Exhibit 10.39

 

[GRAPHIC APPEARS HERE]

 

MASTER EQUIPMENT LEASE AGREEMENT No. 36151

 

LESSOR:    FLEET CAPITAL CORPORATION    LESSEE:    PACER INTERNATIONAL, INC.  
  

a Rhode Island corporation

       

a Tennessee Corporation

Address:   

One Financial Plaza

   Address:   

2300 Clayton Road, #1200

    

Providence, Rhode Island 02903-2448

       

Concord, CA 94520

 

1. LEASE OF EQUIPMENT

 

Subject to the terms and conditions set forth herein (the “Master Lease”) and in
any Lease Schedule incorporating the terms of this Master Lease (each, a “Lease
Schedule”), Lessor agrees to lease to Lessee, and Lessee agrees to lease from
Lessor, the items and units of personal property, fixtures and other property
described in each such Lease Schedule, together with all replacements, parts,
additions, accessories and substitutions therefor (collectively, the
“Equipment”). As used in this Lease, the term “item of Equipment” shall mean
each functionally integrated and separately marketable group or unit of
Equipment subject to this Lease. Each Lease Schedule shall constitute a
separate, distinct and independent lease of Equipment and contractual obligation
of Lessee. References to “the Lease,” “this Lease,” “any Lease,” “hereof” or
“hereunder” shall mean and refer to any Lease Schedule which incorporates the
terms of this Master Lease, together with all exhibits, addenda, schedules
(except other Lease Schedules), certificates, riders and other documents and
instruments executed and delivered in connection with such Lease Schedule or
this Master Lease, all as the same may be amended or modified from time to time.
The Equipment is to be delivered at the location specified or referred to in the
applicable Lease Schedule. The Equipment shall be deemed to have been accepted
by Lessee for all purposes under this Lease as of the Acceptance Date upon
Lessor’s acceptance and execution of an Acceptance Certificate with respect to
such Equipment, executed by Lessee after receipt of all other documentation
required by Lessor with respect to such Equipment. Lessor shall not be liable or
responsible for any failure or delay in the delivery of the Equipment to Lessee
for whatever reason. As used in this Lease, “Acquisition Cost” shall mean (a)
with respect to all Equipment subject to a Lease Schedule, the amount set forth
as the Acquisition Cost in the Lease Schedule and the Acceptance Certificate
applicable to such Equipment; and (b) with respect to any item of Equipment, the
total amount of all vendor or seller invoices (including Lessee invoices, if
any) for such item of Equipment, together with all acquisition fees and costs of
delivery, installation, testing and related services, accessories, supplies or
attachments procured or financed by Lessor from vendors or suppliers thereof
(including items provided by Lessee) relating or allocable to such item of
Equipment (“Related Expenses”). As used in this Lease with respect to any
Equipment, the terms “Acceptance Date,” “Rental Payment(s),” “Rental Payment
Date(s),” “Rental Payment Numbers,” “Rental Payment Commencement Date,” “Lease
Term”, “Lease Term Commencement Date “ and “Renewal Term”: shall have the
meanings and values assigned to them in the Lease Schedule, the Acceptance
Certificate and any Riders applicable to such Equipment.

 

2. TERM AND RENT

 

The Lease Term for any Equipment shall be as specified in the applicable Lease
Schedule. Rental Payments shall be in the amounts and shall be due and payable
as set forth in the applicable Lease Schedule. Lessee shall, in addition, pay
interim interest to Lessor on a pro-rata, per-diem basis from the date of the
payment of the Acquisition Cost of the Equipment to the Lease Term Commencement
Date set forth in the applicable Acceptance Certificate, payable on such Lease
Term Commencement Date. If any rent or other amount payable hereunder shall not
be paid within 10 days of the date when due, Lessee shall pay as an
administrative and late charge an amount equal to 5% of the amount of any such
overdue payment. All payments to be made to Lessor shall be made to Lessor in
immediately available funds at the address shown above or at such other place,
as Lessor shall specify in writing. THIS IS A NON-CANCELABLE, NON-TERMINABLE
LEASE OF EQUIPMENT FOR THE ENTIRE LEASE TERM PROVIDED IN EACH LEASE SCHEDULE
HERETO.

 

3. POSSESSION AND QUIET ENJOYMENT; PERSONAL PROPERTY

 

No right, title or interest in the Equipment shall pass to Lessee other than the
right to maintain possession and use of the Equipment for the Lease Term
(provided no Event of Default has occurred) free from interference by any person
lawfully claiming by, through, or under Lessor. The Equipment shall always
remain personal property even though the Equipment may hereafter become attached
or affixed to real property. Lessee agrees to give and record such notices and
to take such other action at its own expense as may be necessary to prevent any
third party (other than anyone claiming by, through or under Lessor, including
but not limited to an assignee of Lessor) from acquiring or having the right
under any circumstances to acquire any interest in the Equipment, this Lease or
any additional collateral given in connection with the Lease.

 

4. DISCLAIMER OF WARRANTIES

 

LESSOR IS NOT THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, NOR THE AGENT
THEREOF, AND MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO ANY
MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OF THE
EQUIPMENT, ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS
CAPACITY OR DURABILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE
MANUFACTURE OR ASSEMBLY OF THE EQUIPMENT, OR THE CONFORMITY OF THE EQUIPMENT TO
THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER RELATING THERETO, OR
PATENT INFRINGEMENTS, AND LESSOR HEREBY DISCLAIMS ANY SUCH WARRANTY. LESSOR IS
NOT RESPONSIBLE FOR ANY REPAIRS OR SERVICE TO THE EQUIPMENT, DEFECTS THEREIN OR
FAILURES IN THE OPERATION THEREOF. Lessee has made the selection of each item of
Equipment and the manufacturer and/or supplier thereof based on its own judgment
and expressly disclaims any reliance upon any statements or representations made
by Lessor. For so long as no Event of Default has occurred and is continuing,
Lessee shall be the beneficiary of, and shall be entitled to, all rights under
any applicable manufacturer’s or vendor’s warranties with respect to the
Equipment, to the extent permitted by law. Lessor shall cooperate with Lessee
with respect to the resolution of any claims by Lessee under such warranties, in
good faith and by appropriate proceedings at Lessee’s expense.

 

If the Equipment is not delivered, is not properly installed, does not operate
as warranted, becomes obsolete, or is unsatisfactory for any reason whatsoever,
Lessee shall make all claims on account thereof solely against the manufacturer
or supplier and not against Lessor, and Lessee shall nevertheless pay all
rentals and other sums payable hereunder. Lessee acknowledges that neither the
manufacturer or supplier of the Equipment, nor any sales representative or agent
thereof, is an agent of Lessor, and no agreement or representation as to the
Equipment or any other matter by any such sales representative or agent of the
manufacturer or supplier shall in any way affect Lessee’s obligations hereunder.

