EXHIBIT 10.1
LEASE NO. 3717
LEASE AGREEMENT
For and in consideration of the mutual covenants and promises hereinafter
set forth, the individual, company or other legal person identified on the
signature page of this Lease as the lessor ("Lessor") and the individual,
company or other legal person identified on the signature page of this Lease as
the lessee ("Lessee") hereby agree as follows:
1. LEASE. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, all machinery, equipment, motor vehicles and other property described in
any schedule or schedules executed by the parties, concurrently herewith or
hereafter, which schedules state they are subject to this Lease (collectively,
the "Schedules"). All machinery, equipment, motor vehicles and other property
described in any Schedule and all replacement parts, additions, repairs and
accessories incorporated in, or attached or affixed to, any such property is
collectively referred to in this Lease as the "Equipment."
2. TERM OF LEASE. This Lease shall commence on the date it is executed
and, unless sooner terminated by Lessor as provided in Section 18, shall
continue until the total number of "Payments" shown on each Schedule shall have
been made.
3. RENT. As rent for the Equipment described on each Schedule, Lessee
agrees to pay to Lessor the sum of (x) the rent payments shown under "Rent
Payment" on that Schedule, multiplied by the total number of "Payments" shown on
that Schedule, plus (y) any additional rent specified on that Schedule, plus (z)
"Interim Rent" amounts payable with respect to the period between the
Commencement Date and the first Rent Payment Due Date, based on a 30-day month
and the number of days between the Commencement Date and the first Rent Payment
Due Date. Payments are to be made on each and every Rent Payment Due Date shown
on the Schedule until the total number of payments have been made. The first
rent payment with respect to each Schedule is due upon (i) Lessee's execution of
a delivery receipt, if the Equipment described in that Schedule is motor
vehicles, or (ii) upon Lessee's acceptance (as described in Section 8) of any
Equipment other than motor vehicles described in that Schedule. Rent shall be
paid on the dates specified in the Schedule at the office of Lessor or to such
other person or at such other place as Lessor may from time to time designate in
writing. In addition to the rent payments described above, Lessee shall pay the
amount of any personal property taxes or other taxes and all maintenance,
insurance and other costs and expenses with respect to the Equipment (including
amounts, if any, required to be paid under Sections 13 and 15 of this Lease). If
Lessee fails to make any such payment or pay any other expense required to be
paid by Lessee pursuant to this Lease, Lessor, at its option, may pay such
expense, which shall constitute additional rent and be due and payable from
Lessee to Lessor upon demand thereof.
4. LATE CHARGE. The Payments described in Section 3 shall be paid when
due to the person entitled to those payments. In the event Lessee's rental
payments or any sum required to be paid to Lessor shall become past due, Lessee
agrees to pay to Lessor, not later than one month thereafter, an amount equal to
5% of the scheduled lease payment or twenty dollars ($20.00), whichever is
greater, but only to the extent allowed by law.
5. SECURITY DEPOSIT. Lessee has deposited or will deposit with Lessor the
sum shown as "Security Deposit", if any, on each Schedule as a security deposit
and not as advance rent. Lessor may, at its option, apply any security deposit
to cure any default by Lessee under the Lease, in which event Lessee shall
promptly pay a sufficient amount to Lessor to restore the security deposit to
the full amount specified on the Schedule. Upon termination of this Lease,
Lessor shall return any remaining balance of the security deposit, if any, to
Lessee if, and only if, Lessee has fulfilled all of its obligations under the
Lease.
6. SELECTION OF EQUIPMENT AND SUPPLIER. Lessee has selected the Equipment
and the supplier of the Equipment Lessor agrees to order the Equipment from the
supplier in accordance with Lessor's customary practices, and Lessor shall not
be obligated to lease the Equipment to Lessee unless the supplier fills the
order. Lessor shall have no liability because of any delay by the supplier in
filling the order. Lessee will accept the Equipment if delivered in good repair
and authorizes Lessor to add to the Schedules any serial numbers or other
identification of the Equipment when known. Any delay in the delivery of the
Equipment will not affect the validity of this Lease.
7. WARRANTIES. LESSOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE
CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF, THE ABSENCE
OR ANY CLAIM OF INFRINGEMENT OR THE LIKE WITH RESPECT TO, OR ANY OTHER MATTER
CONCERNING, THE EQUIPMENT AND EXPRESSLY DISCLAIMS ANY SUCH WARRANTIES OR ANY
OTHER WARRANTIES IMPLIED BY LAW. LESSEE HEREBY WAIVES ANY CLAIM IT MIGHT HAVE
AGAINST LESSOR FOR ANY LOSS, DAMAGE OR EXPENSE CAUSED BY THE EQUIPMENT OR BY ANY
DEFECT THEREIN, OR BY THE USE OR MAINTENANCE OF, OR SERVICING OR ADJUSTMENT TO,
THE EQUIPMENT AND, AS TO LESSOR, LEASES THE EQUIPMENT AS-IS AND WITH ALL FAULTS
AND WITHOUT WARRANTY OF ANY KIND. LESSOR WILL NOT BE LIABLE FOR ANY LOSS OR
INTERRUPTION OF OR DAMAGE TO LESSEE'S BUSINESS ON ACCOUNT OF ANY MECHANICAL
FAILURE OR DELAY IN CONNECTION WITH THE FURNISHING OR USE OF THE EQUIPMENT.
