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2006-314ORDINANCE NO. oo ` AN ORDINANCE AUTHORIZING THE FINANCING OF FLEET VEHICLES AND EQUIPMENT FOR VARIOUS CITY DEPARTMENTS THROUGH A LEASE PURCHASE FINANCING AGREEMENT; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (FILE 3608-THIRD PARTY LEASE PURCHASE OF VEHICLES AND EQUIPMENT, APPROXIMATE FINANCE CHARGES OF $188,608.70 FOR 60 MONTHS AND $108,352.30 FOR 120 MONTHS FOR TOTAL FINANCE CHARGES OF $296,961). WHEREAS, In the 2006-2007 budget process the City Council authorized the purchase of various trucks and equipment listed on Exhibit A from the to be determined lowest responsible bidders pursuant to Chapter 252 of the Texas Local Government Code in the estimated principal sum of $2,160,569; and WHEREAS, Section 271.005 of the Local Government Code authorizes the City council, in its discretion, to contract for the financing of personal property; and WHEREAS, the City Council finds that the herein authorized financing of the budgeted equipment through a lease purchase agreement with Chase Equipment Leasing Inc. is appropriate and in the public interest; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be expended for the herein authorized lease purchase agreement; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION 1. The City Council hereby authorizes a lease purchase agreement to finance the acquisition of trucks and equipment listed on Exhibit A with Chase Equipment Leasing Inc., said agreement providing for a financed amount of $2,457,530 having five annual payments of approximately $188,608.70 with an effective rate of not to exceed 3.66% over 5 years and ten annual payments of approximately $108,352.30 with an effective rate of not to exceed 3.86% over ten years. SECTION 2. The City Manager, or the Purchasing Agent as his designee, is authorized to enter into a lease purchase agreement on behalf of the City in accordance with the terms set forth in Section I and to expend the funds provided for in Section 1. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the a ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CI ATTORNEY BY: day of 12006. APE 0YRMcN0aMAY0-R- Page 2 of 2 Exhibit A Equipment Listin Estimated Equipment uant. Purchase Price Total 60 Month Financing Roll Off Refuse Truck 2 each $140,000 $280,000 Side Load Refuse Truck I each $170,000 $170,000 Front Load Refuse Truck 2 each $187,500 $375,000 Haul Truck (Tractor) I each i $139,320 $139,320 100 Yd Transfer Trailer 3 each $ 83,640 $250,920 14 Yd Dump Truck I each $ 98,000 $ 98,000 3/4 Ton Pick Up 1 each $ 21,719 $ 21,719 Utility Vehicle With I each $ 12,000 $ 12,000 Hydraulic Dump 72" Recycler 1 each $ 19,059 $ 19,059 61" Mower I each $ 10,530 $ 10,530 One Ton Truck Trencher 1 each $ 50,000 $ 50,000 Tractor With 15' Mower 1 each $ 83,740 $ 83,740 Rotary Mower 16' 1 each $ 77,000 $ 77,000 Utility Vehicle With Lift 1 each $ 12,000 $ 12,000 3/4 Ton Pick Up 1 each $ 25,000 $ 25,000 Water Truck 1 each $ 75,000 $ 75,000 Exhibit.A Estimated Equipment uant. Purchase Price Total 120 Month Financing Sheepfoot Roller 1 each $ 145,000 $ 145,000 Asphalt Pulvi-Mixer 1 each $ 338,000 $ 338,000 Total Approximate Cost $ 2,182,288 do) CHASE CHASE EQUIPMENT LEASING INC. Mail Code OH1-1085 1111 Polaris Parkway, Suite 3-A Columbus, OH 43240-2050 City of Denton Attn: Tom D. Shaw, Purchasing Agent 215 East McKinney Street Denton, TX 76201 RE: New Account # 1000130102 Dear Mr. Shaw: December 7, 2006 Thank you for the opportunity to work with you on the equipment lease for the Heavy Roller and the Pulvi-Mixer. We appreciate your business and welcome the opportunity to work with you. I am sorry the funding of this schedule did not flow as smoothly as previous transactions. I hope to redeem myself on future schedules with the City. Enclosed for your records are the transaction document sets. Your payments will be due Annually on the 17th of the month, with your next payment due on November 17. 2007. You will be receiving an invoice for the above referenced account at: 901-B Texas Street ATTN: Tom Shaw, REF FILE 3155 Denton, TX 76209 This letter is intended to serve as a confirmation and does not modify or amend our agreement. If we can be of assistance, please call our Customer Service Department at 800-879-9182 from 8:00 a.m. through 5:00 p.m. EST Monday through Friday. We will be happy to help you. Sincerely, .7M . Heubach '-'Doaumentation Specialist ,xEnclosures tv m C) < i :,l Lu 1, ~ h JPMorgan Chase Bank, N.A. CHASE CHASE EQUIPMENT LEASING INC. Mail Code OH1-1085 1111 Polaris Parkway, Suite 3-A Columbus, OH 43240-2050 City of Denton Attn: Tom D. Shaw, Purchasing Agent 215 East McKinney Street Denton, TX 76201 RE: New Account # 1000130103 Dear Mr. Shaw: December 7, 2006 Thank you for the opportunity to work with you on the equipment lease for the Various Titled Vehicles and Assorted Equipment including a Mower and Trencher. We appreciate your business and welcome the opportunity to work with you. I am sorry the funding of this schedule did not flow as smoothly as it should have. I hope to redeem myself in the future. Enclosed for your records are the transaction document sets. Your payments will be due Annually on the 17th of the month, with your next payment due on November 17, 2007. You will be receiving an invoice for the above referenced account at: 901-B Texas Street ATTN: Tom Shaw, REF FILE 3155 Denton, TX 76209 This letter is intended to serve as a confirmation and does not modify or amend our agreement. If we can be of assistance, please call our Customer Service Department at 800-879-9182 from 8:00 a.m. through 5:00 p.m. EST Monday through Friday. We will be happy to help you. Sincerely, Mary bath Documentation Specialist Enclosures 3 if i "10 q j 12 rz .i.f s N]'l v t tl W SIVic13iVH JPMorgan Chase Bank, N.A. ESCROW AGREEMENT Dated as of 11117512006 (Gross Fund-Earnings to Lessee) This Escrow Agreement together with all addenda, riders and attachments hereto, as the same may from time to time be amended, modified or supplemented ("Agreement") is made and entered as of the date set forth above by and among the Escrow Agent identified below ("Escrow Agent"), the Lessee identified below ("Lessee") and CHASE EQUIPMENT LEASING INC. ("Lessor'). Escrow Agent: The Bank of New York Trust Company, N. A. Lessee: City of Denton For good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Recitals. 1.01 Lessor and Lessee have entered into the Lease identified below whereby Lessor has agreed to lease and sell certain property described therein (the "Equipment") to Lessee, and Lessee has agreed to lease and purchase the Equipment from Lessor, in the manner and on the terms set forth in the Lease. 1.02 "Lease" means, collectively, the Lease Schedule identified below and the Master Lease-Purchase Agreement identified in said Lease Schedule (to the extent that it relates to said Lease Schedule) together with all exhibits, schedules, addenda, riders and attachments thereto. Lease Schedule No. 1000130102 1.03 LESSOR'S DEPOSIT: $ 483,000.00. Lessor shall pay or cause to be paid to the Escrow Agent the amount of the Lessor's Deposit which will be credited to the Equipment Acquisition Fund established in Section 2 hereof. To the extent that the Purchase Price of the Equipment exceeds the Lessor's Deposit, Lessee shall either deposit with Escrow Agent funds which will be credited to the Equipment Acquisition Fund and used to pay the balance of the Purchase Price of the Equipment or Lessee shall pay such balance directly to the Suppliers. 1.04 FUNDING EXPIRATION DATE: 05/17/2008. Lessee and Lessor agree that all Equipment should be delivered and installed, and all funds disbursed from the Equipment Acquisition Fund, no later than the above Funding Expiration Date. 1.05 Under the Lease, Lessee will cause each item of Equipment to be ordered from the applicable Suppliers. Lessee shall furnish to Lessor as soon as available, a copy of the purchase orders or purchase contracts for all Equipment ordered pursuant to the Lease, showing the Supplier, the Purchase Price and the estimated delivery dates. 1.06 Subject to such control by Lessee and Lessor as is provided herein, Lessor and Lessee agree to employ the Escrow Agent to receive, hold, invest and disburse the moneys to be paid to the Escrow Agent as described in Section 1.03, all as hereinafter provided. The Escrow Agent shall not be obligated to assume or perform any obligation of Lessee or Lessor under the Lease or of any Supplier with respect to any Equipment by reason of anything contained in this Agreement. Any funds in the Equipment Acquisition Fund not needed to pay the Purchase Price of Equipment will be paid to Lessor or Lessee, all as hereinafter provided. 1.07 This Agreement is not intended to alter or change in any way the rights and obligations of Lessor and Lessee under the Lease, but is entirely supplemental thereto. 1.08 Each of the parties hereto has authority to enter into this Agreement, and has taken all actions necessary to authorize the execution of this Agreement by the officers whose signatures are affixed hereto.. Section 2. Equipment Acquisition Fund. 2.01 The Escrow Agent shall establish a special escrow fund designated as the Equipment Acquisition Fund (the "Equipment Acquisition Fund"), shall keep such fund separate and apart from all other funds and money held by it, and shall administer such fund as provided in this Agreement. 2.02 The Lessor's Deposit and any funds deposited by Lessee under Section 1.03 hereof shall be credited to the Equipment Acquisition Fund which shall be used to pay the balance of the Purchase Price of each item of Equipment subject to the Lease. The Escrow Agent shall pay to the Suppliers of the Equipment the payment amounts then due and payable - with respect thereto upon receipt of a Receipt Certificate/Payment Request executed by Lessor which specifies each Page 1 Supplier and its address and the applicable portion of the Purchase Price of the items of Equipment to be paid. As between Lessee and Lessor only, Lessee agrees that it will submit to Lessor for Lessors signature a Receipt Certificate/Payment Request that has been executed by Lessee together with (a) the Suppliers' invoices specifying the applicable portion of the Purchase Price of the items of Equipment described in said Receipt Certificate, (b) if the item of Equipment is a titled vehicle, a copy of the Manufacturer's Statement of Origin (MSO) covering such item showing Lessor as first and sole lienholder, and (c) any other documents required by the Lease, and Lessee agrees that Lessor shall not be obligated to execute any such Receipt Certificate until all of the foregoing have been submitted to Lessor. 2.03 If Lessor delivers to the Escrow Agent written notice of the occurrence of an event of default under the Lease or of a termination of the Lease due to a non-appropriation event or non-renewal event under the Lease, then the Escrow Agent shall immediately remit to Lessor the remaining balance of the Equipment Acquisition Fund. 2.04 Upon the Escrow Agent's receipt of a Full Funding Notice, the Escrow Agent shall apply the balance remaining in the. Equipment Acquisition Fund: first, to all reasonable fees and expenses incurred. by the Escrow Agent in connection herewith as evidenced by its statement forwarded to Lessee and Lessor, and second, to Lessor to be applied by Lessor for benefit of Lessee either: (a) toward the principal portion of the Rent Payment next coming due under the Lease; or (b) toward a partial prepayment of the principal amount remaining due under the Lease and thereupon Lessor shall prepare and deliver to Lessee a revised Payment Schedule reflecting such partial prepayment of principal. - "Full Funding Notice" means the Final Receipt Certificate/Payment Request which confirms that all Equipment covered by the Lease has been delivered to and accepted by Lessee under the Lease and that the full amount of the Lessor's Deposit has been paid to the applicable Suppliers. 2.05 Upon the Funding Expiration Date stated in Section 1.04 above, the Escrow Agent shall apply the balance of the Lessor's Deposit remaining in the Equipment Acquisition Fund: first, to all reasonable fees and expenses incurred by the Escrow Agent in connection herewith as evidenced by its statement forwarded to Lessee and Lessor, and second to Lessor to be applied by Lessor for benefit of Lessee either: (a) toward the principal portion of the Rent Payment next coming due under the Lease; or (b) toward a partial prepayment of the principal amount remaining due under the Lease and thereupon Lessor shall prepare and deliver to Lessee a revised Payment Schedule reflecting such partial prepayment of principal. - Upon the Funding Expiration Date stated in Section 1.04 above, the Escrow Agent shall apply the interest earnings on the Lessor's Deposit as set forth in Section 2.04 above. 2.06 The Escrow Agent shall not be responsible for the sufficiency of the moneys credited to the Equipment Acquisition Fund to make the payments herein required. Section 3. Money in Equipment Acquisitions Fund: Investment. 3.01 The money and investments held by the Escrow Agent under this Agreement are irrevocably held in trust for the benefit of Lessee and Lessor, and such money, together with any income or interest earned thereon, shall be expended only as provided in this Agreement, and shall not be subject to levy or attachment, or to any security interest or lien, by or for the benefit of any creditor of either Lessee or Lessor; provided, that the money and investments held by the Escrow Agent under this Agreement shall be subject to the security interests provided in Sections 3.07 and 4.03 hereof. 3.02 Money held by the Escrow Agent hereunder shall be invested and reinvested by the Escrow Agent at the written direction of Lessee in Qualified Investments (as defined below). Such investments shall be registered in the name of the Escrow Agent and held by the Escrow Agent. The Escrow Agent may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section. Such investments and reinvestments shall be made giving consideration for the time at which funds are required to be available. No investment shall be made that would cause the Agreement to be deemed an "arbitrage bond" within the meaning of Section 148(a) of the Internal Revenue Code of 1986, as amended. 