Exhibit 10.25
BB&T EQUIPMENT FINANCE CORPORATION
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT (this “Lease”) is made as of December 30, 2009,
between BB&T EQUIPMENT FINANCE CORPORATION, its successors and assigns
(“Lessor”), and ABF FREIGHT SYSTEM, INC., its successors and permitted assigns
(“Lessee”).
Lessee desires to lease from Lessor the equipment and other property (the
“Equipment”) described in each Equipment Schedule executed pursuant to this
Lease (each, a “Schedule”) incorporating by reference the terms and conditions
of this Lease (the term “Lease” shall also include any Riders to this Lease
entered into with respect to such Schedule). Certain definitions and
construction of certain of the terms used in this Lease are provided in
Section 19 hereof.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Lease agree as follows:
1. AGREEMENT TO LEASE; TERM. This Lease is effective as of the date specified
above. By entering into a Schedule, Lessor leases the Equipment described
therein to Lessee, and Lessee leases such Equipment from Lessor, in each case,
subject to the terms and conditions in this Lease and such Schedule and all of
the other documents and agreements executed in connection herewith
(collectively, the “Lease Documents”). Each Schedule, incorporating the terms
and conditions of this Lease, will constitute a separate instrument of lease.
The term of lease with respect to each item of Equipment leased under a Schedule
shall commence on the date of execution of such Schedule and continue for the
term provided in that Schedule.
2. RENT. Lessee shall pay Lessor (a) the rental installments (“Basic Rent”) as
and when specified in each Schedule, without demand, and (b) all of the other
amounts payable in accordance with this Lease, such Schedule and/or any of the
other Lease Documents (“Other Payments”, and together with the Basic Rent,
collectively, the “Rent”). Upon Lessee’s execution thereof, the related Schedule
shall constitute a non-cancelable net lease, and Lessee’s obligation to pay
Rent, and otherwise to perform its obligations under or with respect to such
Schedule and all of the other Lease Documents, are and shall be absolute and
unconditional and shall not be affected by any circumstances whatsoever,
including any right of setoff, counterclaim, recoupment, deduction, defense or
other right which Lessee may have against Lessor, the manufacturer or vendor of
the Equipment (the “Suppliers”), or anyone else, for any reason whatsoever
(each, an “Abatement”). Lessee agrees that all Rent shall be paid in accordance
with Lessor’s or Assignee’s written direction. Time is of the essence. If any
Rent is not paid within five (5) days of the due date, Lessee shall pay a late
charge equal to five (5) percent of the amount in arrears.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE. Lessee represents,
warrants and agrees that, as of the effective date of this Lease and of each
Schedule: (a) Lessee has the form of business organization indicated, and is and
will remain duly organized and existing in good standing under the laws of the
state specified, under Lessee’s signature and is duly qualified to do business
wherever necessary to perform its obligations under the Lease Documents,
including each jurisdiction in which the Equipment is or will be located.
Lessee’s legal name is as shown in the preamble of this Lease; and Lessee’s
Federal Employer Identification Number and organizational number are as set
forth under Lessee’s signature. Within the previous six (6) years, Lessee has
not changed its name, done business under any other name, or merged or been the
surviving entity of any merger, except as disclosed to Lessor in writing.
(b) The Lease Documents (1) have been duly authorized by all necessary action
consistent with Lessee’s form of organization, (2) do not require the approval
of, or giving notice to, any governmental authority, (3) do not contravene or
constitute a default under any applicable law, Lessee’s organizational
documents, or any agreement, indenture, or other instrument to which Lessee is a
party or by which it may be bound, and (4) constitute legal, valid and binding
obligations of Lessee enforceable against Lessee, in accordance with the terms
thereof. (c) Other than Lessee’s obligations for Lessee’s contractual employees
as provided by existing multiemployer plans, 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 have a Material Adverse Effect. As used herein, “Material
Adverse Effect” shall mean (i) a materially adverse effect on the business,
condition (financial or otherwise), operations, performance or properties of
Lessee, or on Lessor’s rights and remedies under this Lease, or (ii) a material
impairment of the ability of Lessee to perform its obligations under or remain
in compliance with such Schedule or any of the other Lease Documents. Further,
Lessee is not in default under any financial or other material agreement that,
either individually, or in the aggregate, would have a Material Adverse Effect.
(d) Under the applicable laws of each such jurisdiction, such Equipment consists
(and shall continue to consist) solely of personal property and not fixtures.
Such Equipment is removable from and is not essential to the premises at which
it is located. (e) The financial statements of Lessee (copies of which have been
furnished to Lessor) have been prepared in accordance with generally accepted
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. (f)
With respect to any Collateral, Lessee has good title to, rights in, and/or
power to transfer all of the same. (g) The Supplier is not an affiliate of
Lessee. (h) The Supply Contract (as such term is hereinafter defined) represents
an arms’ length transaction and the purchase price for the Equipment specified
therein is the amount obtainable in an arms’ length transaction between a
willing and informed buyer and a willing and informed seller under no compulsion
to sell.
LEASE AGREEMENT — TRUE LEASE

 

 

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4. FURTHER ASSURANCES AND OTHER COVENANTS. Lessee agrees as follows: (a) Lessee
shall obtain and deliver to Lessor and/or promptly execute or otherwise
authenticate any documents, filings, waivers (including any landlord and
mortgagee waivers), releases and other records, and will take such further
action as Lessor may reasonably request in furtherance of Lessor’s rights under
any of the Lease Documents. Lessee irrevocably authorizes Lessor to file UCC
financing statements (“UCCs“), and other filings with respect to the Equipment
or any Collateral. Without Lessor’s prior written consent, Lessee agrees not to
file any corrective or termination statements or partial releases with respect
to any UCCs filed by Lessor pursuant to this Lease. (b) Lessee shall provide
written notice to Lessor: (1) thirty (30) days prior to any change in Lessee’s
name or jurisdiction or form of organization; (2) promptly upon the occurrence
of any Event of Default (as defined in Section 15) or event which, with the
lapse of time or the giving of notice, or both, would become an Event of Default
(a “Default”); and (3) promptly upon Lessee becoming aware of any alleged
violation of applicable law relating to the Equipment or this Lease. (c) Lessee
has been advised by Lessor that the USA Patriot Act establishes minimum
standards of account information to be collected and maintained by Lessor, and
that to help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account; and
specifically, this means that when Lessee executes this Lease, Lessor may ask
for Lessee’s name and address, the date of birth of the officers executing this
Lease, and other information that will allow Lessor to identify Lessee; and that
Lessor may also ask to see the driver’s license or other identifying documents
of the officers of Lessee executing this Lease. (d) Lessee is and will remain in
full compliance with all applicable laws including, without limitation,
(i) ensuring that no person who owns a controlling interest in or otherwise
controls Lessee is or shall be (A) listed on the Specially Designated Nationals
and Blocked Person List maintained by the Office of Foreign Assets Control
(“OFAC”), Department of the Treasury, and/or any other similar lists maintained
by OFAC pursuant to any authorizing statute, Executive Order or regulation, or
(B) a person designated under Sections 1(b), (c) or (d) of Executive Order
No. 13224 (September 23, 2001), any related enabling legislation or any other
similar Executive Orders, and (ii) compliance with all applicable Bank Secrecy
Act (“BSA”) laws, regulations and government guidance on BSA compliance and on
the prevention and detection of money laundering violations.
5. CONDITIONS PRECEDENT. Lessor’s agreement to purchase and lease any Equipment
under a Schedule, is conditioned upon Lessor’s determination that all of the
following have been satisfied: (a) Lessor having received the following, in form
and substance reasonably satisfactory to Lessor: (1) evidence as to due
compliance with the insurance provisions of Section 11; (2) if requested, lien
searches in the jurisdiction of Lessee’s organization, and wherever else Lessor
deems appropriate; (3) UCCs, real property waivers and all other filings
required by Lessor; (4) a certificate of an appropriate officer of Lessee
certifying: (A) resolutions duly authorizing the transactions contemplated in
the applicable Lease Documents, and (B) the incumbency and signature of the
officers of Lessee authorized to execute such documents; (5) an opinion of
counsel for Lessee as to each of the matters set forth in sub-parts (a) through
(c) of Section 3; (6) the only manually executed original of the Schedule, and
counterpart originals of all other Lease Documents; (7) all purchase documents
pertaining to the Equipment (collectively, the “Supply Contract”); (8) if
requested by Lessor, good standing certificates from the jurisdiction of
Lessee’s organization and the location of the Equipment, and evidence of
Lessee’s organizational number; (9) the Master Lease Guaranty (the “Guaranty”),
in form and substance satisfactory to Lessor, duly executed by Arkansas Best
Corporation (the “Guarantor”); (10) a certificate of Guarantor’s secretary
certifying: (A) resolutions duly authorizing the undertaking to guarantee the
payment and performance of the obligations of Lessee under this Lease, and
(B) the incumbency and signature of the officers of Guarantor authorized to
execute the Guaranty; (11) an opinion of counsel for Guarantor as to each of the
matters set forth in Subparts (a)(1) and (2), (b) and (c) of Section 4 of the
Guaranty; and (12) such other documents, agreements, instruments, certificates,
opinions, and assurances, as Lessor reasonably may require. (b) All
representations and warranties provided by Lessee in favor of Lessor in any of
the Lease Documents shall be true and correct on the effective date of the
related Schedule (Lessee’s execution and delivery of the Schedule shall
constitute Lessee’s acknowledgment of the same). (c) There shall be no Default
or Event of Default under the Schedule or any other Lease Documents. The
Equipment shall have been delivered to and accepted by Lessee, as evidenced by
the Schedule, and shall be in the condition and repair required hereby; and on
the effective date of such Schedule Lessor shall have received good title to the
Equipment described therein, free and clear of any claims, liens, attachments,
rights of others and legal processes (“Liens”).
LEASE AGREEMENT — TRUE LEASE

