UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9670
-------------------------------
PLM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3041257
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower,
Suite 800, San Francisco, CA 94105-1301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 974-1399
----------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: common stock - $.01 par
value; outstanding as of October 28, 1999 - 7,982,974 shares.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
----------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Operating lease income $ 7,344 $ 3,295 $ 16,634 $ 8,341
Management fees 1,966 2,344 6,198 7,036
Partnership interests and other fees 263 61 579 742
Acquisition and lease negotiation fees -- 548 1,079 2,363
(Loss) gain on the sale or disposition of assets, net (29) 283 (41 ) 1,492
Aircraft brokerage and services -- 204 -- 1,090
Other 343 345 1,031 1,369
--------------------------------------------------------------
Total revenues 9,887 7,080 25,480 22,433
--------------------------------------------------------------
COSTS AND EXPENSES
Operations support 4,121 3,160 9,943 9,505
Depreciation and amortization 2,172 1,221 5,651 3,461
General and administrative 1,322 2,003 4,851 6,174
--------------------------------------------------------------
Total costs and expenses 7,615 6,384 20,445 19,140
--------------------------------------------------------------
Operating income 2,272 696 5,035 3,293
Interest expense (1,425) (912) (3,862) (2,806)
Interest income 60 376 252 838
Other income, net 700 15 577 478
--------------------------------------------------------------
Income before income taxes 1,607 175 2,002 1,803
Provision for income taxes 633 68 790 703
--------------------------------------------------------------
Net income from continuing operations 974 107 1,212 1,100
Income from discontinued operations, net of income tax 403 1,255 1,182 2,446
--------------------------------------------------------------
Net income before cumulative effect of accounting change 1,377 1,362 2,394 3,546
Cumulative effect of accounting change -- -- (236) --
--------------------------------------------------------------
Net income to common shares $ 1,377 $ 1,362 $ 2,158 $ 3,546
==============================================================
Basic earnings per weighted-average common share outstanding:
Income from continuing operations $ 0.12 $ 0.01 $ 0.15 $ 0.13
Discontinued operations 0.05 0.15 0.15 0.29
Cumulative effect of accounting change -- -- (0.03) --
--------------------------------------------------------------
Net income $ 0.17 $ 0.16 $ 0.27 $ 0.42
==============================================================
Diluted earnings per weighted-average common share outstanding:
Income from continuing operations $ 0.12 $ 0.01 $ 0.15 $ 0.13
Discontinued operations 0.05 0.15 0.14 0.28
Cumulative effect of accounting change -- -- (0.03) --
--------------------------------------------------------------
Net income $ 0.17 $ 0.16 $ 0.26 $ 0.41
==============================================================
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars, except share amounts)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
----------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 2,315 $ 8,786
Receivables (net of allowance for doubtful accounts of $0.7
million as of September 30, 1999 and $0.4 million
as of December 31, 1998) 7,162 5,003
Receivables from affiliates 3,213 2,944
Investment in direct finance leases, net 1,871 2,082
Net assets of discontinued operations 25,140 27,342
Equity interest in affiliates 19,743 22,588
Assets held for sale 8,004 --
Trailers held for operating leases 97,344 63,044
Less accumulated depreciation (19,304) (15,516)
-------------------------------------------
78,040 47,528
Restricted cash and cash equivalents 1,545 2,261
Other, net 3,784 3,424
-------------------------------------------
Total assets $ 150,817 $ 121,958
===========================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Short term warehouse facility $ 7,600 $ --
Senior secured notes 22,559 28,199
Senior secured loan 10,294 14,706
Other secured debt 40,420 13,142
Payables and other liabilities 10,457 9,648
Deferred income taxes 8,492 6,066
-------------------------------------------
Total liabilities 99,822 71,761
Shareholders' equity:
Common stock ($.01 par value, 50,000,000 shares
authorized, 7,977,974 issued and outstanding as of
September 30, 1999 and 8,159,919 as of December 31, 1998) 112 112
Paid-in capital, in excess of par 75,057 74,947
Treasury stock (4,057,781 shares as of September 30, 1999
and 3,875,836 shares as of December 31, 1998) (16,542) (15,072)
Accumulated deficit (7,632) (9,790)
------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 50,995 50,197
-------------------------------------------
Total liabilities and shareholders' equity $ 150,817 $ 121,958
===========================================
</TABLE>
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
For the Year Ended December 31,
1998 and the Nine Months Ended September 30, 1999
(in thousands of dollars)
<TABLE>
<CAPTION>
Accumulated
Common Stock Deficit &
-------------------------------------------
Paid-in Accumulated
Capital in Other Total
At Excess Treasury Comprehensive Comprehensive Shareholders'
Par of Par Stock Income Income Equity
===============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1997 $ 112 $ 74,650 $ (13,435) $ (14,779) $ 46,548
Comprehensive income
Net income 4,857 $ 4,857 4,857
Other comprehensive income:
Foreign currency translation
income 132 132 132
=================
Comprehensive income $ 4,989
=================
Exercise of stock options 218 211 429
Common stock repurchases (2,059) (2,059)
Reissuance of treasury stock 79 211 290
- ---------------------------------------------------------------------------------------------------- --------------
Balances, December 31, 1998 112 74,947 (15,072) (9,790) 50,197
Comprehensive income
Net income 2,158 $ 2,158 2,158
=================
Exercise of stock options 9 570 579
Common stock repurchases (2,149) (2,149)
Reissuance of treasury stock, net 101 109 210
=========================================================== ===============
Balances, September 30, 1999 $ 112 $ 75,057 $ (16,542) $ (7,632) $ 50,995
=========================================================== ===============
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1999 1998
--------------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income from continuing operations $ 1,212 $ 1,100
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,651 3,461
Foreign currency translation -- (80)
Deferred income tax expense (benefit) 2,426 (7,298)
Loss (gain) on sale or disposition of assets, net 41 (1,529)
Loss on sale of investment in subsidiary -- 245
Undistributed residual value interests 716 1,032
Minority interest in net loss of subsidiaries -- (100)
Increase (decrease) in payables and other liabilities 977 (3,669)
(Increase) decrease in receivables and receivables from affiliates (2,428) 2,310
Amortization of organization and offering costs 2,129 2,129
(Increase) decrease in other assets (266) 883
----------------------------------
Cash provided by (used in) operating activities of continuing operations 10,458 (1,516)
Cash provided by operating activities of discontinued operations 6,095 14,777
----------------------------------
Net cash provided by operating activities 16,553 13,261
----------------------------------
INVESTING ACTIVITIES
Principal payments received on finance leases 211 170
Purchase of property, plant, and equipment (512) (182)
Purchase of transportation equipment and capital improvements (57,985) (41,849)
Proceeds from the sale of transportation equipment for lease 394 6,150
Proceeds from the sale of assets held for sale 13,801 22,366
Sale of investment in subsidiary -- 176
Decrease in restricted cash and restricted cash equivalents 716 10,629
Investing activities of discontinued operations 12,301 (67,653)
------------------------------------
Net cash used in investing activities (31,074) (70,193)
FINANCING ACTIVITIES
Borrowings of short-term warehouse credit facilities 39,008 16,256
Repayment of short-term warehouse credit facilities (31,408) (16,000)
Borrowings of senior secured notes -- 5,000
Repayment of senior secured notes (5,640) (3,765)
Repayment of senior secured loan (4,412) (4,412)
Borrowings of other secured debt 28,570 173
Repayment of other secured debt (1,292) (114)
Proceeds from exercise of stock options 579 411
Reissuance of treasury stock, net 42 --
Purchase of stock (2,149) (1,017)
Net financing activities of discontinued operations (15,248) 61,553
---------------------------------
Net cash provided by financing activities 8,050 58,085
---------------------------------
Net (decrease) increase in cash and cash equivalents (6,471) 1,153
Cash and cash equivalents at beginning of period 8,786 5,224
=================================
Cash and cash equivalents at end of period $ 2,315 $ 6,377
=================================
SUPPLEMENTAL INFORMATION
Net cash paid for interest from continuing operations $ 3,840 $ 2,891
=================================
Net cash paid for interest from discontinued operations $ 7,937 $ 7,280
=================================
Net cash paid for income taxes $ 212 $ 1,529
=================================
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
PLM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. GENERAL
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary, consisting primarily of normal
recurring accruals, to present fairly PLM International, Inc. and its wholly-
and majority-owned subsidiaries (the Company's) financial position as of
September 30, 1999 and December 31, 1998, statements of income for the three and
nine months ended September 30, 1999 and 1998, statements of changes in
shareholders' equity and comprehensive income for the year ended December 31,
1998 and the nine months ended September 30, 1999 and statements of cash flows
for the nine months ended September 30, 1999 and 1998. Certain information and
note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted from the accompanying consolidated financial statements. For further
information, reference should be made to the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, on file with the Securities and Exchange Commission.
2. RECLASSIFICATIONS
Certain prior-period amounts have been reclassified to conform to the current
period's presentation.
3. DISCONTINUED OPERATIONS
In the third quarter of 1999, the Company entered into a non-binding letter of
intent to sell its wholly-owned commercial and industrial leasing subsidiary
American Finance Group, Inc. (AFG). Completion of the sale is expected to occur
during the first quarter of 2000. Accordingly, effective with the issuance of
the third quarter 1999 financial statements, AFG's results of operations and net
assets have been classified as discontinued operations and prior periods have
been restated. For business segment reporting purposes, AFG's data was
previously reported as the segment "Commercial and industrial equipment leasing
and financing".
The components of amounts reflected in the income statements and balance sheets
for the discontinued operations are as follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
------------------------------------------------------------
<S> <C> <C> <C> <C>
Income Statement
Revenue $ 6,257 $ 7,843 $ 19,676 $ 20,342
Costs and expenses (5,617) (5,849) (17,741) (16,325)
------------------------------------------------------------
Operating income 640 1,994 1,935 4,017
Income tax (237) (739) (753) (1,571)
-------------------------------------------------------------
Net income from discontinued operations $ 403 $ 1,255 $ 1,182 $ 2,446
=============================================================
</TABLE>
3. DISCONTINUED OPERATIONS (continued)
Net assets of discontinued operations as of September 30, 1999 and December 31,
1998 are as follow:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
-----------------------------------------
(in thousands of dollars)
<S> <C> <C>
Cash and cash equivalents $ 360 $ --
Restricted cash 8,473 8,088
Receivables 1,337 2,279
Investment in direct finance leases 118,677 143,006
Loan receivables 23,445 23,493
Commercial and industrial equipment, net 19,638 16,689
Other assets, net 1,989 3,898
Warehouse credit facility (20,100) (34,420)
Nonrecourse securitized debt (110,679) (111,222)
Payables and other liabilities (3,450) (12,120)
Deferred income taxes (14,550) (12,349)
========================================
Net assets of discontinued operations $ 25,140 $ 27,342
========================================
</TABLE>
4. FINANCING TRANSACTION ACTIVITIES
American Finance Group, Inc., originates and manages lease and loan transactions
on primarily new commercial and industrial equipment that is financed by
nonrecourse securitized debt for the Company's own account or sold to
unaffiliated investors. The Company uses one of its warehouse credit facilities
to finance the acquisition of these assets prior to permanent financing by
nonrecourse securitized debt or sale. The majority of these transactions are
accounted for as direct finance leases, while some transactions qualify as
operating leases or loans.
During the nine months ended September 30, 1999, the Company funded $34.8
million in equipment that was placed on finance lease. Also during the nine
months ended September 30, 1999, the Company sold equipment on finance lease
with an original equipment cost of $40.5 million, resulting in a net gain of
$0.4 million.
During the nine months ended September 30, 1999, the Company funded $6.1 million
in loans to customers.
5. EQUIPMENT
Equipment held for operating lease includes trailers and commercial and
industrial equipment that is depreciated on the straight-line method down to the
equipment's estimated salvage value.
During the nine months ended September 30, 1999, the Company funded $20.3
million in commercial and industrial equipment that was placed on operating
lease. During the nine months ended September 30, 1999, the Company sold
commercial and industrial equipment that was on operating lease for a net gain
of $1.7 million.
During the first nine months of 1999, the Company purchased trailers for $36.2
million and sold trailers with a net book value of $0.4 million for $0.4
million.
The Company classifies equipment as held for sale if the particular asset is
subject to a pending contract for sale or is held for sale to an affiliated
program. Equipment held for sale is valued at the lower of the depreciated cost
or the fair value less costs to sell. During the first nine months of 1999, the
Company
<PAGE>
5. EQUIPMENT (continued)
purchased marine containers for $21.8 million, and sold marine containers for
$13.8 million to affiliated programs at cost, which approximated their fair
market value. As of September 30, 1999, the Company held marine containers with
a net book value of $8.0 million for sale to affiliated programs. As of December
31, 1998, the Company had no equipment held for sale.
6. DEBT
The Company has warehouse credit facilities for PLM Financial Services, Inc.
(FSI) and AFG. FSI has a $24.5 million warehouse credit facility to be used to
acquire assets on an interim basis prior to sale to affiliated programs or
unaffiliated third parties, and to purchase trailers prior to obtaining
permanent financing. FSI's facility is shared with PLM Equipment Growth Fund VI,
PLM Equipment Growth & Income Fund VII, and Professional Lease Management Income
Fund I, LLC. Borrowings under this facility by the other eligible borrowers
reduce the amount available to be borrowed by the Company. All borrowings under
this facility are guaranteed by the Company. AFG has a $60.0 million warehouse
credit facility to be used to acquire assets on an interim basis prior to
placement in the Company's nonrecourse securitization facility or sale to
unaffiliated third parties. These facilities expire on December 14, 1999. The
Company believes it will be able to renew these facilities on substantially the
same terms upon expiration. As of September 30, 1999, FSI and PLM Equipment
Growth Fund VI had $7.6 million and $1.0 million in borrowings outstanding on
the $24.5 million facility and there were no other borrowings outstanding on the
facility by any of the other eligible borrowers. As of September 30, 1999, AFG
had $20.1 million in borrowings outstanding on its $60.0 million facility.
The Company has available a nonrecourse securitization facility to be used to
acquire assets by AFG, secured by direct finance leases, operating leases, and
loans on commercial and industrial equipment that generally have terms from one
to seven years. The facility allowed the Company to borrow up to $150.0 million
through October 12, 1999. In October 1999, this facility was amended to extend
the facility through October 10, 2000 and reduce the amount available to be
borrowed to $125.0 million. Repayment of the facility matches the terms of the
underlying leases. As of September 30, 1999, there were $105.5 million in
borrowings under this facility. The Company is required to hedge the interest
rate exposure to the Company on at least 90% of the aggregate discounted lease
balance (ADLB) of those leases and loans used as collateral in its nonrecourse
securitization facility. As of September 30, 1999, 90% of the ADLB had been
hedged.
