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EXHIBIT 10.6
MASTER LEASE AGREEMENT
dated as of JULY 1, 1998 ("AGREEMENT")
THIS AGREEMENT, is between GENERAL ELECTRIC
CAPITAL CORPORATION its successors
and assigns, if any ("LESSOR") and ROADWAY
EXPRESS, INC. ("LESSEE"). Lessor has
an office at 1787 SENTRY PARKWAY/WEST 16
SENTRY PARK/WEST, SUITE 200, BLUE BELL,
PA 19422. Lessee is a corporation organized
and existing under the laws of the
State of Delaware. Lessee's mailing address
and chief place of business is 1077
GORGE BLVD., AKRON, OH 44310. This
Agreement contains the general terms that
apply to the leasing of Equipment from
Lessor to Lessee. Additional terms that
apply to the Equipment (term, rent,
options, etc.) shall be contained on a
schedule ("SCHEDULE"). A form of the
Schedule is attached.
1. LEASING
(a) Lessor agrees to lease to Lessee, and
Lessee agrees to lease from Lessor,
the equipment ("EQUIPMENT") described in
any Schedule signed by both parties.
(b) Lessor shall purchase Equipment from
the manufacturer or supplier
("SUPPLIER") and lease it to Lessee when
Lessor receives (i) a Schedule for the
Equipment, (ii) evidence of insurance which
complies with the requirements of
Section 9, and (iii) such other documents
as Lessor may reasonably request. Each
of the documents required above must be in
form and substance satisfactory to
Lessor. Lessor hereby appoints Lessee its
agent for inspection and acceptance of
the Equipment from the Supplier. Once the
Schedule is signed, the Lessee may not
cancel the Schedule.
2. TERM, RENT AND PAYMENT
(a) The rent payable for the Equipment and
Lessee's right to use the Equipment
shall begin on the earlier of (i) the date
when the Lessee signs the Schedule
and accepts the Equipment or (ii) when
Lessee has accepted the Equipment under a
Certificate of Acceptance ("LEASE
COMMENCEMENT DATE"). The term of this
Agreement shall be the period specified in
the applicable Schedule. The word
"term" shall include all basic and any
renewal terms.
(b) Lessee shall pay rent to Lessor at its
address stated above, except as
otherwise directed by Lessor. Rent payments
shall be in the amount set forth in,
and due as stated in the applicable
Schedule. If any Advance Rent (as stated in
the Schedule) is payable, it shall be due
when the Lessee signs the Schedule.
Advance Rent shall be applied to the first
rent payment and the balance, if any,
to the final rent payment(s) under such
Schedule. In no event shall any Advance
Rent or any other rent payments be refunded
to Lessee. If rent is not paid
within ten (10) days of its due date,
Lessee agrees to pay a late charge of five
cents ($.05) per dollar on, and in addition
to, the amount of such rent but not
exceeding the lawful maximum, if any.
(c) Lessor shall not disturb Lessee's quiet
enjoyment of the Equipment during
the term of the Agreement unless a default
has occurred and is continuing under
this Agreement.
3. RENT ADJUSTMENT
(a) If, solely as a result of Congressional
enactment of any law (including,
without limitation, any modification of, or
amendment or addition to, the
Internal Revenue Code of 1986, as amended,
("CODE")), the maximum effective
corporate income tax rate (exclusive of any
minimum tax rate) for calendar-year
taxpayers ("EFFECTIVE RATE") is higher than
thirty-five percent (35%) for any
year during the lease term, then Lessor
shall have the right to increase such
rent payments by requiring payment of a
single additional sum. The additional
sum shall be equal to the product of (i)
the Effective Rate (expressed as a
decimal) for such year less .35 (or, in the
event that any adjustment has been
made hereunder for any previous year, the
Effective Rate (expressed as a
decimal) used in calculating the next
previous adjustment) times (ii) the
adjusted Termination Value (defined below),
divided by (iii) the difference
between the new Effective Tax Rate
(expressed as a decimal) and one (1). The
adjusted Termination
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Value shall be the Termination Value
(calculated as of the first rent due in the
year for which the adjustment is being
made) minus the Tax Benefits that would
be allowable under Section 168 of the Code
(as of the first day of the year for
which such adjustment is being made and all
future years of the lease term). The
Termination Values and Tax Benefits are
defined on the Schedule. Lessee shall
pay to Lessor the full amount of the
additional rent payment on the later of (i)
receipt of notice or (ii) the first day of
the year for which such adjustment is
being made.
(b) Lessee's obligations under this Section
3 shall survive any expiration or
termination of this Agreement.
