EXHIBIT 10.14
EQUIPMENT SCHEDULE NO. 02
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EQUIPMENT SCHEDULE NO. 02 dated as of February 2, 1999 (this "Schedule")
between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC. ("Lessor"),
and R-B RUBBER PRODUCTS, INC., an Oregon corporation ("Lessee").
INTRODUCTION:
Lessor and Lessee have heretofore entered into that certain Master
Equipment Lease Agreement dated as of May 12, 1997 (the "Master Lease"; the
Master Lease and this Schedule hereinafter collectively referred to as, this
"Lease"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings specified in the Master Lease. The Master Lease provides for
the execution and delivery of a Schedule substantially in the form hereof for
the purpose of confirming the acceptance and lease of the Equipment under this
Lease as and when delivered by Lessor to Lessee in accordance with the terms
thereof and hereof.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
EQUIPMENT & INVOICING TERMS
1. EQUIPMENT. Pursuant to the terms and conditions of this Lease, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the equipment
listed on EXHIBIT A attached hereto (the "Equipment"). The aggregate Total Cost
of such Equipment is $802,400.00.
2. TERM. The Initial Term of this Lease with respect to the Equipment
described on this Schedule shall commence on the date on which such Equipment is
delivered to Lessee, and, unless earlier terminated as provided herein, shall
expire on a date which is eighty-four (84) months after the Rent Commencement
Date (the "Initial Term Expiration Date").
3. RENT PAYMENT DATES; RENT. Lessee hereby agrees to pay Rent for the
Equipment throughout the Initial Term in eighty-four (84) consecutive monthly
installments payable in advance on the Rent Commencement Date and on the same
day each month thereafter (each, a "Rent Payment Date"). Each such installment
of Rent shall be in an amount equal to $8,633.62.
4. EQUIPMENT LOCATION; BILLING ADDRESS. The Equipment described on this
Schedule shall be located at, and except as otherwise provided in this Lease,
shall not be removed from, the following address: 000 Xxxx 00xx Xxxxxx,
XxXxxxxxxxx, XX 00000. The billing address of Lessee is as follows: R-B RUBBER
PRODUCTS, INC., 000 Xxxx 00xx Xxxxxx, XxXxxxxxxxx, XX 00000.
TRANSACTION TYPE TERMS
5. PURCHASE, RENEWAL AND OPTION TERMS.
a. FMV. With respect to the Equipment described on this Schedule, Section
32 of the Master Lease ("Renewal and Purchase Options") is hereby deleted in its
entirety and the following is substituted in its place:
So long as no Default or Event of Default shall have occurred and be
continuing and Lessee shall have given Lessor at least ninety (90) days but
not more than one hundred eighty (180) days prior written notice (the
"Option Notice"), Lessee shall have the following purchase and renewal
options at the expiration of the Initial Term, or any Renewal Term, to:
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(i) purchase all, but not less than all, Items of Equipment for a purchase
price (the "Purchase Option Price") equal to the then Fair Market Sale
Value thereof; (ii) renew this Lease on a month to month basis at the same
Rent payable at the expiration of such Initial Term or Renewal Term, as the
case may be; (iii) renew this Lease for a minimum period of not less than
twelve (12) consecutive months at the then current Fair Market Rental
Value; or (iv) return such Equipment to Lessor pursuant to, and in the
condition required by, the Lease. If Lessee fails to give Lessor the Option
Notice, Lessee shall be deemed to have chosen option (ii) above.
Payment of the Purchase Option Price, applicable sales taxes, together with
all other amounts due and owing by Lessee under the Lease (including, without
limitation, Rent) during such Initial Term and Renewal Term shall be made on the
last day of the Initial Term or Renewal Term, as the case may be, in immediately
available funds against delivery of a xxxx of sale transferring to Lessee all
right, title and interest of Lessor in and to the Equipment ON AN "AS IS" "WHERE
IS" BASIS, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. LESSOR MAY
SPECIFICALLY DISCLAIM ANY SUCH REPRESENTATIONS AND WARRANTIES.
a. Early Buyout Option. So long as no Default or Event of Default
shall have occurred and be continuing, Lessee shall have the option to
purchase all, but not less than all, Items of Equipment on the date which is
sixty (60) months after the Rent Commencement Date (the "EBO Date") at a
price (the "EBO Price") equal to twenty-five and two hundredths percent
(25.02%) of the Total Cost of the Equipment, plus any applicable sales taxes.
For Lessee to exercise its option hereunder, Lessee shall notify Lessor in
writing of its desire to effect such option at least ninety (90) days (but
not more than one hundred eighty (180) days) prior to the EBO Date. Such
notice shall be irrevocable. The EBO Price represents the parties present
best estimate of the fair market value of the Equipment on the EBO Date
determined by using commercially reasonable methods which are standard in the
industry. Payment of the EBO Price, applicable sales taxes, together with all
other amounts due and owing by Lessee under the Lease (including, without
limitation, Rent) on or before the EBO Date, shall be made on the EBO Date in
immediately available funds. Thereafter, upon Lessee's written request,
Lessor shall deliver to Lessee a xxxx of sale transferring to Lessee all
right, title and interest of Lessor in and to the Equipment ON AN "AS IS"
"WHERE IS" BASIS, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY
MATTER WHATSOEVER. If Lessee shall fail to pay all amounts required to be
paid under the Lease on the EBO Date, the Lease shall continue in full force
and effect and Lessee agrees to reimburse Lessor for all reasonable costs,
expenses and liabilities incurred in connection therewith.