 

5. REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Lessee represents and warrants to and covenants with Lessor that:

 

(a) Lessee has the form of business organization indicated above, Lessee’s chief
executive office and address for purpose of notices hereunder is as listed
above, and Lessee is duly organized and existing in good standing under the laws
of the state listed in the caption of this Master Lease and is duly qualified to
do business wherever necessary to carry on its present business and operations
and to own its property, and Lessee shall provide written notice to Lessor not
less than thirty (30) days prior to any contemplated change in Lessee’s name,
its form, its state of organization, its organizational identification number
issued by its state of organization or its chief executive office or notice
address; (b) this Lease has been duly authorized by all necessary action on the
part of Lessee consistent with its form of organization, does not require any
further shareholder, member, manager or partner approval, does not require the
approval of, or the giving notice to, any federal, state, local or foreign
governmental authority and

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does not contravene any law binding on Lessee, any provision of its certificate
or articles of incorporation or by-laws, or certificate or articles of
organization or operating agreement, or partnership certificate or agreement or
any other agreement among the shareholders, members or partners of Lessee, or
any agreement, indenture, or other instrument to which Lessee is a party or by
which it may be bound; (c) this Lease has been duly executed and delivered by
authorized officers, members, managers or partners of Lessee and constitutes a
legal, valid and binding obligation of Lessee enforceable in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors
generally, and except as such enforceability may be subject to the application
of equitable principles, legal or equitable; (d) Lessee has not and will not,
directly or indirectly, create, incur or permit to exist any lien, encumbrance,
mortgage, pledge, attachment or security interest on or with respect to the
Equipment or this Lease (except for tax or repairmen’s liens for amounts not yet
due and payable or being contested in good faith, as long as there is no
material risk of forfeiture with respect to said liens, and except those of
persons claiming by, through or under Lessor [collectively, the “Permitted
Liens”]); (e) the Equipment will be used solely in the conduct of Lessee’s
business, and not for personal, family or household use; (f) there are no
pending or threatened actions or proceedings before any court or administrative
agency which materially adversely affect Lessee’s financial condition or
operations, and all credit, financial and other information provided by Lessee
or at Lessee’s direction is, and all such information hereafter furnished will
be, true, correct and complete in all material respects; (g) Lessor has not
selected, manufactured or supplied the Equipment to Lessee and has acquired any
Equipment subject hereto solely in connection with this Lease and Lessee has
received and approved the terms of any purchase order or agreement with respect
to the Equipment; and, (h) Lessee shall provide written notice to Lessor
promptly upon Lessee becoming aware of any alleged violation of applicable law
relating to the Equipment or this Lease, which has, or is likely to have, a
material adverse affect on Lessee’s ability to discharge its obligations under
this Lease or the value or utility of the Equipment.

 

6. INDEMNITY

 

Lessee assumes the risk of liability for, and hereby agrees to indemnify and
hold safe and harmless, and covenants to defend, Lessor, its employees, servants
and agents from and against: (a) any and all liabilities, losses, damages,
claims and expenses (including legal expenses of every kind and nature) arising
out of the manufacture, purchase, shipment and delivery of the Equipment to
Lessee, acceptance or rejection, ownership, titling, registration, leasing,
possession, operation, use, return or other disposition of the Equipment,
including, without limitation, any liabilities that may arise from patent or
latent defects in the Equipment (whether or not discoverable by Lessee), any
claims based on absolute tort liability or warranty and any claims based on
patent, trademark or copyright infringement; (b) any and all loss or damage of
or to the Equipment; and (c) any obligation or liability to the manufacturer or
any supplier of the Equipment arising under any purchase orders issued by or
assigned to Lessor, except, following Lessee’s acceptance of the Equipment and
Lessor’s receipt of all required Lease documentation and satisfaction of all
conditions precedent therefor, payment of the Acquisition Cost thereof.
Notwithstanding the foregoing, Lessee shall not be required to indemnify any
person or entity for any of the claims set forth above (collectively, the
“Claims”) to the extent that such Claims arise from (i) the gross negligence or
willful misconduct of such person or entity; (ii) any taxes, fees and other
governmental charges (it being acknowledged and agreed that Lessee’s obligations
with respect to taxes, fees and other governmental charges are set forth in
Section 7 of this Lease) or to any penalty or other liability arising from a
“prohibited transaction” described in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”); (iii) any Claims attributable
to any liens, encumbrances, mortgages, pledges, attachments or security
interests on or with respect to the Equipment or this Lease created by, through
or under Lessor; (iv) any claims, other than a Claim set forth above, resulting
from an assignment by Lessor pursuant to Section 16 of this Lease (except an
assignment in connection with the exercise by Lessor of its remedies under
Section 9 of this Lease upon the occurrence of an Event of Default) or (v) any
Claims arising in connection with any Equipment after such Equipment has been
returned by Lessee to Lessor in the condition required by Section 18 following
the expiration or earlier termination of the Lease Term for such Equipment;
provided, however, nothing contained herein shall relieve Lessee of its
obligation to indemnify a person or entity entitled to an indemnity for Claims
which relate to or arise out of facts or conditions giving rise to any Claim
which occurred or were in existence prior to such return. The foregoing
indemnities and covenants set forth in this Section 6 shall continue in full
force and effect and shall survive the expiration or earlier termination of the
Lease.

 

7. TAXES AND OTHER CHARGES

 

Lessee represents, warrants and covenants that: (a) Lessee (i) shall use the
Equipment, or cause the Equipment to be used, either (x) within the United
States or (y) “in the transportation of property to and from the United States”
within the meaning of Section 168(g)(4)(E) of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”), and (ii) shall maintain records to
demonstrate that the Equipment is used in accordance with subclause (i) during
each calendar year during the term of this Lease (which records shall be made
available to Lessor as and when reasonably requested by Lessor); and (b) the
Equipment is, and will be used by Lessee so as to remain, property eligible for
the MACRS Deductions. As used herein, “MACRS Deductions” shall mean the
deductions under Section 167 of the Code, determined in accordance with the
modified Accelerated Cost Recovery System with respect to the Total Cost of any
item of the Equipment using the accelerated method set forth in Section
168(b)(1) or 168(b)(2) of the Code as in effect on the date of this Lease for
property assigned to the 5-year class of property and taking into account the
special depreciation allowance and basis adjustment under Section 168(k)(1) of
the Code.

