Page 1 of 10
Exhibit 10.17
[LOGO] PRIMMS
TRUCK LEASE AND SERVICE AGREEMENT
DATED: August 24, 2001
THIS TRUCK LEASE AND SERVICE AGREEMENT is entered into as of the date set forth
above, by and between PRIMMS, L.P., a Delaware limited partnership ("PRIMMS"),
whose business address is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx
00000, and SMART & FINAL INC. ("Lessee"), whose business address is 000 Xxxxxxx
Xxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, for the benefit of its wholly
owned subsidiary, XXXXX XXX COMPANY, ("HLC"), whose business address is 0000 X.
X. 000xx Xxxxxx, Xxxxx, Xxxxxxx, 00000, and whose business is distribution.
1. LEASE; TERM. PRIMMS hereby agrees to lease unto Lessee, and Lessee hereby
-----------
agrees to lease from PRIMMS, the vehicles described in any Schedule A attached
hereto or hereafter made a part hereof (such vehicles, together with any
additional or substitute vehicles owned and furnished by PRIMMS to Lessee
hereunder, the "Leased Vehicles"), all upon the terms and conditions set forth
in this Agreement and on the applicable Schedule A. Each Schedule A shall
constitute a separate vehicle lease. The term of lease for each Leased Vehicle
shall begin on the date such vehicle is tendered by PRIMMS to Lessee, or 48
hours after PRIMMS has notified the Lessee that the vehicle is ready to enter
Lessee's service, whichever occurs first (the "Date in Service"), and shall
remain in effect for the lease term applicable to such vehicle as described on
the applicable Schedule A or until earlier cancelled or terminated as in this
Agreement provided. All Leased Vehicles shall be used in the normal and ordinary
course of the HLC's business as described above, at the location set forth on
the applicable Schedule A for the respective vehicle. Each Schedule A referred
to this Agreement shall be deemed a part of this Agreement when it has been
executed and delivered by the parties. Lessee's execution of any Schedule A
shall constitute Lessee's authorization to PRIMMS to acquire the vehicles listed
thereon. It is expressly understood and agreed that Lessee, by virtue of this
Agreement, acquires no right, title or interest in or to the property described
in this Agreement.
2. CHARGES. The annual fixed shop charges are set forth on Schedule B attached
-------
hereto. All charges herein shall be in accordance with charges shown on the
applicable Schedule A attached hereto, subject to all subsequent charge
adjustments provided for herein. Lessee agrees to pay PRIMMS for the use of each
Leased Vehicle a sum which shall consist of the applicable fixed four-week lease
charge plus the applicable mileage charge, and such other charges as may be
provided for in this Agreement or on the applicable Schedule A. Such charges
shall be prorated for any partial four-week period during such term. The fixed
four-week lease charge is specified on the applicable Schedule A and is the
minimum charge applicable to a Leased Vehicle. The mileage charge shall be
computed at the rate specified on the applicable Schedule A and on the basis of
the total number of miles the Leased Vehicles shall be operated. The fixed
four-week lease charge will be invoiced in advance on the Date in Service and on
the first day of each four-week period thereafter. The mileage charge will be
invoiced in arrears on the last day of each four-week period and on the last day
of the lease term. All charges hereunder are due and payable by Lessee within
twenty (20) days from the date of Lessee's receipt of PRIMMS' invoice.
The Lessee agrees to report four-week mileage/hourly readings for all
Leased Vehicles to PRIMMS at the end of each four-week period. Leased Vehicles
operating interstate must have miles and hours submitted to PRIMMS on PRIMMS'
"Driver Trip Report" form, which shall be delivered to PRIMMS no later than the
Wednesday following the week for which the report applies. Mileage readings on
Leased Vehicles domiciled by PRIMMS and operated wholly within the State of
Florida will be secured by PRIMMS.
Each lease hereunder is a net lease and Lessee's obligations to pay all
charges hereunder, except as otherwise provided herein, shall be absolute and
unconditional. The obligations of Lessee shall not be affected by or subject to
any abatement, reduction, setoff, defense, counterclaim, interruption, deferment
or recoupment of any kind whatsoever. It is the intention of the parties that
all charges hereunder shall continue to be payable in all events in the manner
and at the time set forth in this Agreement. Nothing herein shall impair
Lessee's right to maintain an independent action at law or in equity.
Without limiting the generality of the foregoing, any credits due Lessee
from PRIMMS shall not be deducted by Lessee from any charges due hereunder
unless such credits are reflected on PRIMMS' invoice. Such credits shall be
reflected by PRIMMS on the next invoice sent to Lessee by PRIMMS after such
credits have been identified and verified by PRIMMS.
Page 2 of 10
3. FAILURE OF MILEAGE RECORDER. The number of miles over which any particular
---------------------------
Leased Vehicle shall have been operated for any given period of time shall be
determined by means of a standard mileage recording device attached to such
vehicle. In the event the mileage recording device of any Leased Vehicle shall,
at any time while such vehicle is being operated by Lessee, fail to function,
thereby rendering unavailable a correct mileage record for such vehicle, the
mileage for any day, days or fraction of a day, when the mileage recording
device is thus out of order, shall be computed on the basis of either the fuel
consumed or the daily average mileage of such vehicle for the next twenty (20)
days of recorded mileage (or, if less, the balance of the lease term) and
multiplying such daily average by the number of days and/or fraction of day
during which the mileage recording device of such vehicle shall have failed to
function.
4. CONTROL OF VEHICLES. Lessee shall use the Leased Vehicles solely in the
-------------------
course of its own business activities and shall have complete and exclusive
control of the Leased Vehicles, including, but not limited to, destination,
route of travel, consignee, selection of stopover points, layover period, and
all other matters incidental to the movement of the Leased Vehicles both loaded
and empty, on outbound and return movements. Under no circumstances shall Lessee
permit any third party, including employees or agents of PRIMMS, to assume
control of any Leased Vehicle during its use in the conduct of Lessee's
business. Drivers of Leased Vehicles shall be conclusively presumed to be the
servants and agents of the Lessee, and Lessee shall be responsible for the
payment of all wages, state and federal unemployment taxes, Social Security
contributions and all costs, insurance premiums and money damages or
contributions arising by reason of workmen's compensation laws, with respect to
such drivers.
