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Golf Carts Lease Purchase Agreement (1999)LEASE PURCHASE AGREEMENT This Agreement (the "Lease") is made as of this 8th day of November, 1999 by and between UMB Banc Leasing Corp., a Missouri corporation, with offices at 1010 Grand Boulevard, Kansas City, Missouri 64106 (the "Lessor"), and City of Salina, Kansas with principal offices at 300 West Ash Street, Salina, Kansas 67402-0736 (the "Lessee"), wherein it is agreed as follows: 1. Lease of Equipment: As requested by Lessee, Lessor will order the equipment described in Exhibit A attached hereto, but Lessor shall not be liable for specific performance of this Lease or for damages if for any reason the supplier thereof delays or fails to fill the order. Subject to the terms and conditions hereof, Lessor agrees to lease to Lessee and Lessee agrees subject to the acceptance of the equipment to lease from Lessor the equipment described in Exhibit A, together with all replacements thereof and additions thereto (herein collectively called the "Equipment"). 2. Delivery and Acceptance: Lessee shall cause the Equipment to be delivered at the location specified in Exhibit A (the "Equipment Location") and shall pay all costs incurred in connection with the delivery and installation of the Equipment to the extent not included in the cost financed hereunder. Any delay in such delivery shall not affect the validity of this Lease. Lessee shall accept or reject the Equipment as soon as it has been delivered and is operational, or as soon as any test period has expired. Notwithstanding the foregoing, in the event the Equipment is not accepted by Lessee within thirty (30) days from the date of its delivery, Lessor, at Lessor's sole option shall have the right to terminate this Lease. If the Lessee rejects the Equipment, this Lease shall terminate with respect to the Equipment so rejected and the Rental Payments shall be adjusted accordingly. Lessee shall evidence its acceptance of the Equipment by executing and delivering to Lessor a certificate in the form of Exhibit B attached hereto (the "Acceptance Certificate"). Lessee hereby authorizes the Lessor to add to this Lease and to any other description of the Equipment the serial number of each item of Equipment when available. 3. Term: This Lease shall become effective upon the execution hereof by Lessee and Lessor. The initial term of this Lease shall commence on the date Lessee executes the Acceptance Certificate (the "Start Date") and shall continue through the end of Lessee's fiscal year containing the Start Date and, unless earlier terminated as expressly provided for in this Lease, shall be automatically renewed on a fiscal year to fiscal year basis for the number of Lessee's annual fiscal years necessary to comprise the lease term as set forth in Exhibit C attached hereto and made a part hereof (the "Lease Term"). 4. Rent: Lessee agrees, subject to appropriation of funds budgeted for payment of Rental Payments hereunder for each fiscal year of the Lease Term, to pay Lessor or any Assignee (as defined below), the Rental Payments for the Equipment as set forth in Exhibit C (the "Rental Payments"). The parties acknowledge and agree that the Rental Payments shall be allocated and divided among (i) the capital cost required to purchase the Equipment for cash, (ii) the amount included in the Rental Payments as interest at the average annual effective interest cost, and (iii) the amount included in the Rental Payments for service, maintenance, insurance and other charges, if any (exclusive of the capital cost and interest cost), all as determined in accordance with K.S.A. § 10-1116c(c) and as set forth in Exhibit C. A portion of each Rental Payment is paid as and represents the payment of interest as set forth in Exhibit C. The Rental Payments shall be payable, without notice or demand, at the office of Lessor (or such other place as Lessor or any Assignee may designate in writing, from time to time) and shall commence .on the I 367269.02/stbb-I 1/8/99 first day of the first month following the Start Date, and the remaining Rental Payments shall be payable on the same day of each consecutive year thereafter for the duration of the Lease Term. To the extent permitted by applicable law, whenever any portion of a Rental Payment is received by Lessor or its Assignee more than fifteen (15) days after the due date, Lessee shall pay to Lessor or its Assignee, on demand, a late charge of twenty-five dollars ($25.00). Except as specifically provided in the first sentence of this Section 4 and Section 8 hereof, the Rental Payments shall be absolute, and unconditional in all events and will not be subject to any setoff, defense, counterclaim, abatement or recoupment for any reason whatsoever. 5. Authority and Authorization: Lessee represents, warrants and covenants that (a) it shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its existence, and (ii) the Lease; (b) it has complied with all bidding and budgeting requirements where necessary and by due notification has presented this Lease for approval and adoption as a valid obligation on its part and that all requirements have been met and procedures have been followed to ensure the enforceability of the Lease; (c) it has sufficient appropriations or other funds available to pay all amounts due hereunder for its current fiscal year; (d) no event has occurred and no condition exists which, upon the execution of this Lease or with notice or the passage of time or both, would constitute a default under any debt, revenue or purchase obligation which it has issued or to which it is a party (the "Obligation") nor has it been in default under an Obligation at any time during the past five (5) years; and (e) no lease, rental agreement or contract for purchase, to which Lessee has been a parry, at any time during the past five (5) years, has been terminated by Lessee as a result of insufficient funds being appropriated in any fiscal year. 6. Lessee Certification: Lessee warrants and covenants that (i) it is a municipal corporation and a political subdivision of the State of Kansas within the meaning of Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and the related regulations and ruling thereunder; (ii) Lessee's obligation under this Lease constitutes an enforceable obligation issued by or on behalf of City of Salina, Kansas, such that any interest income derived under this Lease and due Lessor or its Assignee shall not be includable in the gross income of any recipient thereof for purposes of federal income taxation; (iii) this Lease represents a valid deferred payment obligation of Lessee for the amount herein set forth; (iv) Lessee has the legal capacity to enter into this Lease and, to the best of Lessee's knowledge, is not in contravention of any state or county, statute, rule, regulation or other governmental provision governing the ownership or use of the Equipment; (v) during the Lease Term, the Equipment shall not be used in a trade or other business of any person or entity other than Lessee so as to cause this Lease to be a pro rata activity bond within the meaning of the Code; and (vi) Lessee shall complete and timely file Internal Revenue Service form 8038g or 8038gc, as appropriate, in the manner set forth in Section 149(e) of the Code. 7. Appropriations and Essential Use: Lessee reasonably believes that sufficient funds can be obtained to make all Rental Payments during the Lease Term. Lessee hereby covenants that it shall do all things lawfully within its power to obtain funds from which the Rental Payments may be made. It is Lessee's intent to make the Rental Payments for the full Lease Term if funds are legally available therefor and in that regard, Lessee represents that: (a) the use of the Equipment is essential to its proper, efficient and economic functioning or to the services that it provides to its citizens; (b) Lessee has an immediate need for and expects to make immediate and continued use of substantially all of the Equipment, which need is not temporary or expected to diminish in the foreseeable future; and (c) the Equipment shall be 2 367269.02/sfbb-1 1/8/99 used by the Lessee only for the purpose of performing one or more of its governmental or proprietary functions consistent with the permissible scope of its authority. On the Start Date, Lessee will execute and deliver to Lessor a letter in the form of Exhibit D attached hereto. Notwithstanding the foregoing, the decisions to budget and appropriate funds and to continue this Lease shall remain the decision of the governing body of Lessee, to be made in accordance with normal and customary procedures for such decisions. 