EQUIPMENT LEASE
THIS EQUIPMENT LEASE is made and entered into as of the 2nd day of January, 1996
by and between NORTH COUNTRY THERMAL LINE, INC. ("Lessor") and THERMAL LINE
WINDOWS, L.L.P., a Minnesota limited liability partnership ("Lessee").
WITNESSETH:
WHEREAS, subject to the terms and upon the conditions herein contained, Lessor
desires to lease to Lessee, and Lessee desires to take and rent from Lessor, the
equipment described on EXHIBIT A attached hereto and hereby made part hereof
(the "Equipment").
NOW, THEREFORE, pursuant to the foregoing recital, which is an integral part
hereof, and in consideration of the mutual covenants contained herein, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. LEASE. Subject to the terms and upon the conditions hereby contained,
Lessor hereby leases the Equipment to Lessee and Lessee hereby takes and rents
the Equipment from Lessor.
2. TERM. The term of this Lease ("Lease Term") shall begin as of the date
hereof and shall continue for a period of five (5) years.
3. RENT. As rent for the use of Equipment hereunder, Lessee shall pay to
Lessor, at such address as Lessor may direct, the sum of $3,036.83 per month
("Rent"), beginning upon the date hereof and continuing on the same day of each
calendar month thereafter until the expiration of the Lease Term.
4. OPTION TO PURCHASE. Upon the expiration of the Lease Term, Lessee shall
have the right and option (the "Purchase Option") to purchase the equipment from
Lessor for a price (the "Option Price") equal to the greater of $32,493.94 or
the fair market value of the Equipment, as determined hereunder. The Purchase
Option shall be exercisable by the delivery of written notice of exercise to
Lessor prior to sixty (60) days before the expiration of the Lease Term. If the
Purchase Option shall be exercised, a closing of the purchase and sale of the
Equipment thereunder shall be held upon the expiration of the Lease Term,
whereat Lessor shall deliver to Lessee a Xxxx of Sale with respect to the
Equipment, which Xxxx of Sale shall transfer title in and to the Equipment to
the Lessee free and clear of any liens or encumbrances other than liens or
encumbrances created or caused by Lessee. For purposes of determining the Option
Price, unless otherwise agreed by Lessor and Lessee in writing, the fair market
value of the Equipment shall be determined as follows:
a. No later than one hundred twenty (120) days prior to the
expiration of the Lease Term, Lessor shall provide Lessee
written notice of Lessor's determination of the fair market
value of the Equipment.
b. Such determination shall be deemed to be the fair market value
of the Equipment unless, within fifteen (15) days following
the receipt of such notice, Lessee shall provide Lessor
written notice of its objection to such determination (an
"Objection Notice").
c. Within fifteen (15) days following the receipt of an Objection
Notice by Lessor, each of Lessee and Lessor shall select an
appraiser to determine the fair market value of the Equipment
and shall provide the name and address of such appraiser to
the other.
d. If either Lessee or Lessor shall fail to comply with the
provisions of Paragraph 4(c), the appraiser selected by the
other, by itself, shall perform the appraisal described
herein, and the results of such appraisal shall be conclusive
as to the fair market value of the Equipment.
e. The appraiser selected by Lessee and the appraiser selected by
Lessor (or, if Paragraph 4(d) shall become applicable, the
appraiser selected by Lessee or Lessor) shall determine the
fair market value of the Equipment.
f. If the appraiser selected by Lessee and the appraiser selected
by Lessor shall be unable to agree as to the fair market value
of the Equipment, such appraisers shall appoint a third
appraiser and the fair market value of the Equipment shall be
determined by such third appraiser and shall be conclusive and
binding as the fair market value of the Equipment.
g. If Paragraph 4(f) shall require the appointment of a third
appraiser, and the appraiser selected by Lessee and the
appraiser selected by Lessor shall be unable to agree as to
such third appraiser, either Lessor or Lessee may petition any
court of competent jurisdiction for the appointment of such
third appraiser.
