MASTER EQUIPMENT LEASE AGREEMENT
NO. 84010HT151
Dated as of
January 4, 1984
between
AMTRAN CORPORATION
LESSOR
AND
CONTRACT TRANSPORTATION SYSTEMS CO.
LESSEE
TABLE OF CONTENTS
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SECTION PAGE
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1. Definitions................................................. 1
2. Agreement for Lease of Equipment............................ 3
3. Delivery and Acceptance of Equipment........................ 3
4. No Warranties by Lessor..................................... 3
5. Lease Term.................................................. 4
6. Rent........................................................ 4
7. Changes in Acquisition Cost................................. 4
8. Lessee's Representations and Warranties..................... 4
9. Titling and Registration; Identification Marks.............. 5
10. Fees and Taxes.............................................. 6
11. Indemnification by Lessee................................... 7
12. Use of Equipment; Liens..................................... 7
13. Equipment Maintenance, Repair, and Additions................ 9
14. Loss, Damage or Destruction of Equipment.................... 9
15. Transfer.................................................... 10
16. Reports..................................................... 10
17. Insurance................................................... 11
18. Return of Equipment......................................... 12
19. Lessor's Ownership: Equipment to be and
Remain Personal Property.................................. 13
20. Events of Default........................................... 13
21. Assignment by Lessor;Estoppel Certificates.................. 16
22. Option to Renew............................................. 17
23. Additional Rights of Lessor................................. 18
24. Net Lease; Non-Terminability................................ 19
25. Lessee's Right to Sublease
and Assign.................................................. 19
26. Recording, Registration and Filing.......................... 19
27. Investment Tax Credit....................................... 20
28. Option to Purchase.......................................... 20
29. Lessee's Right to Terminate................................. 20
30. Quiet Enjoyment............................................. 21
31. Notices..................................................... 22
32. Entire Agreement, Severability,
Effect and Modification of Lease....................... 22
33. Countersignature............................................ 22
34. Governing Law............................................... 22
35. Lessor's Right to Perform for Lessee........................ 22
36. Agreement for Lease Only.................................... 23
37. Financial Statements........................................ 23
38. Miscellaneous............................................... 23
EXHIBIT 1 -- Rental Schedule and Certificate of
Inspection and Acceptance with
Stipulated Loss Values
EXHIBIT 2 -- Agreement
MASTER EQUIPMENT LEASE AGREEMENT NO. 84010HT151, dated as of January 4,
1984, between AMTRAN CORPORATION (herein called "Lessor"), a Massachusetts
corporation having a place of business at One Liberty Square, Boston,
Massachusetts 02109, and Contract Transportation Systems Co. (hereinafter called
"Lessee"), a Delaware corporation with its principal place of business at 1370
Ontario Street, Cleveland, Ohio 44101.
In consideration of the mutual covenants hereafter contained, Lessor and
Lessee hereby agree as follows:
1. Definitions - The following terms shall, unless the context otherwise
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requires, have the following meanings for all purposes of this Lease:
"ACQUISITION COST" of any item of Equipment means an amount equal to
the sum of (i) the purchase price of such item of Equipment paid by Lessor,
plus, (ii) any excise, sales or use tax paid by Lessor on or with respect to
such item of Equipment, plus (iii) any reasonable costs, expenses and fees paid
or incurred by Lessor in obtaining and delivering such item of Equipment to
Lessee and any expenses of installation of such item of Equipment paid for by
Lessor.
"ADDITIONAL RENT" shall have the meaning specified in Section 6(b)
hereof.
"APPRAISAL" shall have the meaning specified in Section 22(c) hereof.
"BASIC RENT" shall have the meaning specified in Section 6(a) hereof.
"CASUALTY OCCURRENCE" shall have the meaning specified in Section 14
hereof.
"CERTIFICATE OF INSPECTION AND ACCEPTANCE" means the certification
contained in or which is an Exhibit to each Rental Schedule to be executed by
Lessee, substantially in the form of "Exhibit 1" attached hereto.
"DEFAULT INTEREST RATE" shall mean the rate of interest set forth in
Section 6(b) hereof.
"EQUIPMENT" means the equipment described on each Rental Schedule now
or hereafter executed pursuant to this Master Lease, and owned by Lessor and
leased by Lessor to Lessee or ordered by Lessor for lease to Lessee as provided
herein and any attachments, accessories, or additions thereto or substitutions
therefor.
"EVENTS OF DEFAULT" shall have the meaning specified in Section 20(a)
hereof.
"FAIR MARKET VALUE" means the appraised value of the Equipment in
question determined with the procedure for Appraisal set forth in Section 22(c)
hereof.
"FAIR RENTAL RATE" shall have the meaning specified in Section (22a)(2)
hereof.
"INTERIM TERM" shall commence upon the commencement date set forth in
the applicable Rental Schedule and shall end on the commencement date of the
Primary Term.
"INVESTMENT TAX CREDIT" shall mean any investment tax credit provided
for in Section 38 et seq. of the Internal Revenue Code of 1954, as amended,
which may be available with respect to the Equipment or any item thereof.
"LEASE" shall have the meaning specified in Section 2 hereof.
"LEASE COMMENCEMENT DATE" with respect to an item of Equipment means
the date of the commencement of the Lease Term of such item and shall be the
date such item is accepted by Lessee for lease hereunder.
"LEASE TERM" for each Rental Schedule shall mean the "Interim Term"
plus the "Primary Term" including any period of renewal provided for herein.
"MANUFACTURER(S)" shall mean the manufacturer(s) listed for each item
of Equipment on the Rental Schedule in question.
"MASTER LEASE" shall have the meaning specified in Section 2 hereof.
"PAYMENT DATES" shall have the meaning specified in Section 6(a)
hereof.
"PRIMARY TERM" for each Rental Schedule shall commence and shall end on
the date set forth therein.
"PRIME RATE OF INTEREST" shall mean the rate of interest announced from
time to time as its "Prime Rate" by the lending institution providing the
permanent debt financing with respect to the Rental Schedule in question; if the
lending institution in question has no PRIME RATE OF INTEREST, then Lessor and
Lessee agree that the PRIME RATE OF INTEREST announced from time to time by
Morgan Guaranty Trust company of New York, in New York City shall apply
hereunder.
"RENEWAL TERM" shall have the meaning specified in Section 22(a)(2)
hereof.
"RENTAL SCHEDULE" means each schedule, substantially in the form of
"Exhibit 1" attached hereto, now or hereafter executed by Lessor and Lessee
pursuant to this Master Lease, setting forth a full description of Equipment to
be leased hereunder, its location, its Acquisition Cost, the amount of rent
payable by Lessee with respect thereto, the lease term thereof, the Lease
Commencement Date with respect thereto, and such other details as Lessor and
Lessee may desire.
"STIPULATED LOSS VALUE" shall have the meaning specified in Section
14(b) hereof.
"TERMINATION DATE" means the expiration or termination of the Primary
Term or Renewal Term of any item of Equipment, whether by the passage of time or
otherwise.
2. AGREEMENT FOR LEASE OF EQUIPMENT - Lessor shall lease to Lessee and
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Lessee shall lease from Lessor such Equipment as may be mutually agreed, in the
manner and upon the terms and conditions specified in this Master Equipment
Lease Agreement (this "Master Lease"). Each Rental Schedule shall Incorporate
the terms of this Master Lease and shall constitute a separate lease (the term
"this Lease" shall hereinafter refer collectively to the applicable Rental
Schedule and this Master Lease, to the extent the terms of this Master Lease
are incorporated in such Rental Schedule).
3. DELIVERY AND ACCEPTANCE OF EQUIPMENT - Lessor and Lessee understand that
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the manufacturer or vendor of the Equipment will deliver the Equipment to the
premises of the Lessee specified in the Rental Schedule and such delivery shall
be deemed to be delivery of the Equipment by Lessor to Lessee hereunder. Lessor
hereby authorizes Lessee as its agent to accept for Lessor, and in Lessor's
name, the Equipment from said manufacturer or vendor upon delivery. Upon such
delivery, Lessee shall cause an inspector or inspectors of Lessee to inspect
the Equipment, and if it is found to be acceptable to accept delivery of such
Equipment and execute and deliver to Lessor a Certificate of Inspection and
Acceptance stating that such Equipment has been inspected and accepted and is
marked in accordance with Section 9 hereof, whereupon such Equipment shall be
deemed to have been delivered to and accepted by Lessee. Lessee's execution of
each Rental Schedule and Certificate of Acceptance shall obligate Lessee to
lease the Equipment described therein from Lessor upon the acceptance of such
Equipment by Lessee and Lessee shall be subject thereafter to all the terms and
conditions of this Lease.