Lessee acknowledges that Lessor is not a dealer or manufacturer of equipment of
any kind and is not the seller of the Equipment, and that each unit of Equipment
is of a type, size, design and capacity selected solely by Lessee. Lessee also
acknowledges that Lessor supplies the Equipment without any obligation to
install, test, erect, service or maintain the Equipment. If the Equipment is not
properly installed, does not operate as represented or warranted by the
manufacturer or seller thereof, or is unsatisfactory for any reason, Lessee
shall make any claim on account thereof solely against the manufacturer or
seller and no such occurrence shall relieve Lessee of any of its obligations
under this Lease. The only warranty applicable to any Equipment is the
manufacturer's warranty, if any (in the case of new Equipment). Lessee
acknowledges receipt of the manufacturer's warranty with respect to any new
Equipment. So long as Lessee is not in default under this Lease, Lessor assigns
to Lessee any manufacturer's, seller's or other warranty, whether express or
implied, on the Equipment and any claim that Lessor may have as owner of the
Equipment against the manufacturer or supplier or any other person. Lessor makes
no representation or warranty whatsoever concerning the validity or
enforceability of any such assignment and makes no representation or warranty
concerning the nature or scope of the warranty provided by any such
manufacturer, seller,
supplier or other person. All claims or actions on any warranty shall be made or
prosecuted by Lessee, at its sole expense, and Lessor shall have no obligation
whatsoever to make any claim on such warranty. Any recovery in cash or cash
equivalents under such warranty shall be made payable jointly to Lessee and
Lessor. At Lessor's option, all cash proceeds or cash equivalents from such
warranty recovery may be used to repair or replace the Equipment. Lessee shall
continue to pay rent to Lessor as specified in this Lease, notwithstanding any
claim for breach of warranty.
8. INSPECTION AND ACCEPTANCE BY LESSEE. Upon delivery of the Equipment,
Lessee shall promptly make all necessary inspections and tests of the Equipment
in order to determine whether the Equipment conforms to specifications and is in
good condition and repair. Lessee shall promptly notify Lessor in writing of any
defect or other objection to the type or condition of the Equipment. If Lessee
fails to notify Lessor in writing of any defect in or objection to the Equipment
within ten (10) days after delivery of the Equipment to Lessee, it shall
conclusively be established, as between Lessor and Lessee, that Lessee has fully
inspected the Equipment and that Lessee is satisfied with and has accepted the
Equipment as in good condition and repair for all purposes of this Lease. If
Lessee determines that the Equipment is in good condition and repair before the
expiration of ten (10) days after the Equipment is delivered, and in all events
prior to placing the Equipment in service, Lessee shall execute and deliver to
Lessor a certificate of acceptance in a form satisfactory to Lessor. Lessee's
acceptance of any Equipment with knowledge of a nonconformity cannot be revoked
because of such nonconformity.
9. LOCATION AND RIGHT OF INSPECTION. The Equipment shall be delivered to
and, with the exception of motor vehicles, at all times be located at the
address of Lessee shown on this Lease, or at such other place as shall be
mutually agreed upon in writing between Lessor and Lessee. Any motor vehicles
included in the Equipment are leased principally for use in the United States,
and will not be used outside of the United States and Canada. Lessor shall at
any and all times during business hours have the right to enter into and upon
the premises where the Equipment is located for the purpose of inspecting the
Equipment or observing its use. Lessee shall not move any Equipment other than
motor vehicles from the location to which said Equipment is delivered except
with the prior written consent of Lessor. Lessee shall promptly advise Lessor of
any circumstances with respect to location of the Equipment which may in any
manner affect Lessor's title thereto.
10. USE. The Equipment shall be kept by Lessee in its possession and
control. Lessee shall use the Equipment with due care, and shall comply with all
laws, ordinances or regulations applicable to the use, operation or maintenance
of the Equipment and the requirements of any insurer. Lessee shall put the
Equipment only to the use contemplated by the manufacturer. Lessee shall use any
motor vehicles included in the Equipment only in the course of Lessee's own
business, and shall permit any such vehicles to be operated only by Lessee's
agents or employees or members of Lessee's immediate family who, in each case,
are legally licensed to operate such vehicles. No driver of any motor vehicle
included in the Equipment shall have the authority to act on behalf of Lessor
without prior written authorization from Lessor. If Lessor as owner of any motor
vehicle included in the Equipment receives a notice of a parking or traffic
violation which involves the payment of a fine or penalty, Lessor may (but is
not required to) pay the fine or penalty. If Lessor does so, Lessee will
immediately repay Lessor the amount of the fine or penalty and an additional $10
handling and administrative fee. If any Equipment is confiscated by any public
authority, or if Lessor suffers any damage because of Lessee's use of the
Equipment for an illegal purpose, Lessee shall pay to Lessor the amount of any
such damage and, in the case of confiscation, the Stipulated Loss Value
determined in accordance with the relevant Schedule(s) and Lessor may, at its
option, terminate this Lease.