h. For purposes of this Paragraph 4, the appraiser selected by
Lessee and Lessor shall be deemed to have failed to agree on
any matter if such appraisers shall have been in disagreement
with regard to such matter for a period in excess of fourteen
(14) days.
i. All costs and expenses incurred by either Lessee or Lessor in
connection with the appraisal process described in this
Paragraph 4, including, without limitation, the fees and
charges of the appraiser selected by Lessee, the fees and
charges of the appraiser selected by Lessor and the fees and
charges of a third appraiser, if any, shall be allocated
equally between Lessee and Lessor.
j. Notwithstanding anything contained herein to the contrary, the
fair market value of the Equipment shall not be determined
hereunder, and any process to determine the fair market value
of the Equipment hereunder shall be immediately discontinued,
if Lessee shall waive the Purchase Option by written notice
delivered to Lessor.
5. USE. Lessee shall use the Equipment in a careful and proper manner and
shall comply with and conform to all laws relating to the possession, use or
maintenance of the Equipment. Lessee shall install, operate and maintain the
Equipment only in accordance with applicable vendor's or manufacturer's manuals
or instructions and will allow the Equipment to be operated only by competent
and duly qualified personnel. Lessee shall use the Equipment only within the
state of North Dakota and shall not remove the Equipment from the state of North
Dakota without the prior written consent of Lessor.
6. MAINTENANCE. Lessee shall, at its sole expense, keep and maintain the
Equipment in good operating condition, reasonable wear and tear excepted. Lessee
shall obtain and pay for all duplicate parts, extras, mechanisms and devices of
every kind needed or used in the operation, repair or renewal of the Equipment,
and the same shall become part of the Equipment. Lessee shall not make or allow
any addition, subtraction or alteration to, from or in the Equipment without
prior written consent of Lessor.
7. INSURANCE. Lessee shall, at its sole expense, obtain and maintain
insurance coverage against loss or theft of or damage or destruction to the
Equipment, which insurance coverage shall be carried in an amount not less than
the replacement cost of the Equipment. Such insurance coverage shall be
maintained with an insurance carrier licensed to transact business in the state
of North Dakota and the policy(ies) therefore shall provide that Lessor shall
receive at least thirty (30) days advance written notice, by certified mail,
return receipt requested, before cancellation, termination, nonrenewal or
amendment thereto.
8. RISK OF LOSS AND/OR DAMAGE. Lessee hereby assumes any and all risks and
liability, whether or not covered by insurance, for loss of or damage to the
Equipment however arising from or incident to the installation, possession,
operation, use or maintenance of the Equipment. In the event that the Equipment
shall be damaged or destroyed by any cause whatsoever, Lessee shall, at its
option: (a) repair the Equipment, returning it to its condition immediately
preceding such damage or destruction; (b) replace the Equipment with new
equipment of equivalent value and reasonably acceptable to Lessor, which
equipment shall become the property of Lessor and be subject to the terms and
provisions of this lease, being defined herein as the "Equipment"; or (c) pay to
Lessor the entirety of the rent then remaining due under this Lease, together
with the Option Price, whereupon this Lease shall terminate. Lessee expressly
agrees and acknowledges that unless and until this lease shall be terminated in
accordance with the terms and provisions hereof, no damage or destruction of or
to the Equipment, irrespective of the cause, shall relieve Lessee of its duties
and obligations hereunder.
9. RETURN OF EQUIPMENT. Upon the expiration of the Lease Term, or as
otherwise provided in this Lease, and unless the Purchase Option shall be
exercised in accordance with its terms, Lessee shall immediately return the
Equipment to Lessor at such address in Mandan, North Dakota, as Lessor shall
reasonably specify. Any and all additions or improvements made to the Equipment
by Lessee shall immediately be deemed to be part of the Equipment and, as such,
shall become property of Lessor.
