MASTER EQUIPMENT LEASE AGREEMENT
--------------------------------------------------------------------------------
THIS MASTER EQUIPMENT LEASE AGREEMENT dated as of July 8, 1998 is made by
and between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC., having an
address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lessor"), and JORE
CORPORATION, a Montana corporation with its principal place of business at ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee").
TERMS AND CONDITIONS OF LEASE
1. LEASE. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Equipment, subject to and upon the terms and conditions set forth
herein. Each Equipment Schedule shall constitute a separate and enforceable
lease incorporating all the terms and conditions of this Master Equipment Lease
Agreement as if such terms and conditions were set forth in full in such
Equipment Schedule. In the event that any term or condition of any Equipment
Schedule conflicts with or is inconsistent with any term or condition of this
Master Equipment Lease Agreement, the terms and conditions of the Equipment
Schedule shall govern.
2. DISCLAIMER OF WARRANTIES. LESSOR MAKES NO (AND SHALL NOT BE DEEMED
TO HAVE MADE ANY) WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN, OPERATION OR CONDITION
OF, OR THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN, THE
EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE
STATE OF TITLE THERETO OR ANY COMPONENT THERETO, THE ABSENCE OF LATENT OR
OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AND LESSOR HEREBY DISCLAIMS THE
SAME; IT BEING UNDERSTOOD THAT THE EQUIPMENT IS LEASED TO LESSEE "AS IS" AND
ALL SUCH RISKS, IF ANY, ARE TO BE BORNE BY LESSEE. NO DEFECT IN, OR
UNFITNESS OF, THE EQUIPMENT, OR ANY OF THE OTHER FOREGOING MATTERS, SHALL
RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR OF ANY OTHER OBLIGATION
HEREUNDER. LESSEE HAS MADE THE SELECTION OF THE EQUIPMENT FROM THE SUPPLIER
BASED ON ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY
STATEMENTS OR REPRESENTATIONS MADE BY LESSOR. LESSOR IS NOT RESPONSIBLE FOR
ANY REPAIRS, SERVICE, MAINTENANCE OR DEFECT IN THE EQUIPMENT OR THE OPERATION
THEREOF. IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES (WHETHER UNDER THE UCC OR OTHERWISE), INCLUDING,
WITHOUT LIMITATION, ANY LOSS, COST OR DAMAGE TO LESSEE OR OTHERS ARISING FROM
ANY OF THE FOREGOING MATTERS, INCLUDING, WITHOUT LIMITATION, DEFECTS,
NEGLIGENCE, DELAYS, FAILURE OF DELIVERY OR NON-PERFORMANCE OF THE EQUIPMENT.
ANY WARRANTY BY THE SUPPLIER IS HEREBY ASSIGNED TO LESSEE BY LESSOR WITHOUT
RECOURSE. SUCH WARRANTY SHALL NOT RELEASE LESSEE FROM ITS OBLIGATION TO
LESSOR TO PAY RENT, TO PERFORM ALL OTHER OBLIGATIONS HEREUNDER AND TO KEEP,
MAINTAIN AND SURRENDER THE EQUIPMENT IN THE CONDITION REQUIRED BY SECTIONS 12
AND 13 HEREOF. Lessee's execution and delivery of a Certificate of
Acceptance shall be conclusive evidence as between Lessor and Lessee that the
Items of Equipment described therein are in all of the foregoing respects
satisfactory to Lessee, and Lessee shall not assert and claim of any nature
whatsoever against Lessor based on any of the foregoing matters; PROVIDED,
HOWEVER, that nothing contained herein shall in any way bar, reduce or defeat
any claim that Lessee may have against the Supplier or any other person
(other than Lessor).
3. NON-CANCELABLE LEASE. THIS LEASE IS A NET LEASE AND LESSEE'S
OBLIGATION TO PAY RENT AND PERFORM ITS OBLIGATIONS HEREUNDER ARE ABSOLUTE,
IRREVOCABLE AND UNCONDITIONAL UNDER ANY AND ALL CIRCUMSTANCES WHATSOEVER AND
SHALL NOT BE SUBJECT TO ANY RIGHT OF SET OFF, COUNTERCLAIM, DEDUCTION, DEFENSE
OR OTHER RIGHT WHICH LESSEE MAY HAVE AGAINST THE SUPPLIER, LESSOR OR ANY OTHER
PARTY. LESSEE SHALL HAVE NO RIGHT TO TERMINATE (EXCEPT AS EXPRESSLY PROVIDED
HEREIN) OR CANCEL THIS LEASE OR TO BE RELEASED OR DISCHARGED FROM ITS OBLIGATION
HEREUNDER FOR ANY REASON WHATSOEVER, INCLUDING, WITHOUT LIMITATION, DEFECTS IN,
DESTRUCTION OF, DAMAGE TO OR
--------------------------------------------------------------------------------
Page 1 of 11
INTERFERENCE WITH ANY USE OF THE EQUIPMENT (FOR ANY REASON WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, WAR, ACT OF GOD, STRIKE OR GOVERNMENTAL
REGULATION), THE INVALIDITY, ILLEGALITY OR UNENFORCEABILITY (OR ANY ALLEGATION
THEREOF) OF THIS LEASE OR ANY PROVISION HEREOF, OR ANY OTHER OCCURRENCE
WHATSOEVER, WHETHER SIMILAR OR DISSIMILAR TO THE FOREGOING, WHETHER FORESEEN OR
UNFORESEEN.
4. DEFINITIONS. Unless the context otherwise requires, as used in this
Lease, the following terms shall have the respective meanings indicated below
and shall be equally applicable to both the singular and the plural forms
thereof:
(a) "APPLICABLE LAW" shall mean all applicable Federal, state,
local and foreign laws (including, without limitation, any Environmental Law,
industrial hygiene and occupational safety or similar laws), ordinances,
judgments, decrees, injunctions, writs and orders of any Governmental Authority
and rules, regulations, orders, licenses and permits of any Governmental
Authority.
(b) "APPRAISAL PROCEDURE" shall mean the following procedure for
obtaining an appraisal of the Fair Market Sales Value or the Fair Market Rental
Value. Lessor shall provide Lessee with the names of three independent
Appraisers. Within ten (10) business days thereafter, Lessee shall select one
of such Appraisers to perform the appraisal. The selected Appraiser shall be
instructed to perform its appraisal based upon the assumptions specified in the
definition of Fair Market Sales Value or Fair Market Rental Value, as
applicable, and shall complete its appraisal within twenty (20) business days
after such selection. Any such appraisal shall be final, binding and conclusive
on Lessee and Lessor and shall have the legal effect of an arbitration award.
Lessee shall pay the fees and expenses of the selected Appraiser.
(c) "APPRAISER" shall mean a person engaged in the business of
appraising property who has at least ten years' experience in appraising
property similar to the Equipment.
(d) "AUTHORIZED SIGNER" shall mean those officers of Lessee, set
forth on an incumbency certificate (in form and substance satisfactory to
Lessor) delivered by Lessee to Lessor, who are authorized and empowered to
execute this Lease, the Equipment Schedules and all other documents the
execution of which is contemplated hereby.
(e) "CERTIFICATE OF ACCEPTANCE" shall mean a certificate of
acceptance, in form and substance satisfactory to Lessor, executed and delivered
by Lessee in accordance with Section 7 hereof indicating, among other things,
that the Equipment described therein has been accepted by Lessee for all
purposes of this Lease.
(f) "DEFAULT" shall mean any event or condition which, with the
passage of time or the giving of notice, or both, would constitute an Event of
Default.
(g) "ENVIRONMENTAL LAW" shall mean any federal, state, or local
statute, law, ordinance, code, rule, regulation, or order or decree regulating,
relating to or imposing liability upon a person in connection with the use,
release or disposal of any hazardous, toxic or dangerous substance, waste, or
material as same may relate to the Equipment or its operation.
(h) "EQUIPMENT" shall mean an item or items of personal property
designated from time to time by Lessee which are described on an Equipment
Schedule and which are being or will be leased by Lessee pursuant to this Lease,
together with all replacement parts, additions and accessories incorporated
therein or affixed thereto.
(i) "EQUIPMENT GROUP" shall consist of all Items of Equipment
listed on a particular Equipment Schedule.
(j) "EQUIPMENT LOCATION" shall mean the location of the Equipment,
as set forth on an Equipment Schedule, or such other location (approved by
Lessor) as Lessee shall from time to time specify in writing.