During the first nine months of 1999, the Company made principal payments of
$2.4 million on its nonrecourse notes payable remaining. As of September 30,
1999, the Company had $5.2 million in nonrecourse notes payable. Principal and
interest on the notes are due monthly beginning April 1998 through March 2001.
The notes bear interest ranging from 8.32% to 9.5% per annum and are secured by
direct finance leases for commercial and industrial equipment that have terms
corresponding to the repayment of the notes.
In the second quarter of 1999, the Company entered into a $15.0 million credit
facility loan agreement bearing interest at LIBOR plus 1.5%. This facility
allows the Company to borrow up to $15.0 million within a one-year period. As of
September 30, 1999, the Company had borrowed $8.6 million under this facility.
Principal payments of $0.1 million are due quarterly beginning August 2000, with
a final payment of $1.4 million due August 2006.
During the first nine months of 1999, the Company entered into four $5.0 million
debt agreements bearing interest at 6.20%, 6.81%, 6.90%, and 7.05%,
respectively, each with payments of $0.1 million due monthly through 2006, with
a final payment of $1.3 million, $1.3 million, $1.3 million, and $1.2 million,
respectively, due in 2006, secured by certain trailer equipment. In return for
favorable financing terms, these agreements give beneficial tax treatment in
these secured trailers to the lenders.
During the first nine months of 1999, the Company repaid $4.4 million of the
senior secured loan, $5.6 million of the senior secured notes, and $1.3 million
of the other secured debt, in accordance with the debt repayment schedules.
<PAGE>
7. SHAREHOLDERS' EQUITY
During the first nine months of 1999, the Company repurchased 359,215 shares of
the Company's common stock for $2.1 million, under the $5.0 million common stock
repurchase program authorized by the Company's Board of Directors in December
1998. As of September 30, 1999, 422,515 shares had been repurchased under this
plan, for a total of $2.5 million.
During the nine months ended September 30, 1999, 27,486 shares were issued from
treasury stock as part of the senior management bonus program (net of forfeited
shares), 6,784 shares were issued from treasury stock as a stock grant, and
143,000 shares were issued for the exercise of stock options. Consequently, the
total common shares outstanding decreased to 7,977,974 as of September 30, 1999
from the 8,159,919 outstanding as of December 31, 1998.
Net income per basic weighted-average common share outstanding was computed by
dividing net income to common shares by the weighted-average number of shares
deemed outstanding during the period. The weighted-average number of shares
deemed outstanding for the basic earnings per share calculation during the three
months ended September 30, 1999 was 8,061,551 and during the three months ended
September 30, 1998 was 8,356,102. The weighted-average number of shares deemed
outstanding for the basic earnings per share calculation during the nine months
ended September 30, 1999 was 8,097,489, and during the nine months ended
September 30, 1998 was 8,358,214. The weighted-average number of shares deemed
outstanding, including potentially dilutive common shares, for the diluted
earnings per weighted-average share calculation during the three months ended
September 30, 1999 was 8,137,547, and during the three months ended September
30, 1998 was 8,503,075. The weighted-average number of shares deemed
outstanding, including potentially dilutive common shares, for the diluted
earnings per weighted-average share calculation during the nine months ended
September 30, 1999 was 8,204,268, and during the nine months ended September 30,
1998 was 8,518,381.
8. LEGAL MATTERS
The Company and various of its wholly-owned subsidiaries are named as defendants
in a lawsuit filed as a purported class action in January 1997 in the Circuit
Court of Mobile County, Mobile, Alabama, Case No. CV-97-251 (the Koch action).
Plaintiffs, who filed the complaint on their own and on behalf of all class
members similarly situated, are six individuals who invested in certain
California limited partnerships for which the Company's wholly-owned subsidiary,
PLM Financial Services, Inc. (FSI), acts as the general partner, including PLM
Equipment Growth Fund IV (Fund IV), PLM Equipment Growth Fund V (Fund V), PLM
Equipment Growth Fund VI (Fund VI), and PLM Equipment Growth & Income Fund VII
(Fund VII) (the Partnerships). The complaint asserts eight causes of action
against all defendants, as follows: fraud and deceit, suppression, negligent
misrepresentation and suppression, intentional breach of fiduciary duty,
negligent breach of fiduciary duty, unjust enrichment, conversion, and
conspiracy. Plaintiffs allege that each defendant owed plaintiffs and the class
certain duties due to their status as fiduciaries, financial advisors, agents,
and control persons. Based on these duties, plaintiffs assert liability against
defendants for improper sales and marketing practices, mismanagement of the
Partnerships, and concealing such mismanagement from investors in the
Partnerships. Plaintiffs seek unspecified compensatory and recissory damages, as
well as punitive damages, and have offered to tender their limited partnership
units back to the defendants.
In March 1997, the defendants removed the Koch action from the state court to
the United States District Court for the Southern District of Alabama, Southern
Division (Civil Action No. 97-0177-BH-C) (the court) based on the court's
diversity jurisdiction, and the court denied plaintiffs' motion to remand, which
denial was upheld on appeal. In December 1997, the court granted defendants
motion to compel arbitration of the named plaintiffs' claims, based on an
agreement to arbitrate contained in the limited partnership agreement of each
Partnership. Plaintiffs appealed this decision, but in June 1998 voluntarily
dismissed their appeal pending settlement of the Koch action, as discussed
below.
In June 1997, the Company and the affiliates who are also defendants in the Koch
action were named as defendants in another purported class action filed in the
San Francisco Superior Court, San Francisco,
<PAGE>
8. LEGAL MATTERS (Continued)
California, Case No. 987062 (the Romei action). The plaintiff is an investor in
Fund V, and filed the complaint on her own behalf and on behalf of all class
members similarly situated who invested in certain California limited
partnerships for which FSI acts as the general partner, including the
Partnerships. The complaint (as amended in August 1997) alleges the same facts
and the same nine causes of action as in the Koch action, plus additional causes
of action against all of the defendants, including alleged unfair and deceptive
practices, constructive fraud, unjust enrichment, a claim for treble damages and
violations of the California Securities Law of 1968.
In July 1997, defendants filed with the district court for the Northern District
of California (Case No. C-97-2847 WHO) a petition (the petition) under the
Federal Arbitration Act seeking to compel arbitration of plaintiff's claims and
for an order staying the state court proceedings pending the outcome of the
arbitration. In October 1997, the district court denied the Company's petition
to compel arbitration, but in November 1997, agreed to hear the Company's motion
for reconsideration of this order. The hearing on this motion has been taken off
calendar and the district court has dismissed the petition pending settlement of
the Romei action, as discussed below. The state court action continues to be
stayed pending such resolution.
In May 1998, all parties to the Koch and Romei actions entered into a memorandum
of understanding related to the settlement of those actions (the monetary
settlement), following which the parties agreed to an additional equitable
settlement (the equitable settlement). The terms of the monetary settlement and
the equitable settlement are contained in a Stipulation of Settlement that was
filed with the court. The monetary settlement provides for a settlement and
release of all claims against defendants in exchange for payment for the benefit
of the class of up to $6.0 million. The final settlement amount will depend on
the number of claims filed by authorized claimants who are members of the class,
the amount of the administrative costs incurred in connection with the
settlement, and the amount of attorneys' fees awarded by the court. The Company
will pay up to $0.3 million of the monetary settlement, with the remainder being
funded by an insurance policy. The equitable settlement provides, among other
things: (a) for the extension of the operating lives of Funds V, VI, and VII by
judicial amendment to each of their partnership agreements, such that FSI, the
general partner of each such partnership, be permitted to reinvest partnership
funds in additional equipment into the year 2004, and will liquidate the
partnerships' equipment in 2006; (b) that FSI is entitled to earn front-end fees
(including acquisition and lease negotiation fees) up to 20% in excess of the
compensatory limitations set forth in the North American Securities
Administrator's Association's Statement of Policy; (c) for a one-time repurchase
of up to 10% of the outstanding units of Funds V, VI, and VII by the respective
partnership at 80% of such partnership's net asset value; and (d) for the
deferral of a portion of FSI's management fees until such time as certain
performance thresholds have, if ever, been met by the partnerships. The
equitable settlement also provides for payment of the equitable class attorneys'
fees from partnership funds in the event, if ever, that distributions paid to
investors in Funds V, VI, and VII during the extension period reach a certain
internal rate of return. Defendants will continue to deny each of the claims and
contentions and admit no liability in connection with the monetary and equitable
settlements.
The court, among other things, preliminarily approved the monetary and equitable
settlements in June 1999, and set a final fairness hearing for November 16,
1999. For settlement purposes, the monetary settlement class (the monetary
class) consists of all investors, limited partners, assignees, or unit holders
who purchased or received by way of transfer or assignment any units in the
Partnerships between May 23, 1989 and June 29, 1999. The equitable settlement
class (the equitable class) consists of all investors, limited partners,
assignees or unit holders who on June 29, 1999 held any units in Funds V, VI,
and VII, and their assigns and successors in interest.
The monetary settlement remains subject to certain conditions, including but not
limited to notice to the monetary class for purposes of the monetary settlement
and final approval of the monetary settlement by the court following a final
fairness hearing. The equitable settlement remains subject to numerous
conditions, including but not limited to: (a) notice to the equitable class, (b)
review and clearance by the SEC, and dissemination to the members of the
equitable class, of solicitation statements regarding the proposed extensions,
(c) disapproval by less than 50% of the limited partners in Funds V, VI, and VII
of
<PAGE>
8. LEGAL MATTERS (Continued)
the proposed amendments to the limited partnership agreements, (d) judicial
approval of the proposed amendments to the limited partnership agreements, and
(e) final approval of the equitable settlement by the court following a final
fairness hearing. The monetary settlement, if approved, will go forward
regardless of whether the equitable settlement is approved or not. The Company
continues to believe that the allegations of the Koch and Romei actions are
completely without merit and intends to continue to defend this matter
vigorously if the monetary settlement is not consummated.
The Company is involved as plaintiff or defendant in various other legal actions
incidental to its business. Management does not believe that any of these
actions will be material to the financial condition of the Company.
9. PURCHASE COMMITMENTS
As of September 30, 1999, the Company had committed to purchase $16.3 million of
equipment for its commercial and industrial lease and finance receivable
portfolio.
From October 1, 1999 to October 28, 1999, the Company funded $4.4 million of the
commitments outstanding as of September 30, 1999 for its commercial and
industrial lease and finance receivable portfolio.
As of October 28, 1999, the Company had committed to purchase $14.5 million of
equipment for its commercial and industrial lease and finance receivable
portfolio.
As of September 30, 1999, the Company had committed to purchase $10.0 million of
marine containers. As of September 30, 1999, the Company had accrued $3.4
million for marine containers, which the Company has taken delivery of and the
Company had classified these containers as assets held for sale.
10. OPERATING SEGMENTS
The Company operates in three operating segments: trailer leasing, commercial
and industrial equipment leasing and financing, and the management of investment
programs and other transportation equipment leasing. The trailer leasing segment
includes 22 trailer rental facilities that engage in short to mid-term operating
leases of refrigerated and dry van trailers to a variety of customers and
management of trailers for the investment programs. The management of investment
programs and other transportation equipment leasing segment involves managing
its syndicated investment programs, from which it earns fees and equity
interests, and arranging short to mid-term operating leases of other
transportation equipment. The commercial and industrial equipment leasing and
financing segment originates finance and operating leases and loans on
commercial and industrial equipment that is financed through a securitization
facility, brokers equipment, and manages institutional programs owning
commercial and industrial equipment. In the third quarter of 1999, the Company
entered into a non-binding letter of intent to sell its wholly-owned commercial
and industrial leasing subsidiary American Finance Group, Inc. (AFG). This
segment is accounted for as discontinued operations. The Company evaluates the
performance of each segment based on profit or loss from operations before
allocating general and administrative expenses and before allocating income
taxes. The segments are managed separately because each operation requires
different business strategies.
<PAGE>
10. OPERATING SEGMENTS (continued)
The following tables present a summary of the operating segments (in thousands
of dollars):
<TABLE>
<CAPTION>
Commercial Management
and of Investment
Industrial Programs
Equipment and Other
Leasing Transportation
Trailer and Equipment
For the three months ended September 30, 1999 Leasing Financing Leasing Other<F1>1 Total
-------------------------------------------------------------------------------
REVENUES
<S> <C> <C> <C> <C> <C>
Lease income $ 7,069 $ -- $ 275 $ -- $ 7,344
Fees earned 227 -- 2,002 -- 2,229
Loss on sale or disposition of assets, net (29) -- -- -- (29)
Other 10 -- 333 -- 343
-------------------------------------------------------------------------------
Total revenues 7,277 -- 2,610 -- 9,887
-------------------------------------------------------------------------------
COSTS AND EXPENSES
Operations support 3,365 -- 691 65 4,121
Depreciation and amortization 2,053 -- 119 -- 2,172
General and administrative expenses -- -- -- 1,322 1,322
------------------------------------------------------------------------------
Total costs and expenses 5,418 -- 810 1,387 7,615
------------------------------------------------------------------------------
Operating income (loss) 1,859 -- 1,800 (1,387) 2,272
Interest expense, net (902) -- (463) -- (1,365)
Other income, net -- -- 700 -- 700
------------------------------------------------------------------------------
Income (loss) before income taxes $ 957 $ -- $ 2,037 $ (1,387) $ 1,607
===============================================================================
Income from discontinued operations, net of $ -- $ 403 $ -- $ -- $ 403
tax
==============================================================================
Total assets as of September 30, 1999 $ 83,781 $ 25,140 $ 35,084 $ 6,812 $150,817
==============================================================================
Commercial Management
and of Investment
Industrial Programs
Equipment and Other
Leasing Transportation
Trailer and Equipment
For the three months ended September 30, 1998 Leasing Financing Leasing Other<F1>1 Total
------------------------------------------------------------------------------
REVENUES
Lease income $ 2,721 $ -- $ 574 $ -- $ 3,295
Fees earned 306 -- 2,647 -- 2,953
Gain on sale or disposition of assets, net 40 -- 243 -- 283
Other -- -- 549 -- 549
------------------------------------------------------------------------------
Total revenues 3,067 -- 4,013 -- 7,080
------------------------------------------------------------------------------
COSTS AND EXPENSES
Operations support 1,205 -- 1,311 644 3,160
Depreciation and amortization 1,014 -- 207 -- 1,221
General and administrative expenses -- -- -- 2,003 2,003
------------------------------------------------------------------------------
Total costs and expenses 2,219 -- 1,518 2,647 6,384
------------------------------------------------------------------------------
Operating income (loss) 848 -- 2,495 (2,647) 696
Interest expense, net (414) -- (122) -- (536)
Other income, net -- -- 15 -- 15
------------------------------------------------------------------------------
Income (loss) before income taxes $ 434 $ -- $ 2,388 $ (2,647) $ 175
===============================================================================
Income from discontinued operations, net of $ -- $ 1,255 $ -- $ -- $ 1,255
tax
===============================================================================
Total assets as of September 30, 1998 $ 38,692 $ 26,694 $ 32,179 $ 9,147 $106,712
==============================================================================
<FN>
<F1> 1 Includes costs not identifiable to a particular segment such as general
and administrative and certain operations support exprenses.
