Exhibit 10.12
MASTER EQUIPMENT LEASE AGREEMENT
THIS AGREEMENT is entered into this ___ day of ________, 1994 between
METLIFE CAPITAL, LIMITED PARTNERSHIP ("Lessor") whose address is 00000 X.X. 0xx
Xx., mailing address C-97550, Xxxxxxxx, Xxxxxxxxxx 00000 and WAGONMASTER
TRANSPORTATION COMPANY ("Lessee") whose address is 0000 Xxxxxxxx Xxxx, Xxxx
Xxxxxxx, Xxxxxxxxx 00000.
Lessor and Lessee from time to time may enter into written agreements in
the form of "Request to Purchase Addenda" for the purchase by Lessor of
equipment and leasing of such equipment to Lessee. To facilitate such
transactions, Lessor and Lessee are entering into this Master Equipment Lease
Agreement (the "Master Lease"), the terms and provisions of which shall be
incorporated by reference in each such Request to Purchase, and they MUTUALLY
AGREE AS FOLLOWS:
1. REQUEST TO PURCHASE
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If Lessor agrees to acquire and lease equipment when requested by Lessee,
the parties shall sign a Request to Purchase Addendum ("Request to Purchase")
setting forth the particulars regarding the transaction, including, without
limitation, the list of items of equipment (individually, an "Item" and,
collectively, the "Equipment"), the prices of each Item (including disclosure of
all rebates, discounts and other incentives received or receivable with respect
thereto), "Related Costs", including taxes, transportation, installation and
other applicable costs, the aggregate of the foregoing ("Total Cost"), length of
the Basic Term, rental rates and other applicable provisions. "Cost of an Item"
shall mean the price of the Item plus its applicable portion of Related Costs.
In the absence of a signed Request to Purchase, this Master Lease shall not
constitute a lease or a commitment by either party to enter into a lease.
2. PURCHASE; ACCEPTANCE
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(a) Request; Specifications. Signing a Request to Purchase shall
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constitute the request from Lessee to Lessor to purchase the Equipment, and the
Request to Purchase and this Master Lease shall constitute the lease and
agreement (the "Lease") regarding the Equipment. Lessee will assign to Lessor
purchase orders or agreements issued or entered into by Lessee for the
Equipment, or Lessor shall issue Lessor's purchase orders to the suppliers of
the Equipment, as Lessor at the time shall deem appropriate, all in form and
substance satisfactory to Lessor. At the time of signing the Request to
Purchase, Lessee shall furnish Lessor detailed specifications ("Specifications")
for the purchase of the Items, including descriptions, prices, delivery terms
and instructions, installation provisions and all other applicable
specifications. Lessee assumes full responsibility with respect to the selection
of items supplied for lease and the specification thereof; the Lessor shall have
no
liability or responsibility with respect thereto regardless of whether the
specifications prove inadequate for the intended purpose or use.
(b) Inspection; Acceptance. It is Lessee's responsibility to receive and
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promptly inspect and test each Item tendered for delivery by a supplier and the
installation thereof. Lessee shall give Lessor written notice of acceptance of
an Item as soon as it can be determined that the Item and its installation are
in compliance with Specifications. As between Lessee and Lessor, the giving of
such written notice shall constitute Lessee's irrevocable acceptance of the Item
or Items designated in the notice, whether or not such Items or their
installation or Lessor's title to the same are defective in any respect, and
notwithstanding any failure of an Item or its installation to conform to
Specifications, without prejudice however to rights which Lessor and Lessee, or
either of them, may have against any other person, whether with respect to
design, manufacture, condition or otherwise.
(c) Purchase Cut-Off Date. If, by the "Purchase Cut-Off Date" set forth in
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a Request to Purchase, Lessee shall not have given Lessor written notice of
acceptance of an Item, Lessor shall have no obligation to purchase the Item or
to lease it to Lessee. In such event, Lessee shall immediately pay all accrued
Interim Rental and reimburse Lessor for all sums Lessor may have paid for or
with respect to the Item and for all Lessor's costs and expenses with respect
thereto, and Lessee shall indemnify and defend Lessor against and hold Lessor
harmless from any and all cost, expense, loss, liability and damage that Lessor
may suffer or that may be asserted against Lessor by reason of Lessor's failure
or refusal to purchase such Item. Any such Item shall be deemed to be deleted
from the Request to Purchase and no longer included in the Equipment.
(d) Conditions. Lessee shall deliver to Lessor such further instruments,
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documents and certifications as Lessor reasonably may request, including without
limitation evidences of authority (e.g., corporate certificates, corporate
resolutions, partnership documents and authorizations), evidence of insurance,
purchase orders and acceptances thereof, purchase and sale agreements and
financial information, and instruments and documents to implement, perfect or
continue the perfection of Lessors rights and remedies as owner and Lessor of
the Equipment, including Uniform Commercial Code forms. Notwithstanding the
execution, delivery or filing of any instruments or documents, it is agreed that
this transaction is a lease and is not intended as security. Lessee's delivery
of the foregoing and of the Specifications are conditions precedent to any
obligation of Lessor to purchase or to make any commitments to purchase or pay
for the Equipment or any Item.