8. Nonappropriation of Funds. Notwithstanding any other provision contained herein (whether in this Section 8 or in any other provision hereof), Lessee is obligated only to pay periodic payments or monthly installments hereunder as may lawfully be made from: (a) funds budgeted and appropriated for that purpose during Lessee's current budget year, or (b) funds made available from any lawfully operated revenue producing source. In the event that Lease payments are not . made when otherwise due by virtue of the preceding sentence, either Lessee or Lessor shall have the right, upon written notice to the other, to immediately terminate the Lease Term. In the event insufficient funds are appropriated and. budgeted for the acquisition, retention or operation of the Equipment in any fiscal year in which the Rental Payments for the Equipment are due under this. Lease, then Lessee shall, not less than thirty (30) days prior to the end of such applicable fiscal year, in writing, notify Lessor and any Assignee at Lessor's address appearing at the beginning of this Lease or as otherwise directed in writing, of such occurrence. This Lease shall thereafter terminate and be rendered null and void on the last day of the fiscal year for which appropriations were made without penalty, liability. or expense to the Lessee of any kind, except as to (i) the portions of the Rental Payments herein agreed upon for which funds shall have been appropriated and budgeted or are otherwise available and (ii) Lessee's other obligations and liabilities under this Lease relating to, accruing or arising prior to such termination. In the event of such termination, Lessee agrees to peaceably surrender possession of the Equipment to . Lessor or its Assignee on the day of such termination, packed for shipment in accordance with the manufacturer's specifications and eligible for manufacturer's maintenance, freight prepaid and insured to any location designated by Lessor within a 100 mile radius of Lessor's address as first stated above, all at Lessee's expense. Lessor or its Assignee may exercise all available legal and equitable rights and remedies in retaking possession of the Equipment. Notwithstanding the foregoing, Lessee agrees (but only to the extent permitted by applicable state or federal law): (i) that it will not cancel this Agreement under the provisions of this Section if any funds are appropriated by it for the acquisition, retention or operation of the Equipment or other equipment performing functions similar to the Equipment for the fiscal period in which such attempted termination occurs, and (ii) that it will not, during the Lease Term hereof, give priority in the application of funds legally available for the payment of Rental Payments to any other functionally similar equipment. This Section shall not be construed to authorize Lessee to terminate this Agreement solely to acquire equipment similar to the Equipment or to allocate funds legally available for Rental Payments directly or indirectly to equipment which would perform essentially the same function as the Equipment. This Section is not intended to permit or authorize the Lessee to utilize the termination provisions of this Lease to terminate this Lease in lieu of exercising the Lessee's rights against any manufacturer of all or any part of the Equipment in the event of Lessee's dissatisfaction, for any reason, with all or any part of the Equipment. Nor is this Section intended to be construed to permit or authorize the Lessee to terminate this Lease for any reason in order to utilize equipment which is currently owned by Lessee or is 3 367269.02/sfbb-11/8/99 under Lessee's control in lieu of utilizing all or any part of the Equipment which performs the same function. 9. Limitation on Warranties: Lessee has selected both the Equipment and the vendor from whom Lessor is to purchase the Equipment in reliance hereon. Lessee acknowledges and agrees that the Equipment is of a size, design and capacity selected by Lessee, that Lessor is not a manufacturer, vendor or distributor of such Equipment, and that Lessor has not made, and does not hereby make, any representation, warranty or covenant, express or implied, with respect to the merchantability, condition, quality, durability, design, operation, fitness for use, or suitability of the Equipment in, any respect whatsoever or in connection with or for the purposes and uses of Lessee, or any other representation, warranty or covenant of any kind or character, express or implied, with respect thereto and Lessor shall not be obligated or liable for actual, incidental, consequential or other damages of or to Lessee or any other person or entity arising out of or in connection with the Equipment, including but not limited to the use, performance or maintenance of the Equipment. Lessor hereby assigns to Lessee during the Lease Term, to the extent permitted by law, all rights under and to manufacturer's warranties, if any, that it may have with respect to the Equipment. Lessor authorizes Lessee, to the extent permitted by law, to enforce in its own name any warranty, representation or other claim enforceable against the manufacturer. Lessor assumes no responsibility for shipment, delivery, installation or maintenance. The obligation of Lessee to pay the Rental Payments shall not be abated, impaired or reduced by reason of any claims of Lessee with respect to the Equipment, including but not limited to its condition, quality, workmanship, delivery, shipment, installation, defects or otherwise. 10. Title; Purchase Money Security Interest: To the extent the same shall not render this Lease unenforceable Title to the Equipment is deemed to be in Lessee so long as no Event of Default has occurred and/or this Lease has not been terminated pursuant to the provisions of Section 8 above. Upon the earlier of (i) termination of this Lease in accordance with Section 8 above or (ii) the occurrence of any Event of Default by Lessee, title shall immediately revert to Lessor free of any right, title or interest of Lessee unless Lessor elects otherwise. In order to secure all of its obligations hereunder, Lessee hereby (a) grants to Lessor a first and prior purchase money security interest in any and all rights, title and interest of Lessee in the Lease, the Equipment and in all additions, attachments, accessions accessories, replacements, improvements and substitutions thereto, now or hereafter acquired, together with all rents, issues, income, profits and proceeds thereof, including insurance proceeds; and (b) agrees if and to the extent permitted by law to execute and deliver all financing statements, certificates of title and other instruments necessary or appropriate to evidence and perfect such security interest. 11. Personal Property: The Equipment is intended to be and shall remain, personal property under Kansas law and shall not be deemed to be affixed or attached to real property or any building thereon. If requested by Lessor, Lessee shall, at its expense, furnish to Lessor landlord or mortgagee waivers with respect to the Equipment. 12. Use; Repairs: Lessee shall use the Equipment in a careful manner for the use contemplated by the manufacturer of the Equipment and shall comply with all laws, ordinances, insurance policies and regulations relating to, and, subject to appropriation of funds budgeted for such purpose for each current 4 367269.02/stbb-11/8/99 fiscal year, shall pay all costs, claims, damages, taxes, fees and charges arising out of its possession, use or maintenance. Lessee, at its sole cost and expense, shall maintain the Equipment according to the manufacturer's recommended guidelines and shall furnish proof of such maintenance, if requested by Lessor and shall furnish all needed servicing and parts, which parts shall become part of the Equipment. 