(k) "EQUIPMENT SCHEDULE" shall mean each equipment lease schedule
from time to time executed by Lessor and Lessee with respect to an Equipment
Group, pursuant to and incorporating by reference all of the terms and
conditions of this Master Equipment Lease Agreement.
(l) "EVENT OF DEFAULT" shall have the meaning specified in Section
22 hereof.
(m) "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALE VALUE" shall
mean the value of each Item of Equipment for lease or sale, unless otherwise
specified herein as determined between Lessor and Lessee, or, if Lessor and
Lessee are unable to agree, pursuant to the Appraisal Procedure, which would be
obtained in an arms-length transaction between an informed and willing lessor or
seller (under no compulsion to lease or sell) and an informed and willing lessee
or buyer (under no compulsion to lease or purchase). In determining the Fair
Market
--------------------------------------------------------------------------------
Page 2 of 11
Rental Value or Fair Market Sale, Value of the Equipment, (a) such Fair
Market Rental Value or Fair Market Sale Value shall be calculated on the
assumption that the Equipment is in the condition and repair required by
Sections 12 and 13 hereof, and (b) there shall be excluded from the
calculation thereof the value of any upgrades and attachments made pursuant
to Section 14 hereof in which the Lessor does not own an interest; PROVIDED,
HOWEVER, that, unless otherwise provided in such Section 22, for purposes of
Section 22 of the Lease, Fair Market Sale Value of the Equipment shall be
determined based upon the actual facts and circumstances then prevailing
without regard to the assumptions in clause (a) above.
(n) "GOVERNMENTAL ACTION" shall mean all authorizations,
consents, approvals, waivers, filings and declarations of any Govenmental
Authority, including, without limitation, those environmental and operating
permits required for the ownership, lease, use and operation of the Equipment.
(o) "GOVERNMENTAL AUTHORITY" shall mean any foreign, Federal,
state, county, municipal or other governmental authority, agency, board or
court.
(p) "GUARANTOR" shall mean any guarantor of Lessee's obligations
hereunder.
(q) "ITEM OF EQUIPMENT" shall mean each item of the Equipment.
(r) "LATE PAYMENT RATE" shall mean an annual interest rate
equal to the lesser of 18% or the maximum interest rate permitted by
Applicable Law.
(s) "LEASE", "HEREOF", "HEREIN" and "HEREUNDER" shall mean,
with respect to an Equipment Group, this Master Equipment Lease Agreement and
the Equipment Schedule on which such Equipment Group is described, including
all addenda attached thereto and made a part thereof.
(t) "LIEN" shall mean all mortgages, pledges, security
interests, liens, encumbrances, claims or other charges of any kind whatsoever.
(u) "PURCHASE AGREEMENT" shall mean any purchase agreement or
other contract entered into between the Supplier and Lessee for the
acquisition of the Equipment to be leased hereunder.
(v) "RELATED EQUIPMENT SCHEDULE" shall have the meaning set
forth in Section 27 hereof.
(w) RESERVED.
(x) RESERVED.
(y) "RENT" shall mean the periodic rental payments due hereunder
for the leasing of the Equipment, as set forth on the Equipment Schedules,
and, where the context hereof requires, all such additional amounts as may
from time to time be payable under any provision of this Lease.
(z) "RENT COMMENCEMENT DATE" shall mean, with respect to an
Equipment Group, the date on which Lessor disburses funds for the purchase of
such Equipment Group, as determined by Lessor in its sole discretion.
(aa) "RENT PAYMENT DATE" with respect to an Equipment Group,
shall have the meaning set forth in the Equipment Schedule associated
therewith.
(ab) "STIPULATED LOSS VALUE" shall mean, as of any Rent Payment
Date and with respect to an Item of Equipment, the amount determined by
multiplying the Total Cost for such Item of Equipment by the percentage
specified in the applicable Stipulated Loss Value Supplement opposite such
Rent Payment Date.
(ac) "STIPULATED LOSS VALUE SUPPLEMENT" with respect to an
Equipment Group shall have the meaning set forth in the Equipment Schedule
associated therewith.
(ad) "SUPPLIER" shall mean the manufacturer or the vendor of the
Equipment, as set forth on each Equipment Schedule.
(ae) "TERM" shall mean the Initial Term, as defined in Section 8
hereof, and any Renewal Term, as defined in Section 8 hereof.
(af) "TOTAL COST" shall mean, with respect to an Item of
Equipment, (1) the acquisition cost of such Item of Equipment (including
Lessor's capitalized costs), as set forth on the Equipment Schedule on which
such Item of Equipment is described, or (2) if no such acquisistion cost is
specified, the Supplier's invoice price for such Item of Equipment plus
Lessor's capitalized costs, or (3) if no such acquisition cost is specified
and no such invoice price is obtainable, an allocated price for such Item of
Equipment based on the Total Cost of all Items of Equipment set forth on the
Equipment Schedule on which such Item of Equipment is described, as
determined by Lessor in its sole discretion.
5. SUPPLIER NOT AN AGENT. LESSEE UNDERSTANDS AND AGREES THAT (i)
NEITHER THE SUPPLIER, NOR ANY SALES REPRESENTATIVE OR OTHER AGENT OF THE
SUPPLIER, IS (1) AN AGENT OF LESSOR OR (2) AUTHORIZED TO MAKE OR ALTER ANY
TERM OR CONDITION OF THIS LEASE, AND
------------------------------------------------------------------------------
Page 3 of 11
(ii) NO SUCH WAIVER OR ALTERATION SHALL VARY THE TERMS OF THIS LEASE UNLESS
EXPRESSLY SET FORTH HEREIN.
6. ORDERING EQUIPMENT. Lessee has selected and ordered the Equipment
from the Supplier and, if appropriate, has entered into a Purchase Agreement
with respect thereto. Lessor shall accept an assignment from Lessee of
Lessee's rights, but none of Lessee's obligations, under any such Purchase
Agreement. Lessee shall arrange for delivery of the Equipment so that it can
be accepted in accordance with Section 7 hereof. If an Item of Equipment is
subject to an existing Purchase Agreement between Lessee and the
Supplier, Lessee warrants that such Item of Equipment has not been delivered
to Lessee as of the date of the Equipment Schedule applicable thereto. If
Lessee causes the Equipment to be modified or altered, or requests any
additions thereto prior to the Rent Commencement Date, Lessee (i)
acknowledges that any such modification, alteration or addition to an Item of
Equipment may affect the Total Cost, taxes, purchase and renewal options, if
any, Stipulated Loss Value and Rent with respect to such Item of Equipment,
and (ii) hereby authorizes Lessor to adjust such Total Cost, taxes, purchase
and renewal options, if any, Stipulated Loss Value and Rent as appropriate.
Lessee hereby authorizes Lessor to complete each Equipment Schedule with the
serial numbers and other identification data of the Equipment Group
associated therewith, as such data is received by Lessor.
7. DELIVERY AND ACCEPTANCE. Upon acceptance for lease by Lessee of any
Equipment delivered to Lessee and described in any Equipment Schedule, Lessee
shall execute and deliver to Lessor a Certificate of Acceptance. LESSOR SHALL
HAVE NO OBLIGATION TO ADVANCE FUNDS FOR THE PURCHASE OF THE EQUIPMENT UNLESS
AND UNTIL LESSOR SHALL HAVE RECEIVED A CERTIFICATE OF ACCEPTANCE RELATING
THERETO EXECUTED BY LESSEE. Such Certificate of Acceptance shall constitute
Lessee's acknowledgment that such Equipment (a) was received by Lessee, (b)
is satisfactory to Lessee in all respects and is acceptable to Lessee for
lease hereunder, (c) is suitable for Lessee's purposes, (d) is in good order,
repair and condition, (e) has been installed and operates properly, and (f)
is subject to all of the terms and conditions of this Lease (including,
without limitation, Section 2 hereof).
8. TERM; SURVIVAL. With respect to any Item of Equipment, unless
otherwise specified thereon, the initial term of this Lease (the "Initial
Term") shall commence on the date on which such Item of Equipment is
delivered to Lessee, and, unless earlier terminated as provided herein, shall
expire on the final Rent Payment Date for such Item of Equipment. With
respect to an Item of Equipment, any renewal term of this Lease
(individually, a "Renewal Term"), as contemplated hereby, shall commence
immediately upon the expiration of the Initial Term or any prior Renewal
Term, as the case may be, and, unless earlier terminated as provided herein,
shall expire on the date on which the final payment of Rent is due and paid
hereunder. All obligations of Lessee hereunder shall survive the expiration,
cancellation or other termination of the Term hereof.