(e) Supplemental Lease Schedule. If at any time prior to the Closing Date
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Lessee requests Lessor to add further Items to the Equipment, and if Lessor so
agrees, Lessee shall execute a Supplemental Request to Purchase in a form
supplied by Lessor, which shall become part of the Request to Purchase, subject
to all of its
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provisions and the provisions of this Master Lease, and the equipment specified
therein shall be Items of Equipment under the Lease. If at any time after the
Closing Date Lessee requests Lessor to add further Items to the Equipment, and
if Lessor so agrees, Lessee shall execute an additional Request to Purchase
Addendum, amending the Lease to include such Items as part of the Equipment and
setting forth the particulars with respect thereto. The Basic Term with respect
to all Equipment, including Items covered by a Supplemental Lease Schedule,
shall terminate in accordance with the provisions of the original Request to
Purchase.
(f) Closing. Following the date ("Closing Date") which is the earlier of
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(i) the date Lessee gives Lessor written notice of acceptance of the last Item
or (ii) the Purchase Cut-Off Date (or on such other day as is mutually agreed),
Lessor shall send Lessee a Closing Schedule, setting forth any adjustments to
descriptions and Costs of Items and Total Cost and confirming the Closing Date
and amount of Periodic Rental installments and payment schedules. Such Closing
Schedule and the facts and determinations set forth therein shall be conclusive
unless, within sixty (60) days after the Closing Schedule is sent by Lessor to
Lessee, Lessee shall give Lessor written notice specifying any claimed error
therein. Notwithstanding any such notice, Lessee shall pay all rentals as they
become due. If Lessee establishes an error that affects the amount of rentals,
Lessor shall give Lessee a credit for any overpayment of rentals, and Lessee
promptly shall pay Lessor any underpayments.
3. LESSEE'S WARRANTIES
-------------------
(a) Lessee represents and warrants to Lessor that it is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and that it is qualified to do business
in every jurisdiction where the failure to qualify would have a materially
adverse effect on Lessor's rights hereunder; it has taken all corporate or
partnership action which may be required to authorize the execution, delivery
and performance of this Lease, and such execution, delivery and performance will
not conflict with or violate any provision of its Charter or Articles or
Certificate of Incorporation, By-laws or any provisions thereof, or in the case
of a partnership, its Certificate of Partnership or Limited Partnership and its
Partnership Agreement, or result in a default or acceleration of any obligation
under any agreement, order, decree or judgement to which it is a party or by
which it is bound, nor is it now in default under any of the same; there is no
litigation or proceeding pending or threatened against it which may have a
materially adverse effect on Lessee or which would prevent or hinder the
performance by it of its obligations hereunder; this Lease and the attendant
documents constitute valid obligations of the Lessee, binding and enforceable
against it in accordance with their respective terms; no action by or with any
commission or administrative agency is required in connection herewith; it has
the power to own its assets and to transact business in which it is engaged; it
will give to Lessor prompt notice of any change in its name, identity or
structure.
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(b) Lessee's written acceptance of an Item and its installation shall
constitute a REPRESENTATION AND WARRANTY BY Lessee to Lessor that: (i) the Item
is personal property in good order and condition and, unless Lessor otherwise
agrees in writing, has not been used prior to the time of such written notice of
acceptance, the Equipment does not constitute "imported property covered by an
Executive order" as defined in Section 168 (g)6) of the Internal Revenue Code of
1986 ("Code"), and that the recovery period set forth in the Request to Purchase
is the period applicable under the Code to the Equipment; and (ii) at all times
Lessee shall keep the Equipment in Lessee's possession at the address specified
in the Request to Purchase unless Lessor shall otherwise consent in writing.
Lessee shall not cause, suffer or permit any Item to be attached or affixed to
real property or improvements thereon (collectively, "Realty") unless Lessor
first shall consent thereto in writing and Lessee shall have obtained from all
persons having any interest in the Realty written consents which approve such
attachment, waive any claims to or encumbrances upon attached Items and consent
to the detachment and removal of such Items at any time by Lessor or Lessee.
Notwithstanding attachment of any Items to Realty, all the Equipment at all
times shall be and remain personal property. Upon termination of Lessee's right
to possession of the Equipment, whether by expiration of the Term or otherwise,
Lessee at its sole cost and expense shall detach and remove the Equipment from
the Realty and save Lessor harmless from and indemnify and defend Lessor against
any claim, demand, loss, liability, and damage arising from such detachment,
removal, or both.
(c) With respect to the Equipment and to each Item of Equipment, Lessee
represents and warrants to Lessor that: (i) at all times during the Term, for
federal income tax purposes, each item of income, deduction and credit related
to the Equipment will be derived from or allocable to sources within the United
States; (ii) Lessee, its successors or assigns will not at any time during the
Term remove any Item of Equipment from the United States in such a manner or for
such a period as will result in such Item of Equipment being deemed used
predominantly outside the United States within the meaning of Code Section
168(g)(4), and Lessee shall maintain sufficient records to verify such use
(which records will be furnished to Lessor within thirty (30) days after receipt
of written request therefor); (iii) when accepted under the Lease, the fair
market value of the Equipment will not be less than Lessor's Cost thereof
(excluding sales, use and Federal excise taxes); (iv) Lessee will not claim that
it is the owner of any Item of Equipment at any time after execution of the
Lease; (v) during the Lease term, Lessee will not cause the Equipment to be
depreciated using the "Alternative Depreciation System" as provided in Code
Section 168(g), unless Lessor so elects; (vi) when accepted under the Lease, no
Item of Equipment will require improvements, modifications or additions (other
than ancillary items of removable equipment of a kind that are selected and
furnished by purchasers or lessees of similar equipment) in order to be rendered
complete for its intended use by Lessee; and (vii) assuming that Lessor is
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considered the Owner of each Item of Equipment for federal income tax purposes,
each Item of Equipment will be deemed to be placed in service by Lessor within
the meaning of the Code and Regulations thereunder on the date each Item of
Equipment is accepted under the Lease.