4. NO WARRANTIES BY LESSOR - As between Lessor and Lessee, Lessee's
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acceptance for lease hereunder of any Equipment as evidenced by its execution
of a Certificate of Inspection and Acceptance with respect thereto shall
constitute Lessee's acknowledgment that such Equipment:
(a) is of a size, design, capacity and manufacture acceptable to Lessee for
lease hereunder; and
(b) otherwise conforms to the requirements of this Lease and is subject to
all of the terms and conditions of this Lease.
LESSOR HEREBY MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS AS TO
ANY MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION THE CONDITION, SELECTION,
QUALITY, SUITABILITY OR OPERATION OF ANY EQUIPMENT, OR THE MERCHANTABILITY,
FITNESS FOR ANY PARTICULAR PURPOSE OR PERFORMANCE OF THE EQUIPMENT OR THE
MAINTENANCE THEREOF, AND THE LESSEE LEASES THE EQUIPMENT "AS IS" AND "WHERE
IS". In no event shall any defect in, or unfitness of, any Equipment relieve
Lessee of the obligation to pay rent or to make any other payments required
hereunder or of any other obligation hereunder. Without limiting the generality
of the foregoing, Lessor shall not be liable to Lessee for any (a) defects,
either latent or patent, in any of the Equipment or for any direct or
consequential damage therefrom; (b) loss of use of any of the Equipment or for
any interruption in Lessee's business occasioned by Lessee s inability to use
any of the Equipment for any reason whatsoever; and (c) damages in the event
that the Manufacturer delays delivery of the Equipment. Lessor hereby transfers
and assigns to Lessee for and during the Lease Term all its rights and interest
in the Manufacturer's warranty with respect to any and all of the Equipment,
and agrees to execute all agreements and documents reasonably
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necessary to effect such transfer and assignment. To the extent that any claims
or rights of Lessor with respect to the Equipment may not be assigned or
otherwise be available to Lessee, Lessor will use its best efforts to enforce
such claims or rights against the Manufacturer.
5. LEASE TERM - The Equipment is leased for an Interim Term and a Primary
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Term unless and until the term of this Lease shall expire, be extended or be
terminated pursuant to any provision hereof. The Interim Term and the Primary
Term shall commence and expire on the dates set forth in the Rental Schedule
applicable to the item of Equipment in question. The provisions of Section 11
shall apply as between Lessor and Lessee with respect to any Equipment from the
time the Equipment is ordered by Lessor. Lessee hereby authorizes Lessor to
insert the Lease Commencement Date for an item of Equipment on the Rental
Schedule therefor when such item has been accepted by Lessee for lease
hereunder.
6. RENT (a) This Lease is a net lease and Lessee shall pay to Lessor in
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immediately available funds on the due date, as fixed rent for the Equipment
during the Interim Term and the Primary Term, the amount set forth in the Rental
Schedule ("Basic Rent") on the dates set forth therein ("Payment Dates"), at
Lessor's address set forth above, or at such other address or to such other
person or entity as Lessor, from time to time, may designate.
(b) Lessee shall also pay to Lessor on demand, in immediately available
funds on the due date, all amounts which Lessee is required to pay pursuant to
this Lease (other than Basic Rent) together with every fine, penalty, interest
and cost which may be added for non-payment or late payment thereof. Such
amounts shall constitute additional rent ("Additional Rent"). If Lessee shall
fail to pay any Additional Rent, Lessor shall have the right to pay the same and
shall have all rights, powers and remedies with respect thereto as are provided
herein or by law in the case of nonpayment of Basic Rent. With respect to any
amount of Basic Rent or Additional Rent not paid when due hereunder, Lessee
shall pay to Lessor interest on such overdue amount at the lower of: (1) two
percent (2%) above the Prime Rate of interest per annum but in no event less
than two percent (2%) per annum above the permanent debt rate of the Rental
Schedule(s) applicable to such overdue amount, or (ii) the highest rate
permitted by law ("Default Interest Rate"). Lessee shall perform all Its
obligations under this Lease at its sole cost and expense, and shall pay all
Basic Rent and Additional Rent when due. Lessor agrees to invoice Lessee on a
semi-annual basis for each Basic Rent payment, said invoice to be sent to Lessee
thirty (30) days prior to the due date of the Basic Rent payment in question.
7. CHANGES IN ACQUISITION COST - In the event that, subsequent to Lessor's
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placing of the order for the Equipment with the Manufacturer and prior to the
execution by Lessee of the Certificate of Inspection and Acceptance, the
Acquisition Cost shall increase or decrease, Lessor and Lessee agree to make the
necessary changes to the Rental Schedule for such item of Equipment and to make
any necessary adjustments necessitated thereby in the rent figures set forth on
such Rental Schedule. Lessor agrees that it will take no action not sanctioned
by the Lessee which will cause the price of the Equipment to increase during the
period referred to in this Section 7.
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8. LESSEE'S REPRESENTATIONS AND WARRANTIES -- Lessee represents and
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warrants for the benefit of Lessor (and if requested by Lessor, will provide
other supporting documents to the effect) that both as of the date of this Lease
and the date any Equipment is accepted for lease hereunder:
(a) Lessee is a corporation legally incorporated and validly existing, in
good standing under the laws of the state of its incorporation, with
full corporate power to enter into this Lease and to pay and perform its
obligations hereunder, and under each Rental Schedule and is qualified
to do business in the location(s) where the Equipment is installed;
(b) this Lease has been duly authorized, executed and delivered by and
Lessee, is enforceable in accordance with its terms and Lessee's
execution, delivery and performance thereunder do not and will not
contravene any provisions of or constitute a default under, any
indenture, mortgage, contract or other instrument by which it is bound;
(c) any approval required from any public regulatory body or from any parent
or affiliate of Lessee or from any other person, firm or corporation
with respect to the entering into or performance of this Lease by Lessee
has been obtained as of the date of this Lease or will be obtained
promptly thereafter;
(d) there are no suits or proceedings pending, or to the knowledge of Lessee
threatened, in any court or before any regulatory commission, board or
other administrative governmental agency against or affecting Lessee,
which, if decided against Lessee, would impair Lessee's ability to pay
the rents as they become due or perform any of its other obligations
pursuant to this Lease; and
(e) there has been no material adverse change to Lessee's financial
condition since the date of Lessee's most recent audited financial
statement.
9. TITLING AND REGISTRATION; IDENTIFICATION MARKS -- (a) The Lessee will,
on behalf of the Lessor and at the Lessee's expense, promptly obtain an
application for the Lessor's title for each item of Equipment, reflecting the
Lessor or its assignee as owner and whomever the Lessor shall designate as first
lienholder, the Manufacturer's certificate of title and a certificate of
registration issued in the name of the Lessor or its assignee. Certificates of
ownership shall be delivered to the Lessor or to whomever the Lessor shall
designate. The Lessee shall, at Lessee's expense, take such action as shall be
necessary from time to time to avoid suspension or revocation of any
certificates of ownership and to renew and maintain all certificates of
registration. If the Lessee is required to obtain any new certificate of
ownership or of registration, the Lessee shall, at Lessee's sole expense and
after prior written notice to the Lessor, obtain such new certificate of
ownership or of registration in the manner provided herein. The Lessor appoints
the Lessee its attorney-in-fact for the purpose of carrying out the Lessee's
obligations pursuant to this Section 9. The Lessee shall notify the Lessor of
the state in which each item of Equipment is titled and registered, the license
plate number of each item of Equipment, and any changes of such state of license
plate number.
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(b) If requested by Lessor or required by federal, state or local law, Lessor
shall furnish to Lessee and Lessee shall, at Lessee's expense, affix to the
Equipment a sign, tag or other form of notice to disclose Lessor's ownership of
the Equipment or that the Equipment is leased, and Lessee shall keep and
maintain such sign, tag or other form of notice affixed or attached to the
Equipment throughout the Lease Term. Lessee will not allow the name of any
persons other than Lessor or its assignee to be placed on any Equipment as a
claim of ownership other than that of Lessor; provided, however, that Lessee may
cause such Equipment to be lettered with the names or initials or other insignia
customarily affixed by the manufacturer thereof or used by Lessee on equipment
used by it of the same or a similar type for convenience of identification of
its rights to use such Equipment as permitted under this Lease or normal
advertising displays.