9. RENT. With respect to Each Item of Equipment, Lessee shall pay the
Rent set forth on the Equipment Schedule applicable to such Item of Equipment,
commencing on the Rent Commencement Date, and, unless otherwise set forth on
such Equipment Schedule, on the same day of each payment period thereafter
for the balance of the Term. Rent shall be due whether or not Lessee has
received any notice that such payments are due. All Rent shall be paid to
Lessor at its address set forth on the Equipment Schedule, or as otherwise
directed by Lessor in writing.
10. LOCATION; INSPECTION; LABELS. The Equipment shall be delivered to
the Equipment Location and shall not be removed therefrom without Lessor's
prior written consent. Lessor shall have the right to enter upon the
Equipment Location and inspect the Equipment at any reasonable time. Lessor
may, without notice to Lessee, remove the Equipment if the Equipment is, in
the opinion of Lessor, being used beyond its capacity or is in any manner
improperly cared for, abused or misused. At Lessor's request, Lessee shall
affix labels stating that the Equipment is owned by Lessor permanently in a
prominent place on the Equipment and shall keep such labels in good repair
and condition.
11. USE; ALTERATIONS. Lessee shall use the Equipment lawfully and only
in the manner for which it was designed and intended and so as to subject it
only to ordinary wear and tear. Lessee shall comply with all Applicable Law.
Lessee shall immediately notify Lessor in writing of any existing, pending or
threatened
------------------------------------------------------------------------------
Page 4 of 11
investigation, inquiry, claim or action by any Governmental Authority in
connection with any Applicable Law or Governmental Action which could adversely
affect the Equipment or this Lease. Lessee, at its own expense, shall make such
alterations, additions or modifications or improvements to the Equipment as may
be required from time to time to meet the requirements of Applicable Law or
Governmental Action. Except as otherwise permitted herein, Lessee shall not make
any alterations, additions, modifications or improvements to the Equipment
without Lessor's prior written consent.
12. REPAIRS AND MAINTENANCE. Lessee, at Lessee's own cost and expense,
shall (a) keep the Equipment in good repair, good operating condition and
working order and in compliance with the manufacturer's specifications, and (b)
enter into and keep in full force and effect during the Term hereof a
maintenance agreement with the manufacturer of the Equipment, or a
manufacturer-approved maintenance organization, to maintain, service and repair
the Equipment so as to keep the Equipment in as good operating condition and
working order as it was when it first became subject to this Lease and in
compliance with the manufacturer's specifications. Upon Lessor's request, Lessee
shall furnish Lessor with an executed copy of any such maintenance agreement. An
alternate source of maintenance may be used by Lessee with Lessor's prior
written consent. Lessee, at its own cost and expense and within a reasonable
period of time, shall replace any part of any Item of Equipment that becomes
worn out, lost, stolen, destroyed or otherwise rendered permanently unfit or
unavailable for use (whether or not such replacement is covered by the aforesaid
maintenance agreement), with a replacement part of the same manufacture, value,
remaining useful life and utility as the replaced part immediately preceding the
replacement (assuming that such replaced part is in the condition required by
this Lease). Such replacement part shall be free and clear of all Liens.
Notwithstanding the foregoing, this paragraph shall not apply to any Loss or
Damage (as defined in Section 16 hereof) of any Item of Equipment.
13. RETURN OF EQUIPMENT. Upon the expiration (subject to Section 32
hereof and except as otherwise provided in an Equipment Schedule) or earlier
termination of this Lease, Lessee, at its sole expense, shall return the
Equipment to Lessor by delivering such Equipment F.A.S. or F.O.B. to such
location or such carrier (packed for shipping) as Lessor shall specify. Lessee
agrees that the Equipment, when returned, shall be in the condition required by
Section 12 hereof. All components of the Equipment shall have been properly
serviced, following the manufacturer's written operating and servicing
procedures, such that the Equipment is eligible for a manufacturer's standard,
full service maintenance contract without Lessor's incurring any expense to
repair or rehabilitate the Equipment. If, in the opinion of Lessor, any Item of
Equipment fails to meet the standards set forth above, Lessee agrees to pay on
demand all costs and expenses incurred in connection with repairing such Item of
Equipment and restoring it so as to meet such standards, assembling and
delivering such Item of Equipment. If Lessee fails to return any Item of
Equipment as required hereunder, then, all of Lessee's obligations under this
Lease (including, without limitation, Lessee's obligation to pay Rent for such
Item of Equipment at the rental then applicable under this Lease) shall continue
in full force and effect until such Item of Equipment shall have been returned
in the condition required hereunder.
14. EQUIPMENT UPGRADES/ATTACHMENTS. In addition to the requirements of
Section 11 hereof, Lessee, at its own expense, may from time to time add or
install upgrades or attachments to the Equipment during the Term; PROVIDED, that
such upgrades or attachments (a) are readily removable without causing material
damage to the Equipment, (b) do not materially adversely affect the Fair Market
Sale Value, the Fair Market Rental Value, residual value, productive capacity,
utility or remaining useful life of the Equipment, and (c) do not cause such
Equipment to become "limited use property" within the meaning of Revenue
Procedure 76-30, 1976-2 C.B. 647 (or such other successor tax provision), as of
the applicable delivery date or the time of such upgrade or attachment. Any such
upgrades or attachments which are not required by Section 11 hereof and which
can be removed without causing damage to or adversely affecting the condition of
the Equipment, or reducing the Fair Market Sale Value, the Fair Market Rental
Value, residual value, productive capacity, utility or remaining useful life of
the Equipment shall remain the property of Lessee; and upon the expiration or
earlier termination of this Lease and provided that no Event of Default exists,
Lessee may, at its option, remove any such upgrades or attachments and, upon
such removal, shall restore the Equipment to the condition required hereunder.
15. SUBLEASE AND ASSIGNMENT (a) WITHOUT LESSOR'S PRIOR WRITTEN CONSENT,
LESSEE SHALL NOT (i) ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE
OF THIS
Page 5 of 11
LEASE, THE EQUIPMENT OR ANY INTEREST THEREIN, OR (ii) SUBLET OR LEND THE
EQUIPMENT TO, OR PERMIT THE EQUIPMENT TO BE USED BY, ANYONE OTHER THAN LESSEE OR
LESSEE'S QUALIFIED EMPLOYEES.
(b) Lessor, at any time with or without notice to Lessee, may sell,
transfer, assign and/or grant a security interest in this Lease, any Equipment
Schedule or any Item of Equipment. In any such event, any such purchaser,
transferee, assignee or secured party shall have and may exercise all of
Lessor's rights hereunder with respect to the items to which any such sale,
transfer, assignment and/or security interest relates, and LESSEE SHALL NOT
ASSERT AGAINST ANY SUCH PURCHASER, TRANSFEREE, ASSIGNEE OR SECURED PARTY ANY
DEFENSE, COUNTERCLAIM OR OFFSET THAT LESSEE MAY HAVE AGAINST LESSOR. Lessee
acknowledges that no such sale, transfer, assignment and/or security interest
will materially change Lessee's duties hereunder or materially increase its
burdens or risks hereunder. Lessee agrees that upon written notice to Lessee of
any such sale, transfer, assignment and/or security interest, Lessee shall
acknowledge receipt thereof in writing and shall comply with the directions and
demands of Lessor's successor or assign.
16. LOSS OF OR DAMAGE TO EQUIPMENT. (a) Lessee shall bear the entire risk
of loss, theft, destruction, disappearance of or damage to any and all Items of
Equipment ("Loss or Damage") from any cause whatsoever during the Term hereof
until the Equipment is returned to Lessor in accordance with Section 13 hereof.
No Loss or Damage shall relieve Lessee of the obligation to any Rent or of any
other obligation under this Lease.
(b) In the event of Loss or Damage to any Item of Equipment, Lessee,
at the option of Lessor, shall within thirty (30) days following such Loss or
Damage: (1) place such Item of Equipment in good condition and repair, in
accordance with the terms hereof; (2) replace such Item of Equipment with
replacement equipment (acceptable to Lessor) in as good condition and repair,
and with the same value, remaining useful economic life and utility, as such
replaced Item of Equipment immediately preceding the Loss or Damage (assuming
that such replaced Item of Equipment is the condition required by this Lease),
which replacement equipment shall be free and clear of all Liens; or (3) pay to
Lessor the sum of (i) all Rent due and owing hereunder with respect to such Item
of Equipment (at the time of such payment) plus (ii) the Stipulated Loss Value
as of the Rent Payment Date next following the date of such Loss or Damage with
respect to such Item of Equipment, as set forth on the Schedule applicable
thereto. Upon Lessor's receipt of the payment required under subsection (3)
above, Lessee shall be entitled to Lessor's interest in such Item of Equipment,
in its then condition and location, "as is" and "where is", without any
warranties, express or implied. If Lessee replaces the Item of Equipment
pursuant to subsection (b) above, title to such replacement equipment shall
immediately (and without further act) vest in Lessor and thereupon shall be
deemed to constitute Items of Equipment and be fully subject to this Lease as if
originally leased hereunder. If Lessee fails to either restore or replace the
Item of Equipment pursuant to subsection (1) or (2) above, respectively, Lessee
shall make the payment under subsection (3) above.