4. TERM OF LEASE
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The Term of the Lease ("Term") shall consist of an "Interim Term" and a
"Basic Term." The Interim Term shall begin on the date that Lessee first gives
Lessor written notice of acceptance of an Item or written approval for partial
payment, whichever is earlier, and shall continue until the time the Basic Term
begins. The Basic Term shall begin on the Closing Date and shall continue for
the length of the Basic Term set forth in the Request to Purchase.
5. INTERIM RENTAL
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During the Interim Term, Lessee shall pay rent monthly ("Interim Rental"),
on a calendar month basis, in an amount determined by Lessor by applying the
"Interim Rental Rate" set forth in the Request to Purchase to portions of the
Total Cost then or theretofore expended by Lessor, for the number of days such
sums are outstanding during such calendar month. The "prime rate" referred to in
this Lease shall mean the rate per annum announced by Chase Manhattan Bank, New
York City, from time to time as its prime rate, whether or not such rate is
applied by said bank to any then outstanding loans, changing with each announced
change of such prime rate. Lessee shall pay Lessor each installment of Interim
Rental on the fifteenth day after the end of such calendar month.
6. PERIODIC RENTAL
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Lessee shall pay rent ("Periodic Rental") for the Basic Term in an amount
calculated by multiplying the Total Cost by the Periodic Rental Rate set forth
in the Request to Purchase multiplied by the number of months constituting the
length of the Basic Term. Lessee shall pay installments of Periodic Rental to
Lessor in accordance with the payment schedule set forth in the Request to
Purchase.
7. LATE PAYMENT
------------
If any installment of rent or other sum owing under the Lease shall not be
paid when due and shall remain unpaid for ten (10) days, Lessee shall pay Lessor
a late charge equal to five percent (5%) of the amount delinquent, but in no
event at a rate greater than limited by any applicable law. Such late charge is
in addition to and not in lieu of other rights and remedies Lessor may have.
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8. INSURANCE
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Lessee shall procure and continuously maintain and pay for (a) all risk
physical damage insurance covering loss or damage to the Equipment for not less
than the full replacement value thereof naming Lessor as Loss Payee and (b)
bodily injury and property damage combined single limit liability insurance
naming Lessor as Additional Insured, all in such amounts and against such risks
and hazards as are set forth in the Request to Purchase, with insurance
companies and pursuant to contracts or policies and with deductibles thereon
satisfactory to Lessor. All contracts and policies shall include provisions for
the protection of Lessor notwithstanding any act or neglect of or breach or
default by Lessee, shall provide that they may not be modified, terminated or
cancelled unless Lessor is given at least ten (10) days advance written notice
thereof, and shall provide that the coverage is "primary coverage" for the
protection of Lessee and Lessor notwithstanding any other coverage carried by
Lessee or Lessor protecting against similar risks. Lessee shall promptly notify
any appropriate insurer and Lessor of each and every occurrence which may become
the basis of a claim or cause of action against the insureds and provide Lessor
with all data pertinent to such occurrence. Lessee shall furnish Lessor with
certificates of such insurance or copies of policies upon request, and shall
furnish Lessor with renewal certificates not less than ten (10) days prior to
the renewal date. Proceeds of all insurance shall be payable first to Lessor to
the extent of its liability or interest as the case may be.
9. TAXES
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Lessee shall pay or reimburse Lessor for the payment of all taxes, fees,
assessments and other governmental charges of whatsoever kind or character and
by whomsoever payable on or relating to any Item of Equipment or the sale,
purchase, use, value, value added, ownership, possession, shipment,
transportation, delivery or operation thereof or the exercise of any option,
election or performance of any obligation by Lessee hereunder, which may accrue
or be levied, assessed or imposed during the Term and any Renewal Term or which
remain unpaid as of the date of surrender of such Item to Lessor, and all taxes
of any kind imposed by any federal, state, local or foreign taxing authority
against Lessor on or measured by any amount payable by Lessee hereunder,
including, without limitation, all license and registration fees and all sales,
use, value, ad valorem, personal property, excise, gross receipts, stamp or
other taxes, imposts, duties and charges together with any penalties, fines or
interest thereon, except taxes of Lessor on net income imposed by the United
States or any state. Lessee shall reimburse Lessor for any payments made by
Lessor which are the obligation of Lessee under the Lease, but Lessee shall not
be obligated to pay any amount under this Section so long as it shall in good
faith and by appropriate proceedings contest the validity or the amount thereof,
unless such contest would adversely affect the title of Lessor to any Item of
Equipment or would subject any Item to forfeiture or sale. Lessee shall
indemnify Lessor on an after-tax
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basis against any loss, claim, demand and expense, including legal expense,
resulting from such nonpayment or contest and further agrees to indemnify Lessor
against any and all taxes, assessments and other charges imposed upon Lessor
under the laws of any federal, state, local or foreign government or taxing
authority, as a result of any payment made by Lessee pursuant to this Section.
Whenever this lease terminates as to any Item, Lessee will, on request, advance
to Lessor the amount estimated by Lessor to equal personal property taxes on the
Item which are not yet payable but for which Lessee will afterward become liable
hereunder; Lessor will account to Lessee for such advances. On request of either
Lessor or Lessee, the other will submit written evidence of all payments
required of it under this Section.