4. TAXES. If permitted by law, Lessee shall
report and pay promptly all taxes,
fees and assessments due, imposed, assessed
or levied against any Equipment (or
purchase, ownership, delivery, leasing,
possession, use or operation thereof),
this Agreement (or any rents or receipts
hereunder), any Schedule, Lessor or
Lessee by any governmental entity or taxing
authority during or related to the
term of this Agreement, including, without
limitation, all license and
registration fees, and all sales, use,
personal property, excise, gross
receipts, franchise, stamp or other taxes,
imposts, duties and charges, together
with any penalties, fines or interest
thereon (collectively "TAXES"). Lessee
shall have no liability for Taxes imposed
by the United States of America or any
state or political subdivision thereof
which are on or measured by the net
income of Lessor except as provided in
Sections 3 and 14(c). Lessee shall
promptly reimburse Lessor (on an after tax
basis) for any Taxes charged to or
assessed against Lessor. Lessee shall show
Lessor as the owner of the Equipment
on all tax reports or returns, and send
Lessor a copy of each report or return
and evidence of Lessee's payment of Taxes
upon request.
5. REPORTS
(a) If any tax or other lien shall attach
to any Equipment, Lessee will notify
Lessor in writing, within ten (10) days
after Lessee becomes aware of the tax or
lien. The notice shall include the full
particulars of the tax or lien and the
location of such Equipment on the date of
the notice.
(b) Lessee will deliver to Lessor, Lessee's
complete financial statements,
certified by a recognized firm of certified
public accountants within ninety
(90) days of the close of each fiscal year
of Lessee. Lessee will deliver to
Lessor copies of Lessee's quarterly
financial report certified by the chief
financial officer of Lessee, within ninety
(90) days of the close of each fiscal
quarter of Lessee. Lessee will deliver to
Lessor all Forms 10-K and 10-Q, if
any, filed with the Securities and Exchange
Commission within thirty (30) days
after the date on which they are filed.
(c) Lessor may inspect any Equipment during
normal business hours after giving
Lessee reasonable prior notice.
(d) Lessee will keep the Equipment at the
Equipment Location (specified in the
applicable Schedule) and will give Lessor
prior written notice of any relocation
of Equipment. If Lessor asks, Lessee will
promptly notify Lessor in writing of
the location of any Equipment.
(e) If any Equipment is lost or damaged
(where the estimated repair costs would
exceed the greater of ten percent (10%) of
the original Equipment cost or ten
thousand and 00/100 dollars ($10,000)), or
is otherwise involved in an accident
causing personal injury or property damage,
Lessee will promptly and fully
report the event to Lessor in writing.
(f) Lessee will furnish a certificate of an
authorized officer of Lessee stating
that he has reviewed the activities of
Lessee and that, to the best of his
knowledge, there exists no default or event
which with notice or lapse of time
(or both) would become such a default
within thirty (30) days after any request
by Lessor.
6. DELIVERY, USE AND OPERATION
(a) All Equipment shall be shipped directly
from the Supplier to Lessee.
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(b) Lessee agrees that the Equipment will
be used by Lessee solely in the
conduct of its business and in a manner
complying with all applicable laws,
regulations and insurance policies and
Lessee shall not discontinue use of the
Equipment.
(c) Lessee will not move any equipment from
the location specified on the
Schedule, without the prior written consent
of Lessor.
(d) Lessee will keep the Equipment free and
clear of all liens and encumbrances
other than those which result from acts of
Lessor.
7. MAINTENANCE
(a) Lessee will, at its sole expense,
maintain each unit of Equipment in good
operating order and repair, normal wear and
tear excepted. The Lessee shall also
maintain the Equipment in accordance with
manufacturer's recommendations. Lessee
shall make all alterations or modifications
required to comply with any
applicable law, rule or regulation during
the term of this Agreement. If Lessor
requests, Lessee shall affix plates, tags
or other identifying labels showing
ownership thereof by Lessor. The tags or
labels shall be placed in a prominent
position on each unit of Equipment.
(b) Lessee will not attach or install
anything on any Equipment that will impair
the originally intended function or use of
such Equipment without the prior
consent of Lessor. All additions, parts,
supplies, accessories, and equipment
("Additions") furnished or attached to any
Equipment that are not readily
removable shall become the property of
Lessor. All Additions shall be made only
in compliance with applicable law. Lessee
will not attach or install any
Equipment to or in any other personal or
real property without the prior written
consent of Lessor.