17. INSURANCE. (a) Lessee, at all times during the Term hereof (until the
Equipment shall have been returned to Lessor) and at Lessee's own cost and
expense, shall maintain (1) insurance against all risks of physical loss or
damage to the Equipment (including theft and collision for Equipment consisting
of motor vehicles) in an amount not less than the full replacement value thereof
or the Stipulated Loss Value thereof, whichever is greater, and (2) commercial
general liability insurance (including blanket contractual liability coverage
and products liability coverage) for personal and bodily injury and property
damage in an amount satisfactory to Lessor.
(b) All insurance policies required hereunder shall (1) require 30
days' prior written notice of cancellation or material change in coverage to
Lessor (any such cancellation or change, as applicable, not being effective
until the thirtieth (30th) day after the giving of such notice); (2) name
"KeyCorp and its subsidiaries and affiliated companies, including Key Corporate
Capital Inc." as an additional insured under the public liability policies and
name Lessor as sole loss payee under the property insurance policies; (3) not
require contributions from other policies held by Lessor; (4) waive any right of
subrogation against Lessor; (5) in respect of any liability of any of Lessor,
except for the insurers' salvage rights in the event of a Loss or Damage, waive
the right of such insurers to set-off, to counterclaim or to any other
deduction, whether by attachment or otherwise, to the extent of any monies due
Lessor under such policies; (6) not require that Lessor pay or be liable for any
premiums with respect to such insurance covered thereby; (7) be in full force
and effect throughout any geographical areas at any time traversed by an Item of
Equipment; and (8) contain breach of warranty provisions providing that, in
respect of the interests of Lessor in such policies, the insurance shall not be
invalidated by any action or inaction of Lessee or any other person (other than
Lessor) and shall insure Lessor regardless of any breach or violation of any
Page 6 of 11
warranty, declaration or condition contained in such policies by Lessee or by
any other person (other than Lessor). Prior to the first date of delivery of
any Item of Equipment hereunder, and thereafter not less than 15 days prior to
the expiration dates of the expiring policies theretofore delivered pursuant to
this Section, Lessee shall deliver to Lessor a duplicate original of all
policies (or in the case of blanket policies, certificates thereof issued by the
insurers thereunder) for the insurance maintained pursuant to this Section.
18. GENERAL TAX INDEMNIFICATION. Lessee shall pay when due and shall
indemnify and hold Lessor harmless from and against (on an after-tax basis) any
and all taxes, fees, withholdings, levies, imposts, duties, assessments and
charges of any kind and nature (together with interest and penalties
thereon)(including, without limitation, sales, use, gross receipts, personal
property, ad valorem, business and occupational, franchise, value added,
leasing, leasing use, documentary, stamp or other taxes) imposed upon or against
Lessor, Lessor's assigns, Lessee or any Item of Equipment by any Governmental
Authority with respect to any Item of Equipment or the manufacturing, ordering,
sale, purchase, shipment, delivery, acceptance or rejection, ownership, titling,
registration, leasing, subleasing, possession, use, operation, removal, return
or other dispossession thereof or upon the rents, receipts or earnings arising
therefrom or upon or with respect to this Lease, exception only all Federal,
state and local taxes on or measured by Lessor's net income (other than income
tax resulting from making any alterations, improvements, modifications,
additions, upgrades, attachments, replacements or substitutions by Lessee).
Whenever this Lease terminates as to any Item of Equipment, Lessee shall, upon
written request by Lessor, advance to Lessor the amount determined by Lessor to
be the personal property or other taxes on said item which are not yet payable,
but for which Lessee is responsible, provided Lessor provides Lessee with copies
of tax bills supporting Lessor's request.
19. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to perform or
comply with any of its obligations contained herein, Lessor may (but shall
not be obligated to do so) itself perform or comply with such obligations,
and the amount of the reasonable costs and expenses of Lessor incurred in
connection with such performance or compliance, together with interest on
such amount at the Late Payment Rate, shall be payable by Lessee to Lessor
upon demand. No such performance or compliance by Lessor shall be deemed a
waiver of the rights and remedies of Lessor or any assignee of Lessor against
Lessee hereunder or be deemed to cure the default of Lessee hereunder.
20. DELINQUENT PAYMENTS; INTEREST. If Lessee fails to pay any Rent or
other sums under this Lease when the same becomes due, Lessee shall pay to
Lessor a late charge equal to five percent (5%) of such delinquent amount. Such
late charge shall be payable by Lessee upon demand by Lessor and shall be deemed
Rent hereunder. In no event shall such late charge exceed the maximum amounts
permitted under Applicable Law.
21. PERSONAL PROPERTY; LIENS. Lessor and Lessee hereby agree that the
Equipment is, and shall at all times remain, personal property notwithstanding
the fact that any Item of Equipment may now be, or hereafter become, in any
manner affixed or attached to real property or any improvements thereon. Lessee
shall at all times keep the Equipment free and clear from all Liens. Lessee
shall (i) give Lessor immediate written notice of any such Lien, (ii) promptly,
at Lessee's sole cost and expense, take such action as may be necessary to
discharge any such Lien, and (iii) indemnify and hold Lessor, on an after-tax
basis, harmless from and against any loss or damage caused by any such Lien.
22. EVENTS OF DEFAULT; REMEDIES. (a) As used herein, the term "Event of
Default" shall mean any of the following events: (1) Lessee fails to pay any
Rent within ten (10) days after the same shall have become due; (2) Lessee or
any Guarantor becomes insolvent or makes an assignment for the benefit of its
creditors; (3) a receiver, trustee, conservator or liquidator of Lessee or any
Guarantor or of all or a substantial part of Lessee's or such Guarantor's assets
is appointed with or without the application or consent of Lessee or such
Guarantor, respectively; (4) a petition is filed by or against Lessee or any
Guarantor under any bankruptcy, insolvency or similar legislation; (5) Lessee or
any Guarantor violates or fails to perform any provision of either this Lease or
any other loan, lease or credit agreement or any acquisition or purchase
agreement with Lessor or any other party; (6) Lessee violates or fails to
perform any covenant or representation made by Lessee herein; (7) any
representation or warranty made herein or in any Lease, certificate, financial
statement or other statement furnished to Lessor shall prove to be false or
misleading in any material respect as of the date on which the same
--------------------------------------------------------------------------------
Page 7 of 11
was made; (8) Lessee makes a bulk transfer of furniture, furnishings, fixtures
or other equipment or inventory; or (9) there is a material adverse change in
Lessee's or any Guarantor's financial condition since the first Rent
Commencement Date of any Equipment Schedule executed in connection herewith. An
Event of Default with respect to any Equipment Schedule hereunder shall, at
Lessor's option, constitute an Event of Default for all Equipment Schedules
hereunder and any other agreements between Lessor and Lessee.