10. MAINTENANCE, ETC.
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(a) Lessee at its expense at all times shall: (i) keep the Equipment in
good and efficient working order, condition and repair, ordinary wear and tear
excepted, and make all inspections and repairs, including replacement of worn
parts, to effect the foregoing and to comply with requirements of laws,
regulations, rules and provisions and conditions of insurance policies; and (ii)
pay all costs, expenses, fees and charges incurred in connection with the use or
operation of the Equipment and of each Item, including but not limited to
repairs, maintenance, storage and servicing. Lessee shall not make any
alterations, substitutions, improvements or additions to the Equipment or Items,
except those required in order to comply with laws, regulations, rules and
insurance policies, unless Lessor first shall have consented thereto in writing.
Notwithstanding any consent by Lessor, Lessee shall pay all costs and expenses
of the foregoing. All replacements, repairs, improvements, alterations,
substitutions and additions shall constitute accessions to the Equipment and
title thereto shall vest in Lessor.
(b) Lessor hereby transfers and assigns to Lessee, for so long during the
Term and any Renewal Term as Lessee is not in default, Lessor's right, title and
interest in, under and to any assignable factory and dealer warranty, whether
express or implied, with respect to the Equipment. All claims and actions upon
any warranty shall be made and prosecuted by Lessee at its sole cost and
expense. Lessor shall have no obligation to make or prosecute any claim upon or
under a warranty. So long as Lessee shall not be in default, Lessor shall
cooperate with Lessee with respect to a claim on a non-assignable warranty, at
Lessee's expense. Lessee shall have proceeds of a warranty claim or recovery
paid to Lessor. Lessor shall make such proceeds available for any repair,
restoration or replacement to correct such warranted condition. Excess proceeds
shall be used to reduce Lessee's Lease obligations.
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11. USE
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So long as Lessee shall not be in default, Lessee shall be entitled to the
possession, use and quiet enjoyment of the Equipment during the Term and any
Renewal Term in accordance with the terms of the Lease. Unless a purchase option
is exercised, Lessee shall deliver and surrender the Equipment to Lessor at the
end of the Term or Renewal Term in accordance with paragraph 20 hereof. Lessee
warrants that the Equipment will at all times be used and operated solely in the
conduct of Lessee's business for the purpose for which it was designed and
intended and under and in compliance with applicable laws and all lawful acts,
rules, regulations and orders of any governmental bodies or officers having
power to regulate or supervise the use of such property, except that Lessee may
in good faith and by appropriate proceedings contest the application of any such
rule, regulation or order in any reasonable manner that will not adversely
affect the title of Lessor to any Equipment or subject the same to forfeiture or
sale. Lessee will not permit its rights or interest hereunder to be subject to
any lien, charge or encumbrance and will keep the Equipment free and clear of
any and all liens charges, encumbrances and adverse claims (except those arising
from acts of Lessor).
12. NET LEASE; LOSS AND DAMAGE
--------------------------
(a) This is a net lease. Lessee assumes all risk of and shall indemnify
Lessor against all damage to and loss of the Equipment from any cause
whatsoever, whether or not such loss or damage is or could have been covered by
insurance. Except as otherwise specifically provided herein, the Lease shall not
terminate and there shall be no abatement, reduction, suspension or deferment of
Interim or Periodic Rental for any reason, including damage to or loss of the
Equipment or any one or more Items. Lessee promptly shall give Lessor written
notice of any material loss or damage, describing completely and in detail the
cause and the extent of loss and damage. At its option, Lessee shall: (i) repair
or restore the damaged or lost Items to good condition and working order; or
(ii) replace the damaged or lost Items with similar equipment in good condition
and working order; or (iii) pay Lessor in cash the Stipulated Loss Value of the
damaged or lost Items. Upon Lessee's complying with the foregoing, Lessor shall
pay or cause to be paid over to Lessee the net proceeds of insurance, if any,
with respect to such damage or loss. "Damage" and "loss'' shall include damages
and losses of any kind whatsoever including, without limitation, physical damage
and partial or complete destruction, including intentionally caused damage and
destruction, and theft.
(b) If Lessee pays Lessor the Stipulated Loss Value for an Item, then the
Lease shall terminate with respect to that Item, that Item shall no longer be
deemed part of the Equipment and Lessee shall be entitled to retain the Item.
However, it is understood that Lessor makes no representation or warranty with
respect to the Item, and further that Lessor shall have no obligation to pay any
tax with respect
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thereto. In the event that Lessee pays Lessor the Stipulated Loss Value for an
Item, no further Interim Rental shall be payable with respect to the Item, and
Periodic Rental for the remainder of the Term shall be reduced by multiplying
the Cost of that Item by the Periodic Rental Rate by the number of months then
remaining in the Basic Term.
13. STIPULATED LOSS VALUE
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The Stipulated Loss Value of an Item shall be a sum computed by Lessor,
which shall not exceed the amount determined by multiplying the Cost of the Item
by the Stipulated Loss Factor as set forth in the Request to Purchase for the
Lease Year during which the loss of the Item occurs. Stipulated Loss Value is
based on the recovery period specified in the Request to Purchase.
