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TRINITY INDUSTRIES LEASING COMPANY
RAILROAD CAR NET LEASE AGREEMENT
This Lease Agreement, dated February 12, 2002, (hereinafter called
the "Agreement") by and between TRINITY INDUSTRIES LEASING COMPANY, a
Delaware corporation, with its principal office at 70 West Madison Street,
Suite 1960, Chicago, Illinois 60602-4391. (hereinafter called "Lessor") and
SOUTH DAKOTA SOYBEAN PROCESSORS, a South Dakota corporation, with its
principal office at 100 Caspian Avenue, Volga, South Dakota 57071
(hereinafter called "Lessee").
In consideration of the mutual terms and conditions hereinafter set
forth, the parties hereto hereby agree as follows:
ARTICLE 1: LEASE AGREEMENT
Lessor agrees to lease to Lessee, and Lessee agrees to lease from
Lessor, the cars shown on each Rider hereto and such additional Riders as may
be added from time to time (each such Rider and together with this Agreement
shall be collectively referred to as the "Lease") by agreement of the parties
and signed by their duly authorized representatives (all such cars being
hereinafter referred to as a "car" or the "cars"). Each Rider shall set forth
a brief description of the car or cars covered thereby, including such facts
as the number of cars, the Association of American Railroads (AAR) or
Department of Transportation (DOT) specifications, rental charges, term
throughout which the car or cars shall remain in Lessee's service and such
other information as may be desired by both parties. Lessor and Lessee agree
that each Rider hereto shall constitute a separate Lease which incorporates
the terms of this Agreement. Each Rider shall be severable from any other
cars or Riders relating to this Agreement and shall become a separate lease
(incorporating the terms of this Agreement) which is separately transferable
for all purposes. It is the intent of all parties to this Agreement to
characterize this Agreement as a true lease.
ARTICLE 2: TERM
The term of this Lease, with respect to each car, shall commence
upon the initial delivery of such car to Lessee in the manner set forth in
Article 3 and shall terminate on the earlier of the loss or destruction of
such car or, with respect to all cars leased hereunder, at the end of the
lease term set forth in the Rider(s) attached hereto; provided, however, that
without limiting any other rights Lessor may have against Lessee, if Lessee
is responsible for such loss or destruction of a car under Paragraph C of
Article 8, this Lease, with respect to such car, shall continue until Lessee
pays to Lessor the Settlement Value (defined in Article 9 hereof) of such car
as determined immediately prior to such loss or destruction. Notwithstanding
the expiration or termination of this Lease, the obligations of the Lessee
hereunder shall continue in effect with regard to each car until each car is
returned to the possession of the Lessor in clean condition in accordance
with Article 14 hereof.
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ARTICLE 3: DELIVERY
A. DELIVERY
Lessor agrees to deliver each car to Lessee, and Lessee agrees to
accept such delivery. The obligations of the Lessor to deliver the cars shall
be excused, and Lessor shall not be liable, for any causes beyond the
reasonable control of Lessor (including, but not limited to, delays caused by
fire, labor difficulties, delays of carriers and materials suppliers,
governmental authority, late delivery by the manufacturer of the cars or late
delivery by a prior lessee) and, in the event of a delay in such delivery,
Lessor shall deliver the cars to Lessee as soon as reasonably possible
thereafter.
B. PLACE OF DELIVERY
Lessor shall cause the cars to be delivered to Lessee at such
point(s) specified in each Rider hereto.
C. COST OF DELIVERY
Lessor shall pay all freight charges and other costs, if any, of the
delivery of the cars from the point of manufacture.
ARTICLE 4: ACCEPTANCE OF CARS
Upon delivery, Lessee shall promptly inspect each car and shall
accept such car if it: (a) complies with the description set forth in the
attached Rider(s), and (b) is fit and suitable for operation as those terns
are defined in the Interchange Rules adopted by the AAR (the "Interchange
Rules"). Upon acceptance, Lessee shall deliver to Lessor a Certificate of
Acceptance in the form attached hereto as Exhibit A. Notwithstanding the
foregoing, Lessee shall be deemed to have accepted any car delivered
hereunder if, with respect to such car, the Lessee shall: (c) load, or
otherwise use the car, or (d) fail to notify Lessor, in writing, within five
(5) days after delivery of Lessee's rejection of the car and the specific
reasons why the car does not meet the applicable standards set forth in the
Rider(s) or the Interchange Rules. If Lessee rejects any car, Lessor shall
have the right to have the rejected car inspected by an inspector acceptable
to both Lessor and Lessee. The cost of such inspection will be paid by Lessor
if the cause for rejection is affirmed by the inspector, otherwise such cost
will be borne by Lessee. The Lessee shall be deemed to have accepted any car
for which the inspector determines that good cause for rejection did not
exist. The decision of the inspector shall be final and binding upon the
parties. The Lesses's acceptance, however affected, shall be deemed effective
as of the delivery date and the monthly rentals as hereinafter set forth
shall accrue from the delivery date. Such acceptance shall conclusively
establish that such cars conform to the applicable standards set forth in the
Rider(s) and the Interchange Rules.