13. Modification: Lessee shall not make any modifications, additions or improvements to the Equipment without the Lessor's prior written consent, and any permitted addition which cannot be readily removed without damaging the Equipment's originally intended function or value shall become part of the Equipment. 14. Location; Inspection: The Equipment shall not be removed from the Equipment Location except for ordinary use in accordance with the Equipment's intended purpose without Lessor's prior written consent. Lessor shall be entitled to enter upon the Equipment Location or elsewhere during reasonable business hours to inspect the Equipment or observe its use and operation. 15. Liens and Taxes: Lessee shall keep the Equipment free and clear of all levies, liens and encumbrances except those created under this Lease. Lessee shall pay, when due, all charges and taxes (federal, state and local) which may now or hereafter be imposed upon the ownership, leasing, rental, sale, purchase, possession or use of the Equipment, excluding however, all taxes on or measured by Lessor's income. If Lessee fails to pay said charges and taxes when due, Lessor shall have the right, but shall not be obligated, to pay said charges and taxes. If Lessor pays any charges or taxes for which Lessee is responsible or liable under this Lease, Lessee shall, upon demand, reimburse Lessor therefor. 16. Risk of Loss; Damage Destruction: Lessee assumes all risk of loss or of damage to the Equipment from any cause whatsoever, and no such loss of or damage to the Equipment shall relieve Lessee of the obligation to make the Rental Payments or to perform any other obligation under this Lease in accordance with and subject to the provisions hereof. In the event of damage to any item of Equipment, Lessee shall immediately place the same in, good repair (the proceeds of any insurance recovery shall be applied to the cost of such repair). If Lessor determines that any item of Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee shall: (a) replace the same with like equipment in good repair; or (b) on the next Rental Payment date pay to Lessor all amounts owed by Lessee under this Lease, including the Rental Payment due on such date. In the event that Lessee is obligated to make such payment with respect to less than all of the Equipment, Lessor shall provide Lessee with the pro rata amount of the Rental Payment and the balance of the Rental Payments then due and remaining unpaid hereunder, as applicable, to be made by Lessee with respect to the Equipment which has suffered the event of loss. 17. Insurance: Lessee shall, at its expense (subject to appropriation of funds for such purpose), maintain at all times during the Lease Term, fire and extended coverage, public liability and property damage insurance with respect to the Equipment in such amounts, covering such risks, and with such insurers as shall be satisfactory to Lessor. In no event shall the insurance limits be less than an amount equal to the balance of the Purchase Price then remaining for the Lease Term. Each insurance policy shall name Lessee as an insured and Lessor or its assigns as an additional insured and loss payee, as appropriate, and shall contain a clause requiring the insurer to give Lessor or its Assignee at least thirty (30) days prior written notice of any alteration in the terms of such policy or the cancellation thereof. The 5 367269.02/sfbb-I 1/8/99 proceeds of any such policies shall be payable to Lessee and Lessor or its Assignees, as their interests may appear. Upon acceptance of the Equipment and upon each insurance renewal date, Lessee shall deliver to Lessor a certificate in the form of Exhibit E attached hereto evidencing such insurance. In the event of any loss, damage, injury or accident involving the Equipment, Lessee shall promptly provide Lessor with written notice thereof and make available to Lessor all information and documentation relating thereto. Notwithstanding the foregoing, with Lessor's prior written consent, Lessee may self -insure against any and all risks for which insurance is required. 18. Indemnification: If any interest payments as set forth in Exhibit C are included in the recipient's gross income for lessee through action, failure to act, or misrepresentation of material fact, caused the interest payments to be includable in the lessor's taxable gross income, Lessee agrees to pay to the recipient an additional amount, which together with the amount of interest to be paid by Lessee under this Lease, puts the recipient in the same after-tax yield position which it would have had if such payments had been excluded from the gross income of the recipient under Section 103 of the Code. In addition, Lessee agrees, if and to the extent permitted by law, to indemnify Lessor against, and hold Lessor, its Assignees, or any participants with such, harmless from, any and all claims, actions, proceedings, expenses, damages, liabilities or losses (including, but not limited to, attorneys' fees and courts costs) arising in connection with the Equipment, including, but not limited to, its selection, purchase, delivery, possession, use, operation or return and the recovery of claims under insurance policies thereon. 19. Events of Default: The term "Event of Default", as used in this Lease, means the occurrence of any one or more of the following events: (a) Lessee fails to make any Rental Payment (or any other payment) as it becomes due in accordance with the terms of this Lease, and any such failure continues for ten (10) days after the date thereof; (b) Lessee fails to perform or observe any other covenant, condition or agreement to be performed or observed by it hereunder and such failure is not cured within ten (10) days after written notice thereof by Lessor; (c) the discovery by Lessor that any statement, representation or warranty made by Lessee in this Lease or in any document delivered by Lessee pursuant hereto or in connection herewith is false, misleading or erroneous in any material respect; (d) Lessee becomes insolvent, is unable to pay its debts as they become due, makes an assignment for the benefit of creditors, applies or consents to the appointment of a receiver, trustee, conservator or liquidator of Lessee or of all or a substantial part of its assets, a petition for relief is filed by Lessee under federal bankruptcy, insolvency or similar laws, or a petition in a proceeding under any bankruptcy, insolvency or similar laws, is filed against Lessee and is not dismissed within thirty (30) days thereafter; (e) Lessee suffers an adverse material change in its financial condition or operations from the date hereof and, as a result, Lessor deems itself insecure; or (f) Lessee shall be in default under any other agreement with Lessor. 20. Remedies: Upon the occurrence of an Event of Default, Lessor may to the extent permitted by law, at its option, exercise any one or more of the following remedies; (a) by written notice to Lessee declare an amount equal to all amounts then due under this Lease and all remaining Rental Payments which shall become due during the current fiscal year of Lessee for which funds have been budgeted to be immediately due and payable, whereupon the same shall become immediately due and. payable; (b) by written notice to Lessee, request Lessee to (and Lessee agrees that it shall), at Lessee's expense, promptly 6 367269.02/stbb-11/8/99 return the Equipment to Lessor in the manner set forth in Section 8 hereof, or Lessor, at its option, may enter upon the premises where the Equipment is located and take immediate possession of and remove the same without liability to Lessor or its agents for such entry or for damage to property or otherwise; (c) sell or lease the Equipment or sublease it for the account of Lessee, holding Lessee liable for (i) all Rental Payments and other payments due to the effective date of such selling, leasing or subleasing but within the current fiscal year of Lessee for which funds have been budgeted; and (ii) for the difference between the purchase price, rental and other amounts paid by the purchaser, lessee or sublessee pursuant to such sale, lease or sublease and the remaining amounts payable by the Lessee hereunder during the current fiscal year; and (d) exercise any other right, remedy or privilege which may be available to it under applicable law, including the right to (i) proceed by appropriate court action to enforce the terms of this Lease, (ii) recover damages for the breach of this Lease, and (iii) rescind this Lease as to any or all of the Equipment. In addition, Lessee shall remain liable for all covenants and indemnities under this Lease and for all legal fees and other costs and expenses, including court costs, incurred by Lessor with respect to the enforcement of any of the remedies listed above or any other remedy available to Lessor. 