6. NATURE OF TRANSACTION; TRUE LEASE. (a) It is the express intent of
the parties that this Lease constitute a true lease and not a sale of the
Equipment. Title to the Equipment shall at all times remain in Lessor, and
Lessee shall acquire no ownership, title, property, right, equity, or
interest in the Equipment other than its leasehold interest solely as Lessee
subject to all the terms and conditions hereof. To the extent that Article 2A
("Article 2A") of the Uniform Commercial Code ("UCC") applies to the
characterization of this Lease, the parties hereby agree that this Lease is a
"Finance Lease" as defined therein. Lessee acknowledges: (i) that Lessee has
selected the "Supplier" (as defined in the UCC) and has directed Lessor to
purchase the Equipment from the Supplier in connection with this Lease, and
(ii) that Lessee has been informed in writing in this Lease, before Lessee's
execution of this Lease, that Lessee is entitled under Article 2A to the
promises and warranties, including those of any third party, provided to
Lessor by the Supplier in connection with or as part of the Purchase
Agreement, and that Lessee may communicate with the Supplier and receive an
accurate and complete statement of those promises and warranties, including
any disclaimers and limitations of them or of remedies. The filing of UCC
financing statements pursuant to Section 34 of the Master Lease is
precautionary and shall not be deemed to have any effect on the
characterization of this Lease. NOTWITHSTANDING THE FOREGOING, LESSOR HAS NOT
MADE, AND HEREBY DISCLAIMS ANY ADVICE, REPRESENTATIONS, WARRANTIES AND
COVENANTS, EITHER EXPRESSED OR IMPLIED, WITH RESPECT TO ANY LEGAL, ECONOMIC,
ACCOUNTING, TAX OR OTHER EFFECTS OF THE LEASE AND THE TRANSACTION(S)
CONTEMPLATED THEREBY, AND LESSEE HEREBY DISCLAIMS ANY RELIANCE ON ANY SUCH
WARRANTIES, STATEMENTS OR REPRESENTATIONS MADE BY LESSOR WITH RESPECT THERETO.
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(b) Notwithstanding the express intent of Lessor and Lessee that this
agreement constitute a true lease and not a sale of the Equipment, should a
court of competent jurisdiction determine that this agreement is not a true
lease, but rather one intended as security, then solely in that event and for
the expressly limited purposes thereof, Lessee shall be deemed to have hereby
granted Lessor a security interest in the Equipment and all accessions,
substitutions and replacements thereto and therefor, and proceeds (cash and non-
cash), including, without limitation, insurance proceeds thereof (but without
power of sale), to secure the prompt payment and performance as and when due of
all obligations and indebtedness of Lessee, now existing or hereafter created,
to Lessee pursuant to this Lease or otherwise. In furtherance of the foregoing,
Lessee shall execute and deliver to Lessor, to be filed at Lessee's expense,
Uniform Commercial Code financing statements, statements of amendment and
statements of continuation as reasonably may be required by Lessor to perfect
and maintain perfected such security interest.
(c) In the event that the Supplier erroneously invoices Lessee for the
Equipment, Lessee agrees to forward said invoice to Lessor immediately.
Lessee acknowledges that the Equipment is, and shall at all times remain, the
property of Lessor, and that Lessee has no right, title or interest therein
or thereto except as expressly set forth in this Lease.
7. TAX INDEMNIFICATION. (a) Lessee acknowledges that Lessor has
executed this Lease, and that the Rent payable by Lessee under this Lease has
been computed, upon the assumptions that Lessor will (i) be entitled to
depreciation or cost recovery deductions ("MACRS Deductions") for Federal
income tax purposes under the Modified Accelerated Cost Recovery System
provided for in Section 168 of the Internal Revenue Code of 1986, as amended
(the "Code"), and depreciation or cost recovery deductions ("State
Depreciation Deductions") for state income tax purposes for the Equipment
Location, in each case on the basis that (1) each Item of Equipment
constitutes "7-year property" within the meaning of Section 168(e) of the
Code, (2) the initial tax basis for each Item of Equipment will be equal to
the Total Cost, (3) deductions for each Item of Equipment will be computed by
using the method specified in Section 168(b)(1) of the Code over the 7-year
recovery period described in Section 168(c) of the Code, and (4) the
applicable convention for each Item of Equipment under Section 168(d) of the
Code is the half-year convention; (ii) be entitled to deductions for Federal
income tax purposes (available in the manner and as provided by Section 163
of the Code) for interest payable with respect to any indebtedness incurred
by Lessor in connection with any financing by Lessor of any portion of the
Total Cost of each Item of Equipment ("Interest Deductions"); and (iii) be
subject to tax for each year at a composite Federal and New York corporate
income tax rate equal to the then highest marginal rate for corporations
provided for under the Code and the laws of New York (the "Highest Marginal
Tax Rate"). The MACRS Deductions, State Depreciation Deductions and Interest
Deductions are hereinafter collectively referred to as the "Tax Benefits".
(b) Lessee represents and warrants to Lessor that (i) each Item of
Equipment constitutes "7-year property" within the meaning of Section 168(e)
of the Code, (ii) Lessee shall not attempt to claim such Tax Benefits, (iii)
at and after the time of delivery of the Equipment to Lessee pursuant to this
Lease the Lessee shall not claim any ownership or title in and to the
Equipment, and (iv) Lessee has not, and will not, at any time after such
delivery throughout the Term of this Lease, take any action or omit to take
any action (whether or not the same is permitted or required hereunder) which
will result in the loss by Lessor of all or any part of such Tax Benefits.