10. TITLE. At all times during the Lease Team, title to the Equipment shall
remain with Lessor. Lessee shall not change or remove any insignia or lettering
which may be placed upon
the Equipment to indicate Lessor's ownership thereof. Lessor may, at its
option, cause the Lease to be filed or recorded or may cause such financing
statements as Lessor may deem appropriate to be filed with respect to the
Equipment. Upon request, Lessee shall, without delay, execute and deliver to
Lessor any and all documents or instruments that may be necessary to any such
recording or filing.
11. WARRANTIES.
a. Lessor hereby represents and warrants to Lessee that Lessor is
the owner of the Equipment, that Lessor holds title to the
Equipment free and clear of any liens or encumbrances of any
type or nature whatsoever and that the Lessor has all power
and authority necessary to execute, enter into and perform
this Lease.
b. LESSEE HEREBY ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS LEASE: (i) THE EQUIPMENT IS
LEASED TO LESSEE HEREUNDER "AS IS," AND WITHOUT WARRANTY OF
LESSOR, EITHER EXPRESSED OR IMPLIED; AND (ii) LESSOR HAS NOT
MADE, DOES NOT MAKE AND AFFIRMATIVELY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY NATURE WHATSOEVER,
DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, INCLUDING
SPECIFICALLY, BUT NOT EXCLUSIVELY, REPRESENTATIONS OR
WARRANTIES AS TO THE SUITABILITY, DURABILITY, FITNESS FOR USE,
MERCHANTABILITY, CONDITION OR QUALITY OF THE EQUIPMENT.
12. DEFAULT. As used herein, the term "Event of Default" shall mean one or
more of the following occurrences: (a) Lessee shall fail to make any payment of
rent due Lessor hereunder within fifteen (15) days following the date upon which
such payment is due; (b) Lessee shall fail to perform any of its duties or
obligations hereunder and such failure shall continue for a period of thirty
(30) days following the receipt of written notice thereof from Lessor; or (c)
Lessee makes an assignment for the benefit of creditors or authorizes, initiates
or consents to the initiation against it of any proceeding for a moratorium or
for relief under the United States Bankruptcy Code or any similar state law or
otherwise procures a stay of enforcement against it of creditors remedies
generally.
13. REMEDIES. Without limiting any other provision of this Lease, upon the
occurrence of any Event of Default, Lessor may, at its option: (a) terminate
this Lease by written notice delivered to Lessee, whereupon Lessor shall be
entitled to damages from Lessee in an amount equal to the present value,
determined by using an interest rate of thirteen percent (13%) per annum, of the
difference between (i) the unpaid Rent for the balance of the Lease Term, and
(ii) the amount which Lessee proves that Lessor can receive over the balance of
the Lease Term from reletting the Equipment to another lessee, net of all costs
and expenses which could reasonably be incurred by Lessor in connection with any
such reletting, or (b) without constituting a termination of this Lease or
relieving Lessee of its duties and obligations hereunder, demand that the
Equipment be returned to Lessor in accordance with Paragraph 9 hereof, whereupon
Lessee shall so return the Equipment to Lessor. Upon any termination of this
Lease by Lessor hereunder and/or upon any failure of Lessee to return the
Equipment to Lessor hereunder, Lessor may, without demand or legal process and
without hereby rendering Lessor liable to refund any sums received as a deposit
and without constituting a termination of this Lease or relieving Lessee of its
duties and obligations hereunder, enter into the premises where the Equipment is
located and take possession of and remove the Equipment. The remedies of Lessor
hereunder are cumulative and may, to the extent permitted by law, be exercised
concurrently or separately, together with any other remedies that may be
available to Lessor at law or in equity. The election of any one remedy shall
not be deemed to be an election of such remedy and shall not preclude the
exercise of any other remedy. No failure or delay on the part of Lessor to
exercise any right or remedy shall operate as a waiver thereof; nor shall any
single or partial exercise by Lessor of any right or remedy preclude any further
exercise of any right or remedy.
