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<br />paragraph 10 of this Lease within 60 days from the time it ceased to operate.
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<br />(b) Any Item of Equipment is requisitioned, condemned or taken over by any governmental authority under the
<br />power of eminent domain or otherwise for a definite period which exceeds the then remaining Lease Term, or for any indefinite period of
<br />time.
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<br />(c) Any Item of Equipment suffers damage which, in the good faith judgement of the Lessor would require the
<br />expenditure of an amount equal to or greater than fifty percent of Lessor's cost of that Item of Equipment (as shown on the Schedule for
<br />that Item) to repair or restore it to its condition and operating capacity immediately prior to suffering such damage.
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<br />(d) Any Item of Equipment is lost, stolen or commandeered.
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<br />15. CASUALTY PAYMENT. If any Item of Equipment shall suffer a Casualty Occurrence, Lessee shall promptly and
<br />fully inform Lessor with respect thereto. Lessee shall pay to Lessor, on the first date that any installment of rent for that Item becomes
<br />due after the giving of such notice, an amount (a "Casualty Payment") equal to the sum of (a) the Stipulated Loss Value (defined below)
<br />calculated as provided in this Section 15, for that Item of Equipment, computed as of the date the Casualty Payment is due, plus (b) all
<br />installments of rent then due in connection with that Item as of the date of such Casualty Payment, plus (c) any and all of the other
<br />payments due to Lessor under this Lease as of the date of such Casualty Payment with respect to that Item. Upon tender of the
<br />Casualty Payment, this Lease shall terminate with respect to the Item of Equipment for which the Casualty Payment was made, and
<br />Lessee and/or Lessee's insurer shall become entitled to such Item of Equipment, for salvage purposes, in such Item's then condition
<br />and location, AS-IS-WHERE-IS, WITHOUT ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR
<br />PURPOSE, OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. For purposes of this Section 15, "Stipulated Loss Value" shall be
<br />determined through the following three steps: First step -- the "Affected Equipment Percentage" shall be determined by dividinQ (1) the
<br />total cost to the Lessor to acquire the Equipment suffering the Casualty Occurrence !2Y (2) the Lessor's Cost of all Equipment. Second
<br />step -- the "Unrecovered Investment" shall be determined by adding the Lessor's assumed residual value for all of the Equipment plus
<br />the principal remaining for all of the Equipment as shown on the applicable Schedule. Third step -- the "Stipulated Loss Value" shall be
<br />the amount determined by multiplying the Affected Equipment Percentage times the Lessor's Unrecovered Investment, and then adding
<br />to that amount any and all taxes arising out of or in connection with the Casualty Occurrence and/or the transfer of the Item of
<br />Equipment for salvage purposes. LESSOR'S DETERMINATION OF THE STIPULATED LOSS VALUE AND THE RESULTING
<br />CASUALTY PAYMENT SHALL BE BINDING AND CONCLUSIVE UPON LESSEE.
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<br />16. TAXES AND GENERAL COVENANTS.
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<br />(a) This Lease is a lease to a governmental agency pursuant to sections of Texas Local
<br />Government Code" and, as such, the Equipment is currently exempt from all taxation by the Commonwealth and any of its political
<br />subdivisions.
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<br />(b) To the extent required by law, Lessee shall prepare and file all personal property tax returns and shall pay
<br />when due any and all sales, use, property and excise taxes, license and registration fees, ad valorem taxes and assessments, charges
<br />and other duties of any nature whatsoever (except for taxes based on Lessor's net income), however designated, now or hereafter
<br />imposed by any governmental entity, whether based upon the rent or the Equipment or the purchase, delivery, ownership, leasing, use,
<br />possession or return thereof. If Lessee shall fail to pay any such taxes, fees, assessments, charges or other duties when due, Lessor
<br />may, but is not obligated to, pay such amounts. Lessee shall promptly reimburse Lessor for any and all such amounts paid by Lessor,
<br />and the failure of Lessee to reimburse Lessor promptly shall constitute an Event of Default hereunder.
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<br />(c) Lessee shall keep the Equipment free and clear of all levies, liens and encumbrances.
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<br />(d) Within fifteen (15) days of availability, and in any event within one hundred twenty (120) days after the end of
<br />each fiscal year, Lessee shall furnish to Lessor a balance sheet of Lessee and the related statement of operations, changes in financial
<br />position and profit and loss, showing sources and uses of income for such fiscal year, all in reasonable detail and stating in comparative
<br />form the figures as of the end of the fiscal year and for the previous corresponding period. If requested by Lessor, such financial
<br />statements shall be audited, or certified by an independent certified public accountant satisfactory to Lessor, accompanied by an
<br />opinion (in form and substance satisfactory to Lessor) of such public accountant, and must be signed by an appropriately authorized
<br />official of Lessee.
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<br />17. REPRESENTATIONS AND WARRANTIES OF THE LESSEE. The Lessee represents and warrants as follows:
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<br />(a) Lessee is a public body, corporate and politic, duly organized and existing under the constitution and the
<br />laws of the State of Texas
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<br />(b) Lessee will do or cause to be done all things necessary to preserve and keep in full force and effect its
<br />existence as a body corporate and politic.
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<br />(c) Lessee is authorized under the constitution and laws of the State of Texas to enter into this Lease and the
<br />transactions contemplated hereby, and to perform all of its obligations hereunder.
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<br />(d) Lessee has been duly authorized to execute and deliver this Lease under the terms and provisions of the
<br />resolution of its governing body, by appropriate official approval, and further represents, covenants and warrants that all requirements
<br />have been met and procedures have occurred in order to insure the enforceability of this Lease, and Lessee has complied with such
<br />public bidding requirements as may be applicable to this Lease and the acquisition by Lessee of the equipment hereunder. Lessee
<br />shall cause to be executed and delivered to Lessor the Incumbency Certificate, substantially in the form attached hereto as Exhibit A,
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