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Exhibit 10.31
EXECUTION COPY
MASTER EQUIPMENT LEASE
THIS MASTER EQUIPMENT LEASE (the "Lease") is made effective as of May
26, 1994, by and between MAY PROPERTIES, INC., a Texas Corporation, ("Lessor")
and WASTE-QUIP MANUFACTURING COMPANY ("Lessee").
The parties agree that Lessee shall lease from Lessor certain personal
property, together with all components, parts, additions, accessions, and
attachments incorporated therein as more further described in Equipment Schedule
1 (collectively referred to herein as the "Original Equipment") to be executed
pursuant hereto, subject to the terms and conditions set forth therein and those
set forth herein. Lessor and Lessee hereby acknowledge and agree that Lessor has
not manufactured the Original Equipment but Lessor has acquired the same and may
acquire subsequent equipment ("After Acquired Equipment") at the request of
Lessee and in connection with this Lease. The Original Equipment and the After
Acquired Equipment shall collectively shall be referred to herein as the
"Equipment".
In the event Lessee requests Lessor to acquire After Acquired Equipment
for Lessee's use under an Equipment Schedule in accord with the terms of this
Lease and Lessor is willing to do so, Lessor may require Lessee to execute and
deliver one or more documents as a condition thereto, including, without
limitation, any of the following documents in form and substance satisfactory to
Lessor: (i) an Equipment Schedule relating to the After Acquired Equipment to be
leased thereunder; (ii) a purchase order or invoice and any necessary
assignments thereof; (iii) a Delivery and Acceptance Certificate; (iv) evidence
of insurance; (v) UCC financing statement; and (vi) such other documents as
Lessor shall reasonably request.
This Lease is made upon the following terms and conditions:
1. TERM. The term of this Lease with respect to any item of the
Equipment shall consist of the term set forth in the Equipment Schedule relating
thereto; provided, however, that this Lease shall be effective from the date
provided above.
2.1 RENT. Lessee shall pay Lessor rent for the Equipment, without any
deduction or setoff and without prior notice or demand, the aggregate amounts
specified in the Equipment Schedule relating thereto. This Lease is a net lease,
and Lessee shall not be entitled to any abatement or reduction of payments due
hereunder for any reason. Lessee hereby waives any and all existing or future
claims to any offset against the rent payments due hereunder, and agrees to make
the rent payments regardless of any offset or claim which may be asserted by
Lessee.
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2.2 RENT PAYMENTS AND LATE CHARGES. Rent is payable as and when
specified in the Equipment Schedule by mailing the same to Lessor at its
specified address and shall be effective upon receipt. Payments may be applied
by Lessor at any time against any obligation due and owing by Lessee under this
Lease (in Lessor's sole discretion) notwithstanding any statement appearing on
or referred to in any remittance from Lessee.
Time is of the essence. If any payment due hereunder is not paid in
full on the due date or within ten (10) days thereafter, Lessor may collect, and
Lessee agrees to pay, a late charge equal to the greater of $25.00 or 5% of the
payment due, but in no event greater than the highest charge permitted by law.
2.3 RENT ADJUSTMENTS. As used in this Lease, Rent shall mean Base Rent,
as defined in Equipment Schedule 1 plus all other amounts provided for in this
Lease to be paid by Lessee, all of which shall constitute rental in
consideration for this Lease and the leasing of the Equipment (collectively the
"Rent"). The Rent shall be paid at the times and in the amounts provided for
herein in legal tender of this United States of American to Lessor at the
address specified above or to such other person or at such other address as
Lessor may from time to time designate in writing. The Rent shall be paid
without notice, demand, abatement, deduction or offset except as may be
expressly set forth in this Lease.
2.4 COSTS OF ACQUISITION OF EQUIPMENT. Intentionally
Deleted.
2.5 OFFSET OF RENT. Notwithstanding anything to the contrary contained
in this Lease, Lessor and Lessee hereby agree that any and all rights or
remedies afforded Lessee in connection with the Asset Purchase Agreement (the
"Asset Purchase Agreement") dated May
20, 1994 by and between May Fabricating Co., Inc., May Fab - Mississippi, Inc.
and May Fab - Oklahoma, Inc., collectively seller, and Waste-Quip Manufacturing
Company, a wholly owned subsidiary of Waste-Quip, Inc. ("Waste-Quip") as buyer,
and Waste-Quip, which relate to abatement or reduction of payments, existing or
future claims to offset shall supersede any provision to the contrary contained
in this Lease. In the event any such provision in the Asset Purchase Agreement
is in conflict with the provisions of this Lease the provision of the Asset
Purchase Agreement shall govern.
3. COVENANTS OF LESSEE. Lessee covenants and agrees as
follows:
(a) Lessee promptly will execute and deliver to Lessor such
further documents, instruments and assurances and take such further action as
Lessor from time to time may reasonably request to carry out the intent and
purpose of the Lease and to establish and protect the rights and remedies
intended to be created in favor of Lessor hereunder.
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(b) Lessee shall provide written notice to Lessor of the
commencement of the proceedings under the Federal Bankruptcy Laws or other
insolvency laws (as now or hereafter in effect) involving Lessee or any
guarantor hereof as a debtor.
4. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and
warrants to Lessor that on the date of this Lease and on the date of execution
of each Equipment Schedule:
(a) Lessee has the power and capacity to enter into this Lease
and perform all the obligations thereunder and under the Equipment Schedule(s)
and related documents and is duly qualified to do business in the state where
the Equipment is located and wherever necessary to carry on its present business
and operations.