10. FEES AND TAXES - Lessee agrees to pay promptly when due, and to
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indemnify and hold Lessor harmless from, all license, title and registration
fees whatsoever, all taxes (including without limitation all sales, use,
personal property, franchise, ad valorem, value added, leasing, leasing use,
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federal highway use, fuel, third structure and stamp taxes) and all levies,
imposts, duties, highway or bridge tolls, fees (including without limitation all
documentation fees) and all other charges (together with any penalties, fines or
interest thereon), whether such fees, taxes, or charges are general or special,
ordinary or extraordinary, foreseen or unforeseen, which are assessed, levied or
imposed by any governmental or taxing authority against or upon Lessor, with
respect to any Equipment or the purchase, acquisition, ownership, delivery,
leasing, possession, use, operation, control or return thereof, or the rents,
receipts or earnings arising therefrom which accrue during the term of this
Lease, excluding, however, any federal, state or local taxes levied on or
measured by Lessor's net income. In the event any such fees, levies, imposts,
duties, charges or taxes which are the responsibility of Lessee are paid by
Lessor, or if Lessor be required to collect or pay any thereof, Lessee shall
reimburse Lessor therefor (plus any penalties, fines or interest thereon)
promptly upon demand. Lessee will file all personal property tax returns
covering the Equipment, and unless and until Lessor notifies Lessee in writing
to the contrary, Lessee will pay the personal property taxes levied or assessed
thereon directly to the levying authority. Upon Lessor's written request, Lessee
shall submit to Lessor a true and correct copy of its personal property tax
return and its receipt evidencing payment of the tax. In the event Lessor elects
to pay personal property taxes directly to levying authority, Lessor shall
submit to Lessee a true and correct copy of Its personal property tax return and
its receipt evidencing payment of the tax and Lessee will then promptly
reimburse Lessor for the full amount of such personal property taxes so paid by
Lessor. All of the obligations of Lessee under this Section 10 with respect to
any fees, levies imposts, duties, charges, withholdings, taxes and governmental
charges (together with any penalties, fines or interest thereon) assessed,
levied imposed or accrued prior to the expiration or other termination of this
Lease shall continue in full force and effect notwithstanding such expiration or
other termination and are expressly made for the benefit of, and shall be
enforceable by, Lessor.
Lessor shall obtain a sales tax exemption, where available, with respect to
its purchase of the Equipment from the vendor thereof and any tax payable with
respect to the use of the Equipment by Lessee shall be paid by Lessee, a pro
rata basis, with each rental payment due hereunder, to the extent permissible by
law.
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11. INDEMNIFICATION BY LESSEE - Lessee shall indemnify Lessor against, and
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agrees to defend, protect, save and keep Lessor harmless from any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, expenses and disbursements, including legal fees and expenses, of
whatsoever kind and nature imposed on, incurred by or asserted against Lessor
(including, without limitation, by way of strict or absolute liability), in any
way relating to or arising out of:
(a) The ordering, construction, purchase, acceptance, installment, rejection
or use of the Equipment; or
(b) Lessee's acts or omissions relating to the delivery, non-delivery,
possession, use, maintenance, operation, control, condition, return,
redelivery, storage, surrender, or other use of the Equipment during the term of
this Lease, including without limitation:
(i) claims or penalties arising from any violation of the laws of any
country or political subdivision thereof,
(ii) loss, damage, destruction, removal of any item of Equipment,
death or injury to any person, including tort claims of any kind,
whether based on fault or strict liability in tort (whether or not such
loss, damage, death or injury is shown to be caused by any use or misuse
of any item of Equipment),
(iii) any liens or other claims required to be removed or released by
Lessee pursuant to Section 12 hereof,
(iv) latent or other defects, whether or not discoverable, and
(v) any claim for patent, trademark or copyright infringement,
provided, however, Lessee shall have no obligation to Lessor under this Section
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11 for any indemnification or hold harmless claim against Lessee which in any
way relates to or arises out of the negligence or wilful misconduct of the
Lessor.
In case any action, suit or proceeding is brought against Lessor by reason of
any of the foregoing, Lessee, at Lessee's expense, shall cause the claim upon
which such action, suit or proceeding is based to be discharged, or shall resist
and defend such action, suit or proceeding (or cause the same to be resisted or
defended) by counsel designated by Lessee. If Lessor shall be made a party to
any litigation commenced against Lessee, and Lessee, at its expense, shall fail
to provide Lessor with counsel approved by Lessor, Lessee shall pay all costs
and attorneys' fees and expenses incurred by Lessor in connection with such
litigation. Notwithstanding any other provision hereof, Lessor shall not be
required to take any action hereunder involving the expenditure of funds unless
Lessee shall have provided Lessor with such funds as may reasonably be requested
by Lessor in connection with such action to be taken by Lessor. Lessor agrees,
at Lessee's expense, to cooperate and take such action as may be reasonably
necessary to generally assist Lessee in the conduct of any litigation relating
to this Lease and hereinbefore described in this Section 11.
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The indemnification of Lessee under this Section 11 shall survive the
payment of all obligations under, and the termination of, this Lease.
12. USE OF EQUIPMENT; LIENS - During the Lease Term, Lessee warrants and
------------------------
agrees that the Equipment will be used and operated under and in compliance with
the laws of the jurisdictions in which the Equipment may be located and
operated and in compliance with all lawful acts, rules, regulations and orders
of any judicial, legislative or regulatory body having power to regulate or
supervise the use of the Equipment. Lessee shall comply with and shall cause the
Equipment to comply with all contracts (including insurance policies) agreements
and restrictions applicable thereto or to the use or ownership thereof. Lessee
shall use each item of Equipment and permit each item of Equipment to be used
only for such purposes as such Equipment was designed and suited.
During the Lease Term Lessee, will not directly or indirectly create, incur,
assume or suffer to exist any mortgage, security interest, pledge, lien, charge,
encumbrance or claim on or with respect to the Equipment, Lessor's title
thereto, or any interest therein, except:
(a) the respective rights of Lessor (and its assigns, if any) and Lessee as
herein provided;
(b) liens or encumbrances granted or placed thereon by Lessor (or its
assigns, if any);
(c) liens or encumbrances resulting from claims against Lessor but not
against Lessee and unrelated to this Lease, and not resulting from any
default, act or omission of Lessee;
(d) liens for taxes either not yet due or being contested in good faith
and by appropriate proceedings;
(e) inchoate materialmen's, mechanics', workmen's, repairmen's, employees'
or other like liens arising in the ordinary course of business and not
delinquent; and
(f) liens arising out of judgments against Lessee with respect to which at
the time of appeal or proceeding for review is being prosecuted in good
faith and with respect to which there has been secured a stay of
execution pending such appeal or proceeding for review; provided,
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however, that the liens referred to in clauses (d) and (e) of this
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Section 12 and this clause (f) may remain only so long as the existence
thereof does not subject the Equipment in question to forfeiture,
seizure, sale or foreclosure or otherwise adversely affect the rights
of Lessor or its assigns.
Lessee, at its own expense, will promptly take such action as may be necessary
to keep the Equipment free and clear of, and to duly discharge, any such
mortgage, security interest, pledge, lien, charge, encumbrance or claim not
excepted above. Lessee agrees to procure and maintain in effect all licenses,
certificates, permits and other approvals and consents required by federal,
state, county, municipal or foreign laws and regulations in connection with
Lessee's possession, use, operation and maintenance of the Equipment. Except as
otherwise provided in Section 25 hereof, Lessee agrees that without
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Lessor's prior written consent, which consent will not be unreasonably
withheld, Lessee will not assign or transfer its rights under this Lease, or
sublease any of the Equipment, or remove or suffer any of the Equipment to be
removed from the location specified in the Rental Schedule for such Equipment,
or permit any Equipment to be used by anyone other than Lessee, Lessee's
employees, a representative of the manufacturer or an independent contractor
engaged by Lessee.
13. EQUIPMENT MAINTENANCE, REPAIR, AND ADDITIONS (a) During the Lease Term
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with respect thereto, Lessee, at Lessee's sole expense, will maintain the
Equipment and each item thereof in good and efficient operating repair,
appearance and condition except for ordinary wear and tear, and will make all
ordinary and extraordinary adjustments, replacements and repairs which may be
required to keep the Equipment and each item thereof in good and efficient
operating repair and condition. All maintenance and repairs to the Equipment
shall be made by the Manufacturer thereof or those of substantially equal skill
or knowledge in maintaining and repairing the Equipment.