21. Early Purchase Option: Lessee may, upon sixty (60) days prior written notice to Lessor, and provided Lessee shall have fully paid and performed all other obligations hereunder and provided no Event of Default has occurred and is continuing, pay to Lessor the applicable Purchase Price set forth on Exhibit C, whereupon title to the Equipment shall become unconditionally vested in Lessee and Lessor shall then transfer any and all of its right and interest in the Equipment to Lessee as is, where is, without warranty, express or implied, except that Lessor shall warrant to Lessee that the Equipment is free and clear of any liens created by Lessor and Lessor shall execute and file all documents required by any public entity to release any liens created by Lessor. 22. Assignment: Without Lessor's prior written consent, Lessee shall not; (a) assign, transfer, pledge, hypothecate or grant any security interest in, or otherwise dispose of, this Lease or the Equipment or any interest in this Lease or the Equipment or (b) sublet or lend the Equipment or permit the Equipment to be used by anyone other than Lessee or Lessee's employees. Lessor, without the consent of Lessee, may assign all or any portion or portions of its right, title and interest in and to this Lease, the Equipment and any other documents executed with respect to this Lease, and/or grant or assign all or any portion or portions of its security interest in this Lease and the Equipment, in whole or in part to various Assignees, their agents or trustees (each and any one herein referred to as an "Assignee"). Any such Assignee shall have all of the assigned rights of Lessor under this Lease. Subject to the foregoing, this Lease shall inure to the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto. Any assignment or reassignment of any of Lessor's right, title or interest in this Lease or the Equipment shall be effective upon receipt by Lessee of a duplicate original of the document by which the assignment or reassignment is made. During the Lease Term, Lessee covenants that it shall keep a complete and accurate record of all assignments in form necessary to comply with Section 149 (a) of the Code and the regulations, proposed or existing, from time to time promulgated thereunder. Lessee agrees to acknowledge, in writing, any assignments if so requested. Lessor, and not Lessee, shall be responsible for compliance with applicable securities laws and all costs associated therewith. 7 367269.02/sfbb-11/8/99 Lessee agrees that, upon notice of assignment, if so instructed it shall pay directly to the Assignee, or its Trustee or Agent without abatement, deduction or setoff other than expressly provided by law all amounts which become due hereunder. 23. Nature of Agreement: Lessor and Lessee agree that it is their intention that, for federal income tax purposes, the interest of Lessor in the Equipment is as a secured party and the interest of Lessee is as a debtor, and that Lessor neither has nor shall have any equity in the Equipment. It is the agreement of Lessor and Lessee that the aggregate rental payments provided for hereunder constitute the purchase price of the Equipment together with interest on the unamortized amount thereof over the term of this Lease, that each periodic installment of rent constitutes principal and interest, in accordance with the schedule of rental payments set forth in Exhibit C, which fully amortizes the purchase price of the Equipment, together with Interest, over the term of this Lease, and that upon the due and punctual payment of the installments of Rental Payments and other amounts and performance of all other obligations under this Lease, title to the Equipment shall vest permanently in Lessee as provided in this Lease, free and clear of any lien or security of Lessor therein. 24. Notices: All notices to be given under this Lease shall be made in writing and mailed by certified mail to the other party at its address set forth herein or at such other address as the party may provide in writing from time to time. Any such notice shall be deemed to have been received five (5) days subsequent to mailing. 25. Section Headings: All section headings contained herein are for the convenience of reference only and are not intended to define or limit the scope of any provision of this Lease. 26. Governing Law: This Lease shall be governed by the provisions hereof and by the laws of the state of Kansas. 27. Further Assurances: Lessor's obligations hereunder are further conditioned upon Lessee delivering to Lessor: (i) an opinion or opinions of counsel in substantially the form of Exhibit F attached hereto or as Lessor may otherwise request; and (ii) a certificate of a duly authorized official of Lessee in the form of Exhibit G attached hereto. Moreover, Lessee shall execute or provide, as requested by Lessor, any documents and information which are reasonably necessary with respect to the transaction contemplated by this Lease. Lessee hereby authorizes Lessor to execute and file on behalf of Lessee and as Lessee's attorney-in-fact such UCC financing and continuation statements as Lessor deems necessary to perfect its and/or its Assignee's purchase money security interest in the Equipment or this Lease. 28. Entire Agreement; Amendments: This Lease, together with the exhibits attached hereto which are hereby made a part hereof together with any other attachments hereto, if any, and other documents or instruments executed by Lessee and Lessor in connection herewith, constitute the entire agreement between the parties with respect to the lease of the Equipment, and this Lease shall not be modified, amended, altered or changed except with the written consent of Lessee and Lessor. 29. Severability: Any provision of this Lease found to be prohibited by law shall be ineffective to the extent of such prohibition without invalidating the remainder of this Lease. 8 367269.02/stbb-11/8/99 LESSOR: UMB BANC LEASING CORP. By Name: Date: Title: LESSEE: (Public Entity) CITY OF SALINA, KANSAS � By (� Name: Date: %� �� `t Title:nc� 10 367269.02/sfbb-11/8/99 EXHIBIT E TO LEASE PURCHASE AGREEMENT INSURANCE INFORMATION Lessee Name: Lease Date: City of Salina - Name of Insurance Company: Twin City Fire Ins. Co. Name of Insurance Agency: Insurors & Investors Inc. Address of Insurance Agency: P.O. Box 1213, Salina, KS 67402-1213 Name of Agent: John Lohmeyer Phone Number of Agent: Policy Number: Expiration Date: 785-825-0286 37 MSP QH 1271 6/30/2000 POLICY AMOUNT Fire & Extended Coverage $ 70,228,139. Deductible $ 5,000. Other: (specify) X Liability - Bodily Injury $ n/a Liability - Property Damage $ n/a 30 Day Notice of Cancellation UMB Banc Leasing Corp. Insurance Certificate to Follow Follow-up Date: Yes X No Yes X No Yes X No Information Taken By: 367269.02/sfbb-11/8/99 EXHIBIT A TO LEASE PURCHASE AGREEMENT Description of Equipment: Quantity Description of Leased Equipment 11 IBM AS/400 Model 720 Location of Equipment: Street Address: 300 West Ash Street City: .Salina State: Kansas Certification: County: Saline Zip Code: 67401 Lessee hereby certifies that the description of the property set forth above constitutes an accurate listing of the Equipment referred to in the Lease. Lessee: (Public Entity) CITY OF SALINA, KANSAS By c �� Name: Title: I Date: 367269.02/sfbb-11 /8/99 EXHIBIT B TO LEASE PURCHASE AGREEMENT DELIVERY AND ACCEPTANCE CERTIFICATE TO: UMB Banc Leasing Corp. Reference is made to the Lease Purchase Agreement between the undersigned ("Lessee"), and UMB Banc Leasing Corp. ("Lessor"), dated November 8, 1999 ("Lease") and to the Equipment as such term is defined therein. In connection therewith we are pleased to confirm to you the following: 32. All of the Equipment has been delivered to and received by the undersigned; all installation or other work necessary prior to the use thereof has been completed; said Equipment has been examined and/or tested and is in good operating order and condition and is in all respects satisfactory to the undersigned and as represented, and said Equipment has been accepted by the undersigned and complies with all terms of the Lease. Consequently, you are hereby authorized to pay for the Equipment in accordance with the terms of any purchase orders for the same. 33. In the event at any time in the future the Equipment fails to perform as expected or represented, we will, subject to the provisions of this Lease, continue to honor the Lease in all respects and subject to the provisions of this Lease continue to make our rental and other payments thereunder in the normal course of business and we will look solely to the vendor, distributor or manufacturer for recourse. 