(b) This Lease, the Equipment Schedule(s), and all other
documents executed by Lessee in connection herewith have been duly authorized,
executed, and delivered by Lessee and Lessee has the authority to execute the
same.
(c) The Equipment accepted under any Delivery and Acceptance
Certificate is and will remain tangible personal property.
(d) The Equipment will at all times be used for commercial or
business purposes.
5. DELIVERY, INSPECTION, AND ACCEPTANCE BY LESSEE. Upon tender of
delivery, Lessee shall cause an inspection of the Original Equipment to be made.
Lessee agrees the Original Equipment is in good order and in compliance with the
provisions of this Lease and the Asset Purchase Agreement, and upon execution of
this Lease Lessee shall accept delivery of the same and on such date Lessee
shall execute and deliver to Lessor a Delivery and Acceptance Certificate in a
form as set forth on Schedule 1 hereof containing a complete description of each
item of Original Equipment delivered and accepted; whereupon, as between Lessor
and Lessee, the Original Equipment shall be deemed to have been finally accepted
by Lessee pursuant to this Lease. Upon tender of delivery of any After Acquired
Equipment Lessee shall cause an inspection of the After Acquired Equipment to be
made and if the same is found to be in good order and compliance with the
provisions of any applicable purchase order, Lessee shall accept delivery of the
same and shall execute and deliver to Lessor a Delivery and Acceptance
Certificate in form as set forth on Schedule 1 containing a complete description
of each item of After Acquired Equipment as delivered and accepted; where upon
as between Lessor and Lessee the same shall be deemed to have been finally
accepted by Lessee pursuant to this Lease.
Except as set forth in the Asset Purchase Agreement, Lessor shall not
be liable for loss or damage occasioned by any cause,
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circumstance, or event of whatsoever nature, including, but not limited to,
failure of or delay in delivery of After Acquired Equipment, delivery of the
After Acquired Equipment to the wrong place, delivery of improper equipment or
property other than the After Acquired Equipment, damage to the After Acquired
Equipment, governmental regulations, strike, embargo, or other cause,
circumstance, or event. All expenses incurred in connection with Lessor's
purchase of After Acquired Equipment (including shipment, delivery,
installation, and servicing of the Equipment by the manufacturer or supplier or
by any other party) shall be the responsibility of the Lessee.
If, for reasonable cause, Lessee shall refuse to accept delivery of any
item of After Acquired Equipment, (i) Lessee will thereupon be assigned all
rights and assume all obligations as purchaser of the After Acquired Equipment
and will indemnify and hold Lessor harmless from and against any and all claims
of the manufacturer, supplier, or any other person in connection with the
purchase thereof; and (ii) Lessee shall have all rights as the purchaser of the
After Acquired Equipment and be entitled to pursue any and all remedies which
may be available against the manufacturer, supplier, or other person for any
failure or breach in connection with the manufacture, shipment, or delivery of
the After Acquired Equipment.
6. IDENTIFICATION OF EQUIPMENT. If instructed by Lessor, Lessee will
cause each principal item of the Equipment to be continually marked, in a plain
and distinct manner, with the name of Lessor. If so instructed, Lessee will not
place any item of the Equipment in operation or exercise any control of dominion
over the same until such name shall have been so marked thereon. Lessee will not
allow the name of any person or entity other than that of Lessor to be placed on
any item of the Equipment in a manner which might be interpreted as a claim of
ownership (provided that Lessee may place its name or logo on the Equipment).
7.1 USE. Lessee shall use the Equipment solely in the conduct of its
business and in a careful and proper manner. Lessee will not change the location
of any Equipment as specified in the Equipment Schedule(s) without the prior
written consent of Lessor, which consent shall not be unreasonably withheld or
delayed. A condition of Lessor's consent to change the location of any Equipment
shall be that Lessee shall return that Equipment to Lessor upon the termination
of this Lease at a destination to be designated by Lessor. Lessor and Lessee
agree that Lessee shall obtain and pay for all costs associated with the
transportation of the Equipment including, but not limited to, a policy of
transit insurance in the amount equal to the full replacement value of the
Equipment naming Lessor as the loss payee on the policy; provided further Lessor
and Lessee agree that Lessee's responsibility for such cost shall not exceed the
cost of returning the Equipment to its location upon the date hereof.
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7.2 MAINTENANCE. At its own expense, Lessee will cause the
Equipment to be kept and maintained as recommended by the manufacturer and in as
good operating condition as when delivered to Lessee hereunder, ordinary wear
and tear resulting from proper use alone excepted, and will provide all
maintenance and service and make all repairs or maintenance reasonably necessary
for such purpose.
If any parts or accessories forming part of the Equipment become worn
out, lost, destroyed, damaged beyond repair, or otherwise permanently rendered
unfit for use, Lessee, at its own expense and within a reasonable time, will
cause such parts or accessories to be replaced by replacement parts or
accessories which are free and clear of all liens, encumbrances, or rights of
others and have a value and utility at least equal to the parts or accessories
replaced. All equipment, accessories, parts, and replacements for, or which are
added to or become attached to, the Equipment which are essential to the
operation of the Equipment or which cannot be detached from the Equipment
without materially interfering with the operation of the Equipment or adversely
affecting the value or utility which the Equipment would have had without the
addition thereof, shall immediately become the property of Lessor, and shall be
deemed incorporated in the Equipment and subject to the terms of this Lease as
if originally leased hereunder. Lessee shall not make any material alterations
to the Equipment without the prior written consent of Lessor, which consent
shall not be unreasonably withheld or delayed. The Equipment Schedule(s) may
also be subject to specific return provisions attached thereto. Notwithstanding
anything to the contrary contained in this Lease, Lessor and Lessee hereby agree
that in the event that any Equipment wears out completely and it is not, in the
reasonable judgment of Lessee, economically feasible to maintain or repair said
Equipment, after giving Lessor at least fifteen (15) days prior written notice
of intent to do so, Lessee may discard said Equipment without replacement.