</FN>
</TABLE>
<PAGE>
10. OPERATING SEGMENTS (continued)
<TABLE>
<CAPTION>
Commercial Management
and of Investment
Industrial Programs
Equipment and Other
Leasing Transportation
Trailer and Equipment
For the nine months ended September 30, 1999 Leasing Financing Leasing Other<F1>2 Total
-----------------------------------------------------------------------------
REVENUES
<S> <C> <C> <C> <C> <C>
Lease income $ 15,746 $ -- $ 888 $ -- $ 16,634
Fees earned 628 -- 7,228 -- 7,856
Loss on sale or disposition of assets, net (41) -- -- -- (41)
Other 10 -- 1,021 -- 1,031
-----------------------------------------------------------------------------
Total revenues 16,343 -- 9,137 -- 25,480
-----------------------------------------------------------------------------
COSTS AND EXPENSES
Operations support 7,754 -- 1,579 610 9,943
Depreciation and amortization 5,292 -- 359 -- 5,651
General and administrative expenses -- -- -- 4,851 4,851
-----------------------------------------------------------------------------
Total costs and expenses 13,046 -- 1,938 5,461 20,445
-----------------------------------------------------------------------------
Operating income (loss) 3,297 -- 7,199 (5,461) 5,035
Interest expense, net (2,090) -- (1,520) -- (3,610)
Other income (expenses), net -- -- 700 (123) 577
-----------------------------------------------------------------------------
Income (loss) before income taxes $ 1,207 $ -- $ 6,379 $ (5,584) $ 2,002
=============================================================================
Income from discontinued operations, net of $ -- $ 1,182 $ -- $ -- $ 1,182
tax
=============================================================================
Cumulative effect of accounting change,
net of tax $ -- $ (236) $ -- $ -- $ (236)
=============================================================================
Total assets as of September 30, 1999 $ 83,781 $ 25,140 $ 35,084 $ 6,812 $150,817
=============================================================================
Commercial Management
and of Investment
Industrial Programs
Equipment and Other
Leasing Transportation
Trailer and Equipment
For the nine months ended September 30, 1998 Leasing Financing Leasing Other<F2>2 Total
-----------------------------------------------------------------------------
REVENUES
Lease income $ 6,154 $ -- $ 2,187 $ -- $ 8,341
Fees earned 822 -- 9,319 -- 10,141
Gain on sale or disposition of assets, net 113 -- 1,379 -- 1,492
Other 3 -- 2,456 -- 2,459
-----------------------------------------------------------------------------
Total revenues 7,092 -- 15,341 -- 22,433
-----------------------------------------------------------------------------
COSTS AND EXPENSEs
Operations support 3,148 -- 5,044 1,313 9,505
Depreciation and amortization 2,541 -- 920 -- 3,461
General and administrative expenses -- -- -- 6,174 6,174
-----------------------------------------------------------------------------
Total costs and expenses 5,689 -- 5,964 7,487 19,140
-----------------------------------------------------------------------------
Operating income (loss) 1,403 -- 9,377 (7,487) 3,293
Interest expense, net (1,096) -- (872) -- (1,968)
Other income (expenses), net (1) -- 479 -- 478
-----------------------------------------------------------------------------
Income (loss) before income taxes $ 306 $ -- $ 8,984 $ (7,487) $ 1,803
=============================================================================
Income from discontinued operations, net of $ -- $ 2,446 $ -- $ -- $ 2,446
tax
=============================================================================
Total assets as of September 30, 1998 $ 38,692 $ 26,694 $ 32,179 $ 9,147 $106,712
=============================================================================
<FN>
<F2> 2 Includes costs not identifiable to a particular segment such as general
and administrative and certain operations support expenses.
</FN>
</TABLE>
<PAGE>
11. CUMULATIVE EFFECT OF ACCOUNTING CHANGE FROM DISCONTINUED OPERATIONS, NET OF
TAX
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities,"
which requires costs related to start-up activities to be expensed as incurred.
The statement requires that initial application be reported as a cumulative
effect of a change in accounting principle. The Company adopted this statement
during the first quarter of 1999, at which time it took a $0.2 million charge,
net of tax of $0.2 million, related to start-up costs of its commercial and
industrial equipment operations which is being accounted for as discontinued
operations.
12. SUBSEQUENT EVENTS
In October 1999, the Company sold $4.6 million of containers held for sale to an
affiliated program at its cost, which approximated their fair market value.
In October 1999, the Company amended its nonrecourse securitization facility to
extend the facility through October 10, 2000 and reduce the amount available to
be borrowed under this facility to $125.0 million.
In October 1999, the Company entered into two debt agreements totaling $5.0
million bearing interest at 6.71%, with payments of $0.1 million due monthly
beginning November of 1999 and a final payment of $0.8 million due November
2006, secured by certain trailer equipment. In return for favorable financing
terms, these agreements give beneficial tax treatment in these secured trailers
to the lenders.
On October 26, 1999, the Company agreed to sell its wholly -owned subsidiary,
American Finance Group, Inc., for approximately $29 million in cash to Guaranty
Federal Bank, subject to closing adjustments which are not expected to be
material. Consummation of the transaction is subject to various conditions,
including the approval of PLM shareholders, and closing of the transaction is
expected to occur only after such approval has been secured and all other
conditions have been satisfied.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
TRAILER LEASING
The Company operates 22 trailer rental facilities that engage in short-term and
mid-term operating leases. Nineteen of these facilities operate predominantly
refrigerated trailers used to transport temperature-sensitive commodities,
consisting primarily of food products. Three facilities operate only dry van
(non-refrigerated) trailers. The Company intends to move virtually all of its
dry van trailers to these facilities. In 1999, the Company has opened three new
refrigerated trailer yards.
MANAGEMENT OF INVESTMENT PROGRAMS AND OTHER TRANSPORTATION EQUIPMENT LEASING
The Company has syndicated investment programs from which it earns various fees
and equity interests. Professional Lease Management Income Fund I, LLC (Fund I)
was structured as a limited liability company with a no front-end fee structure.
The previously syndicated limited partnership programs allow the Company to
receive fees for the acquisition and initial leasing of the equipment. The Fund
I program does not provide for acquisition and lease negotiation fees. The
Company invested the equity raised through syndication for these programs in
transportation equipment and related assets, which it then manages on behalf of
the investors. The equipment management activities for these types of programs
generate equipment management fees for the Company over the life of a program.
The limited partnership agreements generally entitle the Company to receive a 1%
or 5% interest in the cash distributions and earnings of a partnership, subject
to certain allocation provisions. The Fund I agreement entitles the Company to a
15% interest in the cash distributions and earnings of the program, subject to
certain allocation provisions. The Company's interest in the earnings and
distributions of Fund I will increase to 25% after the investors have received
distributions equal to their original invested capital.
In 1996, the Company announced the suspension of public syndication of
equipment leasing programs with the close of Fund I. As a result of this
decision, revenues earned from managed programs, which include management fees,
partnership interests and other fees, and acquisition and lease negotiation
fees, will be reduced in the future as the older programs liquidate and the
managed equipment portfolio for these programs becomes permanently reduced.
The Company will occasionally own transportation equipment prior to sale to
affiliated programs. During this period, the Company earns lease revenue and
incurs interest expense.
COMMERCIAL AND INDUSTRIAL EQUIPMENT LEASING AND FINANCING
The Company funds and manages long-term direct finance leases, operating leases,
and loans through its American Finance Group, Inc. (AFG) subsidiary. Master
lease agreements are entered into with predominantly investment-grade lessees
and serve as the basis for marketing efforts. The underlying assets represent a
broad range of commercial and industrial equipment, such as point-of-sale,
materials handling, computer and peripheral, manufacturing, general-purpose
plant and warehouse, communications, medical, and construction and mining
equipment. Through AFG, the Company is also engaged in the management of
institutional programs for which it receives management fees. In previous years,
the Company acquired equipment for the institutional programs for which it
earned acquisition fees, but the Company does not anticipate acquiring equipment
for the institutional programs in the future. The Company also earns syndication
fees for arranging purchases and sales of equipment between other unaffiliated
third parties.
In the third quarter of 1999, the Company entered into a non-binding letter of
intent to sell its wholly-owned commercial and industrial leasing subsidiary
American Finance Group, Inc. (AFG).
<PAGE>
COMPARISON OF THE COMPANY'S OPERATING RESULTS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998
The following analysis reviews the operating results of the Company:
REVENUES
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1999 1998
-----------------------------------------
(in thousands of dollars)
<S> <C> <C>
Operating lease income $ 7,344 $ 3,295
Management fees 1,966 2,344
Partnership interests and other fees 263 61
Acquisition and lease negotiation fees -- 548
(Loss) gain on the sale or disposition of assets, net (29) 283
Aircraft brokerage and services -- 204
Other 343 345
-----------------------------------------
Total revenues $ 9,887 $ 7,080
</TABLE>
The fluctuations in revenues for the three months ended September 30, 1999,
compared to the same quarter in 1998, are summarized and explained below.
OPERATING LEASE INCOME BY TYPE:
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1999 1998
-----------------------------------------
(in thousands of dollars)
<S> <C> <C>
Refrigerated and dry van over-the-road trailers $ 7,069 $ 2,721
Lease income from assets held for sale 263 128
Intermodal trailers -- 451
Other 12 (5)
-----------------------------------------
Total operating lease income $ 7,344 $ 3,295
</TABLE>
Operating lease income includes revenues generated from assets held for
operating leases and assets held for sale that are on lease. Operating lease
income increased $4.0 million during the third quarter of 1999, compared to the
same quarter of 1998, due to the following:
(a) A $4.3 million increase in operating lease income was generated from
refrigerated and dry van trailer equipment, of which $3.9 million was due
to an increase in the amount of these types of equipment owned and on
operating lease, and $0.4 million was due to higher utilization. For the
quarter ended September 30, 1999, the average investment in refrigerated
and dry van trailer equipment was $92.1 million, compared to $44.7 million
for the third quarter of 1998.
(b) A $0.1 million increase in operating lease income generated from assets
held for sale. During the third quarter of 1999, the Company owned marine
containers, which generated $0.3 million in operating lease income. As of
September 30, 1999, these marine containers are held for sale. During the
third quarter of 1998, the Company owned a 14.7% interest in an entity
owning a marine vessel that generated $0.1 million in operating lease
income. The Company sold its interest in the entity that owned the marine
vessel, at cost, which approximated the fair market value, to an affiliated
program during the third quarter of 1998.
<PAGE>
These increases in operating lease income were partially offset by a $0.5
million decrease in operating lease income from intermodal trailers due to the
sale of all of the Company's intermodal trailers during August 1998.
MANAGEMENT FEES:
Management fees are, for the most part, based on the gross revenues generated by
equipment under management. Management fees were $2.0 million and $2.3 million
for the quarters ended September 30, 1999 and 1998, respectively. The decrease
in management fees resulted from a net decrease in managed equipment from the
PLM Equipment Growth Fund (EGF) programs. With the termination of syndication
activities in 1996, management fees from the older programs are decreasing and
are expected to continue to decrease as the programs liquidate their equipment
portfolios.
PARTNERSHIP INTERESTS AND OTHER FEES:
The Company records as revenues its equity interest in the earnings of the
Company's affiliated programs. The net earnings and distribution levels from the
affiliated programs were $0.3 million and $0.5 million for the quarters ended
September 30, 1999 and 1998, respectively. In addition, a decrease of $0.1
million and $0.4 million in the Company's residual interests in the programs was
recorded during the quarters ended September 30, 1999 and 1998, respectively.
The decrease in net earnings and distribution levels and residual interests in
1999, compared to 1998, resulted mainly from the disposition of equipment in
certain of the EGF programs. Residual income is based on the general partner's
share of the present value of the estimated disposition proceeds of the
equipment portfolios of the affiliated partnerships when the equipment is
purchased. Net decreases in the recorded residual values result when partnership
assets are sold and the proceeds are less than the original investment in the
sold equipment.
ACQUISITION AND LEASE NEGOTIATION FEES:
During the quarter ended September 30, 1999, the Company did not purchase any
equipment on behalf of the EGF programs and no acquisition and lease negotiation
fees were recorded. This is compared to the Company's purchase of $10.0 million
in transportation and other equipment during the quarter ended September 30,
1998, resulting in a $0.5 million decrease in acquisition and lease negotiation
fees.
Because of the Company's decision to halt syndication of equipment leasing
programs with the close of Fund I in 1996 and because Fund I has a no front-end
fee structure, acquisition and lease negotiation fees will be substantially
reduced in the future.
(LOSS) GAIN ON THE SALE OR DISPOSITION OF ASSETS, NET:
During the quarter ended September 30, 1999, the Company recorded $29,000 in
loss on the sale or disposition of transportation equipment with a net book
value of $0.2 million for proceeds of $0.2 million. During the quarter ended
September 30, 1998, the Company recorded $0.3 million in gain on the sale or
disposition of assets with a net book value of $5.2 million for proceeds of $5.5
million.
AIRCRAFT BROKERAGE AND SERVICES:
Aircraft brokerage and services revenue decreased $0.2 million during the
quarter ended September 30, 1999, compared to the same quarter of 1998, due to
the sale of the Company's aircraft leasing and spare parts brokerage subsidiary
in August 1998.
<PAGE>
COSTS AND EXPENSES
For the Three Months
Ended September 30,
1999 1998
-----------------------------------------
(in thousands of dollars)
Operations support $ 4,121 $ 3,160
Depreciation and amortization 2,172 1,221
General and administrative 1,322 2,003
-----------------------------------------
Total costs and expenses $ 7,615 $ 6,384
OPERATIONS SUPPORT:
Operations support expense, including salary and office-related expenses for
operational activities, equipment insurance, repair and maintenance costs,
equipment remarketing costs, costs of goods sold, and provision for doubtful
accounts, increased $1.0 million (30%) for the quarter ended September 30, 1999,
compared to the quarter ended September 30, 1998. Operations support expenses
related to the trailer leasing segment increased $2.2 million due to the
expansion of its trailer rental operations. This increase was offset by a $1.2
million decrease in operations support expenses related to the management of
investment programs and other transportation equipment leasing segment, and
other expenses mainly related to the sale of the Company's aircraft leasing and
spare parts brokerage subsidiary in August 1998, and the sale of other
transportation equipment including intermodal trailers (discussed in the
operating lease income section).
