the applicable period, Lessor will not unreasonably withhold its consent to any extension of such time if corrective action is instituted by Lessee within the applicable period and diligently pursued until the default is corrected, EQUIPMENT LEASE/PURCHASE AGREEMENT Page 22 A10251FMS . The foregoing provisions of this Section 12,01 are subject to the following limitation: if by reason of force ma;eure Lessee is unable in whole or in part to carry out its agreement other than the obligations on the part of Lessee contained in Article VII hereof, Lessee shall not be deemed in default during the continuance of such inability, The term "force ma;eure" as used herein shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States or of the State of Alaska or any of their . departments, agencies or officials, or any civil or military authority; insurrections, riots, landslides, earthquakes, fires, storms, droughts, floods, explosions, breakage or accident to machinery, transmission pipes or canals; or any other cause or event not reasonably within the control of Lessee. Section 12.02 Remedies on Default, Whenever any event of default referred to in Section 12,01 hereof shall have happened and be continuing, Lessor shall have the right at its option, without any further demand or notice, to take either or both of the following remedial steps: A, With or without terminating this Lease, retake possession of the Equipment and sell, lease or sublease the . Equipment for the account of Lessee, holding Lessee liable EQUIPMENT LEASE/PURCHASE AGREEMENT Page 23 A10251FMS . for the difference between (i) the rents and other amounts payable by Lessee hereunder and (ii) the purchase price, rent or other amounts paid by a purchaser, lessee or sublessee of the Equipment pursuant to such sale, lease or sublease. B, Take whatever action at law or in equity may appear necessary or desirable to enforce its rights as holder of a security interest in the Equipment. The remedies recited herein requiring the payment of money by Lessee are subject to the appropriation of funds therefor. . Section 12,03 No Remedy Exclusive, Each remedy of Lessor under this Lease shall be cumulative and in addition to every other remedy of Lessor under this Lease. A delay or omission to exercise any right or power accruing upon any default shall not impair any such right or power, or 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 XII, it shall not be necessary to give any notice, other than such notice as may be required in this Article XII, . ~UIPMENT LEASE/PURCHASE AGREEMENT Page 24 A10251FMS . ARTICLE XII I Miscellaneous Section 13.01 Notices, AIl notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by certified mail, postage prepaid, return receipt requested, to the parties at their respective places of business. Section 13,02 Bindinq Effect. This Lease shall inure to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns. Section 13,03 Severability. In the event any . provision of this Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provisions hereof. Section 13.04 Amendments, Cha!ill.~ and Modifications. This Lease may be amended by Lessor and Lessee in writing signed by both parties, Section 13.05 Execution in Counterparts, This Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 13.06 Applicable Law; Jurisdiction. This Lease shall be governed by and construed in accordance with . the laws of the State of Alaska, Any civil action brought EQUIPMENT LEASE/PURCHASE AGREEMENT Page 25 A10251FMS . by any party under this Lease shall be commenced and maintained in the Superior Court, Third Judicial District, State of Alaska, at Anchorage. Section 13,07 Captions, The captions or headings in this Lease are for convenience only and no way define, limit or describe the scope or intent of any provisions or sections of this Lease, Section 13,08 Assignment, The interest of Lessor in this Lease shall be recorded on the books of Lessee. Lessor may assign its interest under this Lease, but the assignment shall not be effective until Lessee is notified . of the name and address of the assignee and the assignment is recorded on the books of Lessee. IN WITNESS WHEREOF, the parties have executed this contract as of the date first written above. CITY OF SEWARD RAINIER BANK ALASKA, N,A. Darryl Schaefermeyer City Manager Marcey Rawitscher Assistant Vice President A T T EST: Linda S. Murphy City Clerk . EQUIPMENT LEASE/PURCHASE AGREEMENT Page 26 A10251FMS