11. INDEMNITY. Lessee shall hold Lessor harmless from, and pay to Lessor
the amount of, any fines, penalties or other amounts for which Lessor is held
liable as a result of any legal expenses Lessor has arising out of, the use,
condition, ownership or operation of any items of Equipment, including any
claims made under the strict liability doctrine, and as a result of any lien,
encumbrance or claim made on the Equipment by anyone, including Lessee's
employees and agents. Lessee shall indemnify Lessor against, and hold Lessor
harmless from, any and all claims, actions, damages (including reasonable
attorneys' fees), obligations, liabilities and liens (including any of the
foregoing arising or imposed without Lessee's fault or negligence, or in
connection with latent or other defects, or any claim for patent, trademark or
copyright infringement or under the doctrine of "strict liability"), imposed or
incurred by or asserted against Lessor or its successors or assigns, arising out
of the manufacture, purchase, lease, possession, operation, condition, return or
use of the Equipment by operation of law or by Lessee's failure to comply with
the terms of this Lease. Upon written notice by Lessor of the assertion of any
claim hereby indemnified against, Lessee shall assume full responsibility for
the defense thereof. This section shall survive termination of this Lease.
12. ALTERATIONS, REPAIRS AND MAINTENANCE. Lessee will, at its expense,
keep and maintain the Equipment in good working order, supply and install all
replacement parts and accessories when required to maintain the Equipment in
good working order, which parts and accessories shall be and become the sole
property of Lessor, and furnish all gasoline, oil, repairs, parts, tires, tubes,
batteries, accessories, service, maintenance and all other items of a similar
nature necessary for the operation of the Equipment Lessee shall not, without
the prior written consent of Lessor, make any alterations, modifications,
additions, subtractions or improvements to, or xxxx the Equipment, but any such
alterations, modifications, additions or improvements, whether or not authorized
by Lessor, shall become the property of Lessor and shall be deemed to be a part
of the Equipment. Lessee shall pay all costs required to repair all damage to,
or alter, the Equipment or any accessories, or to make the Equipment conform to
any federal, state or municipal requirements. Lessee shall follow any
maintenance program required or recommended by the manufacturer of the Equipment
to make sure that its warranty remains valid.
13. LICENSING, REGISTRATION AND TAXES. If the Equipment or use of the
Equipment requires licensing by or registration with any governmental authority,
Lessee shall, at its expense, obtain and maintain such license or registration
continuously during the term of this Lease. As additional rent, Lessee shall pay
when due all federal, state or local license and registration fees, assessments,
sales, use, heavy vehicle use, property and other taxes (excluding any tax
measured by Lessor's net income), together with any penalties or interest
applicable thereto, now or hereafter imposed by any governmental authority upon
any item of the Equipment or the rent payable hereunder or by reason of the use,
operation or maintenance of the
Equipment. Lessee shall pay all such fees or taxes whether they are payable by
or assessed to Lessor or Lessee but, if under law or custom such payments shall
be made only by Lessor, Lessee shall promptly notify Lessor and shall reimburse
Lessor, upon demand, for all payments thereof made by Lessor. If by law any such
registration, license fee or tax is billed to Lessor, Lessee, at its expense,
will do any and all things required to be done by Lessor in connection with the
licensing or registration procedure and the levy or assessment of any tax,
including the billing or payment thereof. Upon request, Lessee shall provide
Lessor with proof of payment of any such fee or tax.
14. TAX INDEMNIFICATION. This Lease has been entered into on the basis
that Lessor shall be entitled to such deductions and other tax benefits as are
provided by federal, state and local law to an owner of property (the "Tax
Benefits") including, without limitation, (a) with respect to each item of
Equipment, the accelerated cost recovery deduction (or any alternative
depreciation system deduction, if so elected by Lessor) allowed under the
provisions of Section 168 of the Internal Revenue Code of 1986, as amended (the
"Code"); and (b) all of the foregoing Tax Benefits, credits and deductions being
computed pursuant to such federal, state and local tax rates, tax rate schedules
and formulae as are presently in effect.
If Lessor shall lose for any reason whatsoever (including, without
limitation, as a result of a change in applicable law with respect to tax rates
or any other Tax Benefits), shall not have or shall lose the right to claim, or
if there shall be disallowed or recaptured with respect to Lessor, all or any
portion of the Tax Benefits as are currently provided to an owner of property
with respect to one or more items of the Equipment ("Loss") then, upon thirty
(30) days written notice to Lessee by Lessor that a Loss has occurred, Lessee
shall pay Lessor an amount which, in the reasonable opinion of Lessor and after
deduction of all taxes required to be paid by Lessor with respect to the receipt
of such amount, will cause Lessor's net after-tax return (based on the highest
marginal tax rates) over the term of the Lease with respect to such item of
Equipment to equal the net after-tax return that would have been available if
Lessor had been entitled to the utilization of all the Tax Benefits.
For purposes of this Section 14, a Loss shall occur upon the earliest of
(a) the happening of any event (such as a change in applicable law with respect
to tax rates or any other Tax Benefit or a disposition or change in the use of
an item of Equipment) which may cause such Loss, (b) the payment by Lessor to
the Internal Revenue Service of the tax increase resulting from such Loss, or
(c) the adjustment of the tax return of Lessor to reflect such Loss. Lessor
shall not be entitled to a payment under this Section on account of any loss due
solely to one or more of the following events: (aa) a disqualifying disposition
due to sale of an item of Equipment by Lessor prior to any default by Lessee,
(bb) a failure of Lessor to claim timely or properly the Tax Benefits (as
adjusted or otherwise modified by tax elections Lessor may have made with
respect thereto) for an item of Equipment in the tax return of the Lessor, (cc)
a disqualifying change in the nature of Lessor's business or liquidation
thereof, (dd) a foreclosure by any person holding through Lessor a lien or an
item of Equipment, which foreclosure results solely from an act of Lessor, or
(ee) the failure of Lessor to have sufficient taxable income or tax liability to
utilize the Tax Benefits.
All of Lessor's rights and privileges arising from the indemnities
contained in this Section 14 shall survive the expiration of other termination
of this Lease.
For purposes of this Section 14, the term "Lessor" shall include any
affiliated group (within the meaning of Section 1504 of the Code) of which
Lessor is a member for any year in which a consolidated income tax return is
filed for such affiliated group.
15. INSURANCE. Lessee, at its expense, shall procure, maintain and pay for
(a) with respect to any Equipment other than motor vehicles, insurance against
the loss or theft of or damage to the Equipment, for the "Stipulated Loss Value"
determined in accordance with the relevant Schedule(s), naming Lessor and its
assigns as loss payee, (b) comprehensive general liability insurance providing
coverage for bodily injury and property damage with combined single limits of at
least $1 million not subject to an annual aggregate, naming Lessor and its
assigns as an additional insured, and endorsed to act as primary insurance with
respect to Lessor, (c) in the case of motor vehicles included in the Equipment,
comprehensive and collision damage coverage for the actual cash value of the
motor vehicle(s) and with a deductible not greater than the insurance deductible
specified in the Schedule, naming Lessor and its assigns as loss payee, (d) in
the case of motor vehicles included in the Equipment, motor vehicle liability
insurance covering bodily injury or property damage arising out of the
ownership, maintenance or use of the vehicle with combined single limits of at
least $1 million and naming Lessor and its assigns as additional insured, and
endorsed to act as primary insurance with respect to Lessor, and (e) any other
insurance required by Lessor or any governmental authority. All such insurance
shall be in form and amount, and provided by an insurer, satisfactory to Lessor.
Lessee shall deliver the policies of insurance or duplicates thereof or
certificates of insurance to Lessor at the time the lease is signed or prior to
the delivery of the Equipment and thereafter thirty (30) days prior to each
policy renewal. Each insurer shall agree by endorsement upon the policy or
policies issued by it or by independent instrument furnished to Lessor that the
insurer will provide thirty (30) days prior written notice to Lessor of any
cancellations or non-renewal of the policy or any material change in policy
conditions. Lessee shall comply with all restrictions (including any
geographical limitations) contained in any insurance policies. All insurance
policies shall provide that the insurance shall not be invalidated as to Lessor
by any act, omission or neglect of Lessee. Lessee shall notify Lessor
immediately in writing of any accident involving the Equipment regardless of the
amount of damage, and shall cooperate fully with Lessor and all insurance
companies in the investigation, prosecution and defense of claims. The proceeds
of any insurance, at the option of Lessor, shall be applied (aa) toward the
replacement, restoration or repair of the Equipment, or (bb) toward payment of
the obligations of Lessee under this Lease. Lessee hereby appoints Lessor as
Lessee's attorney-in-fact to make claim for, receive payment of, and execute and
endorse all documents, checks or drafts for loss or damage under any such
insurance or pay said fees, assessments, charges and taxes, as the case may be.
In that event Lessee shall reimburse Lessor for the cost thereof upon demand,
and failure to repay the same shall constitute an Event of Default under this
Lease.
16. LOSS AND DAMAGE. Lessee hereby assumes and shall bear the entire risk
of loss, theft, damage or destruction of all or any item of the Equipment from
any cause whatsoever; and no loss, theft, damage or destruction of all or any
item of the Equipment shall relieve Lessee of its obligation to pay rent or of
any other obligation under this Lease, which
shall continue in full force and effect, notwithstanding such loss, theft,
damage or destruction. This risk of loss shall pass to Lessee on the earlier of
(i) delivery of the Equipment to a carrier for shipment to Lessee; (ii) tender
of the Equipment to Lessee; or (iii) acknowledgement by a bailee who holds the
Equipment of Lessee's right to possession of the Equipment. In the event of
damage to any item of Equipment, Lessee shall immediately place the same in good
repair (ordinary wear and tear excepted). If Lessor determines that any item of
Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee, at the
option of Lessor, will (a) replace the same with similar equipment in good
repair, or (b) pay Lessor in cash all of the following: (aa) all amounts then
owed by Lessee to Lessor under this Lease, and (bb) the Stipulated Loss Value of
said item of Equipment, determined as of that date in accordance with the
Schedule(s), less any proceeds of insurance thereon received by Lessor. Upon
Lessor's receipt of such payment, Lessee shall be entitled to whatever interest
Lessor may have in said item of Equipment, in its then condition and location,
without warranties, express or implied, and this Lease shall be terminated with
respect to such item.
17. DEFAULTS. The occurrence of any one or more of the following events
shall constitute an Event of Default under this Lease:
(a) Lessee shall fail to make any rent or other payment when due; or
(b) Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under this Lease
and such failure shall continue for a period of ten (10) days after written
notice thereof is delivered to Lessee by Lessor; or
(c) Any representation or warranty made by Lessee in this Lease or in
any document or certificate furnished to Lessor in connection with or
pursuant to this Lease (including but not limited to financial statements)
shall have been false in any material respect when made or furnished; or
(d) Lessee shall become insolvent or bankrupt or make an assignment
for the benefit of creditors or consent to the appointment of a trustee or
receiver, or a trustee or receiver shall be appointed for Lessee or for a
substantial part of its property without its consent and shall not be
dismissed for a period of thirty (30) days, or bankruptcy, reorganization
or insolvency proceedings shall be instituted by or against Lessee and, if
instituted against Lessee, shall not be dismissed for a period of thirty
(30) days, or Lessee dies, is dissolved, terminates its existence or its
business is discontinued; or
(e) Lessee removes, sells, transfers, encumbers, parts with
possession of or sublets, or attempts to remove, sell, transfer, encumber,
part with possession of or sublet all or any item of the Equipment; or
(f) Lessee is liquidated or dissolved, or commences any acts relative
thereto, or, without the prior written consent of Lessor, (i) Lessee sells
or otherwise disposes of all or substantially all of the assets of Lessee,
(ii) Lessee merges or consolidates with any other person, or (iii) if
Lessee is a corporation, ownership, control, or power to vote fifty
percent (50%) or more of the outstanding shares of any class of voting
securities of Lessee is transferred by the current holders, in one or more
transactions; or
(g) Any indebtedness of Lessee (including but not limited to
indebtedness to Lessor or any of its affiliates) is not paid when due, or
Lessee defaults under any bond, debenture, note or other evidence of
indebtedness of Lessee or under any indenture or other instrument under
which any such evidence of indebtedness has been issued or by which it is
governed and payment of such indebtedness is accelerated.
18. REMEDIES. Upon the occurrence and during the continuation of any Event
of Default, Lessor shall have all the rights and remedies provided by applicable
law and by this Lease. In addition to the rights and remedies provided by
applicable law, Lessor may, at its option, declare this Lease to be in default.
Upon declaring this Lease to be in default, Lessor, at its sole discretion, may
exercise any one or more of the following remedies:
(a) terminate this Lease; or
(b) declare immediately due and payable, without notice or demand to
Lessee, the sum of (i) the accrued and unpaid rent payments for the period
ending on the date of default; (ii) the present value of any and all rent
payments for the period from the date of default throughout the scheduled
expiration of this Lease; and (iii) any other sums then payable under the
Lease; or
(c) cause Lessee, upon written demand of Lessor and at Lessee's
expense, to return promptly any or all items of Equipment to Lessor in
accordance with all of the terms of Section 21 hereof, or Lessor, at its
option, may take possession of any or all items of Equipment without demand
or notice where the same may be located without any court order or process
of law and remove the same without liability for injuries suffered through
or loss caused by such repossession, and such repossession shall not
constitute termination of this Lease unless Lessor expressly terminates
this Lease in writing, and Lessee waives any and all rights to notice and
judicial hearing with respect to the repossession or attachment of the
Equipment by Lessor in the event of default under this Lease by Lessee; or
(d) sell or lease any or all items of Equipment at public or private
sale or lease at such time(s) as Lessor may determine and, if notice
thereof is required by law, any notice in writing of such sale or lease by
Lessor to Lessee not less than ten (10) days prior to the date thereof
shall constitute reasonable notice thereof to Lessee; or otherwise dispose
of, hold, use, operate, or keep idle such Equipment, all as Lessor, at its
sole discretion, may determine and all free and clear of any rights of
Lessee and without any duty to account to Lessee for such action or
inaction or for any proceeds with respect thereto; or
(e) exercise any other right or remedy which maybe available to
Lessor under the Uniform Commercial Code or any other applicable law or
proceed by appropriate court action to enforce the terms of this Lease, to
recover possession of the Equipment, to
recover damages for the breach of this Lease or to rescind this Lease as to
any or all Equipment.
Lessor may elect, whether before or after recovering possession of the
Equipment, by written notice to Lessee, to cause Lessee to pay Lessor as
liquidated damages for loss of a bargain and not as a penalty, and in lieu of
all other sums due to Lessor for the remaining term of this Lease (except any
indemnification obligation under Sections 11 and 14, which shall survive the
payment of the Stipulated Loss Value) on the date specified in such notice, an
amount equal to the rent payment or payments and other payments under the Lease
that are due and payable as of the date of the written notice, plus a sum equal
to the Stipulated Loss Value of the Equipment, determined as of the date of the
written notice in accordance with the Schedule(s), reduced by any net proceeds
of the disposition of the Equipment which were previously received by the
Lessor. In the event Lessor collects the liquidated damages specified in the
preceding sentence and has not previously sold or re-leased the Equipment,
Lessor shall appoint Lessee as Lessor's agent to dispose of the Equipment at the
best price obtainable on an "as is, where is" basis and Lessee shall be entitled
to the proceeds of such sale of the Equipment to the extent they do not exceed
the Stipulated Loss Value and shall pay any excess to Lessor.
Lessee shall pay Lessor all costs and expenses, including attorneys' fees,
incurred by Lessor in exercising any of its rights or remedies under this Lease
or in enforcing any of the terms or conditions of this Lease. Lessee shall
continue to be liable for all indemnities under this Lease and for all legal
fees and other costs and expenses resulting from an Event of Default or the
exercise of Lessor's remedies, including placing any Equipment in the condition
required by Section 21 of this Lease, notwithstanding Lessor's exercise of any
right or remedy under this Lease. Except as expressly provided above, no remedy
is exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to Lessor at law or in equity. The
repossession or subsequent sale or lease by Lessor of any item of Equipment
shall not bar an action for a deficiency as herein provided and the bringing of
any action or the entry of judgment against Lessee shall not bar Lessor's right
to repossess any or all items of Equipment. No express or implied waiver by
Lessor of any default shall constitute a waiver of any other default by Lessee
or a waiver of any of Lessor's rights. To the extent permitted by applicable
law, Lessee hereby waives any rights now or hereafter conferred by statute or
otherwise which may require Lessor to sell, lease or otherwise use any Equipment
in mitigation of Lessor's damages as set forth in this Section 18 or may
otherwise limit or modify any of Lessor's rights or remedies under this Section
18. LESSEE AGREES THAT ANY ACTION BY LESSEE OR LESSOR CONCERNING THE LEASE SHALL
BE VENUED IN THE COURTS OF THE STATE OF MINNESOTA, AND LESSEE HEREBY SUBMITS TO
THE PERSONAL JURISDICTION OF THE COURTS OF MINNESOTA, BOTH FEDERAL AND STATE, IN
ANY ACTION WITH RESPECT TO THIS LEASE AND AGREES THAT ANY STATE COURT ACTION
SHALL BE VENUED IN THE DISTRICT COURT OF HENNEPIN COUNTY, MINNESOTA. LESSOR AND
LESSEE EACH IRREVOCABLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS LEASE OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
19. ASSIGNMENT. Lessee shall not assign, pledge or hypothecate this Lease
in whole or in part, nor any interest in this Lease, nor shall Lessee sublet or
lend any item of the
Equipment, nor pledge, mortgage or otherwise encumber the Equipment or permit it
to be encumbered, without the prior written consent of Lessor. Lessee's interest
herein may not be assigned or transferred by operation of the law. Consent to
any of the foregoing acts shall not be deemed to be consent to any subsequent
similar act. Lessor may assign this Lease and any documents and rights related
hereto, including guarantees, and may mortgage the Equipment or both in whole or
in part, without notice to Lessee. If Lessee is given notice of such assignment,
it shall acknowledge receipt of that notice in writing. Each assignee or
mortgagee from Lessor shall have all of the rights, but none of the obligations,
of Lessor under this Lease. Lessee shall not assert against any assignee and/or
mortgagee any defense, counterclaim or offset that Lessee may have against
Lessor. Upon receipt from Lessor of written notice of assignment, Lessee will
pay to the assignee any portion of the rent assigned to the assignee. Lessee's
obligation to pay rent to the assignee shall be absolute and unconditional and
shall not be subject to any defense or offset, and said obligations shall
continue until Lessee receives a written notice from the assignee that all
indebtedness secured by such assignment has been paid in full. Notwithstanding
any assignment, Lessor warrants that Lessee shall quietly enjoy use of the
Equipment, subject to the terms and conditions of this Lease. Subject to this
Section 19, this Lease inures to the benefit of and is binding upon the heirs,
legatees, personal representatives, successors and assigns of Lessor and Lessee.
20. OWNERSHIP. The Equipment is and shall at all times remain the sole and
exclusive property of Lessor. Lessee shall have no right, title or interest
therein or thereto except as expressly set forth in this Lease. This Lease is a
lease and not a security agreement, and Lessee has no right, title or interest
in the property except as Lessee. Lessee has no option to purchase the
Equipment. The Equipment shall remain personal property regardless of whether it
becomes affixed or attached to real property, or permanently rests upon any real
property or any improvement thereon. Lessee shall not attach the Equipment to
any personal or real property so as to cause the property to become an accession
or fixture thereto or take any action which would confer upon any person having
an interest in such real or personal property an interest in the Equipment.
Lessee agrees to execute all such agreements and other documents, and to obtain
the execution thereof, in recordable form, by all parties having an interest in
any real property to which any of the Equipment is affixed, as Lessor may, from
time to time, reasonably request with respect to the identity of the Equipment
as personal property, and Lessee further consents to the recordation of all such
agreements and documents. Lessee shall affix to the Equipment and maintain
thereon such labels, plates or decals as may be provided by Lessor, or
conspicuously xxxx the Equipment with such language as Lessor may reasonably
request, to the effect that such Equipment is owned by Lessor. Lessor is hereby
authorized at Lessee's expense to cause this Lease or any financing statement in
respect thereto, showing the interest of Lessor in the Equipment, to he filed or
recorded with any governmental office deemed appropriate by Lessor. A carbon,
photographic or other reproduction of this Lease or any financing statement
filed pursuant to this Lease may be filed by Lessor as a financing statement.
Lessee shall execute all documents requested by Lessor to effect any filing.
21. SURRENDER. Upon expiration of this Lease, Lessee shall, with sixty
(60) days prior written notice to Lessor, return each unit of Equipment to
Lessor free of all advertising or insignia placed thereon by Lessee, and in good
condition, repair and working order (ordinary wear and tear resulting from
proper use of the Equipment excepted). Absence or malfunctioning
of a catalytic converter or other pollution control equipment with respect to
any motor vehicle included in the Equipment shall not be considered ordinary
wear and tear. Lessee shall return the Equipment, in accordance with Lessor's
instructions, either (a) by delivering the Equipment at Lessee's sole cost and
expense, to any location selected by Lessor within the county in which the
Equipment was delivered to Lessee, or within the county to which the Equipment
was moved with Lessor's consent, to the nearest office of Lessor, or to the
location identified on the relevant Schedule for return of the Equipment
(whichever of the foregoing is selected by Lessor, in its sole discretion); or
(b) by loading the Equipment on board any carrier designated by Lessor and
shipping the same, freight prepaid, to a destination selected by Lessor. If
Lessee fails to provide Lessor with written notice at least sixty (60) days
prior to the expiration of the lease term, the term of the Lease will be
automatically extended on a month-to-month basis until the Equipment is returned
to Lessor. This provision shall not he construed to be a right of renewal or to
authorize Lessee to retain the Equipment after the expiration of the Lease.
22. NO OFFSET; IRREVOCABLE AND INDEPENDENT PROMISES. Upon Lessee's
acceptance of any Equipment, Lessee promises to pay rent and perform all other
obligations with respect to such Equipment shall become irrevocable and
independent, and shall not be subject to cancellation, termination,
modification, repudiation, excuse or substitution without the consent of Lessor
or any assignee. Lessee hereby waives any and all existing and future claims and
offsets against any rent or other payments due hereunder, and agrees to pay the
rent and other amounts due hereunder regardless of any offset or claim which may
be asserted by Lessee or on its behalf against Lessor or any other person. This
is a net lease and rent due under this Lease shall not be subject to abatement
for any reason whatsoever. Lessee hereby further acknowledges that the
manufacturer or vendor of the Equipment and their agents and employees were at
no time and are not now the agents or under the supervision of Lessor, and that
Lessor was not and is not the agent of the manufacturer or vendor.
23. WAIVERS. No waiver of Lessee's obligations, conditions or covenants
shall be deemed to take place unless the waiver is in writing and signed by
Lessor. Failure to exercise any remedy which Lessor may have under this Lease or
any acquiescence in the default of Lessee by Lessor shall not constitute a
waiver of any obligation of Lessee, including the obligation as to which Lessee
is in default; and Lessor shall be entitled to pursue any remedy available to it
under this Lease until Lessee has rendered complete performance of all
obligations under this Lease.
24. FINANCIAL AND OTHER REPORTS. During the term of this Lease, Lessee
shall furnish Lessor with annual financial statements within one hundred twenty
(120) days after the end of Lessee's fiscal year, and Lessee shall provide
Lessor such other financial information as Lessor may from time to time request,
including without limitation, any reports filed with federal or state regulatory
agencies. Lessee hereby warrants and represents that all financial statements
previously delivered or to be delivered to Lessor by or on behalf of Lessee, and
any statements and data submitted in writing to Lessor in connection with this
Lease, are or will be true and correct and did or will fairly present the
financial condition of Lessee for the periods involved.
25. MASTER LEASE. In the event Lessor shall hereafter lease to Lessee
additional Equipment, the Equipment shall be described on a Schedule executed by
the parties which shall refer to this Lease. Each Schedule shall, in addition to
describing the Equipment to be leased thereunder, set forth the term of the
Lease with respect to that Equipment, the amount of rent, the manner of payment
of the rent, the number of rent payments, the commencement of the rent payments,
the amount of any security deposit and the stipulated loss value with respect to
that Equipment, and may include other provisions. Each such Schedule when
executed by the parties shall be deemed to be a part of this Lease, and all of
the provisions of this Lease, except such provisions as may be explicitly
amended by a Schedule, shall govern such Schedule or Schedules, it being
understood and agreed that this Lease shall be the Master Lease.
26. CROSS DEFAULT. Lessee hereby agrees that any default by Lessee in the
payment of rent or performance of any other term or condition of any lease
between Lessor and Lessee, or under any Schedule, whether previously or
hereafter entered into, shall at the option of Lessor constitute an Event of
Default in all Leases or Schedules, including this Lease between Lessor and
Lessee, and that thereupon the provisions of Section 18 above shall be
applicable.
27. NOTICES. All notices required or permitted under this Lease shall be
sufficient if delivered personally or mailed to the party receiving the notice
at the address set forth below that party's signature, or at such other address
as either party nay designate in writing delivered to the other party from time
to time. My such notice shall be effective upon delivery or forty-eight (48)
hours after it has been deposited in the United States mail, duly addressed and
postage prepaid.
28. MISCELLANEOUS. LESSEE ACKNOWLEDGES AND AGREES THAT THIS LEASE IS
INTENDED AS A "FINANCE LEASE" AS DETERMINED IN MINN. STAT. SECTION
336.2A-103(1)(G), AND THAT LESSOR IS ENTITLED TO ALL BENEFITS, PRIVILEGES AND
PROTECTIONS OF A LESSOR UNDER A FINANCE LEASE If mere than one party executes
this Lease as Lessee, all obligations to be performed by Lessee shall be the
joint and several liability of all such parties. Wherever the context permits,
Lessee's representations, warranties and covenants under this Lease shall
survive the delivery and return of the Equipment. Any provision of this Lease
which nay be determined by competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective, to the
extent of such prohibition or unenforceability, without invalidating the
remaining provisions of this Lease, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provisions
in any other jurisdiction. To the extent permitted by applicable law, Lessee
hereby waives any provision of law which renders any provision of this Lease
prohibited or unenforceable in any respect. No term or provision of this Lease
maybe changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which the enforcement of the
change, waiver, discharge or termination is sought. This Lease contains the
entire agreement between the parties and embodies any oral representations,
negotiations or agreements made in connection herewith. The captions in this
Lease are for convenience of reference only and shall not define or limit any of
the terms or provisions hereof. As used in this Lease, the term "Lease" shall
include all exhibits and Schedules related to this Lease. The neuter includes
the masculine or feminine, the singular includes the plural, and the word
"Lessor" includes all assignees of
Lessor. THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (BUT NOT THE LAW OF CONFLICTS) OF THE STATE
OF MINNESOTA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
Time is of the essence hereof. Lessee's obligations hereunder shall survive the
expiration or earlier termination thereof. This Lease shall not become effective
or binding until executed by Lessor at its place of business in Eden Prairie,
Minnesota. Lessee shall promptly notify Lessor of any changes in Lessee's
address. Lessee warrants and agrees that the Equipment is leased and will be
used for business purposes only and that the Equipment will not be used for
personal, family or household purposes.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of this
date, December 1, 2002.
INFINITE GRAPHICS INCORPORATED, Lessee LEASE FINANCE GROUP, INC., Lessor
By /s/ Xxxxxxxx X. Xxxxxxx, Xx. By
---------------------------------- ------------------------------
Title: CEO Title
------------------------------- ---------------------------
Address: 0000 Xxxx Xxxx Xxxxxx Xxxxxxx: Xxxxx 000
Xxxxxxxxxxx, XX 00000 0000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
SCHEDULE TO LEASE AGREEMENT
LESSOR: Lease Finance Group, Inc. LEASE NO. 3717
------------------------------------ ------------------------------------
LESSEE: Infinite Graphics Incorporated SCHEDULE NO. 1
------------------------------------ ---------------------------------
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EQUIPMENT
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(1) Heidelberg Mask Write 800 & Laser, s/n 281
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Location of Equipment (if other than 000 Xxxxx Xxxxxx Xxxx
Lessee's address on the Lease): Xxxxxxxx Xxxxxxx, XX 00000 County: El Paso
------------------------------------ ------------
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INITIAL LEASE TERM RENT PAYMENT RENT PAYMENT DUE DATE
60 Months $ ** per month, The 1st day of each month
------- ---------- -------
60 Payments plus applicable taxes
-------
PAYMENT APPLIES TO: END-OF-LEASE OPTIONS
First Payment $ 175,000.00 X Purchase Option $ Fair Market Value
------------ ----- ---------------------
Taxes ______% $
------------
Administrative Fee $ 100.00 STIPULATED LOSS VALUE
------------
Other $ 0.00
------------
Security Deposit $ 52,750.00 Year 1 $831,300.00 Year 2 $749,800.00 Year 3 $635,700.00
------------
Amount Due $ 227,850.00 Year 4 $505,300.00 Year 5 $350,450.00 Year 6 $__________
------------
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Other Terms: ** Rent payments shall consist of one (1) payment of $175.000.00 followed by
---------------------------------------------------------------------------------
fifty-nine (59) payments of $10.947.46.
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Rent Payments shall commence upon Lessee's acceptance of the Equipment and shall be made on
each Rent Payment Due Date thereafter until the total number of Payments has been made. Lessor
hereby leases to Lessee and Lessee hereby leases from Lessor the Equipment described above
under the terms and conditions set forth above and pursuant to and subject to all terms and
conditions of the Lease Agreement between Lessor and Lessee dated December 1, 2002.
ACCEPTED: DATED AS OF December 1, 2002
---------------------------
LEASE FINANCE GROUP, INC. (Lessor) INFINITE GRAPHICS INCORPORATED (Lessee)
By: By: /s/ Xxxxxxxx X. Xxxxxxx, Xx.
----------------------------------- -----------------------------------
Title: Title: CEO
------------------------------ ------------------------------
By: By:
----------------------------------- -----------------------------------
Title: Title:
------------------------------ ------------------------------
CERTIFICATE OF ACCEPTANCE
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Lessee hereby certifies that the Equipment described above has been received by
Lessee in good order and condition acceptable to Lessee. Any decals or metal
plates supplied by Lessor have been affixed to the Equipment in accordance with
Lessor's instructions. Lessor agrees to pass on all equipment warranties
provided by vendor(s) and/or manufacturer(s). Lessee acknowledges that Lessor
has not made any representations or warranties regarding and is not liable for
the performance of the Equipment and agrees that all rental payments will be
made regardless of equipment operability.
-----------------------------------------------------------------------------------------------
December 1, 2002 /s/ Xxxxxxxx X. Xxxxxxx, Xx. CEO
------------------------------ -----------------------------------------------------------
Date of Delivery Lessee's Signature Title
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