DEPRECIATION AND AMORTIZATION:
Depreciation and amortization expenses increased $1.0 million (78%) for the
quarter ended September 30, 1999, compared to the quarter ended September 30,
1998. The increase resulted from an increase in depreciation for refrigerated
trailer equipment on operating lease.
GENERAL AND ADMINISTRATIVE:
General and administrative expenses decreased $0.7 million (34%) during the
quarter ended September 30, 1999, compared to the same quarter in 1998,
primarily due to a $0.4 million decrease in compensation and benefits expenses
due to a decrease in staffing, $0.2 million decrease in professional services,
and $0.1 million decrease in rent and office related expenses due to a decrease
in staffing and office space requirements.
OTHER INCOME AND EXPENSES
For the Three Months
Ended September 30,
1999 1998
-----------------------------------------
(in thousands of dollars)
Interest expense $ (1,425) $ (912)
Interest income 60 376
Other income, net 700 15
INTEREST EXPENSE:
Interest expense increased $0.5 million (56%) during the quarter ended September
30, 1999, compared to the same quarter in 1998, due to an increase in borrowings
to fund trailer purchases.
<PAGE>
INTEREST INCOME:
Interest income decreased $0.3 million (84%) during the quarter ended September
30, 1999, compared to the same quarter of 1998, as a result of lower average
cash balances during the quarter ended September 30, 1999, compared to the same
quarter of 1998.
OTHER INCOME, NET:
Other income of $0.7 million for the quarter ended September 30, 1999 represents
mileage income received from the railroads.
PROVISION FOR INCOME TAXES:
For the three months ended September 30, 1999, the provision for income taxes
was $0.6 million, representing an effective rate of 39%. For the three months
ended September 30, 1998, the provision for income taxes was $0.1 million,
representing an effective rate of 39%.
NET INCOME FROM DISCONTINUED OPERATIONS:
Net income from discontinued operations was $0.4 million for the three months
ended September 30, 1999 compared to $1.3 million for the three months ended
September 30, 1998. Income from discontinued operations for the three months
ended September 30, 1999 and 1998 included revenues of $6.3 million and $7.8
million, respectively.
Operating lease income from discontinued operations increased to $2.4 million
for the three months ended September 30, 1999, compared to $2.1 million for the
same period of 1998 which resulted from an increase in the amount of commercial
and industrial equipment owned and on operating lease. Finance lease income
decreased to $2.7 million for the three months ended September 30, 1999 compared
to $3.5 million for the same period of 1998 which resulted from a decrease in
commercial and industrial equipment that were on finance lease.
Acquisition and lease negotiation fees from discontinued operations decreased
$0.3 million during the third quarter of 1999 compared to the same quarter of
1998 due to no equipment being purchased by AFG for the institutional investment
programs during the third quarter of 1999, compared to $11.9 million for the
same quarter of 1998 for which the Company earned $0.3 million in acquisition
and lease negotiation fees.
During the third quarter of 1999, AFG recorded a $0.5 million gain on the sale
or disposition of commercial and industrial equipment, compared to $1.0 million
for the same quarter of 1998.
Depreciation and amortization expense from discontinued operations increased to
$2.1 million for the three months ended September 30, 1999, compared to $1.6
million for the same quarter of 1998 due to an increase in commercial and
industrial equipment on operating lease. Interest expenses decreased to $2.3
million for the three months ended September 30, 1999 compared to $3.1 million
for the same period of 1998 due to lower average debt outstanding during the
three months ended September 30, 1999, compared to the same period in 1998.
NET INCOME
As a result of the foregoing, for the three months ended September 30, 1999, net
income was $1.4 million, resulting in basic and diluted earnings per
weighted-average common share outstanding of $0.17. For the same quarter in
1998, net income was $1.4 million, resulting in basic and diluted earnings per
weighted-average common share outstanding of $0.16.
<PAGE>
Comparison of the Company's Operating Results for the Nine Months Ended
September 30, 1999 and 1998
The following analysis reviews the operating results of the Company:
REVENUES
For the Nine Months
Ended September 30,
1999 1998
------------------------------------
(in thousands of dollars)
Operating lease income $ 16,634 $ 8,341
Management fees 6,198 7,036
Partnership interests and other fees 579 742
Acquisition and lease negotiation fees 1,079 2,363
(Loss) gain on the sale or disposition of
assets, net (41) 1,492
Aircraft brokerage and services -- 1,090
Other 1,031 1,369
-----------------------------------------
Total revenues $ 25,480 $ 22,433
The fluctuations in revenues for the nine months ended September 30, 1999,
compared to the nine months ended September 30, 1998, are summarized and
explained below.
OPERATING LEASE INCOME BY TYPE:
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1999 1998
-----------------------------------------
(in thousands of dollars)
<S> <C> <C>
Refrigerated and dry van over-the-road trailers $ 15,746 $ 6,153
Lease income from assets held for sale 850 412
Intermodal trailers -- 1,630
Other 38 146
-----------------------------------------
Total operating lease income $ 16,634 $ 8,341
</TABLE>
Operating lease income includes revenues generated from assets held for
operating leases and assets held for sale that are on lease. Operating lease
income increased $8.3 million during the nine months ended September 30, 1999,
compared to the same period of 1998, due to the following:
(a) A $9.6 million increase in operating lease income was generated from
refrigerated and dry van trailer equipment of which $7.0 million was due to
an increase in the amount of these types of equipment owned and on
operating lease, and $2.6 million was due to higher utilization. For the
nine months ended September 30, 1999, the average investment in
refrigerated and dry van trailer equipment was $80.1 million, compared to
$42.1 million for the same period of 1998.
(b) A $0.4 million increase in operating lease income was generated from assets
held for sale. During the nine months ended September 30, 1999, the Company
purchased $21.8 million in marine containers and sold $13.8 million to
affiliated programs at cost, which approximated their fair market value. The
Company earned $0.9 million in operating lease income on these marine
containers during the nine months ended September 30, 1999. During the nine
months ended September 30, 1998, the Company owned an entity owning a marine
vessel that generated $0.4 million in operating lease income. The Company
sold its interest in the entity that owned the marine vessel at cost, which
approximated fair market value, to an affiliated program during 1998.
<PAGE>
These increases in operating lease income were partially offset by the
following:
(a) A $1.6 million decrease in operating lease income from intermodal trailers
due to the sale of all of the Company's intermodal trailers in 1998.
(b) A $0.1 million decrease in other operating lease income was due to the
Company's strategic decision to dispose of certain transportation assets
and exit certain equipment markets.
MANAGEMENT FEES:
Management fees are, for the most part, based on the gross revenues generated by
equipment under management. Management fees were $6.2 million and $7.0 million
for the nine months ended September 30, 1999 and 1998, respectively. The
decrease in management fees resulted from a net decrease in managed equipment
from the PLM Equipment Growth Fund (EGF) programs. With the termination of
syndication activities in 1996, management fees from the older programs are
decreasing and are expected to continue to decrease as the programs liquidate
their equipment portfolios.
PARTNERSHIP INTERESTS AND OTHER FEES:
The Company records as revenues its equity interest in the earnings of the
Company's affiliated programs. The net earnings and distribution levels from the
affiliated programs were $1.1 million and $1.5 million for the nine months ended
September 30, 1999 and 1998, respectively. In addition, a decrease of $0.6
million and $0.8 million in the Company's residual interests in the programs was
recorded during the nine months ended September 30, 1999 and 1998, respectively.
The decrease in net earnings, distribution levels and residual interests in
1999, compared to 1998, resulted mainly from the disposition of equipment in
certain of the EGF programs. Residual income is based on the general partner's
share of the present value of the estimated disposition proceeds of the
equipment portfolios of the affiliated partnerships when the equipment is
purchased. Net decreases in the recorded residual values result when partnership
assets are sold and the proceeds are less than the original investment in the
sold equipment.
ACQUISITION AND LEASE NEGOTIATION FEES:
During the nine months ended September 30, 1999, the Company, on behalf of the
EGF programs, purchased transportation and other equipment for $37.1 million.
The Company did not take acquisition and lease negotiation fees on $16.6 million
of this equipment, as the Company has reached certain fee limitations for one of
its limited partnership programs per the partnership agreement. This is compared
to the Company's purchase of $42.9 million in transportation and other equipment
during the nine months ended September 30, 1998, resulting in a $1.3 million
decrease in acquisition and lease negotiation fees.
Because of the Company's decision to halt syndication of equipment leasing
programs with the close of Fund I in 1996 and because Fund I has a no front-end
fee structure, acquisition and lease negotiation fees will be substantially
reduced in the future.
GAIN (LOSS) ON THE SALE OR DISPOSITION OF ASSETS, NET:
During the nine months ended September 30, 1999, the Company recorded $41,000 in
loss on the sale or disposition of transportation equipment. During the nine
months ended September 30, 1998, the Company recorded $1.5 million in gain on
the sale or disposition of assets. Of this gain, $0.5 million resulted from the
Company purchased and subsequently sold railcars to an unaffiliated third party.
AIRCRAFT BROKERAGE AND SERVICES:
Aircraft brokerage and services revenue decreased $1.1 million during the nine
months ended September 30, 1999, compared to the same period of 1998, due to the
sale of the Company's aircraft leasing and spare parts brokerage subsidiary in
August 1998.
<PAGE>
OTHER REVENUE:
Other revenue decreased $0.3 million during the nine months ended September 30,
1999, compared to the same period of 1998, primarily due to decreased revenue
earned for providing data processing services to the affiliated programs.
COSTS AND EXPENSES
For the Nine Months
Ended September 30,
1999 1998
-----------------------------------------
(in thousands of dollars)
Operations support $ 9,943 $ 9,505
Depreciation and amortization 5,651 3,461
General and administrative 4,851 6,174
-----------------------------------------
Total costs and expenses $ 20,445 $ 19,140
OPERATIONS SUPPORT:
Operations support expense, including salary and office-related expenses for
operational activities, equipment insurance, repair and maintenance costs,
equipment remarketing costs, costs of goods sold, and provision for doubtful
accounts, increased $0.4 million (5%) for the nine months ended September 30,
1999, compared to the same period of 1998. Operations support expense related to
the trailer leasing segment increased $4.6 million due to the expansion of PLM
Rental, with the addition of a total of twelve rental yards in 1998 and 1999 and
new trailers to existing yards. These increases were offset by a $4.2 million
decrease in operations support expenses related to the management of investment
programs and other transportation equipment leasing segment, and other expenses
mainly related to the sale of the Company's aircraft leasing and spare parts
brokerage subsidiary in August 1998, and the sale of other transportation
equipment including intermodal trailers (discussed in the operating lease income
section).
DEPRECIATION AND AMORTIZATION:
Depreciation and amortization expenses increased $2.2 million (63%) for the nine
months ended September 30, 1999, compared to the nine months ended September 30,
1998. The increase resulted from an increase in depreciation of $2.8 million
from refrigerated trailer equipment on operating lease, which was partially
offset by the reduction of $0.6 million in depreciation expense from intermodal
trailers and other equipment.
GENERAL AND ADMINISTRATIVE:
General and administrative expenses decreased $1.3 million (21%) during the nine
months ended September 30, 1999, compared to the same period in 1998, primarily
due to a $0.7 million decrease in rent and office related expenses, a $0.5
million decrease in compensation and benefits expenses, a $0.1 million decrease
in travel and entertainment expenses, a $0.1 million decrease in insurance
expenses, and a $0.1 million decrease in sublease commissions. These increases
were due to a decrease in staffing and office space requirements.
OTHER INCOME AND EXPENSES
For the Nine Months
Ended September 30,
1999 1998
---------------------------------------
(in thousands of dollars)
Interest expense $ (3,862) $ (2,806)
Interest income 252 838
Other income, net 577 478
INTEREST EXPENSE:
Interest expense increased $1.1 million (38%) during the nine months ended
September 30, 1999, compared to the same period in 1998. Interest expense
related to the trailer leasing segment increased $1.0 million due to an increase
in borrowings to fund trailer purchases.
INTEREST INCOME:
Interest income decreased $0.6 million (70%) during the nine months ended
September 30, 1999, compared to the same period of 1998, as a result of lower
average cash balances during the nine months ended September 30, 1999, compared
to the same period of 1998.
OTHER INCOME, NET:
Other income of $0.6 million for the nine months ended September 30, 1999
represents $0.7 million of mileage income received from the railroads, partially
offset by $0.1 million in expenses related to the settlement of a lawsuit.
During the nine months ended September 30, 1998, the Company recorded other
income of $0.7 million related to the settlement of a lawsuit against Tera Power
Corporation and others, and recorded expense of $0.3 million related to a legal
settlement for the Koch and Romei actions (refer to Note 8).
PROVISION FOR INCOME TAXES:
For the nine months ended September 30, 1999, the provision for income taxes was
$0.8 million, representing an effective rate of 39%. For the nine months ended
September 30, 1998, the provision for income taxes was $0.7 million,
representing an effective rate of 39%.
NET INCOME FROM DISCONTINUED OPERATIONS:
Net income from discontinued operations was $1.2 million for the nine months
ended September 30, 1999 compared to $2.4 million for the nine months ended
September 30, 1998. Income from discontinued operations for the nine months
ended September 30, 1999 and 1998 included revenues of $19.7 million and $20.3
million, respectively.
Operating lease income from discontinued operations increased to $6.8 million
for the nine months ended September 30, 1999, compared to $6.4 million for the
same period of 1998 due to an increase in the amount of commercial and
industrial equipment owned and on operating lease. Finance lease income
decreased to $8.6 million for the nine months ended September 30, 1999 compared
to $9.2 million for the same period of 1998 due to a decrease in commercial and
industrial assets that were on finance lease.
Acquisition and lease negotiation fees from discontinued operations decreased
$0.7 million for the nine months ended September 30, 1999, compared to the same
period of 1998 due to no equipment being purchased by AFG for the institutional
investment programs during the first nine months of 1999, compared to $26.0
million for the same period of 1998, for which the Company earned $0.7 million
of acquisition and lease negotiation fees.
During the first nine months of 1999 and 1998, AFG recorded $2.1 million gain on
the sale or disposition of commercial and industrial equipment.
Operations support from discontinued operations increased to $4.1 million for
the nine months ended September 30, 1999 compared to $3.4 million for the same
period of 1998 primarily due to an increase in compensation and benefits expense
resulting from a new bonus program initiated in 1999 to retain AFG employees
during AFG's potential sale and increased staffing. Depreciation and
amortization expenses increased to $5.7 million for the nine months ended
September 30, 1999, compared to $5.4 million for the same quarter of 1998 due to
an increase in the commercial and industrial equipment on operating lease.