 

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6. ACCEPTANCE UNDER LEASE. Upon delivery, Lessee shall inspect and, if
conforming to the condition required by the applicable Supply Contract, accept
the Equipment and execute and deliver to Lessor a Schedule describing such
Equipment. The Schedule will evidence Lessee’s unconditional and irrevocable
acceptance under the Schedule of the Equipment described therein. However, if
Lessee fails to accept delivery of any item of the Equipment, or accepts such
Equipment but fails to satisfy any or all of the other conditions set forth in
Section 5, Lessor shall have no obligation to purchase or lease such Equipment.
In such event, Lessor’s rights shall include, among other things, the right to
demand that Lessee (a) fully assume all obligations as purchaser of the
Equipment, with the effect of causing Lessor to be released from any liability
relating thereto, (b) immediately remit to Lessor an amount sufficient to
reimburse it for all advance payments, costs, taxes or other charges paid or
incurred with respect to the Equipment (including any of such amounts paid by
Lessor to Supplier under the Supply Contract or as a reimbursement to Lessee),
together with interest at the Default Rate accruing from the date or dates such
amounts were paid by Lessor until indefeasibly repaid by Lessee in full, and
(c) take all other actions necessary to accomplish such assumption.
7. USE AND MAINTENANCE. (a) Lessee shall (1) use the Equipment solely in the
continental United States (provided, however, that without limiting Lessee’s
indemnification obligations pursuant to Section 14(b) hereof, Lessee may use the
Equipment on an occasional basis in Mexico and/or Canada so long as such use
does not cause the Equipment to be deemed to constitute tangible property “used
predominantly outside the United States”, within the meaning of the Internal
Revenue Code of 1986, as now or hereafter amended (the “Code”)) and in the
conduct of its business, for the purpose for which the Equipment was designed,
in a careful and proper manner, and shall not permanently discontinue use of the
Equipment; (2) operate, maintain, service and repair the Equipment, and maintain
all records and other materials relating thereto, (A) in accordance and
consistent with (i) the Supplier’s recommendations and all maintenance and
operating manuals or service agreements, whenever furnished or entered into,
including any subsequent amendments or replacements thereof, issued by the
Supplier or service provider, (ii) the requirements of all applicable insurance
policies, (iii) the Supply Contract, so as to preserve all of Lessee’s and
Lessor’s rights thereunder, including all rights to any warranties, indemnities
or other rights or remedies, (iv) all applicable laws, and (v) the prudent
practice of other similar companies in the same business as Lessee, but in any
event, to no lesser standard than that employed by Lessee for comparable
equipment owned or leased by it; and (B) without limiting the foregoing, so as
to cause the Equipment to be in good repair and operating condition and in at
least the same condition as when delivered to Lessee hereunder, except for
ordinary wear and tear resulting despite Lessee’s full compliance with the terms
hereof; (3) provide written notice to Lessor not less than thirty (30) days
after any change of the location of any Equipment (or the location of the
principal garage of any Equipment, to the extent that such Equipment is mobile
equipment) as specified in the Schedule; and (4) not attach or incorporate the
Equipment to or in any other property in such a manner that the Equipment may be
deemed to have become an accession to or a part of such other property. (b)
Within a reasonable time, Lessee will replace any parts of the Equipment which
become worn out, lost, destroyed, damaged beyond repair or otherwise unfit for
use, by new or reconditioned replacement parts which are free and clear of all
Liens and have a value, utility and remaining useful life at least equal to the
parts replaced (assuming that they were in the condition required by this
Lease). Any modification or addition to the Equipment that is required by this
Lease shall be made by Lessee. Title to all such parts, modifications and
additions to the Equipment immediately shall vest in Lessor, without any further
action by Lessor or any other person, and they shall be deemed incorporated in
the Equipment for all purposes of the related Schedule. Unless replaced in
accordance with this Section, Lessee shall not remove any parts originally or
from time to time attached to the Equipment, if such parts are essential to the
operation of the Equipment, are required by any other provision of this Lease or
cannot be detached from the Equipment without materially interfering with the
operation of the Equipment or adversely affecting the value, utility and
remaining useful life which the Equipment would have had without the addition of
such parts. Except as permitted in this Section, Lessee shall not make any
material alterations to the Equipment. (c) Upon forty-eight (48) hours’ notice,
Lessee shall afford Lessor and/or its designated representatives access to the
premises where the Equipment is located for the purpose of inspecting such
Equipment and all applicable maintenance or other records relating thereto at
any reasonable time during normal business hours; provided, however, if a
Default or Event of Default shall have occurred and then be continuing, no
notice of any inspection by Lessor shall be required. If any discrepancies are
found as they pertain to the general condition of the Equipment, Lessor will
communicate these discrepancies to Lessee in writing. Lessee shall then have
thirty (30) days to rectify these discrepancies at its sole expense. Lessee
shall pay all expenses of a re-inspection by Lessor’s appointed representative,
if corrective measures were required.
LEASE AGREEMENT — TRUE LEASE

 

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8. DISCLAIMER; QUIET ENJOYMENT. (a) THE EQUIPMENT IS LEASED HEREUNDER “AS IS,
WHERE IS”. LESSOR SHALL NOT BE DEEMED TO HAVE MADE, AND HEREBY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE EQUIPMENT,
INCLUDING ANY PART, OR ANY MATTER WHATSOEVER, INCLUDING, AS TO EACH ITEM OF
EQUIPMENT, ITS DESIGN, CONDITION, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
PURPOSE, TITLE, ABSENCE OF ANY PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT OR
LATENT DEFECT (WHETHER OR NOT DISCOVERABLE BY LESSEE), COMPLIANCE OF SUCH ITEM
WITH ANY APPLICABLE LAW, CONFORMITY OF SUCH ITEM TO THE PROVISIONS AND
SPECIFICATIONS OF ANY PURCHASE DOCUMENT OR TO THE DESCRIPTION SET FORTH IN THE
RELATED SCHEDULE OR ANY OF THE OTHER LEASE DOCUMENTS, OR ANY INTERFERENCE OR
INFRINGEMENT (EXCEPT AS EXPRESSLY PROVIDED IN SECTION 8(b)), OR ARISING FROM ANY
COURSE OF DEALING OR USAGE OF TRADE, NOR SHALL LESSOR BE LIABLE, FOR ANY
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR STRICT OR ABSOLUTE
LIABILITY IN TORT; AND LESSEE HEREBY WAIVES ANY CLAIMS ARISING OUT OF ANY OF THE
FOREGOING. Without limiting the foregoing, Lessor will not be responsible to
Lessee or any other person with respect to, and Lessee agrees to bear sole
responsibility for, any risk or other matter that is the subject of Lessor’s
disclaimer; and Lessor’s agreement to enter into this Lease and any Schedule is
in reliance upon the freedom from and complete negation of liability or
responsibility for the matters so waived or disclaimed herein or covered by the
indemnity in this Lease. So long as no Event of Default has occurred, Lessee may
exercise Lessor’s rights, if any, under any warranty with respect to the
Equipment. Lessee’s exercise of such rights shall be at its sole risk, shall not
result in any prejudice to Lessor, and may be exercised only during the term of
the related Schedule. Lessee shall not attempt to enforce any such warranty by
legal proceeding without Lessor’s prior written approval. (b) Lessor warrants
that during the term of each Schedule, so long as no Event of Default has
occurred, Lessee’s possession and use of the Equipment leased thereunder shall
not be interfered with by Lessor or anyone rightfully claiming an interest
through Lessor. The preceding warranty is in lieu of all other warranties by
Lessor, whether written, oral or implied, with respect to this Lease or the
Equipment. Any actual or purported breach of this warranty shall not give rise
to any Abatement, but Lessee may bring a direct cause of action against Lessor
for any actual damages directly resulting from any such breach.
9. FEES AND TAXES. Lessee agrees to: (a) (1) if permitted by law, file in
Lessee’s own name or on Lessor’s behalf, directly with all appropriate taxing
authorities all declarations, returns, inventories and other documentation with
respect to any personal property taxes (or any other taxes in the nature of or
imposed in lieu of property taxes) due or to become due with respect to the
Equipment, and if not so permitted by law, to promptly notify Lessor and provide
it with all information required in order for Lessor to timely file all such
declarations, returns, inventories, or other documentation, and (2) pay on or
before the date when due all such taxes assessed, billed or otherwise payable
with respect to the Equipment directly to the appropriate taxing authorities;
(b) (1) pay when due as requested by Lessor, and (2) defend and indemnify Lessor
on a net after-tax basis against liability for all license and/or registration
fees, assessments, and sales, use, property, excise, privilege, value added and
other taxes or other charges or fees now or hereafter imposed by any
governmental body or agency upon the Equipment or with respect to the
manufacture, shipment, purchase, ownership, delivery, installation, leasing,
operation, possession, use, return, or other disposition thereof or the Rent
hereunder (other than taxes on or measured solely by the net income of Lessor
(except as and to the extent expressly addressed in Section 14(b) hereof)); and
(c) indemnify Lessor against any penalties, charges, interest or costs imposed
with respect to any items referred to in clauses (a) and (b) above (the items
referred to in clauses (a), (b), and (c) above being referred to herein as
“Impositions”). Any Impositions which are not paid when due and which are paid
by Lessor shall, at Lessor’s option, become immediately due from Lessee to
Lessor.
10. TITLE; GRANTING CLAUSE. (a) Lessee and Lessor intend that: (1) each
Schedule, incorporating by reference the terms of this Lease, constitutes a true
“lease” and a “finance lease” as such terms are defined in Article 2A and not a
sale or retention of a security interest; and (2) Lessor is and shall remain the
owner of each item of Equipment (unless sold by Lessor pursuant to any Lease
Document), and Lessee shall not acquire any right, title or interest in or to
such Equipment except the right to use it in accordance with the terms of the
related Schedule. (b) In order to secure the prompt payment of the Rent and all
of the other amounts from time to time outstanding with respect hereto and to
each Schedule, and the performance and observance by Lessee of all of the
provisions hereof and thereof and of all of the other Lease Documents, Lessee
hereby collaterally assigns, grants, and conveys to Lessor, a security interest
in and lien on all of Lessee’s right, title and interest in and to all of the
following (whether now existing or hereafter created, and including any other
collateral described on any rider hereto; the “Collateral”): (1) (if contrary to
the parties’ intentions a court determines that such Schedule is not a true
“lease” under the UCC) the Equipment described in such Schedule or otherwise
covered thereby (including all inventory, fixtures or other property comprising
the Equipment), together with all related software (embedded therein or
otherwise) and general intangibles, all additions, attachments, accessories and
accessions thereto whether or not furnished by the Supplier; (2) all subleases,
chattel paper, accounts, security deposits, and general intangibles relating
thereto, and any and all substitutions, replacements or exchanges for any such
item of Equipment or other collateral, in each such case in which Lessee shall
from time to time acquire an interest; and (3) any and all insurance and/or
other proceeds of the property and other collateral in and against which a
security interest is granted hereunder. The collateral assignment, security
interest and lien granted herein shall survive the termination, cancellation or
expiration of each Schedule until such time as Lessee’s obligations thereunder
and under the other Lease Documents are fully and indefeasibly discharged.
(c) If contrary to the parties’ intentions a court determines that any Schedule
is not a true “lease”, the parties agree that in such event Lessee agrees that:
(1) with respect to the Equipment, in addition to all of the other rights and
remedies available to Lessor hereunder upon the occurrence of a Default, Lessor
shall have all of the rights and remedies of a first priority secured party
under the UCC; and (2) any obligation to pay Basic Rent or any Other Payment, to
the extent constituting the payment of interest, shall be at an interest rate
that is equal to the lesser of the maximum lawful rate permitted by applicable
law or the effective interest rate used by Lessor in calculating such amounts.
LEASE AGREEMENT — TRUE LEASE