ARTICLE 5: MARKINGS
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At the time of delivery of the cars by Lessor to Lessee, the cars
will be plainly marked on each side with the identification marks of Lessee.
If such markings (or any of the markings required pursuant to Article 12)
shall at any time be removed or become illegible, wholly or in part, Lessee
shall immediately cause such markings to be restored or replaced at Lessee's
expense. Lessee shall not otherwise place, or permit to be placed, any
lettering or marking of any kind upon the cars without Lessor's prior written
consent.
ARTICLE 6: PAYMENT OF RENTALS
The monthly rental with respect to each car shall be as set forth in
the Rider(s), and, subject to Article 2, shall accrue from (and including)
the date of delivery at the point of manufacture to (and excluding) the date
the car is redelivered in accordance with Article 14. The rental shall be
payable to Lessor at 21038 NETWORK PLACE, CHICAGO, ILLINOIS 60673-1210 or at
such other address as Lessor may specify by notice to Lessee, in U.S. Dollars
and in advance on or before the first day of each calendar month during the
term hereof; provided, however, that the rental for each car for the month in
which it is delivered shall be prorated for the number of days (including the
date of delivery) remaining in such month at a daily rate based upon a 365
day year; and shall be payable on or before the first day of the next
succeeding calendar month. The amount by which rental payments for any month
exceed the pro rata rental due for the cars leased to Lessee during such
month shall be refunded to Lessee within ten (10) days of the end of such
calendar month.
This Lease is a net lease. Lessee's obligation to pay Lessor all
rentals and other amounts hereunder, unless such obligation shall be
terminated pursuant to the express provisions of this Lease, shall be
absolute and unconditional; and Lessee shall not be entitled to any abatement
or reduction of, or set off against, such rentals or other amounts
irrespective of any claim, counterclaim, recoupment, defense or other right
which Lessee may have, directly or indirectly, against the Lessor, the
manufacturer of the cars or any other person or entity.
ARTICLE 7: TITLE AND USAGE
A. TITLE TO THE CARS
Lessee acknowledges and agrees that by the execution of this Lease
it does not obtain, and by payments and performance hereunder it does not,
and will not, have or obtain any title to the cars or any property right or
interest therein, legal or equitable, except solely as Lessee hereunder and
subject to all of the terms hereof. Lessee shall keep the cars free from any
liens or encumbrances created by or through Lessee.
B. USAGE OF THE CARS
Throughout the continuance of this Lease, so long as Lessee is not
in default under this Lease, but subject to Article 12, Lessee shall be
entitled to possession of each car from the date the Lease becomes effective
as to such car and shall use such car only in the manner for which it was
designed and intended, and so as to subject it only to ordinary wear and
tear, and in the usual interchange of traffic, provided, however that Lessee
agrees that the cars shall, at all times, be
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used: (a) in conformity with all Interchange Rules, (b) in compliance with
the terms and conditions of this Lease, and (c) predominantly in the
continental limits of the United States, provided however, in no event shall
more that forty percent (40%) of all cars shown on all the Riders to this
Agreement (as determined by mileage records and measured annually on a
calendar year basis) be used outside of the contiguous United States at the
same time.
In the event any car is used outside of the continental United
States for any reason whatsoever, Lessee shall assume full responsibility for
all costs, taxes, duties or other charges incidental to such use including
costs incurred in returning any such car to the continental United States.
C. LESSEE'S RIGHT TO TRANSFER OR SUBLEASE
Lessee shall not transfer, sublease or assign the cars or its
interest and obligations pursuant to this Lease, nor shall a transfer,
sublease or assignment by operation of law or otherwise of Lessee's interest
in the cars or this Lease be effective against Lessor, without Lessor's prior
written consent. No transfer, sublease or assignment of this Lease or of the
cars shall relieve Lessee from any of its obligations to Lessor under this
Lease.
Notwithstanding the foregoing paragraph, Lessee shall have the right
to sublease any of the cars for single trips to its customers or suppliers,
and to cause each car so subleased to be boarded or placarded with the name
of the sublessee in accordance with the provisions of the demurrage tariffs
lawfully in effect, where the sole purpose of such subleasing is to obtain an
exemption from demurrage for said cars so subleased; provided, however, that
notwithstanding any such sublease, Lessee shall continue to remain liable to
Lessor for the fulfillment of Lessee's obligations under this Lease; and,
provided further, that Lessor shall have the right, at any time, to withdraw
the privilege of subleasing hereinabove granted to Lessee.