Lessee agrees that discarding such Equipment shall have no effect on the Base
Rent or any other obligations of Lessee set forth in this Lease.
Upon reasonable advance notice, Lessor shall have the right to inspect
the Equipment and all maintenance records with respect thereto, if any, at any
reasonable time during Lessee's normal business hours.
8. DISCLAIMER OF WARRANTIES. LESSOR, NOT BEING A SELLER, A
MANUFACTURER, OR A SELLER'S OR MANUFACTURER'S AGENT, EXPRESSLY DISCLAIMS AND
MAKES TO LESSEE NO WARRANTY OR REPRESENTATION, (EXCEPT FOR THOSE MADE IN THE
ASSET PURCHASE AGREEMENT WHICH REMAIN IN FULL FORCE AND EFFECT) EXPRESS OR
IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE
INCLUDING, BUT NOT LIMITED TO: THE FITNESS FOR USE DESIGN, OR CONDITION OF THE
EQUIPMENT; THE YEAR OF MANUFACTURE; THE QUALITY OR CAPACITY OF THE EQUIPMENT;
THE WORKMANSHIP IN THE EQUIPMENT; THAT THE EQUIPMENT WILL SATISFY THE
REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION, OR
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CONTRACT PERTAINING THERETO; AND ANY GUARANTY OR WARRANTY AGAINST PATENT
INFRINGEMENT OR LATENT DEFECTS, it being agreed that all such risks, as between
Lessor and Lessee, are to be borne by Lessee. Lessor is not responsible or
liable for any direct, indirect, incidental, or consequential damage to or loss
resulting from the installation, operation, or use of the Equipment or any
product manufactured thereby. All assignable warranties made by the manufacturer
or supplier to Lessor are hereby assigned to Lessee for and during the term of
this Lease and Lessee agrees to resolve all such claims directly with the
manufacturer or supplier. The proceeds of any successful prosecution of a
warranty claim shall be applied to the repair or replacement of the affected
item of the Equipment. Lessor shall cooperate fully with Lessee with respect to
the resolution of such claims; provided, however, except as set forth in the
Asset Purchase Agreement neither the existence of any such claim nor the manner
of resolution thereof shall affect in any manner the unconditional obligation of
Lessee to make Rent payments hereunder.
9. FEES AND TAXES.
(a) From and after the effective date of this Lease and to the
extent permitted by law, Lessee shall file any necessary report or return for,
shall pay promptly when due, shall otherwise be liable to reimburse Lessor for,
and agrees to indemnify and hold Lessor harmless from: (i) all titling,
recordation, documentary stamp, and other fees; (ii) taxes (other than taxes
calculated solely on the basis of net income), including but not limited to
sales, use and personal property taxes; and (iii) assessments and all other
charges or withholding of any nature (together with any penalties, fines or
interest thereon); arising at any time upon or relating to the Equipment or this
Lease or with respect to the acquisition, ownership, use, operation, leasing,
delivery, return, or other disposition of the Equipment, or upon the rentals
payable hereunder, whether the same be assessed to Lessor or Lessee.
(b) If any report or return for, or property listing in
connection with, or any, fee, tax, or assessment described in subpart (a) hereof
is, by law, required to be filed by, assessed or billed to, or paid by Lessor,
Lessee at its own expense will do any and all things required to be done by
Lessor (to the extent permitted by law) in connection therewith and is hereby
authorized by Lessor to act on behalf of Lessor in any and all respects,
including (but not limited to), after obtaining the prior written consent of
Lessor (which shall not be unreasonably withheld or delayed), the contest or
protest, in good faith and by appropriate proceedings, of the validity of any
such tax or assessment, or the amount thereof. Lessor agrees to cooperate fully
with Lessee in any such contest, and Lessee agrees promptly to indemnify Lessor
for all reasonable expenses incurred by Lessor in the course of such
cooperation. A claim shall be paid, subject to refund proceedings, if failure to
pay would adversely affect the title or rights of Lessor hereunder. Provided
Lessee is not in a payment
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Default (as hereinafter defined) Lessor and Lessee agree that if Lessor shall
obtain a refund which has been paid by Lessee, or by Lessor and for which Lessor
has been reimbursed by Lessee, Lessor shall promptly pay such refund to Lessee.
Notwithstanding the preceding sentence, Lessor and Lessee agree that in the
event Lessee is in a payment default upon Lessors receipt of any such refund
Lessor shall be permitted to hold in escrow any amounts sufficient to cure said
default and, upon resolution of said default, Lessor shall either apply those
funds toward said default or return the same to Lessee whichever is applicable.
Lessee will cause all xxxxxxxx of such charges to Lessor to be
made to Lessor in care of Lessee and will, in preparing any report or return
required by law, show the ownership of the Equipment in Lessor, and shall serve
a copy of any such report or return to Lessor.
If Lessee fails to pay any such charges when due, except any
tax or assessment being contested in good faith and by appropriate proceedings
as above provided for a reasonable period of time, Lessor at its option may pay
such charges, in which event the amount so paid (including any penalty or
interest incurred as a result of Lessee's failure), plus interest thereon at the
rate of 14% per annum shall be paid by Lessee to Lessor with the next periodic
payment of rent.
