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<br />to intervene in any such claim or action and to be defended with legal counsel of Lessor's choice.
<br />11. FINANCIAL REPORTING REQUIREMENTS. Lessee shall maintain a standard, modern system of accounting
<br />that reflects the application of generally accepted accounting principles consistently applied. Lessee shall furnish to Lessor
<br />within one hundred eighty (180) days of the close of each fiscal year, Lessee's audited financial statements. Lessee shall furnish
<br />Lessor such additional financial information, including, but not limited to, budgets, from time to time specified by Lessor in
<br />such form and with such certifications as Lessor may require.
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<br />12. INSURANCE. Throughout the term ofthis Lease, and until Lessor has received possession of the Equipment upon
<br />its return to Lessor or until Lessee purchases the Equipment if and as permitted under the terms set forth herein and in the
<br />Equipment Schedule, Lessee, at its expense, shall (a) keep the Equipment insured against collision (if applicable) loss, damage,
<br />fire and theft, with extended or combined additional coverage, in such amounts as Lessor may from time to time specify;
<br />(b) maintain liability insurance in amounts satisfactory to Lessor concerning any property damage, personal injury or fatality
<br />. it may result from the possession, use or operation of the Equipment; and (c) keep the Equipment insured against such other
<br />ks in such amounts as Lessor may from time to time specify. All such insurance policies shall name Lessor as an additional
<br />,ured. Lessee shall, on request of Lessor, deliver to Lessor the policies or other evidence of such insurance satisfactory to
<br />Lessor, with a standard (non-attribution) long form endorsement attached thereto or indicated therein, showing loss proceeds,
<br />if any, payable directly to Lessor, all in form satisfactory to Lessor, together with receipts for the paid premiums thereunder.
<br />The loss proceeds of such insurance, to the extent permitted by law, shall be paid directly to Lessor and such proceeds, less
<br />any costs and expenses incurred or paid by Lessor in the collection thereof, shall be applied, at the election of Lessor, either
<br />toward repair or replacement of the Equipment damaged, destroyed, lost or stolen or to payment of any rental payment or other
<br />amount payable by Lessee hereunder (including, but not limited to, any "Casualty Payment," as defined below), whether or not
<br />then due. For purposes of this Section, participation in the Texas Municipal League Intergovernmental Risk Pool shall
<br />constitute coverage.
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<br />Lessee will carry workmen's compensation insurance covering all employees working on, in or about the Equipment
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<br />Lessee shall cause all insurance policies required under the terms of this Section to (a) provide by endorsement on the
<br />policies that no cancellation, alteration, change, lapse or expiration thereof shall be effective as to Lessor for thirty (30) days
<br />after receipt by Lessor of written notice thereof; (b) provide that the insurers shall hold harmless and waive any rights of
<br />subrogation against Lessor; (c) be primary without right of contribution from any other insurance which is carried by Lessor;
<br />(d) waive any rights of setoff, counterclaim or other deduction against Lessor; (e) provide that Lessor shall have no obligation
<br />or liability for premiums, commissions, assessments or calls in connection with such insurance; and (f) provide that such
<br />policies will not be invalidated by any act or omission of Lessee or any other additional insured, and shall insure Lessor and
<br />its assigns, regardless of any breach or violation of any warranty, declaration, condition or covenant contained in such policies
<br />by Lessee or any other additional insured.
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<br />13. LOSS. DAMAGE OR DESTRUCTION OF EOUIPMENT. Lessee shall bear all risk of damage, destruction, loss
<br />possession or theft of the Equipment or any part thereof, and no such event shall cause any abatement or release whatsoever
<br />in Lessee's liability to pay rent or to perform other covenants as provided herein. In the event that any Equipment is lost, stolen,
<br />condemned by any governmental authority, if applicable, totally destroyed, damaged beyond repair or permanently rendered
<br />unfit for use (each an "Event of Loss"), then Lessee shall promptly notify Lessor of the occurrence of such Event of Loss and
<br />shall pay or cause to be paid to Lessor, not later than the earlier to occur of (a) the date that is ninety (90) days subsequent to
<br />the date such Event of Loss occurred or (b) the date of receipt of insurance proceeds in respect of such Event of Loss, a
<br />"Casualty Payment" (defined below) in respect of the Equipment as to which there has occurred such Event of Loss. In
<br />addition, Lessee shall continue to pay all rental payments that become due and payable on such Equipment after the date that
<br />such Event of Loss has occurred and prior to the date that the Casualty Payment thereon is actually received by Lessor. If
<br />Lessee shall have timely paid all such rental payments on such Equipment, all rental payments thereon that became due and
<br />payable prior to the date such Event of Loss occurred, and the Casualty Payment that is due and payable with respect thereto,
<br />then the liability of the Lessee to pay rent for such Equipment shall be discharged. For purposes of this Lease, "Casualty
<br />Payment" means, with respect to any item of Equipment as to which an Event of Loss has occurred, a payment in an amount
<br />equal to the "Stipulated Loss Value" (defined below) of such Equipment determined as of the date such Casualty Payment is
<br />due and payable less the net amount of recovery, if any, actually received by Lessor on or prior to the date such Casualty
<br />Payment is due and payable from insurance or otherwise in respect of such Event of Loss.
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