3.03 The Escrow Agent shall have no discretion whatsoever with respect to the management, disposition or investment of the Escrow Account and is not a trustee or fiduciary to Lessee. Lessee acknowledges and agrees that all investments made pursuant to this section shall be for the account and risk of Lessee and any losses associated with investments shall be borne solely by Lessee. Escrow Agent shall from time to time invest and reinvest the funds held in the Escrow Account, as and when instructed by Lessee, in writing, in any one or more of the following (hereinafter, "Qualified Page 2 Investments"): (a) obligations of the United States of America or any agency, created thereby; (b) general obligations of any State of the United States of America; (c) general obligations of any political subdivision of a State of the United States of America, if such obligations are rated by at least two recognized rating services as at least AA; (d) certificates of deposit of any national bank or banks (including, if applicable, Escrow Agent or an affiliate of Escrow Agent) insured by the Federal Deposit Insurance Corporation (FDIC) with a net worth in excess of $100,000,000 ("Acceptable Bank"); (e) obligations of State or Municipal Public Housing Authorities chartered by the United States of America and guaranteed by the United States of America; (f) demand interest bearing accounts of Escrow Agent or an affiliate of Escrow Agent if Escrow Agent or an affiliate of Escrow Agent is an Acceptable Bank; (g) money market funds whose assets are solely invested in obligations listed in (a) through (I) above, including repurchase agreements secured by such obligations and prime commercial paper, so long as the money market funds are rated in either of the two highest categories of any Rating Agency at the time of purchase, including, without limitation, the JPMorgan Funds, or any other mutual fund for which the Escrow Agent or an affiliate of the Escrow Agent serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (1) the Escrow Agent or an affiliate of the Escrow Agent receives fees from such funds for services rendered, (2) the Escrow Agent charges and collects fees for services rendered pursuant to the Lease or this Agreement, which fees are, separate from the fees received from such funds and (3) services performed for such funds and pursuant to this Agreement may at times duplicate those provided to such funds by the Escrow Agent or its affiliates; and (h) any other obligations approved in writing by Lessor. 3.04 If any of the above-described Qualified Investments are not legal investments of Lessee, then Lessee shall immediately notify Escrow Agent which of said Qualified Investments are not legal investments of Lessee, and shall provide Escrow Agent with direction to invest funds in accordance with Section 3.03. 3.05 The Escrow Agent shall, without further direction, sell such investments as and when required to make any payment from the Equipment Acquisition Fund. Any income received on such investments shall be credited to the Equipment Acquisition Fund. 3.06 The Escrow Agent shall furnish a monthly statement listing all investments to Lessor and to Lessee. The Escrow Agent shall not be responsible or liable for any loss suffered in connection with any investments of moneys made by it in accordance with this Section. 3.07 Lessee hereby grants Lessor a security interest in the money and investments held by the Escrow Agent under this Agreement as collateral security for the payment and performance of all of Lessee's obligations under the Lease, this Agreement and any agreement, contract or instrument related to the Lease or this Agreement. Lessee represents and warrants to Lessor that the money and investments held by the Escrow Agent under this Agreement are free and clear of any liens, security interests or encumbrances other than the security interests created under this Agreement. Escrow Agent hereby acknowledges that it holds the money and investments held by the Escrow Agent under this Agreement subject to such security interest created by Lessee as bailee for Lessor, provided, that Escrow Agent's security interest in such money and investments as created under Section 4.03 hereof shall be superior to Lessors security interest therein. Section 4. Escrow Agent's Authority: Indemnification. 4.01 The Escrow Agent may: act in reliance upon any writing, notice, certificate, instruction, instrument or signature which it, in good faith, believes to be genuine; assume the validity and accuracy of any statement or assertion contained in such a writing, notice, certificate, instruction or instrument; and assume that any person purporting to give any such writing, notice, certificate, instruction or instrument in connection with the provisions hereof has been duly authorized to do so. Except as expressly provided otherwise in this Agreement, the Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to forth of, the manner of execution of, or the validity, accuracy or authenticity of any writing, notice, certificate, instruction or instrument deposited with it, nor as to the identity, authority or right of any person executing the same. The Escrow Agent's duties hereunder (including, without limitation, its duties as to the safekeeping, investment and disbursement of moneys in the Equipment Acquisition Fund) shall be limited to those specifically provided herein. 4.02 Lessee and Lessor jointly and severally shall indemnify, defend and save harmless the Escrow Agent from any and all claims, liabilities, losses, damages, fines, penalties and expenses (including out-of pocket and incidental expenses and fees and expenses of in house or outside counsel) ("Losses") arising out of or in connection mAth (i) its execution and performance of this Agreement, except to the extent and that such Losses are due to the gross negligence or willful misconduct of the Escrow Agent, or (ii) its following any instructions or other directions from Lessee or the Lessor, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof. The provisions of this Section 4.02 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent for any reason. The indemnifications set forth herein are intended to and shall include the indemnification of all affected agents, directors, officers and employees of the Escrow Agent. In no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. Page 3 4.03 Lessee and Lessor hereby grant Escrow Agent a first priority security interest in the money and investments held by the Escrow Agent under this Agreement as collateral security for the costs and expenses of the foregoing of Section 4.02 and for any other expenses, costs, fees or charges of any character or nature which may be incurred by the Escrow Agent (including reasonable attorneys' fees and court costs) relating to any suit (interpleader or otherwise) or other dispute arising between Lessee and Lessor as to the correct interpretation of the Lease, this Agreement or any instructions given to the Escrow Agent hereunder, with the right of the Escrow Agent, regardless of the instructions aforesaid, to hold the said property until and unless said expenses, costs, fees and charges shall be fully paid. 4.04 If Lessee or Lessor disagree about the interpretation of the Lease or this Agreement, about their rights and obligations under the Lease or this Agreement, or about the propriety of any action contemplated by the Escrow Agent hereunder, then the Escrow Agent may, but shall not be required to, file an appropriate civil action to resolve the disagreement. Lessee and Lessor shall pay all costs, including reasonable attorneys' fees, in connection with such action. The Escrow Agent shall be fully protected in suspending all or any part of its activities under this Agreement until a final judgment in such action is received. 4.05 The Escrow Agent may consult with counsel of its own choice and shall have full and complete authorization and protection with the opinion of such counsel. The Escrow Agent shall otherwise not be liable for any mistakes of facts or errors of judgment, or for any acts or omissions of any kind unless caused by the Escrow Agent's gross negligence or willful misconduct. None of the provisions contained in this Agreement shall require the Escrow Agent to use or advance its own funds in the performance of any of its duties or the exercise of any of its fights or powers hereunder. Section 5. Change of Escrow Agent. 5.01 Upon agreement of the parties hereto, a national banking association or a state bank having capital (exclusive of borrowed capital) and surplus of at least $ 10,000,000.00, qualified as a depository of public funds, may be substituted to act as Escrow Agent under this Agreement. Such substitution shall not be deemed to affect the rights or obligations of the parties hereto. Upon any such substitution, the Escrow Agent agrees to assign to such substitute Escrow Agent all of its rights under this Agreement. 5.02 The Escrow Agent or any successor may at any time resign by giving mailed notice to Lessee and Lessor of its intention to resign and of the proposed date of resignation, which shall be a date not less than thirty (30) days after such notice is deposited in the United States mail with postage fully prepaid, unless an earlier resignation date and the appointment of a successor Escrow Agent has been approved by Lessee and Lessor. .5.03 The_Escrow Agent may appoint an agent to exercise any of the powers, rights or remedies granted to the Escrow Agent under this Agreement, to hold title to property or to take any other action which may be desirable or necessary hereunder. 5.04 Any corporation, association or other entity into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or otherwise transfer all or substantially all of its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger consolidation or other transfer to which it is a party, ipso facto, shall be and become successor escrow agent hereunder, vested with all other matters as was its predecessor, without the execution or filing of any instrument or any further act on the part of the parties hereto, notwithstanding anything herein to the contrary. Section 6. Administrative Provisions. 6.01 The Escrow Agent shall keep complete and accurate records of all money received and disbursed under this Agreement, which shall be available for inspection by Lessee or Lessor, or the agent of either of them, at any time during regular business hours. 6.02 All written notices to be given under this Agreement shall be given by mail to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other parties hereto in writing from time to time. Any such notice shall be deemed to have been received three (3) days after deposit in the United States mail, with postage fully prepaid. 6.03 This Agreement shall be construed and governed in accordance with the laws of the State of Lessee. 6.04 Any provision of this Agreement found to be prohibited by law shall be ineffective only to the extent of such prohibition, and shall not invalidate the remainder of this Agreement. 6.05 This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Specifically, the term "Lessor" as used herein means any person or entity to whom Lessor has assigned its Page 4 - right to receive Rent Payments under the Lease and any other payments due to Lessor hereunder from and after the date when a written notice of such assignment is filed with the Escrow Agent. 6.06 This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same Agreement. . 6.07 This Agreement shall terminate upon disbursement by the Escrow Agent of all money held by it hereunder. Section 7. Security Procedures. In the event funds transfer instructions are given (other than in writing at the time of executionof this Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on schedule t hereto ("Schedule t"), and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone numbers for callbacks may be changed only in a writing actually received and acknowledged by theEscrow Agent. The Escrow Agent and the beneficiary's bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the Lessee or Lessor to identify (I) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary's bank or an intermediary bank designated. The parties to this Escrow Agreement acknowledge that these security procedures are commercially reasonable. [The next page is the signature page.] Page 5 Section 8. Escrow Agent Fees. $750.00 ("Acceptance Fee"). As compensation for Escrow Agent's services hereunder, Lessee agrees to pay Escrow Agent the above Acceptance Fee; provided, that Escrow Agent will waive the Acceptance Fee so long as the Qualified Investment for the Lessors Deposit shall be an eligible deposit of any bank affiliate of the Escrow Agent and/or any JPMorgan Fund. If the Acceptance Fee is payable by Lessee, then Lessee authorizes Escrow Agent either to deduct said Acceptance Fee from the interest and earnings otherwise payable to Lessee under this Agreement or to bill and collect said Acceptance Fee at the Funding Expiration Date. In addition, Lessee agrees to reimburse Escrow Agent for its reasonable out-of-pocket costs and expenses and any extraordinary fees and expenses for performing its obligations hereunder (including, but not limited to, attorney's fees and expenses) and to pay all other amounts expressly due and payable to Escrow Agent hereunder. - IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. The Bank of New York Trust Company, N. A. ("Escrow. Agent") By: Title: CHASE EQUIPMENT LEASING INC. ("Lessor") By: Title: ithertEy City of Denton ("Less " n 6y,-~ Tom D. Shaw 6525 West Oval Campus, Suite 200 New Albany, Ohio 43054 1111 Polaris Parkway, Suite A-3 Columbus, Ohio 43240 215 East McKinney Street Title: Purchasing Agent Denton, TX 76201 Attachments: Schedule 1 (Name/telephone # of call-back person(s). designated by Section 