 

Lessee agrees to comply with all laws, regulations and governmental orders
related to this Lease and to the Equipment and its use or possession, and to pay
when due, and to defend and indemnify Lessor against liability for all license
fees, assessments, and sales, use, property, excise, privilege and other taxes
(including any related interest or penalties) or other charges or fees now or
hereafter imposed by any governmental body or agency (“Taxes”) upon any
Equipment, or with respect to the manufacturing, ordering, shipment, purchase,
ownership, delivery, installation, leasing, operation, possession, use, return,
or other disposition thereof or the rentals hereunder (other than Excluded Taxes
[as defined below]). Any fees, taxes or other lawful charges paid by Lessor upon
failure of Lessee to make such payments shall at Lessor’s option become
immediately due from Lessee to Lessor. “Excluded Taxes” means any of the
following Taxes: (i) any Tax on or measured by the net income of Lessor; (ii)
any Tax in the nature of a franchise tax or Tax on or with respect to the
transaction of business by Lessor imposed by any taxing authority in a
jurisdiction in which Lessor has its place of organization or a place of
business; (iii) any Tax imposed on or with respect to any sale, assignment,
transfer or other disposition by Lessor of any interest in the Equipment or any
Lease unless caused by an event of loss described in the last sentence of
Section 12 or by Lessor’s exercise of remedies upon an Event of Default; (iv)
any fine, penalty, interest or addition to Tax resulting from (A) the failure of
Lessor to file any tax return or other tax document, or to pay any tax, in a
timely and proper manner unless such failure is caused by the failure of Lessee
to perform its obligations under the Lease or (B) the failure of Lessor to
comply with its obligations under Sections 6011, 6111 or 6112 of the Code (as
defined below) and the regulations thereunder or under any corresponding state
law; (v) any Tax to the extent incurred or increased as a result of the gross
negligence or willful misconduct of Lessor or any transaction between Lessor (or
any Affiliate of Lessor [as defined below]), and a third party for financing
Lessor’s investment in the Equipment; (vi) in the case of a Lessor that acquires
its interest in the Equipment after the Acceptance Date thereof, Taxes to the
extent exceeding the Taxes for which Lessee would have been required to
indemnify the original Lessor if the original Lessor continued to be the Lessor;
(vii) any United States federal or state withholding Tax that applies to any
rent or other amount payable under the Lease due to the status of Lessor (or any
individual or entity that owns directly or indirectly an interest in Lessor) as
other than a “United States person”, as defined in Section 7701(a)(30) of the
Code; (viii) any Tax arising from any event, or imposed with respect to any
period occurring, after termination of the Lease and Lessee’s return of the
Equipment in accordance with the terms of this Lease (except in the event of
Lessor exercising its remedies under Section 9 of this Lease upon the occurrence
of an Event of Default); and (ix) any Tax arising from a “prohibited
transaction” described in Section 406 of ERISA or Section 4975 of the Code. If
Lessor receives written notice from any taxing authority (a “Tax Claim”)
asserting against Lessor liability for a Tax for which Lessee may be required to
indemnify Lessor pursuant to this paragraph, Lessor shall promptly provide
written notice thereof to Lessee. Provided that no Event of

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Default has occurred and is continuing, upon Lessee’s written request (received
not more than 30 days following Lessee’s receipt of Lessor’s written notice) and
concurrent written agreement to pay for all costs and expenses of conducting the
requested contest, then Lessor shall contest such Tax Claim in such forum as
Lessor shall select, considering in good faith such request as Lessee may make
concerning the most appropriate forum in which to proceed.

 

If any Lease Schedule is denominated as a “True Lease Schedule,” then, with
respect to the Equipment set forth on such True Lease Schedule, Lessee and
Lessor anticipate that Lessor shall be entitled to the following tax benefits
(the “Tax Benefits”): Lessor will be entitled to cost recovery deductions under
Section 168 of the Internal Revenue Code of 1986, as amended (the “Code”), using
a 200% declining balance method of depreciation switching to the straight line
method for the first taxable year for which such method will yield larger
depreciation deductions, and assuming a half-year convention and zero salvage
value, for the applicable recovery period for such Equipment as set forth in the
True Lease Schedule with respect to such Equipment, taking into account the
special depreciation allowance and basis adjustment under Section 168(k)(1) of
the Code. With respect to Equipment set forth on any such True Lease Schedule,
Lessee agrees that: Lessee will not claim that Lessee is the owner of the
Equipment subject thereto or that Lessee is otherwise entitled to all or any of
the Tax Benefits; Lessee will not take any action inconsistent with Lessor’s
anticipated Tax Benefits; and the Equipment will not constitute “public utility
property” or “tax-exempt use property” within the meaning of Sections 168(i)(10)
or 168(h) of the Code. If, as the result of any act, omission and/or
misrepresentation of Lessee, there shall be a loss, disallowance, recapture or
delay in claiming all or any portion of the Tax Benefits with respect to the
Equipment, or there shall be included in Lessor’s gross income for Federal,
state or local income tax purposes any amount on account of any addition,
modification or improvement to or in respect of any of the Equipment made or
paid for by Lessee (any such loss, disallowance, recapture, delay or inclusion
being herein called a “Tax Loss”), Lessee shall reimburse Lessor for such Tax
Loss in the manner provided for in this Section 7. Lessee shall not have any
liability to Lessor for indemnification hereunder for any Tax Loss with respect
to a Lease resulting from one or more of the following: (i) any voluntary
transfer or other disposition by Lessor of any of its interests in the Lease or
the Equipment; (ii) Lessor’s failure to claim or follow the proper procedure in
claiming any Tax Benefit in a proper and timely manner; (iii) Lessor’s failure
to have sufficient income to utilize any Tax Benefit; (iv) any involuntary
disposition of the Equipment resulting from (A) any bankruptcy or insolvency of
the Lessor (or any Affiliate of Lessor) or (B) Lessee’s exercise of an option to
purchase the Equipment; (v) any event requiring Lessee to pay an amount
determined by reference to the Stipulated Loss Value (as defined below); (vi)
the application of Section 168(d)(3) of the Code; and, (vii) the failure of
Lessor to comply with its notification and contest obligations set forth in the
following paragraph of this Section 7 of this Lease.

 