 

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11. INSURANCE. Upon acceptance under a Schedule, until the Equipment is returned
to Lessor in accordance with this Lease, Lessee shall maintain all-risk
insurance coverage with respect to the Equipment insuring against, among other
things: (a) any casualty to the Equipment (or any portion thereof), including
loss or damage due to fire and the risks normally included in extended coverage,
malicious mischief and vandalism, for not less than the full replacement value
of the Equipment; and (b) any commercial liability arising in connection with
the Equipment, including both bodily injury and property damage with a combined
single limit per occurrence of not less than the amount specified in the
Schedule; having a deductible or self-insured retention in a maximum amount of
$1,000,000.00 or such greater amount as may be mutually agreed to by Lessor and
Lessee. Notwithstanding the foregoing, provided that no Event of Default has
then occurred, Lessee may self-insure with respect to the coverage required
pursuant to Clause (a) of the immediately preceding sentence. The required
insurance policies (including endorsements) or self-insurance shall (i) be in
form and amount generally acceptable under industry standards, and written by
insurers of recognized reputation and responsibility satisfactory to Lessor (but
such insurer shall carry a current rating by A.M. Best Company of at least “A”
for a general policyholder and a financial rating of at least “VIII”), (ii) be
endorsed to name Lessor as an additional insured (but without responsibility for
premiums), (iii) provide that any amount payable under the required physical
damage coverage shall be paid directly to Lessor as sole loss payee, and
(iv) provide for thirty (30) days’ written notice by such insurer of
cancellation, material change, or non-renewal. Lessee agrees that it shall
obtain and maintain such other coverages (including pollution coverage), or
cause adjustments to be made to the scope, amount or other aspects of the
existing coverages, promptly upon Lessor’s request, as and when Lessor and
Lessee agree that such additional coverages or modifications to be appropriate
in light of any changes in applicable law, prudent industry practices, Lessee’s
anticipated use of the Equipment or other pertinent circumstances.
12. LOSS AND DAMAGE. (a) At all times until the Equipment is returned to Lessor
in accordance with this Lease, Lessee shall bear the risk of loss, theft,
confiscation, taking, unavailability, damage or partial destruction of the
Equipment and shall not be released from its obligations under any Schedule or
other Lease Document in any such event. (b) Lessee shall provide prompt written
notice to Lessor of any Total Loss or any material damage to the Equipment. Any
such notice must be provided together with any damage reports provided to any
governmental authority, the insurer or Supplier, and any documents pertaining to
the repair of such damage, including copies of work orders, and all invoices for
related charges. (c) Without limiting any other provision hereof, Lessee shall
repair all damage to any item of Equipment from any and all causes, other than a
Total Loss, so as to cause it to be in the condition and repair required by this
Lease. (d) A “Total Loss” shall be deemed to have occurred to an item of
Equipment upon: (1) the actual or constructive total loss of any item of the
Equipment, (2) the loss, disappearance, theft or destruction of any item of the
Equipment, or damage to any item of the Equipment that is uneconomical to repair
or renders it unfit for normal use, or (3) the condemnation, confiscation,
requisition, seizure, forfeiture or other taking of title to or use of any item
of the Equipment or the imposition of any Lien thereon by any governmental
authority. On the next rent payment date following a Total Loss (a “Loss Payment
Date”), Lessee shall pay to Lessor the Basic Rent due on that date plus the
Stipulated Loss Value of the item or items of the Equipment with respect to
which the Total Loss has occurred (the “Lost Equipment”), together with any
Other Payments due hereunder with respect to the Lost Equipment. Upon making
such payment, (i) Lessee’s obligation to pay future Basic Rent shall terminate
solely with respect to the items of Lost Equipment so paid for, but Lessee shall
remain liable for, and pay as and when due, all Other Payments, and (ii) Lessor
shall convey to Lessee all of Lessor’s right, title and interest in the Lost
Equipment, “AS IS WHERE IS”, but subject to the requirements of any third party
insurance carrier in order to settle an insurance claim. As used in this Lease,
“Stipulated Loss Value” shall mean the product of the Total Invoice Cost of the
Lost Equipment, times the percentage factor applicable to the Loss Payment Date,
as set forth in the Schedule of Stipulated Loss Values incorporated in such
Schedule. After the final rent payment date of the original term or any renewal
term of a Schedule, the Stipulated Loss Value shall be determined as of the last
rent payment date during the applicable term of such Schedule, and the
applicable percentage factor shall be the last percentage factor set forth in
the Schedule of Stipulated Loss Values incorporated in such Schedule. (e) Lessor
shall be under no duty to Lessee to pursue any claim against any person in
connection with a Total Loss or other loss or damage. (f) If Lessor receives a
payment under an insurance policy required under this Lease in connection with
any Total Loss or other loss of or damage to an item of Equipment, and such
payment is both unconditional and indefeasible, then provided Lessee shall have
complied with the applicable provisions of this Section, Lessor shall either
(1) if received pursuant to a Total Loss, remit such proceeds to Lessee up to an
amount equal to the amount paid by Lessee to Lessor as the Stipulated Loss
Value, or credit such proceeds against any amounts owed by Lessee pursuant to
Section 12(d), or (2) if received with respect to repairs made pursuant to
Section 12(c), remit such proceeds to Lessee up to an amount equal to the amount
of the costs of repair actually incurred by Lessee, as established to Lessor’s
satisfaction.
LEASE AGREEMENT — TRUE LEASE

 