7 above) Page 6 FROM +<~~~~<uuo ur:i4 oa4<1JOD]tl (WED ztlil 6~UlY 06 L~ 4g/ST. 16:42/NO. 4861769630 P gg t: t KSLNU rr Jt d//11 Section It, Escrow Aeent Fa hereunder. Lessee !grace tD ypa~.Escrow 57.00 ('Acceptance Fes'). As Acceptance Fee so long e9 the Qualified Investmentfor~ Acceptance Fe ' ~mDaltsanorl for Es<rew Agent's seNims Of the Escrow Agent the L f e' DfO~n- ~~+r'~.9i Escrow Agent will Escrow andlar any JPMOrgen Fund. K the goCe Deposit $hall be an eligible deposit of waive the A r Agent either to deduct said Acceptance Fee from the eptanc and 14: p le by Lessee, then any bank affitm g cement to r bill and cotecreas said Acee 9 Otherwise payable tom reimburse Escrow Agent fu its ronable oup crovtbe Funding E expiration Date. In addIdoR Lessee Lessee u under INS Performing its obli nder to gations hereunder (includn0. end expenses and en agrees to ritonlinary rmressly due and Payable tc Escrow but not limited to, attorneys fees and x t fees and expensoS for e Agent hereunder. arrpens6enses) and ando pay all other amounts IN WITNESS WHEREOF, the paroes have executed this Agreement as of the date first written above. The Bank of New York Trust Company, K A ("Escrow Agenq By: Title; CHASE EQUIPMENT LF_ASINO INC. ('Lessor")) BYi.s~e 6525 West oval Campus, Suite 200 ,New Albany, •3hio 43054 1111 Polarh _ _ _ arkway. Suite A.3 COI.r.: neus. ONO 43240 city of Denton (lossge• ~ ,r.. Tom D. Shaw 215 East MgOnney Street Tine: Purchasing Agr,(.i _ Denton, TX 76201 q me Schedule 1 (Name/telephone it of call-back Person(s) deslgnaNd by Section 7 above Page 6 ID:CEC4570DF9E424F 12ra/2006 3:19:.2 PM [Central Standard Time] DNIS:992210051 CUP: User:CEOLME 0 Pg 3 Of 3 Schedule l Telephone Number(s) for Call-Backs and Person(s) Designated to Confine Funds Transfer Instructions If to Lessee: City of Denton/#1000130102 Name ` Telephone Number 2. CC.r's ^4~b 1 0,'I nZ 3. u If to Lessor Name Telephone Number 1. Larry E. Spencer (614) 213-7177 2. Timothy L. Ellerbrock (614) 213-7645 3. Aric Camburn (614) 213-1932 4. Mary Heubach (614) 213-1557 5. Lory R. King (614) 213-1146 6 Nate J Ruhe - (614-213-3859) Telephone call-backs shall be made to each Lessee and Lessor if joint instructions are required pursuant to this Escrow Agreement. Page 7 ?fie BANK of NEW YORK 11/17/2006 City of Denton Re: Lease #1000130102 Dear Mr. Shaw. It is our pleasure to serve as escrow agent on the above-referenced matter. We understand that you have authorized and directed us to invest cash balances in one of the JPMorgan Money Market Funds in accordance with the escrow agreement, In that regard, we hereby request that you select the JPMorgan Money Market Fund you choose to invest in and sign our Authorization and Direction to The Bank of New York Trust Company, N.A. to Invest Cash Balances in Money Market Mutual Funds (the "Direction"). A copy of the Direction is enclosed. Once signed, please submit the originally executed form to Chase Equipment Leasing Inc. along with the other leasing and escrow documents. Please do not hesitate to contact the undersigned should you have any questions. Sincerely, The Bank of New York Trust Company, N.A Joyce Antoncic Assistant Vice President (614) 775-5280 9he BANK of NEW YORK - - [Auth-2b] [To use when The Bank of New York Trust Company, N.A. is appointed to provide services] AUTHORIZATION AND DIRECTION TO THE BANK OF NEW YORK TRUST COMPANY, NA TO INVEST CASH BALANCES IN MONEY MARKET MUTUAL FUNDS THROUGH THE BANK OF NEW YORK CUSTOMER NAME (the "Customer"):City of Denton ACCOUNT (the "Account"): Escrow Fund AGREEMENT (Description): Escrow Agreement for City of Denton ACCOUNT NUMBER/c2,/ % 070 3 . Sl d Check One ,JPMorgan Prime Money Market F.rd V--_^r+ c' -r=s !?n _ JPMorgan U.S. Government Money yiarket Fund Morgan Shares (3916) JPMorgan Federal Money Market Fund Morgan Shares (353) JPMorgan Treasury Plus Money Market Fund Morgan Shares (3919) _ JPMorgan 100% U.S. Treasury Securities Money Market Fund Morgan Shares (677) - JPMorgan Tax Free Money Market Fund Morgan Shares (2) These instructions supersede any previous instructions which pertain to the investment of cash in the Account AUTHORIZATION AND DIRECTION The Bank of New York Trust Company, NA ("BNYNA"), through its affiliate, The Bank of New York ("BNY"), is hereby authorized and directed to invest any available cash in the Account in shares of the Fund and to redeem shares of the Fund to meet the cash requirements of the Account. Customer may, from time to time, direct BNYNA in writing to redeem and exchange shares of the Fund for shares of, or to invest available cash or the proceeds from any redemption in, another eligible investment and BNYNA shall comply with such direction. Customer represents and warrants to BNYNA that it is authorized and empowered to direct BNYNA to make the investment speed herein through BNY and that the investment authorized herein is an authorized investment PROSPECTUS: Customer has read the Prospectus of the Fund and has independently made the determination to direct BNYNA, through BNY, to invest available cash in the Account in shares of the Fund. Customer understands that the Fund is not an obligation of, or recommended, endorsed or guaranteed in any way by, BNY, its affiliates or any other bank; that the Fund is not insured by an agency or instrumentality of the United States, such as the Federal Deposit Insurance Corporation; ahd that investments in the Fund may be subject to investment risks, including possible loss of the principal amount invested. Customer further understands that, neither BNY nor its affiliates has participated in the preparation of the Prospectus or is responsible for its content PERIODIC STATEMENTS: Customer agrees that transactions in the Fund will be reported only in BNYNA's regular periodic account statements. ?ire BANK . of NEWYORK VOTING SHARES: Customer assumes the obligation and retains the right to vote all shares of the Fund held hereunder for the benefit of the Account. SHAREHOLDER SERVICES FEES: Customer acknowledges that the Fund is authorized to make payments from its management fee or any other source available to parties such as banks or broker- dealers ("Service Organizations") that provide shareholder support services to the Fund and that Service Organizations currently are compensated at a rate of up to the Maximum Rate of .50% annually of the average.net assets of each Fund with respect to which they provide or have provided shareholder support services. Customer further acknowledges that BNY is a Service Organization and is paid, and hereby consents to such payment, by the Fund up to the Maximum Rate annually of the average daily balance of the Account invested in the Fund for shareholder support services rendered to the Fund by BNY, which services may include, without limitation, answering client's inquiries regarding the Fund, assistance to clients in changing dividend options, account designations and addresses, processing purchase and redemption transactions, providing periodic statements showing a client's account balance and the integration of such statement with other transactions, arranging for BNY wires, and providing such other information and services as the Fund's distributor or Customer reasonably may request. Customer further acknowledges that the Fund may purchase securities from or through BNY or its affiliates, may engage in repurchase transactions with BNY or its affiliates, may place funds on deposit in accounts with BNY or its affiliates and receive interest income thereon and may obtain ether sarAces from BNY for which BNY is paid a fee. INVESTMENT MAINTENANCE FEE: BNYNA will charge an investment maintenance fee with respect to investments in the Fund, calculated at an annual rate of up to zero (0.00) basis points on average total monthly account balances. This Authorization and Direction is executed, acknowledged and consented to at on [City] [State] [Date] City of Denton ESCROW FUNDING SCHEDULE ADDENDUM AND ARBITRAGE CERTIFICATE Dated As Of 11/17/2006 Lease Schedule No. 1000130102 Lessee: City of Denton Escrow Agent: The Bank of New York Trust Company, N. A. Escrow Agreement dated as of 11/172006 Amount To Be Deposited Into Escrow: S 483,000.00 ("Lessor's Deposit") Reference is made to the above Lease Schedule ("Schedule'l to the Master Lease-Purchase Agreement identified in the Schedule ("Master Lease") by and between Chase Equipment Leasing Inc. ("Lessor") and the above lessee ("Lessee"). As used herein, "Lease" shall mean the Schedule and the Master Lease, but only to the extent that the Master Lease relates to the Schedule. This Addendum amends and modifies the terms and conditions of the Lease and is hereby made a part of the Lease. Unless otherwise defined. herein, capitalized terms defined in the Master Lease shall have the same meaning when used herein. NOW, THEREFORE, as part of the valuable consideration to induce the execution of the Lease, Lessor and Lessee hereby agree to amend the Lease as follows: 1. Lessee and Lessor together with the above Escrow Agent ("Escrow Agent") have entered into the above Escrow Agreement ("Escrow Agreement") establishing a fund ("Equipment Acquisition Fund") from which the Purchase Price of the Equipment will be paid. - 2. Lessor shall deposit such amount into escrow as is required by the Escrow Agreement, which amount shall be credited to the Equipment Acquisition Fund. Lessee shall pay the balance of the Purchase Price of the Equipment, either by deposit in escrow to the Equipment Acquisition Fund or by direct payment to the Suppliers of the Equipment. 3. The Lease Term of the Lease shall commence on the earlier of the date specified in the Payment Schedule to the Schedule or the date of Lessor's deposit of funds into the Equipment Acquisition Fund. Notwithstanding the statements regarding delivery and acceptance of the Equipment in the Schedule, the parties acknowledge that the Equipment will be accepted as provided in the Escrow Agreement. 4. The delivery of documents and the satisfaction of any other conditions required by the Escrow Agreement or this Addendum shall be additional Funding Conditions for the Lease. - 5. Upon Lessee's execution of the Escrow Agreement, Lessee hereby represents and warrants to Lessor that: (a) Lessee has fulbpower, authority and legal right to execute and deliver the Escrow Agreement and to perform its obligations under the Escrow Agreement, and all such actions have been duly authorized by appropriate findings and actions of Lessee's governing body, (b) the Escrow Agreement has been duly executed and delivered by Lessee and constitutes a legal, valid and binding obligation of Lessee, enforceable in accordance with its terms; and (c) the Escrow Agreement is authorized under, and the authorization, execution and delivery of the Escrow Agreement complies with, all applicable federal, state and local laws and regulations (including, but not limited to, all open meeting, public bidding and public investment laws) and all applicable judgments and court orders. 6. The opinion of Lessee's legal counsel will include statements to the same effect as the representations of Lessee in paragraph 5 above. . 7. It shall be an additional event of default under the Lease if Lessee fails to pay or perform any of its obligations under the Escrow Agreement or this Addendum or if any of the representations of Lessee in the Escrow Agreement or this Addendum prove to be false, misleading or erroneous in any material respect 8. ARBITRAGE CERTIFICATE. The authorized representative of Lessee who executes this Addendum hereby certifies that he/she is the duly qualified and acting representative of Lessee with the title set forth below his/her signature hereon; that Lessee has executed and delivered the Schedule and the Master Lease (collectively, the "Lease"); that Lessee is apolitical subdivision of the State identified in the Lease; and that in his/her official capacity as such officer he/she is responsible for executing and delivering, on behalf of the Lessee, the Lease and this Addendum. This paragraph of this Addendum (hereinafter, this paragraph shall be identified as the "Arbitrage Certificate') is being issued by Lessee as a "no arbitrage certificate" pursuant to Section 148 of the Internal Revenue NIUN2ESCR.ADD PAGE 1 OF 3 Code of 1986, as amended (the "Code"), and Treasury Regulations, Sections 1.148-0 through 1.148.11 (the "Regulations"). Lessee represents and warrants to Lessor that the following facts, estimates and circumstances are in existence on the date of this Arbitrage Certificate or are reasonably expect to occur hereafter. (a) The Lease provides for the lease of the Equipment described in the Lease by Lessor to Lessee. Under the Lease, Lessee is required to make Rent Payments with respect to the Equipment, comprising principal and interest, on the dates and in the amounts stated in the Payment Schedule to the Lease. (b) Pursuant to the Lease and for the purpose of meeting its obligations thereunder and assuring the Lessee of the availability of monies needed to pay the cost of the Equipment when due, Lessee, Lessor and the Escrow Agent have executed the Escrow Agreement. (c) Contracts or purchase orders providing for the acquisition and delivery of the Equipment have been issued by Lessee to Equipment Vendors therefor and the Equipment will be acquired and installed with due diligence. Based upon the provisions of the contracts or purchase orders, the Equipment will be acquired and installed no later than eighteen (18) months from the date of the Escrow Agreement ("Funding Expiration Date"). (d) The Escrow Agreement provides that Lessor shall deposit the Lessor's Deposit into escrow to be credited to the Equipment Acquisition Fund created by the Escrow Agreement and utilized to pay for the Equipment as provided therein. It is presently expected that all such funds initially credited to the Equipment Acquisition Fund shall be disbursed to pay for the Equipment, but any such amounts ultimately determined not to be needed for such purposes and the interest earnings on the amounts held in escrow shall be utilized on or after