(c) If, as a result of any act, omission or misrepresentation of Lessee,
(x) the Tax Benefits are lost, disallowed, deferred, eliminated, reduced,
recaptured, compromised or otherwise unavailable to Lessor, (y) for Federal,
foreign, state or local income tax purposes, any item of income, loss or
deduction with respect to any Item of Equipment is treated as derived from, or
allocable to, sources outside the United States, or (z) there shall be included
in the gross income of Lessor for Federal, state or local income tax purposes
any amount on account of any addition, modification, substitution or improvement
to or in respect of any Item of Equipment made or paid for by Lessee (any of the
foregoing being hereinafter a "Tax Loss"), then, within thirty (30) days of
Lessee's receipt of written notice from Lessor that such a Tax Loss has
occurred, Lessee shall pay to Lessor an amount which, after deduction therefrom
of all taxes to be paid in respect of the receipt thereof, will enable Lessor to
receive the same Net Economic Return (as hereinafter defined) that Lessor would
have realized on this Lease had such Tax Loss
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(together with any interest, penalties or additions to tax) not occurred. Any
event which, by the terms of this Lease, requires payment by Lessee to Lessor of
the Stipulated Loss Value of the Equipment shall not constitute the act of
Lessee for purpose of the foregoing sentence.
(d) As used in this Section, the term "Net Economic Return" shall mean
Lessor's net after-tax yield, aggregate after-tax cash flow and return on
assets, based on (i) the assumptions used by Lessor in originally calculating
Rent and Stipulated Loss Value percentages, including the assumptions set
forth above (as such assumptions may have been revised pursuant to the last
sentence of this subsection) and (ii) the Highest Marginal Tax Rate actually
in effect during each year from the date of such original calculations to the
date of such Tax Loss, both dates inclusive. In the event Lessor shall suffer
a Tax Loss with respect to which Lessee is required to pay an indemnity
hereunder, and the full amount of such indemnity has been paid or provided
for hereunder, the aforesaid assumptions, without further act of the parties
hereto, shall thereupon be and be deemed to be amended, if and to the extent
appropriate, to reflect such Tax Loss.
(e) For purposes of this Section, the term "Lessor" shall include the
entity or entities, if any, with which Lessor consolidates any tax return.
Lessee acknowledges that it has neither sought nor received tax advice from
Lessor as to the availability to Lessee of any tax benefits with respect to the
Equipment. All of Lessor's rights and privileges arising from the indemnities
contained in this Lease will survive the expiration or other termination or
cancellation of this Lease. Such indemnities are expressly made for the benefit
of, and are enforceable by, Lessor and its successors and assigns.
8. STIPULATED LOSS VALUE; DISCOUNT RATE. (a) The Stipulated Loss Values
applicable to the Equipment and this Lease are as set forth on a supplement (the
"Stipulated Loss Value Supplement") prepared by Lessor.
(b) Any provision of this Lease to the contrary notwithstanding, all
present value calculations to be made with respect to the Equipment described
on this Schedule shall be made using a discount rate equal to three percent
(3%).
9. PERSONAL PROPERTY TAX. Unless otherwise directed in writing by
Lessor or required by Applicable Law, Lessee will not list itself as owner of
any Item of Equipment for property tax purposes. Upon receipt by Lessee of
any property tax xxxx pertaining to such Item of Equipment from the
appropriate taxing authority, Lessee will promptly forward such property tax
xxxx to Lessor. Upon receipt by Lessor of any such property tax xxxx (whether
from Lessee or directly from the taxing authority), Lessor will pay such tax
and will invoice Lessee for the expense. Upon receipt of such invoice, Lessee
will promptly reimburse Lessor for such expense.
10. MODIFICATIONS TO MASTER LEASE. With respect to the Equipment described
on this Schedule, the Master Lease shall be modified as follows:
(a) Section 22(b)(7) of the Master Lease ("Events of Default; Remedies"),
is hereby amended by deleting all of the Section up to the colon, and replacing
the deleted language with the following:
by written notice to Lessee specifying a payment date (the "Remedy Date"),
demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the
Remedy Date, as liquidated damages for loss of a bargain and not as a
penalty, any unpaid Rent due prior to the Remedy Date plus whichever of the
following amounts Lessor, in its sole discretion, shall specify in such
notice (together with interest on such amount at the Default Rate from the
Remedy Date to the date of actual payment)
(b) Section 31 of the Master Lease ("Representations and Warranties of
Lessee"), is hereby amended by adding the following additional representation:
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Lessee has conducted a comprehensive review and assessment of the Lessee's
computer applications and made inquiry of the Lessee's key suppliers,
vendors and customers with respect to the "year 2000 problem" (that is, the
risk that computer applications may not be able to properly perform
date-sensitive functions after December 31, 1999) and based on that
review and inquiry, the Lessee does not believe the year 2000 problem will
result in a material adverse change in the Lessee's business condition
(financial or otherwise), operations, properties or prospects, or ability
to perform the obligations of Lessee under this Lease.
CONFORMING MODIFICATIONS. With respect to the Equipment described on this
Schedule, the Master Lease shall be modified as follows:
(c) The definitions of "Equipment" and "Term" in Section 4 of the Master
Lease ("Definitions") are hereby deleted in their entirety and the following
definitions are substituted in their place:
"EQUIPMENT" shall mean an item or items of personal property designated
from time to time by Lessee which are described on an Equipment Schedule
and which are being or will be leased by Lessee pursuant to a Lease,
together with all replacement parts, additions and accessories incorporated
therein or affixed thereto including, without limitation, any software that
is a component or integral part of, or is included or used in connection
with, any Item of Equipment, but with respect to such software, only to the
extent of Lessor's interest therein, if any.