14. OWNERSHIP AND MARKING
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Lessee has not and by execution and performance hereof will not have or
obtain any title to the Equipment or any other interest therein except as Lessee
hereunder and subject to all the terms hereof. Title to the equipment shall at
all times remain in Lessor and Lessee at its expense shall protect and defend
the title of Lessor and keep it free of all claims and liens other than the
rights of Lessee hereunder and claims and liens created by or arising through
Lessor. Lessee will treat this transaction as a lease for tax purposes and will
not claim any credit or deduction inconsistent with Lessor's ownership of the
Equipment. On or before the delivery thereof, Lessee will cause each Item of
Equipment (to the extent practicable and, to the extent not practicable, then
each major component) to be plainly, permanently and conspicuously marked by
stenciling or by a metal tag or plate or decal affixed thereto with the
following legend:
PROPERTY OF AND LEASED FROM METLIFE CAPITAL, LIMITED PARTNERSHIP
00000 X.X. 0XX XX., XXXXX 000, C-97550, BELLEVUE, WASHINGTON 98009
Lessee shall replace any such marking which may be removed or destroyed or
become illegible and keep the Equipment free from any markings or labelings
which might be interpreted as a claim of ownership thereof by Lessee or any
other person except Lessor or its assigns.
15. LESSEE'S INDEMNITIES
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(a) General Indemnities. Lessee will defend, indemnify and hold harmless
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Lessor from and against any claim, cause of action, damage, liability, cost or
expense (including but not limited to legal fees and costs) which may be
asserted against or incurred in any manner by or for the account of Lessor or
Lessee: (i) relating to the Equipment or any part thereof, including without
limitation the
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manufacture, construction, purchase, delivery, acceptance or rejection,
installation, ownership, sale, leasing, removal or return of the Equipment, or
as a result of the use, maintenance, repair, replacement, operation or the
condition thereof (whether defects are latent or discoverable); (ii) by reason
or as a result of any act or omission of Lessee for itself or as agent or
attorney-in-fact for Lessor hereunder; (iii) as a result of claims for patent,
trademark or copyright infringement; or (iv) as a result of product liability
claims or claims for strict liability.
(b) If Lessor shall lose the right to claim, suffer a disallowance of or
be required to recapture all or any portion of the modified Accelerated Recovery
deductions pursuant to Section 168(e) of the Code with respect to the Total Cost
for property with cost recovery period(s) referred to in the Request to Purchase
Addendum due to (i) any act or failure to act of Lessee or any Assignee or
Sublessee of Lessee; (ii) the incorrectness of any representation or warranty
made by Lessee in the Lease, or in any certificate, statement or document
delivered or furnished to Lessor pursuant thereto; (iii) the sale or other
disposition of the Equipment or any Item of Equipment or the interest of Lessor
therein after the occurrence of an Event of Default under the Lease or; (iv)
Lessee (or its Assignee or Sublessee) making any non-severable improvement
within the meaning of Revenue Procedure 79-48 to the Equipment or any Item of
Equipment not permitted by Revenue Procedure 79-48, then Lessee shall pay to
Lessor on demand a sum equal to the amount of deductions or credits lost by
Lessor as a result of such event, or at Lessee's option, such sum shall be paid
as a rental adjustment. The amount of lost deductions and credits to be paid by
Lessee pursuant to this Section either in a lump sum or over the term of the
Lease shall be computed by Lessor so as to cause Lessor's after-tax rate of
return on investment and after-tax cash flows in respect of the Lease to equal
that which would have been realized by Lessor if such event had not occurred,
but without regard to whether Lessor has or would have had taxable income
sufficient to use the lost deductions or credits.
(c) Lessee shall indemnify Lessor against any and all taxes, assessments
and other charges imposed upon Lessor under the laws of any federal, state,
local or foreign government or taxing authority, as a result of any payment made
by Lessee pursuant to this Section 15.
(d) This Lease assumes that the provisions of the Internal Revenue Code of
1986 (as enacted October 22, 1986) govern this transaction. In the event a
material adverse change in tax law, including but not limited to technical
corrections, modifications or official interpretations of the Tax Reform Act of
1986, occurs prior to the Closing Date, then the rental factor shall be adjusted
to preserve Lessor's after-tax economics.
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16. END OF TERM OPTIONS
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(a) Purchase Option. Lessee may purchase all, but not less than all of the
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Equipment on the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or 38% of Total Cost, whichever is greater,
provided Lessee is not then in breach or default and that Lessee gives Lessor
written notice of election to purchase at least sixty (60) days prior to the
Option Date. Upon payment of the purchase price and all Rentals and other sums
owing or to become owing to and including the Option Date, Lessor shall transfer
to Lessee all of Lessor's right, title and interest in the Equipment, in its
then condition, without any representation or warranty other than the warranty
that the Equipment is not subject to any liens resulting from acts of Lessor.
For purposes of this Lease, the term "Fair Market Value" shall be an amount
agreed upon by Lessor and Lessee or if such parties are unable to agree prior to
the Option Date, such value shall be determined by an appraiser chosen by mutual
agreement. Lessee shall pay the fees and expenses of the appraiser.
(b) Renewal Option. At the end of the Term (the "Option Date"), provided
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there shall be no breach or default by Lessee or event which with the giving of
notice or passage of time, or both, might mature into an event of default,
Lessee may renew the lease for Thirty-six (36) months (the "Renewal Term"), by
giving Lessor written notice of election to renew at least sixty (60) days
before the Option Date. The rental for the Renewal Term shall be .8467% of the
Total Cost as of the first day of the Renewal Term. All provisions of the Lease
shall continue in full force and effect during a Renewal Term except for the
amount of the rental and, Lessee may purchase all, but not less than all of the
Equipment on the last day of the Renewal Term, for cash, at the Equipment's then
Fair Market Value.