ARTICLE 8: MAINTENANCE AND REPAIRS
A. MAINTENANCE RESPONSIBILITY
Lessee shall, at its expense, maintain, repair and keep the cars (i)
according to prudent industry practice and in all material respects, in good
working order, and in good physical condition for cars of a similar age and
usage, normal wear and tear excepted, (ii) subject to clause (i) and (ii) in
a manner in all material respects consistent with maintenance practices used
by Lessee, as applicable, in respect of any cars owned by Lessee, and (iii)
in accordance in all material respects with all manufacturer's warranties in
effect and in accordance with all applicable provisions, if any, of insurance
policies required to be maintained pursuant to Article 10 and (iv) in
compliance in all material respects with any applicable laws and regulations
from time to time in effect, including the Interchange Rules, FRA rules and
regulations as they apply to the maintenance and operation of cars in
interchange. In no event shall Lessee discriminate in any material respect as
to the use or maintenance of any car (including the periodicity of
maintenance or record keeping in respect of such car) as compared to
equipment of similar nature which Lessee owns or net leases. Lessee will
maintain in all material respects all records, logs and other materials
required by relevant industry standards or any governmental authority
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having jurisdiction over the cars required to be maintained in respect of any
car, all as if Lessee were owner of such cars,
B. ALTERATIONS
Lessee shall not alter the physical structure of any of the cars
without the prior written approval of Lessor. Any modification, alteration or
addition to the cars required by any governmental law, rule, regulation,
requirement or the Interchange Rules shall be Lessee's responsibility and at
its expense.
C. RESPONSIBILITY FOR LOST, DESTROYED OR DAMAGED CARS
If any of the cars, or any part thereof, shall be lost, destroyed or
damaged, Lessee shall be responsible for, and shall indemnify Lessor and hold
Lessor harmless from (as provided in Article 9 hereof), the loss, destruction
or damage to the cars, or part thereof, during the term.
Notwithstanding anything contained herein to the contrary, Lessee
shall be responsible for, and the provisions of this Paragraph C of Article 8
shall apply to, the loss, destruction or damage to a car or any part thereof
during the term which shall: (a) be occasioned by the misuse or negligence of
Lessee, its consignee, agent or sublessee, (b) occur while such car is on the
tracks of Lessee or any private siding or track, or on the track of any
railroad that does not subscribe to, or fails to meet its obligations under,
the Interchange Rules or any private or industrial railroad, or (c) be caused
by any commodity which may be transported or stored in or on such car.
Lessee shall notify Lessor of the loss or destruction of any of the
cars within two (2) days after the date of such event. If a car is lost or
destroyed, Lessor shall, at its option, have the right to: (a) substitute for
such car another car of the same type, capacity and condition; provided,
however, that the rental rate for a substituted car for each month after such
car is delivered to Lessee shall be determined in accordance with the
Rider(s), or (b) withdraw the car from this Lease, and, therefore, reduce the
number of cars leased hereunder.
D. LININGS AND COATINGS
The application, maintenance and removal of interior protective
linings and coatings in cars so equipped is the responsibility of Lessee.
E. INTERIOR PREPARATION FOR COMMODITIES
Any cleaning or special preparation of the interior of cars to make
them suitable for the shipment of commodities by or for Lessee during the
term of the lease shall be done at Lessee's expense unless otherwise agreed.
ARTICLE 9: INDEMNIFICATION BY LESSEE
A. DAMAGES, LOSSES AND INJURIES DUE TO OPERATION OF THE CARS
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Lessee shall defend (if such defense is tendered to Lessee),
indemnify and hold Lessor harmless from and against and does hereby release
Lessor from all claims, suits, liabilities, losses, damages, cost and
expense, including attorney's fees, in any way arising out of, or resulting
from, the condition, storage, use, loss of use, maintenance or operation of
the cars, or any other cause whatsoever. In all cases to which this indemnity
agreement applies, Lessee's obligation shall be to indemnify Lessor for the
full amount of the claim, suit, liability, loss, damage, cost or expense
involved and principles of comparative negligence shall not apply.
Lessor and Lessee shall cooperate with and assist each other in any
reasonable manner requested, but without affecting their respective
obligations under this Article or Article 8, to establish proper claims
against parties responsible for the loss, destruction of or damage to, the
cars.
For the purpose of this Lease, the amount of loss resulting from
the loss or destruction of a car shall be measured by its Settlement Value as
determined immediately prior to the time of such loss or destruction. The
"Settlement Value" of a car shall be determined by application of Rule 107 of
the Interchange Rules.
B. LOSSES TO AND DAMAGES CAUSED BY COMMODITIES
Lessor shall not be liable for any loss of, or damage to,
commodities, or any part thereof, loaded or shipped in the cars, however such
loss or damage shall be caused or shall result; and Lessee shall be
responsible for, indemnify Lessor against and save Lessor harmless from, any
such loss, damage or claim therefor. In the event any of the cars, fittings
or appurtenances thereto, including all interior lading protective devices,
special interior linings and removable parts, if any, shall become damaged by
any commodity loaded therein, Lessee shall be responsible for such damage,
and shall indemnify Lessor against and save Lessor harmless from. any such
loss, damage or claim therefor according to the same terms of indemnification
set forth in Paragraph A of Section 9.
C. LOSS OF USE OF CAR
Notwithstanding any provision contained herein to the contrary,
Lessor shall not be liable to Lessee for any damages, costs or losses which
result from the loss of the use of any of the cars for any reason whatsoever.