Interest expense decreased to $7.4 million for the nine months ended September
30, 1999 compared to $7.9 million for the same period of 1998 due to lower
average debt outstanding during the nine months ended September 30, 1999,
compared to the same period in 1998. Other expenses of $1.0 million for the nine
months ended September 30, 1999 represent the expense related to the proposed
initial public offering of AFG (during the first quarter of 1999, the Company's
Board of Directors determined that it was in the Company's best interest to sell
AFG rather than proceed with a stock offering, and therefore wrote off all
associated offering costs).
CUMULATIVE EFFECT OF ACCOUNTING CHANGE:
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities,"
which requires costs related to start-up activities to be expensed as incurred.
The statement requires that initial application be reported as a cumulative
effect of a change in accounting principle. The Company adopted this statement
during the first quarter of 1999, at which time it took a $0.2 million charge,
net of tax of $0.2 million, related to start-up costs of its commercial and
industrial equipment operations which is being accounted for as discontinued
operations.
NET INCOME
As a result of the foregoing, for the nine months ended September 30, 1999, net
income was $2.2 million, resulting in basic and diluted earnings per
weighted-average common share outstanding of $0.27 and $0.26, respectively. For
the same period in 1998, net income was $3.5 million, resulting in basic and
diluted earnings per weighted-average common share outstanding of $0.42 and
$0.41, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash requirements have historically been satisfied through cash flow from
operations, borrowings, and the sale of equipment.
Liquidity in the remainder of 1999 and beyond will depend, in part, on the
continued remarketing of the equipment portfolio at similar lease rates, the
management of existing sponsored programs, the effectiveness of cost control
programs, the purchase and sale of equipment, the volume of trailer equipment
leasing transactions, additional borrowings, and the potential proceeds from the
sale of AFG. Management believes the Company can accomplish the preceding and
that it will have sufficient liquidity and capital resources for the next twelve
months. Future liquidity is influenced by the factors summarized below.
DEBT FINANCING:
NONRECOURSE SECURITIZED DEBT: The Company has available a nonrecourse debt
facility for up to $125.0 million, secured by direct finance leases, operating
leases, and loans on commercial and industrial equipment at AFG that generally
have terms of one to seven years. The facility is available for a one-year
period expiring October 10, 2000. Repayment of the facility matches the terms of
the underlying leases. As of September 30, 1999, $105.5 million in borrowings
was outstanding under this facility. As of October 28, 1999, $104.4 million in
borrowings was outstanding under this facility.
In addition to the $125.0 million nonrecourse debt facility discussed above, as
of September 30, 1999 and October 28, 1999, the Company also had $5.2 million
and $5.0 million, respectively, in nonrecourse notes payable secured by direct
finance leases on commercial and industrial equipment at AFG that have terms
corresponding to the note repayment schedule that began April 1998 and ends
March 2001. The notes bear interest from 8.32% to 9.5% per annum.
FSI WAREHOUSE CREDIT FACILITY: Assets acquired and held on an interim basis by
FSI for sale to affiliated programs or third parties have, from time to time,
been partially funded by this warehouse credit facility. This facility is also
used to temporarily finance the purchase of trailers prior to permanent
financing being obtained. This facility expires on December 14, 1999. The
Company believes it will be able to renew this facility on substantially the
same terms upon its expiration.
This facility is shared with EGF VI, PLM Equipment Growth & Income Fund VII (EGF
VII), and Fund I. Borrowings under this facility by the other eligible borrowers
reduce the amount available to be borrowed by the Company. All borrowings under
this facility are guaranteed by the Company. This facility provides 80%
financing for transportation assets purchased by the Company. The Company can
hold assets under this facility for up to 150 days. Interest accrues at prime or
LIBOR plus 162.5 basis points, at the option of the Company. As of September 30,
1999, the Company and EGF VI had $7.6 million and $1.0 million outstanding
borrowings under this facility, respectively. As of October 28, 1999, the
Company had $0.9 million in borrowings outstanding under this facility, and
there were no borrowings outstanding under this facility by any other eligible
borrowers.
AFG WAREHOUSE CREDIT FACILITY: Assets acquired and held on an interim basis by
AFG for placement in the Company's securitization facility or for sale to
unaffiliated third parties have, from time to time, been partially funded by a
$60.0 million warehouse credit facility. The facility expires December 14, 1999;
however, the Company believes it will be able to renew this facility on
substantially the same terms upon its expiration.
This facility provides for financing of 100% of the present value of the lease
stream of commercial and industrial equipment for up to 90% of original
equipment cost of the assets held on this facility.
Borrowings secured by investment-grade lessees can be held under this facility
until the facility's expiration. Borrowings secured by noninvestment-grade
lessees may be outstanding for 120 days. Interest accrues at prime or LIBOR plus
137.5 basis points, at the option of the Company. As of September 30, 1999, the
Company had $20.1 million outstanding under this facility. As of October 28,
1999, the Company had $21.1 million outstanding under this facility.
SENIOR SECURED NOTES: The Company's senior secured notes agreement, which had an
outstanding balance of $22.6 million as of September 30, 1999 and October 28,
1999, bears interest at LIBOR plus 240 basis points. The Company has pledged
substantially all of its future management fees, acquisition and lease
negotiation fees, data processing fees, and partnership distributions as
collateral to the facility. The facility required quarterly interest-only
payments through August 15, 1997, with principal plus interest payments
beginning November 15, 1997. Principal payments of $1.9 million are payable
quarterly through termination of the loan on August 15, 2002.
SENIOR SECURED LOAN: The Company's senior loan with a syndicate of insurance
companies, which had an outstanding balance of $10.3 million as of September 30,
1999 and October 28, 1999, provides that equipment sale proceeds from pledged
equipment or cash deposits be placed into a collateral account or used to
purchase additional equipment to the extent required to meet certain debt
covenants. Pledged equipment for this loan consists of the storage equipment and
virtually all trailer equipment purchased prior to August 1998. As of September
30, 1999, the cash collateral balance for this loan was $2,000 and is included
in restricted cash and cash equivalents on the Company's balance sheet. The
facility bears interest at 9.78% and required quarterly interest payments
through June 30, 1997, with quarterly principal payments of $1.5 million plus
interest charges beginning June 30, 1997 and continuing until termination of the
loan in June 2001.
OTHER SECURED DEBT: As of September 30, 1999, the Company had $31.8 million in
six debt agreements, bearing interest from 5.35% to 7.05%, each with payments of
$0.1 million due monthly in advance. The debt is secured by certain trailer
equipment.
In the second quarter of 1999, the Company entered into a $15.0 million credit
facility loan agreement bearing interest at LIBOR plus 1.5%. This facility
allows the Company to borrow up to $15.0 million within a one-year period. As of
September 30, 1999, the Company had borrowed $8.6 million under this facility.
Payments of $0.1 million are due quarterly beginning August 2000, with a final
payment of $1.4 million due August 2006.
INTEREST-RATE SWAP CONTRACTS: The Company has entered into interest-rate swap
agreements in order to manage the interest-rate exposure associated with its
nonrecourse securitized debt. As of September 30, 1999, the swap agreements had
a weighted-average duration of 1.40 years, corresponding to the terms of the
related debt. As of September 30, 1999, a notional amount of $94.8 million of
interest-rate swap agreements effectively fixed interest rates at an average of
6.52% on such obligations. For the nine months ended September 30, 1999,
interest expense increased by $0.5 million due to these arrangements.
TRAILER LEASING:
The Company operates 22 trailer rental facilities that engage in short-term and
mid-term operating leases. Nineteen of these facilities operate predominantly
refrigerated trailers used to transport temperature-sensitive commodities,
consisting primarily of food products. Three facilities operate only dry van
(non-refrigerated) trailers. The Company intends to move virtually all of its
dry van trailers to these facilities. In 1999, the Company has opened three new
refrigerated trailer yards. During the nine months ended September 30, 1999, the
Company purchased $36.2 million of primarily refrigerated trailers and sold
refrigerated and dry van trailers with a net book value of $0.4 million for
proceeds of $0.4 million. The net proceeds from the sale of assets that were
collateralized as part of the senior loan facility were placed in a collateral
account.
OTHER TRANSPORTATION EQUIPMENT LEASING AND OTHER:
During the first nine months of 1999, the Company purchased marine containers
for $21.8 million, and the Company sold $13.8 million to affiliated programs, at
cost, which approximated their fair market value. In October 1999, the Company
sold an additional $4.6 million of these marine containers to an affiliated
program, at cost which approximated their fair value.
STOCK REPURCHASE PROGRAM:
In December 1998, the Company announced that its Board of Directors had
authorized the repurchase of up to $5.0 million of the Company's common stock.
As of October 28, 1999, 422,515 shares had been repurchased under this plan for
a total of $2.5 million.
Management believes that, through debt and equity financing, possible sales of
equipment, proceeds from the potential sale of AFG, and cash flows from
operations, the Company will have sufficient liquidity and capital resources to
meet its projected future operating needs over the next twelve months.
EFFECTS OF THE YEAR 2000:
It is possible that the Company's currently installed computer systems, software
products, and other business systems, or those of the Company's vendors, service
providers, and customers, working either alone or in conjunction with other
software or systems, may not accept input of, store, manipulate, and output
dates on or after January 1, 2000 without error or interruption, a possibility
commonly known as the "Year 2000" or "Y2K" problem.
The Company has established a special Year 2000 oversight committee to review
the impact of Year 2000 issues on its business systems in order to determine
whether such systems will retain functionality after December 31, 1999. As of
September 30, 1999, the Company has completed inventory, assessment,
remediation, and testing stages of its Year 2000 review of its core business
information systems. Specifically, the Company (a) has integrated Year
2000-compliant programming code into its existing internally customized and
internally developed transaction processing software systems and (b) the
Company's accounting and asset management software systems have been made Year
2000 compliant. In addition, numerous other software systems provided by vendors
and service providers have been replaced with systems represented by the vendor
or service provider to be Year 2000 functional. These systems have been fully
tested as of September 30, 1999 and are compliant.
As of September 30, 1999, the Company has spent $0.1 million to become Year 2000
compliant and does not anticipate any additional Year 2000-compliant
expenditures.
Some risks associated with the Year 2000 problem are beyond the ability of the
Company to control, including the extent to which third parties can address the
Year 2000 problem. The Company is communicating with vendors, services
providers, and customers in order to assess the Year 2000 compliance readiness
of such parties and the extent to which the Company is vulnerable to any
third-party Year 2000 issues. As part of this process, vendors and service
providers were ranked in terms of the relative importance of the service or
product provided. All service providers and vendors who were identified as of
medium to high relative importance were surveyed to determine Year 2000 status.
The Company has received satisfactory responses to Year 2000 readiness inquiries
from surveyed service providers and vendors.
It is possible that certain of the Company's equipment lease portfolio may not
be Year 2000 compliant. The Company has contacted equipment manufacturers of the
portion of the Company's leased equipment portfolio identified as date sensitive
to assure Year 2000 compliance or to develop remediation strategies. The Company
does not expect that non-Year 2000 compliance of its leased equipment portfolio
will have an adverse material impact on its financial statements. The Company
has surveyed the majority of its lessees and the majority of those surveyed have
responded satisfactorily to Year 2000 readiness inquiries.
There can be no assurance that the software systems of such parties will be
converted or made Year 2000 compliant in a timely manner. Any failure by such
other parties to make their respective systems Year 2000 compliant could have a
material adverse effect on the business, financial position, and results of
operations of the Company. The Company has made and will continue an ongoing
effort to recognize and evaluate potential exposure relating to third-party Year
2000 noncompliance. The Company will implement a contingency plan if the Company
determines that third-party noncompliance would have a material adverse effect
on the Company's business, financial position, or results of operation.
The Company is currently developing a contingency plan to address the possible
failure of any systems, vendors or service providers due to Year 2000 problems.
For the purpose of such contingency planning, a reasonably likely worst case
scenario primarily anticipates an inability to access systems and data on a
temporary basis resulting in possible delay in reconciliation of funds received
or payment of monies owed. The Company is evaluating whether there are
additional scenarios which have not been identified. Contingency planning will
encompass strategies up to and including manual processes. The Company
anticipates that these plans will be completed by December 31, 1999.
ACCOUNTING PRONOUNCEMENTS:
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize those items as assets or liabilities in the statement of financial
position and measure them at fair market value.
FASB Statement No. 137, "Accounting for Derivatives, Instruments, and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133, an
amendment of FASB Statement No. 133," issued in June 1999, defers the effective
date of Statement No. 133. Statement No. 133, as amended, is now effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000. As of
September 30, 1999, the Company is reviewing the effect SFAS No. 133 will have
on the Company's consolidated financial statements.
FORWARD-LOOKING INFORMATION:
Except for historical information contained herein, the discussion in this Form
10-Q contains forward-looking statements that contain risks and uncertainties,
such as statements of the Company's plans, objectives, expectations, and
intentions. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. The Company's actual results could differ materially from
those discussed here.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is that of interest rate risk. A
change in the U.S. prime interest rate, LIBOR rate, or lender's cost of funds
based on commercial paper market rates, would affect the rate at which the
Company could borrow funds under its various borrowing facilities. Increases in
interest rates to the Company, which may cause the Company to raise the implicit
rates charged to its customers, could in turn, result in a reduction in demand
for the Company's lease financing. The Company's warehouse credit facilities,
$8.6 million of other secured debt, and the senior secured notes are variable
rate debt. The Company estimates a 1 percent increase or decrease in the
Company's variable rate debt would result in an increase or decrease,
respectively, in interest expense of $0.2 million in 1999, $0.1 million in 2000,
$0.2 million in 2001, $0.1 million in 2002, $0.1 million in 2003, and $0.1
million thereafter. The Company estimates a 2 percent increase or decrease in
the Company's variable rate debt would result in an increase or decrease,
respectively, in interest expense of $0.4 million in 1999, $0.3 million in 2000,
$0.3 million in 2001, $0.2 million in 2002, $0.1 million in 2003, and $0.3
million thereafter.
All of the Company's other financial assets and liabilities are at fixed rates.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 8 to the consolidated financial statements.
Item 5. Other information
The Company has agreed to sell its wholly -owned subsidiary, American Finance
Group, Inc., for approximately $29 million in cash to Guaranty Federal Bank,
subject to closing adjustments which are not expected to be material.
Consummation of the transaction is subject to various conditions, including the
approval of PLM shareholders, and closing of the transaction is expected to
occur only after such approval has been secured and all other conditions have
been satisfied. A copy of the agreement relating to such sale is attached as
Exhibit 10.7.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
10.1 Severance Agreement among PLM International, Inc. and certain
employees dated August 1999.
10.2 Amendment #1 dated April 2, 1999 to Master Lease Agreement among PLM
International, Inc. and Wells Fargo Equipment Finance, Inc. dated
April 2, 1999.