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13. REDELIVERY. (a) Lessee shall provide written notice to Lessor not less than
one hundred eighty (180) days and not more than two hundred forty (240) days
prior to the expiration of the term of any Schedule (or of any renewal thereof,
if applicable) of Lessee’s intent to return the Equipment described on such
Schedule to Lessor upon the expiration of the term of such Schedule. IF LESSEE
FAILS TO PROVIDE THE FOREGOING NOTICE IN A TIMELY MANNER, THE TERM OF THE
APPLICABLE SCHEDULE AUTOMATICALLY SHALL BE DEEMED TO HAVE BEEN EXTENDED, WHICH
EXTENSION SHALL CONTINUE UNTIL ONE HUNDRED EIGHTY (180) DAYS AFTER THE DATE ON
WHICH LESSEE PROVIDES THE REQUIRED NOTICE, DURING WHICH EXTENSION PERIOD LESSEE
SHALL CONTINUE TO PAY TO LESSOR PER DIEM RENT AT THE LAST PREVAILING LEASE RATE
UNDER THE APPLICABLE SCHEDULE; provided, however that Lessor may elect to
terminate such extension at any time upon ten (10) days written notice to
Lessee. During such extension period, the terms and conditions of this Lease
(including, without limitation, the provisions of this Section 13) shall
continue to be applicable. Solely for purposes of the definition of Stipulated
Loss Value in Section 12(d) hereof, any such extension shall be deemed a renewal
of the term of such Schedule. (b) Upon the expiration or earlier cancellation or
termination of any Schedule, Lessee shall return the Equipment described on such
Schedule to Lessor free and clear of all Liens whatsoever, to any of Lessee’s
distribution center locations within the continental United States. Lessee shall
provide, at its expense, transit insurance for the redelivery period in an
amount equal to the replacement value of such Equipment and Lessor shall be
named as the loss payee on all such policies of insurance. Lessee shall cause:
(1) the Supplier’s representative or other qualified person acceptable to Lessor
(the “Designated Person”) to de-install such Equipment in accordance with the
Supplier’s specifications (as applicable) and pack such Equipment properly and
in accordance with the Supplier’s recommendations (as applicable); and (2) such
Equipment to be transported in a manner consistent with the Supplier’s
recommendations and practices (as applicable). Upon return, such Equipment shall
be: (i) in the same condition as when delivered to Lessee under the related
Schedule, ordinary wear and tear excepted; (ii) mechanically and structurally
sound, capable of performing the functions for which such Equipment was
originally designed, in accordance with the Supplier’s published and recommended
specifications (as applicable); (iii) redelivered with all component parts in
good operating condition (and all components must meet or exceed the Supplier’s
minimum recommended specifications, unless otherwise agreed by Lessor in
writing); (iv) redelivered with all software and documentation necessary for the
operation of such Equipment for the performance of the functions for which such
Equipment was originally designed (whether or not such software is embedded in
or otherwise is a part of such Equipment); and (v) cleaned and cosmetically
acceptable, with all Lessee-installed markings removed and all rust, corrosion
or other contamination having been removed or properly treated, and in such
condition so that it may be immediately installed and placed in service by a
third party. Upon delivery, such Equipment shall be in compliance with all
applicable Federal, state and local laws, and health and safety guidelines.
Lessee shall be responsible for the cost of all repairs, alterations,
inspections, appraisals, storage charges, insurance costs, demonstration costs
and other related costs necessary to cause such Equipment to be in full
compliance with the terms of this Lease. (c) If requested by Lessor, Lessee
shall also deliver all related records and other data to Lessor, including all
records of maintenance, modifications, additions and major repairs, computerized
maintenance history, and any maintenance and repair manuals (collectively, the
“Records”). All manuals or other documents delivered to Lessor that are subject
to periodic revision will be fully up-to-date and current to the latest revision
standard of any particular manual or document. In the event any such Records are
missing or incomplete, Lessor shall have the right to cause the same to be
reconstructed at Lessee’s expense. (d) In addition to Lessor’s other rights and
remedies hereunder, if such Equipment and the related Records are not returned
in a timely fashion, or if repairs are necessary to place any item of Equipment
in the condition required in this Section, Lessee shall (i) continue to pay to
Lessor per diem rent at the last prevailing lease rate under the applicable
Schedule with respect to such item of Equipment, for the period of delay in
redelivery, and/or for the period of time reasonably necessary to accomplish
such repairs, and (ii) pay to Lessor an amount equal to the aggregate cost of
any such repairs. Lessor’s acceptance of such rent on account of such delay
and/or repair does not constitute an extension or renewal of the term of the
related Schedule or a waiver of Lessor’s right to prompt return of such
Equipment in proper condition. Such amount shall be payable upon the earlier of
Lessor’s demand or the return of such Equipment in accordance with this Lease.
(e) Without limiting any other terms or conditions of this Lease, the provisions
of this Section are of the essence of each Schedule, and upon application to any
court of equity having jurisdiction, Lessor shall be entitled to a decree
against Lessee requiring Lessee’s specific performance of its agreements in this
Section.
LEASE AGREEMENT — TRUE LEASE

 

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14. INDEMNITY. (a) General. Lessee shall indemnify, defend and keep harmless
Lessor and any Assignee (as defined in Section 17), and their respective agents
and employees (each, an “Indemnitee”), from and against any and all Claims
(other than such as may directly and proximately result from the actual, but not
imputed, negligence or willful misconduct of such Indemnitee), by paying, on a
net after-tax basis, or otherwise discharging same, when and as such Claims
shall become due. Lessee agrees to further indemnify each such Indemnitee with
respect to Claims for which such Indemnitee is strictly liable. Lessor shall
give Lessee prompt notice of any Claim hereby indemnified against and Lessee
shall be entitled to control the defense of and/or to settle any Claim, in each
case, so long as (1) no Default or Event of Default has occurred and is then
continuing, (2) Lessee confirms, in writing, its unconditional and irrevocable
commitment to indemnify each Indemnitee with respect to such Claim, (3) Lessee
is financially capable of satisfying its obligations under this Section,
(4) Lessor approves the defense counsel selected by Lessee, and (5) there is no
reasonable risk of criminal liability being imposed on Lessor or any of its
directors, officers or employees as a result of such Claim. The term “Claims”
shall mean all claims, allegations, harms, judgments, settlements, suits,
actions, debts, obligations, direct damages, demands (for compensation,
indemnification, reimbursement or otherwise), losses, penalties, fines,
liabilities (including strict liability), charges that Lessor has incurred or
for which it is responsible, in the nature of interest, Liens, and costs
(including attorneys’ fees and disbursements and any other legal or non-legal
expenses of investigation or defense of any Claim, whether or not such Claim is
ultimately defeated or enforcing the rights, remedies or indemnities provided
for hereunder, or otherwise available at law or equity to Lessor), of whatever
kind or nature, contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable, by or against any person, arising on account of (A) any Lease
Document, including the performance, breach (including any Default or Event of
Default) or enforcement of any of the terms thereof, or (B) the Equipment, or
any part or other contents thereof, any substance at any time contained therein
or emitted therefrom, including any hazardous substances, or the premises at
which the Equipment may be located from time to time, or (C) the ordering,
acquisition, delivery, installation or rejection of the Equipment, the
possession of any property to which it may be attached from time to time,
maintenance, use, condition, ownership or operation of any item of Equipment,
and by whomsoever owned, used, possessed or operated, during the term of any
Schedule with respect to that item of Equipment, the existence of latent and
other defects (whether or not discoverable by Lessor or Lessee) any claim in
tort for negligence or strict liability, and any claim for patent, trademark or
copyright infringement, or the loss, damage, destruction, theft, removal,
return, surrender, sale or other disposition of the Equipment, or any item
thereof, including, Claims involving or alleging environmental damage, or any
criminal or terrorist act, or for whatever other reason whatsoever. If any Claim
is made against Lessee or an Indemnitee, the party receiving notice of such
Claim shall promptly notify the other, but the failure of the party receiving
notice to so notify the other shall not relieve Lessee of any obligation
hereunder.
(b) Tax Indemnity. (1) Lessee represents and warrants that: (A) it believes that
it is reasonable to estimate that the useful life of the Equipment exceeds the
lease term (including any interim and fixed rental renewal periods) by the
greater of one (1) year or twenty (20) percent of such estimated useful life,
and that said Equipment will have a value at the end of the lease term,
including any fixed rate renewal period, of at least twenty (20) percent of the
Total Invoice Cost of the Equipment, without including in such value any
increase or decrease for inflation or deflation during the original lease term;
and (B) the Equipment is, and will be used by Lessee so as to remain, property
eligible for the MACRS Deductions (as defined below).
(2) (A) If by reason of (i) any act or failure to act of Lessee (including a
breach of any covenant or agreement of Lessee set forth in this Lease), or
(ii) the misrepresentation of or breach by Lessee of any of the warranties and
representations set forth in Section 14(b) (1) of this Lease and Section 6(b) of
the Schedule (if applicable), Lessor in computing its taxable income or
liability for tax, shall lose, or shall not have, or shall lose the right to
claim or there shall be disallowed or recaptured for Federal and/or state income
tax purposes, in whole or in part, the benefit of MACRS Deductions; or
(B) Lessor shall become liable for additional tax as a result of Lessee having
added an attachment or made an alteration to the Equipment, including (without
limitation) any such attachment or alteration which would increase the
productivity or capability of the Equipment so as to violate the provisions of
Rev. Proc. 2001-28, 2001-1 C.B. 1156 (as it may hereafter be modified or
superseded); or (C) Lessor shall be entitled to claim a lesser credit for
foreign taxes against its Federal income tax liability than that to which Lessor
would have been entitled if each item of income, gain, loss and deduction with
respect to the Equipment had been treated as income from sources within the
United States pursuant to Section 861 of the Code; hereinafter referred to as a
“Loss”; then Lessee shall pay Lessor the Tax Indemnification Payment as
additional rent and Lessor shall revise the Schedule(s) of Stipulated Loss
Values to reflect the Loss. 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 Invoice 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 class of property specified in the Schedule
pertaining thereto and (if the applicable Schedule specifies that bonus
depreciation is available) taking into account the fifty (50) percent special
depreciation allowance and basis adjustment under Section 168(k)(1) of the Code;
“Lessor” shall be deemed to include the consolidated Federal taxpayer group of
which Lessor is a member; and “Tax Indemnification Payment” shall mean such
amount as, after consideration of (i) all taxes required to be paid by Lessor in
respect of the receipt thereof under the laws of any governmental or taxing
authority in the United States, and (ii) the amount of any interest or penalty
which may be payable by Lessor in connection with the Loss, shall be required to
cause Lessor’s after-tax net return (the “Net Return”) to be equal to, but no
greater than, the Net Return computed consistently with current tax laws (and
with the assumption that Lessor is taxed at the highest marginal Federal and
state tax rates) as of the date of this Lease that would have been available to
Lessor had the Loss not occurred.
LEASE AGREEMENT — TRUE LEASE

 