34. We acknowledge that Lessor is neither the vendor nor manufacturer or distributor of the Equipment and has no control, knowledge or familiarity with the condition, capacity, functioning or other characteristics of the Equipment. 35. The serial number of each item of Equipment which is set forth on Exhibit A to the Lease is correct. This certificate shall not be considered to alter, construe, or amend the terms of this Lease. Date: j � / / '-) / �(G Witness: Lessee:_ City of Salina, Kansas By L//tea Natiie: Rodney an Title: Direlr of PZe . I � J— J) A A -Penny Day 367269.02/sfbb-11 /8/99 EXHIBIT D TO LEASE PURCHASE AGREEMENT ESSENTIAL USE/SOURCE OF FUNDS LETTER RE: Lease Purchase Agreement Dated November 8, 1999 UMB Banc Leasing Corp. 1010 Grand Boulevard Kansas City, Missouri 64106 Gentlemen: This confirms and affirms that the Equipment described in the Lease Purchase Agreement referred to above (the "Lease") is essential to the function of the undersigned or to the service we provide our citizens. Further, we have an immediate need for, and expect to make immediate use of, substantially all of such Equipment, which need is not temporary or expected to diminish in the foreseeable future. Such Equipment will be used by us only for the purposes of performing one or more of our governmental or proprietary functions consistent with the permissible scope of our authority. Specifically, such Equipment was selected by us to be used as follows: Financial record keeping, Public Safety record keeping, Jail Administration Municipal & District Court record keenina The estimated useful life of such Equipment based upon manufacturer's representations and our projected needs is 5 years Our source of funds for payments of the rent due under the Lease for the current fiscal year is not applicable We expect and anticipate adequate funds to be available for all future payments of rent due after the current fiscal.year for the following reasons: User charges are made to the various operating departments of the City and County to recover costs Date: 11/17/99 Very truly yours, City of Salina, KS By: :Z4V Name: Rodney ranz Title: Di rect r of Finance 367269.02/sfbb-1 1/8/99 NOV-17-99 WED 12:13 PH FAX NO. P. 02 EXHIBIT C TO LEASE PURCHASE AGREEMENT RENTAL PAYMENTS DUE UNDER LEASE PURCHASE AGREEMENT PAYMENT REMAINING DATE PAYMENT INTEREST PRINCIPAL BALANCE March 1, 2000 $103,729.30 $4,881.48 $98,847.82 $192,738.78 March 1, 2001 $103,729.30 $9,733.31 $93,995.99 $98,742.79 March 1, 2002 $103,729.30 $4,986.51 "$98,742.79 $0.00 Principal $291,586.60 Rate 5.05% Yrs./Pmts. 3 Years Ann.Pmt. $103,729.30 Capital cost required to purchase Equipment and for cash. Average annual effective cost is $ No amount's have been included for service, maintenance, insurance and other changes. Dated: 1 ( / '� / `' " CITY OF SALINA, KANSAS Accepted by: 2� Na (�me. J ;) Tit}le. 367269.02/s(bb-11/ 16/,)9 EXHIBIT G TO LEASE PURCHASE AGREEMENT CERTIFICATE OF RESOLUTIONS I, Penny Day , do hereby certify that I am the duly elected or appointed and acting C i -ty-7 I e r k of the Ci ty Of Sal i n a duly organized and existing under the laws of the State of Kansas (the "Lessee"), and that the following resolutions have been presented to and duly adopted by the City Commission, City of Salina at a meeting duly and regularly held and convened in accordance with applicable law on the 27th day of October , 1999 WHEREAS, the Lessee is entering a Lease Purchase Agreement ("Lease") dated 11/17 ,1999 , with UMB Banc Leasing Corp.; WHEREAS, Lessee has carefully reviewed its financing requirements for the current calendar year and reasonably expects that it will not issue more than ten million dollars ($10,000,000) of tax-exempt obligations during the calendar year; NOW, THEREFORE, BE IT RESOLVED, that the Lessee be, and hereby is, authorized to enter into the Lease with UMB Bank Leasing Corp. for a period of 3 years, and be it further RESOLVED, that an official of the Lessee be, and hereby is, authorized, empowered and directed to sign on its behalf the Lease and any addenda, schedules, notes, UCC financing statements or other instruments issued under the provision of the Lease and any other instrument or document which may be necessary or expedient in connection with agreement upon or fulfillment of the provisions of the Lease. RESOLVED, that pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, this Lease be and hereby is designated a "qualified tax-exempt obligation" includable within the ten million dollars ($10,000,000) of the aggregate issues designated as "qualified tax-exempt obligations" for the calendar year within which this Lease is entered into. RESOLVED, that Lessee shall not designate more than ten million dollars ($10,000,000) of tax-exempt obligations during the .current calendar year as qualified tax- exempt. obligations and Lessee, together with its subordinate entities, does not reasonably expect to issue more than ten million dollars $10,000,000) of tax-exempt obligations during the current calendar year. IN WITNESS WHEREOF, I have duly executed this certificate and affixed the seal hereto this 17thday of November , 1999. Lessee: CITY OF SALINA, KANSAS (SEAL) By: ._ Name: Penny ay Title: Acting City Clerk Tax I.D. Number: 48-6017228 367269.02/sf bb -11 /8/99 CITY OF SALINA, KANSAS City Attorney Greg A. Bengtson Telephone - (785) 823-6325 Facsimile — (785) 823-1868 EXHIBIT F TO LEASE PURCHASE AGREEMENT OPINION OF COUNSEL November 11, 1999 UMB Bank Leasing Corporation 1010 Grand Boulevard Kansas City, Missouri 64106 129 South 8th P.O. Box 380 Salina, KS 67402-0380 Re: Lease Purchase Agreement dated November 8, 1999, by and between UMB Banc Leasing Corp. ("Lessor") and City of Salina, Kansas ("Lessee") Ladies and Gentlemen: I have acted as counsel to Lessee with respect to the Lease Purchase Agreement described above and various related matters, and in this capacity have reviewed a duplicate original or certified copy thereof, the Exhibits attached and executed pursuant thereto (together, the "Lease") dated as of November 8, 1999, between Lessor and Lessee. Based upon the examination of these and such other documents as I deem relevant, it is my opinion that: 1. Lessee is a political subdivision of the State of Kansas ("State"), duly organized, existing, and operating under the Constitution and laws of the State. 2. Lessee is authorized and has power under applicable law to enter into the Lease, and to carry out its obligations thereunder and the transactions contemplated thereby. 3. The Lease has been duly authorized, approved, executed, and delivered by and on behalf of Lessee, and is the legal, valid, and binding contract of Lessee enforceable in accordance with its terms, except to the extent limited by State and Federal laws affecting remedies against Lessee as the State or as a political subdivision of the State 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 Lease and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance UMB Bank Leasing Corporation November 11, 1999 Page 2 with all applicable open meeting, public records, public bidding, and all other laws, rules, and regulations of the State. 