"TERM" shall mean the Initial Term or any Renewal Term, each as defined in
Section 8 hereof, and any Extended Lease Term or Interim Term as defined in
an Equipment Schedule.
(d) The following shall be inserted as the penultimate sentence of Section
11 of the Master Lease ("Use; Alterations"):
All such alterations, additions, modifications or improvements shall
immediately, and without further act, be deemed to constitute Items of
Equipment and be fully subject to this Lease as if originally leased
hereunder.
(e) The following shall be inserted as the penultimate sentence of Section
12 of the Master Lease ("Repairs and Maintenance"):
Upon installation, attachment or incorporation in, on or into such Item of
Equipment, such replacement part shall immediately, and without further
act, be deemed to constitute an Item of Equipment and be fully subject to
this Lease as if originally leased hereunder.
(f) Section 22 of the Master Lease ("Events of Default") is hereby amended
as follows:
(i) with respect to Section 22(a), the term "Event of Default" shall also
mean any of the following which are hereby added as new subparts: (10)
Lessee merges or consolidates with any other corporation or entity, or
sells, leases or disposes of all or substantially all of its assets without
the prior written consent of Lessor; (11) a change in control occurs in
Lessee or any Guarantor; or (12) the death or dissolution of Lessee or any
Guarantor;
(ii) with respect to Section 22(b)(4), the word "terminate" is hereby
deleted and the words "cancel or terminate" are hereby substituted in its
place;
(iii) with respect to Section 22(b)(5), the existing section is hereby
deleted in its entirety and the following is substituted in its place:
(5) demand that Lessee, and Lessee shall, upon written demand of
Lessor and at Lessee's expense forthwith return all Items of Equipment
to Lessor in the manner and condition required by Section 13 hereof,
provided, however, that Lessee shall remain and be liable to Lessor
for any amounts provided for herein or other damages resulting from
the Equipment not being in the condition
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required by Section 12 hereof, and otherwise in accordance with all of
the provisions of this Lease, except those provisions relating to
periods of notice;
(iv) with respect to Section 22(b)(6), the word "termination" is hereby
deleted and the words "cancellation or termination" are hereby substituted
in its place; and
(v) Beginning with Section 22(b)(7) inclusive, the remainder of Section
22(b) is hereby deleted in its entirety and the following is substituted in
its place:
(7) by written notice to Lessee specifying a payment date (the "Remedy Date")
demand that Lessee forthwith return all Items of Equipment to Lessor in the
manner and condition required by Section 22(b)(5) hereof and, in addition,
demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the
Remedy Date, as liquidated damages for loss of a bargain and not as a
penalty, any unpaid Rent due prior to the Remedy Date plus whichever of the
following amounts Lessor, in its sole discretion, shall specify in such
notice (together with interest on such amount at the Default Rate from the
Remedy Date to the date of actual payment): (i) an amount, with respect to an
Item of Equipment, equal to the Rent payable for such Item of Equipment for
the remainder of the then current Term thereof, after discounting such Rent
to present worth as of the Remedy Date on the basis of a per annum rate of
discount equal to three percent (3%) from the respective dates upon which
such Rent would have been paid had this Lease not been canceled or
terminated; or (ii) the Stipulated Loss Value, computed as of the Remedy Date
or, if the Remedy Date is not a Rent Payment Date, the Rent Payment Date next
following the Remedy Date (provided, however, that, with respect to any
proceeds actually received by Lessor for any Item of Equipment returned to or
repossessed by Lessor, Lessor agrees that it shall first apply such proceeds
to satisfy Lessee's obligation to pay the Stipulated Loss Value or, if Lessor
has received payment in full of the Stipulated Loss Value from Lessee, Lessor
shall remit such proceeds to Lessee (after first deducting any Lessor
Expense) up to the amount of the Stipulated Loss Value; (8) cause Lessee, at
its expense, to promptly assemble any and all Items of Equipment and return
the same to Lessor at such place as Lessor may designate in writing; and (9)
exercise any other right or remedy available to Lessor under applicable law
or proceed by appropriate court action to enforce the terms hereof or to
recover damages for the breach hereof or to rescind this Lease. In addition,
Lessee shall be liable, except as otherwise provided above, for any and all
unpaid Rent due hereunder before or during the exercise of any of the
foregoing remedies, and for reasonable legal fees and other costs and
expenses incurred by reason of the occurrence of any Event of Default or the
exercise of Lessor's remedies with respect thereto. If an Event of Default
occurs, Lessee hereby agrees that ten (10) days prior notice to Lessee of (A)
any public sale or (B) the time after which a private sale may be negotiated
shall be conclusively deemed reasonable and, to the extent permitted by
Applicable Law, Lessee waives all rights and defenses with respect to such
disposition of the Equipment. None of Lessor's rights or remedies hereunder
are intended to be exclusive of, but each shall be cumulative and in addition
to any other right or remedy referred to hereunder or otherwise available to
Lessor at law or in equity, and no express or implied waiver by Lessor of any
Event of Default shall constitute a waiver of any other Event of Default or a
waiver of any of Lessor's rights.