(c) Return Option. At the end of the Term (the "Option Date"), provided
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there shall be no breach or default by Lessee or event which with the giving of
notice or passage of time, or both, might mature into an event of default,
Lessee may return the Equipment after giving Lessor written notice of election
to return the Equipment at least ninety (90) days before the Option Date, on
payment to Lessor of a fee of 9.50% of Total cost ("Termination Fee") and on
return of the Equipment to Lessor pursuant to paragraph 20 hereof, Lessee may
terminate the Lease with respect to all, but not less than all of the Equipment.
In addition to the return provisions contained in paragraph 20 hereof, the
following special return provisions shall apply:
a) Advertising and insignia placed on containers will be removed and any damage
to surfaces caused by the removal must be repaired prior to the return of the
containers to MetLife and the repaired surfaces must be painted to match the
existing color scheme; b) Be in compliance with all the applicable federal,
state and local laws and regulations; c) Be in good appearance, in a clean
condition, free of
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abnormal rust and corrosion; d). Be in good repair and operating condition and
have no missing or damaged parts; e) Have no visibly cracked or bent frames or
undercarriage damage; f) Have no exterior paint, body or panel damage in excess
of $250.00 total appraisal repair cost per container; 9) Refrigeration units
must be in good operating condition with no more than 10,000 hours on
compressors, and 20,000 hours on diesel engines since last maintenance or
overhaul.
17. LESSOR MAY PERFORM
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If Lessee at any time shall fail to pay to any person any sum which Lessee
is required by the Lease to pay or shall fail to do or perform any other thing
Lessee is required by the Lease to do or perform, Lessor at its option may pay
such sum or do or perform such thing, and Lessee shall reimburse Lessor on
demand for the amount of such payment and for the cost and expense which may be
incurred by Lessor for such acts or performance, together with interest thereon
at the Default Rate from the date of demand until paid.
18. DEFAULT
-------
(a) Events of Default. Each of the following shall constitute an event of
-----------------
default: (i) failure to perform and comply with the provisions and conditions of
Section 8 hereof or to pay any sum, including installments of rental, on the
date when due; (ii) failure to perform and comply with any other provision or
condition of the Lease within thirty (30) days after Lessor shall have given
Lessee written notice of default with respect thereto, or failure to make good,
within thirty (30) days after written notice by Lessor to Lessee, any
representation or warranty, whether made in the Lease or in any certificate,
agreement, instrument or statement, including income and financial statements,
which shall prove to have been incorrect in any material respect when made;
(iii) any event of default occurs with respect to any obligations of Lessee to
Lessor on or with respect to any transactions, debts, undertakings or agreements
other than the Lease; (iv) the failure of Lessee generally to pay debts as they
become due in the ordinary course of business, or the filing of any application
for the appointment of a receiver for a major part of Lessee's assets or the
filing of any petition or application by or against Lessee under any present or
future laws for the relief of debtors or for the subjection of the property of a
debtor to the control of any court, tribunal or agency for the benefit of
creditors, including proceedings under the Bankruptcy Code, if the proceeding
commenced by such filing shall not be dismissed within sixty (60) days from the
date of filing; (v) the execution by Lessee of a general assignment for the
benefit of creditors; (vi) the merger, consolidation, reorganization, conversion
to a Subchapter "S" status or dissolution of a corporate or partnership Lessee,
which has a materially adverse effect upon Lessor's position under the Lease.
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(b) Effect on Request to Purchase. Upon the occurrence of an Event of
-----------------------------
Default, Lessor shall have no further obligation to Lessee to purchase Equipment
or Items or to lease any thereof to Lessee.
(c) Remedies. (i) Upon the occurrence of an event of default as provided
--------
above, Lessor may at its option (1) proceed by appropriate court action or
actions, either at law or in equity, to enforce performance by the Lessee of the
applicable covenants of this Lease or to recover damages for the breach thereof;
or (2) by notice in writing to the Lessee terminate Lessee's right of possession
of the equipment, whereupon all rights of the Lessee to use the Equipment shall
absolutely cease and terminate, but Lessee shall remain liable as herein
provided. Upon such a termination, Lessee at its expense shall redeliver the
Equipment to Lessor. If Lessee shall fail to do so, Lessor may retake possession
of the Equipment by entering upon any premises at any reasonable time and
thereafter Lessor may hold, possess, sell, upgrade, lease to others or enjoy the
same, free from any right of Lessee, or its successors or assigns. If Lessor is
required to retake possession, Lessee upon demand shall reimburse Lessor for all
costs and expenses relating thereto. Notwithstanding such redelivery or retaking
Lessor shall have a right to recover from Lessee any and all amounts which under
the terms of the Lease may be then due or which may have accrued to the date of
such termination, and also to recover forthwith from the Lessee its damages for
loss of a bargain and not as a penalty, an amount equal to the higher of Fair
Market Value or the Stipulated Loss Value of the Equipment as of the rent
payment date on or next preceding the date of default, less: (1) the amount
Lessor in fact receives from the sale of the Equipment, after deduction of all
estimated expenses of such sale (Equipment which Lessor is unable to recover
shall at Lessor's option be deemed worthless) or, (2) at Lessor's election, the
present value of the non-cancelable regularly scheduled rentals receivable from
a subsequent lease of all or part of the Equipment entered into by Lessor
(discounted at the Default Rate), and taking into account only the rentals
receivable from the commencement date of such subsequent lease until the end of
the Lease Term specified in the Request to Purchase for such Equipment. In
addition, Lessee shall be liable to Lessor for all costs and expenses incurred
by Lessor by reason of Lessees breach or default. In addition to the foregoing,
the Lessee shall be liable for interest on any of the above referenced amounts
from and after the due date at the Default Rate, or the legal limit, whichever
is smaller; (ii) "Lessor's costs and expenses incurred by reason of Lessees
breach or default" shall include, without limitation, costs and expenses of
receiving or retaking possession of the Equipment, storing, holding,
transporting, insuring, caring for, servicing, maintaining and renting the
Equipment or Items and collecting rents and professional fees and expenses with
respect to or incurred by reason of the breach or default, including legal fees
and expenses for advice and legal services in any actions or proceedings which
Lessor may commence or in which Lessor may appear or participate to exercise or
enforce any rights or remedies or to protect or preserve any rights or
interests, and in all reviews of and appeals from any such actions or
proceedings; (iii) The "Default Rate" of interest shall be a rate per
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annum computed monthly which shall be five (5) percentage points above the prime
rate, but not greater than the maximum rate, if any, limited by applicable law.