D. TAX INDEMNITY
Lessee acknowledges that the Rental Amount provided for in the
Rider(s) is computed on the assumptions that (a) Lessor or a third-party (the
"Owner Participant") and the affiliated group of corporations (as defined in
Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code")
of which it (or its owners) is a member (all references to Lessor or Owner
Participant in this Article include such affiliated group) shall be treated
for United States federal income tax purposes (and to the extent allowable
for state and local tax purposes) as the owner of the cars and will be
entitled to full depreciation deductions based on Lessor or Owner
Participant's total cost of the Equipment under (i) applicable Sections of
the Internal Revenue
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Code of 1986, as amended (the "Code"), in amounts equal to the most
accelerated method, shortest recovery period and applicable convention
allowed under the Code and (ii) accelerated cost recovery deductions for
state and local income tax purposes in effect at the time each Rider is
entered into (such deductions being referred to hereinafter as "Tax
Benefits"), and (b) all deductions or credits allowable to Lessor or Owner
Participant with respect to the cars will be treated as derived from or
allocable to sources within the United States. If, as a result of any act or
failure to act of Lessee (including the use of the cars outside of the United
States) or any physical damage to or loss, or governmental taking of the
cars, Lessor or Owner Participant shall (x) lose, have recaptured or
disallowed, or not be entitled to the full use of the Tax Benefits, or (y)
have its tax increased or accelerated on account of recomputation or
recapture of such Tax Benefits in any year or years pursuant to the
provisions of the Code (each of the events referred to in (x) and (y) above
being referred to as a "Loss"), then Lessee shall pay to Lessor upon demand,
a sum which, on an After Tax Basis, shall be sufficient to restore Lessor or
Owner Participant to the same position Lessor or Owner Participant would have
been in had such Loss not been incurred after taking into account all
relevant factors. For the purpose of this Article, a Loss shall occur upon
the earlier of (1) the payment by Lessor or Owner Participant to the.
Internal Revenue Service of the tax increase resulting from such Loss or (2)
the adjustment of the tax return of Lessor or Owner Participant to reflect
such Loss. If the Owner Participant has transferred ownership of the cars to
Lessor, all references in this paragraph to Owner Participant shall be deemed
to be references to Lessor with respect to any loss for any period after such
transfer.
ARTICLE 10: INSURANCE
Lessee shall maintain at all times on the cars, at its expense,
"all-risk" physical damage insurance and comprehensive commercial general
liability insurance (covering bodily injury, property damage and pollution
exposures, including, but not limited to, contractual liability and products
liability) in such amounts, against such risks, in such form and with such
insurers as shall be satisfactory to Lessor from time to time; provided, that
the amount of "all-risk" physical damage insurance shall not on any date be
less than the full replacement value of the cars as of such date. Such
insurance policy will, among other things, name Lessor as an additional named
insured or as loss payee (as the case may be), require that the insurer give
Lessor at least thirty (30) days prior written notice (at the address for
notice to Lessor set forth herein) of any alteration in or cancellation of
the terms of such policy, and require that the interests of Lessor be
continually insured regardless of any breach of or violation by Lessee of any
warranties, declarations or conditions contained in such insurance policy.
Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact
coupled with an interest for the sole purposes of making claim for, receiving
payment of, and executing any and all documents that may be required to be
provided to the insurance carrier in substantiation of any claim for loss or
damage to the cars or related to the Lease under said insurance policies, and
endorsing Lessee's name to any and all drafts or checks in payment of such
applicable loss proceeds; provided that Lessor shall not exercise the
foregoing power of attorney except at such time as Lessee is in default
hereof, following Lessee's failure or refusal to take the applicable action
after receipt of Lessor's written demand therefor. Prior to the Delivery Date
and from time to time thereafter, Lessee shall furnish to Lessor an original
certificate or other evidence satisfactory to Lessor that such insurance
coverage is in effect, provided, however, that Lessor shall be under no duty
to
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ascertain the existence or adequacy of such insurance. The insurance
maintained by Lessee shall be primary without any right of contribution from
insurance which may be maintained by Lessor. The obligations of Lessee under
this Article shall be independent of all other terms under this Lease and
shall in no event relieve Lessee from any indemnity obligation hereunder.
ARTICLE 11: TAXES AND OTHER CHARGES
Except as otherwise hereinafter provided, Lessee shall pay and
indemnify and hold Lessor (and each person who is in turn indemnified by
Lessor) harmless from any and all
(a) taxes including, without limitation, any taxes (withholding or
otherwise) imposed by Canada or any province thereof or any
governmental or administrative subdivision thereof, sales
and/or use taxes, gross receipts, franchise, single business
and personal property taxes and
(b) license fees, assessments, charges, fines, levies, imposts,
duties, tariffs, customs, switching, demurrage, track storage,
detention, special handling and empty mileage charges,
including penalties and interest thereon, levied or imposed by any foreign,
Federal, state or local government or taxing authority, railroad or other
agency upon or with respect to the cars, or Lessor (or any such person) in
connection with the cars or the lease thereof hereunder, and Lessee shall
prepare and file all returns and reports required in connection with the
foregoing arid shall furnish copies thereof to Lessor upon request.