Unless otherwise expressly provided for in this Agreement, all Leased
Vehicles shall be used in highway transportation only and shall not be used in
conjunction with any railroad movement, such as trailer-on-flatcar or piggyback
operations.
5. DRIVER QUALIFICATIONS. Lessee shall cause all Leased Vehicles to be operated
---------------------
only by safe, careful, legally qualified drivers, who shall have all required
licenses, and shall be selected, employed, controlled and paid exclusively by
HLC. Lessee shall cause said vehicles to be used and operated with reasonable
care and precaution to prevent any loss or damage to said vehicles or other
property or any injury to any person because of negligence or reckless use,
abuse, fire, theft, collision, or other cause. Any written complaint from PRIMMS
specifying any reckless, careless or abusive handling by a driver of any Leased
Vehicle shall be addressed to an officer of Lessee. Lessee and PRIMMS shall have
thirty (30) days to rectify any issues regarding a driver's qualifications to
operate any Leased Vehicle. Upon written complaint from PRIMMS specifying any
reckless, careless or abusive handling by a driver of any Leased Vehicle, Lessee
shall upon mutual agreement with PRIMMS remove such driver and substitute
therefor a careful and safe driver having all of the above qualifications as
soon as it is reasonably possible to do so. Lessee shall cause all drivers of
Leased Vehicles to comply with all reasonable regulations that coincide with
applicable state and federal laws now or hereafter made by PRIMMS and agreed to
by Lessee insofar as same shall relate to the proper use, care and operation of
the Leased Vehicles.
6. OVERLOADING; OBSERVANCE OF LAWS. Lessee agrees that none of the Leased
-------------------------------
Vehicles will, while in the possession, custody or control of Lessee, be
operated in excess of their respective rated maximum weights as specified on the
applicable Schedule A. Lessee agrees that in the event any of the Leased
Vehicles be damaged in any manner due to overloading, Lessee shall, promptly
after demand, pay PRIMMS the amount of any and all damages and losses PRIMMS may
sustain thereby. Lessee shall not permit the Leased Vehicles to be operated (a)
by a driver in possession of or under the influence of alcohol or any controlled
drug, substance or narcotic; (b) in a reckless or abusive manner; (c) off an
approved road; or (d) in violation of any federal, state or local statutes,
laws, ordinances, rules or regulations applicable to the operation of such
vehicles.
Without limiting the generality of the foregoing, Lessee agrees not to use
or allow any Leased Vehicle to be used for the transportation of any property or
material deemed extra-hazardous by reason of being explosive, inflammable or
fissionable, or any contraband or other property which may be subject to, or
which may cause the Leased Vehicles to be subject to, forfeiture or seizure,
except for properly packaged inflammable products designed for commercial use
that are being transported in the ordinary course of Lessee's business.
7. RESPONSIBILITIES OF LESSEE. Lessee shall (a) pay for all damage to any Leased
--------------------------
Vehicle caused by Lessee's failure to deliver the vehicle to PRIMMS for
necessary servicing or maintenance; and (b) reimburse PRIMMS within five
business days after demand for expenses incurred in removing or towing a Leased
Vehicle after collision or a Leased Vehicle which has left the road or has
become mired, and all expenses incurred to start up the vehicle if Lessee fails
to use an engine heating device and vehicle is equipped with same.
Lessee hereby agrees to pay for the replacement cost of any tarpaulins,
sleeper berth linens, stake or removable body and trailer sidewalls, cargo
securing chains and ratchets, cargo securing belts or bars, shoring bars,
tachograph charts or discs, refrigeration electrical standby cords or engine
heater cords provided with the Leased Vehicles unless
Page 3 of 10
such replacement is necessary because of sole proven negligence on the part of
PRIMMS, its agents or employees in the design or installation of any such items.
The use of tire chains is expressly prohibited on any Leased Vehicle except
to the extent required by law to be used by Lessee during periods of inclement
weather.
If any of the Leased Vehicles are to be parked by Lessee outside during
winter months, PRIMMS hereby agrees, at its own cost and expense, to equip said
vehicles with engine or battery heaters and sufficient electrical cords to
operate said heaters. Lessee hereby agrees to provide at its own cost and
expense electrical outlets installed in the general area where said vehicles are
parked and to operate said heaters at all times while the Leased Vehicles are
parked during winter months.
8. WRITTEN REPORTS BY DRIVERS. Lessee undertakes and agrees that each of its
--------------------------
drivers will, upon completion of each trip or dispatch, make a written report of
any faulty operation or other trouble which the driver had with the vehicle and
of any repairs or maintenance which the vehicle may require. Except as so
reported, it shall be conclusively presumed that each vehicle operated
satisfactorily.
Lessee shall provide PRIMMS weekly with all trip records, fuel tickets or
invoices, and other records or documents relating to the use of the Leased
Vehicles as may be necessary for the preparation of the fuel tax returns and
other state licensing or use tax reports to be prepared by PRIMMS hereunder. In
the event PRIMMS is assessed any additional charge, assessment, tax or penalty
or shall have any credit disallowed as a result of the untimely or improper
furnishing of such documents or information by Lessee, then Lessee shall
promptly reimburse PRIMMS the amount of such additional charges, assessments,
taxes, penalties or losses of credit. Such weekly trip records shall be prepared
by Lessee on a trip report form provided by PRIMMS and shall be returned to
PRIMMS, in proper form, no later than three working days after the Friday of the
week for which the report applies. Reports received later than this date will be
considered not received with all unreported miles being classified as mileage
incurred in the state of the vehicle's domicile as shown on the applicable
Schedule A. If Lessee provides all such documents or information to PRIMMS on a
timely basis and if Lessee is assessed any additional charges as a result of the
untimely or improper filings by PRIMMS, PRIMMS agrees to reimburse Lessee for
such charges.