the Funding Expiration Date to pay part of the principal due under the Lease, as provided in the Escrow Agreement. (e) All of the spendable proceeds of the Lease will be expended on the Equipment and related expenses on or before the Funding Expiration Daze. (f) The original proceeds of the Lease, and interest to be earned thereon, do not exceed the amount necessary for the purpose for which the Lease is issued. (g) The interest of Lessee in the Equipment has not been and is not expected during the term of the Lease to be sold or disposed of by Lessee. (h) No sinking fund is expected to be created by Lessee with respect to the Lease and Rental Payments (i) Lessee represents, warrants and covenants to one of the following statements of this clause (i) as is initialed by Lessee below [and if Lessee fails to initial its selection, then subclause (A) shall be deemed to have been selected by Lessee]: (A) 100% of the proceeds of the Lease shall be paid for the acquisition of the Equipment within 18 months of the date of the Escrow Agreement in accordance with the - following schedule: 15% within 6 months of the date of the Escrow Agreement; 60% within 12 months of the date of the Escrow Agreement; and 1000/6 within 18 months of the date of the Escrow Agreement. (B) 100% of the proceeds of the Lease shall be paid for the acquisition of the Equipment within 6 months of the date of the Escrow Agreement. - (C) Lessee qualifies for the "small issuer" exemption in section 148(f)(4)(D) of the Code because all of the following are true: (1) Lessee is a governmental unit with general taxing powers, and (2) the Lease is not a "private activity bond" as defined in Section 141 of the Code, and (3) 95% or more of the proceeds of the Lease shall be used for the governmental activities of Lessee, and (4) the aggregate face amount of all tax exempt bonds and other tax exempt obligations (other than "private activity bonds") issued by Lessee (and any subordinate entities of lessee as contemplated by Section 148(1) of the Code) during the calendar year in which the Lease is issued is not reasonably expected to exceed $5,000,000. 0) Lessee hereby covenants that Lessee shall comply with all of the requirements of the Code and Regulations relating to the rebate of arbitrage profit to the United States of America (including, without limitation Section 148(f) of the Code) and will rebate to the United States of America all arbitrage profit required thereby. (k) To the best of the knowledge and belief of the undersigned, the expectations of Lessee, as set forth above, are reasonable; and there are no present facts, estimates and circumstances which would change the foregoing expectations. MUN2ESCRADD PAGE 2 OF 3 (1) Lessee has not been notified of the listing or proposed listing of it by the Internal Revenue Service as an issuer whose arbitrage certificates may not be relied upon 9. Except as expressly amended by this Addendum and other modifications signed by Lessor, the Lease remains unchanged and in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date first referenced above City of Denton Chase Equipment Leasine Inc. (Lessee) BY ~\\7C~~~- (Lessor) By: Tom D.Shaw Title: Purchasing Agent Title MUN2ESCR.ADD PAGE 3 OF 3 LEASE SCHEDULE NO. 1000130102 Dated As Of 11/17/2006 This Lease Schedule, together with its Payment Schedule, is attached and made a part of the Master Lease- Purchase Agreement described below ("Master Lease") between the Lessee and Lessor named below. All terms and conditions of the Master Lease are incorporated herein by reference. Unless otherwise defined herein, capitalized terms defined in the Master Lease will have the same meaning when used herein. Master Lease-Purchase Agreement dated April 22, 2004. A. EQUIPMENT DESCRIBED: The Equipment includes all of the property described on Schedule A-1 attached hereto and made a part hereof. B. EQUIPMENT LOCATION: See Attached Schedule Al. C. ACCEPTANCE OF EQUIPMENT: AS BETWEEN LESSEE AND LESSOR, LESSEE AGREES THAT: (a) LESSEE HAS RECEIVED AND INSPECTED ALL EQUIPMENT; (b) ALL EQUIPMENT IS IN GOOD WORKING ORDER AND COMPLIES WITH ALL PURCHASE ORDERS, CONTRACTS AND SPECIFICATIONS; (c) LESSEE ACCEPTS ALL EQUIPMENT FOR PURPOSES OF THE LEASE "AS-IS, WHERE-IS"; AND (d) LESSEE WAIVES ANY RIGHT TO REVOKE SUCH ACCEPTANCE. D. ESSENTIAL USE; CURRENT INTENT OF LESSEE: Lessee represents and agrees that the use of the Equipment is essential to Lessee's proper, efficient and economic functioning or to the services that Lessee provides to its citizens and the Equipment will be used by Lessee only for the purpose of performing its governmental or proprietary functions consistent with the permissible scope of its authority. Lessee currently intends for the full Lease Term: to use the Equipment; to continue this Lease; and to make Rental Payments if funds are appropriated in each fiscal year by its governing body. E. RENTAL PAYMENTS; LEASE TERM: The Rental Payments to be paid by Lessee to Lessor, the commencement date thereof and the Lease Term of this Lease Schedule are set forth on the Payment Schedule attached to this Lease Schedule. F. RE-AFFIRMATION OF THE MASTER LEASE: Lessee hereby re-affirms all of its representations, warranties and obligations under the Master Lease (including, without limitation, its obligation to pay all Rental Payments, its disclaimers in Section 7 thereof and its representations in Sections 6.1 and 16 thereof). EquipmenttEscrow Acceptance Date: LESSEE: City of Denton By=. - Tom D.Shaw - Title: Purchasing Agent 215 East McKinney Street Denton, TX 76201 LESSOR: Chase Equipment Leasing Inc.. formerly known as Banc One Leasing Corporation Title 1111 Polaris ParkvM<Sufte A3 Columbus, Ohio 43240 MLDS.DOC PAGE 1 OF 1 SCHEDULE A-1 Equipment Description Lease Schedule No. 1000130102 Dated 1111712006 The Equipment described below includes all attachments, additions, accessions, parts, repairs, improvements, replacements and substitutions thereto. Equipment Location: 215 East McKinney Street Denton, TX 76201 Equipment Description: (1) Heavy-Roller and (1) Pulvi-Mixer for the Street Department. Expected Equipment Purchase Price Minus Lessee Down PaymentfTrade-in Net Amount Financed $483,000.00 $0.00 $483.000.00 This Schedule A-1 is attached to the Lease Schedule or a Receipt Certificate/Payment Request relating to the Lease Schedule. City of Denton (Lessee) Tom D.Shaw Title: Purchasing Agent Chase Equipment Leasing Inc. (Lessor) By Titre: MLDSAI.DOC PAGE 1 OF 1 TEXAS LEASE SCHEDULE ADDENDUM Dated As Of 1111712006 Lease Schedule No.1000130102 dated 1111712006 Lessee: City of Denton Reference is made to the above Lease Schedule ("Schedule") and to the Master Lease-Purchase Agreement ("Master Lease") identified in the Schedule by and between Chase Equipment Leasing Inc. ("Lessor") and the above lessee ("Lessee"). As used herein, "Lease" shall mean the Schedule and the Master Lease, but only to the extent that the Master Lease relates to the Schedule. This Addendum amends and modifies the terms and conditions of the Lease and is hereby made a part of the Lease. Unless otherwise defined herein, capitalized terms defined in the Master Lease shall have the same meaning when used herein. NOW, THEREFORE, solely for purposes of the Lease, Lessor and Lessee hereby agree as follows: 1. NON-APPROPRIATION AND NON-SUBSTITUTION AMENDMENTS. All of subsections 6.1, 6.2 and 6.3 of the Master Lease are deleted and replaced with the following: "6. TERMINATION FOR GOVERNMENTAL NON-APPROPRIATIONS. "6.1 For the Lease, Lessee represents and warrants: that It has appropriated and budgeted the necessary funds to make all Rent Payments required pursuant to such Lease for the remainder of the fiscal year in which the Lease Term commences; and that it currently intends to make Rent Payments for the full Lease Term as scheduled in the applicable Payment Schedule if funds are appropriated for the Rent Payments in each succeeding fiscal year by its governing body. Without contractually committing itself to do so, Lessee reasonably believes that moneys in an amount sufficient to make all Rent Payments can and will lawfully be appropriated and made available therefor. All Rent Payments shall be payable out of the general funds of Lessee or out of other funds legally available therefor. Lessor agrees that the Lease will not be a general obligation of Lessee and the Lease shall not constitute a pledge of either the full faith and credit of Lessee or the taxing power of Lessee. "6.2 If Lessee's governing body fails to appropriate sufficient funds in any fiscal year for Rent Payments or other payments due under the Lease and if other funds are not legally available for such payments, then a "Non- Appropriation Event" shall be deemed to have occurred. If a Non-Appropriation Event occurs, then: (a) Lessee shall give Lessor immediate notice of such Non-Appropriation Event and provide written evidence of such failure by Lessee's governing body; (b) on the Return Date, Lessee shall return to Lessor all, but not less than all, of the Equipment covered by the Lease, at Lessee's sole expense, in accordance with Section 21 hereof (provided, that if under applicable State law Lessee's obligation to pay the expenses of returning the Equipment would render the Lease void or unenforceable under State law, then Lessee shall not be obligated to paythe expenses of returning the Equipment under section 21 hereof, but Lessee shall be required to cooperate with Lessor in Lessors taking possession of the Equipment); and (c) the Lease shall terminate on the Return Date without penalty to Lessee, provided, that Lessee shall pay all Rent Payments and other amounts payable under the Lease for which funds shall have been appropriated or are otherwise legally available, provided further, that Lessee shall pay month-to- month rent at the rate set forth in the Lease for each month or part thereof that Lessee fails to return the Equipment under this Section 62. "Return Date" means the last day of the fiscal year for which appropriations were made for the Rent Payments due under the Lease." - - 2. DECLARATION OF PERSONAL PROPERTY FINANCING. (a) LESSEE AND LESSOR EXPRESSLY DECLARE AND AGREE THAT THE EQUIPMENT SHALL CONSTITUTE PERSONAL PROPERTY AND THAT THE EQUIPMENT SHALL NOT BE DEEMED, OR IDENTIFIED AS, ANY OF THE FOLLOWING: REAL PROPERTY; AN IMPROVEMENT ON ANY REAL PROPERTY; A PERMANENT BUILDING OR STRUCTURE ON ANY REAL PROPERTY; OR A FD(TURE ON ANY REAL PROPERTY. (b) Lessee represents and warrants to Lessor that the Equipment is personal property and thatthe Equipment is not any of the following: real property; an improvement on any real property, a permanent building or structure on any real property, ora rudure on any real property. Upon Lessors written request, Lessee shall furnish to Lessora certificate executed by an independent engineer or architect who is reasonably satisfactory to Lessor wherein said engineer or architect certifies that the Equipment is relocatable or transportable and will remain personal property. (c) Without limiting the generality of the representations in the Master Lease as it applies to the Lease, Lessee (munilease.tex) Page 1 represents and warrants to Lessor that the Lease complies with all applicable provisions of the laws of the State of Texas, including, without limitation, all applicable public finance laws of the State of Texas. - 3. NO SALE OF FRACTIONAL INTERESTS IN THE LEASE. Lessor agrees that: (a) unless otherwise agreed by Lessee in writing, Lessor will not create or sell fractional interests in the Lease or participation interests in the Lease; (b) if Lessor sells or assigns its rights in the Lease, then, unless otherwise agreed by Lessee in writing, such sale or assignment shall be of an undivided interest in all of Lessors right, title and interest in the Lease to a single purchaser or assignee; and (c) if Lessee consents to the creation or sale of any fractional interests in the Lease or any participation interests in the Lease, Lessor agrees that such transaction shall comply with applicable State and federal law. 4. GENERAL. Except as expressly amended by this Addendum and other modifications signed by Lessor, the Lease remains, unchanged and in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date first referenced above City of Denton n Chase Equipment Leasinq Inc. BL~s~ge),~--~j , (Lessor) Tom D.Shaw Title: Purchasing Agent itle, ~ v (munilease.tex) Page 2 PAYMENT SCHEDULE This Payment Schedule is attached and made a part of the Lease Schedule identified below which is part of the Master Lease-Purchase Agreement identified therein, all of which are between the Lessee and Lessor named below. Lease Schedule No. 1000130102 Dated 11/17/2006 Accrual Date: 11/17/2006 Amount Financed: $483,000.00 Interest Rate: 3.870000% per annum Rent Number Rent- Date Rent Payment Interest Pri!-,ci al p Termination 1 11/17/2007 $ 59,164.77 $ Portion 18 692 10 Portion Value 2 3 11/17/2008 $ 59,164.77 $ , . 17,125 81 S, °.J,472_.G7 $ 455,803.15 4 11/17/2009 $ 59,164.77 $ . 15,498--, i 42,038.96 $ 412,503.02 5 11/17/2010 $ 59,164.77 $ 'yu 11 $ 43,665.87 $ 367,52-1 18- 11/17/2011 11/17/2011 $ 59,164.77 $ 45,355.74 $ 320 810 76 6 11/17/2012 $ 59,164.'-, 'P 12,053.76 $ 47,111.01 , . $ 272 286 42 7 11/17/2013 $ 59, " 164 7 $ 10,230.56 $ 48,934.21 , . $ 221 884 19 8 11/17/2014 & r . 7 - 59,164 77 $ $ 8,336.81 6 $ 50,827.96 , . $ 169,531.39 g 11/17/7 $ . 