Notwithstanding the foregoing, Lessee shall not be responsible for
any tax imposed by the United States or any state or governmental subdivision
thereof which is measured solely by Lessor's (or any such person's) net
income, unless such tax is in substitution for or releases Lessee from the
payment of any taxes for which Lessee would otherwise be obligated under
Article 11.
ARTICLE 12: LESSOR'S RIGHT TO ASSIGN, SUBORDINATION
All rights of Lessor hereunder may be assigned, pledged, mortgaged,
leased, transferred or otherwise disposed of, either in whole or in part,
and/or Lessor may assign, pledge, mortgage, lease, transfer or otherwise
dispose of title to the cars, with or without notice to Lessee. As a
condition to any such assignment, pledge, mortgage, lease, transfer or other
disposition, Lessor shall have entered into a management agreement with the
assignee, pledgee, mortgagee, lessor, or other holder of legal title to or
security interest in the cars for purposes of allowing such assignee,
pledgee, mortgagee, lessor or other holder of legal title to or security
interest in the cars to perform Lessor's obligations hereunder. In the event
of any such assignment, pledge, mortgage, lease, transfer or other
disposition, this Lease and all rights of Lessee hereunder or those of any
person, firm or corporation who claims or who may hereafter claim any rights
in this Lease under or through Lessee, are hereby made subject and
subordinate to the terms, covenants and conditions of any assignment, pledge,
mortgage, lease, or other agreements covering the cars heretofore or
hereafter created and entered into by Lessor, its successors or assigns and
to all of the rights of any such assignee, pledgee, mortgagee, lessor,
transferee or
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other holder of legal title to or security interest in the cars. During the
term of this Lease no such assignee, pledgee, mortgagee, lessor, transferee
or other holder of legal title to or security interest in the cars shall
interfere with the quiet use, possession and enjoyment of the cars by Lessee
provided that no event of default or termination event (however described)
shall have occurred under such assignment, pledge, mortgage, lease or other
agreement and provided that no event of default or termination event (however
described) has occurred under this Lease and provided further that the
exercise by assignee, pledgee, mortgagee, lessor, transferee or other holder
of legal title to or security interest in the cars of their respective rights
under or in connection with such assignment, pledge, mortgage, lease or other
agreement or this Lease shall not constitute such an interference. Lessee
hereby agrees that Lessor or such assignee, pledgee, mortgagee, lessor,
transferee or other holder of legal title to or security interest in the cars
may terminate this Lease simultaneously with the termination of any such
assignment, pledge, mortgage, lease or other agreement and that upon such
termination, Lessee shall redeliver the cars to Lessor. Any sublease or
assignment of the cars permitted by this Lease that is entered into by Lessee
or its successors or assigns shall contain language which expressly makes
such assignment or sublease subject to the subordination contained herein. At
the request of Lessor or any assignee, pledgee, mortgagee, lessor, transferee
or other holder of the legal tithe to or security interest in the cars,
Lessee, at Lessor's expense, shall letter or mark the cars to identify the
legal owner of the cars and, if applicable. place on each side of each car,
in letters not less than one inch in height, the words "Ownership Subject to
a Security Lease Filed with the Surface Transportation Board" or other
appropriate words reasonably requested.
In the event that Lessor assigns its interest in this Lease, Lessee,
at the request of Lessor, shall execute and deliver to Lessor an
Acknowledgment of Assignment of Lease in form satisfactory to Lessor and upon
such request and execution furnish to Lessor an opinion of counsel that such
Acknowledgment has been duly authorized, executed and delivered by Lessee and
constitutes a valid, legal and binding instrument, enforceable in accordance
with its terms.
ARTICLE 13: DEFAULT BY LESSEE
If Lessee defaults in the payment of any sum of money to be paid
under this Lease and such default continues for a period of ten (10) days
after written notice to Lessee of such default; or if Lessee fails to perform
any covenant or condition required to be performed by Lessee which failure
shall not be remedied within ten (10) days after notice thereof by Lessor to
Lessee; or if Lessee shall dissolve, make or commit any act of bankruptcy, or
if any proceeding under any bankruptcy or insolvency statute of any laws
relating to relief of debtors is commenced by Lessee, or if any such
proceeding is commenced against Lessee and same shall not have been removed
within thirty (30) days of the date of the filing thereof, or if a receiver,
trustee or liquidator is appointed for Lessee or for all or a substantial
part of Lessee's assets with Lessee's consent, of if, without Lessee's
consent, the same shall not have been removed within thirty (30) days of the
date of the appointment thereof; or if an order, judgment or decree be
entered by a court of competent jurisdiction and continue unpaid and in
effect for any period of thirty (30) consecutive days without a stay of
execution; or if a writ of attachment or execution is levied on any car and
is not discharged within ten (10) days thereafter, Lessor may exercise one or
more of the following remedies with respect to the cars:
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1. Immediately terminate this Lease and Lessee's right hereunder;
2. Require Lessee to return the cars to Lessor at Lessee's
expense, and if Lessee fails to so comply. Lessor may take
possession of such cars without demand or notice and
without court order or legal process. Lessee hereby waives
any damages occasioned by such taking of possession whether
or not Lessee was in default at the time possession was
taken, so long as Lessor reasonably believes that Lessee
was in default at such time; Lessee acknowledges that it
may have a right to notice of possession and the taking of
possession with a court order or other legal process.