4. TERMINATION BY LESSEE. Notwithstanding anything contained herein to the
contrary, Lessee shall have the right and option to terminate this Lease by
written notice delivered to Lessor upon the occurrence of either of the
following events:
a. The sale or other disposition of all or substantially all of
the assets and properties of Lessee in a single transaction or
in a series of related transactions; or
b. More than fifty percent (50%) of the partnership interest(s)
of Lessee shall be sold or otherwise transferred by the
holder(s) thereof, in a single transaction or in a series of
related transactions, to any person(s) who or which is not
(are not) an Affiliate(s) (as that term is hereafter defined)
of such holder(s).
15. ASSIGNMENT.
a. This Lease and Lessor's rights and privileges hereunder may be
assigned by Lessor any time and from time to time in its sole
and absolute discretion and without the consent of Lessee;
provided, however, that Lessor shall provide Lessee written
notice of each and every such assignment.
b. With the exception of an assignment or sublease to any person
or entity who or which acquires all or substantially all of
the assets and properties of Lessee, which may be made by
Lessee upon written notice of Lessor, this Lease and Lessee's
rights and privileges hereunder may not be assigned, sublet or
otherwise transferred or conveyed without the prior written
consent of Lessor.
16. GENERAL PROVISIONS.
a. NOTICES. All notices or other communications from either of
the parties hereto to the other shall be in writing and will
be considered duly given if sent by first class mail, return
receipt requested, postage prepaid, to the party at his or its
address set forth below, or to such other address as the party
hereafter designates by written notice to the other.
If to Lessor to: If to Lessee, to:
North Country Thermal Line, Inc. Thermal Line Windows, L.L.P.
X.X. Xxx 000 0000 Xxxx Xxxx Xxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
b. WAIVER, MODIFICATION OR AMENDMENT. No waiver, modification or
amendment of any term, condition or provision of this lease
shall be valid or of any effect unless made in writing, signed
by the party(ies) to be bound or its (their) duly authorized
representatives and specifying with particularity the nature
and extent of such waiver, modification, or amendment. Any
waiver by any party of any provision hereof shall not affect,
or impair any right arising from, any other provision hereof.
c. AFFILIATES DEFINED. As used in this Agreement, the term
"Affiliate" means, as to any person: (a) any parent
company(ies); (b) any subsidiary(ies); (c) any entity (of
whatever form) directly or indirectly owned, operated or
controlled by such person or all or any of the principals,
partners, shareholders, members, directors or officers of such
person; and (d) any spouse, child, brother, sister or parent
of such person.
d. PERSONS. As used in this Agreement, the term person means and
includes both individuals and entities.
e. ENTIRE AGREEMENT. This Lease contains the entire understanding
of the parties hereto in respect to the transactions
contemplated hereby and supersedes all prior agreements and
understandings between the parties with respect to such
matter.
f. PARTIES IN INTEREST. Except as herein otherwise provided, this
Lease shall inure to the benefit and shall be binding upon the
parties and their personal representatives, heirs, successors
and assigns.
g. INTERPRETATION AND SEVERANCE. The provisions of this Lease
shall be applied and interpreted in a manner consistent with
each other so as to carry out the purposes and intent of the
parties hereto, but if for any reason any provision hereof is
determined to be unenforceable or invalid, such provisions
shall be deemed severed from this lease and the remaining
provisions shall be carried out with the same force and effect
as of the severed provision or part thereof had not been an
part of this Lease.
h. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same instrument.
i. GOVERNING LAW. This Lease shall be construed and enforceable
in accordance with the laws of the State of North Dakota.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and year first above written.
LESSOR: LESSEE:
/s/ Xxxxx X. Xxxxxxxx THERMAL LINE WINDOWS, L.L.P.
-------------------------------- a Minnesota limited liability partnership
North Country Thermal Line, Inc.
Xxxxx X. Xxxxxxxx, President
By Ice, Inc.,
A North Dakota corporation
A General Partner
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Xxxxx X. Xxxxxxxx
Its President