9. ROAD BREAKDOWNS. In the event any Leased Vehicle shall be disabled, PRIMMS
---------------
shall promptly repair or cause same to be repaired, after receipt from the
Lessee and/or its agents of notice of such disability, specifying where the
vehicle is located, the nature of the disability and, if known, the cause
thereof. Lessee undertakes that its drivers shall not make any repairs or
adjustments to any said vehicles, but in all cases of mechanical trouble, shall
give prompt notice to PRIMMS by the most prudent means available, describing the
nature of the trouble and the location of the vehicle, and shall abide by
PRIMMS' directions concerning emergency repairs. PRIMMS shall have no liability
for any contracted repair or service to a Leased Vehicle unless authorized by
PRIMMS and supported by a receipted xxxx therefor, itemizing the cost of labor
and/or materials, accompanied by the damaged parts.
10. EQUIPMENT MAINTENANCE. Lessee shall deliver to PRIMMS at the service
---------------------
location shown on the applicable Schedule A for the respective vehicle, or as
otherwise reasonably directed by PRIMMS, all Leased Vehicles needing repairs or
as shall be requested by PRIMMS for inspection, necessary repairs or
maintenance, at the times designated by PRIMMS. PRIMMS undertakes and agrees to
make such inspection of each such vehicle at reasonable intervals to minimize,
insofar as possible, interruptions to Lessee's use of such vehicle. PRIMMS
agrees, at its own expense, unless otherwise expressly provided in this
Agreement or on the applicable Schedule A, to provide suitable and adequate
repairs and maintenance service, including oiling and greasing of said vehicles,
to maintain said vehicles in good repair, mechanical condition and running
order, and to furnish all necessary oil and other lubricants necessary for the
operation of such vehicles. Any vehicles delivered to Lessee for use under this
Agreement shall, unless Lessee gives prompt written notice to the contrary, be
conclusively presumed to have had a neat and proper appearance and to have been
in good repair, mechanical condition and running order when so delivered to
Lessee.
During the initial thirty (30) days of the Lease Term, PRIMMS will check
the engine oil and water levels on the Leased Vehicles on a weekly basis. PRIMMS
will notify Lessee of the applicable increase cost if PRIMMS is to continue to
provide this service.
11. TIRES. PRIMMS will provide at its own cost and expense all necessary tires
-----
and tubes for Leased Vehicles. Lessee undertakes and agrees that its drivers
will not operate any Leased Vehicles on a flat tire or on any tire or tires
which do not contain sufficient air pressure to prevent damage to the tires
other than ordinary wear and tear, and that in the event spare tires or tubes
become necessary, such drivers will notify PRIMMS immediately, whereupon, PRIMMS
will promptly supply the necessary tires and tubes. Reimbursement for the repair
of tires damaged by hitting sharp or blunt objects in the roadway will be
negotiated in good faith and mutually agreed upon prior to billing.
Page 4 of 10
Lessee agrees to reimburse PRIMMS for the loss of or damage to any tires on
any Leased Vehicles caused by hitting sharp or blunt objects, whether on the
roadway or off, except that Lessee shall not be required to reimburse PRIMMS if
such damaged tires can be repaired and reused by PRIMMS.
Reimbursement for the repair of tires damaged by hitting sharp or blunt
objects in the roadway will be negotiated in good faith and mutually agreed upon
prior to billing.
12. ADDITIONAL VEHICLES. PRIMMS may, in its discretion, so long as it has
-------------------
available sufficient captive vehicles of the size and type required by Lessee,
supply to Lessee additional vehicles for temporary use upon the same terms,
conditions and limitations as are applicable to Leased Vehicles in this
Agreement. Any additional vehicles rented to Lessee by PRIMMS under this section
shall be at PRIMMS' lease rate for Leased Vehicles. Additional vehicles rented
to Lessee by PRIMMS that are unlike any Leased Vehicles shall be at the then
current posted rate for such vehicles. For the purposes of this section, all
additional vehicle daily rates will be based upon one-fifth (1/5th) of the
weekly rates of vehicles leased under this Agreement.
Where additional vehicles are furnished by PRIMMS through a third party
lessor, the rate for such vehicles will be at the actual rental rate paid by
PRIMMS, but all of the terms and conditions applicable to the lease of such
vehicles will be as set forth in a separate lease agreement to be entered into
between the Lessee and such other lessor.
PRIMMS shall not be required to add any special painting, lettering or
alterations to any additional vehicles furnished to Lessee hereunder.
13. [INTENTIONALLY OMITTED.]
---------------------
14. FUEL PROCUREMENT. The party designated on the applicable Schedule A agrees
----------------
to provide fuel for the Leased Vehicles listed on such Schedule A. The party
designated to provide fuel agrees to be responsible for any mechanical problems
or damage to any Leased Vehicle caused by poor quality fuel, fuel waxing or
freezing, and for the cost of any repairs or maintenance required as result
thereof. PRIMMS agrees to check fluid levels on the Leased Vehicles once a week
for the first 30 days of the term of this Agreement and will provide Lessee with
a cost estimate of PRIMMS' continuation of this service. If Lessee elects not to
have PRIMMS continue such service, Lessee agrees to check the engine oil and
water levels each time the Leased Vehicles are fueled.
Notwithstanding anything to the contrary contained herein, in the event,
fuel shall be unavailable to PRIMMS from any commercially reasonable source due
to any fuel shortage, fuel rationing or allocation by PRIMMS' suppliers, the
petroleum industry, the Federal Office of Emergency Preparedness, and/or any
other governmental body, or the unavailability of fuel to PRIMMS or Lessee for
any other reason, including but not limited to federal, state or municipal
statutes, laws or ordinances, rules or regulations, PRIMMS shall have no
obligation to provide Lessee with fuel under this Agreement. In such event
Lessee shall be deemed to be the party designated on Schedule A to furnish fuel
and shall procure all fuel from such other sources as are available to Lessee,
and no default on the part of PRIMMS shall exist hereunder and no cause for
cancellation of this Agreement shall exist nor shall Lessee make any reduction
or set-off in the fixed four-week lease charge because of such fuel shortage. If
fuel continues to be unavailable to both PRIMMS and Lessee for a continuous
six-month period, the parties may, at their sole discretion, by mutual consent,
agree upon a reduction of the charges under this Agreement. Notwithstanding that
PRIMMS may be designated on Schedule A as the party to provide fuel, Lessee
shall have the option at any time upon thirty (30) days prior written notice to
PRIMMS to provide fuel for the Leased Vehicles hereunder.