Lessee, however, knowingly waives any right to such notice
of possession and the taking of such possession without
court order or legal process;
3. Lease the cars to such persons, at such rental and for such
period of tine as Lessor shall elect. Lessor shall apply
the proceeds from such leasing, less all costs and expenses
incurred in the recovery, repair, storage and renting of
such cars, toward the payment of Lessee's obligations
hereunder. Lessee shall remain liable for any deficiency,
which, at Lessor's option, shall be paid monthly, as
suffered, or immediately or at the end of the Lease term as
damages for Lessee's default;
4. Bring legal action to recover all rent or other amounts
then accrued or thereafter accruing from Lessee to Lessor
under any provision hereunder;
5. Pursue any other remedy which Lessor may have.
Each remedy is cumulative and may be enforced separately or
concurrently. In the event of default, Lessee shall pay to Lessor upon demand
all costs and expenses including reasonable attorneys' fees expended by
Lessor in the enforcement of it rights and remedies hereunder, and Lessee
shall pay interest on any amount owing to Lessor from the time such amount
becomes due hereunder at a rate per annum equal to three percentage points
above the prime rate of Chase Manhattan Bank (or its successor), such rate to
be reduced, however, to the extent it exceeds the maximum rate permitted by
applicable law. In addition, Lessee shall, without expense to Lessor, assist
Lessor in repossessing the cars and shall, for a reasonable time if required,
furnish suitable trackage space for the storage of the cars.
If Lessee fails to perform any of its obligations hereunder, Lessor,
at Lessee's expense, and without waiving any rights it may have against
Lessee for such nonperformance, may itself render such performance. Lessee
shall reimburse Lessor on demand for all sums so paid by Lessor on Lessee's
behalf, together with interest at a rate equal to three percentage points
above the prime rate of Chase Manhattan Bank (or its successor), such rate to
be reduced however, to the extent it exceeds the maximum rate permitted by
applicable law.
ARTICLE 14: DELIVERY AT END OF TERM
Lessee shall not deliver the cars prior to the end of the term
without the prior written consent of Lessor. Notwithstanding anything
contained herein to the contrary. Lessee shall not
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load any car leased hereunder during the final fifteen (15) days of the term,
except as otherwise provided in the Rider(s).
At the end of the term, Lessee, at its expense, shall deliver each
car to Lessor, or to a subsequent lessee, at the point designated by Lessor,
empty, free from residue, and in the same good order and condition as it was
delivered by Lessor to Lessee, ordinary wear and tear excepted. Lessee, at
its expense, shall remove or cause to be removed from the cars any of
Lessee's special advertising, lettering or other markings. Lessee shall, on
demand, reimburse Lessor for the expense of cleaning any car that contains
residue or such other cost which may be incurred to place a car in the
condition describes above.
If any car is not redelivered to Lessor or not delivered to a
subsequent lessee on or before the date on which the term ends, or in the
event that a car so delivered is not in the condition required by this
Article 14, Lessee shall pay rental for each day that each car is not
delivered as required herein or until each car is delivered in the condition
required, at a prorated monthly rental rate determined in accordance with the
monthly rental rate set forth in the Rider(s). Lessee shall pay to Lessor on
or before the last day of each month the amount lessee is obligated to pay to
Lessor for such month under this Article 14. In addition to any other
indemnity provided herein and any payments to be made to Lessor hereunder,
Lessee shall also indemnify and hold Lessor harmless from and against all
losses, injuries, liabilities, claims and demands whatsoever, including those
asserted by a subsequent lessee arising out of or as a result of such late
delivery or failure to deliver in the condition required.
ARTICLE 15: WARRANTIES AND REPRESENTATIONS
LESSOR MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED,
AS TO THE CONDITION, MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE OF ANY
OTHER MATTER CONCERNING THE CARS. LESSEE HEREBY WAIVES ANY CLAIM IT MIGHT
HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE OR EXPENSE CAUSED BY THE CARS OR BY
ANY DEFECT THEREIN. Lessee shall be solely responsible for determining that
the specifications and design of any car are appropriate for the commodities
therein. During the period of any lease hereunder in which Lessee renders
faithful performance of its obligations, Lessor hereby assigns to Lessee any
factory or dealer warranty, whether express or implied, or other legal right
Lessor may have against the manufacturer in connection with defects in the
cars covered by this Lease.
ARTICLE 16: OPINION OF COUNSEL
Lessee, on or before the execution of this Lease, shall furnish to
Lessor an opinion of Lessee's counsel, satisfactory to counsel for Lessor and
in form and substance satisfactory to such counsel, that as of the date of
the Lease:
1. Lessee is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State
of South Dakota and is either duly qualified to do business
and is in good standing in such other jurisdictions in
which the business
11
<Page>
and activities of Lessee require such qualification or its
failure to so qualify in such other jurisdiction will not
have a material adverse impact on this Lease.