(b) Upon request by Lessee, Lessor agrees to purchase or otherwise obtain
for the Lessee additional items of equipment that are available for interface
and connection with items of the Equipment and to lease the same to the Lessee
for the remaining Lease Term, including renewal terms, upon the same terms and
conditions as are herein specified, and the rentals for such additional items
shall be negotiated in good faith between Lessor and Lessee. Notwithstanding the
foregoing and provided that the value of the Equipment or any item thereof shall
not be reduced thereby, Lessee shall have the right at any time to add or
connect additional compatible equipment to the Equipment whether such compatible
equipment is owned by Lessee or on rental with any third party. In each case,
Lessee shall disconnect or detach such equipment upon the expiration or earlier
termination of this Lease, or such equipment shall become the property of the
Lessor. Lessee agrees to indemnify and hold Lessor harmless from any loss or
damage caused to the Equipment by the connection to, or disconnection from, any
compatible equipment.
14. LOSS, DAMAGE OR DESTRUCTION OF EQUIPMENT - Lessee shall bear all risks
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of damage to, taking of, or loss or destruction of, any item of Equipment during
the Lease Term thereof and until such Equipment has been returned to Lessor
pursuant to the provisions of Sections 18 or 20, whichever is applicable.
In the event that any item of Equipment shall become lost, stolen, destroyed
or irreparably damaged from any cause whatsoever, or if any item of Equipment or
Lessor's title thereto shall be requisitioned or seized by and governmental
authority (each such occurrence being hereafter called a "Casualty Occurrence")
during the Lease Term of such item until such item has been returned to Lessor
in accordance with the provisions of Sections 18 or 20 hereof, whichever is
applicable, Lessee shall promptly notify Lessor in writing of such fact, fully
informing Lessor of all details with respect thereto, and shall at the option of
Lessee:
(a) within ten (10) days of such Casualty Occurrence inform Lessor by
written notice of its intent to replace the item or items of Equipment suffering
such Casualty Occurrence and with the written consent of Lessor, replace the
same, as soon as practicable, with like property approved by the
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Lessor with a market value and utility at least equal to that of the replaced
Equipment prior to the Casualty Occurrence which property shall thereupon become
the property of Lessor subject to this Lease for the then remaining Lease Term.
In the event Lessee elects to replace the Equipment pursuant to this Section
14(a) and Lessor does not give its consent as provided for herein, Lessee agrees
to promptly pay either the Stipulated Loss Value or Fair Market Value pursuant
to the provisions of Section 14(b) hereof; or
In the event Lessee elects, with the written concurrence of Lessor, to
replace the Equipment pursuant to this Section 14(a), any insurance proceeds
received as a result of the Casualty Occurrence in question shall be applied
first in payment of any then due and unpaid obligation of Lessee to Lessor
hereunder and secondly to reimburse Lessee for funds it has expended to replace
the item of Equipment in question pursuant to this Section 14(a), provided that
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all remaining amounts, if any, shall be paid to Lessor.
(b) pay Lessor in cash the greater of the Fair Market Value of the item of
Equipment in question as of the date of the Casualty Occurrence or the
"Stipulated Loss Value" as set forth in the Exhibit to the Rental Schedule
pursuant to which such item of Equipment is leased hereunder. This payment shall
be made on the next succeeding Payment Date following the Casualty Occurrence.
Upon such payment and the payment of all other rent and all other amounts then
due hereunder up to and including the Payment Date this Lease shall terminate
with respect to the Equipment or part thereof so paid for and all Lessor's right
and title to the Equipment shall pass to Lessee, "as is" and "where is" without
warranty or recourse, as evidenced by a duly executed bill of sale naming Lessor
as the seller and Lessee as the buyer.
In the event a payment has been or is to be made by Lessee pursuant to
Section 14(b) as the result of a Casualty Occurrence, any insurance proceeds
received as a result of the Casualty Occurrence in question shall be applied
first in payment of any then unpaid obligation of Lessee to Lessor hereunder and
secondly in payment of Lessee's obligation to pay the greater of Stipulated Loss
Value or Fair Market Value for such item if not already paid by Lessee to
Lessor, or, if already paid by Lessee, to reimbursement to Lessee for its
payment of Stipulated Loss Value or payment of Fair Market Value whichever is
the case, provided that all remaining amounts, if any, shall be paid to Lessor.
-------- ----
Nothing in this Section 14 shall in any way diminish Lessee's obligation to
return the Equipment pursuant to Sections 18 or 20 hereof in the event the
Lessee elects to replace the Equipment in question pursuant to clause (a)
hereof.
15. TRANSFER - Lessor may at its sole discretion sell or transfer any of
--------
the Equipment and/or this Lease to a partnership, trust or other person or
entity subject to the rights of the Lessee or any assignee of Lessee under this
Lease, provided, however, that Lessor agrees to pay any costs or expenses
-------- -------
associated with such transfer.
16. REPORTS - On or before February 1 of each year of the Lease Term,
-------
Lessee will cause to be furnished to Lessor, if requested, an accurate
statement, as of the preceding calendar year:
-10-
(a) showing the amount, description and identifying numbers of all items of
Equipment that may have suffered a Casualty Occurrence during the
preceding calendar year, and such other information regarding the
condition and state of repair of such items of Equipment as Lessor may
reasonably request;
(b) certifying that all items of Equipment have been marked as required by
Section 9 hereof; and
(c) certifying that all items of Equipment continue to remain located at the
premises specified on the Rental Schedule therefor or at such location
as has been approved in writing by the Lessor.
Lessor shall have the right, upon reasonable notice to Lessee, to inspect
the items of Equipment and Lessee's records with respect thereto at such times
as shall be reasonably necessary to confirm to Lessor the existence and proper
maintenance thereof during the continuance of the Lease.
17. INSURANCE - (a) Lessee will maintain, at its sole cost and expense, at
---------
all times during the Lease Term of any Equipment, and until such Equipment has
been returned to Lessor in accordance with the provisions of Sections 18 or 20,
whichever is applicable, with reputable insurers acceptable to Lessor, such
acceptance not to be unreasonably withheld, (A) insurance in an amount equal to
the greater of Fair Market Value or Stipulated Loss Value, of each item of
Equipment leased hereunder, insuring against loss and/or damage to such
Equipment arising out of any risk covered by fire, windstorm, explosion, and
extended coverage and against such other risks as are customarily insured
against by companies owning property of a similar character and engaged in a
business similar to that engaged in by Lessee, or, alternatively, Lessee shall
have the right to self assume with respect to damages set forth in clause (A)
hereof to the extent and in the amounts set forth in clause (A) hereof, and (B)
comprehensive public liability and property damage insurance, insuring against
liability for death, bodily injury and property damage resulting from ownership,
maintenance, use or operation of the Equipment in the minimum amount of
$5,000,000. All insurance policies shall (i) name Lessor (and also any assignee
of Lessor, if requested by such assignee) as an additional insured, with losses
under the physical loss and/or damage policies to be payable to Lessor and
Lessee as their respective interests may appear, (ii) with respect to the
physical loss and damage policies only, shall contain endorsements waiving any
default in payment of premium or satisfaction of any other obligation of the
Lessee as a condition to payment to Lessor as additional insured, and (iii)
provide that the policies may only be materially altered or canceled by the
insurer after thirty (30) days prior written notice to Lessor and to any
assignee of Lessor. Lessee shall deliver to Lessor, prior to the Lease
Commencement Date for any item of Equipment (or any such other time or times as
Lessor may request) a certificate or other evidence of the maintenance of all
such insurance satisfactory to Lessor, provided however, that Lessor shall be
under no duty to examine such certificates or other evidence of insurance, or to
advise Lessee in the event that its insurance is not in compliance with this
Lease. The comprehensive physical loss or damage insurance policy or policies
shall also provide that upon receipt by the insurer from Lessor of any written
notice of the occurrence of an Event of Default hereunder, any proceeds payable
by said insurer with respect to any loss or destruction of, or damage to, any
Equipment, shall be payable solely to Lessor (and to any
-11 -
assignee of Lessor, if requested by such assignee) from the date of said
insurer's receipt of such written notice, up to the date said insurer receives
written notice from Lessor that said Event of Default is no longer continuing
hereunder. On or prior to acceptance of any item of Equipment for lease
hereunder, and thereafter not less than five (5) days prior to the expiration
dates of the expiring policies required pursuant to this Section 17, Lessee
shall deliver to each party hereto certificates of insurance issued by the
insurers thereunder or by an insurance broker authorized to bind such insurers
evidencing the insurance maintained pursuant to this Section 17; provided,
--------
however, that if the delivery of any certificate is delayed, Lessee shall
- -------
deliver the formal certificate upon receipt thereof.
(b) In the event that Lessee shall fail to maintain insurance as herein
provided, Lessor or its assignee may at its option, but without obligation,
provide such insurance and, in such event, Lessee shall, upon demand from time
to time, reimburse Lessor or its assignee for the cost thereof, together with
interest on such cost computed at the Default Interest Rate per annum, computed
from the date of payment of such cost to the date of reimbursement. Lessor or
its assignee shall give Lessee prompt written notice of any such insurance.