10.3 Master Lease Agreement among PLM International, Inc. and Associates
Leasing, Inc. dated August 25, 1999.
10.4 Master Lease Agreement among PLM Rental Inc. and Fleet Capital, Inc.
dated September 23, 1999.
10.5 Amendment #2 dated October 12, 1999 to Master Lease Agreement among
PLM International, Inc. and Wells Fargo Equipment Finance, Inc. dated
April 2, 1999.
10.6 Master Lease Agreement among PLM Rental Inc. and US Bancorp dated
September 22, 1999.
10.7 Stock Sales Agreement among PLM International, Inc. and Guaranty
Federal Bank dated October 26, 1999.
(B) Reports on Form 8-K
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM INTERNATIONAL, INC.
/s/Richard K Brock
-------------------------
Richard K Brock
Vice President and
Corporate Controller
Date: October 28, 1999
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,860
<SECURITIES> 0
<RECEIVABLES> 12,246
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 97,344
<DEPRECIATION> (19,304)
<TOTAL-ASSETS> 150,817
<CURRENT-LIABILITIES> 0
<BONDS> 80,873
0
0
<COMMON> 0
<OTHER-SE> 58,627
<TOTAL-LIABILITY-AND-EQUITY> 150,817
<SALES> 0
<TOTAL-REVENUES> 25,480
<CGS> 0
<TOTAL-COSTS> 20,445
<OTHER-EXPENSES> 577
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,862
<INCOME-PRETAX> 2,002
<INCOME-TAX> 790
<INCOME-CONTINUING> 1,212
<DISCONTINUED> 1,182
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</TABLE>
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into on this
__ day of August, 1999, by and between PLM INTERNATIONAL, INC., its successors
and/or assigns (the "Company"), and _____________ ("Employee").
WHEREAS, Employee currently holds the position(s) of __________ of the
Company; and
WHEREAS, in the event any person or group proposes a change in control
transaction (as defined in Section 2 of this Agreement), the Board of Directors
would consider such proposal in order to determine whether it was fair and in
the best interest of the shareholders; and
WHEREAS, any such consideration by the Board of Directors may lead to
uncertainty regarding the future path of the Company and the long-term prospects
for executive employment with the Company; and
WHEREAS, the Company's Board of Directors believes it is important to
the enhancement of shareholder value that, notwithstanding such uncertainty,
Employee act vigorously and constructively in any negotiations being conducted
in connection with a change in control transaction to achieve the result most
favorable to the Company's shareholders and continue to manage the on-going
business of the Company in order to achieve the most positive results
attainable; and
WHEREAS, as an inducement for Employee to remain in the employ of the
Company before and after a change in control transaction, this Agreement
provides for certain incentives for Employee upon a change in control and for
certain severance benefits to be paid and provided to Employee in the event
Employee's employment is terminated without cause (as defined herein) following
or resulting from a change in control transaction.
NOW, THEREFORE, in consideration of the above premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree as follows:
1. Term. The term of this Agreement shall commence on the date hereof
and shall continue (i) until December 31, 1999 so long as no Change in Control
(as defined below) has occurred on or before December 31, 1999; or (ii) until
all obligations under this Agreement have been met in the event a Change in
Control has occurred on or before December 31, 1999.
<PAGE>
2. Change in Control.
A. For the purposes of this Agreement only, the term "Change
in Control" shall mean the occurrence of any one of the following events:
(i) Any person or group (a "Person"), within the
meaning of Sections 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), acquiring
"beneficial ownership" ("Beneficial Ownership"), as defined in
Rule 13d-3 under the Exchange Act, of securities of the
Company representing more than fifty percent (50%) of the
combined voting power of the Company's then outstanding
securities; provided, however, in determining whether a Change
in Control has occurred, voting securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition
by (a) an employee benefit plan (or trust forming a part
thereof) maintained by the Company or any corporation or other
Person of which a majority of its voting power or its voting
equity securities or equity interests is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (b) the Company or its Subsidiaries, or (c) any
Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(ii) A merger, consolidation or reorganization
(collectively, a "Transaction") involving the Company unless
such Transaction is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a Transaction involving
the Company where:
(a) The stockholders of the Company
immediately before such Transaction own, directly or
indirectly, immediately following such Transaction,
at least fifty percent (50%) of the combined voting
power of the outstanding voting securities of the
corporation resulting from such Transaction (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the voting
securities of the Company immediately before such
Transaction, or
(b) No Person, other than (1) the Company,
(2) any Subsidiary, or (3) any employee benefit plan
(or any trust forming a part thereof) maintained by
the Company or any Subsidiary, has Beneficial
Ownership of more than fifty percent (50%) of the
combined voting power of the Surviving Corporation's
then outstanding voting securities;
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary of the Company);
provided however, that in no event shall the sale or other
disposition of the Company's subsidiary American Finance
Group, Inc. (AFG) by itself, or the sale or other disposition
of the Company's subsidiary PLM Rental, Inc. (PLMR) by itself,
be deemed to be a sale or other disposition of all or
substantially all of the assets of the Company for the
purposes of this Agreement; and further provided however, that
in the event either AFG or PLMR is sold or otherwise disposed
of during the term of this Agreement, then the later sale or
other disposition of PLMR (in the case of an earlier sale or
disposition of AFG) or AFG (in the case of an earlier sale or
disposition of PLMR) shall be deemed to be a sale or other
disposition of all or substantially all of the assets of the
Company; or
(iv) The stockholders of the Company approve a plan
of dissolution or liquidation of the Company.
B. In the event that a Change in Control transaction as
defined in this Agreement occurs, and such transaction is also deemed to be a
Change in Control as defined in and under the Employment Agreement (the
"Employment Agreement") dated as of _________ between the Company and Employee
(specifically, a majority of the members of the Continuing Directors of the
Board of Directors of the Company does not approve the Change in Control event
specifically for purposes of the Employment Agreement), then the terms and
conditions of the Employment Agreement, including but not limited to Sections
10.2, 11, 12 and 13 thereof, shall govern and supercede this Agreement.
3. Stock Options and Grants.
A. Upon the occurrence of a Change in Control, any and all
options to purchase stock and grants of stock (common or otherwise) in the
Company granted to Employee pursuant to any plan or otherwise, including options
granted pursuant to the 1988 Management Stock Compensation Plan and/or the 1998
Management Stock Compensation Plan, and any and all grants of stock in the
Company granted to Employee pursuant to the 1996 Mandatory Management Stock
Bonus Plan (collectively, any or all of these plans shall be referred to herein
as the "Stock Plans"), shall become immediately accelerated and fully vested and
any restrictions on such options and grants shall, to the extent permissible
under applicable securities laws, fully lapse. The Company shall endeavor to
cause any restrictions on the options or grants not lapsed by operation of this
Section 3 to so lapse.
B. Upon the vesting of all such options and grants (whether
pursuant to this Section 3 or Section 6(C)(ii) below) and, in the case of
options, so long as such options have not expired, Employee may elect by written
notice to the Company at any time following such vesting that the Company
"cash-out" such options and/or grants by paying to Employee within five (5) days
of the notice the value of the options and/or grants so long as Employee
surrenders to the Company, and agrees to the cancellation of, the options or
grants. The value of the options and/or grants shall be calculated based on the
higher of (i) the price paid to the Company's shareholders in connection with a
tender offer that results in a Change in Control or (ii) the average daily
closing price of the common stock of the Company for the ten days preceding the
date of the Change in Control (or if the accelerated vesting occurs pursuant to
Section 6(C)(ii), for the ten days preceding the Date of Termination (as defined
below)), less (in the case of options only) the exercise price of the option. In
the event Employee does not elect to "cash-out" pursuant to Section 3(B), then
Employee's rights regarding such options and grants shall be as set forth in the
Stock Plans and agreements governing such options and grants, except that
Employee shall be deemed to be fully vested and any restrictions on such options
and grants shall remain fully lapsed.
4. Termination By Company In Connection With a Change in Control.
A. In the event that Employee's employment is terminated by
the Company subsequent to or resulting from a Change in Control for a reason
other than Cause or Disability, the Company shall pay Employee the Severance
Benefits specified in Section 6(C).
B. For purposes of this Agreement, "Cause" shall be limited
to:
(i) The willful and continued failure by Employee to
perform his/her day to day responsibilities substantially in
the same manner as performed prior to the Change in Control
(other than any failure resulting from Employee's incapacity
due to physical or mental illness), which has not been cured
within ten (10) days after written demand for substantial
performance is delivered by the Company to Employee, which
demand specifically identifies the manner in which Employee
has not substantially performed his/her day to day
responsibilities. The financial condition of the Company
(including any subsidiary, division or department thereof),
and/or Employee's contribution thereto, shall not be
considered for the purposes of determining whether Employee
has willfully failed to perform his/her day to day
responsibilities;
(ii) A willful and intentional act or omission by
Employee which is, in the reasonable determination of the
Company, materially injurious to the Company, monetarily or
otherwise. For purposes of subsection (i) above and this
subsection (ii), no act or omission on Employee's part shall
be considered willful and intentional unless done, or omitted
to be done, by him/her not in good faith and without the
reasonable belief that his/her action(s) or omission(s) was in
the best interests of the Company; or
(iii) The conviction of Employee of, or his/her
admission or plea of nolo contendere to, a crime involving an
act of moral turpitude, which is a felony or which results or
is intended to result, directly or indirectly, in gain or
personal enrichment of Employee, relatives of Employee, or
their affiliates at the expense of the Company;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 4(B), "Cause" shall not be deemed to include a refusal by Employee
to execute any certificate or document that Employee in good faith determines
contains any untrue statement of a material fact.
C. For the purposes of this Agreement, Disability shall mean
if, as a result of Employee's incapacity due to physical or mental illness,
Employee shall have been absent or substantially absent from his/her duties
hereunder for a period of six (6) consecutive months, and within thirty (30)
days after a Notice of Termination (as hereinafter defined) is given, which
Notice of Termination may be given before or after the end of such six month
period, Employee shall not have returned to the performance of his/her duties
hereunder on a full-time basis, Employee's employment shall terminate upon the
expiration of such thirty (30) days. Employee's absence or substantial absence
from his/her duties will be treated as resulting from incapacity due to physical
or mental illness if Employee is "totally disabled from his/her own occupation."
Total disability from Employee's own occupation will exist where (i) because of
sickness or injury, Employee cannot perform the important duties of his/her
occupation, (ii) Employee is either receiving Doctor's Care or has furnished
written proof acceptable to the Company that further Doctor's Care would be of
no benefit, and (iii) Employee does not work at all. Doctor's Care means regular
and personal care of a Doctor which, under prevailing medical standards, is
appropriate for the condition causing the disability.
5. Termination by Employee.
A. Employee may terminate his/her employment during the term
of this Agreement upon thirty (30) days' Notice of Termination to the Company
for any reason. If Employee terminates his/her employment hereunder subsequent
to a Change in Control and such termination is made for any of the reasons
listed in Section 5(B) (such reason(s) to be detailed in the Notice of
Termination), such termination shall be deemed to have been done for good reason
("Good Reason") and the Company shall pay Employee the Severance Benefits
specified in Section 6(C), below.
B. Reasons constituting "Good Reason" shall include:
(i) Any breach by the Company of any material
provision of this Agreement which has not been cured within
ten (10) days after written notice detailing such
non-compliance is given by Employee to the Company;
(ii) Any demonstrable and material diminution of the
base and/or incentive compensation, duties, responsibilities,
authority or powers of Employee as they relate to any
positions or offices held by Employee during the term of this
Agreement; provided that Employee provides a reasonable
description of any such diminution(s) and a statement that
Employee finds, in good faith, such diminution to be a
material diminution and that, as such, he/she elects to
terminate his/her employment hereunder for Good Reason;
(iii) The failure of the Company to include Employee
in any Employee Benefit Plan or Incentive Compensation Plan
for which Employee has previously participated or would
reasonably expect to participate in. Employee may reasonably
expect to participate in an Employee Benefit Plan or Incentive
Compensation Plan if, without limitation, other employees of
the Company with similar titles, levels of responsibilities or
salaries participate or have participated in such plan; or
(iv) Any requirement by the Company that Employee
relocate his/her primary business office to a geographical
area greater than twenty (20) miles from the Company 's
principal executive offices as existing on January 1, 1999, or
if Employee is based in an office other than the Company's
principal executive offices, twenty (20) miles from the
Company's office where Employee is based as of January 1,
1999.
C. In the event Employee terminates his/her employment for
Good Reason and the Company disputes that the termination was for Good Reason,
the Company shall have the burden of proving that any such reason was not "Good
Reason".
6. Compensation Upon Termination.
A. Termination For Cause. Following a Change in Control, if
Employee's employment is terminated for Cause as defined in this Agreement, the
Company shall pay Employee his/her full Base Salary (and any accrued but unused
vacation and personal days) through the Date of Termination at the rate in
effect at the time Notice of Termination is given, and the Company shall have no
further obligations to Employee under this Agreement. The rights, limitations
and obligations of each of the Employee and the Company under any other
agreement or plan, including but not limited to any stock option or bonus plan,
deferred compensation plan and related agreement(s), as of the Date of
Termination shall remain in full force and effect.
B. Termination for Disability. Following a Change in Control,
if Employee's employment is terminated for Disability as defined in this
Agreement, the Company shall pay to Employee his/her full Base Salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given. The Company shall also pay to Employee any accrued but unused vacation
and personal days, and the Company shall also provide benefits to Employee
pursuant to the standard policy of the Company with respect to terminated
disabled employees. The rights, limitations and obligations of each of the
Employee and the Company under any other agreement or plan, including but not
limited to any stock option or bonus plan, deferred compensation plan and
related agreement(s), as of the Date of Termination shall remain in full force
and effect.