MISCELLANEOUS TERMS & CONDITIONS
11. ADDITIONAL MAINTENANCE REQUIREMENTS. Section 13 of the Lease ("Return
of Equipment") shall be deleted in its entirety and the following substituted in
its place:
13. RETURN OF EQUIPMENT. (a) Upon the expiration of the Term of any Lease
or upon demand by Lessor pursuant to Section 22 hereof, Lessee, at its sole
expense, shall return all of the Equipment leased under the Lease by
delivering it in a manner consistent with the manufacturer's
recommendations and practices to such place or on board such carrier
(packed properly and in accordance with the manufacturer's instructions)
as Lessor shall specify. Lessee agrees that the Equipment, when returned,
shall be free and clear of all Liens, and in the same condition as when
delivered to Lessee, reasonable wear and tear excepted. Reasonable wear
and tear shall mean that each item of the Equipment has been maintained
by Lessee in "Average Saleable Condition" (as hereinafter defined) and
that all components of the Equipment have been properly serviced,
following the manufacturer's written operating and servicing procedures,
such that the Equipment is eligible
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for a manufacturer's standard, full service maintenance contract without
Lessor's incurring any expense to repair or rehabilitate the Equipment. If, in
the opinion of Lessor, any item of the Equipment fails to meet the standards set
forth in this Section 13, Lessee agrees to pay on demand all costs and expenses
incurred in connection with repairing the Equipment, restoring it to such
condition so as to meet such standards and assembling and delivering such Item
of Equipment pursuant to Lessor's instructions. If Lessee fails to return any
Item of Equipment as required hereunder, then, all of Lessee's obligations under
this Lease (including, without limitation, Lessee's obligation to pay Rent for
such Item of Equipment at the rental then applicable under this Lease) shall
continue in full force and effect until such Item of Equipment shall have been
returned in the condition required hereunder.
(b) Lessee shall give Lessor at least ninety (90), but not more than one
hundred eighty (180) days written notice that Lessee is returning the Equipment
as provided for above (the "Return Notice") and shall include with such notice,
all of the following:
(i) a detailed inventory of all components of the Equipment including
without limitation all of the model and serial numbers of any components;
(ii) a complete set of current and up to date service and operating
manuals for each Item of Equipment;
(iii) a complete set of current and up to date maintenance logs and
other appropriate documentation detailing the Equipment's then current
configuration (including a description of all replacements and additions
thereto made during the Term of the Lease) and all operating requirements
and technical data regarding the setup, use and operation of the Equipment;
(iv) an in-depth field service report (the "Report") detailing the
results of an inspection conducted by a representative of the manufacturer
or a qualified equipment maintenance provider acceptable to Lessor
certifying that the Equipment has been properly inspected, examined,
tested and is operating within the manufacturer's specification and
addressing, at a minimum the following areas:
(A) comprehensive physical inspection;
(B) testing of all material and workmanship of the Equipment; and
(C) conformation of all Equipment operations to Applicable Law and
confirming that the Equipment is otherwise in Average Saleable
Condition (as hereinafter defined).
If the Report discloses that any of the material, workmanship or Equipment
does not meet or, does not operate within, the manufacturer's
specifications or any Applicable Law, Lessee shall, at its sole expense,
take all necessary corrective measures and submit a second Report from the
same inspector evidencing that the Equipment has been brought into
conformity with the manufacturer's specifications and Applicable Law.
(c) "Average Saleable Condition" shall mean that all of the following minimum
standards have been met:
MACHINE TOOL EQUIPMENT
(i) The Equipment has been or will be disassembled according to
manufacturer's recommendations and by a licensed rigger/erector
specializing in the Equipment, with any transportation devices, such
as metal skids, lifting slings, and brackets which were with the
machine when it originally arrived, included, and, in addition, all
proper blueprinting, mapping, tagging and labeling of each individual
part including cables, electrical apparatus and wires have been
included, all process fluids and/or any hazardous materials have been
removed from the Equipment and disposed of in accordance with
Applicable Law.
(ii) All manuals, maintenance records, log books, plans, drawings and
schematics, inspection and overhaul records, operating requirements or
other materials pertinent to the Equipment's operation, maintenance,
assembly and disassembly have been assembled and are ready to be
returned to Lessor.
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(iii) There is no structural or mechanical damage, and all frames,
structural members, accessories and attachments are structurally
sound without breaks or cracks and in compliance with all federal,
state, local and other regulatory requirements.
(iv) The Equipment is able to perform its required tasks effectively
without repair including but not limited to electronic, electrical and
mechanical controls, pumps, motors, belts, hoses, pins, bushings,
measuring devices, screws, barrels, ways, rams, and clamps, and is
operational and in compliance with all Applicable Law and is within
manufacturer's design performance characteristics and tolerances.
(v) The Equipment is clean and rust free, and sumps and tanks are clean
and dry.
(vi) Equipment with predictable or scheduled replacements or overhaul lives
has not less than 50% useful life remaining before the next such
replacement, overhaul, recalibration or rebuild.
(vii) All major components and all wear points, including, but not limited
to electronic and mechanical controls and pumps, motors, belts, hoses,
pins, bushings, measuring devices, screws, barrels, ways, cams, clamps
and supports, are within manufacturer's design performance
characteristics and tolerances and are capable of performing as
originally intended by the manufacturer and in a safe manner.
(viii) The Equipment is complete, with no missing components or attachments.
(ix) The Equipment has been lubricated according to the maintenance manual
and/or lubrication schedule recommended by the manufacturer, and
written records of the lubrication service have been kept, dated, and
signed by the appropriate authority.
(x) All internal fluids, such as lube oil and hydraulic oil, have been
filled to operating levels, all filler caps have been secured and all
disconnected hoses have been sealed to avoid accidental spillage.
