Comprehensive Equipment Lease with Provision Regarding Investment Tax Credit

Comprehensive Equipment Lease with Provision Regarding Investment Tax Credit

Agreement made on the , between , a corporation organized and existing under the laws of the state of , with its principal office located at , referred to herein as Lessor, and , a corporation organized and existing under the laws of the state of , with its principal office located at , referred to herein as Lessee.

For and in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and subject to the terms and conditions stated below, Lessor leases to Lessee and Lessee leases from Lessor the Equipment described in Exhibit A attached hereto and made a part hereof pursuant to the terms of this Agreement.

1. Term of Lease

The term of this Lease shall be for a period of time beginning and ending .

2. Rent

Lessee agrees to pay to Lessor, as rent for the Equipment, the total sum of $ , payable in monthly installments as follows: $ on the execution of this Lease, receipt of which is acknowledged, in payment of rent for the period from to ; $ on ; and $ on the day of each succeeding month during the term of this Lease. Any payment past due shall bear interest at the rate of per annum.

All such payments shall be made at the principal place of business of Lessor as set forth above, or such other place as shall be designated by written notice from Lessor to Lessee.

3. Location of Equipment

Lessee, without prior written consent of Lessor, shall not permit the Equipment to be removed from .

4. Care of the Equipment

Lessee shall use the Equipment in a careful and proper manner and shall comply with all laws, ordinances, and regulations relating to the possession, use, or maintenance of the Equipment.

5. Identification of Equipment

If at any time during the term of this Lease, Lessor supplies Lessee with labels, plates, or other markings stating that the Equipment is owned by Lessor, Lessee shall affix and keep such labels, plates, or other markings in a prominent place on the Equipment.

6. Alterations

Lessee agrees that he will make no alterations to or in the Equipment without obtaining prior written permission from Lessor. Any such additions to and improvements of the Equipment of any kind shall immediately become Lessor's property and subject to the terms of this Lease.

7. Maintenance and Repair

Lessee, at Lessee's own cost and expense, shall keep the Equipment in good repair, condition, and working order. Lessee shall not remove, alter, disfigure, or cover up any numbering, lettering, or insignia displayed on the Equipment, and shall see that the Equipment is not subjected to careless or needlessly rough usage.

8. Lessor’s Right of Inspection

Lessor, at all times during business hours, shall have the right to enter on the premises where the Equipment may be located for the purpose of inspecting it or observing its use. Lessee shall give Lessor immediate notice of any attachment or other judicial process affecting the Equipment and, whenever requested by Lessor, shall advise Lessor of the exact location of the Equipment.

9. Return of Equipment

On expiration or earlier termination of this Lease, with respect to the Equipment and unless Lessee has paid Lessor in cash the Stipulated Loss Values of the Equipment pursuant to Section 11 and set forth in Exhibit B attached hereto and made a part hereof, Lessee shall return the Equipment to Lessor in good repair, ordinary wear and tear resulting from proper use alone excepted, in the following manner or as may be specified by Lessor:

A. By delivering the Equipment at Lessee's expense to such place as Lessor shall specify within the county in which the Equipment was delivered to Lessee or to which the Equipment was removed with the written consent of Lessor;

B. By loading the Equipment at Lessee's cost on board such carrier as Lessee shall specify and shipping the Equipment, freight collect, to the destination designated by Lessor. Such conditions for return of the Equipment are subject to Lessee's Option to Purchase it as set forth below.

10. Delivery and Acceptance of Equipment

Lessee shall inspect the Equipment within hours after it is delivered to Lessee. Unless Lessee, within days, gives written notice to Lessor specifying any defect in or other proper objection to the Equipment, Lessee agrees it shall be conclusively presumed, as between Lessor and Lessee, that Lessee has fully inspected and acknowledged the Equipment to be in good condition and repair, and that Lessee is satisfied with and has accepted the Equipment in such good condition and repair.

11. Risk of Loss or Damage

Lessee assumes all risk of loss of and damage to the Equipment from any cause. No loss or damage to the Equipment will impair any obligation of Lessee under this Lease, which will continue in full force and effect. In the event of loss of or damage to the Equipment, Lessee, at the option of Lessor, shall:

A. Place the Equipment in good repair;

B. Replace the Equipment with like Equipment in good repair, which Equipment shall become subject to this Lease;

C. Pay Lessor in cash the Stipulated Loss Value. On such payment, this Lease will terminate with respect to the Equipment so paid for and Lessee shall become entitled to the Equipment, as owner.