5. The execution, delivery, and performance of the Lease do not and will not result in the violation of any constitutional, statutory, or other limitation relating to the manner, form, or amount of indebtedness which may be incurred by Lessee. 6. To the best of the undersigned's knowledge, there is no litigation, action, suit, or proceeding pending or before any court, administrative agency, arbitrator, or governmental body that challenges the organization or existence of Lessee; the authority of Lessee or its officers or its employees to enter into the Lease; the proper authorization, approval and/or execution of the Lease, and other documents contemplated thereby; the appropriation of moneys to make Lease Payments under the Lease for the current fiscal year of Lessee; or the ability of Lessee otherwise to perform its obligations under the Lease, and the transactions contemplated thereby and, to the best of my knowledge, no such litigation or actions are threatened. 7. The equipment financed by the Lease is personal property, and when used by the Lessee will not be or become fixtures under the laws of the State. 8. Resolution No. 99-5521 of the governing body of Lessee was duly and validly adopted by such governing body on September 27, 1999, and such resolution has not been amended, modified, supplemented, or repealed and remains in full force and effect. Very t y yo g . Bengtso: torney GAB/ g CITY OF SALINA, KANSAS City Attorney Greg A. Bengtson Telephone - (785) 823-6325 Facsimile — (785) 823-1868 EXHIBIT F TO LEASE PURCHASE AGREEMENT OPINION OF COUNSEL November 11, 1999 UMB Bank Leasing Corporation 1010 Grand Boulevard Kansas City, Missouri 64106 129 South 8th P.O. Box 380 Salina, KS 67402-0380 Re: Lease Purchase Agreement dated November 8, 1999, by and between UMB Banc Leasing Corp. ("Lessor") and City of Salina, Kansas ("Lessee") Ladies and Gentlemen: I have acted as counsel to Lessee with respect to the Lease Purchase Agreement described above and various related matters, and in this capacity have reviewed a duplicate original or certified copy thereof, the Exhibits attached and executed pursuant thereto (together, the "Lease") dated as of November 8, 1999, between Lessor and Lessee. Based upon the examination of these and such other documents as I deem relevant, it is my opinion that: 1. Lessee is a political subdivision of the State of Kansas ("State"), duly organized, existing, and operating under the Constitution and laws of the State. 2. Lessee is authorized and has power under applicable law to enter into the Lease, and to carry out its obligations thereunder and the transactions contemplated thereby. 3. The Lease has been duly authorized, approved, executed, and delivered by and on behalf of Lessee, and is the legal, valid, and binding contract of Lessee enforceable in accordance with its terms, except to the extent limited by State and Federal laws affecting remedies against Lessee as the State or as a political subdivision of the State 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 Lease and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance UMB Bank Leasing Corporation November 11, 1999 Page 2 with all applicable open meeting, public records, public bidding, and all other laws, rules, and regulations of the State. 5. The execution, delivery, and performance of the Lease do not and will not result in the violation of any constitutional, statutory, or other limitation relating to the manner, form, or amount of indebtedness which may be incurred by Lessee. 6. To the best of the undersigned's knowledge, there is no litigation, action, suit, or proceeding pending or before any court, administrative agency, arbitrator, or governmental body that challenges the organization or existence of Lessee; the authority of Lessee or its officers or its employees to enter into the Lease; the proper authorization, approval and/or execution of the Lease, and other documents contemplated thereby; the appropriation of moneys to make Lease Payments under the Lease for the current fiscal year of.Lessee; or the ability of Lessee otherwise to perform its obligations under the Lease, and the transactions contemplated thereby and, to the best of my knowledge, no such litigation or actions are threatened. 7. The equipment financed by the Lease is personal property, and when used by the Lessee will not be or become fixtures under the laws of the State. 8. Resolution No. 99-5521 of the governing body of Lessee was duly and validly adopted by such governing body on September 27, 1999, and such resolution has not been amended, modified, supplemented, or repealed and remains in full force and effect. Very t y yours, A. Bengts City Attorney GA /sg INVOICE 2843 31st Avenue Greeley, CO 80631 1-800-437-7457 Computer Information Concepts Bill To: City of Salina Dave Larrick 300 W. Ash Saline, KS -67401 Invoice Number: PSI3 Ship To, City of Salina Dave Larrick 300 W. Ash Saline, KS -67401 Invoice Date: 10/13/99 Page: 1' Customer ID 285 Ship Via P.O. Number Ship Date 10/13/99 P.O. Date 10/13/99 Due Date 10/13/99 Our Order No. Terms Payable Upon Receipt SalesPerson Item/Description Unit Order Qty Quantity Unit Price Proposal dated September 24, 1999 1 1 291,586.60 Reference your PO #IS92899 Vendor # PO# Name I: v.# Date Due Date -;c -:,;c iPt on :t Discount Head Approval Amount Subject to Amount Exempt Sales Tax from Sales Tax 0.00 291, 586:60 Subtotal: Invoice Discount: Sales Tax: Total Price 291, 586.60 291,586.60 0.00 0.00 Total: 291,586.60 2843 31st Avenue Greeley, CO 80631 ' 1-800-437-7457 Computer Information Concepts Bill To: City of Salina Dave Larrick 300 W. Ash Saline, KS -67401 INVOICE Invoice Number: PS13 Invoice Date: 10/13/99 Ship To: City of Salina Dave Larrick 300 W. Ash Saline, KS -67401 Page: 1 Customer ID 285 Ship Via P.O. Number Ship Date ' 10/13/99 P.O. Date 10/13/99 Due Date 10/13/99 Our Order No. Terms Payable Upon Receipt SalesPerson, Item/Description Unit Order Qty Quantity Unit Price Total Price Proposal dated September 24, 1999 1 1 291,586.60 291,586.60 Reference your PO #IS92899 Vendor # PO# fVarne V. # Irn.,. Date Due Date Discount L pit Head Approval Amount Subject to Amount Exempt Subtotal: 291,586.60 Sales Tax from Sales Tax Invoice Discount: 0.00 0.00 291,586.60 Sales Tax: 0.00 Total: 291,586.60 Form 8038-G, Information Return for Tax -Exempt Governmental Obligations 10, Under Internal Revenue Code section 149(e) OMB No. 1545-0720 (Rev. May 1999) 10 -See separate Instructions. Department of the Treasury Internal Revenue Service Caution: Use Form 8038 -GC if the issue price is under $100,000. If Arnandprl Ps -ti rn ncarle hnrn Issuers name 2 Issuer's employer identification number —Cit - y of Salina. Kansas 3 Number and streetor P.O. box if mail is not delivered to street address) P.O. Box 7A 48 :6 17228 Room/suite 4 Re ort number 13 GZOOQ-1-A 5 City, town, or post office, state, and ZIP code Salina, KS 67402-0736 6 Date of issue 17 11/8/1999 7 Name of issue Lease -Purchase EDP Equipment 8 CUSIP number NA 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative Rodney Franz, Director of Finance (785 )826-7240 11 12 13 14 15 16 17 18 19 20 ­% -r rn-ft a ncaurtr ouxtesf ana ender the Issue rice) See instructions ❑ Education . , , , , , _ . ❑ Health and hospital . . . , , , . . , . _ ._� ❑ Transportation . . . . . . . . . . . . E3 Public safety . . . . . . . . . . . . . . . . . . . • . . _- ❑ Environment (including sewage bonds) . . . . . .15 El Housing . . . . . . . . . . . . . . . . . . . El Utilities - Q Other. Describe ► Gene'rdl ' Governffient ' ' ' ' ' . ' ' ' ' ' ' ' - If obligations are TANS or RANs, check box ► ❑ If obligations are BANS, check box ► ❑ If obli ations are in the form of a lease or installment sale, check box , IN. and attach schedule 11 12 13 14 16 17 18 filed. ' Description of Obli ations. Com fete for the entire issue for which this form is being (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 ' $ $ NA ears Uses of Proceeds of Bond Issue Including underwriters' discount 22 23 24 25 Proceeds used for accrued interest . . . . . . . . . . . . . - Issue price of entire issue (enter amount from line 21, column (b)) , . _ F23 Proceeds used for bond issuance costs (including underwriters' discount) 24— Proceeds used for credit enhancement . . . , , , . 