Subject to Lessee’s contest rights hereunder, a Tax Loss shall be deemed to have
occurred if either (a) a deficiency shall have been proposed or a claim has been
made that a Tax Loss has so occurred by the Internal Revenue Service or other
taxing authority having jurisdiction, or (b) independent tax counsel (“Tax
Counsel”) selected by Lessor and acceptable to Lessee (which acceptance shall
not be unreasonably withheld or delayed by Lessee) has rendered an opinion to
Lessor to the effect that there is no reasonable basis for claiming that such
Tax Loss has not occurred. Lessor shall promptly provide written notice to
Lessee that a Tax Loss has occurred. Provided that no Event of Default has
occurred and is continuing (unless Lessee provides collateral in form and amount
reasonably satisfactory to Lessor to secure Lessee’s obligations under Section 7
of this Lease with respect to the contested Tax), upon Lessee’s written request
(received not more than 30 days after Lessee’s receipt of Lessor’s written
notice to Lessee of the occurrence of such Tax Loss) and concurrent written
agreement to pay Lessor for any liability associated with such Tax Loss in
accordance with the provisions hereof and to pay for all costs and expenses as
and when the same shall become due related to the contest of all or any portion
of any such Tax Loss (a “Contested Matter”), and if in the opinion of Tax
Counsel a reasonable basis for the contest of such Contested Matter exists, then
Lessor shall pursue the contest of such Contested Matter in such forum as Lessor
shall select, considering in good faith such request as Lessee may make
concerning the most appropriate forum in which to proceed. Lessor shall not be
obligated to take any such legal or other appropriate action with respect to a
Contested Matter if Lessor notifies Lessee in writing at any time that Lessor
waives its right to any indemnity payment from Lessee hereunder with respect to
such Contested Matter. The action to be taken may, in Lessor’s sole discretion,
be commenced prior to making payment of any tax, interest and/or penalty
attributable to such Contested Matter (a “Tax Payment”) or after making such Tax
Payment and then seeking a refund and, if the Tax that is the subject of such
Contested Matter is a recurring item, Lessor shall waive its rights to
indemnification for such Tax with respect to any other reporting period to the
extent that failure to contest such Tax effectively precludes a contest of such
Tax. If Lessor takes such action prior to making such Tax Payment, the indemnity
amounts payable under this Section 7 with respect to the Contested Matter need
not be paid by Lessee while such action is pending, provided that Lessee shall
pay the costs and expenses relating to such action as and when the same shall
become due. In such case, if the Final Determination (hereinafter defined) of a
Contested Matter shall be adverse to Lessor, the indemnity amounts payable under
this Section 7 with respect to a Contested Matter shall be computed by Lessor as
of the date of such Final Determination, Lessor shall notify Lessee in writing
of such computation, and Lessee shall make the indemnity payments required in
accordance with this Section 7. If Lessor determines to make such Tax Payment
prior to pursuing a Contested Matter and to then seek a refund, Lessee will
advance to Lessor, as an interest-free loan or loans, and without any additional
net-after-tax cost to Lessor, amounts equal to the amount of such Tax Payment
attributable to such Contested Matter. If Lessor seeks a refund after making
such Tax Payment, and if the Final Determination shall be in favor of Lessor,
(i) no further payments shall be due hereunder in respect of such Contested
Matter (or an appropriate reduction shall be made if the Final Determination is
partly in favor of and partly adverse to Lessor) other than any outstanding
costs or expenses incurred by Lessor with respect to such Contested Matter, and
(ii) Lessor shall pay to the Lessee an amount equal to the amounts theretofore
paid by Lessee to Lessor in respect of such Tax Payment (or a proportionate part
thereof if the Final Determination is partly in favor of and partly adverse to
Lessor) on or before the next succeeding Rent Payment Date (or within thirty
(30) days from such Final Determination, if there is no succeeding Rent Payment
Date), together with the amount of any penalty or interest actually refunded to
Lessor as a result of such Final Determination. If the Final Determination of
such Contested Matter shall be adverse to Lessor, the indemnity amounts payable
under this Section 7 with respect to the Contested Matter shall be computed by
Lessor as of the date of such Final Determination, Lessor shall notify Lessee in
writing of such computation and, Lessee shall make the indemnity payments
required in accordance with this Section 7. A “Final Determination,” for the
purposes of this Section 7 means (i) the occurrence of a Tax Loss which is not
contested or ceases to be contested at the request of Lessee in accordance with
the provisions of this Section 7, (ii) a final decision of a court of competent
jurisdiction after all allowable appeals have been exhausted by either party to
the action, or (iii) a determination within the meaning of Section 1313(a) of
the Code.

 

Subject to the foregoing provisions relating to prepayment of Tax Payments, upon
a Final Determination of a Tax Loss, Lessee shall reimburse Lessor for such Tax
Loss by payment of equal periodic payments over the then remaining Lease Term
with respect to the Equipment related to such Tax Loss with each Rental Payment
due and payable with respect to such Equipment, after deduction of all taxes
required to be paid by Lessor with respect to the receipt of such periodic
payments, in an amount sufficient to provide Lessor with the amounts necessary
to maintain Lessor’s after-tax economic yield and overall net after-tax cash
flows for the entire Lease Term at least at the same level that would have been
available if such Tax Loss had not occurred (computed using the same assumptions
used by Lessor to calculate the Rental Payments and Stipulated Loss Values for
the Equipment affected by the Tax Loss on the Acceptance Date thereof), plus any
interest, penalties or additions to tax that are imposed in connection with such
Tax Loss.

 

To the extent that Lessor obtains a refund of any tax for which Lessee has
indemnified Lessor pursuant to this Section 7, Lessor shall pay to Lessee the
amount of such refund plus the amount of any interest Lessor receives with
respect to such refund, limited to the amount of indemnification payment made by
Lessee. To the extent that the income tax liability of Lessor for any tax year
is reduced due to a Tax or Tax Loss for which Lessee has indemnified Lessor
pursuant to this Section 7, Lessor shall pay to Lessee the amount of such Tax
saving plus the amount of any additional Lessor Tax saving resulting from such
payment. Lessor shall cause each Affiliate of Lessor to comply with the
obligations of Lessor under this Section 7.

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The foregoing indemnities and covenants set forth in this Section 7 shall
continue in full force and effect and shall survive the expiration, cancellation
or earlier termination of the Lease.

 

8. DEFAULT

 

Lessee shall be in default of this Lease upon the occurrence of any one or more
of the following events (each an “Event of Default”):

 

(a) Lessee shall fail to make any payment, of rent or otherwise, under any Lease
within 10 days of the date when due; or (b) Lessee shall fail to obtain or
maintain any of the insurance required under any Lease; or (c) Lessee shall fail
to perform or observe any covenant, condition or agreement under any Lease, and
such failure continues for 20 days after written notice thereof to Lessee; or
(d) Lessee shall default in the payment or performance of any indebtedness or
obligation to Lessor or any affiliated person, firm or entity controlled by
Lessor, under any loan, note, security agreement, lease, guaranty, title
retention or conditional sales agreement or any other instrument or agreement
evidencing such indebtedness with Lessor or such other affiliated person, firm
or entity controlled by Lessor; or (e) any representation or warranty made by
Lessee herein or in any certificate, agreement, statement or document hereto or
hereafter furnished to Lessor in connection herewith, including without
limitation, any financial information disclosed to Lessor, shall prove to be
false or incorrect in any material respect; or (f) death or judicial declaration
of incompetence of Lessee, if an individual; the commencement of any bankruptcy,
insolvency, arrangement, reorganization, receivership, liquidation or other
similar proceeding by Lessee, or the commencement of any such proceeding against
Lessee which is not discharged or vacated within 90 days thereof, or the
appointment of a trustee, receiver, liquidator or custodian for Lessee or any of
its properties of business, or if Lessee suffers the entry of an order for
relief under Title 11 of the United States Code; or the making by Lessee of a
general assignment or deed of trust for the benefit of creditors; or (g) Lessee
shall default in any payment or other obligation to any third party and any
applicable grace or cure period with respect thereto has expired; or (h) Lessee
shall have terminated its corporate existence, consolidated with, merged into,
or conveyed or leased substantially all of its assets as an entirety to any
Person (such actions under this Section 8(h) being referred to as an “Event”),
unless immediately prior to such Event: (i) such Person executes and delivers to
Lessor an agreement reasonably satisfactory in form and substance to Lessor, in
its reasonable discretion, containing only such Person’s effective assumption,
and its agreement to pay, perform, comply with and otherwise be liable for, in
due and punctual manner, all of Lessee’s obligations having previously arisen,
or thereafter arising, under any Lease; and (ii)(A) such Person or the new
entity has a Net Worth equal to or greater than Lessee’s Net Worth as of
December 31, 2002, as published in Lessee’s Form 10-K as filed with the
Securities and Exchange Commission and has a credit rating from Standard &
Poor’s Ratings Group, a Division of McGraw-Hill, Inc. (“Standard & Poor’s”)
equal to or better than BB-; or (B) such Person or the new entity has a Net
Worth of at least Twenty-five Million Dollars ($25,000,000) greater than
Lessee’s Net Worth as of December 31, 2002, as published in Lessee’s Form 10-K
as filed with the Securities and Exchange Commission. Lessee shall promptly
notify Lessor of the occurrence of any Event of Default or the occurrence or
existence of any event or condition, which, upon the giving of notice or lapse
of time, or both, may become an Event of Default.