59,164.77 $ ,369.77 4 3 $ 52,795.00 $ 115,152.54 10 11/;7/2016 $ 59,164.77 $ , 26.60 2 204 36 $ 54,838.17 $ 58,669.22 , . $ 56,960.41 $ _ Totals $5 91,647.70 $108,647.70 $ 483,000.00 City of Denton (Lessee) Tom D. Shaw Title: Purchasing Agent Chase Eauioment Leasing In (Lessor) By. T DENTON MATERIALS MANAGEMENT DIVISION 901 B TEXAS STREET • DENTON, TEXAS 76201 • 940.349.7100 • DEW METRO 817.267.0042 FAX 940.349.7302 December 4, 2006 Mary C. Heubach Chase Equipment Leasing Inc. Mail Code OH1-1085 1111 Polaris Parkway Suite 3-A Columbus, Ohio 43240-2050 REF: City of Denton Lease 1000130102 Dear Mary: Please accept this letter as acknowledgement and acceptance of the revision to the increase in the effective rate from 3.86% to 3.87% and the appropriate adjustment in the annual payment total. Sincerely, Tom D. Shaw, C.P.M. Purchasing Agent tslk "Dedicated to Quality Service" u .cityofdenton.cam PREPAYMENT RESTRICTION SCHEDULE ADDENDUM Lease Schedule No. 1000130102 Lessee: City of Denton Reference is made to the above Lease Schedule ("Schedule") and to the Master Lease-Purchase Agreement ("Master Lease") identified in the Schedule, which are by and between Chase Equipment Leasing Inc. ("Lessor") and the above lessee ("Lessee"). As used herein: "Lease" shall mean the Schedule and the Master Lease,. but onlyto the extentthat the Master Lease relates to the Schedule. This Schedule Addendum amends and supplements the terms and conditionsof the Lease. Unless otherwise defined herein, capitalized terms defined in the Lease shall have the same meaning when used herein. 1. Solely for purposes of the Schedule, Lessor and Lessee agree that, notwithstanding anything to the contrary in the Lease (express or implied), Lessee's option under Section 15 of the Master Lease to purchase the Equipment or to prepay the Lease obligations may be exercised by Lessee only on or after the Permitted Prepayment Month of Lease Term (as stated below). Permitted Prepayment Month: on or after the LAST month of the Lease Term 2. The parties acknowledge that the Termination Value column of the Payment Schedule to the above Lease Schedule is included solelyfor purposes of the calculations required by Sections 13.3 (casualty loss of Equipment) and 14.1 (required amount of casualty loss insurance) of the Master Lease and said Termination Value column does not negate the restrictions on purchase options or voluntary prepayment in paragraph 1 of this addendum. 3. Except as expressly amended or supplemented by this Addendum and other instruments signed by Lessor and Lessee, the Lease remains unchanged and in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date of the Schedule first referenced above. City of Denton (Lessee) B' T e: G CHASE EQUIPMENT LEASING INC. (Lesso By Tom D. Shaw Title: Purchasing Agent (restricted prepay sch add [legal:7.5.02]) City Attorney's Office City of Denton, Texas 21 S East McKinney Denton, Texas 76201 (940) 349-8333 Fax (940) 382-7923 Date: November 28, 2006 Lessee: City of Denton Lessor: Chase Equipment Leasing, Inc. Re: Lease Schedule No. 1000130102 dated 11/17/2006 together with its Master Lease Purchase Agreement dated as of 04/22/2004 by and between the above- named Lessee. and the above-named Lessor and the Escrow Agreement dated 11/17/2006 relating to the foregoing Gentlemen: I have acted as counsel to Lessee with respect to the Lease Schedule, the Master Lease-Purchase Agreement and all other agreements described above or related thereto -(collectively, the "Agreements") and various related matters, and in this capacity have reviewed a duplicate original or certified copy of the Agreements and, such other documents as I have deemed necessary for the purposes of this opinion. Based upon the examination of such documents, it is my opinion that: 1. Lessee is a political subdivision of the State of Texas (the "State") duly organized, existing and operating under the Constitution and laws of the State. 2. Lessee is authorized and has power under State law to enter into all of the Agreements, and to carry out its obligations thereunder and the transactions contemplated thereby. 3. The Agreements and all other documents related thereto have been duly authorized, approved and executed by and on behalf of Lessee, and each of the Agreements is a valid and binding contract of Lessee enforceable in accordance with its terms, except to the extent limited by State and Federal laws affecting creditor's remedies and by bankruptcy, reorganization or other laws of general application relating to or affecting the enforcement of creditors' rights. 4. The authorization, approval and execution of the Agreements and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance with "Dedicated to Quality Service" unow. c i tvofd en to n. co m November 28, 2006 Page 2 all applicable Local, State and Federal laws (including open meeting laws and public bidding and property acquisition laws). 5. To the best of my knowledge, there is no litigation or proceeding pending before any court, administrative agency or governmental body, that challenges: the organization or existence of Lessee; the authority of its officers; the proper authorization, approval and execution of any of the Agreements or any documents relating thereto; the appropriation of monies to make payments under the Agreements for the current fiscal year; or the ability of Lessee otherwise to perform its obligations under the Agreements and the transactions contemplated thereby. 6. Lessee is a political subdivision of the State as referred to in Section 103 of the Internal Revenue Code of 1986, as amended, and the related regulations and rulings thereunder. Lessor, its Assignee and any of their assigns may rely upon this opinion. Very truly yours, John M. Knight Senior Assistant City Attorney . JMK/cd SAOur Documents\Cor pondence\Letters\06\fom Opinion Letter2.doc CERTIFICATE OF CITY SECRETARY THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON I, the undersigned City Secretary of the City of Denton, Texas, (the "City") DO HEREBY CERTIFY that according to the records of the City of which I am custodian, that: the attached is a true and accurate copy of Ordinance No. 2006-314 approved by the City of Denton City Council on November 7, 2006. TO CERTIFY WHICH, witness my official signature and the seal of said City, this the 1st day of December, 2006. ORDINANCE NO.,R066 - ,;5 / 4 AN ORDINANCE AUTHORIZING THE FINANCING OF FLEET VEHICLES AND EQUIPMENT FOR VARIOUS CITY DEPARTMENTS THROUGH A LEASE PURCHASE FINANCING AGREEMENT; PROVIDING FOR TIIE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (FILE 3608-THIRD PARTY LEASE PURCHASE OF VEHICLES AND EQUIPMENT, APPROXIMATE FINANCE CHARGES OF $188,608.70 FOR 60 MONTHS AND $108,352.30 FOR 120 MONTHS FOR TOTAL FINANCE CHARGES OF $296,961). WHEREAS, In the 2006-2007 budget process the City Council authorized the purchase of various trucks and equipment listed on Exhibit A from the to be determined lowest responsible bidders pursuant to Chapter 252 of the Texas Local Government Code in the estimated principal sum of $2,160,569; and WHEREAS, Section 271.005 of the Local Government Code authorizes the City council, in its discretion, to contract for the financing of personal property; and WHEREAS, the City Council finds that the herein authorized financing of the budgeted equipment through a lease purchase agreement with Chase Equipment Leasing Inc. is appropriate and in the public interest; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be expended for the herein authorized lease purchase agreement; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council hereby authorizes a lease purchase agreement to finance the acquisition of trucks and equipment listed on Exhibit A with Chase Equipment Leasing Inc., said agreement providing for a financed amount of $2,457,530 having five annual payments of approximately $373,235.54 with an effective rate of not to exceed 3.66% over 5 years and ten annual payments of approximately $59,135.23,with an effective rate of not to exceed 3.86% over ten years. SECTION 2. The City Manager, or the Purchasing Agent as his designee, is authorized to enter into a lease purchase agreement on behalf of the City in accordance with the terms set forth in Section 1 and to expend the funds provided for in Section 1. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ejrg ~ 2006. /i/ ylal R. McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEG FORM: EDWIN M. SNYDER, ClW ATTORNEY BY: Page 2 of 2 Exhibit A Equipment 60 Month Financing Roll Off Refuse Truck Side Load Refuse Truck Front Load Refuse Truck Haul Truck (Tractor) 100 Yd Transfer Trailer 14 Yd Dump Truck Utility Vehicle With Hydraulic Dump 72" Recycler 61" Mower One Ton Truck Trencher Tractor With 15' Mower Rotary Mower 16' Utility Vehicle With Lift 3/< Ton Pick Up Water Truck Equipment ListinE Estimated uant. Purchase Price Total 2 each 1 each 2 each 1 each 3 each 1 each 1 each $140,000 $170,000 $187,500 $139,320 $ 83,640 $ 98,000 $ 12,000 $280,000 $170,000 $375,000 $139,320 $250,920 $ 98,000 $ 12,000 1 each 1 each 1 each 1 each 1 each 1 each 1 each 1 each $ 19,059 $ 10,530 $ 50,000 $ 83,740 $ 77,000 $ 12,000 $ 25,000 $ 75,000 $ 19,059 $ 10,530 $ 50,000 $ 83,740 $ 77,000 $ 12,000 $ 25,000 $ 75,000 Exhibit A Estimated Equipment uant. Purchase Price Total 120 Month Financine Sheepfoot Roller 1 each $ 145,000 $ 145,000 Asphalt Pulvi-Mixer 1 each. $ 338,000 $ 338,000 Total Approximate Cost $ 2,182,288 CERTIFICATE OF AUTHORIZATION & INCUMBENCY Lessee: City of Denton Lease Schedule No. 1000130102 I hereby certify to CHASE EQUIPMENT LEASING INC. ("Lessor") that I am the officer of the above-named Lessee ("Lessee") with the title indicated beneath my signature below, and as such, I am authorized to execute and deliver this Certificate on behalf of Lessee in connection with the above-identified Lease Schedule together with the Master Lease-Purchase Agreement identified therein (collectively, the "Lease") between Lessor and Lessee. I further certify: (a) that I have examined the representations and warranties made by Lessee in the Lease; and (b) that such representations and warranties remain true and correct as if made on and as of the date of this Certificate. I further certify: (1) that attached hereto as Exhibit A is a copy of the resolutions adopted by the governing bodyof Lessee or the minutes of an official meeting of the governing body of Lessee regarding the matters setforth in said minutes; (2) that the transactions contemplated bythe Lease have been dulyauthorized bythe governing bodyof Lessee pursuant to the resolutions or actions set forth in said Exhibit A; and (3) the resolutions which were adopted by, or the actions taken by, the governing body of Lessee as set forth in Exhibit A are in full force and effect on the date of this Certificate and have not been modified or rescinded. I further certify that the following are names, titles and specimen signatures of officers or representatives of Lessee who are duly authorized to execute and deliver the Lease and any related documents, each of whom has been duly elected or appointed to hold and currently holds the office or position of Lessee which is set forth opposite his or her name: Name Title natu Tom D. Shaw Purchasing Agent The undersigned Secretary/Clerk of the above-named Lessee hereby certifies and attests that the undersigned has access to the official records of the governing body of the Lessee and that the undersigned is authorized to execute and deliver this Certificate. Sig tune ofSecretary/Clerk of Municipality gym) Print Name: To-lie Title: AI_T, /i'4 v t x114-04/l /'-I1 Date: . / I- ZZ .20_0_0 Attachment., Exhibit A. true and complete copy of the original authorizing resolution/minutes (Certificate of Authorization) CERTIFICATE OF INCUMBENCY Lessee: City of Denton Lease Schedule No. 1000130102 Dated 11/17/2006 1, the undersigned Secretary/Clerk identified below, do hereby certify that I am the duly elected or. appointed and acting Secretary/Clerk of the above Lessee (the "Lessee"), a political subdivision duly organized and existing under the laws of the State where Lessee is located, that I have the title stated below, and that, as of the date hereof, the individuals named below are the duly elected or appointed officers of the Lessee holding the offices set forth opposite their respective names. . [NOTE: Use same titles as Authorized Representatives stated in Resolu~tions.] Tom D. Shaw Purchasing Agent Name Title Signature GEe~ c.C~ C~CL Ceti ,~a~1 Name Title Signature IN WITNESS WHEREOF, I have duly executed this certificate and affixed the seal of such Lessee as of the date set forth below. l_ )JV /l' 4 d -a it/ [SEAL] Si cure of Secretary/Clerk of Lessee Print Name: Official Title: Date: NOTE: In case the Secretary/Clerk is also the authorized representative that executes a Lease-Purchase Agreement / documents by the above incumbency, this certificate must also be signed by a second officer. DUPLICATE SCHEDULE A-1 Equipment Description Lease Schedule No. 1000130103 Dated 11/17/2006 The Equipment described below includes all attachments, additions, accessions, parts, repairs, improvements, replacements and substitutions thereto. Equipment Location: 215 East McKinney Street Denton. TX 76201 Equipment Description: Essential Use Equipment identified as, EQUIPMENT Roll Off Refuse Truck Side Load Refuse Truck Front Load Refuse Truck Haul Truck Tractor 100 Yd Transfer Trailer 14 Yd Dump Truck 3/4 Ton Pick-Up Utility Vehicle w/Hydraulic Pump 72" Recycler 61" Mower One Ton Truck Trencher Tractor with 15' Mower Rotary Mower 16' Utility Vehicle with Lift 3/4 Ton Pick-Up Water Truck Expected Equipment Purchase Price Minus Lessee Down Payment/Trade-in Net Amount Financed QUANTITY EST. UNIT PRICE APPROX.COST 2 each $140,000 .00 $280,000. 00 1 each $170,000 .00 $170,000. 00 2 each $187,500 .00 $375,000. 00 1 each $139,320 .00 $139,320. 00 3 each $83,640 .00 $250,920. 00 1 each $98,000 .00 $98,000. 00 1 each $21,719. 00 $21,719. 00 1 each $12,000. 00 $12,000. 00 1 each $19,059. 00 $19,059. 00 1 each $10,530. 00 $10,530. 00 1 each $50,000. 00 $50,000. 00 1 each $83,740. 00 $83,740. 00 1 each $77,000. 00 $77,000. 00 1 each $12,000. 00 $12,000. 00 1 each $25,000. 00 $25,000. 00 1 each $75,000. 00 $75,000. 00 $ 1,677,569.00 $0.00 $ 1,677,569.00 This Schedule A-1 is attached to the Lease Schedule or a Receipt Certificate/Payment Request relating to the Lease Schedule. City of Denton Chase Equipment Leasing Inc. (Lessee) \ (Lessor) By:ll °~`~`.e~ By Tom D.Shaw Title: Purchasing Agent T (schal rev 120106) ESCROW AGREEMENT Dated as of 11117/2006 (Gross Fund-Eamings to Lessee) This Escrow Agreement together with all addenda, riders and attachments hereto, as the same may from time to time be amended, modified or supplemented ("Agreement") is made and entered as of the date set forth above by and among the Escrow Agent identifed below ("Escrow Agent"), the Lessee identified below ("Lessee") and CHASE EQUIPMENT LEASING INC. ("Lessor"). - Escrow Agent: The Bank of New York Trust Company, N. A. Lessee: _ City of Denton For good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Recitals. 