2. Lessee has full corporate power to enter into this Lease.
3. The Lease has been duly authorized, executed and delivered
by Lessee and constitutes a valid, legal and binding
agreement, enforceable in accordance with its terms.
4. No approval is required by Lessee from any governmental or
public body or authority with respect to the entering into
or performance of this Lease.
5. The entering into and performance of this Lease will not
conflict with, or result in a breach of, the terms,
conditions or provision of any law or any regulations,
order, injunction, permit, franchise or decree of any court
or governmental instrumentality.
6. The entering into and performance of this Lease will not
conflict with, or result in a breach of, the terms,
conditions or provisions of any indenture, agreement or
other instrument to which Lessee is party or by which it or
any of its property is bound.
ARTICLE 17: RIGHT OF INSPECTION
Lessor, or its assignee, shall, at any reasonable time and without
interfering with Lessee's operations, have the right to inspect the cars by
its authorized representative wherever they may be located for the purpose of
determining compliance by lessee with its obligations hereunder. Lessee shall
use its best effort to obtain permission, if necessary, for Lessor or its
representative to enter upon any premises where the cars may be located.
ARTICLE 18: REPORT AND NOTICES
A. NOTIFICATION OF LIENS
Lessee shall notify Lessor, in writing, within three (3) days after
any attachment, lien (including any tax and mechanics' liens) or other
judicial process attaches to the cars.
B. REPORT OF LOCATION
Within five (5) days after receipt of written demand from Lessor,
Lessee shall give Lessor written notice of the approximate location of the
cars.
ARTICLE 19: ASSIGNMENT OF RIGHTS
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Except as otherwise provided in Article 12 and Paragraph C of
Article 7, this Lease shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
ARTICLE 20: GOVERNMENTAL LAWS
Lessee shall comply with all governmental laws, rules, regulations,
requirements and the Interchange Rules (herein collectively referred to as
the "Rules") with respect to the use, operation and maintenance of any
interior lading protective devices, special interior linings or removable
parts. Lessee, at its expense, shall further comply with the Rules in the
event such Rules require a change or replacement of any equipment or
appliance on the cars or in case any additional or other equipment or
appliance is required to be installed on the cars.
ARTICLE 21: USE OF CARS ON CERTAIN ROAD UNDER AAR CIRCULAR OT-5
Lessor shall have no responsibility and it shall be Lessee's sole
responsibility to obtain from any railroad all the necessary authority to
place the cars in service under the provisions of AAR Circular OT-5 as
promulgated by the AAR and all supplements thereto and reissues thereof or
subsequent directives (such authority hereinafter called "consent(s)").
Lessor shall not be liable for Lessee's failure to obtain such consents for
any reason whatsoever and this Lease shall remain in full force and effect
notwithstanding any failure of Lessee to obtain such consents.
ARTICLE 22: ADMINISTRATION OF LEASE
Lessee agrees to make available to Lessor information concerning the
movement of the cars reasonably required for the efficient administration of
this Lease.
Lessee agrees to cooperate with Lessor for the purpose of complying
with any reasonable requirements of any lender, the Surface Transportation
Board or the provisions of Article 9 of the Uniform Commercial Code provided
such cooperation does not materially affect the rights of liabilities or
Lessee hereunder.
ARTICLE 23: MISCELLANEOUS
A. ENTIRE AGREEMENT
This Lease, together with any and all exhibits attached hereto,
constitutes the entire agreement between Lessor and Lessee and it shall not
be amended, altered or changed except by written agreement signed by the
parties hereto. No waiver of any provision of this Lease nor consent to any
departure by Lessee therefrom shall be effective unless the same shall be in
writing signed by both parties, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
B. GOVERNING LAW
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This Lease shall be interpreted under and performance shall be
governed by the laws of the State of Texas.
G. CONFLICT WITH INTERCHANGE RULES
In the event the Interchange Rules conflict with any provision of
this Lease, this Lease shall govern.
D. RIDERS AND EXHIBITS
All Riders and Exhibits attached hereto are incorporated herein by
this reference.
E. PAYMENTS
All payments to be made under this Lease shall be made at the
addresses set forth in Article 6.
F. SEVERABILITY
If any term or provision of this or the application thereof shall,
to any extent, be invalid or unenforceable, such invalidity or
unenforceability shall not affect or render invalid or unenforceable any
other provision of this Lease, and this Lease shall be valid and enforced to
the fullest extent permitted by law.
G. HEADING
The headings that have been used to designate the various Sections
and Articles hereof are solely for convenience in reading and ease of
reference and shall not be construed in any event or manner as interpretive
or limiting the interpretation of the same.
H. SURVIVAL
All indemnities contained in this Lease shall survive the
termination hereof. In addition, the obligation to pay any deficiency as well
as the obligation for any and all other payments by Lessee to Lessor
hereunder shall survive the termination of this Agreement or the Lease
Contained herein.