10. INTENT; TITLE. It is the express intent of the parties that this
Lease constitute a true lease and in no event shall this Lease be construed as a
sale of the Equipment. Title to the Equipment shall at all times remain in
Lessor, and Lessee shall acquire no ownership, title, property right, equity, or
interest in the Equipment other than its leasehold interest solely as Lessee
subject to all the terms and conditions hereof. The parties intend and agree
that the Equipment shall remain personal property, notwithstanding the manner in
which it may be affixed to any real property. Lessee agrees Lessee shall not
place, or cause to be placed any liens on the Equipment and shall maintain the
Equipment free from all claims, liens, and legal processes of creditors of
Lessee except for those placed thereon by Lessor which Lessor agrees to remove,
at its sole cost and expense in the event Lessee purchases the Equipment in
connection with Section 15 hereof. Lessee will defend, at its own expense,
Lessor's title to the Equipment from such claims, liens, or legal processes.
Lessee shall also notify Lessor immediately upon receipt of notice of any lien,
attachment, or judicial proceeding affecting the Equipment in whole or in part.
11. INSURANCE. Lessee shall keep the Equipment insured against loss or
damage due to fire and risks normally included in extended coverage, malicious
mischief, and vandalism, for not less than the full replacement value. Lessee
shall also carry public liability insurance, both personal injury and property
damage, covering the Equipment, with a combined single limit amount per
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occurrence acceptable to Lessor. All said insurance shall be in form and amount
and with companies reasonably satisfactory to Lessor. All insurance for loss or
damage shall provide that losses shall be payable to Lessor and Lessee, as their
interest may appear, and Lessee shall utilize its best efforts to have all
checks relating to any such losses delivered promptly to Lessor. Lessor shall be
named as an additional insured with respect to all such liability insurance.
Lessee shall pay the premiums therefore and deliver to Lessor evidence
satisfactory to Lessor of such insurance coverage. Upon the request of Lessor,
Lessee shall cause to be provided to Lessor, not less than fifteen (15) days
prior to the scheduled expiration or lapse of such insurance coverage, evidence
satisfactory to Lessor of renewal or replacement coverage. Each insurer shall
agree, by endorsement upon the policy or by independent instrument furnished to
Lessor, that (a) it will give Lessor thirty (30) days' prior written notice of
the effective date of any material alteration or cancellation of such policy;
and (b) insurance as to the interest of any named additional insured or loss
payee other than Lessee shall not be invalidated by any actions, inactions,
breach of warranty or conditions, or negligence of Lessee with respect to such
policy or policies. The proceeds of such insurance payable as result of loss of
or damage to the Equipment shall be applied as required by the provisions of
Section 12 hereof.
12. LOSS AND DAMAGE. Except as set forth in the Asset Purchase
Agreement Lessee assumes the entire risk of direct and consequential loss of, or
damage to, the Equipment from all causes. Except as provided in this Section for
discharge upon payment of the full replacement value, no loss or damage to the
Equipment or any part thereof shall release or impair any obligations of Lessee
under this Lease, which shall continue in full force and effect and shall be
absolute during the term hereof. Lessee agrees that Lessor shall not incur any
liability to Lessee for any loss of business, loss of profits, expenses, or any
other damages resulting to Lessee by reason of any failure of or delay in
delivery or any delay caused by any non-performance, defective performance, or
breakdown of the Equipment, nor shall Lessor at any time be responsible for
personal injury or the loss or destruction of any other property resulting from
the Equipment.
In the event of loss or damage to any item of the Equipment which does
not constitute a Total Loss (as hereinafter defined), and provided Lessee is not
in default, Lessor shall make available to Lessee any insurance proceeds
received by Lessor on account of such loss or damage to be applied by Lessee
toward the repair or restoration of such Equipment and thereafter the cost of
repairs therefore and Lessee shall, at its sole cost and expense, promptly
repair and restore such item of the Equipment to the condition required by this
Lease. Notwithstanding anything to the contrary contained herein, Lessor and
Lessee agree that the insurance proceeds shall be distributed to Lessee only
upon Lessor's reasonable approval of invoices for repairs to the Equipment.
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Upon the occurrence of: (a) the actual or constructive total loss of
any item of the Equipment; (b) the loss, theft or destruction of any item of the
Equipment or damage to any item of the Equipment to such extent as shall make
repair thereof uneconomical or shall render any item of the Equipment
permanently unfit for normal use for any reason whatsoever; or (c) the
condemnation, confiscation, requisition, seizure, forfeiture, or other taking of
title to or use of any item of the Equipment (as established to the reasonable
satisfaction of Lessor, any such occurrence being herein referred to as a "Total
Loss") during the term of this Lease, Lessee shall give prompt notice thereof to
Lessor. Thereafter, on the next date for the payment of rent, Lessee shall pay
to Lessor the full replacement value of the item or items of the Equipment with
respect to which the Total Loss has occurred and any other sums hereunder with
respect to the Equipment (less any insurance proceeds or condemnation award
actually paid to Lessor) and Lessor shall be obligated to replace said
Equipment, to the extent possible with the insurance proceeds actually received,
as soon as reasonably possible and Lessor and Lessee agree that the Base Rent
shall remain the same.
Full replacement value shall be determined as of the next date on which
a payment of rent is or would be due after a Total Loss or other termination of
this Lease, after payment of any rent due on such date.