(b) Upon the occurrence of an Event of Default, Lessor may do one or
more of the following as Lessor in its sole discretion shall elect: (1) proceed
by appropriate court action or actions, either at law or in equity, to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof; (2) sell any Item of Equipment at public or
private sale; (3) hold, keep idle or lease to others any Item of Equipment as
Lessor in its sole discretion may determine; (4) by notice in writing to Lessee,
terminate this Lease, without prejudice to any other remedies hereunder; (5)
demand that Lessee, and Lessee shall, upon written demand of Lessor and at
Lessee's expense forthwith return all Items of Equipment to Lessor or its order
in the manner and condition required by, and otherwise in accordance with all of
the provisions of this Lease, except those provisions relating to periods of
notice; (6) enter upon the premises of Lessee or other premises where any Item
of Equipment may be located and, without notice to Lessee and with or without
legal process, take possession of and remove all or any such Items of Equipment
without liability to Lessor by reason of such entry or taking possession, and
without such action constituting a termination of this Lease unless Lessor
notifies Lessee in writing to such effect; (7) by written notice to Lessee
specifying a payment date, demand that Lessee pay to Lessor, and Lessee shall
pay to Lessor, on the payment date specified in such notice, as liquidated
damages for loss of a bargain and not as a penalty, any unpaid Rent due prior to
the payment date specified in such notice plus whichever of the following
amounts Lessor, in its sole discretion, shall specify in such notice (together
with interest on such amount at the Late Payment Rate from the payment date
specified in such notice to the date of actual payment): (i) an amount, with
respect to an Item of Equipment, equal to the Rent payable for such Item of
Equipment for the remainder of the then current Term thereof, after discounting
such Rent to present worth as of the payment date specified in such notice on
the basis of a per annum rate of discount equal to five percent (5%) from the
respective dates upon which such Rent would have been paid had this Lease not
been terminated; or (ii) the Stipulated Loss Value, computed as of the payment
date specified in such notice or, if such payment date is not a Rent Payment
Date, the Rent Payment Date next following the payment date specified in such
notice (provided, however, that, with respect to any Item of Equipment returned
to or repossessed by Lessor, the amount recoverable under this clause (ii) shall
be reduced (but not below zero) by an amount equal to the Fair Market Sales
Value (taking into account its actual condition) of such Item of Equipment; (8)
cause Lessee, at its expense, to promptly assemble any and all Items of
Equipment and return the same to Lessor at such place as Lessor may designate
in writing; and (9) exercise any other right or remedy available to Lessor
under applicable law or proceed by appropriate court action to enforce the
terms hereof or to recover damages for the breach hereof or to rescind this
Lease. In addition, Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Rent due hereunder before or during the
exercise of any of the foregoing remedies, and for legal fees and other costs
and expenses incurred by reason of the occurrence of any Event of Default or
the exercise of Lessor's remedies with respect thereto, including without
limitation the repayment in full of any costs and expenses necessary to be
expended in repairing any Item of Equipment in order to cause it to be in
compliance with all maintenance and regulatory standards imposed by this
Lease. If an Event of Default occurs, to the fullest extent permitted by
law, Lessee hereby waives any right to notice of sale and further waives any
defenses, rights, offsets or claims against Lessor because of the manner or
method of sale or disposition of any Items of Equipment. None of Lessor's
rights or remedies hereunder are intended to be exclusive of, but each shall
be cumulative and in addition to any other right or remedy referred to
hereunder or otherwise available to Lessor or its assigns at law or in
equity. No express or implied waiver by Lessor of any Event of Default shall
constitute a waiver of any other Event of Default or a waiver of any of
Lessor's rights.
23. NOTICES. All notices and other communications hereunder shall be in
writing and shall be transmitted by hand, overnight courier or certified mail
(return receipt requested), postage prepaid. Such notices and other
communications shall be addressed to the respective party at the address set
forth above or at such other address as any party may from time to time
designate by notice duly given in accordance with this Section. Such notices
and other communications shall be effective upon receipt.
--------------------------------------------------------------------------------
Page 8 of 11
24. GENERAL INDEMNIFICATION. Lessee shall pay, and shall indemnify and
hold Lessor harmless on an after-tax basis from and against, any and all
liabilities, causes of action, claims, suits, penalties, damages, losses, costs
or expenses (including attorneys' fees), obligations, liabilities, demands and
judgments, and Liens, of any nature whatsoever (collectively, a "Liability")
arising out of or in any way related to: (a) this Lease or any other written
agreement entered into in connection with the transactions contemplated hereby
and thereby (including, without limitation, a Purchase Agreement, if any) or any
amendment, waiver or modification of any of the foregoing or the enforcement of
any of the terms hereof or any of the foregoing, (b) the manufacture, purchase,
ownership, selection, acceptance, rejection, possession, lease, sublease,
operation, use, maintenance, documenting, inspection, control, loss, damage,
destruction, removal, storage, surrender, sale, use, condition, delivery,
nondelivery, return or other disposition of or any other matter relating to any
Item of Equipment or any part or portion thereof (including, in each case and
without limitation, latent or other defects, whether or not discoverable, any
claim for patent, trademark or copyright infringement and any and all
Liabilities in any way relating to or arising out of injury to persons,
properties or the environment or any and all Liabilities based on strict
liability in tort, negligence, breach of warranties or violations of any
regulatory law or requirement, (c) a failure to comply fully with any
Environmental Law with respect to the Equipment or its operation or use, and (d)
Lessee's failure to perform any covenant, or breach of any representation or
warranty, hereunder; PROVIDED, that the foregoing indemnity shall not extend to
the Liabilities to the extent resulting solely from the gross negligence or
willful misconduct of Lessor. Lessee shall deliver promptly to Lessor (i)
copies of any documents received from the United States Environmental Protection
Agency or any state, county or municipal environmental or health agency and (ii)
copies of any documents submitted by Lessee or any of its subsidiaries to the
United States Environmental Protection Agency or any state, county or municipal
environmental or health agency concerning the Equipment or its operation.
25. SEVERABILITY; CAPTIONS. Any provision of this Lease or any Equipment
Schedule which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability shall not invalidate or render
unenforceable such provision in any other jurisdiction. Captions are intended
for convenience or reference only, and shall not be construed to define,
limit or describe the scope or intent of any provisions hereof.
26. LESSOR'S EXPENSE. Lessee shall pay all costs and expenses of Lessor,
including attorneys' fees and the fees of any collection agencies, incurred by
Lessor in enforcing any of the terms, conditions or provisions hereof or in
protecting Lessor's rights hereunder.
27. RELATED EQUIPMENT SCHEDULES. In the event that any Item of Equipment
covered under any Equipment Schedule hereunder may become attached or affixed
to, or used in connection with, Equipment covered under another Equipment
Schedule hereunder (a "Related Equipment Schedule"), Lessee agrees that, if
Lessee elects to exercise a purchase or renewal option under any such
Equipment Schedule, or if Lessee elects to return the Equipment under any
such Equipment Schedule pursuant to Section 13 hereof, then Lessor, in its
sole discretion, may require that all Equipment leased under all Related
Equipment Schedules be similarly disposed of.
28. FINANCIAL AND OTHER DATA. During the Term hereof, Lessee shall
furnish Lessor, as soon as available and in any event within 60 days after
the end of each quarterly period (except the last) of each fiscal year, and,
as soon as available and in any event within 120 days after the last day of
each fiscal year, financial statements of Lessee and each Guarantor, in each
case certified by an independent public accountant if customarily available
or requested. Lessee shall also furnish such other financial reports,
information or data as Lessor may reasonably request from time to time.
29. COMMITMENT FEE REQUIREMENT. An amount equal to the first periodic
payment of Rent must accompany each Lessee proposal for an Equipment Schedule
hereunder. THIS COMMITMENT FEE IS NONREFUNDABLE; provided, however, that, upon
Lessor's acceptance of Lessee's proposal to enter into such Equipment Schedule,
such commitment fee shall be applied to the first periodic payment of Rent
thereunder.
--------------------------------------------------------------------------------
Page 9 of 11
30. NO AFFILIATION WITH THE SUPPLIER. Lessee hereby represents and
warrants to Lessor that, except as previously disclosed in writing to Lessor,
neither Lessee nor any of its officers or directors (if a corporation) or
partners (if a partnership) has, directly or indirectly, any financial interest
in the Supplier.
31. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and
warrants that: (a) Lessee is a corporation duly organized and validly existing
in good standing under the laws of the state of its incorporation; (b) the
execution, delivery and performance of this Lease and all related instruments
and documents: (1) have been duly authorized by all necessary corporate action
on the part of Lessee, (2) do not require the approval of any stockholder,
partner, trustee, or holder of any obligations of Lessee except such as have
been duly obtained, and (3) do not and will not contravene any law, governmental
rule, regulation or order now binding on Lessee, or the charter or by-laws of
Lessee, or contravene the provisions of, or constitute a default under, or
result in the creation of any lien or encumbrance upon the property of Lessee
under, any indenture, mortgage, contract or other agreement to which Lessee is a
party or by which it or its property is bound; (c) this Lease and all related
instruments and documents, when entered into, will constitute legal, valid and
binding obligations of Lessee enforceable against Lessee in accordance with the
terms thereof; (d) there are no pending actions or proceedings to which Lessee
is a party, and there are no other pending or threatened actions or proceedings
of which Lessee has knowledge, before any court, arbitrator or administrative
agency, which, either individually or in the aggregate, would adversely affect
the financial condition of Lessee, or the ability of Lessee to perform its
obligations hereunder; (e) Lessee is not in default under any obligation for the
payment of borrowed money, for the deferred purchase price of property or for
the payment of any rent under any lease agreement which, either individually or
in the aggregate, would have the same such effect; (f) under the laws of the
state(s) in which the Equipment is to be located, the Equipment consists solely
of personal property and not fixtures; (g) the financial statements of Lessee
(copies of which have been furnished to Lessor) have been prepared in accordance
with generally acceptable accounting principles consistently applied ("GAAP"),
and fairly present Lessee's financial condition and the results of its
operations as of the date of and for the period covered by such statements, and
since the date of such statements there has been no material adverse change in
such conditions or operations; (h) the address stated above is the chief place
of business and chief executive office, or in the case of individuals, the
primary residence, of Lessee; (i) Lessee does not conduct business under a
trade, assumed or fictitious name; and (j) the Equipment is being leased
hereunder solely for business purposes and that no item of Equipment will be
used for personal, family or household purposes.