25 --- 22 --- 26 27 Proceeds allocated to reasonably required reserve or replacement fund _. 26 --- Proceeds used to currently refund prior issues . . . . . 27 --- 28 29 30 ' . , . _ Proceeds used to advance refund prior issues . _ 28 --- Total (add lines 24 through 28) . . . . . . . . . . . . _ Nonrefundin m proceeds of the issue subtract line 29 from line 23 and enter aount here . . Descri tion of Refunded Bonds (Complete this part only for refunding bonds. 29 30 1291.58 31 32 33 34 Enter the remaining weighted average maturity of the bonds to be currently refunded ► Enter the remaining weighted average maturity of the bonds to be advance refunded ► Enter the last date on which the refunded bonds will be called . . ► Enter the date(s) the refunded bonds were issued 10- Years years FUrraMilli Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . 35 --- 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) 36a --- b Enter the final maturity date of the guaranteed investment contract ► 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a --- b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the issuer ► and the date of the issue No - 38 If the issuer has designated the issue under section 265(b)(3)(13)(i)(II1) (small issuer exception), check box ► ❑ 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . , ► ❑ 40 If the issuer has identified a hedge, check box ' . . ' ► ❑ Under penalties r perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are e, correct, and complete. Please Sign 'J�V_& Here ign e o issuer's For Paperwork Reduction Act 1/25, tative Date page 2 of the Instructions. 2000 Rodney Franz, Director of Finance Type or print name and title Cat. No. 63773S Form 8038-G (Rev. 5-99) Instructions for Form Department of the Treasury 8038-G Internal Revenue Service (Revised May 1999) Information Return for Tax -Exempt Governmental Obligations (Caution: Use Form 8038 -GC if the issue price is less than $100,000.) Section references are to the Internal Revenue Code, unless otherwise noted. General Instructions Purpose of Form Form 8038-G is used by issuers of tax-exempt governmental obligations to provide the IRS with the information required by section 149(e) and to monitor the requirements of sections 141 through 150. Complete Parts II through VI on the basis of available information and reasonable expectations as of the date the issue is issued. If an item does not apply to the issue you are reporting, write "N/A" in the space provided for the item. Who Must File IF the issue price THEN, for tax-exempt (line 21, column (b)) governmental obligations is... issued after December 31, 1986, issuers must file... $100,000 or more A separate Form 8038-G for each issue Less than $100,000 Form 8038-13C, Information Return for Small Tax -Exempt Governmental Bond Issues, Leases, and Installment Sales Other Forms That May Be Required For rebating arbitrage (or paying a penalty in lieu of arbitrage rebate) to the Federal government, use Form 8038-T, Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate. For private activity bonds, use Form 8038, Information Return for Tax -Exempt Private Activity Bond Issues. When To File File Form 8038-G on or before the 15th day of the 2nd calendar month after the close of the calendar quarter in which the issue is issued. Complete Form 8038-G based on the facts as of the issue date. Late filing. An issuer may be granted an extension of time to file Form 8038-G under Section 3 of Rev. Proc. 88-10, 1988-1 C.B. 635, if it is determined that the failure to file on time is not due to willful neglect. Enter at the top of the form "This Statement Is Submitted in Accordance with Rev. Proc. 88-10." Attach to the Form 8038-G a letter explaining why Form 8038-G was not submitted to the IRS on time. Also indicate whether the bond issue in question is under examination by the IRS. Do not submit copies of the trust indenture or other bond documents. Where To File File Form 8038-G with the Internal Revenue 0� Service Center, Ogden, UT 84 L Rounding to Whole Dollars You may show amounts on this return as whole dollars. To do so, drop amounts less than 50 cents and increase amounts from 50 cents through 99 cents to the next higher dollar. Definitions Tax-exempt obligation. This is any obligation, including a bond, installment purchase agreement, or financial lease, on which the interest is excluded from income under section 103. Tax-exempt governmental obligation. A tax-exempt obligation that is not a private activity bond (see below) is a tax-exempt governmental obligation. This includes a bond issued by a qualified volunteer fire department under section 150(e). Private activity bond. This includes an obligation issued as part of an issue in which: • More than 10% of the proceeds are to be used for any private activity business use, and • More than 10% of the payment of principal or interest of the issue is either (a) secured by an interest in property to be used for a private business use (or payments for such property) or (b) to be derived from payments for property (or borrowed money) used for a private business use. It also includes a bond, the proceeds of which are to be used to make or finance loans (other than loans described in section 141(c)(2)) to certain persons exceeds the smaller of 5% of the proceeds or $5 million. Issue price. The issue price of obligations is generally determined under Regulations section 1.148-1(b). Thus, when issued for cash, the issue price is the price at which a substantial amount of the obligations are sold to the public. To determine the issue price of an obligation issued for property, see sections 1273 and 1274 and the related regulations. Issue. Generally, obligations are treated as part of the same issue only if they are issued by the same issuer, on the same date, and as part of a single transaction, or a series of related transactions. However, obligations issued during the same calendar year (a) under a loan agreement under which amounts are to be advanced periodically (a "draw -down loan") or (b) with a term not exceeding 270 days, may be treated as part of the same issue if the obligations are equally and ratably secured under a single indenture or loan agreement and are issued under a common financing arrangement (e.g., under the same official statement periodically updated to reflect changing factual circumstances). Also, for obligations issued under a draw -down loan that meets the requirements of the preceding sentence, obligations issued during different Cat. No. 63774D calendar years may be treated as part of the same issue if all of the amounts to be advanced under the draw -down loan are reasonably expected to be advanced within 3 years of the date of issue of the first obligation. Likewise, obligations (other than private activity bonds) issued under a single agreement that is in the form of a lease or installment sale may be treated as part of the same issue if all of the property covered by that agreement is reasonably expected to be delivered within 3 years of the date of issue of the first obligation. Arbitrage rebate. Generally, interest on a state or local bond is not tax-exempt unless the issuer of the bond rebates to the United States arbitrage profits earned from investing proceeds of the bond in higher yielding nonpurpose investments. See section 148(f). Construction issue. This is an issue of tax-exempt bonds that meets both of the following conditions: 1. At least 75% of the available construction proceeds are to be used for construction expenditures with respect to property to be owned by a governmental unit or a 501(c)(3) organization, and 2. All the bonds that are part of the issue are qualified 501(c)(3) bonds, bonds that are not private activity bonds, or private activity bonds issued to finance property to be owned by a governmental unit or a 501(c)(3) organization. In lieu of rebating any arbitrage that may be owed to the United States, the issuer of a construction issue may make an irrevocable