13. REDELIVERY. UPON THE EXPIRATION OR EARLIER TERMINATION OF THIS
LEASE (OR OF ANY RENEWAL HEREOF, IF APPLICABLE), UNLESS LESSEE HAS PAID THE FULL
REPLACEMENT VALUE WITH RESPECT THERETO PURSUANT TO SECTION 12 HEREOF, LESSEE
SHALL RETURN, AT ITS OWN EXPENSE, THE EQUIPMENT TO LESSOR AT ITS LOCATION AS OF
THE DATE HEREOF WITHIN TEN (10) DAYS IN THE SAME CONDITION AS WHEN DELIVERED TO
LESSEE HEREUNDER, ORDINARY WEAR AND TEAR RESULTING FROM PROPER USE THEREOF ALONE
EXCEPTED, AND FREE AND CLEAR OF ALL LIENS, ENCUMBRANCES, OR RIGHTS OF OTHERS
WHATSOEVER EXCEPT LIENS OR ENCUMBRANCES RESULTING FROM CLAIMS AGAINST LESSOR. IN
ADDITION TO LESSOR'S OTHER RIGHTS AND REMEDIES HEREUNDER, IF THE EQUIPMENT IS
NOT RETURNED IN A TIMELY FASHION, OR IF REPAIRS ARE NECESSARY TO PLACE THE
EQUIPMENT IN THE CONDITION REQUIRED IN THIS SECTION, LESSEE SHALL CONTINUE TO
PAY TO LESSOR RENT AT THE SAME MONTHLY RATE FOR THE PERIOD OF DELAY IN
REDELIVERY, OR THE COST OF SUCH REPAIRS, AS APPLICABLE. LESSOR'S ACCEPTANCE OF
SUCH RENT ON ACCOUNT OF SUCH DELAY OR REPAIR DOES NOT CONSTITUTE A RENEWAL OF
THE TERM OF THIS LEASE, OR A WAIVER OF LESSOR'S RIGHT TO PROMPT RETURN OF THE
EQUIPMENT IN PROPER CONDITION.
14. OPTION TO RENEW. Provided that Lessee is not then in Default,
Lessee shall have the option to renew this Lease, including any Equipment
Schedule hereto, at the expiration of the term of this Lease, with respect to
all but not less than all of the Equipment on the terms and conditions of this
Lease, for two (2) additional terms of seven (7) years each (each called an
"Option Term"), which Option Term shall commence at 12:01 a.m. on
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the day after the last day of the term or Option Term, as applicable (the "Term
Termination Date") and terminating seven (7) years after the date thereof.
All terms, provisions and conditions of this Lease shall remain in
full force and effect during the Option Terms. It is expressly understood and
agreed that in order for Lessee to exercise the Renewal Option, Lessee must
notify Lessor in writing at least three (3) months prior to the Term Termination
Date any applicable term of its election to exercise the Renewal Option.
Notwithstanding anything to the contrary contained in this Lease, in
the event Lessee exercises its option to renew this Lease, the Base Rent for any
such Option Term shall be as agreed upon by the Lessor and Lessee.
15. OPTION TO PURCHASE. Provided Lessee is not in default hereunder,
Lessor does hereby give and grant to Lessee the right and option to purchase the
Original Equipment during the last six (6) months of the Term of this Lease or
at any time during a Renewal Term thereof (the "Purchase Option"). In the event
Lessee elects to exercise its Purchase Option, Lessee shall give written notice
to Lessor (the "Purchase Notice") of such exercise at least six (6) months prior
to the end of the Term, or at anytime during the Renewal Term, and shall state
in the Purchase Notice an estimated date for completing the acquisition of the
Equipment (the "Closing Date") which will be on the last day of the original
Term if Lessee exercises its option to purchase during the original term of this
Lease. In the event Lessee exercises its purchase option during a Renewal Term,
the Closing Date shall be set for a date which is no later than 180 days from
the date of the Purchase Notice. Upon the Closing Date Lessor and Lessee shall
execute a xxxx of sale for the Equipment reasonably acceptable to Lessor and
Lessee. During the thirty (30) day period after Lessee provides Lessor with its
Purchase Notice Lessor and Lessee shall determine the Purchase Price of the
Equipment as follows:
(i) the cost of the Original Equipment shall be the value
to be determined by an appraiser of Lessee's choice
which shall not be less than 10 percent of the Net
Book Value (as defined in Schedule 1) as of the date
of this Lease; and
(ii) the cost of the After Acquired Equipment shall be the
value to be determined by an appraiser mutually
acceptable to Lessor and Lessee but in no event shall
be less than 10 percent of the Net Book Value (as
defined in Schedule 1) as of the date of the Property
Schedule pursuant to which such After Acquired
Equipment is added to this Lease.
Notwithstanding anything to the contrary contained in this Lease, in the event
Lessor exercises any right to terminate this Lease
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which right is not as a result of Lessee's default, Lessor agrees that Lessee
may void said termination by exercising this option to purchase Equipment. In
the event Lessee chooses to void said termination in connection with this
Section 15, Lessor and Lessee hereby agree to negotiate, in good faith, an
acceptable purchase price for the Equipment. In the event Lessor and Lessee are
unable to arrive at an acceptable purchase price within 30 days after Lessor's
notice of termination; Lessor and Lessee agree that they shall use the procedure
set forth in Schedule 4, Article 2(A) of that Real Estate Lease by and between
Lessor and Lessee dated May 26, 1994 for certain property located in Brookhaven,
Mississippi to resolve such dispute.