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(c) Lessor promptly shall notify Lessee in writing of such Loss and Lessee shall
pay to Lessor the Tax Indemnification Payment within thirty (30) days of such
notice. For these purposes, a Loss shall occur upon the earliest of: (A) the
happening of any event (such as disposition or change in use of any item of the
Equipment) which will cause such Loss, (B) the payment by Lessor to the Internal
Revenue Service or state taxing authority of the tax increase (including an
increase in estimated taxes) resulting from such Loss; (C) the date on which the
Loss is realized by Lessor; or (D) the adjustment of the tax return of Lessor to
reflect such Loss.
15. DEFAULT. A default shall be deemed to have occurred hereunder and under a
Schedule upon the occurrence of any of the following (each, an “Event of
Default”): (a) non-payment of Basic Rent on the applicable rent payment date;
(b) non-payment of any Other Payment within five (5) days after it is due;
(c) failure to maintain, use or operate the Equipment in compliance with
applicable law; (d) breach by Lessee of its covenants pursuant to Section 4(d)
hereof; (e) failure to obtain, maintain and comply with all of the insurance
coverages required under this Lease; (f) any transfer or encumbrance, or the
existence of any Lien, that is prohibited by this Lease; (g) a payment or other
default by Lessee under any loan, lease, guaranty or other financial obligation
to Lessor or its affiliates which default has been declared; (h) a payment or
other default by Lessee under any material (that is, for an amount in excess of
$10,000,000) loan, lease, guaranty or other material financial obligation to any
third party which default has been declared; (i) an inaccuracy in any
representation or breach of warranty by Lessee (including any false or
misleading representation or warranty) in any financial statement or Lease
Document, including any omission of any substantial contingent or unliquidated
liability or claim against Lessee; (j) the commencement of any bankruptcy,
insolvency, receivership or similar proceeding by or against Lessee or any of
its properties or business (unless, if involuntary, the proceeding is dismissed
within sixty (60) days of the filing thereof) or the rejection of this Lease or
any other Lease Document in any such proceeding; (k) the failure by Lessee
generally to pay its debts as they become due or its admission in writing of its
inability to pay the same; (l) Lessee shall (1) enter into any transaction of
merger or consolidation, unless Lessee shall be the surviving entity (such
actions being referred to as an “Event”), unless the surviving entity is
organized and existing under the laws of the United States or any state, and
prior to such Event: (A) such person executes and delivers to Lessor (x) an
agreement satisfactory to Lessor, in its sole discretion, containing such
person’s effective assumption, and its agreement to pay, perform, comply with
and otherwise be liable for, in a due and punctual manner, all of Lessee’s
obligations having previously arisen, or then or thereafter arising, under any
and all of the Lease Documents, and (y) any and all other documents, agreements,
instruments, certificates, opinions and filings requested by Lessor; and (B)
Lessor is satisfied as to the creditworthiness of such person, and as to such
person’s conformance to the other standard criteria then used by Lessor when
approving transactions similar to the transactions contemplated in this Lease;
(2) cease to do business as a going concern, liquidate, or dissolve; or
(3) sell, transfer, or otherwise dispose of all or substantially all of its
assets or property; (m) effective control of Lessee’s voting capital stock,
issued and outstanding from time to time, is not retained by the present holders
(unless Lessee shall have provided thirty (30) days’ prior written notice to
Lessor of the proposed disposition and Lessor shall have consented thereto in
writing); (n) there occurs a default or anticipatory repudiation under the
Guaranty; or (o) breach by Lessee of any other covenant, condition or agreement
(other than those in items (a)-(n)) under this Lease or any of the other Lease
Documents that continues for thirty (30) days after Lessor’s written notice to
Lessee (but such notice and cure period will not be applicable unless such
breach is curable by practical means within such notice period). The occurrence
of an Event of Default with respect to any Schedule shall, at the sole
discretion of Lessor, constitute an Event of Default with respect to any or all
Schedules to which it is then a party. Notwithstanding anything to the contrary
set forth herein, Lessor may exercise all rights and remedies hereunder
independently with respect to each Schedule.
LEASE AGREEMENT — TRUE LEASE

 

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16. REMEDIES. (a) If an Event of Default occurs with respect to any Schedule,
the Lessor thereunder may (in its sole discretion) exercise any one or more of
the following remedies with respect to such Schedule and any or all other
Schedules to which such Lessor is then a party: (1) proceed at law or in equity,
to enforce specifically Lessee’s performance or to recover damages; (2) declare
each such Schedule in default, and cancel each such Schedule or otherwise
terminate Lessee’s right to use the Equipment and Lessee’s other rights, but not
its obligations, thereunder and Lessee shall immediately assemble, make
available and, if Lessor requests, return the Equipment to Lessor in accordance
with the terms of this Lease; (3) enter any premises where any item of Equipment
is located and take immediate possession of and remove (or disable in place)
such item (and/or any unattached parts) by self-help, summary proceedings or
otherwise without liability (except for liability for loss or damage to cargo or
other property located in the Equipment); provided, however, Lessor shall not be
entitled to any lien with regard to any cargo or other property located in the
Equipment and Lessee shall have the absolute right to remove such cargo or
property prior to any such taking; (4) use Lessee’s premises for storage without
liability; (5) sell, re-lease or otherwise dispose of any or all of the
Equipment, whether or not in Lessor’s possession, at public or private sale,
with or without notice to Lessee, and apply or retain the net proceeds of such
disposition, with Lessee remaining liable for any deficiency and with any excess
being retained by Lessor; (6) enforce any or all of the preceding remedies with
respect to any related Collateral, and apply any deposit or other cash
collateral, or any proceeds of any such Collateral, at any time to reduce any
amounts due to Lessor; (7) demand and recover from Lessee all Liquidated Damages
and all Other Payments whenever the same shall be due; and (8) exercise any and
all other remedies allowed by applicable law, including the UCC. As used herein,
“Liquidated Damages” shall mean the liquidated damages (all of which, Lessee
hereby acknowledges, are damages to be paid in lieu of future Basic Rent and are
reasonable in light of the anticipated harm arising by reason of an Event of
Default, and are not a penalty) described in the first sentence of parts (1) or
(2) of Section 16(b), depending upon the recovery and disposition of the
Equipment leased under the applicable Schedule. Upon the occurrence of the Event
of Default described in Section 15(j) hereof, the remedy provided in Clause
(7) above shall be automatically exercised without the requirement of prior
written notice to Lessee or of any other act or declaration by Lessor, and the
Liquidated Damages described therein shall be immediately due and payable.
(b) (1) If an Event of Default occurs with respect to any Schedule, if Lessor
recovers the Equipment and disposes of it by a lease or elects not to dispose of
the Equipment after recovery, upon demand, Lessee shall pay to Lessor an amount
equal to the sum of (A) any accrued and unpaid Rent as of the date Lessor
recovers possession of the Equipment, plus (B) the present value as of such date
of the total Basic Rent for the then remaining term of such Schedule, minus
(C) either, as applicable, (i) the present value, as of the commencement date of
any substantially similar re-lease of the Equipment, of the re-lease rent
payable for that period, commencing on such date, which is comparable to the
then remaining term of such Schedule or (ii) the present value, as of that
certain date which may be determined by taking into account Lessor’s having a
reasonable opportunity to remarket the Equipment, of the “market rent” for such
Equipment (as computed pursuant to Article 2A) in the continental United States
on that date, computed for that period, commencing on such date, which is
comparable to the then remaining term of such Schedule; provided, however,
Lessee acknowledges that if Lessor is unable after reasonable effort to dispose
of the Equipment at a reasonable price and pursuant to other reasonable terms,
or the circumstances reasonably indicate that such an effort will be unavailing,
the “market rent” in such event will be deemed to be $0.00, but in the event
that Lessor does eventually re-lease or otherwise dispose of the Equipment, it
will apply the net proceeds of such disposition, to the extent received in good
and indefeasible funds, as a credit or reimbursement, as applicable, in a manner
consistent with the applicable provisions of Article 2A. Any amounts discounted
to present value, shall be discounted at the rate of three percent (3%) per
annum, compounded annually.
(2) If an Event of Default occurs with respect to any Schedule, if Lessee fails
to return the Equipment in the manner and condition required by this Lease, or
Lessor recovers and sells the Equipment, upon demand, Lessee shall pay to Lessor
an amount calculated as the Stipulated Loss Value of the Equipment (determined
as of the next rent payment date after the date of the occurrence of the subject
Event of Default), together with all other Rent due with respect to the related
Schedule as of such determination date, any amount due from Lessee pursuant to
Rider No. 1 attached to the Schedule, and all Enforcement Costs (defined in
Section 16(c)), less a credit for any disposition proceeds, if applicable
pursuant to the application provisions in the next sentence. If Lessor demands
the Liquidated Damages under this part (2), and recovers and sells the
Equipment, any proceeds received in good and indefeasible funds shall be applied
by Lessor, with respect to the related Schedule: first, to pay all Enforcement
Costs, to the extent not previously paid; second, to pay to Lessor an amount
equal to any unpaid Rent due and payable, together with the Liquidated Damage
amounts specified in this part (2), to the extent not previously paid; third, to
pay to Lessor any interest accruing on the amounts covered by the preceding
clauses, at the Default Rate, from and after the date the same becomes due,
through the date of payment; and fourth, (A) if the Lessor under such Schedule
is also the Lessor under any other Schedules (whether by retaining the same, or
as Assignee), to satisfy any remaining obligations under any or all such other
Schedules, or (B) if such Lessor is not the Lessor under any other Schedule, or
if Lessee’s obligations to such Lessor under such other Schedules have been
fully and indefeasibly satisfied, to reimburse Lessee for such amounts to the
extent paid by Lessee as Liquidated Damages pursuant to this part (2).
LEASE AGREEMENT — TRUE LEASE

 