1.01 Lessor and Lessee have entered into the Lease identified below whereby Lessor has agreed to lease and sell certain property described therein (the "Equipment") to Lessee, and Lessee has agreed to lease and purchase the Equipment from Lessor, in the manner and on the terms set forth in the Lease. 1.02 "Lease" means, collectively, the Lease Schedule identified below and the Master Lease-Purchase Agreement identified in said Lease Schedule (to the extent that it relates to said Lease Schedule) together with all exhibits, schedules, addenda, riders and attachments thereto. Lease Schedule No. 1000130103 1.03 LESSOR'S DEPOSIT: $ 1.677.569.00. Lessor shall pay or cause to be paid to the Escrow Agent the amount of the Lessor's Deposit which will be credited to the Equipment Acquisition Fund established in Section 2 hereof. To the extent that the Purchase Price of the Equipment exceeds the Lessor's Deposit, Lessee shall either deposit with Escrow Agent funds which will be credited to the Equipment Acquisition Fund and used to pay the balance of the Purchase Price of the Equipment or Lessee shall pay such balance directly to the Suppliers. 1.04 FUNDING EXPIRATION DATE: 05/17/2008. Lessee and Lessor agree that all Equipment should be delivered and installed, and all funds disbursed from the Equipment Acquisition Fund, no later than the above Funding Expiration Date. 1.05 Under the Lease, Lessee will cause each item of Equipment to be ordered from the applicable Suppliers. Lessee shall furnish to Lessor as soon as available, a copy of the purchase orders or purchase contracts for all Equipment ordered pursuant to the Lease, showing the Supplier, the Purchase Price and the estimated delivery dates. 1.06 Subject to such control by Lessee and Lessor as is provided herein, Lessor and Lessee agree to employ the Escrow Agent to receive, hold, invest and disburse the moneys to be paid to the Escrow Agent as described in Section 1.03, all as hereinafter provided. The Escrow Agent shall not be obligated to assume or perform any obligation of Lessee or Lessor under the Lease or of any Supplier with respect to any Equipment by reason of anything contained in this Agreement. Any funds in the Equipment Acquisition Fund not needed to pay the Purchase Price of Equipment will. be paid to Lessor or Lessee, all as hereinafter provided. 1.07 This Agreement is not intended to alter or change in any way the rights and obligations of Lessor and Lessee under the Lease, but is entirely supplemental thereto. - 1.08 Each of the parties hereto has authority to enter into this Agreement, and has taken all actions necessary to authorize the execution of this Agreement by the officers whose signatures are affixed hereto. Section 2. Equipment Acquisition Fund. 2.01 The Escrow Agent shall establish a special escrow fund designated as the Equipment Acquisition Fund (the "Equipment Acquisition Fund"), shall keep such fund separate and apart from all other funds and money held by it, and shall administer such fund as provided in this Agreement. 2.02 The Lessor's Deposit and any funds deposited by Lessee under Section 1.03 hereof shall be credited to the Equipment Acquisition Fund which shall be used to pay the balance of the Purchase Prinz of each item of Equipment subject to the Lease. The Escrow Agent shall pay to the Suppliers of the Equipment the payment amounts then due and payable with respect thereto upon receipt of a Receipt Certificate/Payment Request executed by Lessor which specifies each Page 1 Supplier and its address and the applicable portion of the Purchase Price of the items of Equipment to be paid. As between Lessee and Lessor only, Lessee agrees that it will submit to Lessor for Lessor's signature a Receipt Certificate/Payment Request that has been executed by Lessee together with (a) the Suppliers' invoices specifying the applicable portion of the Purchase Price of the items of Equipment described in said Receipt Certificate, (b) if the item of Equipment is a titled vehicle, a copy of the Manufacturer's Statement of Origin (MSO) covering such item showing Lessor as first and sole lienholder, and (c) any other documents required by the Lease, and Lessee agrees that Lessor shall not be obligated to execute any such Receipt Certificate until all of the foregoing have been submitted to Lessor. 2.03 If Lessor delivers to the Escrow Agent written notice of the occurrence of an event of default under the Lease or of a termination of the Lease due to a non-appropriation event or non-renewal event under the Lease, then the Escrow Agent shall immediately remit to Lessor the remaining balance of the Equipment Acquisition Fund. 2.04 Upon the Escrow Agent's receipt of a Full Funding Notice, the Escrow Agent shall apply the balance remaining in the Equipment Acquisition Fund: first, to all reasonable fees and expenses incurred by the Escrow Agent in connection herewith as evidenced by its statement forwarded to Lessee and Lessor, and second, to Lessor to be applied by Lessor for benefit of Lessee either: (a) toward the principal portion of the Rent Payment next coming due under the Lease; or (b) toward a partial prepayment of the principal amount remaining due under the Lease and thereupon Lessor shall prepare and deliver to Lessee a revised Payment Schedule reflecting such partial prepayment of principal. _ "Full Funding Notice" means the Final Receipt Certificate/Payment Request which confirms that all Equipment covered by the Lease has been delivered to and accepted by Lessee under the Lease and that the full amount of the Lessor's Deposit has been paid to the applicable Suppliers. 2.05 Upon the Funding Expiration Date stated in Section 1.04 above, the Escrow Agent shall apply the balance of the Lessor's Deposit remaining in the Equipment Acquisition Fund: first, to all reasonable fees and expenses incurred by the Escrow Agent in connection herewith as evidenced by its statement forwarded to Lessee and Lessor, and second, to Lessor to be applied by Lessor for benefit of Lessee either: (a) toward the principal portion of the Rent Payment next coming due under the Lease; or (b) toward a partial prepayment of the principal amount remaining due under the Lease and thereupon Lessor shall prepare and deliver to Lessee a revised Payment Schedule reflecting such partial prepayment of principal. Upon the Funding Expiration Date stated in Section 1.04 above, the Escrow Agent shall apply the interest earnings on the Lessor's Deposit as set forth in Section 2.04 above. 2.06 The Escrow Agent shall not be responsible for the sufficiency of the moneys credited to the Equipment Acquisition Fund to make the payments herein required. Section 3. Money in Equipment Acquisitions Fund: Investment. 3.01 The money and investments held by the Escrow Agent under this Agreement are irrevocably held in trust for the benefit of Lessee and Lessor, and such money, together with any income or interest earned thereon, shall be expended only as provided in this Agreement, and shall not be subject to levy or attachment, or to any security interest or lien, by or for the benefit of any creditor of either Lessee or Lessor; provided, that the money and investments held by the Escrow Agent under this Agreement shall be subject to the security interests provided in Sections 3.07 and 4.03 hereof. 3.02 Money held by the Escrow Agent hereunder shall be invested and reinvested by the Escrow Agent at the written direction of Lessee in Qualified Investments (as defined below). Such investments shall be registered in the name of the Escrow Agent and held by the Escrow Agent. The Escrow Agent may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section. Such investments and reinvestments shall be made giving consideration for the time at which funds are required to be available. No investment shall be made that would cause the Agreement to be deemed an "arbitrage bond" within the meaning of Section 148(a) of the Internal Revenue Code of 1986, as amended. 3.03 The Escrow Agent shall have no discretion whatsoever with respect to the management, disposition or investment of the Escrow Account and is not a trustee or fiduciary to Lessee. Lessee acknowledges and agrees that all investments made pursuant to this section shall be for the account and risk of Lessee and any losses associated with investments shall be bome solely by Lessee. Escrow Agent shall from time to time invest and reinvest the funds held in the Escrow Account, as and when instructed by Lessee, in writing, in any one or more of the following (hereinafter, "Qualified Page 2 Investments'): (a) obligations of the United States of America or any agency created thereby; (b) general obligations of any State of the United States of America; (c) general obligations of any political subdivision of a State of the United States of America, if such obligations are rated by at least two recognized rating services as at least AA; (d) certificates of deposit of any national bank or banks (including, if applicable, Escrow Agent or an affiliate of Escrow Agent) insured by the Federal Deposit Insurance Corporation (FDIC) with a net worth in excess of $100,000,000 (;Acceptable Bank"); (e) obligations of State or Municipal Public Housing Authorities chartered by the United States of America and guaranteed by the United States of America; (f) demand interest bearing accounts of Escrow Agent or an affiliate of Escrow Agent if Escrow Agent or an affiliate of Escrow Agent is an Acceptable Bank; (g) money market funds whose assets are solely invested in obligations listed in (a) through (f) above, including repurchase agreements secured by such obligations and prime commercial paper, so long as the money market funds are rated in either of the two highest categories of any Rating Agency at the time of purchase, including, without limitation, the JPMorgan Funds, or any other mutual fund for which the Escrow Agent or an affiliate of the Escrow Agent serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (1) the Escrow Agent or an affiliate of the Escrow Agent receives fees from such funds for services rendered, (2) the Escrow Agent charges and collects fees for services rendered pursuant to the Lease or this Agreement, which fees are, separate from the fees received from such funds and (3) services performed for such funds and pursuant to this Agreement may at times duplicate those provided to such funds by the Escrow Agent or its affiliates; and (h) any other obligations approved in writing by Lessor. 3.04 If any of the above-described Qualified Investments are not legal investments of Lessee, then Lessee shall immediately notify Escrow Agent which of said Qualified Investments are not legal investments of Lessee, and shall provide Escrow Agent with direction to invest funds in accordance with Section 3.03. 3.05 The Escrow Agent shall, without further direction, sell such investments as and when required to make any payment from the Equipment Acquisition Fund. Any income received on such investments shall be credited to the Equipment Acquisition Fund. 3.06 The Escrow Agent shall furnish a monthly statement listing all investments to Lessor and to Lessee. The Escrow Agent shall not be responsible or liable for any loss suffered in connection with any investments of moneys made by it in accordance with this Section. 3.07 Lessee hereby grants Lessor a security interest in the money and investments held by the Escrow Agent under this Agreement as collateral security for the payment and performance of all of Lessee's obligations under the Lease, this Agreement and any agreement, contract or instrument related to the Lease or this Agreement. Lessee represents and warrants to Lessor that the money and investments held by the Escrow Agent under this Agreement are free and clear of any liens, security interests or encumbrances other than the security interests created under this Agreement. Escrow Agent hereby acknowledges that it holds the money and investments held by the Escrow Agent under this Agreement subject to such security interest created by Lessee as bailee for Lessor, provided, that Escrow Agent's security interest in such money and investments as created under Section 4.03 hereof shall be superior to Lessor's security interest therein. Section 4. Escrow Aoent's Authority: Indemnification. 4.01 The Escrow Agent may: act in reliance upon any writing, notice, certificate, instruction, instrument or signature which it, in good faith, believes to be genuine; assume the validity and accuracy of any statement or assertion contained in such a writing, notice, certificate, instruction or instrument; and assume that any person purporting to give any such writing, notice, certificate, instruction or instrument in connection with the provisions hereof has been duly authorized to do so. Except as expressly provided otherwise in this Agreement, the Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form of, the manner of execution of, or the validity, accuracy or authenticity of any writing, notice, certificate, instruction or instrument deposited with it, nor as to the identity, authority or right of any person executing the same. The Escrow Agent's duties hereunder (including, without limitation, its duties as to the safekeeping, investment and disbursement of moneys in the Equipment Acquisition Fund) shall be limited to those specifically provided herein. 