16. GENERAL INDEMNITY. Except as set forth in the Asset Purchase
Agreement Lessee assumes and agrees to indemnify, defend, and keep harmless
Lessor, its agents and employees, from and against any and all losses, damages,
injuries, claims, demands, and expenses, including legal expenses (other than
such as may directly and proximately result from the gross negligence or willful
misconduct of Lessor, its agents or employees) arising on account of the
ordering, acquisition, delivery, installation, or rejection of the Equipment,
the possession, maintenance, use, condition (including without limitation,
latent and other defects and whether or not discoverable by Lessor or Lessee,
any claim in tort for strict liability, and any claim for patent, trademark, or
copyright infringement), or operation of any item of the Equipment, and by
whomsoever used or operated, during the term of this Lease with respect to that
item of the Equipment, the loss, damage, destruction, removal, return,
surrender, sale, or other disposition of the Equipment, or any item thereof.
Lessor shall give Lessee prompt notice of any claim or liability hereby
indemnified against. Lessee shall be entitled to control the defense thereof, as
long as Lessee irrevocably acknowledges, in writing, complete responsibility for
and agrees to indemnify Lessor with respect to such claim or liability and
Lessee is not in Default hereunder; provided, however, that Lessor shall have
the right to approve defense counsel selected by Lessee.
17. TAX INDEMNITY. Lessor and Lessee agree that Lessor shall be treated
for Federal income tax purposes as the owner of all equipment leased hereunder,
and shall be entitled to all cost recovery deductions as provided for owners in
the Internal Revenue Code of 1986 ("Recovery Deduction"). Lessee hereby
represents and warrants that at no time during the term of this Lease with
respect to any Equipment will the Lessee take or omit to take any action
(whether or not such act or omission is otherwise permitted by the terms of this
Lease) which will result in the disqualification of any Equipment for, or the
recapture of, Recovery Deduction with respect to Lessor.
18.1 DEFAULT. Each of the following shall constitute a
"Default" by Lessee:
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(a) The failure of Lessee to pay the Rent or any part thereof
or other sum or charge when due and such failure continues without cure
for a period of ten (10) days after notice of such failure has been
sent to Lessee;
(b) The entry of a decree or order by a court having
jurisdiction adjudging Lessee to be bankrupt or insolvent or approving
as properly filed a petition seeking reorganization
of Lessee or any Guarantor under the Federal Bankruptcy Laws, or any
other similar applicable Federal or state law, or a decree or order of
a court having jurisdiction for the appointment of a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency of Lessee
or any Guarantor or its or his property or for the winding up or
liquidation of its or his affairs; or Lessee or any Guarantor shall
institute proceedings to be adjudicated a voluntary bankrupt or shall
consent to the filing of any bankruptcy, reorganization, receivership
or other proceeding against Lessee or any Guarantor or any such
proceedings shall be instituted against Lessee or any Guarantor and the
same shall not be vacated within sixty (60) days after the same are
commenced; or Lessee or any Guarantor shall make an assignment for the
benefit of Lessee's or any Guarantor's creditors or admit in writing
Lessee's or any Guarantor's inability to pay the debts of Lessee or any
Guarantor generally as they may become due;
(c) The failure by Lessee to fulfill or perform, in whole or
in part, any of its obligations or covenants under this Lease and such
failure continues without cure for a period of twenty (20) days after
notice of such failure has been sent to Lessee (except that Lessee
shall not be deemed to be in default if Lessee shall in good faith
commence to cure such breach or failure within said twenty (20) day
period and shall diligently to proceed therewith to completion and in
fact cures such breach or failure within 180 days after notice of such
failure);
(d) Any other default contained in this Lease.
18.2 REMEDIES ON DEFAULT. Upon a Default hereunder, Lessor may, at its
option and at any time thereafter, do any one or more of the following, all of
which are hereby authorized by Lessee:
(1) Xxx for and recover all rent and other payments hereunder,
then accrued or thereafter accruing, with respect to any or all of the Equipment
reduced by any rent thereafter received for said Equipment.
(2) (A) Require Lessee to assemble any or all of the Equipment
at the location to which the Equipment was delivered or the location to which
such Equipment may have been moved by Lessee or such other location in
reasonable proximity to either of the foregoing as Lessor shall designate; or to
return promptly, at
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Lessee's expense, any or all of the Equipment to Lessor at the location, in the
condition, and otherwise in accordance with all of the terms of Section 13
hereof; or (B) take possession of and render unusable by Lessee any or all of
the Equipment, wherever it may be located, without any court order or other
process of law and without liability for any damages occasioned by such taking
of possession (any such taking of possession shall constitute an automatic
termination of this Lease as it applies to those items taken without further
notice, and such taking of possession shall not prohibit Lessor from exercising
its other remedies hereunder).
(3) (A) Sell or otherwise dispose of any or all of the
Equipment, whether or not in Lessor's possession, in a commercially reasonable
manner at public or private sale with notice to Lessee (the parties agreeing
that ten (10) days' prior written notice shall constitute adequate notice of
such sale), with the right of Lessor to purchase and apply the net proceeds of
such disposition, after deducting all costs of possession, storage,
refurbishing, advertising and brokers' fees, to the obligations of Lessee
hereunder with Lessee remaining liable for any deficiency; or (B) retain any
Equipment the possession of which is recovered by Lessor and credit the fair
market value thereof to the obligations of Lessee hereunder with Lessee
remaining liable for any deficiency and with Lessor having no obligation to
reimburse Lessee on account of any excess of such fair market value over such
obligations.
(4) Terminate this Lease as to any or all of the Equipment.
(5) Exercise any other right or remedy available to Lessor at
law or in equity.
Unless otherwise provided above, a termination hereunder shall occur only upon
written notice by Lessor to Lessee and only with respect to all Equipment.