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(c) A cancellation of any Schedule shall occur only upon written notice by
Lessor to Lessee. Unless already specifically provided for in Section 16(b), if
an Event of Default occurs with respect to any Schedule, Lessee shall also be
liable for all of the following (“Enforcement Costs”): (1) all unpaid Rent due
before, during or after exercise of any of the foregoing remedies, and (2) all
reasonable legal fees (including consultation, drafting notices or other
documents, expert witness fees, sending notices or instituting, prosecuting or
defending litigation or arbitration) and other enforcement costs and expenses
incurred by reason of any Default or Event of Default or the exercise of
Lessor’s rights or remedies, including all expenses incurred in connection with
the return or other recovery of any Equipment in accordance with the terms of
this Lease or in placing such Equipment in the condition required hereby, or the
sale, re-lease or other disposition (including but not limited to costs of
transportation, possession, storage, insurance, taxes, lien removal, repair,
refurbishing, advertising and brokers’ fees), and sales or use taxes incurred by
Lessor in connection with any disposition of the Equipment after the occurrence
of an Event of Default, and all other pre-judgment and post-judgment enforcement
related actions taken by Lessor or any actions taken by Lessor in any bankruptcy
case involving Lessee, the Equipment, or any other person. From and after the
date on which an Event of Default occurs, Lessee shall pay interest to Lessor
with respect to all amounts due hereunder until such amounts are received by
Lessor in good funds at a per annum interest rate that is the lesser of ten
(10) percent or the maximum rate permitted by applicable law (the “Default
Rate”). No right or remedy is exclusive and each may be used successively and
cumulatively. Any failure to exercise the rights granted hereunder upon any
Default or Event of Default shall not constitute a waiver of any such right. No
extension of time for payment or performance of any of Lessee’s obligations
hereunder shall operate to release, discharge, modify, change or affect the
original liability of Lessee for such obligations, either in whole or in part.
In any action to repossess any Equipment or other Collateral, Lessee waives any
bonds and any surety or security required by any applicable laws as an incident
to such repossession. Notices of Lessor’s intention to accelerate, acceleration,
nonpayment, presentment, protest, dishonor or any other notice whatsoever (other
than as expressly set forth herein) are waived by Lessee. Any notice given by
Lessor of any disposition of the Equipment or any Collateral or other intended
action of Lessor which is given in accordance with this Lease at least five
(5) business days prior to such action, shall constitute fair and reasonable
notice of such action. The execution of a Schedule shall not constitute a waiver
by Lessor of any pre-existing Default or Event of Default. With respect to any
disposition of any Equipment or Collateral pursuant to this Section, (i) Lessor
shall have no obligation, subject to the requirements of commercial
reasonableness, to clean-up or otherwise prepare the same for disposition,
(ii) Lessor may comply with any applicable law in connection with any such
disposition, and any actions taken in connection therewith shall not be deemed
to have adversely affected the commercial reasonableness of any disposition
thereof, (iii) Lessor may disclaim any title or other warranties in connection
with any such disposition, and (iv) Lessee shall remain responsible for any
deficiency remaining after Lessor’s exercise of its remedies and application of
any funds or credits against Lessee’s obligations under any Schedule, and Lessor
shall retain any excess after such application.
17. ASSIGNMENT. (a) LESSEE SHALL NOT ASSIGN, DELEGATE, TRANSFER OR ENCUMBER ANY
OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR UNDER ANY SCHEDULE, OR ITS LEASEHOLD
INTEREST OR ANY COLLATERAL, SUBLET THE EQUIPMENT OR OTHERWISE PERMIT THE
EQUIPMENT TO BE OPERATED OR USED BY, OR TO COME INTO OR REMAIN IN THE POSSESSION
OF, ANYONE BUT LESSEE. Without limiting the foregoing, (1) Lessee may not
attempt to dispose of any of the Equipment, and (2) Lessee shall (A) maintain
the Equipment free from all Liens, other than Permitted Liens, (B) notify Lessor
immediately upon receipt of notice of any Lien affecting the Equipment, and
(C) defend Lessor’s title to the Equipment. A “Permitted Lien” shall mean any
Lien for Impositions, Liens of mechanics, materialmen, or suppliers and similar
Liens arising by operation of law, provided that any such Lien is incurred by
Lessee in the ordinary course of business, for sums that are not yet delinquent
or are being contested in good faith and with due diligence, by negotiations or
by appropriate proceedings which suspend the collection thereof and, in Lessor’s
sole discretion, (i) do not involve any substantial danger of the sale,
forfeiture or loss of the Equipment or any interest therein, and (ii) for the
payment of which adequate assurances or security have been provided to Lessor.
No disposition referred to in this Section shall relieve Lessee of its
obligations, and Lessee shall remain primarily liable under each Schedule and
all of the other Lease Documents. (b) Lessor may at any time with or without
notice to Lessee grant a security interest in, sell, assign, delegate or
otherwise transfer (an “Assignment”) all or any part of its interest in the
Equipment, this Lease or any Schedule and any related Lease Documents or any
Rent thereunder, or the right to enter into any Schedule, and Lessee shall
perform all of its obligations thereunder, to the extent so transferred, for the
benefit of the beneficiary of such Assignment (such beneficiary, including any
successors and assigns, an “Assignee”). Lessee agrees not to assert against any
Assignee any Abatement (without limiting the provisions of Section 2) or Claim
that Lessee may have against Lessor, and Assignee shall not be bound by, or
otherwise required to perform any of Lessor’s obligations, unless expressly
assumed by such Assignee. Lessor shall be relieved of any such assumed
obligations. If so directed in writing, Lessee shall pay all Rent and all other
sums that become due under the assigned Schedule and other Lease Documents
directly to the Assignee or any other party designated in writing by Lessor or
such Assignee. Lessee acknowledges that Lessor’s right to enter into an
Assignment is essential to Lessor and, accordingly, waives any restrictions
under applicable law with respect to an Assignment and any related remedies.
Upon the request of Lessor or any Assignee, Lessee also agrees (i) to promptly
execute and deliver to Lessor or to such Assignee an acknowledgment of the
Assignment in form and substance satisfactory to the requesting party, an
insurance certificate and such other documents and assurances reasonably
requested by Lessor or Assignee, and (ii) to comply with all other reasonable
requirements of any such Assignee in connection with any such Assignment. Upon
such Assignment and except as may otherwise be provided herein, all references
in this Lease to “Lessor” shall include such Assignee. (c) Subject always to the
foregoing, this Lease and each Schedule shall inure to the benefit of, and are
binding upon, Lessee’s and Lessor’s respective successors and assigns.
LEASE AGREEMENT — TRUE LEASE

 

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18. MISCELLANEOUS. (a) This Lease, each Schedule, any Riders hereto or thereto
and any commitment letter between the parties, constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
shall not be amended or modified in any manner except by a document in writing
executed by both parties. (b) Any provision of this Lease that 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 in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. (c) The representations, warranties and agreements of Lessee
herein shall be deemed to be continuing and to survive the execution and
delivery of this Lease, each Schedule and any other Lease Documents. With
respect to each Schedule, the obligations of Lessee under Sections 8, 9, 10, 12,
13 and 14 hereof, together with any of Lessee’s obligations under the other
provisions of this Lease (as incorporated therein) which have accrued but not
been fully satisfied, performed or complied with prior to the expiration or
earlier cancellation or termination of such Schedule, shall survive the
expiration or earlier cancellation or termination thereof. (d) All of Lessee’s
obligations hereunder and under any Schedule shall be performed at Lessee’s sole
expense. Lessee shall reimburse Lessor promptly upon demand for all expenses
incurred by Lessor in connection with (1) any action taken by Lessor at Lessee’s
request, or in connection with any option, (2) the filing or recording of real
property waivers and UCCs, (3) any Enforcement Costs not recovered pursuant to
Section 16, (4) all inspections, and (5) all lien search reports (and copies of
filings) requested by Lessor. If Lessee fails to perform any of its obligations
with respect to a Schedule, Lessor shall have the right, but shall not be
obligated, to effect such performance, and Lessee shall reimburse Lessor, upon
demand, for all expenses incurred by Lessor in connection with such performance.
Lessor’s effecting such compliance shall not be a waiver of Lessee’s default.
(e) Lessee irrevocably appoints Lessor as Lessee’s attorney-in-fact (which power
shall be deemed coupled with an interest) to: (1) make minor corrections to
manifest errors in factual data in any Schedule and/or any addenda, attachments,
exhibits and/or riders to this Lease or any Schedule; and (2) execute, endorse
and deliver any documents and checks or drafts relating to or received in
payment for any loss or damage under the policies of insurance required by this
Lease, but only to the extent that the same relates to the Equipment, or are
required by titling agencies in order to reflect Lessor as the owner and/or
lienholder with respect to certificates of title pertaining to motor vehicles
(if any) comprising the Equipment. (f) LESSOR AND LESSEE HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH LESSEE AND/OR LESSOR MAY BE PARTIES
ARISING OUT OF OR IN ANY WAY PERTAINING TO THIS LEASE. (g) All notices
(excluding billings and communications in the ordinary course of business)
hereunder shall be in writing, personally delivered, delivered by overnight
courier service, sent by facsimile transmission (with confirmation of receipt),
or sent by certified mail, return receipt requested, addressed to the other
party at its respective address stated below the signature of such party or at
such other address as such party shall from time to time designate in writing to
the other party; and shall be effective from the date of receipt. (h) This Lease
shall not be effective unless and until accepted by execution by an officer of
Lessor at the address, in the State of Maryland (the “State”), as set forth
below the signature of Lessor. THIS LEASE AND ALL OF THE OTHER LEASE DOCUMENTS,
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF THE STATE),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE EQUIPMENT. The parties agree that any action or proceeding
arising out of or relating to this Lease may be commenced in any state or
Federal court in the State, and agree that a summons and complaint commencing an
action or proceeding in any such court shall be properly served and shall confer
personal jurisdiction if served personally or by certified mail to it at the
mailing address below Lessee’s signature, or as it may provide in writing from
time to time, or as otherwise provided under the laws of the State. (i) This
Lease and all of the other Lease Documents may be executed in counterparts.
Photocopies or facsimile transmissions of signatures shall be deemed original
signatures and shall be fully binding on the parties to the same extent as
original signatures. The transfer or possession of the “Original” of this Lease
shall be irrelevant to the full or collateral assignment of, or grant of
security interest in, any Schedule; provided, however, no security interest in
any Schedule may be created through the transfer, possession or control, as
applicable, of any counterpart of such Schedule other than the original thereof,
which shall be identified as the document or record (as applicable) marked
“Original” and all other counterparts shall be marked “Duplicate”. (j) If Lessor
is required by the terms hereof to pay to or for the benefit of Lessee any
amount received as a refund of an Imposition or as insurance proceeds, Lessor
shall not be required to pay such amount, if any Default has occurred and not
been cured or any Event of Default shall have occurred and not been waived by
Lessor. In addition, if Lessor is required by the terms hereof to cooperate with
Lessee in connection with certain matters, such cooperation shall not be
required if a Default or Event of Default has then occurred and is continuing.
(k) To the extent Lessor is required to give its consent or approval with
respect to any matter, the reasonableness of Lessor’s withholding of such
consent shall be determined based on the then existing circumstances; provided,
that Lessor’s withholding of its consent shall be deemed reasonable for all
purposes if (i) the taking of the action that is the subject of such request,
might result (in Lessor’s discretion), in (A) an impairment of Lessor’s rights,
title or interests hereunder or under any Schedule or other Lease Document, or
to the Equipment, or (B) expose Lessor to any Claims or Impositions, or
(ii) Lessee fails to provide promptly to Lessor any filings, certificates,
opinions or indemnities required by Lessor as a condition to such consent.
(l) There is no restriction (either express or implied) on any disclosure or
dissemination of the tax treatment or tax structure of the transactions
contemplated by this Lease or any documents executed in connection herewith.
Further, each party hereto acknowledges that it has no proprietary rights to any
tax matter or tax idea or to any element of the transaction structure
contemplated by this Lease; and each party hereto (and any employee,
representative or agent of any party hereto) may disclose to any and all persons
(without limitation of any kind), the Federal tax treatment and Federal tax
structure of the transaction contemplated by this Lease. This Section 18(l) is
intended to cause the transaction contemplated by this Lease to be treated as
not having been offered under conditions of confidentiality for purposes of
Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the Code and Section 6111 of the Code and the
Treasury Regulations promulgated thereunder; and shall be construed in a manner
consistent with such purpose.
LEASE AGREEMENT — TRUE LEASE