4.02 Lessee are= '_essorjointly and severally shall indemnify, defend and save harmless the Escrow Agent from any and all claims, liabilities, losses, damages, fines, penalties and expenses (including out-of pocket and incidental expenses and fees and expenses of in house or outside counsel) ("Losses") arising out of or in connection with (i) its execution and performance of this Agreement, except to the extent and that such Losses are due to the gross negligence or willful misconduct of the Escrow Agent, or (ii) its following any instructions or other directions from Lessee or the Lessor, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof. The provisions of this Section 4.02 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent for any reason. The indemnifications set forth herein are intended to and shall include the indemnification of all affected agents, directors, officers and employees of the Escrow Agent. In no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the forth of action. Page 3 4.03 Lessee and Lessor hereby grant Escrow Agent a first priority security interest in the money and investments held by the Escrow Agent under this Agreement as collateral security for the costs and expenses of the foregoing of Section 4.02 and for any other expenses, costs, fees or charges of any character or nature which may be incurred by the Escrow Agent (including reasonable attorneys' fees and court costs) relating to any suit (interpleader or otherwise) or other dispute arising between Lessee and Lessor as to the correct interpretation of the Lease, this Agreement or any instructions given to the Escrow Agent hereunder, with the right of the Escrow Agent, regardless of the instructions aforesaid, to hold the said property until and unless said expenses, costs, fees and charges shall be fully paid. _ 4.04 If Lessee or Lessor disagree about the interpretation of the Lease or this Agreement, about their rights and obligations under the Lease or this Agreement, or about the propriety of any action contemplated by the Escrow Agent hereunder, then the Escrow Agent may, but shall not be required to, file an appropriate civil action to resolve the disagreement. Lessee and Lessor shall pay all costs, including reasonable attorneys' fees, in connection with such action. The Escrow Agent shall be fully protected in suspending all or any part of its activities under this Agreement until a final judgment in such action is received. - 4.05 The Escrow Agentmay consult with counsel of its own choice and shall have full and complete authorization and protection with the opinion of such counsel. The Escrow Agent shall otherwise not be liable for any mistakes of facts or errors of judgment, or for any acts or omissions of any kind unless caused by the Escrow Agent's gross negligence or willful misconduct. None of the provisions contained in this Agreement shall require the Escrow Agent to use or advance its own funds in the performance of any of its duties or the exercise of any of its rights or powers hereunder. Section 5. Chance of Escrow Agent. 5.01 Upon agreement of the parties hereto, a national banking association or a state bank having capital (exclusive of borrowed capital) and surplus of at least $10,000,000.00, qualified as a depository of public funds, may be substituted to act as Escrow Agent under this Agreement. Such substitution shall not be deemed to affect the rights or obligations of the parties hereto. Upon any such substitution, the Escrow Agent agrees to assign to such substitute Escrow Agent all of its rights under this Agreement. 5.02 The Escrow Agent or any successor may at any time resign by giving mailed notice to Lessee and Lessor of its intention to resign and of the proposed date of resignation, which shall be a date not less than thirty (30) days after such notice is deposited in the United States mail with postage fully prepaid, unless an earlier resignation date and the appointment of a successor Escrow Agent has been approved by Lessee and Lessor. 5.03 The Escrow Agent may appoint an agent to exercise any of the powers, rights or remedies granted to the Escrow Agent under this Agreement, to hold title to property or to take any other action which may be desirable or necessary hereunder. 5.04 Any corporation, association or other entity into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or otherwise transfer all or substantially all of its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger consolidation or other transfer to which it is a party, ioso facto, shall be and become successor escrow agent hereunder, vested with all other matters as was its predecessor, without the execution or filing of any instrument or any further act on the part of the parties hereto, notwithstanding anything herein to the contrary. Section 6. Administrative Provisions. 6.01 The Escrow Agent shall keep complete and accurate records of all money received and disbursed under this Agreement, which shall be available for inspection by Lessee or Lessor, or the agent of either of them, at any time during regular business hours. 6.02 All written notices to be given under this Agreement shall be given by mail to the party entitted thereto at its address set forth below, or at such address as the party may provide to the other parties hereto in writing from time to time. Any such notice shall be deemed to have been received three (3) days after deposit in the United States mail, with postage fully prepaid. - - 6.03 This Agreement shall be construed and governed in accordance with the laws of the State of Lessee. 6.04 Any provision of this Agreement found to be prohibited by law shall be ineffective only to the extent of such prohibition, and shall not invalidate the remainder of this Agreement. . 6.05 This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Specifically, the term "Lessor" as used herein means any person or entity to whom Lessor has assigned its Page 4 right to receive Rent Payments under the Lease and any other payments due to Lessor hereunder from and after the date when a written notice of such assignment is fled with the Escrow Agent. 6.06 This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same Agreement. 6.07 This Agreement shall terminate upon disbursement by the Escrow Agent of all money held by it hereunder Section 7. Security Procedures. In the event funds transfer instructions are given (other than in writing at the time of execution of this Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized.to seek confirmation of such instructions by telephone call-back to the person or persons designated on schedule 1 hereto ("Schedule 1"), and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone numbers for callbacks may be changed only in a writing actually received and acknowledged by the Escrow Agent. The Escrow Agent and the beneficiary's bank. in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the Lessee or Lessor to identify (i) the beneficiary. (ii) the beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary's bank or an intermediary bank designated. The parties to this Escrow Agreement acknowledge that these security procedures are commercially reasonable. [The next page is the signature page.] Page 5 Section 8. Escrow Agent Fees. $750.00 ("Acceptance Fee"). As compensation for Escrow Agent's services hereunder, Lessee agrees to pay Escrow Agent the above Acceptance Fee; provided, that Escrow Agent will waive the Acceptance Fee so long as the Qualified Investment for the Lessor's Deposit shall be an eligible deposit of any bank affiliate of the Escrow Agent and/or any JPMorgan Fund. If the Acceptance Fee is payable by Lessee, then Lessee authorizes Escrow Agent either to deduct said Acceptance Fee from the interest and earnings otherwise payable to Lessee under this Agreement or to bill and collect said Acceptance Fee at the Funding Expiration Date. In addition, Lessee agrees to reimburse Escrow Agent for its reasonable out-of-pocket costs and expenses and any extraordinary fees and expenses for performing its obligations hereunder (including, but not limited to, attorney's fees and expenses) and to pay all other amounts expressly due and payable to Escrow Agent hereunder. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. The Bank of New York Trust Company, N. A. ("Escrow Agent") By: Title: CHASE EQUIPMENT LEASING INC. ("Lessor") By'~P~~~~ 6525 West Oval Campus, Suite 200 New Albany, Ohio 43054 1111 Polaris Parkway, Suite A-3 Title: tkeRty- Fl/iL.C2<~G~/J~o2hGv~i Columbus, Ohio 43240 City of Denton ("Less \ -A1~ 215 East McKinney Street Tom D. Shaw Title: Purchasing Agent Denton, TX 76201 Attachments: Schedule 1 (Name/telephone # of call-back person(s) designated by Section 7 above) Page 6 FROM o. «06 uo]3O- b14L135398 (WED) 12. 6'06 16: 37/ST. 16:37/NO. 4861763629 P 3 CHASE EQUIP LEASING PAGE 07/13 "'*n 8. Escrow Agent e hereunder, Lessee agrees S750.OO ('Acceptance Fea'), M oompansation for Acceptance er, Feces long e:es to pay Escrow Agent the above Acceptance Fee; 4m ldedh,t Escr EsOr" Agent's services of the Escrow A as the Qualified investment for the Lassoes Dep,, shall bean, tfhat d Oita an will waive the gent andfor any JPMorgan Fund, If the aPo y bank afflllate Escrow Agent either to deduct said Accoptance Fee from At aan~ Fas is Payable by Lessee. then Lessee euthadzaa Agreement of to bill and collect said Acceptance Fes ihs interest and earnings OthenMse payable to Le reimburse Escrow Agent for Its reasonable outrobpockd the Funding Expiraton Data, In wee under this extraor PeAorming its obligations hereunder (inctuding but not et cis end expenses and an nary! a Less ea agrees to expressly due and payable to Escrow lim had to, attorney's x Qrs6s Binary teas and expenses for Agent hereunder. fees and expenses) and to pay all other amounts IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. iris Bank of New York Trust Company, N. A. ('Escrow Agent' By, V 6525 West Oval Campus. Suite 200 Title' New Albany. Ohio 4,3054 HA.SDE ~ UIPNB4T LEASING INC. ey: 1111 Polaris Parkway. suite A.3 T ah«wy- FvRr/~tM/J(~~V Columbus, Ohio 43240 City of Denton ('L.esa e Torr, D gnaw 215 East Mcpnney Street Trtla Purchasing Agent Denton, TX 78201 Att~onrne_^,L= Schedule 1 (Nam0(60ephdne S of Call-back person(s) designated by Section 7 above) Page 6 ID:CE04576DE38e21E 1]16!2006 3:12:49 PM [Central standard Tlme]DNIS:6e2210051 CSID: Uaar:CEQLEASE a Pg 3 of 3 Schedule 1 Telephone Number(s) for Call-Backs and Person(s) Designated to Confirm Funds Transfer Instructions If to Lessee: City of Denton1#1000130103 Name 1 Telephone Number 2. C~r: S U?Z _!An - 3. a'3~~ If to Lessor Name Telephone Number 1. Larry E. Spencer (614) 213-7177 2. Timothy L. Ellerbrock (614) 213-7645 3. Aric Cam burn (614) 213-1932 4. Mary Heubach (614) 213-1557 5. Lory R. King- (614) 213-1146 6. Nate J. Ruhe - (614-213-3859) Telephone call-backs shall be made to each Lessee and Lessor if joint instructions are required pursuant to this Escrow Agreement. Page 7 `fArBANK of NEW YORK [Auth-2b] [To use when The Bank of New York Trust Company, N.A. is appointed to provide services] AUTHORIZATION AND DIRECTION TO THE BANK OF NEW YORK TRUST COMPANY, N.A. TO INVEST CASH BALANCES IN MONEY MARKET MUTUAL FUNDS THROUGH THE BANK OF NEW YORK CUSTOMER NAME (the "Customer"):City of Denton ACCOUNT (the "Account"): Escrow Fund AGREEMENT (Description): Escrow Agreement for City of Denton ACCOUNT NUMBER:g 7G 3. O Check One _ JPMorgan Prime Money Market Fund Morgan Shares (283) JPMorgan U.S. Government Money Market Fund Morgan Shares (3916) JPMorgan Federal Money Market Fund Morgan Shares (353) JPMorgan Treasury Plus Money Market Fund Morgan Shares (3919) !_/JPMorgan 100% U.S. Treasury Securities Money Market Fund Morgan Shares (677) _JPMorgan Tax Free Money Market Fund Morgan Shares (2) These instructions supersede any previous instructions which pertain to the investment of cash in the Account. AUTHORIZATION AND DIRECTION The Bank of New York Trust Company, NA. (°BNYNA"), through its affiliate, The Bank of New York ("BNY"), is hereby authorized and directed to invest any available cash in the Account in shares of the Fund and to redeem shares of the Fund to meet the cash requirements of the Account. Customer may, from time to time, direct BNYNA in writing to redeem and exchange shares of the Fund for shares of, or to invest available cash or the proceeds from any redemption in, another eligible investment and BNYNA shall comply with such direction. Customer represents and warrants to BNYNA that it is authorized and .empowered to direct BNYNA to make the investment specified herein through BNY and that the investment authorized herein is an authorized investment. PROSPECTUS: Customer has read the Prospectus of the Fund and has independently made the determination to direct BNYNA, through BNY, to invest available cash in the Account in shares of the Fund. Customer understands that the Fund is not an obligation of, or recommended, endorsed or guaranteed in any way by, BNY, its affiliates or any other bank; that the Fund is not insured by an agency or instrumentality of the United States, such as the Federal Deposit Insurance Corporation; and that investments in the Fund may be subject to investment risks, including possible loss of the principal amount invested. Customer further understands that, neither BNY nor its affiliates has participated in the preparation of the Prospectus or is responsible for its content PERIODIC STATEMENTS: Customer agrees that transactions in the Fund will be reported only in BNYNA's regular periodic account statements. 