In addition, Lessee shall be liable for all reasonable legal fees and
other expenses incurred by reason of any Default or the exercise of Lessor's
remedies, including all costs and expenses incurred in connection with the
return of any Equipment in accordance with the terms of Section 13 hereof or in
placing such Equipment in the condition required by said Section. Unless the
context expressly requires otherwise, no right or remedy referred to in this
Section is intended to be exclusive, but each shall be cumulative, and shall be
in addition to any other remedy referred to above or otherwise available at law
or in equity, and may be exercised concurrently or separately from time to time.
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The failure of Lessor to exercise the rights granted hereunder upon any
Default of Lessee shall not constitute a waiver of any such right upon the
continuation or reoccurrence of any such Default. In no event shall the
execution of an Equipment Schedule constitute a waiver of Lessor of any
pre-existing Default in the performance of the terms and conditions hereof.
19. ASSIGNMENT BY LESSOR AND LESSEE. Lessee shall not voluntarily, by
operation of law or otherwise, assign this Lease or sublease the Equipment or
any part thereof, or mortgage, pledge, or hypothecate its interest in this Lease
or in the Equipment, or grant any concession or license in the Equipment,
without the prior express written permission of Lessor, which permission shall
not be unreasonable withheld or delayed and any attempt to do any of the
foregoing without said permission shall be void and of no effect.
If Lessee is not a public company that is registered on a national exchange or
that is required to register its stock with the Securities and Exchange
Commission under Section 12(g) of this Securities Exchange Act of 1934, then any
change or transfer or series of changes or transfers aggregating more than forty
percent (40%) in or of (a) the stock of Lessee, (b) the voting or other
controlling rights of Lessee, or (c) the beneficial ownership of or interest in
Lessee, shall be deemed an assignment for the purposes hereof and therefore
shall be prohibited as provided hereinabove. Notwithstanding anything to the
contrary contained in this Lease, Lessee may assign or sublet this Lease without
the consent of Lessor to any person or entity directly or indirectly
controlling, controlled by or under common control of Lessee by providing Lessor
of Lessee's intention to so sublet or assign. Regardless of any such assignment
or sublease, Lessee agrees that Lessee shall not be released from any liability
hereunder.
20. ASSIGNMENT WITHOUT CONSENT. If this Lease is assigned or if the
Equipment is subleased without the permission of Lessor, then Lessor may
nevertheless collect rent from the assignee or sublessee and apply the net
amount collected to the Rent payable hereunder, but no such transaction or
collection of Rent or application thereof by Lessor shall be deemed a waiver of
any provision hereof or a release of Lessee from the performance of the
obligations of Lessee hereunder. All subleases and assignments shall be
subordinate and subject to the provisions of this Lease and shall automatically
terminate upon the expiration or termination of this Lease or the termination of
Lessee's right to possession hereunder.
21. QUIET POSSESSION. Lessor represents and covenants to Lessee that
Lessor has full authority to enter into this Lease, and
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that, conditioned upon Lessee not being in Default hereunder, as to claims of
Lessor or persons claiming under Lessor, Lessee shall peaceably and quietly
hold, possess, and use the Equipment during the term of its Lease subject to the
terms and provisions hereof.
22. LESSOR'S RIGHT TO PERFORM FOR LESSEE. Subject to the terms of the
Asset Purchase Agreement, if Lessee fails to perform or comply with any of its
obligations hereunder, Lessor shall have the right, but shall not be obligated,
after providing Lessee with notice and an opportunity to cure as set forth in
Sections 18.1(c) and 23 hereof, to effect such performance, and the amount of
any out of pocket expenses and other reasonable expenses of Lessor incurred in
connection with such performance, together with interest thereon at the rate of
14% per annum or the maximum lawful rate, whichever is less, shall be payable by
Lessee upon demand.
23. NOTICE. All notices, excluding xxxxxxxx and communications in the
ordinary course of business, hereunder shall be in writing, sent by certified
mail, addressed to the other at its respective address stated below the
signature of such party or at such other address as such party shall form time
to time designate in writing to the other party; and shall be effective
from three (3) days following the date of mailing.
24. ENTIRE AGREEMENT. This Lease, the Equipment Schedules and any
Delivery and Acceptance Certificates executed by the parties, constitute the
entire agreement between the parties with respect to the subject matter hereof
and shall not be amended or altered in any manner except by a document in
writing executed by both parties.
25. SEVERABILITY. Any provision of this Lease which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
26. SURVIVAL OF REPRESENTATIONS, ETC. The representations, warranties,
and covenants of Lessee herein shall be deemed to be continuing and to survive
the execution and delivery hereof. Each execution by Lessee of an Equipment
Schedule shall be deemed a reaffirmation and warranty that there shall have been
no material adverse change in the business or financial condition of Lessee from
the date of execution hereof. The obligations of Lessee under Sections 9, 13,
16, and 17 which accrue during the term of this Lease shall survive the
termination of this Lease.
27. CAPTIONS. The captions in this Lease are for convenience
of reference only and shall not define or limit any of the terms or
provisions hereof.
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28. GOVERNING LAW. This Lease shall not be effective unless and until
accepted by execution by an officer of Lessor. This Lease and the rights of the
parties hereunder shall in all respects be governed by, and construed in
accordance with, the laws of the State of Mississippi, including all matters of
construction, validity, and performance, regardless of the location of the
Equipment. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in any state or Federal court of
competent jurisdiction in Mississippi and each party agrees that a summons and
complaint commencing an action or proceeding in any such court shall be properly
served and shall confer personal jurisdiction if served personally or by
certified mail to it at its address designated pursuant hereto, or as otherwise
provided under the laws of such jurisdiction.