8. STIPULATED LOSS VALUE
If for any reason any unit of Equipment
becomes worn out, lost, stolen,
destroyed, irreparably damaged or unusable
("CASUALTY OCCURRENCES") Lessee shall
promptly and fully notify Lessor in
writing. Lessee shall pay Lessor the sum of
(x) the Stipulated Loss Value (see
Schedule) of the affected unit determined as
of the rent payment date prior to the
Casualty Occurrence; and (y) all rent and
other amounts which are then due under this
Agreement on the Payment Date
(defined below) for the affected unit. The
Payment Date shall be the next rent
payment date after the Casualty Occurrence.
Upon Payment of all sums due
hereunder, the term of this lease as to
such unit shall terminate.
9. INSURANCE
(a) Lessee shall bear the entire risk of
any loss, theft, damage to, or
destruction of, any unit of Equipment from
any cause whatsoever from the time
the Equipment is shipped to Lessee.
(b) Lessee agrees, at its own expense, to
keep all Equipment insured for such
amounts and against such hazards as Lessor
may reasonably require. All such
policies shall be with companies, and on
terms, reasonably satisfactory to
Lessor. The insurance shall include
coverage for damage to or loss of the
Equipment, liability for personal injuries,
death or property damage. Lessor
shall be named as additional insured with a
loss payable clause in favor of
Lessor, as its interest may appear,
irrespective of any breach of warranty or
other act or omission of Lessee. The
insurance shall provide for liability
coverage in an amount equal to at least ONE
MILLION U.S. DOLLARS ($1,000,000.00)
total liability per occurrence, unless
otherwise stated in any Schedule. The
casualty/property damage coverage shall be
in an amount equal to the higher of
the Stipulated Loss Value or the full
replacement cost of the Equipment. No
insurance shall be subject to any
co-insurance clause. The insurance policies
may not be altered or canceled by the
insurer until after thirty (30) days
written notice to Lessor. Lessee agrees to
deliver to Lessor evidence of
insurance reasonably satisfactory to
Lessor.
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(c) Lessee hereby appoints Lessor as
Lessee's attorney-in-fact to make proof of
loss and claim for insurance, and to make
adjustments with insurers and to
receive payment of and execute or endorse
all documents, checks or drafts in
connection with insurance payments. Lessor
shall not act as Lessee's
attorney-in-fact unless Lessee is in
default. Lessee shall pay any reasonable
expenses of Lessor in adjusting or
collecting insurance. Lessee will not make
adjustments with insurers except with
respect to claims for damage to any unit
of Equipment where the repair costs are
less than the lesser of ten percent
(10%) of the original Equipment cost or ten
thousand and 00/100 dollars
($10,000). Lessor may, at its option, apply
proceeds of insurance, in whole or
in part, to (i) repair or replace Equipment
or any portion thereof, or (ii)
satisfy any obligation of Lessee to Lessor
under this Agreement.
10. RETURN OF EQUIPMENT
(a) At the expiration or termination of
this Agreement or any Schedule, Lessee
shall perform any testing and repairs
required to place the units of Equipment
in the same condition and appearance as
when received by Lessee (reasonable wear
and tear excepted) and in good working
order for the original intended purpose
of the Equipment. If required the units of
Equipment shall be deinstalled,
disassembled and crated by an authorized
manufacturer's representative or such
other service person as is reasonably
satisfactory to Lessor. Lessee shall
remove installed markings that are not
necessary for the operation, maintenance
or repair of the Equipment. All Equipment
will be cleaned, cosmetically
acceptable, and in such condition as to be
immediately installed into use in a
similar environment for which the Equipment
was originally intended to be used.
All waste material and fluid must be
removed from the Equipment and disposed of
in accordance with then current waste
disposal laws. Lessee shall return the
units of Equipment to a location within the
continental United States as Lessor
shall direct. Lessee shall obtain and pay
for a policy of transit insurance for
the redelivery period in an amount equal to
the replacement value of the
Equipment. The transit insurance must name
Lessor as the loss payee. The Lessee
shall pay for all costs to comply with this
section (a).
(b) Until Lessee has fully complied with
the requirements of Section 10(a)
above, Lessee's rent payment obligation and
all other obligations under this
Agreement shall continue from month to
month notwithstanding any expiration or
termination of the lease term. Lessor may
terminate the Lessee's right to use
the Equipment upon ten (10) days notice to
Lessee.
(c) Lessee shall provide to Lessor a
detailed inventory of all components of the
Equipment including model and serial
numbers. Lessee shall also provide an
up-to-date copy of all other documentation
pertaining to the Equipment. All
service manuals, blue prints, process flow
diagrams, operating manuals,
inventory and maintenance records shall be
given to Lessor at least ninety (90)
days and not more than one hundred twenty
(120) days prior to lease termination.