 

9. REMEDIES; MANDATORY PREPAYMENT.

 

Upon the occurrence of any Event of Default, Lessor may, at its sole option and
discretion, exercise one or more of the following remedies with respect to any
or all of the Equipment: (a) cause Lessee to promptly return, at Lessee’s
expense, any or all Equipment to such location as Lessor may designate in
accordance with the terms of the Lease including Section 18 of this Master
Lease, or Lessor, at its option, may enter upon the premises where the Equipment
is located and take immediate possession of and remove the same by summary
proceedings or otherwise, all without liability to Lessor for or by reason of
damage to property or such entry or taking possession except for Lessor’s gross
negligence or willful misconduct; (b) sell any or all Equipment at public or
private sale or otherwise dispose of, hold, use, operate, lease to others or
keep idle the Equipment, all as Lessor in its sole discretion may determine and
all free and clear of any rights of Lessee; (c) remedy such default, including
making repairs or modifications to the Equipment, for the account and expense of
Lessee, and Lessee agrees to reimburse Lessor for all of Lessor’s costs and
expenses; (d) by written notice to Lessee, cancel the Lease with respect to any
or all Lease Schedules and the Equipment subject thereto, as such notice shall
specify, and, with respect to such canceled Lease Schedules and Equipment,
declare immediately due and payable and recover from Lessee, as liquidated
damages for loss of Lessor’s bargain and not as a penalty, an amount equal to
the Stipulated Loss Value, calculated as of the next following Rental Payment
Date; (e) apply any deposit or other cash collateral or sale or remarketing
proceeds of the Equipment at any time to reduce any amounts due to Lessor by
Lessee under this Lease; and (f) exercise any other right or remedy which may be
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,
including reasonable attorneys’ fees and court costs. In addition, Lessee shall
pay overdue interest on any delinquent payment or other amounts due under the
Lease (by reason of acceleration or otherwise) from 30 days after the due date
until paid at the rate of 1 1/2% per month or the maximum amount permitted by
applicable law, whichever is lower. Notice of Lessor’s intention to accelerate,
notice of acceleration, notice of nonpayment, presentment, protest, notice of
dishonor, or any other notice whatsoever (other than notices specifically
required of Lessor pursuant to Section 8 of this Master Lease) are hereby waived
by Lessee and any endorser, guarantor, surety or other party liable in any
capacity for any of the Lessee’s obligations under or in respect of the Lease.
No remedy referred to in this Section 9 shall be exclusive, but each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity.

 

The exercise or pursuit by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise or pursuit by Lessor of any or all
such other remedies, and all remedies hereunder shall survive cancellation of
this Lease. At any sale of the Equipment pursuant to this Section 9, Lessor may
bid for the Equipment. Notice required, if any, of any sale or other disposition
hereunder by Lessor shall be satisfied by the mailing of such notice to Lessee
at least ten (10) days prior to such sale or other disposition. In the event
Lessor takes possession and disposes of the Equipment, the proceeds of any such
disposition shall be applied in the following order: (1) to all of Lessor’s
costs, charges and expenses incurred in taking, removing, holding, repairing and
selling or leasing the Equipment; (2) to the extent not previously paid by
Lessee, to pay Lessor for any damages then remaining unpaid hereunder; (3) to
reimburse Lessee for any sums previously paid by Lessee as damages hereunder
(including, without limitation, any payments made pursuant to Section 9(d) of
this Lease); and (4) the balance, if any, shall be retained by Lessor. A
cancellation shall occur only upon written notice by Lessor and only with
respect to such Equipment as Lessor shall specify in such notice. Cancellation
under this Section 9 shall not affect Lessee’s duty to perform Lessee’s
obligations hereunder to Lessor in full. Upon the occurrence of an Event of
Default under Section 8(f) hereof, the remedy set forth in Section 9(d) shall be
deemed to be exercised by Lessor without the requirement of written notice or of
any other act or declaration by Lessor, and the liquidated damages described
therein shall be immediately due and payable. Lessee agrees to reimburse Lessor
on demand for any and all costs and expenses incurred by Lessor in enforcing its
rights and remedies hereunder following the occurrence of an Event of Default,
including, without limitation, reasonable attorney’s fees, and the costs of
repossession, storage, insuring, reletting, selling and disposing of any and all
Equipment.

 

The term “Stipulated Loss Value” with respect to any item of Equipment shall
mean the Stipulated Loss Value as set forth in any Schedule of Stipulated Loss
Values attached to and made a part of the applicable Lease Schedule.

 

10. SECURITY; ADDITIONAL SECURITY

 

Lessee hereby grants to Lessor, to secure the payment and performance in full of
all of Lessee’s obligations under the Lease, a security interest in all
Equipment subject to and more particularly described in the Lease Schedule in
which Lessee may now or hereafter have rights, and all parts, accessories,
accessions and attachments thereto, except for any Improvements that are not
Non-Severable Improvements (as defined below), and all replacements,
substitutions and exchanges (including trade-ins) for such goods, together with
proceeds of all of the foregoing, including goods, accounts, chattel paper,
documents, instruments, general intangibles, investment property, deposit
accounts, letter of credit rights and supporting obligations (the “Collateral”),
provided that with respect to any Lease Schedule denominated as a “True Lease
Schedule” the foregoing grant of a security interest is made on a precautionary
basis and shall not of itself be a factor in determining whether the Collateral
secures an obligation or whether the Lease creates a security interest. For so
long as any obligations of Lessee shall remain outstanding under any Lease,
Lessee hereby further grants to Lessor a security interest in all of Lessee’s
rights in and to Equipment subject to such Lease from time to time, to secure
the prompt payment and performance when due (by reason of acceleration or
otherwise) of each and every indebtedness, obligation or liability of Lessee
owing to Lessor, whether now existing or hereafter arising, including but not
limited to all of such obligations under or in respect of any Lease. The extent
to which Lessor shall have a purchase money security interest in any item of
Equipment under a Lease which is deemed to create a security interest under
Section 1-201(37) of the Uniform Commercial Code (“UCC”) shall be determined by
reference to the Acquisition Cost of such item financed by Lessor. The term
“Lessor” as used in this Section 10 shall include any affiliated person, firm or
entity controlled by Lessor.

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11. NOTICES

 

Any notices or demands required or permitted to be given under this Lease (a)
shall be given in writing, (b) shall become effective (i) if delivered with
receipt acknowledged, such as by Airborne, FedEx, UPS or other private courier
service, on the date of such receipt, (ii) if delivery by either private courier
or U. S. Postal Service is attempted but refused, on the date of such refusal,
or (iii) if mailed by certified or registered mail, return receipt requested,
postage prepaid, then on the earlier of the date of receipt or the fifth day
following such mailing, and (c) shall be addressed to Lessor to the attention of
Customer Accounts, and to Lessee at the address set forth above, or to such
other address as the party to receive notice hereafter designates by such
written notice.

