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benefit of Lessor, for at least thirty (30) days after written notice thereof to Lessor, and no alteration in any such policy
<br />shall be made except upon thirty (30) days written notice of such proposed alteration to Lessor and written approval by
<br />Lessor. If Lessee fails to acquire any policy of insurance required to be maintained pursuant to this paragraph, or fails to
<br />renew or replace any such policy at least twenty (20) days prior to the expiration thereof, or fails to keep any such policy
<br />in full force and effect, Lessor shall have the option (but not the obligation) to pay the premiums on any such policy of
<br />insurance or to take out new insurance in an amount, type, coverage and terms reasonably satisfactory to Lessor. Any
<br />amounts paid therefor by Lessor shall be immediately due and payable to Lessor by Lessee upon demand by Lessor.
<br />No exercise by Lessor of such options shall in anyway affect the provisions of this Lease, including, but not limited to,
<br />the provision that failure by Lessee to maintain the prescribed insurance shall constitute an Event of Default (as that
<br />term is defined in Section 17 below). Lessee hereby assigns to Lessor all sums which become payable under any
<br />insurance covering the Equipment, directs any insurer to pay all such proceeds to Lessor, and authorizes the Lessor to
<br />act as Lessee's attorney -in -fact to make claim for, receive payment of and execute and endorse all documents, checks or
<br />drafts for, loss or damage under any such insurance policy. The proceeds of such insurance, at the option of the
<br />Lessor, shall be applied (a) toward the replacement, restoration or repair of the Equipment or (b) toward payment of
<br />the obligations of Lessee hereunder.
<br />events: 13. CASUALTY. For the purposes of this Lease, "Casualty Occurrence" shall mean any of the following
<br />(a) The Equipment or any Item of Equipment no longer operates in the manner and for the purposes
<br />originally contemplated, for any reason, and it is not made to so operate by repairs or installation of replacement parts
<br />in accordance with Paragraph 10 of this Lease within 60 days from the time it ceased to operate.
<br />(b) Any Item of Equipment is requisitioned, condemned or taken over by any governmental authority
<br />under the power of eminent domain or otherwise for a definite period which exceeds the then remaining Lease Term, or for
<br />any indefinite period of time.
<br />(c) Any Item of Equipment suffers damage which, in the good faith judgment of the Lessor would
<br />require the expenditure of an amount equal to or greater than fifty percent of Lessor's cost of that item of Equipment (as
<br />shown on the Schedule for that Item) to repair or restore it to its condition and operating capacity immediately prior to
<br />suffering such damage.
<br />(d) Any Item of Equipment is lost, stolen or commandeered.
<br />14. CASUALTY PAYMENT. If any Item of Equipment shall suffer a Casualty Occurrence, Lessee shall
<br />promptly and fully inform Lessorwith respect thereto. Lessee shall pay to Lessor, on the first date that any installment of
<br />rent for that Item of Equipment becomes due after the giving of such notice, an amount (a "Casualty Payment ") equal to
<br />the sum of (a) the Stipulated Loss Value (defined below) calculated as provided in this Section 14, for that Item of
<br />Equipment, computed as of the date the Casualty Payment is due, plus (b) all installments of rent then due in
<br />connection with that item as of the date of such Casualty Payment, plus (c) any and all of the other payments due to
<br />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
<br />made, and Lessee and /or Lessee's insurer shall become entitled to such Item of Equipment, for salvage purposes, in
<br />such item's then condition and location, AS- IS- WHERE -IS, WITHOUT ANY WARRANTY OF MERCHANTABILITY OR
<br />OF FITNESS FOR ANY PARTICULAR PURPOSE; OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. For
<br />purposes of this Section 14, "Stipulated Loss Value" shall be determined through the following three steps: First step — the
<br />"Affected Equipment Percentage" shall be determined by dividing (1)the total costto the Lessorto acquire the Equipment
<br />suffering the Casualty Occurrence by (2) the Lessor's Cost of all Equipment. Second step -- the "Unrecovered
<br />Investment" shall be determined by adding the Lessor's assumed residual value for all of the Equipment plus the principal
<br />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
<br />then adding to that amount any and all taxes arising out of or in connection with the Casualty Occurrence and /or the
<br />transfer of the Item of Equipment for salvage purposes. LESSOR'S DETERMINATION OF THE STIPULATED LOSS
<br />VALUE AND THE RESULTING CASUALTY PAYMENT SHALL BE ODNDUCTFDINAC011MMBC1ALLyFEASaW aEMAMEp
<br />AND, ASSUMING SUCH FEASONADJ3qFM, &- VUBEBINDING AND CONCLUSIVE UPON LESSEE,
<br />15. TAXES AND GENERAL COVENANTS.
<br />(a) This Lease is a lease to a governmental agency pursuant to sections271.001 et seq. of Texas
<br />Local Government Code, and, as such, the Equipment is currently exempt from all taxation by the State of Texas and
<br />any of its political subdivisions.
<br />(b) To the extent required by law, Lessee shall prepare and file all personal property tax returns and
<br />shall pay when due any and all sales, use, property and excise taxes, license and registration fees, ad valorem taxes and
<br />assessments, charges and other duties of any nature whatsoever (except for taxes based on Lessor's net income),
<br />however designated, now or hereinafter imposed by any governmental entity, whether based upon the rent or the
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