7be BANK of NEW YORK VOTING SHARES: Customer assumes the obligation and retains the right to vote all shares of the Fund held hereunder for the benefit of the Account. SHAREHOLDER SERVICES FEES: Customer acknowledges that the Fund is authorized to make payments from its management fee or any other source available to parties such as banks or broker- dealers ("Service Organizations") that provide shareholder support services to the Fund and that Service Organizations currently are compensated at a rate of up to the Maximum Rate of .50% annually of the average net assets of each Fund with respect to which they provide or have provided shareholder support services. Customer further acknowledges that BNY is a Service Organization and is paid, and hereby consents to such payment, by the Fund up to the Maximum Rate annually of the average daily balance of the Account invested in the Fund for shareholder support services rendered to the Fund by BNY, which services may include, without limitation, answering client's inquiries regarding the Fund, assistance to clients in changing dividend options, account designations and addresses, processing purchase and redemption transactions, providing periodic statements showing a client's account balance and the integration of such statement with other transactions, arranging for BNY wires, and providing such other information and services as the Fund's distributor or Customer reasonably may request. Customer further acknowledges that the Fund may purchase securities from or through BNY or its affiliates, may engage in repurchase transactions with BNY or its affiliates, may place funds on deposit in accounts with BNY or its affiliates and receive interest income thereon and may obtain other services from BNY for which BNY is paid a fee. INVESTMENT MAINTENANCE FEE: BNYNA will charge an investment maintenance fee with respect to investments in the Fund, calculated at an annual rate of up to zero (0.00) basis points on average total monthly account balances. This Authorization and Direction is executed, acknowledged and consented to at on [City] [State] [Date] City of Denton By (Signature): W Name (Pdnntt): u Title: ("b nl~~Q2 131 %e BANK of NEW YORK 11/1712006 City of Denton Re: Lease #1000130103 Dear Mr. Shaw. It is our pleasure to serve as escrow agent on the above-referenced matter. We understand that you have authorized and directed us to invest cash balances in one of the JPMorgan Money Market Funds in accordance with the escrow agreement. In that regard, we hereby request that you select the JPMorgan Money Market Fund you choose to invest in and sign our Authorization and Direction to The Bank of New York Trust Company, N.A. to Invest Cash Balances in Money Market Mutual Funds (the "Direction°). A copy of the Direction is enclosed. Once signed, please submit the originally executed form to Chase Equipment Leasing Inc. along with the other leasing and escrow documents. Please do not hesitate to contact the undersigned should you have any questions. Sincerely, The Bank of New York Trust Company, N.A. Joyce Antoncic Assistant Vice President (614) 775-5280 ESCROW FUNDING SCHEDULE ADDENDUM AND ARBITRAGE CERTIFICATE Dated As Of 11/17/2006 Lease Schedule No. 1000130103 Lessee: City of Denton Escrow Agent: The Bank of New York Trust Company, N. A. Escrow Agreement dated as of 1111712006 Amount To Be Deposited Into Escr ow: S 1,677,569.00 ("Lessor's Deposit") Reference is made to the above Lease Schedule ("Schedule") to the Master Lease-Purchase Agreement identified in the Schedule ("Master Lease") by and between Chase Equipment Leasing Inc. ("Lessor') and the above lessee ("Lessee"). As used herein, "Lease" shall mean the Schedule and the Master Lease, but only to the extent that the Master Lease relates to the Schedule. This Addendum amends and modifies the terms and conditions of the Lease and is hereby made a part of the Lease. Unless otherwise defined herein, capitalized terms defined in the Master Lease shall have the same meaning when used herein. NOW, THEREFORE, as part of the valuable consideration to induce the execution of the Lease, Lessor and Lessee hereby agree to amend the Lease as follows: -1. Lessee and Lessor together with the above Escrow Agent ("Escrow Agent") have entered into the above Escrow Agreement ("Escrow Agreement") establishing a fund ("Equipment Acquisition Fund") from which the Purchase Price of the Equipment will be paid. - 2. Lessor shall deposit such amount into escrow as is required by the Escrow Agreement, which amount shall be credited to the Equipment Acquisition Fund. Lessee shall pay the balance of the Purchase Price of the Equipment, either by deposit in escrow to the Equipment Acquisition Fund or by direct payment to the Suppliers of the Equipment. - 3. The Lease Term of the Lease shall commence on the earlier of the date specified in the Payment Schedule to the Schedule or the date of Lessor's deposit of funds into the Equipment Acquisition Fund. Notwithstanding the statements regarding delivery and acceptance of the Equipment in the Schedule, the parties acknowledge that the Equipment will be accepted as provided in the Escrow Agreement. 4. The delivery of documents and the satisfaction of any other conditions required by the Escrow Agreement or this Addendum shall be additional Funding Conditions for the Lease. 5. Upon Lessee's execution of the Escrow Agreement, Lessee hereby represents and warrants to Lessor that: (a) Lessee has full power, authority and legal right to execute and deliver the Escrow Agreement and to perform its obligations under the Escrow Agreement, and all such actions have been duly authorized by appropriate findings and actions of Lessee's governing body, (b) the Escrow Agreement has been duly executed and delivered by Lessee and constitutes a legal, valid and binding obligation of Lessee, enforceable in accordance with its terms; and (c) the Escrow Agreement is authorized under, and the authorization, execution and delivery of the Escrow Agreement complies with, all applicable federal, state and local laws and regulations (including, but not limited to, all open meeting, public bidding and public investment laws) and all applicable judgments and court orders. 6. The opinion of Lessee's legal counsel will include statements to the same effect as the representations of Lessee in paragraph 5 above. 7. It shall be an additional event of default under the Lease if Lessee fails to pay or perform any of its obligations under the Escrow Agreement or this Addendum or if any of the representations of Lessee in the Escrow Agreement or this Addendum prove to be false, misleading or erroneous in any material respect. 8. ARBITRAGE CERTIFICATE. The authorized representative of Lessee who executes this Addendum hereby certifies that he/she is the duly qualified and acting representative of Lessee with the title set forth below his/her signature hereon; that Lessee has executed and delivered the Schedule and the Master Lease (collectively, the "Lease"); that Lessee is a political subdivision of the State identified in the Lease; and that in his/her official capacity as such officer he/she is responsible for executing and delivering, on behalf of the Lessee, the Lease and this Addendum. This paragraph of this Addendum (hereinafter, this paragraph shall be identified as the "Arbitrage Certificate'l is being issued by Lessee as a "no arbitrage certificate" pursuant to Section 148 of the Internal Revenue MUN2ESCRADD PAGE I OF 3 Code of 1986, as amended (the "Code"), and Treasury Regulations, Sections 1.148-0 through 1.148.11 (the "Regulations"). Lessee represents and warrants to Lessor that the following facts, estimates and circumstances are in existence on the date of this Arbitrage Certificate or are reasonably expect to occur hereafter. _ (a) The Lease provides for the lease of the Equipment described in the Lease by Lessor to Lessee. Under the Lease, Lessee is required to make Rent Payments with respect to the Equipment, comprising principal and interest, on the dates and in the amounts stated in the Payment Schedule to the Lease. (b) Pursuant to the Lease and for the purpose of meeting its obligations thereunder and assuring the Lessee of the availability of monies needed to pay the cost of the Equipment when due, Lessee, Lessor and the Escrow Agent have executed the Escrow Agreement. (c) Contracts or purchase orders providing for the acquisition and delivery of the Equipment have been issued by Lessee to Equipment Vendors therefor and the Equipment will be acquired and installed with due diligence. Based upon the provisions of the contracts or purchase orders, the Equipment will be acquired and installed no later than eighteen (18) months from the date of the Escrow Agreement ("Funding Expiration Date"). (d) The Escrow Agreement provides that Lessor shall deposit the Lessor's Deposit into escrow to be credited to the Equipment Acquisition Fund created by the Escrow Agreement and utilized. to pay for the Equipment as provided therein. It is presently expected that all such funds initially credited to the Equipment Acquisition Fund shall be disbursed to pay Tor the Equipment, but any such amounts ultimately determined not to be needed for such purposes and the interest earnings on the amounts held in escrow shall be utilized on or after the Funding Expiration Date to pay part of the principal due under the Lease, as provided in the Escrow Agreement. (e) All of the spendable proceeds of the Lease will be expended on the Equipment and related expenses on or before the Funding Expiration Date. (f) The original proceeds of the Lease, and interest to be earned thereon, do not exceed the amount necessary for the purpose for which the Lease is issued. (g) The interest of Lessee in the Equipment has not been and is not expected during the term of the Lease to be sold or disposed of by Lessee. (h) No sinking fund is expected to be created by Lessee with respect to the Lease and Rental Payments. (i) Lessee represents, warrants and covenants to one of the following statements of this clause (i) as is initialed by Lessee below [and if Lessee fails to initial its selection, then subelause (A) shall be deemed to have been selected by Lessee]: _ (A) 100% of the proceeds of the Lease shall be paid for the acquisition of the Equipment within 18 months of the date of the Escrow Agreement in accordance with the following schedule: 15% within 6 months of the date of the Escrow Agreement; - 60% within 12 months of the date of the Escrow Agreement; and - 100% within 18 months of the date of the Escrow Agreement. (B) 100% of the proceeds of the Lease shall be paid for the acquisition of the Equipment within 6 months of the date of the Escrow Agreement - - - (C) Lessee qualifies for the "small issuer" exemption in section 148(f)(4)(D) of the Code because all of the following are true: (1) Lessee is a governmental unit with general taxing powers, and (2) the Lease is not a "private activity bond" as defined in Section 141 of the Code, and (3) 95% or more of the proceeds of the Lease shall be used for the governmental activities of Lessee, and (4) the aggregate face amount of all tax exempt bonds and other tax exempt obligations (other than "private activity bonds") issued by Lessee (and any subordinate entities of Lessee as contemplated by Section 148(f) of the Code) during the calendar year in which the Lease is issued is not reasonably expected to exceed $5,000,000. O Lessee hereby covenants that Lessee shall comply with all of the requirements of the Code and Regulations relating to the rebate of arbitrage profit to the United States of America (including, without limitation Section 148(f) of the Code) and will rebate to the United States of America all arbitrage profit required thereby. _ (k) To the best of the knowledge and belief of the undersigned, the expectations of Lessee, as set forth above, are reasonable; and there are no present facts, estimates and circumstances which would change the foregoing expectations. MUN2ESCR.ADD PAGE 2OF3 (1) Lessee has not been notified of the listing or proposed listing of it by the Internal Revenue Service as an issuer whose arbitrage certificates may not be relied upon. 9. Except as expressly amended by this Addendum and other modifications signed by Lessor, the Lease remains unchanged and in full force and effect. M WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date first referenced above. Citv of Denton Chase Equipment Leasine Inc. (Lessee) (Lessor) Tom Shaw Title: Purchasing Agent n e MUN2ESCR.ADD PAGE 3 OF 3 LEASE SCHEDULE NO. 1000130103 Dated As Of 11/17/2006 This Lease Schedule, together with its Payment Schedule, is attached and made apart of the Master Lease- Purchase Agreement described below ("Master Lease") between the Lessee and Lessor named below. All terms and conditions of the Master Lease are incorporated herein by reference. Unless otherwise defined herein, capitalized terms defined in the Master Lease will have the same meaning when used herein. Master Lease-Purchase Agreement dated April 22, 2004. A. EQUIPMENT DESCRIBED: The Equipment includes all of the property described on Schedule A-1 attached hereto and made a part hereof. B. B. EQUIPMENT LOCATION: See Schedule A1. C. ACCEPTANCE OF EQUIPMENT: AS BETWEEN LESSEE AND LESSOR, LESSEE AGREES THAT: (a) LESSEE HAS RECEIVED AND INSPECTED ALL EQUIPMENT; (b) ALL EQUIPMENT IS IN GOOD WORKING ORDER AND COMPLIES WITH ALL PURCHASE ORDERS, CONTRACTS AND SPECIFICATIONS; (c) LESSEE ACCEPTS ALL EQUIPMENT FOR PURPOSES OF THE LEASE "AS-IS, WHERE-IS"; AND (d) LESSEE WAIVES ANY RIGHT TO REVOKE SUCH ACCEPTANCE. D. ESSENTIAL USE; CURRENT INTENT OF LESSEE: Lessee represents and agrees that the use of the Equipment is essential to Lessee's proper, efficient and economic functioning or to the services that Lessee provides to its citizens and the Equipment will be used by Lessee only for the purpose of performing its governmental or proprietary functions consistent with the permissible scope of its authority. Lessee currently intends for the full Lease Term: to use the Equipment; to continue this Lease; and to make Rental Payments if funds are appropriated in each fiscal year by its governing body. E. RENTAL PAYMENTS; LEASE TERM: The Rental Payments to be paid by Lessee to Lessor, the commencement date thereof and the Lease Term of this Lease Schedule are set forth on the Payment Schedule attached to this Lease Schedule. F. RE-AFFIRMATION OF THE MASTER LEASE: Lessee hereby re-affirms all of its representations, warranties and obligations under the Master Lease (including, without limitation, its obligation to pay all Rental Payments, its disclaimers in Section 7 thereof and its representations in Sections 6.1 and 16 thereof). Equipment/Escrow Acceptance Date: -e596 ' ~ct7lo LESSEE: City of Denton B Tom D. Shaw Title: Purchasing Agent 215 East McKinney Street Denton, TX 76201 LESSOR: Chase Equipment Leasina Inc.. formerly known as Banc One Leasing Corporation By: 1111 Polaris Park, Suite A3 Columbus, Ohio 43240 - MLDS.DOC PAGE 1 OF 1