 

12. USE; MAINTENANCE; INSPECTION; LOSS AND DAMAGE

 

During the Lease Term for each item of Equipment, Lessee shall, unless Lessor
shall otherwise consent in writing: (a) have the unrestricted right to use the
Equipment in its operations and to place the Equipment in an intermodal
interchange program within the United States, Mexico and Canada (the “Intermodal
Interchange program”); (b) permit each item of Equipment to be used by qualified
personnel solely for business purposes and the purpose for which it was designed
and shall, at its sole expense, service, repair, overhaul and maintain each item
of Equipment in good operating order, consistent with prudent industry practice
(but, in no event less than the same extent to which Lessee maintains other
similar equipment in the prudent management of its assets and properties) and in
compliance with all applicable laws, ordinances, regulations, and the
maintenance standards of the Institute of International Container Lessors and
conditions of all insurance policies required to be maintained by Lessee under
the Lease and all manuals, orders, recommendations, instructions and other
written requirements as to the repair and maintenance of such item of Equipment
issued at any time by the vendor and/or manufacturer thereof; (c) maintain
conspicuously on any Equipment such labels, plates, decals or other markings as
Lessor may reasonably require, stating that Lessor is owner of such Equipment
provided, however, that Lessee may cause the Equipment to be lettered with the
names or initials or other insignia customarily used by Lessee; (d) furnish to
Lessor such information concerning the condition, location, use and operation of
the Equipment as Lessor may request; (e) upon forty-eight (48) hours prior
notice from Lessor, Lessee shall use its reasonable best efforts to afford any
person designated by Lessor access to the premises where the Equipment is
located for the purpose of inspecting such Equipment and all applicable
maintenance or other records at any reasonable time during normal business
hours, provided that such inspection shall be at the sole risk of Lessor and
shall be conducted in such a manner as to not disrupt the normal operation of
the Equipment, provided, however, that the failure of Lessor to inspect the
Equipment or to inform Lessee of any noncompliance shall not relieve Lessee of
any of its obligations hereunder; (f) keep the Equipment in compliance with all
of the terms and conditions of the Lease; (g) not permanently discontinue use of
the Equipment, and shall not use any Equipment, nor allow the same to be used,
for any unlawful purpose, nor in connection with any property or material that
would subject the Lessor to any liability under any state or federal statute or
regulation pertaining to the production, transport, storage, disposal or
discharge of hazardous or toxic waste or materials; and (h) make no additions,
alterations, modifications or improvements (collectively, “Improvements”) to any
item of Equipment that are not readily removable without causing material damage
to such item of Equipment or which will cause the value, utility or useful life
of such item of Equipment to materially decline. If any such Improvement is made
and cannot be removed without causing material damage to or decline in value,
utility or useful life of the Equipment or violating a requirement or
recommendation of the manufacturer or supplier of the Equipment (a
“Non-Severable Improvement”), then Lessee warrants that such Non-Severable
Improvement shall immediately become Lessor’s property upon being installed and
shall be free and clear of all liens and encumbrances, other than Permitted
Liens as defined herein, and shall become Equipment subject to all of the terms
and conditions of the Lease. All such Improvements that are not Non-Severable
Improvements shall be removed by Lessee prior to the return of the item of
Equipment hereunder or such Improvements shall also become the sole and absolute
property of Lessor without any further payment by Lessor to Lessee and shall be
free and clear of all liens and encumbrances whatsoever. Lessee shall repair all
damage to any item of Equipment caused by the removal of any Improvement so as
to restore such item of Equipment to the same condition which existed prior to
its installation and as required by this Lease. Lessee shall be permitted to
remove any Improvements, other than Non-Severable Improvements, subject to the
condition that Lessee is able to remove such Improvements without causing
material damage to or decline in value, utility, or useful life of the Equipment
or violating a requirement of the manufacturer or supplier of the Equipment.

 

As between Lessor and Lessee, Lessee hereby assumes all risk of loss, damage or
destruction for whatever reason to the Equipment from and after the earlier of
the date (i) on which the Equipment is ordered or (ii) Lessor pays the purchase
price of the Equipment, and continuing until the Equipment has been returned to,
and accepted by, Lessor in the condition required by the Lease, including
Section 18 hereof upon the expiration of the Lease Term. If during the Lease
Term all or any portion of an item of Equipment shall become lost, stolen,
destroyed, damaged beyond repair or rendered permanently unfit for use for any
reason, or in the event of any condemnation, confiscation, theft or seizure or
requisition of title to or use of such item, Lessee shall immediately pay to
Lessor an amount equal to the Stipulated Loss Value of such item of Equipment,
as of the next following Rental Payment Date.

 

13. INSURANCE

 

Lessee shall procure and maintain insurance in such amounts and upon such terms
and with such companies as Lessor may approve, during the entire Lease Term and
until the Equipment has been returned to, and accepted by, Lessor in the
condition required by Section 18 hereof, at Lessee’s expense, provided that in
no event shall such insurance be less than the following coverages and amounts:
(a) Worker’s Compensation and Employer’s Liability Insurance, in the full
statutory amounts provided by law; (b) Comprehensive General Liability Insurance
including product/completed operations and contractual liability coverage, with
minimum limits of $1,000,000 each occurrence, and Combined Single Limit Body
Injury and Property Damage, $1,000,000 aggregate, where applicable; and (c) All
Risk Physical Damage Insurance on each item of Equipment, in an amount not less
than the greater of the Stipulated Loss Value of the Equipment or (if available)
its full replacement value. Lessor will be included as an additional insured and
loss payee as its interest may appear. Such policies shall be endorsed to
provide that the coverage afforded to Lessor shall not be rescinded, impaired or
invalidated by any act or neglect of Lessee. Lessee hereby waives any of
Lessee’s rights or its insurance carrier’s rights to make any and all claims,
whether through rights of subrogation, reimbursement or otherwise, against
Lessor for or in connection with any loss or damage resulting in any claim under
the insurance policies required to be maintained hereunder.

 

All policies shall be endorsed or contain a clause requiring the insurer to
furnish Lessor with at least 30 days’ prior written notice of any material
change, cancellation or non-renewal of coverage. Upon execution of this Lease,
Lessee shall furnish Lessor with a certificate of insurance or other evidence
satisfactory to Lessor that such insurance coverage is in effect, provided,
however, that Lessor shall be under no duty either to ascertain the existence of
or to examine such insurance coverage or to advise Lessee in the event such
insurance coverage should not comply with the requirements hereof. In case of
failure of Lessee to procure or maintain insurance, Lessor may at its option
obtain such insurance, the cost of which will be paid by the Lessee as
additional rentals. Lessee hereby irrevocably appoints Lessor as Lessee’s
attorney-in-fact to file, settle or adjust, and receive payment of claims made
under any such insurance policy on or after the occurrence of an Event of
Default, and to endorse Lessee’s name on any checks, drafts or other instruments
on payment of such claims. Lessee further agrees to give Lessor prompt notice of
any damage to or loss of, any item of Equipment, which constitutes a total loss
of such item of Equipment.