(c) If no Event of Default or no event which, but for the lapse of time or
the giving of notice or both, would be an Event of Default, shall have occurred
and be continuing, and if the Lessee shall have made payment to Lessor or its
assignee of the Stipulated Loss Value for any item of Equipment, Lessee shall be
entitled to receive any insurance proceeds or condemnation payments with respect
to the related casualty occurrence up to an amount equal to such Stipulated Loss
Value, and any balance of such proceeds or payments shall remain the property of
Lessor and its successors and assigns. All casualty insurance proceeds in
respect to any item of Equipment not suffering a casualty occurrence shall be
paid to Lessee upon proof reasonably satisfactory to Lessor that any damage to
such item of Equipment in respect to which such proceeds were paid has been
fully repaired.
(d) Nothing in this Section 17 shall be construed to prohibit Lessor or its
assignee(s) from insuring at its own expense any item of Equipment or its
interest therein, and any insurance so maintained shall not provide for or
result in a reduction of the coverage or the amounts under any of the insurance
required to be maintained by Lessee under this Section 17.
18. RETURN OF EQUIPMENT - Upon the expiration or earlier termination of
-------------------
this Lease with respect to an item of Equipment, the Lessee, at its own risk and
expense, shall return such item of Equipment to the Lessor, together with all
license plates and all registration certificates, certificates of ownership,
maintenance and repair records and similar documents in the Lessee's possession,
at the place originally delivered hereunder, or such other places as the Lessor
and Lessee may mutually agree, in the condition in which such item of Equipment
is required to be maintained pursuant to Section 13 hereof and, with respect to
any items of Equipment which are tractor or trailer units, at least meeting the
following conditions:
(a) All items of Equipment originally furnished with such item of
Equipment, or the substantial equivalent thereof, shall be installed, intact and
in the condition required by Section 13 hereof at the time of return;
-12-
(b) The power train including engine, transmission and driveline shall
be in standard operating condition;
(c) All components of any item of Equipment shall function in their
original condition and appearance and as originally designed, reasonable wear
and tear excepted;
(d) Each item of Equipment shall comply with all applicable Department
of Transportation and other federal rules and regulations and all rules and
regulations of the jurisdiction in which such item of Equipment is returned; and
(e) Each item of Equipment shall be free of any advertising and
identification of Lessee.
Lessee shall provide storage for each item of Equipment at such item of
Equipment's redelivery location at Lessee's expense and risk for a period of
ninety (90) days or until Lessor has sold or otherwise disposed of such item of
Equipment, whichever shall first occur; provided Lessor has no right hereunder
--------
to abandon any item of Equipment to Lessee.
19. LESSOR'S OWNERSHIP EQUIPMENT TO BE AND REMAIN PERSONAL PROPERTY - Lessee
---------------------------------------------------------------
acknowledges and agrees that it has not, and by the execution of this Lease it
does not have or obtain, and by payments and performance hereunder it does not
and will not have or obtain, any title to the Equipment, nor any property right
or interest, legal or equitable, therein, except its rights as Lessee hereunder
and subject to the terms hereof. It is expressly understood that all of the
Equipment shall be and remain personal property notwithstanding the manner in
which the Equipment may be attached or affixed to realty, and that upon the
expiration or other termination of the Lease Term of any Equipment, Lessee shall
have the obligation, and Lessor shall have the right, to remove, or cause the
removal of, such Equipment, from the premises whereon the same is then located,
whether or not any such Equipment is affixed or attached to realty or to any
building. There shall be no merger of this Lease or the leasehold hereby created
with the fee interest in the any item of Equipment by reason of the fact that
the same person acquires or holds, directly or indirectly, this Lease or the
leasehold interest hereby created or any interest herein or in such leasehold
interest as well as the fee interest any item of Equipment or any interest in
such fee interest.
If Lessee is unable to return, or is prevented from returning, any Equipment
to Lessor upon the expiration or termination of the Lease Term hereof as
required under Sections 18 or 20 hereof, for any reason whatsoever including,
but not limited to, the assertion by any third party of any claim against such
Equipment, or of any right with respect thereto, whether or not resulting from
the manner in which such Equipment is affixed to or attached to, or installed on
or in, the realty or any building(s) thereof, such Equipment shall, for all
purposes of this Lease be deemed to have been subject of a Casualty Occurrence,
and Lessee shall pay to Lessor the amounts provided in Section 14(b) hereof,
with respect to such Equipment, at the time, in the manner, and with the
consequences provided in such Section.
20. EVENTS OF DEFAULT - (a) If, during the continuance of this Lease, one or
-----------------
more of the following events (hereinafter called "Events of Default") shall
occur:
-13-
(1) default shall be made in the payment of any rent hereunder, or default
shall be made in the payment of any obligation provided for in this Lease, and
any such default shall continue for more than ten (10) days after the due date
of such rent or obligation, provided that no Event of Default shall occur if the
-------- ----
failure of the Lessor to receive the payment in question is not the result of
any act or omission on the part of the Lessee and if payment is made to Lessor
by Lessee no later than one (1) business day after Lessee has notice of such
failure of Lessor to receive such payment;
(2) Lessee shall default in the observance and/or performance of any other
covenant, condition and agreement on the part of Lessee to be observed and/or
performed under this Lease and such default shall continue for thirty (30) days
after written notice from Lessor to Lessee specifying the default and demanding
the same to be remedied, provided there shall be no event of default if Lessee
is proceeding diligently to cure and if reasonable indemnification satisfactory
to Lessor and its assignee is provided;
(3) any material representation or warranty made by Lessee herein or in any
document or certificate furnished to Lessor in connection herewith or pursuant
hereto shall at any time prove to be incorrect when made in any material
respect;
(4) Lessee shall make or permit any unauthorized assignment or transfer of
this Lease or of Lessee's rights and obligations hereunder, or Lessee shall make
or permit any unauthorized sublease or transfer of any Equipment, or the
possession of same;
(5) Lessee shall make an assignment for the benefit of creditors, or cease
doing business as a going concern, or become insolvent or bankrupt or admit in
writing its inability to pay its debts as they mature, or consent to the
appointment of a trustee or receiver, or a trustee or a receiver shall be
appointed on decree or order of a court having jurisdiction in the premises, for
Lessee or for a substantial part of Lessee's property without Lessee's consent
and such decree or order shall continue undischarged and unstayed for a period
of ninety (90) days, or bankruptcy, reorganization, insolvency, arrangement, or
liquidation proceeding shall be instituted by or against Lessee, and if
instituted against Lessee, a decree or order adjudicating Lessee a bankrupt
shall continue undischarged and unstayed for a period of ninety (90) days;
(6) if pursuant to the merger of Lessee into another corporation pursuant to
which Lessee is not the surviving corporation, or the consolidation of Lessee
with one or more other corporations and the sale or other disposition of all or
substantially all the assets of Lessee to one or more other entities, the
surviving entity or transferee of assets, as the case may be, shall not deliver
to Lessor and to any assignee of Lessor's interest in this Lease an acknowledged
instrument in recordable form, assuming all obligations covenants and
responsibilities of Lessee hereunder and under any instrument executed by
Lessee, and acknowledging the assignment of Lessor's interest this Lease as
security for indebtedness;
-14-
(b) Then, in any such case, Lessor, at its option, may do any one or more of
the following;
(1) declare this Lease, with respect to the Rental Schedule in question, in
default upon written notice (or telephonic notice promptly confirmed in writing)
to Lessee, and proceed by appropriate court action or actions at law or in
equity or in bankruptcy to enforce performance by Lessee of the covenants and
terms of this Lease and/or to recover damages for the breach thereof;
(2) terminate this Lease upon written notice (or telephonic notice promptly
confirmed in writing) to Lessee; whereupon all right of Lessee to use the
Equipment shall absolutely cease and terminate;
(3) whether or not this Lease be terminated, repossess the Equipment,
wherever found, with legal process, and for this purpose Lessor and/or its
agents may enter upon any premises of or under the control or jurisdiction of
Lessee or any agent of Lessee, and remove the Equipment therefrom;
(4) with respect to any Equipment returned to or repossessed by Lessor, hold
or use such Equipment for any purpose whatsoever, including selling the same at
a private or public, cash or credit sale, or Lessor may re-lease such Equipment
in all the foregoing events free and clear of any rights of the Lessee and
without any duty to account to the Lessee with respect to such action or
inaction;
(5) whether or not Lessor shall have exercised, or shall thereafter at any