15. TAXES AND REQUIREMENTS OF FEDERAL, STATE AND LOCAL AGENCIES. PRIMMS
-----------------------------------------------------------
represents that the Leased Vehicles are, at the time of initial delivery to
Lessee, and, subject to compliance by Lessee with its obligations hereunder,
will be kept mechanically safe and properly equipped in accordance with safety
requirements of all regulatory agencies, including the Surface Transportation
Board and the Department of Transportation.
The party specified on Schedule A shall provide and pay for local vehicle
registrations, State Base vehicle licenses in the state of domicile for the
licensed gross weight shown on the applicable Schedule A and federal highway use
tax relating to the Leased Vehicles. If PRIMMS is the party designated on
Schedule A to prepare and file fuel tax and highway use tax returns, Lessee
shall provide PRIMMS on a timely basis with all necessary reports, records,
receipts, invoices and other information necessary for such preparation and will
reimburse PRIMMS for any additional charge, assessment, tax or penalty imposed
or credit disallowed as a result of the untimely or improper submission of such
information by Lessee. If Lessee files such returns, it shall defend, indemnify
and hold harmless PRIMMS from and against all claims, losses and expenses
resulting from Lessee's failure to timely and properly file such returns or pay
such taxes.
Page 5 of 10
When permitted by law, the party specified on the applicable Schedule A
will apply for such other vehicle licenses and permits, prorate or reciprocity
plates, as may be needed by the Lessee for the lawful operation of the Leased
Vehicles in the respective states listed on the applicable Schedule A. Such
other vehicle licenses, plates and permits will be provided at the Lessee's sole
cost and expense.
Lessee further agrees to pay for all non-fuel sales and use taxes (unless
otherwise provided by law), interstate registration permits and any special
licenses and to pay any other taxes or fees resulting from or associated with
the operation and use of the Leased Vehicles or the fixed lease charges
hereunder, including but not limited to mileage taxes, ton-mile taxes, highway
and bridge tolls.
PRIMMS shall have the right to pay or discharge any lien or encumbrance
asserted against any Leased Vehicle as a result of Lessee's failure to timely
pay any claim or assessment for any such taxes, permits or licenses and Lessee
shall promptly reimburse PRIMMS for such payments; provided, however, that
Lessee shall have 10 days after notice of any such lien or encumbrance to pay or
discharge the same before PRIMMS does so.
Subject to compliance by Lessee with its obligations hereunder, PRIMMS
shall reimburse Lessee for Lessee's payment of any fines, penalties or other
charges levied by reason of any mechanical defects in the Leased Vehicles which
are promptly reported by Lessee to PRIMMS, or failure of PRIMMS to comply with
safety regulations prescribed by any regulatory agency applicable to any Leased
Vehicle, provided that PRIMMS is given prompt notice of any such fines,
penalties or charges.
Upon (a) any increase in the federal, state or local taxes or license fees
applicable to the Leased Vehicles from the levels in effect as of the Date In
Service on the applicable Schedule A, (b) any new or additional federal, state
or local taxes or license fees applicable to the Leased Vehicles or by reason of
the leasing thereof, and (c) any increases in the cost of any equipment or
accessories for any Leased Vehicle required by any change in laws relating
thereto, PRIMMS shall thereupon notify the Lessee in writing of such increased
or additional costs, and the fixed four-week period lease or mileage charges
payable by Lessee shall be increased by an amount equal to the increase in or
addition to such costs, if applicable, for the remaining lease term of the
Leased Vehicles. Such increases in PRIMMS' charges will become effective on the
date such increased or additional taxes or fees are payable or such equipment or
accessories are required. Any decreases in such taxes, fees or costs shall be
credited by PRIMMS to the Lessee when the decreases become effective.
16. CARGO. PRIMMS' liability under Section 19.1 for any loss of or damage to any
-----
property stored, loaded or transported in or upon any Leased Vehicle shall
not exceed $25,000 per occurrence.
17. INSURANCE. Lessee shall maintain at all times until the termination of this
---------
Agreement or until all of the Leased Vehicles have been returned to PRIMMS
(whichever occurs last), at its sole cost expense (a) all risk public liability
and property damage insurance, with the limits described on the applicable
Schedule A, (b) comprehensive insurance covering each Leased Vehicle in an
amount at least equal to the Schedule A value thereof as shown on the applicable
Schedule A, as adjusted to the applicable stipulated loss value reflected on the
referenced table attached to the applicable Schedule A (the "Depreciated
Value"), (c) collision insurance covering the Leased Vehicles in an amount at
least equal to the Depreciated Value thereof, and (d) workers' compensation
insurance with the limits required by law.
In the event that Lessee fails at any time to provide any of such insurance
after receiving written or oral notice of such failure, PRIMMS may (but shall
not be required) to do so at Lessee's expense (the cost of which shall be
payable on demand), without prejudice to its other rights and remedies
hereunder. All such insurance shall be written by an insurance company
reasonably satisfactory to PRIMMS and Lessee, shall name PRIMMS and its
partners, affiliates and assigns and their respective officers, directors,
partners, employees and agents, and any financing source for the Leased Vehicles
designated by PRIMMS, as additional insured parties, as their interests may
appear, shall be primary and not excess or contributory, and shall provide for
not less than 30 days prior written notice to PRIMMS of any cancellation of such
insurance or change in coverage. PRIMMS and any financing source for the Leased
Vehicles designated by PRIMMS shall be named as loss payee as to the Leased
Vehicles on the insurance specified in clauses (b) and (c) above. The Lessee
shall provide PRIMMS with written evidence of such coverage on or before the
commencement date of the lease as to any Leased Vehicle and at least 10 days
prior to the expiration of any coverage thereunder.