 

14. LIMITATION OF LIABILITY

 

Lessor shall have no liability in connection with or arising out of the
ownership, leasing, furnishing, performance or use of the Equipment or any
special, indirect, incidental or consequential damages of any kind or character,
including, without limitation, loss of use of production facilities or
equipment, loss of profits, property damage or lost production, whether suffered
by Lessee or any third party, except to the extent attributable to the gross
negligence or willful misconduct of Lessor.

 

15. FURTHER ASSURANCES

 

Lessee shall promptly execute and deliver to Lessor such further documents and
take such further action as Lessor may reasonably require in order to more
effectively carry out the intent and purpose of this Lease. Lessee covenants and
agrees that Lessee will furnish Lessor (a) within one hundred twenty (120) days
after the end of each fiscal year of Lessee, a balance sheet of Lessee as at the
end of such year, and the related statement of income and statement of changes
in financial position of Lessee for such fiscal year, prepared in accordance
with generally accepted accounting

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principles, all in reasonable detail and certified by independent certified
public accountants of nationally recognized standing selected by Lessee (it
being agreed that if Lessee files a Form 10-K with the Securities and Exchange
Commission, that delivery of such Form 10-K shall be deemed to satisfy the
requirements of this Section 15); and, (b) within sixty (60) days after the end
of each quarter of Lessee’s fiscal year, a balance sheet of Lessee as at the end
of such quarter, and the related statement of income and statement of changes in
financial position of Lessee for such quarter, prepared in accordance with
generally accepted accounting principles (it being agreed that if Lessee files a
Form 10-Q with the Securities and Exchange Commission, that delivery of such
Form 10-Q shall be deemed to satisfy the requirements of this Section 15).
Lessee shall execute and deliver to Lessor upon Lessor’s request any and all
schedules, forms and other reports and information as Lessor may deem reasonably
necessary or appropriate to respond to requirements or regulations imposed by
any governmental authorities. Lessee shall execute and deliver to Lessor upon
Lessor’s request such further and additional documents, instruments and
assurances as Lessor deems reasonably necessary (a) in order to acknowledge and
confirm, for the benefit of Lessor or any assignee or transferee of any of
Lessor’s rights, title and interests hereunder (an “Assignee”), all of the terms
and conditions of all or any part of this Lease and Lessor’s or Assignee’s
rights with respect thereto, and Lessee’s compliance with all of the terms and
provisions hereof and (b) to preserve, protect and perfect Lessor’s or
Assignee’s right, title or interest hereunder and in any Equipment, including,
without limitation, such UCC financing statements or amendments, control
agreements, corporate or member resolutions, votes, certificates of compliance,
notices of assignment or transfers of interests, and restatements and
reaffirmations of Lessee’s obligations and its representations and warranties
with respect thereto as of the dates requested by Lessor from time to time. In
furtherance thereof, Lessor may file or record this Lease or a memorandum or a
photocopy hereof (which for the purposes hereof shall be effective as a
financing statement) so as to give notice to third parties, and Lessee hereby
irrevocably authorizes Lessor to file and record, and appoints Lessor as its
attorney-in-fact to execute (if applicable), file and record UCC financing
statements, amendments thereto and other lien recordation documents with respect
to the Equipment and the Collateral, and Lessee agrees to pay or reimburse
Lessor for any filing, recording or stamp fees or taxes arising from any such
filings. Lessee hereby covenants and agrees that it shall not file any
corrective or termination statement with respect to any UCC financing statements
recorded by or for the benefit of Lessor as secured party without Lessor’s prior
written consent.

 

16. ASSIGNMENT

 

This Lease and all rights of Lessor hereunder shall be assignable by Lessor, in
whole or in part, absolutely or as security, to any Assignee without notice to
Lessee, subject to the rights of Lessee hereunder for the use and possession of
the Equipment for so long as no Event of Default has occurred and is continuing
hereunder. Any such assignment shall not relieve Lessor of its obligations
hereunder unless specifically assumed by the Assignee, and Lessee agrees it
shall not assert any defense, rights of set-off or counterclaim against any
Assignee, nor hold or attempt to hold such Assignee liable for any of Lessor’s
obligations hereunder. No such assignment shall materially increase Lessee’s
obligations hereunder. EXCEPT AS PERMITTED IN SECTION 12 OF THIS LEASE WITH
RESPECT TO THE INTERMODAL INTERCHANGE PROGRAM, LESSEE SHALL NOT ASSIGN OR
DISPOSE OF ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR ENTER INTO ANY
SUBLEASE WITH RESPECT TO ANY OF THE EQUIPMENT WITHOUT THE EXPRESS PRIOR WRITTEN
CONSENT OF LESSOR.

 

17. LESSEE’S OBLIGATION UNCONDITIONAL

 

This Lease is a net lease and Lessee hereby agrees that it shall not be entitled
to any abatement of rents or of any other amounts payable hereunder by Lessee,
and that its obligation to pay all rent and any other amounts owing hereunder
shall be absolute and unconditional under all circumstances, notwithstanding:
(i) any claim by Lessee to any right of set-off, counterclaim, recoupment,
defense or other right which Lessee may have against Lessor, any seller or
manufacturer of any Equipment or anyone else for any reason whatsoever; (ii) the
existence of any liens, encumbrances or rights of others whatsoever with respect
to any Equipment, whether or not resulting from claims against Lessor not
related to the ownership of such Equipment; or (iii) any other event or
circumstances whatsoever. Each Rental Payment or other amount paid by Lessee
hereunder shall be final and Lessee will not seek to recover all or any part of
such payment from Lessor for any reason whatsoever.

 

18. RETURN OF EQUIPMENT

 