time exercise, any of its rights set forth above in this Section 20 with respect
to any item of Equipment, and upon written notice (or telephonic notice promptly
confirmed in writing) to the Lessee specifying a payment date which shall be not
earlier than ten days after the date of such notice, demand that the Lessee pay
to the Lessor, and the Lessee shall pay to the Lessor on the payment date
specified in such notice, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of the Basic Rent for such item of Equipment due after the
payment date specified in such notice), any unpaid Basic Rent for such item of
Equipment due for periods prior to the payment date specified in such notice
plus whichever of the following amounts the Lessor, in its sole discretion,
shall specify in such notice: (i) an amount equal to the excess, if any, of 115%
of the Stipulated Loss Value for such item of Equipment computed as of the Basic
Rent Payment Date next preceding the payment date specified in such notice or if
such payment date occurs on a Basic Rent Payment Date, then computed as of such
Basic Rent Payment Date, over the present value of the fair market rental value
(determined as hereafter in this Section 20 provided) of such item of Equipment
for the remainder of the Lease Term or renewal term, as the case may be, as of
the payment date specified in such notice, such present value to be computed on
the basis of 12% per annum rate of discount from the respective dates upon which
such rent would be paid, or (ii) an amount equal to the excess, if any, of 115%
of the Stipulated Loss Value for such item of Equipment as of the Basic Rent
Payment Date next preceding the payment date specified in such notice or if such
payment date occurs on a Basic Rent Payment Date, then computed as of such Basic
Rent Payment Date, over the fair market sales value of such item of Equipment
(determined as hereafter in this Section 20 provided) as of the payment date
specified in such notice;
-15-
(6) whether or not any Equipment is returned to, or repossessed by Lessor,
as aforesaid, Lessee shall also be liable for, and Lessor may forthwith recover
from Lessee, all unpaid rent and other unpaid sums that accrued prior to the
date of Lessee's default. In addition to the foregoing, Lessor may also recover
from Lessee all costs and expenses arising out of Lessee's default, including
without limitation expenses of repossession of the Equipment and the storage,
repairs, reconditioning, sale and releasing thereof, reasonable attorneys' fees
and fees of collection agencies, incurred by Lessor in exercising any of its
rights or remedies hereunder; and
(7) if Lessor shall have sold any item of Equipment pursuant to paragraph
(4) above, Lessor, in lieu of exercising its rights under paragraph (5) above
with respect to such item of Equipment may, if it shall so elect, demand that
the Lessee pay to Lessor, and the Lessee shall pay to Lessor, as liquidated
damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent
for such item of Equipment due on Payment Dates subsequent to the Payment Date
next preceding such sale), any unpaid Basic Rent for such item of Equipment due
for periods up to and including the Payment Date next preceding the date such
sale occurs plus the amount, if any, by which 115% of the Stipulated Loss Value
of such item of Equipment computed as of the Payment Date next preceding the
date of such sale or if such sale occurs on a Payment Date, then computed as of
such Payment Date, exceeds the net proceeds of such sale.
For the purposes of this Section 20, "fair market rental value" and
"fair market sales value" shall be determined on the basis of an appraisal of
The American Appraisal Company or a comparable independent appraiser chosen by
the Lessor, and the cost of any such appraisal shall be borne by the Lessee.
In the event that any court of competent jurisdiction determines that any
provision of this Section 20 is invalid or unenforceable in whole or in part,
such determination shall not prohibit Lessor from establishing damages it
sustained as a result of any breach of this Lease in any action or proceeding in
which Lessor seeks to recover such damages. Any repossession or resale of any
Equipment shall not bar an action for damages for breach of this Lease, as
hereinbefore provided, and the bringing of an action or the entry of judgment
against Lessee shall not bar Lessor's right to repossess any or all Equipment.
The remedies herein provided in favor of Lessor, shall not be deemed to be
exclusive, but shall be cumulative and shall be in addition to all other
remedies in Lessor's favor existing in law, in equity or bankruptcy.
If an Event of Default has occurred hereunder, Lessee shall pay to Lessor,
on demand, all expenses incurred by Lessor as a result thereof, including
reasonable attorneys' fees and expenses.
21. ASSIGNMENT BY LESSOR; ESTOPPEL CERTIFICATES. - (a) Lessor may, at any
-------------------------------------------
time and from time to time assign, in whole or in part, this Lease, any item of
the Equipment, the Basic Rent, Additional Rent and other sums at any time due
and to become due, or at any time owing or payable by the Lessee to Lessor under
any of the provisions of this Lease without notice to or consent of Lessee.
Lessee agrees that; if so requested, it will acknowledge such assignment in
writing to such assignee.
-16-
(b) No such assignee shall be obligated to perform any duty, covenant or
condition required to be performed by Lessor under any of the provisions of this
Lease. Lessee, by its execution hereof, acknowledges and agree that
notwithstanding any such assignment, each and every covenant, agreement,
representation and warranty of Lessor under this Lease shall be and remain the
sole liability of the Lessor and of every successor in interest of Lessor.
Lessee further acknowledges and agrees that from and after the receipt by Lessee
of written notice of such an assignment from Lessor, Lessee shall comply with
the directions or demands given in writing by the assignee and the assignee
shall have the right to exercise (either in its own name or in the name of the
Lessor) such rights, privileges and remedies of Lessor provided in such
assignments. Lessee shall not assert against the assignee any defense,
counterclaims, set-off, abatement, reduction or recoupment that Lessee may have
against Lessor. After any such assignment, this Lease may not be amended or
modified without the prior written consent of any such assignee. Upon any
assignment of this Lease or granting of any mortgage on or security interest in
any of the Equipment, Lessee agrees to execute and Lessor or its assignee may
record any instruments relating to such assignment, mortgage or security
interest desired by the Lessor or assignee in accordance with the laws of the
relevant jurisdiction(s) and the Lessee shall promptly submit on request such
documents as may be requested by the Lessor or assignee in order to secure and
complete any assignment, mortgage or security interest.
(c) Lessee will, from time to time, upon request by Lessor, execute,
acknowledge and deliver to Lessor a certificate signed by a responsible senior
officer of Lessee stating that this Lease is unmodified and in full effect (or,
if there have been modifications, that this Lease is in full effect as modified,
and setting forth such modifications) and the dates to which Basic Rent,
Additional Rent and other sums payable here under have been paid, and either
stating that to the knowledge of the signer of such certificate no default
exists hereunder or specifying each such default of which the signer has
knowledge. Lessee acknowledges any such certificate may be relied upon by any
existing or prospective assignee of Lessor's interest under this Lease or any
purchaser of any item of the Equipment.
22. OPTION TO RENEW - (a) Upon the expiration of the Primary Term with
---------------
respect to each Rental Schedule, provided that Lessee has paid all rentals and
all other sums then due by Lessee to Lessor, or which would become due upon the
request of Lessor, as required under the provisions of this Lease, and provided
that no Event of Default, and no event which with the giving of notice or lapse
of time, or both, would constitute an Event of Default, has occurred and then
remains unremedied to Lessor's satisfaction, Lessee shall have the option,
exercisable on at least 90 days prior written notice to Lessor to renew the
Lease Term with respect to all, but not less than all (except for items that
have been destroyed and for which Lessor has received payment of the Stipulated
Loss Value with respect thereto) of the Equipment then subject to said Rental
Schedule, either:
(1) on a month-to-month renewal basis, terminable by either Lessor or Lessee
upon thirty days written notice, at the same rate, terms and conditions
as described herein for a term that in no event shall exceed one year;
or
-17-
(2) up to three (3) successive additional terms (each of which being herein
called a "Renewal Term") for one year each at a rental for each such
Renewal Term at a rate that would be obtained in an arms-length
transaction between an informed and willing prospective lessee and an
informed and willing lessor under no compulsion to lease (said rate
being herein called the "Fair Rental Rate").
(b) If, on or before a date 60 days prior to the expiration of the Primary
Term or any Renewal Term with respect to each Rental Schedule for which notice
of Renewal has been given, Lessor and Lessee are unable to agree upon a
determination of the Fair Rental Rate for the Equipment, Lessee and Lessor shall
have no obligation to renew this Lease. However, if Lessee wishes to proceed
with its option, Lessee shall give written notice to Lessor to that effect and
the Equipment shall be leased during the Renewal Term at the Fair Rental Rate
determined in accordance with the procedure for Appraisal below provided that
the total term of the Lease, including any Renewal Term(s) entered into pursuant
to Section 22 hereof, shall not exceed 75% of the useful life of the item of
Equipment in question.