29. CONFLICT WITH ASSET PURCHASE AGREEMENT. Notwithstanding anything to
the contrary contained in this Lease, the Lessor and Lessee agree that in the
event any provision of this Lease conflicts in any manner with the provisions of
the Asset Purchase Agreement that the terms and conditions of the Asset Purchase
Agreement shall govern and shall supersede those set forth in this Lease.
30. SUBORDINATION TO MORTGAGE. Provided Lessor delivers to Lessee a
non-disturbance agreement, which states in pertinent part that Lessee's tenancy
shall not be disturbed and this Lease shall remain in full force and effect
(subject to Lessor's rights under Sections 18.1 and 18.2 hereof), Lessee agrees
that this Lease is subject and subordinate to any mortgage or deed of trust
which may now or hereafter encumber the Premises and to all renewals,
modifications, consolidations, replacements and extensions thereof. This clause
shall be self-operative and no further instrument of subordination need be
required by any mortgagee. In confirmation of such subordination, however,
Lessee shall, at Lessor's request, execute promptly any appropriate certificate
or instrument that Lessor may request. Lessee hereby makes, constitutes and
appoints Lessor as Lessee's agent and attorney-in-fact to execute any such
certificate or instrument for and on behalf of Lessee, which power is coupled
with an interest in favor of Lessor; provided, however, such appointment by
Lessee shall only be exercised by Lessor in the event Lessee fails to execute
such certificate or instrument within seven (7) days after request therefor by
Lessor. In the event of the enforcement by the trustee or the beneficiary under
any such mortgage or deed of trust of the remedies provided for by law or by
such mortgage or deed of trust, Lessee will, upon request of any person or party
succeeding to the interest of Lessor as a result of such enforcement,
automatically attorn to and become the Lessee of such successor in interest
without change in the terms or other provisions of this Lease. Upon request by
any such successor in interest, Lessee shall execute and deliver an instrument
or instruments confirming the attornment provided for herein.
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31. LESSOR'S RIGHT OF TERMINATION. Lessor and Lessee agree that in the
event Sellers, as defined in the Asset Purchase Agreement, exercise their rights
under Section 8.3.7 of the Asset Purchase Agreement in the manner permitted by
that section, Lessor may, in its sole discretion, terminate this Lease upon
thirty (30) days advance written notice and, in such event, Lessee's right under
Section 15 hereof shall not be applicable to such termination by Lessor.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
LESSEE:
WASTE-QUIP MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Chairman
--------------------------------
LESSOR:
MAY PROPERTIES, INC.
By: /s/ Xxxxxx X. May
-----------------------------------
Title: President
--------------------------------
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DELIVERY AND ACCEPTANCE CERTIFICATE
TO: LESSOR
RE: MASTER EQUIPMENT LEASE DATED: May 26, 1994
Equipment Schedule # 1
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The undersigned represents and warrants that the equipment
described in Equipment Schedule # 1 which has been made a part of the Master
Equipment Lease between Lessor and Lessee, dated May 26, 1994, has been
delivered to and accepted by Lessee and any installation or other work to be
performed by Lessor, if any, necessary prior to our use of the equipment has
been completed in a satisfactory manner.
The undersigned affirms that except as provided in the Asset Purchase Agreement,
LESSOR HAS MADE NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO ANY
MATTER WHATSOEVER, INCLUDING BUT NOT LIMITED TO, THE CONDITION OR QUALITY OF THE
EQUIPMENT, ITS YEAR OF MANUFACTURE, ITS MERCHANTABILITY, OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE. Without prejudice to any rights we may have against the
manufacturer or supplier, we accept the original Equipment AS IS, WHERE IS, with
respect to our agreement with Lessor. We acknowledge that Lessor has selected
the manufacturer and supplier of the Original Equipment but has no
responsibility for the performance of the Original Equipment. We agree that all
claims, defenses, and setoffs shall be settled directly with the supplier or
manufacturer without affecting our obligations to Lessor.
The undersigned certifies the equipment is now located at Brookhaven,
Mississippi.
DO NOT SIGN THIS CERTIFICATE UNTIL THE EQUIPMENT HAS ACTUALLY BEEN
RECEIVED AND ACCEPTED. LESSOR MAY RELY ON THIS CERTIFICATE IN
ADVANCING FUNDS.
Date: May 26, 1994 WASTE-QUIP MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Title: Chairman
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PROPERTY SCHEDULE # 1
(including payment terms)
This Property Schedule is part of the Master Equipment Lease dated May
26, 1994, between MAY PROPERTIES, INC., as Lessor, and WASTE-QUIP MANUFACTURING
COMPANY, as Lessee.
A. PROPERTY LOCATION: 0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
B. BASE RENT: Initial installment shall be due on the 1st day of a
calendar month day following Lessee's occupancy of the Premises. The
initial installment shall be $5,733.00, and thereafter, on the first of
each month, a monthly installment of $5,733.00 shall be due.
C. LEASE TERM OR TERM: The term of the Lease shall commence on May 26,
1994, and terminate on May 25, 2001.
D. EQUIPMENT DESCRIPTION: SEE SCHEDULE 1.1
E. RENT BASE RATE: 2% of the "Net Book Value," (as such term
is defined in the Asset Purchase Agreement), of the
Premises.
F. Net Book Value of Original Equipment $286,665.00.
Lessee: Lessor:
WASTE-QUIP MANUFACTURING COMPANY MAY PROPERTIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. May
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Chairman Xxxxxx X. May, President
Date: May 26, 1994 Date: May 26, 1994
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