19. RIGHTS CUMULATIVE
-----------------
Unless otherwise expressly provided herein, all rights and remedies of
Lessor are concurrent and cumulative. The exercise or partial exercise of any
remedy shall not restrict Lessor from further exercise of that remedy or any
other remedy.
20. SURRENDER
---------
At any time that Lessee is required to deliver the Equipment to Lessor,
Lessee shall immediately cease using the Equipment and at Lessee's expense shall
redeliver and surrender the Equipment to Lessor in good order, condition and
repair, ordinary wear and tear excepted, securely crated and safely packed, at a
place to be designated by Lessor in the State where the Equipment by the terms
of the Request to Purchase is required to be kept, and, if Lessor so specifies,
loaded FOB a common or contract carrier designated by Lessor.
21. HOLDOVER
--------
If Lessee shall not immediately redeliver and surrender any Item of
Equipment to Lessor when required by the terms hereof, Lessee shall pay Lessor,
at such time or times as Lessor may demand, a sum equal to a one-month
installment of Periodic Rental for each calendar month or fraction of a month
during which such failure to redeliver and surrender continues.
22. INSPECTION REPORTS
------------------
Lessor, its agents and employees shall have the right to enter upon any
premises where the Equipment or Items are then located to inspect and examine
the same during normal business hours and at any other times if Lessor
reasonably believes any Items or Lessor's rights are in jeopardy of damage or
loss. So long as Lessee is not in default, Lessor shall give Lessee not less
than twenty-four (24) hours notice of such inspection. Lessee shall immediately
give Lessor written notice of any damage to or loss of the Equipment or any
Items from any cause, including without limitation damage or loss caused by
accident, the elements, intentional acts and theft. Such notice shall set forth
an itemization of the affected Items and a detailed account of the event,
including names of any injured persons and a description of any damaged property
arising from any such event or from any use or operation of the Equipment or any
Items, and of any attempt to take, distrain, levy upon, seize or attach the
Equipment or any Items. All rights granted to Lessor herein are for the benefit
of Lessor and shall not be construed to impose any obligation on Lessor, whether
or not Lessor makes any inspections or receives any reports.
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23. FINANCIAL AND OTHER DATA
------------------------
During the Term and any Renewal Term, Lessee: (a) shall furnish Lessor
annual balance sheets and profit and loss statements of Lessee and any guarantor
of Lessee's obligations accompanied, at Lessor's request, by the audit report of
an independent certified public accountant acceptable to Lessor; and (b) at
Lessor's request, shall furnish Lessor all other financial information and
reports reasonably requested by Lessor at any time, including quarterly or other
interim balance sheets and profit and loss statements of Lessee and any such
guarantor. Lessee shall furnish such other information as Lessor may reasonably
request at any time concerning Lessee and its affairs.
24. WARRANTY OF INFORMATION
-----------------------
Lessee warrants that all information furnished and to be furnished to
Lessor is accurate and that all financial statements it has furnished and
hereafter may furnish Lessor, including operating statements and statements of
condition, are and will be prepared in accordance with generally accepted
accounting principles, consistently applied, and reasonably reflect and will
reflect, as of their respective dates, results of the operations and the
financial condition of Lessee and of any other entity they purport to cover.
25. NON-WAIVER
----------
Neither the acceptance by Lessor of any payment or any other performance,
nor any act or failure of Lessor to act or to exercise any rights, remedies or
options in any one or more instances shall constitute a waiver of any such
right, remedy or option or of any other then existing or thereafter accruing
right, remedy or option, or of any breach or default then existing or thereafter
occurring. No purported waiver by Lessor of any right, remedy, option, breach or
default shall be binding unless in writing and signed by an officer of Lessor. A
written waiver by Lessor of any right, remedy, option, breach or default shall
not constitute a waiver of any other then existing or thereafter accruing right,
remedy or option or of any other then existing or thereafter occurring breach or
default.