(c) "Appraisal" shall mean a procedure whereby two recognized independent
equipment appraisers, one chosen by Lessee and one by Lessor shall mutually
agree upon the amount in question. Lessor or Lessee, as the case may be, shall
deliver a written notice to the other party appointing its appraiser within 15
business days after receipt from the other party of a notice appointing that
party's appraiser. If within 15 days after appointment of the two appraisers as
described above, the two appraisers are unable to agree upon the amount in
question, a third recognized independent appraiser shall be chosen within five
days thereafter by the mutual agreement of such first two appraisers, or if such
first two appraisers fail to agree upon the appointment of a third appraiser,
such appointment shall be made by an authorized representative of the American
Arbitration Association, and the appraisal of the third appraiser so appointed
and chosen shall be given within a period of ten (10) days after the selection
of such third appraiser. The average of the three appraisals arrived at by said
three appraisers shall be binding and conclusive on Lessor and Lessee. Lessor
and Lessee shall pay the fees of the respective appraisers appointed by them and
shall share equally the fees and expenses of the third appraiser, if any, and
those of the American Arbitration Association, if applicable.
(d) After a determination of the Fair Rental Rate of the Equipment has been
made in accordance with the procedure described above, Lessee's exercise of its
option shall be effective upon the expiration of the Primary Term of the Rental
Schedule in question.
23. ADDITIONAL RIGHTS OF LESSOR. - No right or remedy hereunder shall be
---------------------------
exclusive of any other right or remedy hereunder or now or hereafter existing.
Failure to insist upon the strict performance of any provision hereof or to the
exercise of any option, right, power or remedy contained herein shall not
constitute a waiver or relinquishment thereof for the future. Receipt by Lessor
of any Basic Rent, Additional Rent or other sum payable hereunder with knowledge
of the breach of any provision hereof shall not constitute a waiver of such
breach and no waiver by Lessor of any provision hereof shall be deemed to have
been made unless made in writing.
-18-
Lessor shall be entitled to injunctive relief in case of the violation, or
attempted or threatened violation, or any of the provisions hereof, or to a
decree compelling performance of any of the provisions hereof or to any other
remedy allowed to Lessor by law.
24. NET LEASE; NON-TERMINABILITY. - This Lease is a net lease and, except as
----------------------------
otherwise expressly provided herein, any present or future law to the contrary
notwithstanding, shall not terminate, nor shall Lessee be entitled to any
abatement, reduction, set-off, counterclaim, defense or deduction with respect
to any Basic Rent, Additional Rent or other sum payable hereunder, nor shall the
obligations of Lessee hereunder be affected, other than as expressly set forth
in this Lease, by reason of any damage to or destruction of any item of the
Equipment; any taking of any item of the Equipment by condemnation or otherwise;
any prohibition, limitation, restriction or prevention of Lessee's use or
enjoyment of any item of the Equipment; any other cause whether similar or
dissimilar to the foregoing; or any bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding affecting Lessor or any assignee of
Lessor in any action with respect to this Lease which may be taken by any
trustee, receiver or liquidator or by any court. The parties intend that the
obligations of Lessee hereunder shall be separate and independent covenants and
agreements and shall continue unaffected unless such obligations shall have been
modified or terminated pursuant to a written amendment to this Lease.
25. LESSEE'S RIGHT TO SUBLEASE AND ASSIGN - Notwithstanding the provisions
-------------------------------------
of Section 12 hereof and provided that no Event of Default has occurred and is
continuing, Lessee shall have the right (a) to sublease the Equipment for a term
or terms expiring no later than the day prior to the Termination Date of this
Lease subject to the prior written approval of the Lessor, which approval shall
not be unreasonably withheld, except that no such consent shall be required for
any sublease to a parent, domestic subsidiary or sister corporation of or any
other business entity affiliated with the Lessee, and (b) to assign this Lease,
provided that Lessee shall remain liable for the full performance of all terms,
- -------- ----
covenants and conditions of this Lease as a principal and not as a surety and
that the Agreement dated as of February 15, 1984 by The Sherwin-Williams Company
in favor of the Lessor relating to this Lease, attached hereto as Exhibit 2,
remains in full force and effect with respect to the continuing obligations of
Lessee and the obligations of such assignee of the Lessee, and further provided,
------- --------
that such assignee shall agree to be bound by all the terms and provisions
hereof. No sublease or assignment of the Equipment by Lessee shall relieve
Lessee of any of its obligations hereunder.
26. RECORDING, REGISTRATION AND FILING - Lessee shall, at its expense,
---------
accomplish all recording, registrations and filings of this Lease and any
mortgage, security interest, waiver, license, permit or certificate incident
thereto, required by law or deemed reasonably necessary by Lessor to protect its
interests in the Equipment, and shall furnish Lessor with satisfactory evidence
of each such recording, registration and filing. Notwithstanding anything
contained herein to the contrary, the cost of filing any mortgage or security
interest intended for the protection of Lessor shall be borne solely by Lessor.
-19-
27. INVESTMENT TAX CREDIT - Lessor agrees to pass to Lessee any Investment
---------------------
Tax Credit. Lessor agrees that it will exercise the available election therefor
in a proper and timely manner and then pass such Investment Tax Credit directly
to Lessee. Lessor hereby acknowledges that all such available Investment Tax
Credit shall be for Lessee's account
28. OPTION TO PURCHASE - (a) Upon the expiration of the Primary Term or any
------------------
Renewal Term with respect to each Rental Schedule, provided that Lessee has paid
all rentals and all other sums then due by Lessee to Lessor, or which would
become due upon request of Lessor, as required under the provisions of this
Lease, and provided that no Event of Default, and no event which with the giving
of notice or lapse of time, or both, would constitute an Event of Default, has
occurred and then remains unremedied to Lessor's satisfaction, Lessee shall have
the option, exercisable on at least 120 days prior written notice to Lessor to
purchase the Equipment with respect to all, but not less than all (except for
items that have been destroyed and for which Lessor has received payment of the
Stipulated Loss Value with respect thereto) of the Equipment then subject to
said Rental Schedule, at the then Fair Market Value, unless otherwise specified
on the applicable Rental Schedule.
(b) If, on or before a date 60 days prior to the expiration of the Primary
Term or any Renewal Term with respect to each Rental Schedule, Lessor and Lessee
are unable to agree upon a determination of the Fair Market Value for the
Equipment, Lessee shall have no obligation to purchase the Equipment. However,
if Lessee wishes to exercise its option at Fair Market Value it shall so notify
Lessor in writing, and such value shall be determined in accordance with the
procedure for Appraisal as set forth in Section 22 hereto.
(c) After a determination of the Fair Market Value of the Equipment has been
made in accordance with the procedure described above, Lessee shall purchase the
Equipment by payment to Lessor of the Fair Market Value in cash upon the
expiration of the term of the applicable Rental Schedule. Upon payment by Lessee
to Lessor of the Fair Market Value, in cash, Lessor shall deliver to Lessee
title to the Equipment evidenced by a valid bill of sale conveying title from
Lessor to Lessee.
29. LESSEE'S RIGHT TO TERMINATE - Provided that no Event of Default has
---------------------------
occurred and remains unremedied, and no event which with the giving of notice or
lapse of time, or both would constitute an event of default:
A. Lessee shall have the option to terminate prior to the expiration of the
primary lease term provided that: (i) a minimum of sixteen (16) semiannual
payments of Basic Rent shall have been made from the Commencement Date of the
primary term, (ii) not less than 180 days prior notice to exercise the early
termination option shall have been given in writing to Lessor, (iii) termination
shall be effective on the date (the "Termination Date") which is the later of
(a) the last day of the month following expiration of ninety-six (96) full
months from the Commencement Date of the Primary Term or (b) the last day of the
month following expiration of the 180 day notice period, or (c) the date of
payment of the Termination Value provided that either (a) or (b) has been
satisfied, and (iv) Lessee shall pay on or prior to the Termination Date an
amount equal to the Termination Value (as hereinafter defined) and all other
sums due Lessor under this Lease including all rents due and owing to the Lessor
up to and including the Payment Date of the last Basic Rent immediately
preceding the Termination Date.
-20-
B. During the period from receipt of notice to Lessor until the Termination
Date, Lessor and Lessee shall each use its best efforts to obtain firm written
offers for the re-lease of the Equipment, and each party shall submit to the
other copies of all offers received. No offer shall be considered a Qualified
Offer to re-lease unless (i) the offer and offeror have been approved in all
respects by Lessor and by Lessor's assignee, (Lessor shall not unreasonably
withhold its approval and will exercise its best efforts to ensure that Lessor's
Assignee does not unreasonably withhold its approval), and (ii) the offer is
received prior to the Termination Date and can be accepted on such date. If no
Qualified Offer to re-lease has been received then the Lessee shall continue the
Lease until expiration.