Upon the expiration, cancellation or earlier termination of the Lease Term, any
Renewal Term, if applicable, or any Build-Down Period (as defined below), if
applicable, with respect to any Equipment, and provided that Lessee has not
validly exercised any purchase option with respect thereto, Lessee shall: (a)
return the Equipment to any designated facility of Lessor or to another facility
of a third party designated by Lessor, which is located within the metropolitan
area of Los Angeles/Long Beach, Oakland, Seattle, Kansas City, St. Louis,
Houston, Dallas, Laredo, Memphis, Atlanta, Jacksonville, Chicago, New York, or
to any other mutually agreed upon location (individually a “Designated Facility”
and collectively, the “Designated Facilities”), and in the manner designated by
this Lease including, as reasonably required by Lessor, securing arrangements
for shipment with all parts and pieces on a carrier designated or approved by
Lessor, and then reassembly (including, if necessary, repair and overhaul) by
such representative at the return location in the condition the Equipment is
required to be maintained by the Lease and in such condition as will make the
Equipment immediately able to perform all functions for which the Equipment was
originally designed (or as upgraded during the Lease Term), and immediately
qualified for the manufacturer’s (or other authorized servicing
representative’s) then-available service contract or warranty; (b) select the
Designated Facility in which to return any item of Equipment and, within seven
(7) days of the return of any item of Equipment, Lessee shall provide Lessor
with written notice as to which Designated Facility the item of Equipment has
been returned; (c) have no return restrictions on the number of items of
Equipment that Lessee can return in any monthly period; (d) cause the Equipment
to qualify for all applicable licenses or permits necessary for its operation
for its intended purpose and to comply with all specifications and requirements
of applicable federal, state and local laws, regulations and ordinances; and (e)
cooperate with Lessor in attempting to remarket the Equipment, including display
and demonstration of the Equipment to prospective purchasers or lessees, and
allowing Lessor to conduct any private sale of the Equipment on Lessee’s
premises. All costs incurred in connection with any of the foregoing shall be
the sole responsibility of the Lessee, except for costs incurred by Lessor with
respect to remarketing the Equipment. During any period of time from the
expiration, cancellation or earlier termination of the Lease until the Equipment
is returned in accordance with the provisions hereof or until Lessor has been
paid the applicable purchase option price if any applicable purchase option is
exercised, Lessee shall have a build-down period (the “Initial Build-Down
Period”) of six (6) months in which to return the Equipment under the Lease.
During the Initial Build-Down Period, the quarterly Rental Payment in effect
immediately prior to the commencement of the Initial Build-Down Period (the
“Initial Holdover Rent”) shall remain in effect with respect to any item of
Equipment not returned to Lessor on the date of the expiration, cancellation or
earlier termination of the Lease. Any item of Equipment not returned to Lessor
upon the expiration of the Initial Build-Down Period shall be subject to a
rental rate of 125% of the quarterly Rental Payment in effect immediately prior
to the Initial Build-Down Period (the “Final Holdover Rent”) for the next six
(6) month period (the “Final Build-Down Period”). Any item of Equipment that is
not returned by the expiration of the six (6) month Final Build-Down Period
shall be deemed to have been lost and Lessee shall immediately pay to Lessor an
amount equal to the Stipulated Loss Value of such item of Equipment as of the
final payment of Final Holdover Rent, provided, however, that nothing contained
herein and no payment of any Holdover Rent hereunder shall relieve Lessee of its
obligation to return the Equipment upon the expiration, cancellation or earlier
termination of the Lease.

 

19. RELATED LEASE SCHEDULES

 

“Related Lease Schedules” means and refers to: (i) Leases covering Equipment
intended to be or which otherwise becomes attached to, affixed to, or used in
connection with other Equipment subject to any other Lease hereunder, or (ii)
Leases entered into pursuant to or in respect of a single credit offering
memorandum or credit approval of Lessor. Lessee agrees that if: (a) Lessee
elects to exercise any purchase option, early termination option, renewal
option, purchase obligation or early purchase option under any Related Lease
Schedule; or (b) Lessee elects to return the Equipment under any Related Lease
Schedule in accordance therewith, then, in either case, Lessor shall have the
right, in its sole discretion, to require Lessee to elect the same or similar
disposition for all Equipment subject and pursuant to the terms and provisions
of one or more other Related Lease Schedules.

 

20. MISCELLANEOUS; DEFINITIONS; ENFORCEABILITY AND GOVERNING LAW

 

The term “Lessee” as used in the Lease shall mean and include any and all
Lessees who sign below, each of whom shall be jointly and severally liable under
the Lease. This Master Lease will not be binding on Lessor until accepted and
executed by Lessor, notice of which is hereby waived by Lessee. Any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given. Time is of the essence in the payment and performance of
all of Lessee’s obligations under the Lease. The captions in this Lease are for
convenience only and shall not define or limit any of the terms hereof.

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As used herein, “Person” shall mean any individual, corporation, partnership,
joint venture, or other legal entity or a governmental authority, whether
employed, hired, affiliated, owned, contracted with, or otherwise related or
unrelated to Lessee or Lessor. All financial terms contained herein that are not
specifically defined herein shall be defined, and all calculations shall be
made, in accordance with generally accepted accounting principles.

 

As used herein, “Affiliate of Lessor” shall mean any affiliated person, firm or
entity controlling, controlled by or under common control with Lessor.

 

Any provisions of this Lease which are unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof, and any such
unenforceability in any jurisdiction shall not render unenforceable such
provisions in any other jurisdiction. To the extent permitted by applicable law,
Lessee hereby waives; (a) any provisions of law which render any provision
hereof unenforceable in any respect; and (b) all rights and remedies under Rhode
Island General Laws Sections 6A-2.1-508 through 522 or corresponding provisions
of the UCC article or division pertaining to personal property leasing in any
jurisdiction in which enforcement of this Lease is sought. Any requirement for
the execution and delivery of any document, instrument or notice may be
satisfied, in Lessor’s sole discretion and to the extent permitted by the UCC,
by authentication of such document, instrument or notice as a record within the
meaning of Article 9 of the UCC.

 

THIS LEASE AND THE LEGAL RELATIONS OF THE PARTIES HERETO SHALL IN ALL RESPECTS
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE
ISLAND, WITHOUT REGARD TO PRINCIPLES REGARDING THE CHOICE OF LAW. LESSEE HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF RHODE
ISLAND AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND FOR THE
PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ITS OBLIGATIONS
HEREUNDER, AND EXPRESSLY WAIVES ANY OBJECTIONS THAT IT MAY HAVE TO THE VENUE OF
SUCH COURTS. LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION BROUGHT ON OR WITH RESPECT TO THIS LEASE. Any action by Lessee against
Lessor for any cause of action relating to this Lease shall be brought within
one year after any such cause of action first arises.

 

THIS LEASE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES CONCERNING THE
LEASE OF THE EQUIPMENT AND CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES
SUPERSEDING ANY AND ALL CONFLICTING TERMS OR PROVISIONS OF ANY PRIOR PROPOSALS,
COMMITMENT LETTERS, TERM SHEETS OR OTHER AGREEMENTS OR UNDERSTANDINGS BETWEEN
THE PARTIES. THIS LEASE MAY NOT BE CONTRADICTED BY EVIDENCE OF (i) ANY PRIOR
WRITTEN OR ORAL AGREEMENTS OR UNDERSTANDINGS, OR (ii) ANY CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES, AND LESSEE
ACKNOWLEDGES AND CERTIFIES THAT NO SUCH ORAL OR WRITTEN AGREEMENTS OR
UNDERSTANDINGS EXIST AS OF THE DATE OF THIS LEASE. THIS LEASE MAY NOT BE
AMENDED, NOR MAY ANY RIGHTS UNDER THE LEASE BE WAIVED, EXCEPT BY AN INSTRUMENT
IN WRITING SIGNED BY THE PARTY CHARGED WITH SUCH AMENDMENT OR WAIVER.

 

Executed and delivered by duly authorized representatives of the parties hereto
as of the date set forth below.

 

DATED AS OF: December 01, 2003

 

FLEET CAPITAL CORPORATION       PACER INTERNATIONAL, INC.

By:

 

 

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By:

 

 

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Name:

 

 

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Name:

 

 

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Title:

 

 

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Title:

 

 

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Lessee’s Taxpayer ID #:

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