(d) Lessee shall make the Equipment
available for on-site operational
inspections by potential purchasers at
least one hundred twenty (120) days prior
to and continuing up to lease termination.
Lessor shall provide Lessee with
reasonable notice prior to any inspection.
Lessee shall provide personnel, power
and other requirements necessary to
demonstrate electrical, hydraulic and
mechanical systems for each item of
Equipment.
11. DEFAULT AND REMEDIES
(a) Lessor may in writing declare this
Agreement in default if: (1) Lessee
breaches its obligation to pay rent or any
other sum when due and fails to cure
the breach within ten (10) days; (2) Lessee
breaches any of its insurance
obligations under Section 9; (3) Lessee
breaches any of its other obligations
and fails to cure that breach within thirty
(30) days after written notice from
Lessor; (4) any representation or warranty
made by Lessee in connection with
this Agreement shall be false or misleading
in any material respect; (5) Lessee
becomes insolvent or ceases to do business
as a going concern; (6) any Equipment
is illegally used; or (7) a petition is
filed by or against Lessee or any
Guarantor of Lessee's obligations to Lessor
under any bankruptcy or insolvency
laws and in the event of an involuntary
petition, the petition is not dismissed
within forty-five (45) days of the filing
date. The default declaration shall
apply to all Schedules unless specifically
excepted by Lessor.
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(b) After a default, at the request of
Lessor, Lessee shall comply with the
provisions of Section 10(a). Lessee hereby
authorizes Lessor to peacefully enter
any premises where any Equipment may be and
take possession of the Equipment.
Lessee shall immediately pay to Lessor
without further demand as liquidated
damages for loss of a bargain and not as a
penalty, the Stipulated Loss Value of
the Equipment (calculated as of the rent
date next preceding the declaration of
default), and all rents and other sums then
due under this Agreement and all
Schedules. Lessor may terminate this
Agreement as to any or all of the
Equipment. A termination shall occur only
upon written notice by Lessor to
Lessee and only as to the units of
Equipment specified in any such notice.
Lessor may, but shall not be required to,
sell Equipment at private or public
sale, in bulk or in parcels, with or
without notice, and without having the
Equipment present at the place of sale.
Lessor may also, but shall not be
required to, lease, otherwise dispose of or
keep idle all or part of the
Equipment. Lessor may use Lessee's premises
for a reasonable period of time for
any or all of the purposes stated above
without liability for rent, costs,
damages or otherwise. The proceeds of sale,
lease or other disposition, if any,
shall be applied in the following order of
priorities: (1) to pay all of
Lessor's costs, charges and expenses
incurred in taking, removing, holding,
repairing and selling, leasing or otherwise
disposing of Equipment; then, (2) to
the extent not previously paid by Lessee,
to pay Lessor all sums due from Lessee
under this Agreement; then (3) to reimburse
to Lessee any sums previously paid
by Lessee as liquidated damages; and (4)
any surplus shall be retained by
Lessor. Lessee shall immediately pay any
deficiency in (1) and (2) above .
(c) The foregoing remedies are cumulative,
and any or all thereof may be
exercised instead of or in addition to each
other or any remedies at law, in
equity, or under statute. Lessee waives
notice of sale or other disposition (and
the time and place thereof), and the manner
and place of any advertising. Lessee
shall pay Lessor's actual attorney's fees
incurred in connection with the
enforcement, assertion, defense or
preservation of Lessor's rights and remedies
under this Agreement, or if prohibited by
law, such lesser sum as may be
permitted. Waiver of any default shall not
be a waiver of any other or
subsequent default.
(d) Any default under the terms of this or
any other agreement between Lessor
and Lessee may be declared by Lessor a
default under this and any such other
agreement.
12. ASSIGNMENT: LESSEE SHALL NOT SELL,
TRANSFER, ASSIGN, ENCUMBER OR SUBLET ANY
EQUIPMENT OR THE INTEREST OF LESSEE IN THE
EQUIPMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR. Lessor may, without the
consent of Lessee, assign this
Agreement, any Schedule or the right to
enter into a Schedule. Lessee agrees
that if Lessee receives written notice of
an assignment from Lessor, Lessee will
pay all rent and all other amounts payable
under any assigned Schedule to such
assignee or as instructed by Lessor. Lessee
also agrees to confirm in writing
receipt of the notice of assignment as may
be reasonably requested by assignee.
Lessee hereby wai
