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<br />expected to diminish in the foreseeable future. The Equipment is essential to and will be used by Lessee only for the
<br />purpose of performing one or more governmental functions of Lessee consistent with the permissible scope of Lessee's
<br />authority and will not be used in a trade or business of any person or entity. (d) Lessee will annually, upon request,
<br />provide Lessor with a letter from the City's accountant stating that funds have been appropriated in the City's annual
<br />budget to continue this lease for the next renewal term. (e) The Equipment is, and shall remain, personal property and
<br />when subject to use by Lessee under this Agreement will not be or become fixtures.
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<br />The Lessee further warrants that this lease will not constitute a "private activity bond" within the meaning of Section
<br />141 of the Internal Revenue Code in that Lessee will not sublease the Equipment, nor will Lessee enter any management,
<br />output, or similar types of contracts where more than 10 percent of the proceeds of the lease purchase agreement will be
<br />used for one or more private business uses or where the payment of the principal of, or interest on, more than 10 percent
<br />of the proceeds of this Lease will be made, either directly or indirectly by payments, property, or monies borrowed by
<br />private business users. (The term "private business use" means any direct or indirect use in a trade or business carried on
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<br />by an individual or entity other than a state or local governmental unit, including use by the Federal Government or any
<br />agency thereof. A special exemption is provided for "exempt facility bonds and 501(C) (3) "tax exempt organization
<br />bonds" .
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<br />4. TITLE TO EQUIPMENT; SECURITY INTEREST. During the Full Lease Term, title to the Equipment shall remain
<br />vested in the Lessor. Upon exercise by Lessee of the purchase option granted in Section 10 of this Lease, Lessor shall
<br />deliver to Lessee by appropriate documents title to the Equipment, free and clear of all liens and encumbrances. In the
<br />event of a default as set forth in Section 12 or non appropriation as set forth in Section 2( e), Lessee will surrender
<br />possession of the Equipment to Lessor as required by Section 2( e) and release all claim or right to said Equipment
<br />accordingly.
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<br />To secure the prompt payment and performance as and when due of all of Lessee's obligations hereunder, and all
<br />other obligations of Lessee to Lessor, both now in existence and hereafter created, Lessee hereby grants to Lessor a first
<br />security interest in the Equipment, and all replacements, substitutions and alternatives therefore and thereof and
<br />accessions thereto and all proceeds (cash and non-cash), including the proceeds of all insurance policies, thereof. Lessee
<br />agrees that with respect to the Equipment Lessor shall have all of the rights and remedies of a secured party under the
<br />Uniform Commercial Code as in effect in the State. Lessee may not dispose of any of the Equipment without the prior
<br />written consent of Lessor, notwithstanding the fact that proceeds constitute part of the Equipment.
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<br />5. USE AND MAINTENANCE. Lessee shall use the Equipment in a manner consistent with the requirements of all
<br />applicable insurance policies, and will not change the location of any Equipment as specified in the Acceptance
<br />Certificate without the prior written consent of Lessor, which consent shall not be unreasonably withheld. Lessee shall not
<br />attach the Equipment to any other item of equipment in such a manner that the Equipment may be deemed to have
<br />become an accession to or a part of such other ,item of equipment. Lessee, at its own expense, will maintain the
<br />Equipment in as good operating condition as when delivered to Lessee hereunder, ordinary wear and tear resulting from
<br />proper use thereof alone excepted, and will make all repairs reasonable necessary for such purpose. In addition, if any
<br />component of the equipment shall become damaged beyond repair, Lessee at its own expense, will within a reasonable
<br />time replace such component, with replacement components which are free and clear of all liens or right of other and have
<br />a value and utility at lease equal to the components replaced. All components which are attached to the Equipment which
<br />are essential to the operation of the Equipment or which cannot be detached from the Equipment without materially
<br />interfering with the operation of the Equipment or adversely affecting the value and utility which the Equipment would
<br />have had without the addition thereof, shall immediately be deemed incorporated in the Equipment and subject to the
<br />terms hereof as if originally leased hereunder, and subject to the security interest of Lessor in the Equipment. Lessee shall
<br />not make any material alterations to the Equipment without the prior written consent of Lessor, which consent shall not be
<br />unreasonably withheld. Upon reasonable~dvance notice, Lessor shall have the right to inspect the Equipment and all
<br />maintenance records with respect thereto, if any, at any reasonable time during normal business hours.
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<br />6. FEES; TAXES; OTHER GOVERNMENTAL AND UTILITY CHARGES. Lessee agrees to indemnify Lessor
<br />against all titling, recordation, documentary stamp and other fees, arising at any time prior to or during the Lease Term,
<br />upon or relating to the Equipment or this Agreement. The parties contemplate that the Equipment will be used for a
<br />governmental purpose of Lessee and that the Equipment will be exempt from all taxes presently assessed and levied with
<br />respect to personal property. In the event that the use, possession or acquisition of the Equipment is found to be subject to
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