12. Obligation to Insure

Lessee, at Lessee's own expense, shall keep the Equipment insured for such risks and in such amounts as Lessor shall require with carriers acceptable to Lessor, shall maintain a loss payable indorsement in favor of Lessor affording to Lessor such additional protection as Lessor shall require, and shall maintain liability insurance satisfactory to Lessor. All such insurance shall name Lessor and Lessee as insured. The policies shall provide that they may not be canceled or altered without at least days' prior written notice to Lessor, and the loss payable indorsement shall provide that all amounts payable by reason of loss of or damage to the Equipment shall be payable only to Lessor. Lessee shall deliver to Lessor evidence satisfactory to Lessor of all such insurance. If loss or damage occurs under circumstances in which Lessee is not in violation of the terms of any such policies, and if Lessee has fulfilled Lessee's obligations under Section 11 of this Lease, and is not otherwise in default under this Lease, Lessor will pay Lessee so much of any insurance proceeds received by Lessor as the result of such loss as will fully reimburse Lessee for the net expense incurred by Lessee in fulfilling Lessee's obligations under Section 11.

13. Taxes and Fees

Lessee shall pay all license fees, assessments, and sales, use, property, and other taxes imposed on the Equipment by reason of ownership, leasing, renting, sale, possession, or use, whether they be assessed to Lessor or Lessee, together with any penalties or interest, excepting federal, state, or local governmental taxes, or payments in lieu of those taxes, imposed on or measured by income of Lessor. If any tax, by law, is to be assessed or billed to Lessor, Lessee, at Lessee's expense, will do anything required to be done by Lessor in connection with the levy, assessment, billing, or payment of such tax, and is authorized by Lessor to act on Lessor's behalf in such respects; Lessee will cause all billings of such taxes to Lessor to be made to Lessor in care of Lessee and will from time to time, on request of Lessor, submit written evidence of the payment of all governmental obligations mentioned in this section. Lessee, on any property tax returns required to be filed by Lessee, will include the Equipment covered by this Lease, or any substitutions or additions, as Equipment owned by Lessee for purposes of tax assessments. It is agreed that Lessee, without obtaining prior written permission of Lessor, will not assert on Lessee's behalf, or on behalf of Lessor, any immunity from taxation based on the tax-exempt status, if any, of Lessor.

14. Deposit of Security

Lessor acknowledges that Lessee has deposited with Lessor as security $ , and the parties agree that such deposit shall be security for performance of Lessee's obligations under this Agreement. Such sum, at Lessor's option, may be applied to satisfy any obligation that may be in default without excusing Lessee from performance of any such obligation. Any portion of such sum that has not been so applied by Lessor will be returned to Lessee at the termination of this Lease.

15. Indemnity of Lessor

Lessee shall indemnify and hold Lessor harmless from and against all claims, actions, proceedings, costs, damages, and liabilities, including attorney's fees, arising out of, connected with, or resulting from use of the Equipment, including, but not limited to, the manufacture, selection, delivery, possession, use, operation, or return of the Equipment.

16. Inspection of Lessee’s Records

Lessee shall keep books and records in accordance with good accounting practice and shall deliver to Lessor financial and profit and loss statements in such form and at such time as Lessor may require. Lessee shall permit Lessor to examine and audit the books of Lessee's business during normal business hours, on reasonable prior notice of Lessor's intention to do so.

17. Events Constituting Default

The following events shall constitute default under this Agreement:

A. The nonpayment by Lessee for a period of days of any sum required to be paid by Lessee;

B. The nonperformance by Lessee of any other term, covenant, or condition of this Lease that is not cured within days after notice of nonperformance from Lessor;

C. Any affirmative act of insolvency by Lessee, or the filing by Lessee of any petition under any bankruptcy, reorganization, insolvency, or moratorium law, or any law for the relief of, or relating to, debtors;

D. The filing of any involuntary petition under any bankruptcy statute against Lessee, or the appointment of any receiver or trustee to take possession of the Equipment of Lessee, unless such petition or appointment is set aside or withdrawn or ceases to be in effect within days of the date of the filing or appointment; or

E. The subjection of any of Lessee's Equipment to any levy, seizure, assignment, application, or sale for or by any creditor or governmental agency.