C. Termination Without Cause or Termination by Employee For
Good Reason. If, (a) subsequent to or resulting from a Change in Control the
Company terminates Employee's employment hereunder other than for Cause or
Disability, or (b) subsequent to a Change in Control Employee terminates his/her
employment for Good Reason, the Company shall, in addition to paying Employee
his/her full Base Salary through the Date of Termination at the rate in effect
at the time the Notice of Termination is given and any accrued but unused
vacation and personal days (as required by law), pay to Employee within seven
(7) business days of the Date of Termination, and provide to Employee, the
following severance benefits:
(i) The Company shall pay to Employee a lump sum
amount equal to _________ (__) months of Employee's Base
Salary at the highest rate in effect during the twelve (12)
months immediately preceding the Date of Termination, less
customary payroll deductions;
(ii) Any and all options to purchase stock (common or
otherwise) in the Company granted to Employee following a
Change in Control pursuant to any plan or otherwise, and any
and all grants of stock in the Company granted to Employee
following a Change in Control pursuant to any plan or
otherwise, shall become immediately accelerated and fully
vested and any restrictions on such options, grants or
equivalent or similar rights shall, to the extent permissible
under applicable securities laws, fully lapse. The Company
shall endeavor to cause any restrictions on the options,
grants or equivalent or similar rights not lapsed by operation
of this Section 6(C) to so lapse. Employee shall have the same
rights in such accelerated and vested options and grants as
provided in Section 3(B) and the Company shall pay to Employee
the value of the options and/or grants upon receipt of
Employee's written notice of his/her election to "cash-out"
pursuant to Section 3(B);
(iii) At the Employee's election by written notice to
the Company made within four (4) business days following the
Date of Termination, the Company shall pay to Employee in a
lump sum the total amount of any Monthly Executive
Compensation Benefit payments that are payable under the
Executive Deferred Compensation Agreement (the "Executive
Deferred Compensation Agreement") dated as of ______, between
the Company and Employee, which amount shall have been
determined pursuant to the terms of Sections 5(a) and 5(b) of
the Executive Deferred Compensation Agreement after taking
into consideration the automatic acceleration of vesting as
provided in Section 10.1, including Section 10.1(a) and
10.1(b), of the Executive Deferred Compensation Agreement. In
the event Employee does not elect to a lump sum payment of the
total amount of any Monthly Executive Compensation Benefit
payments that are payable under the Executive Deferred
Compensation Agreement, then such amounts shall be paid
pursuant to the terms of such Executive Deferred Compensation
Agreement; and
(iv) Employee shall continue to participate in all
life insurance, medical, health, dental and disability plans,
programs or arrangements ("Insurance Plans") in which Employee
participated immediately prior to the Date of Termination on
the same terms as Employee participated immediately prior to
the Date of Termination for the shorter period of (a) months
from the Date of Termination or (b) Employee's commencement of
full time employment with a new company that provides Employee
with benefits at least as favorable as those provided by the
Company; provided that Employee's continued participation is
possible under the general terms and provisions of such plans
and programs and Employee will continue to be obligated to pay
the same employee portion of any premium and any deductible
and/or co-payments associated with such insurance Plans as was
required immediately prior to the Date of Termination.
Employee's right to continued group benefits after any period
covered by the Company will be determined in accordance with
federal and state law.
(v) The payments and benefits provided for in this
Section 6(C) are in addition to, and shall not be deemed to be
in lieu of, any other payments and/or benefits to which
Employee is entitled, including without limitation any and all
payments and benefits under any other pension and retirement
plan and arrangement, supplemental pension and retirement plan
and arrangement, stock option plan(s), and/or insurance and
disability plans.
D. Other Termination by Employee. If following a Change in
Control Employee terminates his/her employment for any reason other than Good
Reason, the Company shall pay to Employee his/her full Base Salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given and any accrued but unused vacation and personal days, and the Company
shall have no further obligations to Employee under this Agreement. The rights,
limitations and obligations of each of the Employee and the Company under any
other agreement or plan, including but not limited to any stock option or bonus
plan, deferred compensation plan and related agreement(s), as of the Date of
Termination shall remain in full force and effect.
E. Termination Prior to a Change in Control. This Agreement
does not provide for the payment or provision of severance benefits in
connection with a termination by Employee or the Company prior to and not in
connection with a Change in Control. Employee's rights to any such benefits
shall continue to be governed by law or other written agreement, if any exists
between Employee and the Company, and nothing in this Agreement is intended to
change, or shall be construed as changing, any of the legal or contractual
rights of either party to terminate Employee's employment (for Cause, at-will,
for Good Reason, or otherwise) prior to and not in connection with a Change in
Control.
F. Section 280G. Notwithstanding any other provisions of this
Agreement or any other agreement between the Company and the Executive, in the
event that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company or any Person whose actions result in
a Change in Control or any Person affiliated with the Company or such Person)
(all such payments and benefits, including the severance benefits provided
hereunder, being hereinafter called "Total Payments") would not be deductible
(in whole or part), by the Company, an affiliate or Person making such payment
or providing such benefit as a result of section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), then, to the extent necessary to make
such portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of section 280G of the Code
in such other plan, arrangement or agreement), the benefits provided hereunder
shall be reduced (if necessary, to zero); provided, however, that,
notwithstanding the terms of any other plan or agreement, the Executive may
elect to have the benefits payable under any other plan or agreement reduced (or
eliminated) prior to any reduction of the benefits payable under this Agreement,
which may include, in the case of the Executive Deferred Compensation Agreement
(if Employee is a party to such agreement), an election to reduce the
Executive's Compensation Period under the Executive Deferred Compensation
Agreement (without increasing the amount determined under Section 1.1 of the
Executive Deferred Compensation Agreement as Executive's Monthly Deferred
Compensation Benefit).
(i) For purposes of this limitation, (a) no portion
of the Total Payments the receipt or enjoyment of which the
Executive shall have waived at such time and in such manner as
not to constitute a "payment" within the meaning of section
280G(b) of the Code shall be taken into account, (b) no
portion of the Total Payments shall be taken into account
that, in the opinion of tax counsel ("Tax Counsel") selected
by the Executive and reasonably accepted by the Company, does
not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of section
280G(b)(4)(A) of the Code, (c) the benefits payable under this
Agreement shall be reduced only to the extent necessary so
that the Total Payments (other than those referred to in
clauses (a) or (b)) in their entirety constitute reasonable
compensation for services actually rendered within the meaning
of section 280G(b)(4)(B) of the Code or are otherwise not
subject to disallowance as deductions by reason of section
280G of the Code, in the opinion of Tax Counsel, and (d) the
value of any noncash benefit or any deferred payment or
benefit included in the Total Payments shall be determined in
accordance with the principles of sections 280G(d)(3) and (4)
of the Code.
(ii) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding that, notwithstanding the good faith of the
Executive and the Company in applying the terms of this
Section 6(F), the Total Payments paid to or for the
Executive's benefit are in an amount that would result in any
portion of such Total Payments being subject to the Excise
Tax, then, if such repayment would result in (a) no portion of
the remaining Total Payments being subject to the Excise Tax
and (b) a dollar-for-dollar reduction in the Executive's
taxable income and wages for purposes of federal, state and
local income and employment taxes, the Executive shall have an
obligation to pay the Company upon demand an amount equal to
the sum of (x) the excess of the Total Payments paid to or for
the Executive's benefit over the Total Payments that could
have been paid to or for the Executive's benefit without any
portion of such Total Payments being subject to the Excise
Tax; and (y) interest on the amount set forth in clause (x) of
this sentence at the rate provided in section 1274(b)(2)(B) of
the Code from the date of the Executive's receipt of such
excess until the date of such payment.
(iii) By execution and delivery of this Agreement,
the provisions of Section 10.4 of the Executive Deferred
Compensation Agreement are hereby superseded and such section
is hereby declared null and void.
7. Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and, except as otherwise provided in Section 6(C)(iv),
no payment or benefit provided for in this Agreement shall be reduced by any
compensation earned by Employee as the result of employment by another employer
after the termination of his/her employment with the Company.
8. Other Definitions. The following definitions shall apply for
purposes of this Agreement:
A. Notice of Termination. Any purported termination by the
Company or by Employee shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon. Any purported termination of Employee's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of this paragraph shall not be effective.
B. Date of Termination. "Date of Termination" shall mean, as
applicable, (a) if Employee's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that Employee shall not
have returned to the performance of his/her duties on a full-time basis during
such thirty (30) day period), (b) the date specified in the Notice of
Termination in compliance with the terms of this Agreement, or (c) if no date is
specified, the date on which a Notice of Termination is given.
9. Successors; Binding Agreement.
A. The Company shall require any successors or assigns
(whether direct or indirect by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company expressly
to assume and agree to perform this Agreement in the same manner and to the same
extent as if they were an original party hereto, and this Agreement shall inure
to the benefit of any such successor or assign.
B. This Agreement shall inure to the benefit of and be
enforceable by Employee's executors, administrators, successors, heirs,
distributes, devisees and legatees.
10. Other Agreements. Except as expressly set forth herein, nothing in
this Agreement is intended to alter the obligations of the Company and/or the
Employee in connection with any other written agreement between the Company and
the Employee, including any employment agreement, option agreement, deferred
compensation agreement, confidentiality agreement or indemnity agreement.
11. Covenant Not to Compete. In consideration of the mutual terms and
agreements set forth herein, Employee hereby agrees that until the first
anniversary of Employee's Date of Termination, (i) Employee will not recruit any
employee of the Company or its subsidiaries or solicit or induce, or attempt to
solicit or induce, any employee of the Company or its subsidiaries, provided
that nothing herein shall preclude Employee from hiring any person who contacts
Employee for employment and who has not been employed by the Company or its
subsidiaries at any time during the preceding six months, and (ii) provided that
Employee has received the severance benefits described in Section 6(C) hereof,
Employee will not solicit, divert or take away, or attempt to solicit, divert or
take away, the business or patronage of any of existing clients, customers or
accounts of the Company or its Subsidiaries. For purposes of this Section 11, a
client, customer or account of the Company shall be deemed to be an existing
client, customer or account if such client, customer or account is a party to a
rental, term or master lease with the Company or is being invoiced on a regular
basis by the Company as of the Date of Termination.
12. Miscellaneous.
12.1 Written notices required by this Agreement shall be delivered to
the Company or Employee in person or sent by overnight courier or certified
mail, with a return receipt requested, to the Company's registered address and
to Employee's last shown address on the Company's records, respectively. Notice
sent by certified mail shall be deemed to be delivered two days after mailing,
and all other notices shall be deemed to be delivered when received.
12.2 This Agreement contains the full and complete understanding of the
parties regarding the subject matter contained herein and supersedes all prior
representations, promises, agreements and warranties, whether oral or written.
12.3 This Agreement shall be governed by and interpreted according to
the laws of the state of California.
12.4 The captions of the various sections of this Agreement are
inserted only for convenience and shall not be considered in construing this
Agreement.
12.5 This Agreement can be modified, amended or any of its terms waived
only by a writing signed by both parties.
12.6 If any provision of this Agreement shall be held invalid, illegal
or unenforceable, the remaining provisions of the Agreement shall remain in full
force and effect and the invalid, illegal or unenforceable provision shall be
limited or eliminated only to the extent necessary to remove such invalidity,
illegality or unenforceability in accordance with the applicable law at that
time.
12.7 In the event the Company is party to a transaction which is
otherwise intended to qualify for "pooling of interests accounting treatment,
then (A) this Agreement shall, to the extent practicable, be interpreted so as
to permit such accounting treatment, and (B) to the extent that the application
of clause (A) of this Section 12.7 does not preserve the availability of such
accounting treatment, then, to the extent that any provision of the Agreement
disqualifies the transaction as a "pooling" transaction (including if
applicable, the entire Agreement), such provision shall be null and void as of
the date hereof. All determinations under this Section 12.7 shall be made by the
accounting firm whose opinion with respect to "pooling of interests" is required
as a condition of consummation of such transaction.
12.8 If either party institutes an action to enforce the terms of this
Agreement, the prevailing party in such action shall be entitled to recover
reasonable attorneys' fee, costs and expenses.
12.9 No remedy made available to either party by any of the provisions
of this Agreement is intended to be exclusive of any other remedy. Each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder as well as those remedies existing at law, in equity, by statute
or otherwise.
IN WITNESS WHEREOF, the parties have executed this document under seal
as of the date specified above.
PLM INTERNATIONAL, INC. EMPLOYEE
By: __________________________ _________________________________
Its: __________________________
ATTEST: _______________________ ATTEST: _____________________
Amendment No. 1 to
Master Lease dated April 2, 1999
Between
PLM International, Inc. ("Lessee")
And
Wells Fargo Equipment Finance, Inc. ("Lessor")
Lessor and Lessee hereby agree to amend the Lease as follows:
1. Paragraph 6 is amended by adding the following to the end thereof: For
Administrative convenience and as an accommodation to Lessee, Lessor agrees that
Lessee may be named as owner on certificate of titles for the Equipment.
2. Paragraph 9 is amended by adding the following to the end thereof:
Notwithstanding anything to the contrary in this paragraph 9, Lessee may, from
time to time, sublet the Equipment without the prior consent of Lessor, provided
however that Lessee shall remain fully obligated to Lessor under this Lease and
the term of the sublease shall not extend beyond the term of the Lease.
3. The last sentence of paragraph 12 is amended to read: Any insurance or
condemnation proceeds received shall be credited to Lessee's obligation under
this paragraph and Lessee shall be entitled to any surplus.
4. Except as modified herein, the terms and conditions of the Lease remain
the same.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment this 2nd day
of April, 1999.
Wells Fargo Equipment Finance, Inc. PLM International, Inc.
By: /s/ Sheryl L. Parranto By: /s/ J. Michael Allgood
Its: Officer Its: V.P. and CFO
<PAGE>
TRUCK LEASE AGREEMENT
(TRAC/Non-Maintenance)
THIS LEASE AGREEMENT is made as of August 25, 1999 by and between Associates
Leasing, Inc. (hereinafter called "Lessor"), an Indiana corporation with a place
of business located at 6160 Stoneridge Mall Rd., Stuite #280, Pleasanton, CA
94588 and PLM International, Inc., (hereinafter "Lessee"), a Delaware
corporation with its principal place of business located at One Market, Steuart
Street Tower, Suite 800, San Francisco, CA 94105.
IN CONSIDERATION of the mutual covenants hereinafter contained, Lessor hereby
leases to Lessee, and Lessee hereby leases from Lessor, one or more vehicles as
shall from time to time be described in Schedules, Vehicle Purchase Orders or
Delivery Receipts executed by authorized employees and agents of Lessee and
accepted by Lessor, at its sole discretion, for the rental and lease term and
upon the terms and conditions set forth below:
1. THIS AGREEMENT is a contract of leasing only and shall consist of the general
terms and conditions stated herein which shall be applicable to every Vehicle
leased hereunder, any Schedule which may hereafter be attached hereto describing
certain Vehicles either individually or as a class and the specific terms for
each, and Delivery Receipts or other evidences of ordering or delivery for each
Vehicle delivered to Lessee by Lessor. without limiting the generality of the
above, it is agreed that the terms hereof may be changed for specific Vehicles
by the Schedules relating thereto. All of said Schedules, Delivery Receipts and
evidences of ordering or delivery are hereby incorporated by reference and made
a part hereof. Wherever used herein, the term "Vehicle" or "Vehicles" shall mean
such passenger automobiles, trucks and other vehicles and trailers as are leased
hereunder from time to time, together with all additional equipment and
accessories thereon. Vehicles shall at all times remain the property of, and
shall be registered in the name of Lessor, but shall be under the full and
complete control of Lessee. During the term of this lease renewal of
registration in the name of Lessor shall be the responsibility and expense of
Lessee, and Lessor will, upon Lessee's request, furnish to Lessee a power of
attorney to this end. Lessee recognizes that it has acquired no right, title,
option or interest in or to any of the Vehicles and agrees that it shall not
assert any claim in or to an interest in any Vehicle other than that of a
lessee. Lessee shall at all times, and at its sole expense and cost, keep the
Vehicle(s) free from all levies, attachments, liens and encumbrances and other
judicial process other than those arising solely from acts of Lessor. Lessee
shall give Lessor immediate written notice of any action taken by a third party
which may jeopardize Lessor's rights in any Vehicle and shall indemnify and hold
Lessor harmless from any loss or damages caused thereby.