election to pay a penalty. The penalty is equal to 11/2% of the amount of construction proceeds that do not meet certain spending requirements. See section 148(f)(4)(C) and the Instructions for Form 8038-T. Specific Instructions Part I—Reporting Authority Amended Return. If you are filing an amended Form 8038-G, check the amended return box and complete Part I and only those parts of Form 8038-G you are amending. Use the same report number (line 4) as was used for the original report. Do not amend the estimated amounts previously reported once the actual amounts are determined. Line 1. The issuer's name is the name of the entity issuing the obligations, not,the name of the entity receiving the benefit of the financing. For a lease or installment sale, the issuer is the lessee or the purchaser. Line 2. An issuer that does not have an employer identification number (EIN) should apply for one on Form SS -4, Application for Employer Identification Number. This form may be obtained at Social Security Administration offices or by calling 1 -800 -TAX -FORM. If the EIN has not been received by the due date for Form 8038-G, write "Applied for" in the space for the EIN. Line 4. Number reports consecutively based on the filing date (not the date of issue). For example, if the issuer filed two Forms 8038-G in the 1999 calendar year, the "report number" for the third Form 8038-G would be "(31999-3." If an issuer (e.g., a state) issues obligations through many departments or agencies, the issuer may assign a letter of the alphabet to each department or agency, and each may separately number its reports by indicating both the report number and letter (e.g., G1999 -5-C, G1999 -2-D). Line 6. The date of issue is generally the date on which the issuer physically exchanges the bonds that are part of the issue for the underwriter's (or other purchaser's) funds. For a lease or installment sale, enter the date interest starts to accrue. Line 7. If there is no name of the issue, please provide other identification of the issue. Line 8. Enter the CUSIP (Committee of Uniform Securities Identification Procedure) number of the bond with the latest maturity. If the issue does not have a CUSIP number, write "None." Part II—Type of Issue Identify the type of obligations issued by checking the appropriate box(es) and entering the corresponding issue price (see Issue price under Definitions on page 1). Attach a schedule listing names and EINs of organizations that are to use proceeds of these obligations if different from those of the issuer. Line 18. Check the box on this line only if lines 11 through 17 do not apply. Enter a description of the issue in the space provided. Line 19. If the obligations are short-term tax anticipation notes or warrants (TANS) or short-term revenue anticipation notes or warrants (RANs), check the first box on this line. If the obligations are short-term bond anticipation notes (BANs), issued with the expectation that they will be refunded with the proceeds of long-term bonds at some future date, check the second box on this line. Line 20. Check this box if property other than cash is exchanged for the obligation, e.g., acquiring a police car, a fire truck, or telephone equipment through a series of monthly payments. (This type of obligation is sometimes referred to as a "municipal lease.") Also check this box if real property is directly acquired in exchange for an obligation to make periodic payments of interest and principal. Do not check this box if the proceeds of the obligation are received in the form of cash, even if the term "lease" is used in the title of the issue. Part III—Description of Obligations Line 21 For column (b), see Issue price under Definitions on page 1. Page 2 For column (c), the stated redemption price at maturity of the entire issue is the sum of the stated redemption prices at maturity of each bond issued as part of the issue. For a lease or installment sale, write "N/A." For column (d), the weighted average maturity is the sum of the products of the issue price of each maturity and the number of years to maturity (determined separately for each maturity and by taking into account mandatory redemptions), divided by the issue price of the entire issue (from line 21, column (b)). For a lease or installment sale, enter instead the total number of years the lease or installment sale will be outstanding. For column (e), the yield, as defined in section 148(h), is the discount rate that, when used to compute the present value of all. payments of principal and interest to be paid on the obligation, produces an amount equal to the purchase price, including accrued interest. See Regulations section 1.148-4 for specific rules to compute the yield on an issue. If the issue is a variable rate issue, write "VR" as the yield of the issue. For other than variable rate issues, carry the yield out to four decimal places (e.g., 5.3125%). If the issue is a lease or installment sale, enter the effective rate of interest being paid. Part IV—Uses of Proceeds of Bond Issue For a lease or installment sale, write "N/A" on Part IV. Line 22. Enter the amount of proceeds that will be used to pay interest from the date the bonds are dated to the date of issue. Line 24. Enter the amount of the proceeds that will be used to pay bond issuance costs, including fees for trustees and bond counsel. Line 25. Enter the amount of the proceeds that will be used to pay fees for credit enhancement that are taken into account in determining the yield on the issue for purposes of section 148(h) (e.g., bond insurance premiums and certain fees for letters of credit). Line 27. Enter the amount of the proceeds that will be used to pay principal, interest, or call premium on any other issue of bonds within 90 days of the date of issue. Line 28. Enter the amount of the proceeds that will be used to pay principal, interest, or call premium on any other issue of bonds after 90 days of the date of issue, including proceeds that will be used to fund an escrow account for this purpose. Part V—Description of Refunded Bonds Complete this part only if the bonds are to be used to refund a prior issue of tax-exempt bonds. For a lease or installment sale, write "N/A" on Part V. Lines 31 and 32. The remaining weighted average maturity is determined without regard to the refunding. The weighted average maturity is determined in the same manner as on line 21, column (d). Line 34. If more than a single issue of bonds will be refunded, enter the date of issue of each issue. Part VI—Miscellaneous Line 36. If any portion of the gross proceeds of the issue are or will be invested in a guaranteed investment contract, as defined in Regulations section 1.148-1(b), enter the amount of the gross proceeds so invested, as well as the final maturity date of the guaranteed investment contract. Line 37a. Enter the amount of this issue used to fund a loan to another governmental unit, the interest of which is tax-exempt. Line 39. Check this box if the issue is a construction issue and an irrevocable election to pay a penalty in lieu of arbitrage rebate has been made on or before the date the bonds were issued. The penalty is payable with a Form 8038-T for each 6 -month period after the date the bonds are issued. Do not make any payment of penalty in lieu of arbitrage rebate with this form. See Rev. Proc. 92-22, 1992-1 C.B. 736 for rules regarding the "election document." Line 40. Check this box if the issuer identified a hedge on its books and records in accordance with Regulations sections 1.148-4(h)(2)(viii) and 1.148-4(h)(5). These regulations permit an issuer of tax-exempt bonds to identify a hedge for it to be included in yield calculations for computing arbitrage.. Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The time needed to complete and file this form varies depending on individual circumstances. The estimated average time is: Learning about the law or the form. 2 hr., 41 min. Preparing, copying, assembling, and sending the form to the IRS...... 3 hr., 3 min. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Tax Forms Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. DO NOT send the form to this office. Instead, see Where To File on page 1.