32. RENEWAL AND PURCHASE OPTIONS. With respect to an Equipment Schedule
and the Equipment Group set forth thereon, Lessee shall have the purchase and
renewal options set forth in such Equipment Schedule.
33. LESSEE'S WAIVERS. To the extent permitted by Applicable Law, Lessee
hereby waives (a) any and all rights and remedies which it may now have or which
at any time hereafter may be conferred upon it by statute (including, without
limitation, Article 2A of the Uniform Commercial Code, as applicable) or
otherwise, (1) which may limit or modify Lessor's rights or remedies hereunder,
(2) to terminate, cancel, quit, repudiate or surrender this Lease, except as
expressly provided herein; (3) to reject, revoke acceptance or accept partial
delivery of the Equipment; (4) to recover damages from Lessor for any breach of
warranty or for any other reason PROVIDED, HOWEVER, that no such waiver shall
preclude Lessee from asserting any such claim against Lessor in a separate cause
of action; or (5) to setoff or deduct all or any part of any claimed damages
resulting from Lessor's default, if any, under this Lease.
34. UCC FILINGS. LESSEE HEREBY APPOINTS LESSOR OR ITS ASSIGNEE AS ITS
TRUE AND LAWFUL ATTORNEY IN FACT, IRREVOCABLY AND COUPLED WITH AN INTEREST, TO
EXECUTE AND FILE ON BEHALF OF LESSEE ALL UCC FINANCING STATEMENTS WHICH IN
LESSOR'S SOLE DISCRETION ARE NECESSARY OR PROPER TO SECURE LESSOR'S INTEREST IN
THE EQUIPMENT IN ALL APPLICABLE JURISDICTIONS.
35. MISCELLANEOUS. Time is of the essence with respect to this Lease. Any
failure of Lessor to require strict performance by Lessee or any waiver by
Lessor of any provision herein shall not be construed as a consent or waiver of
any provision of this Lease. Neither this Lease nor any Equipment Schedule may
be
--------------------------------------------------------------------------------
Page 10 of 11
amended except by a writing signed by Lessor and Lessee. This Lease and each
Equipment Schedule shall be binding upon, and inure to the benefit of, the
parties hereto, their permitted successors and assigns. This Lease will be
binding upon Lessor only if executed by a duly authorized officer or
representative of Lessor at Lessor's address set forth above. This Lease, and
all other documents (the execution and delivery of which by Lessee is
contemplated hereunder), shall be executed on Lessee's behalf by Authorized
Signers of Lessee. THIS LEASE IS BEING DELIVERED IN THE STATE OF NEW YORK AND
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
36. JURY TRIAL WAIVER. LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO WHICH LESSOR OR LESSEE MAY BE PARTIES ARISING OUT OF
OR IN ANY WAY PERTAINING TO THIS LEASE. THIS WAIVER IS MADE KNOWINGLY,
WILLINGLY AND VOLUNTARILY BY THE LESSOR AND THE LESSEE WHO EACH ACKNOWLEDGE THAT
NO REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.
37. MORE THAN ONE LESSEE. If more than one person or entity executes this
Lease, each Equipment Schedule, and all addenda or other documents executed in
connection herewith or therewith, as "Lessee," the obligations of "Lessee"
contained herein and therein shall be deemed joint and several and all
references to "Lessee" shall apply both individually and jointly.
38. QUIET ENJOYMENT. So long as no Event of Default has occurred and is
continuing, Lessee shall peaceably hold and quietly enjoy the Equipment without
interruption by Lessor or any person or entity claiming through Lessor.
39. ENTIRE AGREEMENT. This Lease, together with all Equipment Schedules,
riders and addenda executed by Lessor and Lessee collectively constitute the
entire understanding or agreement between Lessor and Lessee with respect to the
leasing of the Equipment, and there is no understanding or agreement, oral or
written, which is not set forth herein or therein. By initialing below, Lessee
hereby further acknowledges the conditions of this Section 39.
LESSEE'S INITIALS: MJ
---
40. EXECUTION IN COUNTERPARTS. This Master Equipment Lease Agreement may
be executed in several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the
day and year first above written.
LESSOR: LESSEE:
KEYCORP LEASING, JORE CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇
------------------------------------- --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇
Title: ASSISTANT TEAM LEADER Title: PRESIDENT
--------------------------------------------------------------------------------
Page 11 of 11
EQUIPMENT SCHEDULE NO. 01
Annual Renewable
--------------------------------------------------------------------------------
EQUIPMENT SCHEDULE NO. 01 dated as of July 8, 1998 (this "Schedule")
between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC. ("Lessor"),
and JORE CORPORATION, a Montana corporation ("Lessee").
INTRODUCTION:
Lessor and Lessee have heretofore entered into that certain Master
Equipment Lease Agreement dated as of July 8, 1998 (the "Master Lease"; the
Master Lease and this Equipment Schedule hereinafter collectively referred to
as, this "Lease"). Unless otherwise defined herein, capitalized terms used
herein shall have the meanings specified in the Master Lease. The Master Lease
provides for the execution and delivery of an Equipment Schedule substantially
in the form hereof for the purpose of confirming the acceptance and lease of the
Equipment under this Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof and hereof.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. EQUIPMENT. Pursuant to the terms and conditions of this Lease, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the equipment
listed on EXHIBIT A attached hereto (the "Equipment"). The aggregate Total Cost
of such Equipment is $450,000.00.
2. TERM. The Initial Term of this Lease with respect to the Equipment
described on this Schedule shall commence on the date on which such Equipment is
delivered to Lessee, and, unless earlier terminated as provided herein, shall
expire on a date which is sixty (60) months after the Rent Commencement Date
(the "Initial Term Expiration Date").
3. RENT PAYMENT DATES; RENT. Lessee hereby agrees to pay Rent for the
Equipment throughout the Initial Term in sixty (60) consecutive monthly
installments payable in arrears on the date which is one (1) month after the
Rent Commencement Date and on the same day of each month thereafter (each, a
"Rent Payment Date"). Each such installment of Rent shall be in an amount equal
to $6,929.20.
4. EQUIPMENT LOCATION; BILLING ADDRESS. The Equipment described on this
Schedule shall be located at, and except as otherwise provided in this Lease,
shall not be removed from, the following address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇ ▇▇▇▇▇. The billing address of Lessee is as follows: JORE CORPORATION, ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
5. NATURE OF TRANSACTION. Despite any other provision of this Lease, for all
purposes other than financial accounting purposes, this Lease is a financing
arrangement and is intended as security and not as a true lease. Lessee shall
be deemed to have hereby granted Lessor a security interest in the Equipment and
all accessions, substitutions and replacements thereto and therefor, and
proceeds (cash and non-cash), including, without limitation, insurance proceeds
thereof (but without power of sale), to secure the prompt payment and
performance as and when due of all obligations and indebtedness of Lessee, now
existing or hereafter created, to Lessor pursuant to this Lease or otherwise.
In furtherance of the foregoing, Lessee shall execute and deliver to Lessor, to
be recorded at Lessee's expense, Uniform Commercial Code financing statements,
statements of amendment and statements of continuation as reasonably may be
required by Lessor to perfect and maintain perfected such security interest.
6. LESSEE'S PURCHASE AND RENEWAL OPTIONS. With respect to the Equipment
described on this Schedule, Section 32 of the Master Lease ("Renewal and
Purchase Options") is hereby deleted in its entirety and the following is
substituted in its place:
--------------------------------------------------------------------------------
Page 1 of 5
(a) RIGHTS ONLY IF NO DEFAULT. Lessee shall have the options described in
this Section 6 only if at the time such right would otherwise inure to Lessee's
benefit, or such option would be exercisable by Lessee, no Default or Event of
Default shall have occurred or be continuing under the Lease. In all events,
Lessor's rights and Lessee's obligations upon a Default or Event of Default are
as provided in Section 22 of the Lease.