The "Termination Value" referred to in this Section 29 shall be an amount equal
to the product of the applicable percentage as set forth with respect to such
Termination Date in Exhibit 1 to the applicable Rental Schedule multiplied by
the Manufacturer's Invoice Cost of the Equipment subject to the notice of
termination.
The "Proceeds" referred to in this Section 29 shall be the net present value
under a re-lease of the Equipment of all future rents from such re-lease
discounted at the lowest interest rate committed in writing in a Qualified
Offer. In calculating the Proceeds, only those non-terminable payments that
accrue from the Termination Date to the end of the Primary Term or the end of
the re-lease, whichever is earlier, shall be taken into account. Lessee shall
upon the Effective Date of Termination pay to Lessor or its Assignee(s) in cash
the amount equal to the Termination Value of the Equipment. Immediately
following the receipt of this payment Lessor shall pay to Lessee in cash an
amount equal to the lesser of the Termination Value or the Proceeds. When Lessor
and its Assignee(s) have received all the sums due and payable hereunder, then
Lessee shall receive from Lessor and its Assignee(s) a legally enforceable
notice of termination of Lessee's rights and obligations under this Lease.
Lessee shall also pay Lessor, on demand, all reasonable and necessary costs
incurred by Lessor, if any, associated with (a) solicitation of offers to re-
lease and (b) the remarketing, deinstallation, transportation (including
transportation insurance), refurbishing and reinstallation of the Equipment.
C. No assignee to whom this Lease has been assigned, whether as collateral
security or otherwise, shall have no obligation to solicit offers for the re-
lease of the Equipment pursuant to this early termination option.
Notwithstanding the assignment of this Lease, this early termination option
shall survive in favor of Lessee. Lessee agrees to look only to Lessor and not
to any assignee of Lessor for the performance of any affirmative obligation
hereunder. The Lessee shall not be relieved of any of its obligations under the
Lease until the Termination Payment, as detailed on Exhibit 1, has been paid in
full to Assignee.
30. QUIET ENJOYMENT - So long as no Event of Default has occurred and is
---------------
continuing hereunder, Lessee shall have peaceful and quiet use and enjoyment of
the Equipment against acts of Lessor or anyone claiming solely by, through, or
under Lessor.
-21-
31. NOTICES - Except as provided in Section 20 hereof, any notice required
-------
or permitted to be given by either party hereto to the other shall be deemed to
have been given five (5) days after it is deposited in the United States mail,
registered, postage prepaid, addressed to either party at its address set forth
herein, or to such other address as either party shall hereafter furnish to the
other in writing.
Notice shall be sent to parties at the following locations:
1. If to Lessee: Contract Transportation Systems Co.
1370 Ontario Street
P.O. Box 856
Cleveland, OH 44101
with a copy to:
The Sherwin-Williams Company
101 Prospect Avenue N.W.
Cleveland, OH 44115
Attention: Treasurer
2. If to Lessor: AmTran Corporation
One Liberty Square
Boston, MA 02109
32. ENTIRE AGREEMENT, SEVERABILITY, EFFECT AND MODIFICATION OF LEASE - This
----------------------------------------------------------------
Lease constitutes the entire agreement between the parties with respect to the
leasing of the Equipment. Any provision of this Lease which is prohibited or
unenforceable in any jurisdiction, shall be, as to such jurisdiction,
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No variation or
modification of this Lease and no waiver of any of its provisions or conditions
shall be valid unless in writing and signed by duly authorized representatives
of Lessor and Lessee.
33. COUNTERSIGNATURE - This Lease is not binding until executed by both
----------------
parties.
34. GOVERNING LAW - Lessor and Lessee agree that this Lease shall be
-------------
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
35. LESSOR'S RIGHT TO PERFORM FOR LESSEE - If Lessee fails to duly and
------------------------------------
promptly perform any of its obligations under this Lease (except for the payment
of rent) or falls to comply with any of the covenants or agreements contained
herein, Lessor may itself perform such obligations or comply with such covenants
or agreements, for the account of Lessee without thereby waiving any default,
and any amount paid or expense (including reasonable attorneys' fees) reasonably
incurred by Lessor in connection with such performance or compliance shall,
together with interest thereon at the Default Interest Rate be payable by Lessee
to Lessor on demand.
-22-
36. AGREEMENT FOR LEASE ONLY - Lessor and Lessee agree that this Lease is
------------------------
and is intended to be a true lease (and not a lease intended as a security or a
lease in the nature of a security interest) and further agree to treat this
Lease as a true lease for all purposes, including without limitation, legal,
tax, clerical and accounting.
37. FINANCIAL STATEMENTS - Lessee agrees to furnish, upon Lessor's request
--------------------
such financial information concerning Lessee as Lessor or Lessor's assignee may
reasonably require during the term of this Lease.
38. MISCELLANEOUS. The captions in this Master Lease and this Lease are for
-------------
convenience of reference only and shall not define or limit the provisions
hereof or thereof.
The Master Lease and this Lease may be executed in separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Master Lease and this
Lease, it shall not be necessary to produce or account for more than one such
counterpart.
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to the due authority,
have caused these presents to be signed in their respective names, by their duly
authorized officers and their corporate seals, if applicable, to be hereunto
affixed and duly attested, as of the date first above written.
LESSOR: LESSEE:
AMTRAN CORPORATION CONTRACT TRANSPORTATION SYSTEMS CO.
By: /s/ Geoffrey A. MacDonald By: /s/ SIGNATURE APPEARS HERE
__________________________ ___________________________
Tit1e: /s/ Vice President Title: Treasurer
_______________________ ________________________
-23-
EXHIBIT 1
RENTAL SCHEDULE ____
AND
CERTIFICATE OF INSPECTION AND ACCEPTANCE
RENTAL SCHEDULE ___ and CERTIFICATE OF INSPECTION AND ACCEPTANCE to Master
Equipment Lease No. 84010HT151 dated as of January 4, 1984 (the "Lease") by and
between the undersigned, the terms and conditions of which are hereby
incorporated herein by reference. Lessee hereby (a) authorizes Lessor to order
for lease to Lessee the equipment described herein (the "Equipment") and to
insert hereon the Lease Commencement Date for such Equipment upon Lessee's
acceptance of same for lease. (b) agrees to lease such Equipment upon Lessee's
acceptance of same for lease, (b) agrees to lease such equipment from Lessor
effective the Lease Commencement Date thereof and for the lease term specified
below, and (c) agrees to pay Lessor the rent, in the amounts and at the times
specified below, and (c) agrees to pay Lessor the rent, in the amounts and at
the times specified below, for each item of Equipment. All of the terms used
herein which are defined in the Lease shall have the same meaning as so defined.
Item Trailor Lessor's
No. Serial No. Unit No. Year Make Model Cost
- ---- -------------------- -------- ---- ---- ----- ---------
Total Equipment Cost: (State) $
-----------------
GRAND TOTAL EQUIPMENT COST: $
LEASE TERM: Interim Term: Primary Term:
Commencement Date: * Commencement Date:
---------- ---------
Expiration Date: Expiration Date:
---------- ---------
*with respect to each Item of Equipment shall be the Acceptance Dates set forth
above.
PAYMENT DATES: The Interim Term rent payment is due and payable
The remaining rentals commence and continue semi-annually
in arrears through and including
-24-
BASIC RENT:
Basic Rent Per Period:
-----------
Basic Rent Per Day:
-----------
NOTE 1: Basic Rent Per Day is applicable during the Interim Term and is payable
on the first Payment Date.
Note 2: Basic Rent Per Period and Basic Rent Per Day is computed by multiplying
the Equipment Cost as set forth above by:
Periodic Lease Rate Factor:
----------
Per Diem Lease Rate Factor:
----------
NOTE 3: Lease rates and rentals are based on an assumed debt rate of % and
will be revised to reflect the actual debt rate.
The undersigned, being a duly authorized representative of the Lessor and the
Lessee hereby CERTIFY that the units of Equipment described above have been duly
delivered to Lessee in good order and duly inspected and accepted by the Lessee
as of the Acceptance Date reflected above on behalf of the Lessee as conforming
in all respects with the requirements and provisions of the Lease.
AMTRAN CORPORATION CONTRACT TRANSPORTATION SYSTEMS CO.
- ------------------ -----------------------------------
LESSOR LESSEE
By By
------------------------------- ----------------------------
Title Title
---------------------------- --------------------------
Date Date
----------------------------- --------------------------