(d) In addition to all other rights of Lessor under the Lease, Lessor shall
have the right to attempt to resell or auction the Equipment from Lessee's
facility with the Lessee's full cooperation and assistance, for a period
commencing with Lessor's receipt of the Return Notice and ending one hundred
eighty (180) days after the Initial Term Expiration Date. Lessee agrees to
pay the reasonable costs and expenses of such sale or auction (and all
storage prior thereto), and agrees that the Equipment shall remain capable of
operation during this period. Lessee shall provide adequate electrical power,
lighting, heat, water and all other requirements sufficient to allow for
normal maintenance and for demonstrations of the Equipment to any potential
buyer.
12. GOVERNING LAW. This Schedule is being delivered in the State of New
York and shall be governed by, and construed in accordance with, the laws of the
State of New York, including all matters of construction, validity and
performance without giving effect to any choice of law or conflict of laws
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS
MADE BY A BANK AFTER OCTOBER 3,1989, CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED
SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND
BE SIGNED BY THAT BANK TO BE ENFORCEABLE.
13. COUNTERPARTS. This Schedule may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
14. MORE THAN ONE LESSEE. If more than one person or entity executes this
Schedule, or any other Lease Documents executed in connection herewith, as
"Lessee," the obligations of "Lessee" contained herein and therein shall be
deemed joint and several and all references to "Lessee" shall apply both
individually and jointly.
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15. RELATIONSHIP TO MASTER LEASE; FURTHER ASSURANCES. This Schedule shall
be construed in connection with and as part of this Lease, and all terms
contained in the Master Lease are hereby incorporated herein by reference with
the same force and effect as if such terms were fully stated herein. By
execution of this Schedule, Lessee and Lessor reaffirm all terms of the Master
Lease except as they may be modified hereby. To the extent that any of the terms
of this Schedule are contrary to or inconsistent with any terms of the Master
Lease, the terms of this Schedule shall govern. LESSEE HEREBY CERTIFIES TO
LESSOR THAT THE REPRESENTATIONS AND WARRANTIES MADE BY LESSEE IN THE MASTER
LEASE (INCLUDING, WITHOUT LIMITATION, SECTION 31 THEREOF) ARE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF THE DATE OF THIS SCHEDULE WITH THE SAME EFFECT AS
THOUGH MADE ON AND AS OF SUCH DATE. Lessee shall take such additional actions
and execute and deliver such additional documents as Lessor shall deem necessary
from time to time to effectuate the terms of this Lease.
16. OREGON BUSINESS ENERGY TAX CREDIT INDEMNITY. In addition to the
assumptions set forth in Section 5(a)(i-iii) of this Equipment Schedule, Lessor
has assumed that Lessor will be entitled to the BETC (as defined below). The
BETC shall be included in the definition of "Tax Benefits" set forth in Section
5(a) of this Equipment Schedule. With respect to the BETC, Lessee hereby
represents, warrants and covenants to Lessor as follows:
(a) This Lease will be a lease for purposes of Oregon Revised Statutes
("ORS") 469.185 - 225. Lessor will be treated as the purchaser, owner,
lessor, and original user of the Property and Lessee will be treated as the
lessee of the Equipment for such purposes. Lessee shall deliver its final
certification of eligibility of the BETC (defined below) for Application No.
7491 on or before March 15, 1999 and in the event Lessee fails to do so, the
Rent due under this Equipment Schedule shall be adjusted in the same manner
as if an Oregon Tax Loss (as defined below) had occurred.
(b) Lessor shall be entitled to the Business Energy Tax Credit ("BETC")
with respect to each item of Equipment as provided by ORS 469.185 - 225. The
applicable BETC available to Lessor in connection with this Schedule is
$280,840.00.
(c) In the event that, pursuant to ORS 469.185 - 225, Lessee is deemed to
be the party eligible to receive the BETC, then Lessee hereby irrevocably
transfers to Lessor all right, title and interest which Lessee has or may have
to such BETC and agrees to cooperate with Lessor in any manner necessary to
ensure (at Lessee's expense) that Lessor continues to receive the benefit of
such BETC.
If for any reason whatsoever any of the representations, warranties, or
covenants of Lessee contained in this Section or in any other agreement relating
to this Section and to the Equipment shall prove to be incorrect and (i) Lessor
shall determine that it is not entitled to claim all or any portion of the BETC
in the amount specified (b) above, or (ii) such BETC is disallowed, adjusted,
recomputed, reduced, or recaptured, in whole or in part, by the Director of the
Oregon Department of Energy or his designee, (each, an "Oregon Tax Loss"), (such
determination, disallowance, adjustment, recomputation, reduction, or recapture
being deemed herein an additional "Tax Loss" pursuant to Section 5(c) of this
Equipment Schedule), then Lessee shall pay to Lessor as an indemnity and as
additional Rent the amounts set forth in Section 5(c) of this Equipment
Schedule.
Further, in the event (i) there shall be any change, amendment, addition,
or modification of any provision of Oregon law or regulations thereunder or
interpretation thereof with respect to the matters set forth in this Section
effective prior to the Rent Commencement Date of the Initial Term of this Lease
with respect to any Equipment, or (ii) if at any time there shall be any change,
amendment, addition, or modification of any provision of Oregon law or
regulations thereunder or interpretation thereof with respect to the maximum
applicable BETC, either of which results in a decrease in Lessor's Net Economic
Return, then Lessor shall recalculate and submit to Lessee the modified Rent or
rental rate required to provide Lessor with the same Net Economic Return as it
would have realized absent such change and the Lease shall thereupon
automatically be deemed to be amended to adopt such Rent or rental rate and
related Stipulated Loss Value.
--------------------------------------------------------------------------------
17. POWER OF ATTORNEY. LESSEE HEREBY APPOINTS LESSOR OR ITS ASSIGNEE AS
ITS TRUE AND LAWFUL ATTORNEY IN FACT, IRREVOCABLY AND COUPLED WITH AN INTEREST,
TO EXECUTE AND FILE ON BEHALF OF LESSEE ALL UCC FINANCING STATEMENTS WHICH IN
LESSOR'S SOLE DISCRETION ARE NECESSARY OR PROPER TO SECURE LESSOR'S INTEREST IN
THE EQUIPMENT IN ALL APPLICABLE JURISDICTIONS. Lessee hereby ratifies, to the
extent permitted by law, all that Lessor shall lawfully and in good faith do or
cause to be done by reason of and in compliance with this paragraph.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Schedule to be duly
executed and delivered on the day and year first above written.
LESSOR: LESSEE:
KEYCORP LEASING, R-B RUBBER PRODUCTS, INC.
A DIVISION OF KEY CORPORATE
CAPITAL INC.
By: By: /s/ [Illegible]
------------------------------- --------------------------------
Name: Name:
Title: Title: SR. V.P
COUNTERPART NO. 01 OF 01 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS.
TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
--------------------------------------------------------------------------------
EXHIBIT A
---------
EQUIPMENT DESCRIPTION
LESSOR: KEYCORP LEASING,
A DIVISION OF KEY CORPORATE CAPITAL INC.
LESSEE: RB Rubber Products
LEASE: Equipment Schedule No. 2 dated as of February 2, 1999 to Master
Equipment Lease Agreement Dated as of May 12, 1997
--------------------------------------------------------------------------------
SHIP TO: RB Rubber Products, Inc.
000 Xxxx 00xx Xxxxxx
XxXxxxxxxxx, XX 00000
QUANTITY: IOWA MATT ASSETS SERIAL # INVOICE #
-------- ---------------- --------- ---------
1 HYDRAULIC HOT PRESS, XXXXXXXX & WHITE, 200 TON
8' X 8' CAPACITY, SINGLE OPENING, 4-POST, 150-250
DEGREE, DIGITAL CONTROLS, ESTIMATED YEAR 1970
**1 HYDRAULIC POWER XXXX, 00 XX, 00" X 27" X 48"
RESERVOIR
**1 JIB CRANE, 13', 360 DEGREE SWING, PRESS
MOUNTED
**1 1/2 TON PNEUMATIC CHAIN HOIST
1 WEIGHT SLEEVE PRESS, XXXXXXXXX XXXX., YR. 1995
2" DIAMETER RAM X 8" STOKE, 3' X 3' FRAME,
HYDRAULIC NO POWER UNIT
1 SINGLE STATION HYDRAULIC
WEIGHT PRESS, XXXXXXXXX, HILL BROS. MACH. MODIFIED
IN 1998 24" DIAMETER RAM X 12" STROKE, 250 PSI,
150-300 DEGREE F., DIGITAL TEMPERATURE CONTROLS,
HYDRAULIC PRODUCT EJECTOR AND 18" MOLD FEED TABLE
**1 PORTABLE XXXXXXXXX XXXXX XXXX, XXX, 0 XX,
00" X 13" X 22" RESERVOIR
1 3 STATION HYDRAULIC WEIGHT PRESS, HILL BROS.
MACH., 24" DIAMETER CAPACITY, EST. 40 TON, YEAR 1995,
3.5: DIAMETER RAM X 12: STROKE, 250 PSI, 150-300 DEGREE F.,
DIGITAL TEMPERATURE CONTROLS, HYDRAULIC PRODUCT EJECTOR AND
18" MOLD FEED TABLE
--------------------------------------------------------------------------------
**1 PORTABLE XXXXXXXXX XXXXX XXXX, XXX, 0 XX, 00" X 13" X 22"
RESERVOIR
1 CONTINUOUS MIXER, HONEY CREEK MFG., YEAR 1995 10,000 POUND PER
HOUR CAPACITY, 34" X 96", DUAL AUGER RIBBON TYPE, 5 HP, MILD STEEL
(NOT INSTALLED)
1 GRANULATOR, HONEY CREEK MFG., YEAR 1995,1500 POUNDS PER HOUR
CAPACITY, 50 HP 9" DIAMETER X 22.5" DISK, (8) KNIFE
(NOT INSTALLED)
