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17. Late Payments. Whenever any rental payment or other amount payable to Lessor by Lessee
<br />hereunder is not paid within fifteen (15) days after such due date, Lessee agrees to pay Lessor a late charge
<br />on the delinquent amount at the "Default Rate," which is one percent (1%) per month, or the maximum
<br />amount permitted under applicable law, whichever is less. Such amount(s) shall be payable solely from
<br />legally available funds in addition to all amounts payable by Lessee as a result of the exercise of any of the
<br />remedies herein provided.
<br />18. Rental Payments to Be Unconditional. Except as expressly set forth to the contrary in this
<br />Lease Agreement (including Paragraph 3), Lessee agrees that as of the Commencement Date, Lessee's
<br />obligations hereunder are absolute and unconditional and shall continue without set-off, deduction,
<br />counterclaim, abatement, recoupment, or reduction and regardless of any disability of Lessee to use the
<br />Equipment or any part thereof because of any reason including, but not limited to, war, act of God,
<br />governmental regulations, strike, loss, damage, destruction, obsolescence, failure of or delay in delivery or
<br />failure of the Equipment to operate properly.
<br />19. Tax Covenants. Lessee agrees that it will not take any action that would cause the interest
<br />component of rental payments hereunder to be or to become ineligible for the exclusion from gross income
<br />of the Lessor or any assignee thereof for federal income tax purposes, nor will Lessee omit to take or cause
<br />to be taken, in a timely manner, any action which omission would cause the interest component of rental
<br />payments hereunder to be or to become ineligible for the exclusion from gross income of the Lessor or any
<br />assignee thereof for federal income tax purposes. Lessee agrees to (a) execute and deliver to Lessor, upon
<br />Lessor's request, a tax certificate and agreement (the terms and conditions of which are incorporated fully by
<br />reference herein) in form and content acceptable to Lessor and Lessee, relating to the establishment and
<br />maintenance of the excludability from gross income of the interest component of rental payments hereunder
<br />for federal income tax purposes; (b) complete and file in a timely manner an information reporting return as
<br />required by the Code; and (c) rebate an amount equal to excess earnings on the Escrow Fund to the federal
<br />government if required by, and in accordance with, Section 148(f) of the Code, and make the determinations
<br />and maintain the records required by the Code.
<br />Lessee represents that neither Lessee nor any agency or unit of Lessee has on hand any property,
<br />including cash and securities, that is legally required or otherwise restricted (no matter where held or the
<br />source thereof) to be used directly or indirectly to purchase the Equipment. Lessee has not and will not
<br />establish any funds or accounts (no matter where held or the source thereof) the use of which is legally
<br />required or otherwise restricted to pay directly or indirectly rental payments hereunder. Lessor and Lessee
<br />certify that, so long as any rental payments hereunder remain unpaid, moneys on deposit in the Escrow Fund
<br />will not be used in a manner that will cause this Lease Agreement to be classified as an "arbitrage bond"
<br />within the meaning of Section 148(a) of the Code.
<br />Should Lessor either (i) receive notice, in any form, from the Internal Revenue Service or (ii)
<br />reasonably determine, based on an opinion of a nationally recognized independent tax counsel, that Lessor
<br />may not exclude, for any reason, any interest (or portion thereof) paid under the Lease Agreement from its
<br />Federal gross income (an "Event of Taxability"), the Lessee shall pay to Lessor upon demand (x) an amount
<br />which, with respect to Rental Payments previously paid and taking into account all penalties, fines, interest
<br />and additions to tax (including all federal, state and local taxes imposed on the interest due through the date
<br />of such event), will restore to Lessor its anticipated after-tax yield (assuming tax at the highest marginal tax
<br />rate and taking into account the time of receipt of Rental Payments and reinvestment at the after-tax yield
<br />rate) on the transaction evidenced by such Lease through the date of such event and (y) as additional Rental
<br />Payments to Lessor on each succeeding Payment Date such amount as will maintain such anticipated after-
<br />tax yield to Lessor.
<br />It is Lessor's and Lessee's intention that this Lease Agreement not constitute a "true" lease for federal
<br />income tax purposes and, therefore, it is Lessor's and Lessee's intention that Lessee be considered the owner
<br />of the Equipment hereunder for federal income tax purposes.
<br />City of Santa Ana / Holman Capital Corporation Page 7 of 11
<br />Equipment Lease -Purchase Agreement April 6, 2018
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