 

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19. DEFINITIONS AND RULES OF CONSTRUCTION. (a) The following terms when used in
this Lease or in any of the Schedules have the following meanings: (1)
“affiliate”: with respect to any given person, shall mean (i) each person that
directly or indirectly owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, five (5) percent or more of the voting stock,
membership interest or similar equity interest having ordinary voting power in
the election of directors or managers of such person, (ii) each person that
controls, is controlled by, or is under common control with, such person, or
(iii) each of such person’s officers, directors, members, joint venturers and
partners. For the purposes of this definition, “control” of a person means the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise; (2) “applicable law” or “law”: any law,
rule, regulation, ordinance, order, code, common law, interpretation, judgment,
directive, decree, treaty, injunction, writ, determination, award, permit or
similar norm or decision of any governmental authority; (3) “AS IS, WHERE IS”:
AS IS, WHERE IS, without warranty, express or implied, with respect to any
matter whatsoever; (4) “business day”: any day, other than a Saturday, Sunday,
or legal holiday for commercial banks under the laws of the state of the
Lessor’s notice address; (5) “governmental authority”: any federal, state,
county, municipal, regional or other governmental authority, agency, board,
body, instrumentality or court, in each case, whether domestic or foreign; (6)
“person”: any individual, corporation, limited liability entity, 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; and (7) “UCC” or “Uniform Commercial Code”: the
Uniform Commercial Code as in effect in the State or in any other applicable
jurisdiction; and any reference to an article (including Article 2A) or section
thereof shall mean the corresponding article or section (however termed) of any
such applicable version of the Uniform Commercial Code. (b) The following terms
when used herein or in any of the Schedules shall be construed as follows: (1)
“herein,” “hereof,” “hereunder,” etc.: in, of, under, etc. this Lease or such
other Lease Document in which such term appears (and not merely in, of, under,
etc. the section or provision where the reference occurs); (2) “including”:
means including without limitation unless such term is followed by the words
“and limited to,” or similar words; and (3) “or”: at least one, but not
necessarily only one, of the alternatives enumerated. Any defined term used in
the singular preceded by “any” indicates any number of the members of the
relevant class. Any Lease Document or other agreement or instrument referred to
herein means such agreement or instrument as supplemented and amended from time
to time. Any reference to Lessor or Lessee shall include their permitted
successors and assigns. Any reference to an applicable law shall also mean such
law as amended, superseded or replaced from time to time.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
LEASE AGREEMENT — TRUE LEASE

 

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IN WITNESS WHEREOF, the parties hereto have caused this Master Lease Agreement
to be duly executed, under seal, as of the day and year first above set forth.

                    BB&T EQUIPMENT FINANCE CORPORATION       ABF FREIGHT SYSTEM,
INC.   Lessor       Lessee  
 
                 
By:
  /s/ Stephen Gray            [SEAL]     By:   /s/ Judy R. McReynolds          
[SEAL]
 
                 
 
  Name: Stephan Gray           Name: Judy R. McReynolds  
 
  Title:   Senior Vice President           Title:   Assistant Treasurer  
 
                 
 
  600 Washington Avenue           3801 Old Greenwood Road  
 
  Suite 201           Fort Smith, Arkansas 72903  
 
  Towson, Maryland 21204           Facsimile: 479-785-8650  
 
  Facsimile: 410-825-1691              
 
                              Form of Organization: Corporation              
Jurisdiction of Organization: Delaware               Organizational No.: 0937905
              Federal Employer Identification No.: 71-0249444  

LEASE AGREEMENT — TRUE LEASE

 

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BB&T EQUIPMENT FINANCE CORPORATION
EQUIPMENT SCHEDULE SERIES ____ NO. _____
executed pursuant to that certain Master Lease Agreement dated as of
December 30, 2009 (the “Lease”; which is incorporated herein by reference). This
Equipment Schedule, incorporating by reference the terms and conditions of the
Lease, constitutes a separate instrument of lease. To the extent of any conflict
or inconsistency between the terms of this Equipment Schedule and the Lease, the
terms of this Equipment Schedule shall prevail.
1. EQUIPMENT. The Equipment leased hereunder shall be as set forth in the
schedule attached hereto.
TOTAL INVOICE COST: $________________________
2. TERM. Upon and after the date of execution hereof, the Equipment shall be
subject to the terms and conditions provided herein and in the Lease.
A full term of lease with respect to said Equipment shall commence on the date
hereof and shall extend for thirty-six (36) months after the first day of
 _____, 2010 (the “Base Lease Commencement Date”).
3. RENT.
(a) During the period from the date hereof to the Base Lease Commencement Date
(the “Interim Term”), the pro-rated daily rent for said Equipment shall be
$______ per day; computed as  _____% of the Total Invoice Cost specified above.
This pro-rated payment shall be made on the last day of the month for each month
during the Interim Term.
(b) From and after the Base Lease Commencement Date, the monthly rent for said
Equipment during the term of this Lease shall be $_____, computed as  _____% of
the Total Invoice Cost specified above. Rent payments shall be made, in advance,
on the first day of the month for each month during the term of this Lease.
4. LESSEE’S CONFIRMATION. Lessee hereby confirms and warrants to Lessor that the
Equipment: (a) was duly delivered to Lessee at the location specified in
Section 5 hereof; (b) has been received, inspected and determined to be in
compliance with all applicable specifications and that the Equipment is hereby
accepted for all purposes of the Lease; and (c) is a part of the “Equipment”
referred to in the Lease and is taken subject to all terms and conditions
therein and herein provided.
5. LOCATION OF EQUIPMENT. The location of the Equipment is specified on the
Schedule of Equipment attached hereto.
6. TAX ATTRIBUTES. (a) The class of property to which the Equipment is assigned
(as referenced in Section 14(b)(2) of the Lease) is 3-year property.
(b) The bonus depreciation [is/is not] available with respect to the Equipment.
[IF BONUS DEPRECIATION IS AVAILABLE, INCLUDE THE FOLLOWING: Lessee represents
and warrants that: (1) each item of Equipment constitutes “qualified property”
pursuant to Section 168(k) of the Code and is eligible for the additional
first-year depreciation deduction equal to fifty (50) percent of the Total
Invoice Cost of the Equipment contemplated by the Code, as specified on this
Schedule; (2) the Equipment shall be treated as originally placed in service not
earlier than the date of the execution and delivery of this Schedule, or in the
event the transaction is a sale-leaseback transaction, Lessee shall not have
placed in service the Equipment subject to this Lease at any time prior to three
(3) months before the execution and delivery of this Schedule; (3) Lessee has
not arranged to purchase, and Lessor is not purchasing, the Equipment pursuant
to a binding written contract entered into before January 1, 2008; and (4) each
item of Equipment shall be placed in service before January 1, 2010.]

 

 

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7. COMMERCIAL LIABILITY INSURANCE. The amount of commercial liability insurance
referenced in Section 11 of the Lease is $10,000,000.00.
8. PERSONAL PROPERTY TAXES.
Please choose one of the options below by initialing where indicated. Initial
ONLY ONE choice of option:
OPTION 1 Lessee’s Initials:  _____ 
(Applicable in Jurisdictions Requiring Lessor to List Equipment): Lessee agrees
that it will not list any of such Equipment for property tax purposes or report
any property tax assessed against such Equipment until otherwise directed in
writing by Lessor. Upon receipt of any property tax bill pertaining to such
Equipment from the appropriate taxing authority, Lessor will pay such tax and
will invoice Lessee for the expense. Upon receipt of such invoice, Lessee will
promptly reimburse Lessor for such expense;
OPTION 2 Lessee’s Initials:  _____ 
(Applicable in Jurisdictions Permitting Lessee to List Equipment): Lessee agrees
that it will (a) list all such Equipment, (b) report all property taxes assessed
against such Equipment, and (c) pay all such taxes when due directly to the
appropriate taxing authority until Lessor shall otherwise direct in writing.
9. SCHEDULE OF STIPULATED LOSS VALUES. This Schedule of Stipulated Loss Values
shall be applicable solely to the Equipment described in this Equipment
Schedule.