26. NOTICES, PAYMENTS
-----------------
(a) A written notice may be given: (i) by delivering the same to a
corporate officer of the party to whom it is directed (the "Addressee"), or to a
general partner if the Addressee is a partnership, or to the owner if the
Addressee is a sole proprietorship; or (ii) by mailing the notice to the
Addressee by first class mail registered or certified, with postage prepaid,
addressed to the Addressee at the address following its name in the opening
paragraph of the Request to Purchase or
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to such other address as Addressee may specify by notice in writing given in
accordance with this Section. A notice so mailed shall be deemed given on the
third business day following the date of mailing. A "business day" shall be any
day that is not a Saturday or Sunday, or a legal holiday.
(b) The Lessee shall make all payments to Lessor at the place where the
notice is to be mailed to Lessor pursuant to subparagraph (a). Payments are
deemed paid when received by Lessor.
27. ASSIGNMENT
----------
(a) Lessee shall not sublease or allow any other person to possess the
Equipment, nor shall Lessee assign the Lease or any rights in or to the
Equipment or Items. Any attempted assignment shall be of no effect, unless
Lessor first shall have consented thereto in writing. Lessor's consent to an
assignment in any one or more instances shall not impose any obligation upon
Lessor to consent to any other or further assignments. Lessor's consent to an
assignment shall not release Lessee from any obligations with respect to the
Lease unless expressly so stated in the written consent.
(b) All rights of Lessor hereunder may be assigned, pledged, mortgaged,
transferred or otherwise disposed of, either in whole or in part, without notice
to Lessee but subject always to the rights of Lessee under this Lease. If Lessee
is given notice of any such assignment, Lessee shall acknowledge receipt thereof
in writing. In the event that Lessor assigns this Lease or the rent due or to
become due hereunder or any other interest herein, whether as security for any
of its indebtedness or otherwise, no breach or default by Lessor hereunder or
pursuant to any other agreement between Lessor and Lessee, should there be one,
shall excuse performance by Lessee of any provision hereof, it being understood
that in no event of such default or breach by Lessor that Lessee shall pursue
any rights on account thereof solely against Lessor. No such assignee shall be
obligated to perform any duty, covenant or condition requested to be performed
by Lessor under the terms of this Lease.
28. SURVIVAL
--------
The representations, warranties, indemnities and agreements of Lessee, and
Lessee's obligations under any and all provisions of the Lease, shall survive
the expiration or other termination of the Lease, shall be binding upon its
successors and assigns and are expressly made for the benefit of and shall be
enforceable by Lessor and its successors and assigns.
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29. MISCELLANEOUS
-------------
(a) The term "Lessor" shall mean the Lessor named herein and its
successors and assigns.
(b) Whenever the context so requires, any pronoun gender includes all
other genders, and the, singular includes the plural. If more than one person
constitute Lessee, whether as a partnership or otherwise all such persons are
and shall be jointly and severally liable for all agreements, undertakings and
obligations of Lessee.
(c) All captions and section, paragraph and other divisions and
subdivisions are for convenience of reference only and shall not affect the
construction, interpretation or meaning of the agreement or Lease or of any of
the provisions thereof.
(d) This Lease shall be governed by and construed according to the
law of the State of Washington.
(e) This Lease shall be binding upon and, except as limited in
Section 27 hereof, shall inure to the benefit of Lessor and Lessee and their
respective successors and assigns.
(f) This Lease cannot be cancelled or terminated except as expressly
provided herein.
(g) Wherever Lessor's consent is required hereunder, such consent
will not be unreasonably withheld.
(h) Lessee's obligation to pay or reimburse Lessor for expenses as
provided hereunder shall be limited to reasonable expenses.
30. LESSOR'S DISCLAIMER
-------------------
Lessee acknowledges and agrees that it has selected both the Equipment of
the type and quantity which is the subject of this Lease and the supplier for
whom the Lessor purchased the equipment. LESSOR MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE DESIGN, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, QUALITY, WORKMANSHIP, OR THE SUITABILITY, ADEQUACY, OPERATION, USE OR
PERFORMANCE OF THE EQUIPMENT OR AS TO ITS MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE. ANY DELAY IN DELIVERY SHALL NOT AFFECT THE VALIDITY OF THIS
LEASE. The Lessee understands and agrees that neither of the supplier nor any
salesman or any agent of the supplier is an agent of Lessor. No
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salesman or agent of supplier is authorized to waive or alter any term or
condition of this Lease, and no representation as to the Equipment or any other
matter by the supplier shall in any way affect Lessee's duty to pay the rent and
perform its obligations as set forth in this Lease. Lessor shall not be liable
to Lessee for any incidental, consequential, or indirect damages or for any act,
neglect, omission, breach or default by Lessor or any third party.
31. NO AFFILIATION WITH SUPPLIERS
-----------------------------
Lessee warrants that neither it nor any of its officers, directors (if a
corporation) or partners (if a partnership) has, directly or indirectly, a
substantial financial interest in the manufacturer or supplier of any Equipment
except as previously disclosed in writing to Lessor.
32. ENTIRE AGREEMENT
----------------
This Lease and any Requests to Purchase hereto shall constitute the entire
agreement between the parties and shall not be altered or amended except by an
agreement in writing signed by the parties hereto or their successors or
assigns.
IN WITNESS WHEREOF Lessor and Lessee have signed this agreement as of the
day and year first hereinabove written.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED WAGONMASTER TRANSPORTATION
PARTNERSHIP COMPANY
BY: MetLife Capital, General Partner
By:____________________________ By: /s/ Xxxxxxx Xxxxx
-------------------------------
Its: Vice President Its: President
--------------------------- ------------------------------
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