18. RISK OF LOSS. From the Date in Service of each Leased Vehicle until such
------------
vehicle is returned to PRIMMS at the termination of the lease for such vehicle,
Lessee shall bear all risk of loss, damage, theft, destruction, condemnation or
impoundment with respect to such vehicle from any cause whatsoever, other than
the sole negligence or willful misconduct of PRIMMS.
Page 6 of 10
19. INDEMNIFICATION BY LESSEE. Lessee agrees to release, indemnify, and hold
-------------------------
harmless PRIMMS and its partners, affiliates, agents and employees, from and
against (a) any claims or causes of action (including reasonable attorneys fees
and court costs) for death of or injury to persons, or loss of or damage to
property, including but not limited to any Leased Vehicle and any property
stored, loaded or transported on any Leased Vehicle, except where the same is
solely due to PRIMMS' negligent or willful acts or omissions, and (b) any loss,
cost, damage, liability, fine, forfeiture, seizure, penalty or expense
(including reasonable attorneys' fees and court costs) (collectively, "Losses")
which PRIMMS may incur, directly or indirectly, arising out of or in connection
with (i) the type and number of the Leased Vehicles or the purchase, possession,
use, operation, loading or unloading of any Leased Vehicle; (ii) any act or
omission of Lessee or any driver, agent, employee or invitee of Lessee or any
liability imposed upon or assumed by Lessee under any workers' compensation law,
contract, employee benefit plan, or otherwise; (iii) any failure by Lessee to
comply with any federal, state or local law, statute, ordinance or rule or
regulation of any governmental authority, including but not limited to the
Surface Transportation Board and the Department of Transportation; (iv) if
Lessee is the party designated on Schedule A to provide fuel for the Leased
Vehicles, any failure or delay to pay any applicable fuel tax or costs; (v) any
discharge, disposal, release or escape of any Hazardous Materials (as defined in
Section 22 below), whether before or after the date of this Agreement, which
occurs from or in connection with the leasing, operation, fueling or maintenance
of the Leased Vehicles or which occurs at, under, from or onto the premises on
which the Leased Vehicles are parked, stored, fueled or maintained, except where
the same is solely due to PRIMMS' negligent or willful acts or omissions; or
(vi) any other breach by Lessee of its covenants, representations or warranties
under this Agreement. If any unforeseen or extraordinary expense arises in
connection with the ownership of the Leased Vehicles which has not been provided
for in this Agreement, the parties will enter into good faith negotiations and
mutually agree upon which party or parties will bear such expense.
Lessee shall have the exclusive right to defend and/or settle any and all
actions based on or arising out of the foregoing matters for which Lessee is
obligated to indemnify PRIMMS, and Lessee agrees to do so diligently and in good
faith. Each party shall notify the other party promptly upon receipt of notice
or knowledge of any event which could give rise to a claim for indemnification
under this section. Lessee shall not, without the prior written consent of
PRIMMS, settle any such claim without obtaining a full release of any and all
liability against PRIMMS. PRIMMS shall have the right, at its option and at its
expense, to participate in any litigation brought against PRIMMS without thereby
relieving Lessee of its obligations thereunder. If Lessee fails to defend any
such action diligently and in good faith, then PRIMMS may do so at the expense
of Lessee.
19.1 Indemnification by PRIMMS. PRIMMS agrees to release, indemnify and hold
-------------------------
harmless Lessee and its partners, affiliates, agents and employees, from and
against (a) any claims or causes of action (including reasonable attorneys' fees
and court costs) for death of or injury to persons, or loss of or damage to
property, including but not limited to any Leased Vehicle and any property
stored, loaded or transported on any Leased Vehicle, where the same is solely
due to PRIMMS' negligent or wilful acts or omissions, and (b) any loss, cost,
damage, liability, fine, forfeiture, seizure, penalty or expense (including
reasonable attorneys' fees and court costs) which Lessee may incur, directly or
indirectly arising out of or in connection with, (i) any act or omission of
PRIMMS or any driver, agent, employee or invitee of PRIMMS or any liability
imposed upon or assumed by PRIMMS under any workers' compensation law, contract,
employee benefit plan, or otherwise; (ii) any failure by PRIMMS to comply with
federal, state or local law, statute, ordinance or rule or regulation of any
governmental authority, including, but not limited to, the Surface
Transportation Board and the Department of Transportation, (iii) if PRIMMS is
the party designated on Schedule A to provide fuel for the Leased Vehicles, any
failure or delay to pay any applicable fuel or tax costs; (iv) any discharge,
disposal or release of any Hazardous Materials (as defined in Section 22 below),
which occurs from or in connection with the leasing, operation, fueling or
maintenance of the Leased Vehicles or which occurs at, under, from or onto the
premises on which the Leased Vehicles are parked, stored, fueled or maintained,
where the same is solely due to PRIMMS' negligent or wilful acts or omissions;
or (v) any other breach by PRIMMS of its covenants, representations or
warranties under this Agreement.
PRIMMS shall have the exclusive right to defend and/or settle any and all
actions based on or arising out of the foregoing matters for which PRIMMS is
obligated to indemnify Lessee, and PRIMMS agrees to do so diligently and in good
faith. Each party shall notify the other party promptly upon receipt of notice
or knowledge of any event which could give rise to a claim for indemnification
under this section. PRIMMS shall not, without prior written consent of Lessee,
settle any such claim without obtaining a full release of any and all
liabilities against Lessee. Lessee shall have the right, at its option and its
expense, to participate in any litigation brought against Lessee without thereby
relieving PRIMMS of its obligations hereunder. If PRIMMS fails to defend any
such action diligently and in good faith, then Lessee may do so at the expense
of PRIMMS.