5 PAVER MOLDS, XXXXXXXXX MACHINE, YEAR 1997, ALUMINUM,
(2) 41" X 46", (2) 40" X 45", (1) NOT PRESENT ASSUMED TO BE
SIMILAR TO OTHERS
6 LARGE WEIGHT MOLDS, XXXXXXXXX MACHINE, YEAR 1997, 18' DIA.
VARIABLE DEPTH CAST AND MACHINED ALUMINUM, 2 PIECE
1 SMALL WEIGHT MOLD, XXXXXXXXX MACHINE, YEAR 1997, 10" DIAMETER,
VARIABLE DEPTH CAST AND MACHINED ALUMINUM, MULTIPLE PIECE
1 LOT MISCELLANEOUS EQUIPMENT CONSISTING OF:
**155 LF 12" WIDE SKATE WHEEL INFEED/OUTFEED
CONVEYOR WITH STEEL STAND
**1 LOT WEIGHT MOLD RING INSERT LETTERS
**2 FLOOR BEAM SCALES, 1000 FOUND CAPACITY
**4 WORK BENCHES WITH OVERSHELF, 5' L X 3' W, WOOD
**2 URETHANE BINS, 255 GALLON, WITH STEEL STAND
QUANTITY: OTHER ASSETS SERIAL INVOICE
-------- ------------ ------ -------
0 XXXXXXXXX XXX XXXXX, XXX, 00" X 100.5" CAPACITY 818895
SINGLE OPENING, 200 TON, 4-POST, S/N 818895 DIGITAL
CONTROLS, REBUILT 1998
**1 HYDRAULIC POWER UNIT, (2) 50 HP PUMPS, (1) 2 HP PUMP,
(1) RESERVOIR 4' W X 3' H X 76" L
**30 LF DEAD ROLL OUTFEED CONVEYOR 12" WIDE
**90 LF MONO RAIL HOIST WITH 4 LINE BUS, 11' H
**2 1/2 TON ELECTRIC CHAIN HOIST
1 BATCH MIXER, XXXXXX, MODEL SRY 1848, YEAR 1998 98019
S/N 98019, 4' L X 18" W, STAINLESS STEEL, 3 HP,
NOT INSTALLED
1 LOT MISCELLANEOUS EQUIPMENT CONSISTING OF:
**1 DIGITAL PLATFORM BENCH SCALES, OHAUS, 100
POUND CAPACITY, MODEL 15S
--------------------------------------------------------------------------------
**5 SETS WEIGHT MOLDING RINGS (3) "YORK" LABEL,
(2) NO LABEL
**96 WEIGHT MOLD RING WEIGHT STAMPS
**3 DIGITAL PLATFORM BENCH SCALES, XXXXX, 00#
CAPACITY
**1 XXXXXX XXXXX, XXXXXXXXX, 0000 XXXXX
XXXXXXXX
**1 LOT MISCELLANEOUS HAND TOOLS AND METAL
STORAGE BOX FOR IOA MAT PROCESS
1 PLAYGROUND MAT IMPACT TESTER UNIT,
PLAYGROUND CLEARING HOUSE, MODEL TRIAX
GHIC, YEAR 1998
4 MOBILE MORTAR MIXER, MULTIQUIP MQ MODEL WM-
700PE15, 1.5 HP, PLASTIC TUB, 7 CU. FT/100 POUND
CAPACITY, YEAR 1998
1 VERTICAL FOOD QUALITY MIXER, CENTURY, 8 QUART U73191
CAPACITY, S/N U73191, 3 HP, (5) MIXING BOWLS
1 LOT MOLDED PRODUCTS ELECTRICAL INCLUDING: 75
KVA TRANSFORMER, MOTOR CONTROL CENTER, 2000
AMP MAIN SERVICE, MOTOR STARTERS, DISCONNECT
SWITCHES, WRITING AND CONDUIT
1 CRACKER MILL, XXXXXXX, REBUILT IN 1998 BY 090998
NORAMEX, C.ORD#1301, S/N 090998, MO 21-25-36,200
HP, GEAR DRIVE, SIZE 21" X 25" X 36"
**1 CENTRIFUGAL GEAR OIL PUMP, 3/4 HP, 1.5"X1.5"
**1 CENTRIFUGAL WATER PUMP, 3/4 HP, 1.5"X1.5"
**25 LF 1.5" PVC PIPING
**1 HYDRAULIC POWER XXXX, 0 HP
**1 HORIZONTAL DISCHARGE AUGER CONVEYOR, 12"
DIAMETER X 13' LIFT, 7.5 HP, YEAR 1998
**1 VERTICAL AUGER CONVEYOR, 12" DIAMETER X 13"
LIFT, 7.5 HP, YEAR 1998
**8 LF 8" DIAMETER BLOW PIPE TO ROTEX SCREEN
**1 ROTEX VIBRATING SCREEN, MODEL 522,5' X 12', 7.5
HP, YEAR 1998
*1 FINISH AUGER, 9" DIAMETER X 10'L, 2 HP, YEAR 1998
*1 OVERS AUGER, 12" DIAMETER X 20'L, 5 HP, YEAR 1998
**1 INFEED AUGER, 12" DIAMETER X 24 L, 7.5 HP, YEAR 1998
**1 FINISH TAKE AWAY AUGER, 12" DIAMETER X 60' L,
10 HP, YEAR 1998
--------------------------------------------------------------------------------
1 BAGHOUSE, ULTRA INDUSTRIES, YEAR 1998, MODEL BBX-
BBX-169M144-84 IIIG, S/N BX-4105, STEEL SUPPORT 4105
STRUCTURE
**1 ROTARY AIRLOCK, XXXXXXX X. XXXXXX & SONS,
MODEL 18" X 18" HD 193058-1,3 HP
**1 00" XXXXXXXX 00 XXXXXX XXXXX
**1 00" XXXXXXXX 00 XXXXXX XXXXX
**15 LF 20" DIAMETER BLOW PIPE
**2 TRANSITIONS, BLOWER AND BAGHOUSE
**1 BLOW FAN, CLARAGE, MODEL 270 BC SW ARREARS
9R CCW UBD, S/N 980524,20 HP
1 LOT CRACKER MILL & BAG HOUSE ELECTRICAL
INCLUDING:
**600 AMP MOTOR CONTROL CENTER, MOTOR
STARTERS
**350 AMP DISCONNECT SWITCH, WIRING AND
CONDUIT
--------------------------------------------------------------------------------