      Rent   Percent of Total Payment No.   Invoice Cost      

10. RIDER. Rider No. 1 attached hereto is incorporated in this Equipment
Schedule.
11. PAYMENT AUTHORIZATION. Lessor is hereby irrevocably authorized and directed
to pay the Total Invoice Cost specified above as follows:

          Company Name   Address   Amount          

Lessor is hereby authorized to insert such factually correct information as is
necessary to complete this Equipment Schedule, including (without limitation)
the date of execution, and the rental payment amount(s) and factor(s).
[OPTIONAL: USE ONLY IF ALL EQUIPMENT ON THIS SCHEDULE IS SALE-LEASEBACK]
12. BILL OF SALE. In consideration of the payment by Lessor of the amount
specified herein as the Total Invoice Cost of the items of Equipment listed on
the Schedule of Equipment attached hereto, the receipt and sufficiency of which
are hereby acknowledged, Lessee does hereby bargain, sell, assign, transfer and
set over to Lessor such Equipment, together with whatever claims and rights
Lessee may have against the manufacturer and/or supplier of such Equipment,
including (but not limited to) all warranties with respect thereto.

 

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Lessee represents and warrants that: (a) Lessee has good and marketable title to
such Equipment conveyed hereunder and does hereby transfer an interest therein
free and clear of any and all encumbrances, liens, charges or defects; (b) the
transfer of an interest in such Equipment (1) has been duly authorized by all
necessary action on the part of Lessee, (2) does not require the consent of any
stockholder, member, trustee or holders of any indebtedness of Lessee, except
such as have been duly obtained, and (3) does not and will not contravene any
law, governmental rule, regulation or order now binding on Lessee, or the
organizational documents 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;
and (c) no filing or recordation must be made, no notice must be given, and no
other action must be taken with respect to any state or local jurisdiction, or
any person, in order to preserve to Lessor all the rights transferred hereby.
DATE OF EXECUTION: __________________, 20_____

                    BB&T EQUIPMENT FINANCE CORPORATION       ABF FREIGHT SYSTEM,
INC.   Lessor       Lessee  
 
                 
By: 
                        [SEAL]     By:                         [SEAL]
 
             
 
Name:            Name:     
 
Title:            Title:     

 

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BB&T EQUIPMENT FINANCE CORPORATION
RIDER NO. 1 TO EQUIPMENT SCHEDULE SERIES ___ NO. _____
To and part of Equipment Schedule Series ______ No.  _____  dated as of the
 _____  day of  _____, 20_____  (the “Schedule”), executed pursuant to that
certain Master Lease Agreement dated as of the 30th day of December, 2009 (the
“Lease”), each between BB&T EQUIPMENT FINANCE CORPORATION, its successors and
assigns (“Lessor”), and ABF FREIGHT SYSTEM, INC., its successors and permitted
assigns (“Lessee”).
A. TERMINAL RENTAL ADJUSTMENT. It is presently anticipated that the fair market
value of the Equipment upon the expiration of the original lease term relating
thereto will be an amount equal to the Estimated Residual Value of the Equipment
specified on this Schedule. Upon expiration of the original lease term, Lessor
will attempt to sell the Equipment. If the Net Proceeds of Sale (as hereafter
defined) is less than thirty (30) percent of the Total Invoice Cost of the
Equipment (the “Estimated Residual Value”), promptly upon demand Lessee shall
pay to Lessor the amount of the difference. If the Net Proceeds of Sale exceeds
the Estimated Residual Value, the amount of the difference promptly shall be
paid by Lessor to Lessee. If the Equipment has not been sold on the expiration
date of the original lease term relating thereto, then the Net Proceeds of Sale
shall be deemed to be zero; and promptly upon demand Lessee shall pay to Lessor
an amount equal to the Estimated Residual Value of the Equipment. If Lessor
thereafter shall sell the Equipment, the Net Proceeds of Sale promptly shall be
paid by Lessor to Lessee. Any such payment by either Lessee or Lessor shall be
deemed to be a Terminal Rental Adjustment with respect to the Equipment. As used
herein, “Net Proceeds of Sale” shall mean the gross selling price actually
received by Lessor less all (i) selling expenses incurred by Lessor,
(ii) amounts which (if not paid) would constitute a lien on the Equipment for
which Lessee is responsible under the Lease, and (iii) applicable sales or other
transfer taxes paid by Lessor. As used herein, “Equipment” shall mean the
Equipment described on all Schedules of this series.
As required by Section 7701(h) of the Internal Revenue Code of 1986, as now or
hereafter amended, Lessee shall execute and deliver to Lessor the Certification
by Lessee in substantially the form attached hereto as Exhibit No. 1. Lessee
acknowledges that the Truth in Mileage Act of 1986 (and the regulations
promulgated thereunder) requires the lessee of motor vehicles (at the time such
motor vehicles are terminated from the lease) to provide a written disclosure to
the lessor regarding the mileage of such motor vehicles. Under this law, the
“failure to complete or providing false information may result in fines and/or
imprisonment”. Therefore, Lessee agrees to provide to Lessor (on a form provided
by Lessor) upon termination of a motor vehicle from the Lease the mileage
disclosure information required by the Federal regulations.
B. OPTION TO PURCHASE. Provided that no Default or Event of Default has then
occurred, Lessee shall have the option to purchase, upon the expiration of the
term of the Lease, all but not less than all of the Equipment upon the following
terms and conditions: If Lessee desires to exercise this option it shall, at
least two hundred forty (240) days before expiration of the term of the Lease
with respect to the first Schedule of this series to terminate in accordance
with its terms, give Lessor written notice of its intention to exercise this
option to purchase and shall engage in negotiations with Lessor to determine the
purchase price for the Equipment. Not less than one hundred eighty (180) days
before expiration of the term of the Lease with respect to the first Schedule of
this series to terminate in accordance with its terms, Lessee shall give Lessor
written notice of its election to purchase on the terms mutually agreed upon
during negotiations. Such election shall be effective with respect to all
Equipment leased under all Schedules of this series. At the expiration of the
term of the Lease, Lessee shall pay to Lessor in cash any Rent due on that date
plus the purchase price for the Equipment so purchased, determined as
hereinafter provided. Lessee’s exercise of the purchase option contained herein
shall constitute a sale of the Equipment pursuant to Section A above and Lessee
shall be responsible for the performance of its obligations pursuant to
Section A above.
The purchase price of the Equipment shall be an amount equal to its then Fair
Market Value, together with all taxes and charges upon sale. For purposes of
this Section, “Fair Market Value” shall be deemed to be an amount equal to the
sale price obtainable in an arms’ length transaction between a willing and
informed buyer and a willing and informed seller under no compulsion to sell
(and assuming that, as of the date of determination, the Equipment is in at
least the condition required by Section 13 of the Lease). If the parties are
unable to agree on the Fair Market Value of the Equipment, then Lessor and
Lessee shall at Lessee’s expense obtain appraisal values from three independent
appraisers (one to be selected by Lessor, one by Lessee, and the other by the
two selected by Lessor and Lessee; each of whom must be associated with a
professional organization of equipment or personal property appraisers, such as
the American Society of Appraisers) and the average Fair Market Value as
determined by such appraisers shall be binding on the parties hereto.

 

 

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Notwithstanding any election of Lessee to purchase, the provisions of the Lease
shall continue in full force and effect until the passage of ownership of the
Equipment upon the date of purchase. On the date of purchase, Lessor shall
deliver to Lessee a bill of sale transferring and assigning to Lessee, without
recourse or warranty, except (with respect to the status of title conveyed) in
respect of Lessor’s acts, all of Lessor’s right, title and interest in and to
the Equipment. Lessor shall not be required to make and may specifically
disclaim any representation or warranty as to the condition of the Equipment or
any other matters.

                    BB&T EQUIPMENT FINANCE CORPORATION       ABF FREIGHT SYSTEM,
INC.   Lessor       Lessee  
 
                 
By: 
                        [SEAL]     By:                         [SEAL]
 
             
 
Name:            Name:     
 
Title:            Title:     

 

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EXHIBIT NO. 1
CERTIFICATION BY LESSEE
This Certification is provided by the undersigned (“Lessee”) in connection with
that certain Master Lease Agreement dated as of December  _____, 2009 (the
“Lease”), with BB&T EQUIPMENT FINANCE CORPORATION. The parties intend and agree
that the Lease constitute a “qualified motor vehicle operating agreement” within
the meaning of Section 7701(h) of the Internal Revenue Code of 1986, as now or
hereafter amended, and this Certification is required to be provided pursuant to
that Section.
Lessee hereby certifies, under penalty of perjury, that it intends that more
than fifty (50) percent of the use of the Equipment (as such term is defined in
the Lease) is to be in a trade or business of the Lessee.
Lessee acknowledges that it has been advised that it will not be treated as the
owner of the Equipment for Federal income tax purposes.
IN WITNESS WHEREOF, Lessee has caused this Certification to be duly executed,
under seal, as of the  _____  day of December, 2009.

            ABF FREIGHT SYSTEM, INC.
Lessee
      By:                [SEAL]     Name:           Title: