EXHIBIT 10.2
MERCEDES-BENZ CREDIT CORPORATION
LEASE AGREEMENT
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[LOGO] (Open-End)
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LESSOR - LESSEE
Lessor's Name: Valley Freightliner, Inc.
Street Address: 000 Xxxxxxx Xxxx XX
City: Pacific, State: WA. Zip: 98047 *101*
Lessee's Name: XxxxXxxxxx.xxx, Inc.
Street Address: 00000 Xxxxxx Xxxxx
Xxxx. #0
Xxxx: Xxxxxxxx, Xxxxx: WA. Zip: 98033
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This Lease Agreement (hereinafter "Lease") is entered into on the 16th day of
August, 1999, by and between the Lessor named above (hereinafter "Lessor") and
the Lessee named above (hereinafter "Lessee").
1. EQUIPMENT LEASED. Lessor agrees to lease to Lessee and Lessee agrees to lease
from Lessor each item of equipment described in each Schedule now or
hereafter executed pursuant to this Lease, together with any attachments or
accessories now or hereafter incorporated in or attached to said equipment
(hereinafter "Equipment").
It is hereby agreed that additional Equipment may be leased hereunder by the
execution of additional Schedules by Lessor and Lessee. Each such Schedule,
when so executed, shall constitute a separate Lease of the Equipment
described therein. Except as specifically modified in any Schedule, all of
the terms and conditions of this Lease shall govern the rights and
obligations of Lessee and Lessor with respect to the Equipment described in
the Schedules. Whenever reference is made herein to "this Lease" or "the
Lease" it shall be deemed to include all Schedules now or hereafter executed
under this Lease.
2. TERM. This Lease shall commence on the delivery date stated on the applicable
Schedule(s) and shall continue until all rental payments as hereinafter
described, and all of Lessee's other obligations hereunder, have been
satisfied in fill by Lessee.
3. RENTAL. Lessee agrees to pay Lessor monthly payments in an amount and for the
term indicated in the Schedule(s) without reduction or set off for any
reason, except as otherwise provided in this Lease.
The first payment shall be due on the date stated in the Schedule(s).
4. LATE CHARGE; DISHONORED CHECKS. In the event Lessee fails to pay in fill any
rental payment, or any other sum required to be paid hereunder by Lessee,
within ten (10) days of its due date, Lessor may, without declaring Lessee to
be in default, charge Lessee an amount equal to five percent (5%) of such
past due amounts or the maximum allowed by applicable state law. In addition,
Lessor may collect from Lessee a fee for dishonored checks. Such fee shall
not exceed $35 or the maximum amount permitted by applicable law. The
imposition of such a charge by Lessor shall in no way alter Lessor's right to
additionally or subsequently declare Lessee to be in default or to exercise
any of its remedies under this Lease.
5. FEES AND TAXES. Lessee agrees to pay when due all fees, sales and use taxes,
duties, assessments, highway use taxes, or other taxes and charges, however
designated, now or hereafter levied or based upon the purchase, rental,
ownership, use, possession, leasing, operation, control, maintenance or sale
of the Equipment, whether or not paid or payable by Lessor (excluding
Lessor's net income, franchise and business and occupation taxes), and shall
supply Lessor with proof of payment upon written demand therefor by Lessor.
6. INSURANCE. With respect to the Equipment, Lessee shall provide and maintain,
at its own expense, public liability insurance for bodily injury or death and
property damage insurance with an aggregate limit of not less than $750,000
per occurrence, or such other higher limit as may be required by law.
Lessee shall also provide and maintain, at its own expense, collision and
upset insurance with a deductible of not more than $2,500, and fire, theft
and combined additional insurance with a deductible of not more than $2,500.
All insurance required herein shall protect Lessor and Lessee as their
interests may appear. All insurance required to be provided by Lessee shall
designate Lessor as an additional insured and loss payee and shall, by the
terms of the policies or appropriate endorsements thereto: (a) be primary to,
and in no respect excess or contributory to or contingent upon, any liability
insurance provided by Lessor; (b) waive any right of subrogation against
Lessor, (c) provide that all liability insurance shall first be applied
against any claim against Lessor; (d) provide that all insurance proceeds are
to be paid directly to Lessor in respect of any damage to the Equipment; and
(e) provide that
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coverage may not be changed, altered or canceled by the issuing insurance
company without twenty (20) days prior written notice to Lessor.
All insurance required herein to be provided by Lessee shall be placed with
an insurance company acceptable to and approved by Lessor. Lessor shall be
provided with certificates of insurance (or other document(s) acceptable to
Lessor) evidencing the insurance coverage required herein and establishing
that such insurance is in effect with respect to the Equipment.
With respect to any such insurance, Lessee hereby appoints Lessor, or
Lessor's assignee, as Lessee's attorney in fact, with fill power to: (a)
determine at Lessor's discretion what is a reasonable sum for settlement
and/or compromise of claim or suit; (b) institute suit in Lessee's name, or
in Lessor's name, or both, and to add any costs or expenses relating to the
suit or claim, including legal fees and expenses, to the balance of Lessee's
obligations under the Lease; and (c) sign in Lessee's name any settlement,
draft or check.
Lessee agrees that any excess or umbrella liability insurance which it may
have in addition to the minimum requirements set forth above shall also
include the interest of Lessor, to the extent permitted by law.
7. LESSOR'S RIGHT TO PAY. If Lessee fails to insure the Equipment as required by
Section 6 or if Lessee fails to pay and discharge any or all fees, taxes,
liens and other charges as required by Section 5, Lessor, without prejudice
to any other rights hereunder, may (but shall not be obligated to) provide
such insurance, or may pay and discharge such fees, taxes, liens or other
charges, and Lessee agrees to repay said sums to Lessor upon demand. If
Lessee fails to repay Lessor within ten (10) days of the sending of Lessor's
demand for repayment, Lessor may assess a late charge on such amounts in
accordance with Section 4 hereof. If such amounts, including late charges,
remain unpaid for ten (10) additional days, then Lessee shall also be liable
for interest thereon at the default rate of interest set forth in Section 14,
or the maximum amount permitted by law.
8. INDEMNIFICATION. Lessee assumes liability for and agrees to defend, indemnify
and hold Lessor harmless from any claim for liability (including, without
limitation, claims involving strict liability in tort or product liability),
loss, cost, expense or damage of every nature (including, without limitation,
fines, forfeitures, penalties, settlements and attorney's fees) by or to any
person and regardless of its basis, which directly or indirectly results from
or pertains to the purchase, sale, leasing, manufacture, delivery, ownership,
use, possession, operation, condition (including, without limitation, latent
or other defects, whether or not discoverable, and patent, trademark and
copyright infringement), removal, return or storage of the Equipment, the
breach by Lessee of any covenant or condition of this Lease, or the
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recovery of claims under insurance policies thereon. LESSEE'S INDEMNITIES
AND LIABILITIES SHALL CONTINUE IN FULL FORCE AND EFFECT, NOTWITHSTANDING THE
EXPIRATION OR TERMINATION OF THIS LEASE FOR ANY REASON.
Upon request by Lessor, Lessee shall assume the defense of all demands,
claims, actions, suits and all other proceedings against Lessor for which
indemnity is provided herein and shall allow Lessor to participate in the
defense thereof. Lessee shall be subrogated to all rights of Lessor for any
matter for which Lessee has assumed obligation hereunder and may not settle
such demand, claim Or action without Lessor's prior consent. Lessor shall be
subrogated to all rights of Lessee for any matter for which Lessor has
assumed obligation hereunder and may settle such demand, claim or action
without Lessee's prior consent.
9. ASSIGNMENT. All right, title and interest in and to this Lease, as well as
to the Equipment, may be assigned at any time by Lessor without Lessee's
consent. Upon notice of any assignment by Lessor or its assignee, Lessee
shall make all payments coming due hereunder to the assignee without offset,
counterclaim or defense of any kind. It is expressly understood that any
reference in this Lease to "Lessor" shall be construed to mean Lessor or
Lessor's assignee.
Lessee shall not assign, transfer or sublet this Lease, the Equipment or
Lessee's interest hereunder without Lessor's prior written consent (which
may be withheld at Lessor's sole discretion), nor shall Lessee's interest
hereunder inure to the benefit of any trustee, receiver, creditor or
successor of Lessee or its property, whether or not in bankruptcy, or
whether by operation of law or otherwise.
10. OWNERSHIP/TITLE/LIENS. Lessor and Lessee intend for this agreement to be a
true lease; consequently; ownership of and title to all Equipment shall be
and remain in Lessor, notwithstanding possession and use thereof by Lessee.
Lessee has not acquired, and will not acquire by its acceptance of this
Lease, any proprietary rights or interest in the Equipment. Lessee
acknowledges that unless and until Lessor allows Lessee to purchase the
Equipment pursuant to Section 15, Lessee's interest shall be that of lessee
and not owner. Lessee shall keep the Equipment free from all liens and
encumbrances during the term of this Lease.
11. USE, INSPECTION AND ALTERATIONS. Lessee at its sole expense shall have the
Equipment serviced in accordance with the manufacturer's approved
maintenance schedules, ensure that maintenance records are available for
review by Lessor at reasonable times and places and maintain the Equipment
in good repair, appearance, functional order, and good lawful operating
condition.
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Lessee shall not: (a) use or permit the use of the Equipment in any
unintended, injurious or unlawful manner; (b) use or permit the use of the
Equipment primarily for personal, family, household or agricultural
purposes; (c) subject the Equipment to unusual, extreme or severe operating
condition; or (d) change or alter the Equipment without Lessor's prior
written consent, except that Lessee shall make such alterations and
improvements, at Lessee's expense, as may be required from time to time to
meet the requirements of law or of any federal, state or local governmental
authority having jurisdiction over the Equipment.
To ensure compliance with the foregoing, Lessor shall have the right, at any
time, to enter Lessee's premises or elsewhere to inspect the Equipment or to
observe its use. All improvements and alterations, other than improvements
which can be readily removed without causing damage to the Equipment and
without rendering the Equipment unable to comply with law, shall become part
of the Equipment and shall be the property of Lessor.
12. LOSS AND DAMAGE. Lessee hereby assumes all risk of loss, including theft or
destruction, and the risk of damage to the Equipment, from any and every
cause whatsoever, whether or not such loss is covered by insurance. Loss or
damage to the Equipment, or any part thereof, shall not relieve Lessee of
any obligation under this Lease.
If the Equipment is damaged or destroyed in an accident or other occurrence
or confiscated by any governmental authority or subjected to any tax lien or
is stolen, abandoned or subjected to undue peril, Lessee will notify Lessor
within ten (10) days of such occurrence or condition.
If any item of Equipment is damaged and in a condition which Lessor believes
may be reasonably repaired, Lessee shall repair the same to good working
order. If the Equipment is damaged and in a condition which Lessor believes
is beyond reasonable repair, or with respect to any other occurrence or
condition set forth above, Lessor may terminate this Lease with respect to
that Equipment immediately. If the Lease is terminated, Lessee's termination
liability shall be the sum of the following: (1) any Lease payments or other
amounts due and owing as of the time of termination; plus (2) the balance of
the Lease payments Lessee would have made had the Lease gone to fill term
(less a deduction for the time value of such payments computed in accordance
with the simple interest method); plus (3) the Residual Value as set forth
in the Schedule(s) (less a deduction. for the time value of such payments
computed in accordance with the simple interest method); plus (4) an amount
equal to one monthly Lease payment; plus (5) any and all commissions, fees
or other amounts paid by Lessor's assignee as consideration for assignment
of this Lease; less the proceeds Lessor receives from the insurance provided
by Lessee, if any. Lessee expressly understands and agrees that in the event
of a total loss, Lessee's insurance policy may not be sufficient to
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completely satisfy Lessee's indebtedness, and Lessee agrees that in such
event Lessee shall be liable for, and shall pay Lessor upon demand therefor,
the amount of any such deficiency.
13. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE. Lessee
represents, warrants and covenants to Lessor that: (a) the Equipment will
not be used outside of the United States during more than 50 percent of any
calendar year or partial calendar year during the term of this Lease; (b)
Lessee is not and will not become an organization exempt from the tax
imposed by Chapter 1 of the Internal Revenue Code of 1986 nor will Lessee
allow any such entity to use the Equipment; and (c) Lessee is not the United
States, any State (including the District of Columbia) or political
subdivision thereof, or any agency or instrumentality of the United States,
any State or political subdivision thereof or any international
organization, nor will Lessee allow any such entity to use the Equipment.
Lessee acknowledges that if any representation, warranty or covenant herein
is false or if it takes any action or omits to take any action which causes
any such representation, warranty or covenant to be false or to be breached,
Lessor, or the affiliate group of which it is a member, may suffer adverse
tax consequences. Accordingly, Lessee agrees that if it breaches any such
representation, warranty or covenant or if the same shall be or become
false, this Lease shall be deemed to be in default and Lessee shall be
liable to Lessor in the manner and for the amounts specified in Section 14
hereof.
14. DEFAULT; LESSOR'S REMEDIES. Time is of the essence in this Lease, and Lessor
may declare this Lease to be in default and terminated upon the occurrence
of any of the following events: (a) Lessee's failure to pay when due the
fill amount of any payment required hereunder or under any other loan,
retail installment contract or lease with Lessor or any other person or
shall default in the performance of any of the obligations or covenants
hereunder or thereunder, including, without limitation, rent, taxes, liens,
insurance, indemnification, repair or other charge; or (b) the making of any
false or misleading statement by Lessee prior to or in connection with this
Lease; or (c) Lessee's death, dissolution, insolvency or other termination
of existence; or (d) Lessee's becoming the subject of a petition in
bankruptcy, either voluntarily or involuntarily, or making an assignment for
the benefit of creditors, or being named or subjected to a suit for the
appointment of a receiver; or (e) seizure of or levy upon the Equipment by
reason of any legal or governmental process directed against Lessee; or (f)
any bankruptcy, insolvency, termination or default of any guarantor of
Lessee; (g) if any guaranty supporting Lessee's obligations hereunder shall
fail to remain in full force and effect.
Upon Lessee's default, Lessee shall be liable for, and shall pay Lessor upon
demand, the sum of the following as liquidated damages: (1) any Lease
payments or other amounts due and owing as of the time of default; plus (2)
the balance of the Lease payments Lessee would
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have paid had the Lease gone to full term (less a deduction for the time
value of such payments computed in accordance with the Rule of 78's); plus
(3) the Residual Value as set forth in the Schedule(s) (less a deduction for
the time value of such payments computed in accordance with the Rule of
78's); plus (4) an amount equal to one monthly Lease payment; plus (5) any
and all commissions, fees or other amounts paid by Lessor's assignee as
consideration for the assignment of this Lease (collectively, the "Default
Liability").
In the event of Lessee's default, Lessee agrees to surrender the Equipment
to Lessor at such location as Lessor may designate, and agrees that Lessor
may take possession of the Equipment wherever the same may be found, whether
on Lessee's premises or elsewhere, in accordance with applicable law, Lessee
further agrees that any and all rights or interests Lessee may have in the
Equipment shall be extinguished upon Lessee's default, If Lessor obtains
possession of the Equipment following Lessee's default, Lessor shall dispose
of the Equipment by public or private sale in the wholesale or retail
market, and such disposition may be with or without notice to Lessee.
Following any such sale, Lessor shall deduct from the Default Liability the
amount of any proceeds obtained upon disposition of the Equipment, less any
costs or expenses incurred by Lessor in connection with the repossession,
storage, restoration and/or disposition of the Equipment.
Lessor may assess, and Lessee will be liable for, interest on the total
amounts Lessee may owe to Lessor from time to time by reason of Lessee's
default at the rate of eighteen percent (18%) per annum, unless a lower rate
is required by applicable law, in which case that rate shall apply, both
before and after judgment.
Lessee understands and agrees that the remedies provided under this Lease in
favor of Lessor upon default shall not be exclusive, but shall be cumulative
and in addition to any other remedies available to Lessor, whether existing
in law, equity or bankruptcy.
15. PURCHASE OPTION. It is understood and agreed that Lessee has no option to
purchase the Equipment at any time; however, if Lessor does choose to sell
the equipment to Lessee, it will only be upon the expiration of the Lease
and for an amount equal to the Residual Value set forth in the Schedule(s).
If Lessee accepts Lessor's offer, Lessee must also pay any official fees and
taxes assessed in connection with the purchase, plus any other amounts due
hereunder but not paid at the time of termination. Lessee expressly
understands that Lessee shall have absolutely no equity or other ownership
rights in the Equipment prior to the expiration of the Lease.
16. END OF LEASE TERMINATION LIABILITY. Upon the expiration of this Lease,
Lessee shall, at Lessee's expense, assemble and return the Equipment
unencumbered at
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Lessor's place of business, or at such other place as Lessor specifies, in
the same condition, appearance and functional order as received, reasonable
and ordinary wear and tear excepted.
Upon the return of the Equipment as herein provided, Lessor will sell the
Equipment at a public or private sale `with or without notice to Lessee. If
the amount received from the sale (less sales tax payable, reasonable sales
commissions and restoration and storage costs, if any) exceeds the Residual
Value of the Equipment as set forth in the Schedule(s), the amount of such
surplus shall be paid to Lessee. If the amount received from the sale (less
sales tax payable, reasonable sales commissions and restoration and storage
costs, if any) is less than the Residual Value of the Equipment as set forth
in the Schedule(s), Lessee shall be liable for, and shall pay upon demand,
the amount of such deficiency to Lessor. Lessee acknowledges that the
potential benefit or liability contemplated by this Section 16 is not
intended to create any equity interest in the Equipment for Lessee, but
rather are designed as incentives for Lessee to properly maintain the
Equipment as required by this Lease.
17. ADDITIONAL SECURITY. To further secure the performance of Lessee's
obligations to Lessor, hereunder or otherwise, Lessee hereby grants to
Lessor a first security interest in (a) all equipment leased by Lessee from
Mercedes-Benz Credit Corporation (Lessee's interest in said equipment being
assigned to the full extent of Lessee's interest therein); and (b) all
equipment purchased by Lessee and financed by Mercedes-Benz Credit
Corporation.
18. DISCLAIMER OF WARRANTIES. LESSOR IS NOT THE PRODUCER, MANUFACTURER OR
DESIGNER OF THE EQUIPMENT, AND LESSOR MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO THIS LEASE OR THE EQUIPMENT, INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR INTENDED USE. LESSOR SPECIFICALLY DISCLAIMS ANY AND ALL LIABILITY
FOR CONSEQUENTIAL DAMAGES.
Lessor agrees, however, to assign to Lessee all of the manufacturer's
standard warranties applicable to the Equipment, together with any rights
and remedies afforded thereunder, to the extent that those warranties,
rights and remedies are assignable.
19. ENTIRE AGREEMENT; WAIVER. This Lease and the Schedule(s) referred to herein
constitute the entire agreement of the parties hereto. No waiver or
modification of this Lease or any Schedule shall be effective unless in
writing and signed by both parties. No waiver by Lessor of any obligation of
Lessee under this Lease shall be deemed a waiver of Lessor's right to
subsequent or other full and timely performance,
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20. BINDING ON SUCCESSORS AND PERMITTED ASSIGNS. This Lease shall be binding
upon and inure to the benefit of any permitted successors and assigns of
Lessor and Lessee.
21. COSTS AND ATTORNEY'S FEES. If Lessor employs an agent or other party for
purposes of collection or repossession, or refers this Lease to an attorney
for purposes of collection, repossession or enforcement of Lessor's
interests herein, Lessee agrees to reimburse Lessor upon Lessor's demand for
all of Lessor's repossession costs, attorney's fees and expenses to the
extent permitted by applicable state law.
22. NOTICES. All notices and payments shall be mailed to the respective parties
at the addresses set forth above or such other address as a party may
provide to the other party in writing.
23. GOVERNING LAW; JURISDICTION. This Lease shall be deemed to have been made in
the state named in Lessor's address above, and shall be interpreted, and the
rights and liabilities of the parties determined, by the laws and courts of
that state, to the exclusion of the courts of any other state or country,
provided, however, that Lessor shall have the right, but not the obligation,
to litigate in any state or country in which Lessee, the Equipment, or any
of Lessee's or any guarantor's assets are located. LESSEE WAIVES ANY AND ALL
RIGHT TO A JURY TRIAL REGARDING ANY DISPUTE ARISING HEREUNDER.
24. SEVERABILITY. If any of the provisions of this Lease are prohibited by or
held invalid under applicable laws or regulations of any jurisdiction in
which this Lease is sought to be enforced, then that provision shall be
considered inapplicable and omitted but shall not invalidate the remaining
provisions.
25. HEADINGS. Headings at the beginning of each section are solely for the
convenience of the parties and shall not be considered when interpreting
this Lease.
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BY SIGNING BELOW, LESSEE ACKNOWLEDGES THAT LESSOR'S SIGNATURE ON THIS LEASE WILL
HAVE THE EFFECT OF ASSIGNING ALL RIGHT, TITLE AND INTEREST OF LESSOR TO AND IN
THIS LEASE AND THE EQUIPMENT TO MERCEDES-BENZ CREDIT CORPORATION, AND THAT
LESSEE ACCEPTS THE TERMS AND CONDITIONS OF THIS LEASE.
I HAVE RECEIVED AND READ A COMPLETED COPY OF THIS LEASE BEFORE SIGNING BELOW.
Lessee: XxxxXxxxxx.xxx, Inc.
By: /s/: Xxxxx Xxxxxxx
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Title: President and CEO
BY SIGNING BELOW, LESSOR ACCEPTS THE TERMS AND CONDITIONS OF THIS LEASE AND
ASSIGNS ALL RIGHT, TITLE AND INTEREST TO AND IN THIS LEASE AND THE EQUIPMENT TO
MERCEDES-BENZ CREDIT CORPORATION PURSUANT TO THE TERMS OF THE EQUIPMENT PURCHASE
AND LEASE ASSIGNMENT AGREEMENT BY AND BETWEEN LESSOR AND MERCEDES-BENZ CREDIT
CORPORATION.
Lessor: Valley Freightliner, Inc.
By: /s/ Xxx Xxxxxx
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Title: G.M.
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