(b) LIMITATIONS ON RENEWALS AND EXERCISE OF OPTIONS. Each of the options
granted to Lessee hereunder shall be available to Lessee at the expiration of
the Initial Term and any Renewal Term provided that (i) Lessee shall not have
the right to renew or extend the Term of the Lease for any period beyond
eighty-four (84) months from the Rental Commencement Date of the Initial Term
(the "Total Term"), (ii) the Lessee may not exercise more than one option to
be effective at the expiration of the Initial Term or any Renewal Term and
(iii) Lessee has given Lessor written notice of Lessee's exercise of an
option (the "Option Notice") not less than one hundred eighty (180) days nor
more than two hundred seventy (270) days prior to the Initial Term Expiration
Date in the case of both (a) an option exercised during the Initial Term of
this Lease or (b) any option exercised during the last day of the then
current Renewal Term in the case of an option exercised during a Renewal
Term, a "Renewal Term Termination Date"). In the event Lessee fails to give
Lessor the Option Notice, Lessee will be deemed to have elected the Renewal
Option set forth below unless electing the Renewal Option would cause the
Renewal Term that would result from exercising the Renewal Option, when added
to the Initial Term and all previous Renewal Terms, to exceed the Total Term,
in which case Lessee shall be deemed to have elected the Purchase Option.
(c) PURCHASE OPTION. Lessee shall have the option (the "Purchase Option")
and, if Lessee is deemed to have elected this Purchase Option, Lessee shall have
the obligation, to purchase all, but not less than all, Items of Equipment on
the Initial Term Expiration Date or the Renewal Term Expiration Date, as the
case may be, at a price (the "Purchase Option Price") equal to the amount shown
in the following table for the Purchase Option Price corresponding to the
applicable Initial Term Expiration Date or Renewal Term Expiration Date, as the
case may be, and in each case plus applicable sales taxes:
Initial Term Expiration Date or Corresponding Purchase Option Price
Renewal Term Expiration Date
---------------------------------------------------------------------------------
Initial Term Expiration Date $192,375.00
First Renewal Term Expiration Date $122,535.00
Second Renewal Term Expiration Date $45,000.00
Payment of the Purchase Option Price, applicable sales taxes and all other
amounts due and owing by Lessee under the Lease (including, without limitation,
Rent) on or before the Initial Term Expiration Date or the Renewal Term
Expiration Date, as the case may be, shall be made on such date in immediately
available funds against delivery of a ▇▇▇▇ of sale transferring to Lessee all
right, title and interest of Lessor in and to the Equipment ON AN "AS IS" "WHERE
IS" BASIS, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. LESSOR HEREBY
SPECIFICALLY DISCLAIMS ANY SUCH REPRESENTATIONS AND WARRANTIES AND MAY INCLUDE
THESE AND OTHER DISCLAIMERS IN ANY SALE DOCUMENTATION.
(d) RENEWAL OPTION. Lessee shall have the option (the "Renewal Option") to
extend the Term of the Lease for an additional non-cancelable period of twelve
(12) months as to all but not less than all of the Equipment so long as (i)
Lessee is entitled to elect the Renewal Option, (ii) Lessee has not elected the
Purchase Option or been deemed to have elected the Purchase Option or otherwise
exercised or consummated the Purchase Option and (iii) exercising the Renewal
Option is permitted in Section B above. If Lessee has elected the Renewal
Option, or is deemed to have elected the Renewal Option, Lessee agrees to pay
Rent throughout the Renewal Term in twelve (12) consecutive monthly installments
payable in arrears commencing on the Initial Term Expiration Date or the Renewal
Term Expiration Date, as the case may be, and on the same day of each month
thereafter. Each installment of Rent during the Renewal Term shall be in an
amount equal to the Rent set forth in Section 3 of this Lease.
--------------------------------------------------------------------------------
Page 2 of 5
(e) SALE OPTION. Lessee shall have the option (the "Sale Option") to sell
(or cause to be sold) all but not less than all of the Equipment under and in
accordance with this Section E, and to pay or receive an adjustment to Rent as
provided in this Section E. If Lessee fails to exercise either the Purchase
Option or the Renewal Option, and Lessee is not deemed to have exercised either
the Purchase Option or the Renewal Option, Lessee shall be deemed to have
elected this Sale Option and to pay or receive the adjustment to Rent as
provided in this Section E. If Lessee elects, or is deemed to have elected,
this Sale Option, Lessee shall (1) sell the Equipment to a third party on or
before the Initial Term Expiration Date or the Renewal Term Expiration Date, as
the case may be, (2) at Lessor's election exercised in Lessor's sole discretion,
deliver the Equipment to an Equipment broker or seller designated by Lessor, who
shall sell the Equipment to a third party at such time as Lessor may determine
in its sole discretion, and Lessee shall be responsible for all costs of
delivery and, if applicable, storage (either of them a "Third Party Sale") and
(3) whether proceeding under clause (1) or (2) of this Section E, pay, or in the
proper case, receive, the adjustment to Rent provided in paragraph (i) of this
Section E. Any Third Party Sale shall be (a) subject to Lessor's approval and
(b) in the case of a Third Party Sale by Lessee, for cash payable upon closing
of such sale. IT IS EXPRESSLY UNDERSTOOD THAT SUCH THIRD PARTY SALE IS "AS IS,
WHERE IS", WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND LESSOR EXPRESSLY
DISCLAIMS THE SAME.
(i) If the Net Proceeds (as hereinafter defined) of a sale of the
Equipment to a third party (in connection with a Third Party Sale) are less
than the Purchase Option Price, Lessee shall, on the Initial Term
Expiration Date or Renewal Term Expiration Date, as the case may be, in the
case of a Sale by Lessee or upon demand after any other sale of the
Equipment under this Section E, pay to Lessor, in immediately available
funds as an adjustment to Rent, an amount equal to such difference, except
that the amount of such difference that Lessee must pay shall not exceed
the percentage of the Total Cost shown in the following table for the
applicable Initial Term Expiration Date or Renewal Term Expiration Date, as
the case may be:
Initial Term Expiration Date or Corresponding Percentage of Total Cost
Renewal Term Expiration Date
--------------------------------------------------------------------------------------------------
Initial Term Expiration Date 25.98%
First Renewal Term Expiration Date 22.91%
Second Renewal Term Expiration Date 7.59%
If, however, such Net Proceeds (as hereinafter defined) as are actually
received by Lessor exceed the Purchase Option Price, Lessor shall remit to
Lessee an amount equal to such excess as an adjustment to the Rent payable
under the Lease.
(ii) As used herein, the term "Net Proceeds" shall mean, with respect to
the Equipment sold, the gross proceeds of such sale less (a) all sales
taxes and other taxes (excluding taxes on or measured by Lessor's income)
as may be applicable to the sale of the Equipment, (b) all fees, expenses
of sale, reconditioning expenses and any other expenses in connection with
storage, handling of the Equipment or its preparation for sale as well as
any legal or other professional fees incurred by Lessor, and (c) any other
amounts for which, if not paid, Lessor would be liable for payment or
which, if not paid, would constitute a lien on the Equipment.
7. MODIFICATIONS TO MASTER LEASE. With respect to the Equipment described on
this Equipment Schedule, the Master Lease shall be modified as follows:
(a) The following shall be inserted as the penultimate sentence of Section
11 of the Master Lease ("Use; Alterations"):
Title to all such alterations, additions, modifications or
improvements shall immediately, and without further act, vest in
Lessee and thereupon shall be deemed to constitute Items of
Equipment and be fully subject to this Lease as if originally leased
hereunder.
--------------------------------------------------------------------------------
Page 3 of 5
(b) The following shall be inserted as the penultimate sentence of Section
12 of the Master Lease ("Repairs and Maintenance"):
Title to such replacement part shall immediately (and without
further act) vest in Lessee upon installation, attachment or
incorporation of the same in, on or into such Item of Equipment and
thereupon shall be deemed to constitute an Item of Equipment and be
fully subject to this Lease as if originally leased hereunder.
(c) As used in Section 22(a) of the Master Lease ("Events of Default"),
the term "Event of Default" shall also mean any of the following events: (1) a
change in control occurs in Lessee or any Guarantor; or (2) the death or
dissolution of Lessee or any Guarantor.
(d) Section 22(b) of the Master Lease ("Events of Default") is hereby
amended as follows: (1) with respect to Section 22(b)(4), the word "terminate"
is hereby deleted and the words "cancel or terminate" are hereby substituted in
its place; (2) with respect to Section 22(b)(6), the word "termination" is
hereby deleted and the words "cancellation or termination" are hereby
substituted in its place; and (3) with respect to Section 22(b)(7), the word
"terminated" is hereby deleted and the words "canceled or terminated" are hereby
substituted in its place.
8. PERSONAL PROPERTY TAX, DISCLAIMER OF INCOME TAX TREATMENT. (a) Lessee
recognizes that, pursuant to Section 18 of the Master Lease, it is Lessee's
responsibility to include, if required by Applicable Law, all equipment financed
under this Lease in Lessee's personal property tax returns and, if necessary, to
pay any resulting property tax bills. Except in those jurisdictions in which
Lessor is required to list itself as owner of all such Items of Equipment, upon
receipt by Lessee of any property tax ▇▇▇▇ pertaining to such Items of Equipment
from the appropriate taxing authority, Lessee will promptly pay all such taxes
when due. In those jurisdictions in which Lessor is required to list itself as
owner of all such Items of Equipment, upon receipt by Lessee of any property tax
▇▇▇▇ pertaining to such Items of Equipment, Lessee will promptly forward to
Lessor such property tax ▇▇▇▇ and related payment. Upon receipt by Lessor of
any such property tax ▇▇▇▇ and related payment, Lessor will pay such tax.
Lessor and Lessee acknowledge that personal property tax policies vary from
state to state and that, where uncertainty exists as to a particular state's
policies, Lessee shall contact its attorneys or financial advisors (who may be
familiar with such state's personal property tax policy) for advice.
(b) Lessor and Lessee agree that this Lease is not a "true lease" for
federal or state income tax purposes. Lessor agrees that it shall not seek to
obtain any tax benefits arising out of or related to the ownership of the
Equipment including without limitation any MACRS depreciation that may be
available with respect to the Equipment. It is expressly acknowledged by
Lessee, however, that LESSOR HAS MADE NO WARRANTIES, STATEMENTS OR
REPRESENTATIONS AS TO ANY TAX MATTERS, AND LESSEE HEREBY DISCLAIMS ANY RELIANCE
ON ANY SUCH WARRANTIES, STATEMENTS OR REPRESENTATIONS MADE BY LESSOR WITH
RESPECT THERETO. Lessor agrees that it shall not report this Lease, or any
aspect of this Lease, as a "true lease" for federal or any state income tax
purposes, or seek to obtain any tax benefits arising out of or in connection
with any lease to Lessee of the Equipment.
9. STIPULATED LOSS VALUE. The Stipulated Loss Values applicable to the
Equipment and this Lease are as set forth on a supplement (the "Stipulated Loss
Value Supplement") prepared by Lessor.
10. ADDITIONAL MAINTENANCE REQUIREMENTS. See the Return/Maintenance Addendum
executed in connection herewith and made a part hereof.
11. OTHER ADDITIONAL TERMS. See the Joint Exercise of Options Addendum
executed in connection herewith and made a part hereof.
12. GOVERNING LAW. This Schedule is being delivered in the State of New York
and shall in all respects be governed by, and construed in accordance with, the
laws of the State of New York, including all matters of construction, validity
and performance without regard to conflict of laws principles.
--------------------------------------------------------------------------------
Page 4 of 5
13. MORE THAN ONE LESSEE. If more than one person or entity executes this
Schedule, and all addenda or other documents executed in connection herewith, as
"Lessee," the obligations of "Lessee" contained herein and therein shall be
deemed joint and several and all references to "Lessee" shall apply both
individually and jointly.
14. RELATIONSHIP TO MASTER LEASE; FURTHER ASSURANCES. This Schedule shall be
construed in connection with and as part of the Lease, and all terms and
conditions contained in the Master Lease are hereby incorporated herein by
reference with the same force and effect as if such terms and conditions were
fully stated herein. By execution of this Schedule, Lessee and Lessor reaffirm
all terms and conditions of the Master Lease except as they may be modified
hereby. To the extent that any of the terms and conditions of this Schedule are
contrary to or inconsistent with any terms and conditions of the Master Lease,
the terms and conditions of this Schedule shall govern. LESSEE HEREBY CERTIFIES
TO LESSOR THAT THE REPRESENTATIONS AND WARRANTIES MADE BY LESSEE IN THE MASTER
LEASE (INCLUDING, WITHOUT LIMITATION, SECTION 31 THEREOF) ARE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF THE DATE OF THIS SCHEDULE WITH THE SAME EFFECT AS
THOUGH MADE ON AND AS OF SUCH DATE. Lessee shall take such additional actions
and execute and deliver such additional documents as Lessor shall deem necessary
from time to time to effectuate the terms of the Lease.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Equipment Schedule
to be duly executed and delivered on the day and year first above written.
LESSOR: LESSEE:
KEYCORP LEASING, JORE CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇
------------------------------------- --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇
Title: ASSISTANT TEAM LEADER Title: PRES.
COUNTERPART NO. 1 OF 1 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL
CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF
ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
--------------------------------------------------------------------------------
Page 5 of 5
AMENDMENT TO MASTER EQUIPMENT LEASE AGREEMENT
--------------------------------------------------------------------------------
THIS AMENDMENT dated as of July 8, 1998 amends that certain Master
Equipment Lease Agreement dated as of July 8, between KEYCORP LEASING, A
DIVISION OF KEY CORPORATE CAPITAL INC., as Lessor, and JORE CORPORATION, as
Lessee (the "Master Lease"). Unless otherwise specified herein, all capitalized
terms shall have the meanings ascribed to them in the Master Lease.
Lessor and Lessee hereby agree that the Master Lease will be amended, with
respect to each Equipment Schedule executed in connection therewith, to add the
following section:
LESSEE'S FINANCIAL COVENANTS. Lessee hereby covenants with Lessor as follows:
1. On a continuing basis, from the date of the Master Lease until the date
on which Lessee's obligations thereunder are fully paid and performed, Lessee
hereby covenants and agrees that:
I. TANGIBLE NET WORTH: its Tangible Net Worth shall not be less than
$2,300,000, increasing to $4,000,000 as of December 31, 1998, and then
increasing to $5,200,000 as of December 31, 1999, as measured on a fiscal
basis.
II. LEVERAGE RATIO: its Leverage Ratio shall not exceed 6.0 to 1.0, as
measured on a fiscal basis.
III. DEBT COVERAGE RATIO: its Debt Coverage Ratio shall not be less than 2.0
to 1.0, as measured on a fiscal basis. This ratio shall be increased to
2.75 to 1.0, as of December 31, 1999 and shall be maintained thereafter.
IV. EXCESS CASH FLOW COVERAGE: its Excess Cash Flow Coverage shall not be
less than $1,000,000, as measured on a fiscal basis.
V. DEFINITIONS.
a) "TANGIBLE NET WORTH" shall mean (1) the gross book value of all
assets, excluding goodwill, patents, trademarks, licenses, trade
names, organizational expenses, treasury stock, unamortized debt
discount and expense, deferred research and developmental costs, and
other like intangibles, less (2) Total Liabilities.
b) "TOTAL LIABILITIES" shall mean all debt and other obligations,
including, without limitation, Current Liabilities and long term debt
(including, without limitation, term loans, bond issuances, debentures
or notes, capital leases and deferred credit).
c) "LEVERAGE RATIO" shall mean the ratio of Total Liabilities to Tangible
Net Worth.
d) "DEBT COVERAGE RATIO" shall mean the ratio of (1) the sum of net
income before taxes, interest expense, depreciation, amortization and
other non-cash expenses, excluding any extraordinary gains or losses,
to (2) the sum current maturities of long term debt and capital lease
obligations.
e) "EXCESS CASH FLOW COVERAGE" shall mean Lessee's net profit for the
applicable fiscal year exclusive of extraordinary gains, plus non-cash
outlay expenses of depreciation and amortization, less dividends and
distributions to shareholders, minus all current maturities of
Lessee's long term debt, including capital leases, as shown on
Lessee's financial statements.
--------------------------------------------------------------------------------
Page 1 of 2
Except as modified hereby, all of the terms, covenants and conditions of
the Master Lease shall remain in full force and effect and are in all respects
hereby ratified and affirmed.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of
the date first above written.
LESSOR: LESSEE:
KEYCORP LEASING, JORE CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------------- --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇
Title: Assistant Team Leader Title: President
--------------------------------------------------------------------------------
Page 2 of 2