20. DAMAGE TO LEASED VEHICLES. Lessee shall not abuse or carelessly operate any
-------------------------
of the Leased Vehicles. Such vehicles shall not be operated so as to result in
violation of any ordinances, regulations or statutes established by any public
body. Lessee shall reimburse PRIMMS in full, upon demand, for damage to any of
the Leased Vehicles resulting from any cause whatsoever (other than the sole
proven gross negligence or wilful misconduct of PRIMMS),
Page 7 of 10
including but not limited to negligence, abusive or reckless operation,
off-the-road operation, over-loading beyond the load capacity of the Leased
Vehicles as set forth on the applicable Schedule A, contact with other vehicles
or objects, or improper use of mechanical equipment in the loading or unloading
of the Leased Vehicles. If Lessee fails to procure and maintain collision
insurance for any Leased Vehicle, Lessee agrees to reimburse PRIMMS upon demand
for all loss, cost and expense resulting from loss of or damage to any such
vehicle.
To the extent that Lessee's collision insurance hereunder does not cover
the cost of any re-lettering, re-decaling, or towing on any Leased Vehicle,
where such re-lettering, re-decaling or towing is necessary because of accident
damage, collision or upset to such vehicle, Lessee agrees to pay such costs upon
demand.
21. COOPERATION IN DEFENDING A CLAIM. In the event of any accident or occurrence
--------------------------------
involving a Leased Vehicle which accident or occurrence involves bodily injury
or death or property damage exceeding $10,000, or which Lessee believes is due
to PRIMMS' failure to properly repair or maintain the vehicle, Lessee shall
provide PRIMMS with prompt notice thereof. Such notice shall include all
information relevant thereto, including, but not limited to the date, time,
place and circumstance of the accident, names and addresses of persons injured
and owners of property damaged, and names and addresses of witnesses (if any)
and copies of any required police report. In the event of any accident or
occurrence involving a Leased Vehicle, Lessee shall also make all police reports
required by law and by applicable insurance policies. Each party, its agents and
employees shall cooperate fully with the other party and the insurer in the
investigation and defense of any claim or suit, and shall do nothing to impair
or invalidate any applicable insurance coverage. Lessee shall promptly deliver
to PRIMMS, or to such person or company as PRIMMS shall have designated in
writing, any and all papers, notices, summonses, process and documents
whatsoever served upon or delivered to Lessee or Lessee's agents or employees in
connection with any claim, suit, action or proceeding at law or in equity
involving or based upon an accident or occurrence described in the first
sentence of this section and arising out of the ownership, maintenance, use or
operation of any Leased Vehicle.
22. ENVIRONMENTAL MATTERS. Lessee represents and warrants to and covenants with
---------------------
PRIMMS that Lessee is and at all times during the term of this Agreement Lessee
will be (i) in compliance with all applicable Environmental and Safety
Requirements (as defined below), and (ii) in possession of all required permits,
licenses, certifications and approvals (collectively, "Permits"), including
those necessary for the performance by PRIMMS of the maintenance services to be
rendered under Section 10 at the location at which such services are to be
performed (the "Services") (other than Permits required for refrigerant
recycling and for the off-site disposal of any Hazardous Materials generated by
PRIMMS in performing the Services), including the filing of all notices or
applications required thereby or pertaining thereto the vehicles and operations
of the Truck Lease and Service Agreement. Notwithstanding the foregoing, PRIMMS
agrees that it will be solely responsible for (i) refrigerant recycling and the
off-site disposal of any Hazardous Materials generated by PRIMMS in performing
the Services, in accordance with all Environmental and Safety Requirements, and
(ii) the matters described in clause (iv) of Section 19.1.
Within thirty (30) days after the date of execution of the Agreement by
both parties (the "Execution Date"), PRIMMS shall retain an environmental
consultant at PRIMMS' expense to perform an investigation and complete a related
Phase I Environmental Report covering Lessee's existing facility (the "Report").
Lessee agrees to provide access to such facility for that purpose. It shall be a
condition precedent to PRIMMS' obligations hereunder and to take possession of
the Lessee's existing facility that the Report shall be satisfactory to PRIMMS
in its sole discretion. PRIMMS will advise Lessee of the fulfillment or
non-fulfillment of this condition no later than thirty (30) days after the
Execution Date.
For purposes of this Agreement, (a) "Environmental and Safety Requirements"
means all federal, state and local statutes, laws, rules, regulations, codes,
ordinances, orders, standards, permits, licenses, actions, policies and
requirements (including consent decrees, judicial decisions and administrative
orders) relating to protection, preservation or conservation of the environment
and public or worker health and safety, all as amended, hereafter amended, or
reauthorized, and (b) "Hazardous Materials" means any toxic or hazardous
substances, pollutants, waste, or contaminants including, without limitation,
petroleum or petroleum products, asbestos containing material in any form or
condition, polychlorinated biphenyls, to which liability or standards of conduct
may be imposed under the Environmental and Safety Requirements.
23. VEHICLE THEFT OR DESTRUCTION. If a Leased Vehicle is lost or stolen and
----------------------------
remains so for fifteen (15) days after PRIMMS has been notified thereof, the
lease as to such Leased Vehicle shall then terminate provided all charges for
such Leased Vehicle and all other amounts due to PRIMMS under this Agreement
have been paid to the date of the loss or theft. If a Leased Vehicle is, in
PRIMMS' reasonable opinion, damaged beyond repair, PRIMMS shall notify Lessee
within thirty (30) days after PRIMMS has been advised of the loss. Upon receipt
of PRIMMS' notice that the vehicle has been damaged beyond repair, provided all
charges for such Leased Vehicle and all other amounts due to PRIMMS under this
Agreement have been paid to the date such Leased Vehicle was taken out of
service, the lease as to such Leased
Page 8 of 10
Vehicle shall then terminate. Any termination under this section shall be
without prejudice to any right or remedy of PRIMMS arising prior to such
termination.
24. VEHICLE RETURN ON CONTRACT TERMINATION. If this Agreement shall be cancelled
--------------------------------------
or terminated, in whole or in part, as to any Leased Vehicle, Lessee shall, on
or before the effective date of such cancellation or termination, return such
vehicle to PRIMMS, at the location at which delivery of said vehicle shall have
been made to Lessee (or at such other location in the same city as may have been
designated by PRIMMS), in at least as good condition and running order as when
received by Lessee (except as provided in Section 23), ordinary wear and tear
excepted. Except for a Leased Vehicle which is lost or stolen as provided in
Section 23, no cancellation or termination of the lease as to such vehicle shall
be effective until such vehicle is returned to Lessee in accordance with the
preceding sentence.
In the event Lessee shall fail or refuse to return said vehicles to PRIMMS
as aforesaid, PRIMMS shall have the right upon 24 hours advance notice to take
possession of said vehicles and remove the same, and for this purpose, to enter
any premises during operating hours where any of said vehicles shall be, without
being liable to any suit, action, defense or other proceedings by Lessee. Lessee
may also take possession of any property loaded on any such vehicle and either
hold the same until picked up by Lessee or store the same, in each case at
Lessee's expense, without liability for any damage to or loss or spoilage of
such property. Return or repossession of vehicles pursuant to this section shall
not affect in any way the rights of PRIMMS and the obligations of Lessee
specified in Section 26.
Upon termination of this Agreement as to any Leased Vehicle, the Lessee
shall have neither the right nor obligation to purchase such vehicle from
PRIMMS, except as provided in Section 26(b) or Section 27.
25. FORCE MAJEURE. Neither party shall be liable to the other party for the
-------------
first party's failure to perform or delay in the performance of its obligations
hereunder (including, but not limited to its obligation to supply or repair any
vehicle or substitute vehicle or to supply fuel for any Leased Vehicle, but
excluding any obligation to make any payment hereunder) due to causes beyond its
reasonable control, or due to acts of God, acts of civil or military authority,
accidents, fires, strikes lockouts, floods, embargoes, epidemics, quarantine
restrictions, wars, belligerencies, insurgencies, riots, delays in
transportation, equipment shortages or inability due to causes beyond its
reasonable control to obtain from customary sources necessary labor, materials,
parts, components, fuel, power or transportation.
26. CONTRACT CANCELLATION.
---------------------
(a) Either party shall have the right to cancel this Agreement as of any
anniversary of the Date in Service of each vehicle delivered to Lessee
hereunder, by giving to the other party at least sixty (60) days
advance notice thereof, which cancellation shall be effective as of
the anniversary date (the "Cancellation Date") next following the end
of such 60-day period.
(b) In the event Lessee shall elect to cancel this Agreement under Section
26(a) above, then (i) Lessee or another party designated by Lessee
shall purchase the Leased Vehicles for an amount equal to the
Depreciated Value thereof, or (ii) Lessee shall pay to PRIMMS, as
liquidated damages for the loss of a bargain and not as a penalty, the
amount by which the Depreciated Value thereof exceeds the proceeds, if
any, of the sale of the Leased Vehicles by PRIMMS. If Lessee fails to
purchase the Leased Vehicles as aforesaid on or before the
Cancellation Date, then PRIMMS may sell the Leased Vehicles and Lessee
shall pay to PRIMMS the amount required under clause (ii) above
promptly after receipt of an invoice for the amount due.
(c) In the event PRIMMS shall elect to cancel this Agreement under Section
26(a) above, Lessee shall not be obligated to purchase the Leased
Vehicles or to pay the amount required under clause (ii) of Section
26(b).
(d) In the event either party shall elect to cancel this Agreement under
Section 26(a) above, then, unless Lessee purchases the Leased Vehicles
under Section 26(b)(i), Lessee shall reimburse PRIMMS on the
Cancellation Date, or as soon thereafter as the amount can be
determined, for the cost to repair all vehicle damage, the amount of
the prepaid and unused license, registration, permit, or other use
charges, whether designated as fees, taxes or otherwise, and all other
amounts payable by PRIMMS as a result of such early cancellation (to
the extent related to extra equipment originally installed or
alterations originally made to the Leased Vehicles at the request of
Lessee), allocable to the unexpired portion of the term as of the
Cancellation Date.
Page 9 of 10
(e) No cancellation or other termination of this Agreement by either party
shall in any way relieve Lessee of liability for the payment of any
sum accruing or relating to any period on or prior to the effective
date of termination or cancellation.
27. BREACH OR DEFAULT. Time is of the essence of this Agreement. In the event
-----------------
either party (the "Defaulting Party") shall become insolvent, file a voluntary
petition in bankruptcy, make an assignment for the benefit of creditors, be
adjudicated bankrupt by any court of competent jurisdiction, permit or suffer a
receiver to be appointed for its business, permit or suffer a disposition of all
or a substantial portion of its assets outside of the ordinary course of
business, be dissolved or liquidated or cease to be actively engaged in
business, or if any of the representations or warranties of the Defaulting Party
shall be untrue in any material respect at the time made, or if the Defaulting
Party shall be in default in the payment of any amount and/or in the performance
of any other covenants or conditions required under this Agreement (or any other
agreement between Lessee and PRIMMS) to be kept or performed by the Defaulting
Party and such default shall continue for five (5) days after written notice
thereof from the other party (the "Non-Defaulting Party") to the Defaulting
Party, the Non-Defaulting Party may immediately, without further notice or
demand, terminate this Agreement. Such termination shall be without prejudice to
any other right or remedy that the Non-Defaulting Party may have hereunder
including the right to recover any damages incurred.
In the event of any such termination of this Agreement by PRIMMS, Lessee
shall be required (a) at PRIMMS' election to purchase forthwith the Leased
Vehicles for an amount equal to the Depreciated Value thereof or to pay to
PRIMMS the amount required under clause (ii) of Section 26(b), and (b) to pay
all amounts required under Section 26(d), without prejudice to other remedies
PRIMMS may have under this Agreement or at law or in equity. In the event of any
such termination of this Agreement by Lessee, (a) Lessee shall have the option
(but not shall be obligated) to purchase the Leased Vehicles for an amount equal
to the Depreciated Value thereof, and (b) if such option is exercised, Lessee
shall pay all amounts required under Section 26(d), without prejudice to other
remedies Lessee may have under this Agreement or at law or in equity. Such
option shall be exercised by written notice to PRIMMS given within five days
after the date of such termination. Any purchase of a Leased Vehicle by Lessee
under this section or Section 26 shall be on an "as-is, where is" basis.