ARTICLE 24: ADDRESSING OF NOTICES
Any notice required or permitted hereunder shall be in writing and
shall be delivered to the respective parties hereto by personal delivery
thereof or by telegram, telex, telecopier or deposit in the United States
mail as a certified matter, return receipt requested, postage prepaid, and
addressed to the respective parties as follows, unless otherwise advised in
writing.
Lessee to Lessor: Lessor to Lessee:
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Trinity Industries Leasing Company South Dakota Soybean Processors
70 West Madison Street, Suite 1960 100 Caspian Avenue
Chicago, Illinois 60602-4391 Volga, South Dakota 57071-9006
ATTN: Thomas C. Jardine ATTN: Rodney Christianson
Vice President Chief Executive Officer
15
<Page>
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed and delivered as of the 25th day of February, 2002.
LESSOR: TRINITY INDUSTRIES LEASING COMPANY
By: /s/ Thomas C. Jardine
-----------------------------------
Thomas C. Jardine
Vice President
ATTEST:
By: /s/ Neil O. Shoop
-----------------------------------
Assistant Secretary
LESSEE: SOUTH DAKOTA SOYBEAN PROCESSORS
By: /s/ Rodney Christianson
-----------------------------------
Title: CEO
ATTEST:
By: /s/ Roxanne Knapp
-----------------------------------
16
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THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
Before me, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Thomas G. Jardine, known to me to be
the person and officer whose name is subscribed to the foregoing instrument,
and acknowledged to me that the same was the act of the said Trinity
Industries Leasing Company, a Delaware corporation, and that he executed the
same as the act of such corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
Given under my hand and seal of office this the 27 day of FEBRUARY, 2002.
/s/ Brandie Howard
- ---------------------------------------
Notary Public [SEAL]
My Commission Expires: 12/28/05
--------
THE STATE OF SOUTH DAKOTA )
)
COUNTY OF BROOKINGS )
Before me, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared RODNEY CHRISTIANSON known to be the
person and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me treat the same was the act of the said South Dakota
Soybean Processors, a South Dakota corporation, and that he executed the same
as the act of such corporation far the purposes and consideration therein
expressed, and in the capacity therein stated.
Given under my hand and seal of office this the 25 day of FEBRUARY, 2002.
/s/ Beverly Kleinjan
- ---------------------------------------
Notary Public [SEAL]
My Commission Expires: OCTOBER 20, 2006
17
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EXHIBIT A
CERTIFICATE OF ACCEPTANCE OF RAILROAD CAR
This Certificate relates to the railroad cars listed below leased by
Trinity Industries Leasing Company, to South Dakota Soybean Processors under
a Lease Agreement for one hundred (100) railroad cars dated February 12, 2002
into which this certificate is incorporated (by Article 3 thereof).
Railcar Numbers
- ---------------
Lessee hereby certifies that the railcars listed above were
delivered to and received by Lessee, inspected, determined to be acceptable
under the applicable standards (set forth in Article 3 of the Lease
Agreement); and Lessee hereby certifies its acceptance of the railcars as of
___________________.
LESSEE: SOUTH DAKOTA SOYBEAN PROCESSORS
BY:
-----------------------------------------------------
TITLE:
-----------------------------------------------------
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RIDER ONE (1) TO RAILROAD CAR NET LEASE AGREEMENT
Effective this 12TH day of FEBRUARY, 2002, this Rider shall become a
part of the Railroad Car Net Lease Agreement between Trinity Industries
Leasing Company, Lessor, and South Dakota Soybean Processors, Lessee, dated
February 12, 2002 and the cars described herein shall be leased to Lessee,
subject to the terms and conditions in said Railroad Car Net Lease Agreement,
during the term and for the rental shown below:
<Table>
<Caption>
Approximate Base
Number Capacity Monthly
of (gallonage or Rental
Cars Type and Description cubic feet) (Per Car)
100 AAR211A100W1 insulated and exterior coiled tank 29,188 gallons $383.00
------
car; marked SDPX and numbered 97001 through
97100.
</Table>
SDSP "Large" Logo is included in price.
PLACE OF DELIVERY - Lessor shall cause the cars to be delivered to Lessee at
Volga, South Dakota.
Lessor and Lessee agree that this Rider shall constitute a separate
Lease which incorporates the terms of the above referenced Railroad Car Lease
Agreement. This Rider shall be severable from any other cars or riders
relating to the above referenced Railroad Car Lease Agreement and shall
become a separate lease which is separately transferable for all purposes.
The minimum rental period for the cars leased hereunder shall be 216
months, and the cars shall continue under lease thereafter for successive
twelve (12) month terms, al the same rate and under the same conditions,
unless notice, in writing, requesting cancellation shall be given by either
party to the other at least sixty (60) days prior to expiration or the
initial term or any successive term for cars covered by this Rider.
Thereafter, this Rider shall terminate automatically upon the date of release
of the last car covered by this Rider.
TRINITY INDUSTRIES LEASING COMPANY
By: /s/ Thomas C. Jardine
----------------------------------
Thomas C. Jardine
Vice President
SOUTH DAKOTA SOYBEAN PROCESSORS
By: /s/ Rodney Christianson
----------------------------------
Title: CEO
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