18. Lessor’s Right to Prevent Default

Should Lessee fail to make any payment or do any act as provided in this Agreement, then Lessor shall have the right, but not the obligation, without notice to or demand on Lessee, and without releasing Lessee from any obligation under this Agreement, to make or do the same, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien that, in the sole judgment of Lessor, appears to affect the Equipment, and in exercising any such rights, incur any liability and expend whatever amounts in its discretion it may deem necessary. All expenses so incurred by Lessor shall be, without demand, immediately due and payable by Lessee and shall bear interest at the rate of per annum until paid.

19. Lessor’s Right on Default

On the occurrence of any of the events stated in Section 17 as constituting defaults, Lessor, without notice to or demand on Lessee, may:

A. Take possession of the Equipment and lease the Equipment or any portion of it, for such period and for such amount, and to such persons, as Lessor shall elect, and apply the proceeds of any such renting, after deducting all costs and expenses incurred in connection with the recovery, repair, storage, and renting of the Equipment, in payment of the lease payments and other obligations due from Lessee to Lessor, Lessee remaining responsible for any deficiency; or

B. Take possession of the Equipment and sell it or any portion of it at public or private sale, without demand or notice of intention to sell, and apply the proceeds of any such sale, after deducting all costs and expenses incurred in connection with the recovery, repair, storage, and sale of the Equipment and any rentals and other obligations of Lessee then due, against the value of the Equipment sold as determined in Section 11, Paragraph C. If the proceeds, after the permitted deduction, are less than the value so determined, Lessee shall immediately pay Lessor the difference.

20. Status of the Equipment

The Equipment is, and shall at all times remain, personal property, notwithstanding that any part of it may now be, or may become, in any manner attached to, or embedded in, or permanently resting on, real property or any building on real property, or attached in any manner to what is permanent as by means of cement, plaster, nails, bolts, screws, or otherwise.

21. Ownership of the Equipment

The Equipment is, and shall at all times remain, the sole property of Lessor, and Lessee shall have no right, title, or interest in the Equipment except as expressly set forth in this lease.

22. Suspension of Obligations of Lessor

The obligations of Lessor under this lease shall be suspended to the extent that it is hindered or prevented from complying with this lease because of labor disturbances, including strikes and lockouts, acts of God, fires, storms, accidents, governmental regulations, or interferences, or any other cause beyond the control of Lessor.

23. Limitation of Warranties

Lessee acknowledges that the Equipment is of a size, design, capacity, and manufacture selected by Lessee. Lessor is not a manufacturer of the Equipment has not made and does not make any representation, warranty, or covenant, express or implied, with respect to the condition, quality, durability, suitability, or merchantability of the Equipment. Lessor, however, will take any steps reasonably within its power to make available to Lessee any manufacturer's or similar warranty applicable to the Equipment. Lessor shall not be liable to Lessee for any liability, loss, or damage caused or alleged to be caused directly or indirectly by the Equipment, by any inadequacy of, or defect in, the Equipment, or by any incident in connection with the Equipment.

24. Operation of Equipment

Lessee shall provide for the registration and licensing of the Equipment wherever required, shall permit the Equipment to be operated only by competent and qualified employees, and shall insure that the Equipment is not subjected to careless or needlessly rough usage.

25. Liability and Indemnity for Personal Injuries

Liability for injury, disability, and death of workers and other persons caused by operating, handling, or transporting the Equipment during the term of this Lease shall be assumed by Lessee, and Lessee shall indemnify and hold Lessor harmless from and against all such liability.

26. Disposition of Investment Tax Credit

Any investment tax credits pursuant to the provisions of the Internal Revenue Code, as amended, shall be passed on to and be made available by Lessor for the benefit of Lessee. Lessor agrees that, pursuant to this provision, it will prepare and file with Lessee the statement of Equipment leased during its taxable year with respect to which this election is made and will attach the statement to its income tax return during the term of this Lease.

27. Severability

The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision.

28. No Waiver

The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

29. Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

30. Notices

Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

31. Attorney’s Fees

In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees.

32. Mandatory Arbitration

Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect.

33. Entire Agreement

This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

34. Modification of Agreement

Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

35. Assignment of Rights

The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.

36. In this Agreement, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine.

WITNESS our signatures as of the day and date first above stated.