In no event shall either party be liable for consequential, indirect or
special damages on account of any delay or failure to perform its obligations
hereunder. Without limiting the generality of the foregoing, if PRIMMS fails to
furnish Lessee additional units over and above the contracted units, PRIMMS
shall have no liability for the cost of such vehicle.
28. ASSIGNMENT OF INTEREST. Neither this Agreement, nor any interest herein, may
----------------------
be assigned, pledged or encumbered by Lessee or by operation of law without the
prior written consent of PRIMMS, and no Leased Vehicle may be assigned, pledged,
sublet or encumbered nor possession or use thereof given to any other person or
entity, without PRIMMS' prior written consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Lessee may
assign this Agreement (including by operation of law) to any entity controlled
by or under common control with Lessee, without the consent of PRIMMS, provided
that PRIMMS is given prior written notice of any such assignment. Lessee shall
remain liable for all of its obligations hereunder, notwithstanding any such
assignment, pledge, encumbrance, subletting or change of possession.
Subject to the foregoing, this Agreement shall be binding upon the parties
hereto and their respective heirs, executives, administrators, successors and
permitted assigns. Nothing herein shall be deemed to prohibit PRIMMS from
assigning all or any part of its interest in this Agreement to any affiliated
entity, to any third party which succeeds to its business, or to any lender for
security purposes, in each case without the written consent of Lessee.
It is hereby agreed that the rights of the Lessee are subject and
subordinate to any lien given by PRIMMS to secure the purchase price of the
Leased Vehicles and to the rights of any equipment lessor who may be leasing the
Leased Vehicles to PRIMMS. PRIMMS shall have the right to assign to an affiliate
without Lessee's consent, but such assignment shall not release PRIMMS from any
of PRIMMS's obligations under this Agreement. Similarly, assignment of PRIMMS'
interest in this Agreement shall not release Lessee from any of the Lessee's
obligations under this Agreement, and the assignee shall be entitled to all
rights of PRIMMS hereunder, free from any defense, offset or counterclaim by
Lessee.
29. VEHICLE WARRANTIES. PRIMMS and Lessee will cooperate with one another in
------------------
making any warranty claim against the manufacturer. PRIMMS makes no express or
implied warranties or representations with respect to the Leased Vehicles, their
design, condition, quality, merchantability or fitness for any particular
purpose. Except as otherwise expressly provided herein, no defect in, or
unfitness of, any Leased Vehicle will relieve Lessee of the obligation to pay
any lease charges or other amounts due hereunder or to perform any other
obligations of Lessee hereunder.
Page 10 of 10
30. WAIVERS. The failure of either party (the "Non-Defaulting Party") at any
-------
time to require strict performance by the other party of any of the provisions
hereof shall not waive or diminish the Non-Defaulting Party's right thereafter
to demand strict compliance therewith. No waiver of any term or provision hereof
shall be deemed a continuing waiver or a waiver of any other breach. All waivers
hereunder shall be in writing and executed by an officer of the party making
such waiver.
31. NOTICES. All notices or other communications required or permitted under
-------
this Agreement shall be in writing and shall be deemed given when personally
delivered or sent by fax or three business days after being mailed by United
States first class mail, postage prepaid, from an officer of one party to this
Agreement to an officer of the other party to this Agreement, at the parties'
respective addresses as set forth at the beginning of this Agreement (and if
sent by fax, to Primms at 000-000-0000 and to Lessee at 000-000-0000 and
323-869-7862) or to such other address or fax number as either party may from
time to time provide to the other party by written notice.
32. GOVERNING LAW; FORUM. This Agreement is entered into at Oak Brook, Illinois
--------------------
and shall be governed by and construed in accordance with the laws of the State
of Illinois, without regard to its principles of conflicts of law. Any
litigation brought by Lessee in connection with this Lease shall be brought and
maintained solely in the state courts located in DuPage County, Illinois or in
the U.S. District Court for the Northern District of Illinois, Eastern Division,
or in the state or federal court located in the county in which HLC's principal
place of business is located, and Lessee hereby agrees to the jurisdiction of
said courts and to such venue for purposes of such litigation; provided,
however, PRIMMS may bring and maintain an action against Lessee in any
jurisdiction where Lessee conducts business or in which a Leased Vehicle may be
located. Each party waives all right to a trial by jury in any litigation in
connection with this Lease or the Leased Vehicles.
33. LIABILITY OF LESSEE. In the event of any breach by either Lessee or PRIMMS
-------------------
of its obligations under this Agreement, such party shall be liable to the other
party to this Agreement for all costs and expenses, including reasonable
attorneys' fees and court costs, actually incurred in collecting payments due
from the breaching party hereunder or in enforcing any rights of the
non-breaching party pursuant to this Agreement.
34. SURVIVAL. All representations and warranties and indemnification obligations
--------
made herein or in connection with this Agreement shall survive any termination
or cancellation of this Agreement.
35. MISCELLANEOUS. This Agreement, together with all schedules now or hereafter
-------------
made a part hereof, shall constitute the entire agreement between the parties
hereto with respect to the subject matter hereof. This Agreement may not be
amended or altered in any manner unless such amendment or alteration is in
writing and signed on behalf of the parties hereto by their duly authorized
representatives. If any term or provision of this Agreement shall be held to be
invalid or unenforceable, the remaining terms and provisions of this Agreement
shall remain in full force and effect and shall be construed to give effect to
the intent of the parties. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one instrument. The section headings in this Agreement
are for convenience only and shall not affect the construction thereof. The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rule of strict constriction will
be applied against any party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date first set forth above.
PRIMMS, L.P., SMART & FINAL INC.
A Delaware Limited Partnership
By: /s/ Xxxxxx X. Shingle By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------ --------------------------------
Title: President Title: Senior Vice President & Chief
Financial Officer
Date: 10/29/01 Date: 10/8/01
Witness: /s/ Xxxxxx X. Xxxxx Xx. Witness: /s/ Xxxx Xxxxxxx
-------------------------- ----------------------------