2. LESSEE AGREES to pay Monthly Rental for each Vehicle in the amounts stated in
the Schedule "A" applicable to such Vehicle. Such amounts shall be equal to the
product of the Monthly Rental Factors stated in such Schedule for such Vehicle
multiplied by the Schedule "A" Value of such vehicle stated in such Schedule.
The Monthly Rentals are subject to final depreciation adjustment as provided in
Section 9 of this Lease, using a Final Adjustment Percentage which is stated in
the Schedule "B" applicable to such Vehicle.
"Schedule "A" Value" as used herein shall mean the amount designated as such in
the Schedule "A" of such Vehicle, representing the value of such Vehicle as
determined by Lessor.
Lessee acknowledges that Schedule "A" Values set forth in the Schedules are
based upon the manufacturer's price and the amount of required equipment in
effect on the date the Schedule is executed. The "Residual Value" assigned to
each Vehicle represents the product of (a) the Schedule "A" Value multiplied by
(b) the Final Adjustment Percentage corresponding to expiration of the Maximum
Term for such Vehicle, and is provided for informational purposes only.
In addition to the Monthly Rental, Lessee shall pay to Lessor upon demand and as
Additional Rental all other charges payable by Lessee which have been paid by
Lessor. Lessor shall provide Lessee with documentation of any such charges
sufficient to enable Lessee to account for such payments.
3. THE TERM of this Lease in relation to each Vehicle shall extend for a period
not in excess of the Maximum Term noted in the Schedule 'A" relating to such
Vehicle. The Lease Term shall commence on the earlier of (i) the date when such
Vehicle is delivered to Lessee or (ii) forty-eight hours after Lessee has been
notified, orally or in writing, that the Vehicle is ready for delivery
(hereinafter called the "Delivery Date"). If the Delivery Date for such Vehicle
is on or before the fifteenth day of a month, the Monthly Rental for such
Vehicle shall commence as of the first day of such calendar month and if the
Delivery Date for such Vehicle is on or after the sixteenth day of a month, the
Monthly Rental for such Vehicle shall commence as of the first day of the next
succeeding calendar month. Lessee may terminate this Lease as to any Vehicle on
any anniversary of the Delivery Date for such Vehicle by (i) giving notice to
Lessor; and either (ii) returning such Vehicle to Lessor on such anniversary
date in accordance with Section 8 hereof; and paying to Lessor any amount owing
pursuant to Section 9 hereof relating to such Vehicle; or (iii) paying to Lessor
the Final Adjustment Amount relating to such Vehicle. For each Vehicle so
terminated, the term of this Lease shall end on the earlier of (i) the date
Lessee pays to Lessor the Final Adjustment Amount relating to such Vehicle; (ii)
the date such Vehicle is sold in accordance with Section 8 hereof or (iii)
forty-five days after the later of (a) such anniversary date or (b) the date the
Vehicle is actually returned to Lessor and for each Vehicle as to which the
Maximum Term has expired, the term of this Lease shall end on the earlier of (i)
the date such Vehicle is sold in accordance with Section 8 hereof or (ii)
forty-five days after the later of (a) the last day of the Maximum Term or (b)
the date the Vehicle is actually returned to Lessor. if such date is before the
fifteenth day of a month, no Monthly Rental for such Vehicle shall be payable
for such month; if such date is on or after the fifteenth day of a month, a full
Monthly Rental shall be payable for such month without proration. Lessee may
terminate this Lease as to any Vehicle effective at any other time only upon
terms hereafter agreed to by Lessor.
Lessor's failure to deliver vehicles at the time and places specified, by reason
of labor disorders or other circumstances or events beyond the control of
Lessor, shall not impute liability of any kind to Lessor.
4. THIS LEASE MAY BE TERMINATED by either party regarding vehicles not then
ordered or under lease by giving written notice thereof to the other party at
least five days in advance of the proposed termination date. After the giving of
such notice no additional or replacement vehicles will be delivered for lease
hereunder. Notwithstanding expiration or termination, all of the provisions of
the Lease shall continue in full force and effect with respect to each Vehicle
then ordered pursuant to request of Lessee or then under lease until the end of
the lease term for such Vehicle as provided in Section 3 hereof.
5. USE OF VEHICLES under this Lease is permitted only in the conduct of Lessee's
business in the United States and occasionally in Canada and only for lawful
purposes. The conduct of Lessee's business shall consist of subleasing the
Vehicles from time to time to various third-party sublessess. When not
subleased, the Vehicles shall be stored at any of Lessee's *number rental
business locations throughout the United States. Lessee shall require all
sublessees of the Vehicles to comply with all relevant provisions of this Lease
Agreement. No Vehicle shall be used off an improved road or for transportation
of passengers or of material designated as extra-hazardous, radioactive,
flammable or explosive. Lessee will permit the Vehicles to be operated only by
safe and careful drivers who are qualified and properly licensed in accordance
with the laws of the jurisdiction where such Vehicles are used. All operators of
the Vehicles will be conclusively presumed to be the agents, employees or
servants of Lessee and not of Lessor. Upon any complaint from Lessor specifying
illegal, negligent, reckless, careless or abusive handling of the Vehicles,
Lessee shall promptly take such steps as may be necessary to stop and prevent
the recurrence of any such practice. Lessee shall in all respects comply, and
cause all persons operating the Vehicles to comply, with all applicable
requirements of law (including but not limited to rules, regulations, statutes
and ordinances) relating to the licensing maintenance and operation of the
Vehicles (including weight limitations, tire requirements, load, axle and spring
limits) and with all terms and conditions of policies of insurance relating to
the Vehicle. Lessee agrees that it will not load any Vehicle in excess of the
lesser of (i) the payload capacity noted in the manufacturer's specifications
for such Vehicle or (ii) the maximum amount permitted by applicable law.
6. MONTHLY RENTAL and all other amounts owing by Lessee shall be paid to Lessor
at its address stated on page one hereof or at such other place as Lessor shall
hereafter notify Lessee in writing.
Monthly Rentals shall be due and payable in advance on the first day of each and
every month during the term hereof; provided, however, that the first Monthly
Rental for a Vehicle with a Delivery Date on or before the fifteenth day of a
month shall be due and payable on the Delivery Date, whether or not Lessee shall
have received a statement for such amount. Lessor will render to Lessee monthly
statements of the amounts payable on all Vehicles under this Lease and Lessee
shall, within ten (10) days after receipt of such statements, make payment by
one wire transfer for each such statement to the order of Lessor for the Monthly
Rental, Additional Rent and other sums, if any, covered by such statements
without abatement, off-set or counterclaim arising out of any circumstance
whatsoever. Lessee hereby waives any and all existing or future claims of
off-set against the Monthly Rentals, Additional Rents and Adjusted Rents due
hereunder, and agrees to make such payments regardless of any off-set or claim
which may be asserted by Lessee or on its behalf. For each Monthly Rental or
other sum due hereunder which is not paid when due, Lessee agrees to pay Lessor
a delinquency charge calculated thereon at the rate of 1 1/2% per month for the
period of delinquency or, at Lessor's option, 5% of such Monthly Rental or other
sum due hereunder, provided that such a delinquency charge is not prohibited by
law, otherwise at the highest rate Lessee can legally obligate itself to pay
and/or Lessor can legally collect.
7. FEES, TAXES, GOVERNMENTAL ASSESSMENTS AND CHARGES (INCLUDING INTEREST AND
PENALTIES THEREON) of whatsoever nature, by whomsoever payable, (other than
federal, state or local taxes levied on the net income of Lessor) levied,
assessed or incurred during the entire term of the Lease in connection with the
Vehicles including, but not limited to, the titling and registration of the
Vehicles in all jurisdictions required by the nature of Lessee's business and
the purchase, sale, ownership, rental, use, inspection and operation thereof,
shall be paid by Lessee. In the event any of said fees, taxes, governmental
assessments and charges shall have been paid by Lessor, or if Lessor is required
to collect or pay any thereof, Lessee shall reimburse Lessor therefor, upon
demand, as Additional Rent, to the end that Lessor shall receive the rental as
provided in Sections 2 and 9 hereof as a net return on the Vehicles. If
requested by Lessor, Lessee agrees to file, or to refrain from filing, on behalf
of Lessor in form satisfactory to Lessor and before the due date thereof, all
required tax returns and reports concerning the Vehicles with all appropriate
governmental agencies and to mail a copy thereof to Lessor concurrently with the
filing thereof. Lessee further agrees to keep or cause to be kept and made
available to Lessor any and all necessary records relative to the use of the
Vehicles and/or pertaining to the aforesaid fees, taxes, goverrmental,
assessments and charges. Lessee's obligations under this Section shall survive
the expiration or termination of this Lease.
8. LESSEE SHALL RETURN each Vehicle to Lessor, at Lessee's expense, at the
expiration or termination of this Lease in relation to such Vehicle at the
location where delivery was made or at such other location as is designated by
Lessor in the same working order, condition and repair as when received by
Lessee, excepting only reasonable wear and tear caused by normal usage of such
Vehicle, together with all license plates, registration certificates, or other
documents relating to such Vehicle. Upon request of Lessee, Lessor may at its
sole discretion allow Lessee to retain some or all of such license plates or
other documents. Unless otherwise agreed by Lessor, Lessee shall give Lessor at
least sixty, and not more than ninety, days notice of the return of any Vehicle.
After said return, Lessor shall cause such Vehicle to be sold at public or
private sale, at wholesale, for the highest cash offer received and still open
at the time of sale. The "net sale proceeds" for said Vehicle shall be the net
amount received and paid to Lessor after deducting the cost of sale, the cost of
cleaning, repairing, equipping or transporting said vehicle and any other
expenses of Lessor in connection therewith. Alternatively, Lessee may purchase
each Vehicle for the Final Adjustment Amount. Upon receipt of payment of the
Final Adjustment Amount together with any and all applicable sales or other
taxes due in connection therewith, and any and all remaining sums or other
amounts payable under this Lease Agreement or a relevant Schedule, Lessor shall
transfer all its right, title and interest in and to the Vehicle to Lessee. The
Vehicle shall be transferred AS-IS and WHERE-IS without any express or implied
representations or warranties.
9. FINAL ADJUSTMENT for each Vehicle will be made upon receipt of the net sale
proceeds therefor and, unless any default shall have occurred and except as
provided below; Lessor shall pay to Lessee the amount, if any, by which the sum
of (a) the net sale proceeds, and (b) surplus insurance recoveries, if any, on
such Vehicle, exceeds (c) a Final Adjustment Amount, as defined herein, for such
vehicle calculated as of the rental payment date next preceding the date such
Vehicle was returned to Lessor (referred to hereafter as the "Calculation
Date'). The Final Adjustment Amount for any Vehicle as of a Calculation Date
shall be computed by multiplying the Schedule 'Al Value for such Vehicle by that
percentage ("Final Adjustment Percentage") opposite the respective Calculation
Date as set forth in the Final Adjustment Table attached hereto as Schedule B.
If the sum of items (a) and (b) is less than item (c), Lessee shall, within ten
days after notice thereof, pay the deficiency to Lessor as Adjusted Rental
without abatement, off-set or counterclaim arising out of any circumstance
whatsoever. Lessor shall promptly determine the aforesaid amounts and shall
render statements therefor to Lessee. Lessor may apply any sums received as
proceeds from any vehicle which would otherwise be due to Lessee hereunder
against any other obligation of Lessee and Lessor may off-set the amount of any
such rental adjustment against any claim it may have against Lessee.
10. LOSS OF OR DAMAGE TO EACH VEHICLE and loss of use thereof, from whatsoever
cause, are risks hereby assumed by Lessee from the date hereof until such
Vehicle is returned to and sold by Lessor. If any Vehicle is lost, stolen,
damaged or destroyed, Lessee shall promptly notify Lessor thereof. Lessor shall
have no obligation to repair or replace any such Vehicle. There shall be no
abatement of rental otherwise due hereunder during the period a vehicle is
stolen or missing or during the time required for any repair, adjustment,
servicing or replacement of a Vehicle and Monthly Rentals will continue to
accrue until Final Adjustment is made. Final Adjustment in relation to lost,
stolen or destroyed Vehicles shall be made as provided in Section 9, promptly
upon payment of the Final Adjustment Amount or after sale of the salvage and/or
receipt of insurance proceeds, as applicable or within forty-five days after
such loss, theft or destruction; whichever is earlier. For purposes of Final
Adjustment, lost or stolen Vehicles shall be deemed to have been sold as of the
date of such loss or theft, and the amount of net sale proceeds therefor shall
be deemed to be zero. In no event shall Lessor be liable to Lessee, its
employees or agents for business or other losses by reason of loss, theft,
destruction, repair, servicing or replacement of any Vehicle.
ll.A LIABILITY AND PHYSICAL DAMAGE INSURANCE, for bodily injury and property
damage to others, and damage to or loss of vehicles by collision, fire, theft,
or otherwise, from the time each Vehicle is delivered to Lessee until the
Vehicle is sold after return to Lessor and legal title passes to the purchaser
thereof, shall be purchased and maintained by Lessee. Lessor shall not be
required to order vehicles for Lessee's use until binders disclosing insurance
coverage as herein provided have been delivered to Lessor. All insurance
policies shall provide primary coverage, shall name Lessor as additional
insured, shall be in such amounts and with such insurers as shall be approved by
Lessor, shall provide for a minimum of 15 days prior written notice to Lessor
before cancellation or material change for any reason, and shall provide that no
act or default of any person other than Lessor shall affect Lessor's right to
recovery under such policies. The minimum requirement shall be a combined single
limit of $1,000,000 and actual cash value for fire, theft, comprehensive and
collision. Lessor may from time to time by notice to Lessee specify higher
minimum requirements or additional risks to be insured against. Lessee shall
deliver the policies or other satisfactory evidence of insurance required
hereunder to Lessor, but Lessor shall be under no duty to examine such evidence
of insurance nor to advise Lessee in the event said insurance is not in
compliance with this Lease. Evidence of renewal of all expiring policies will be
delivered to Lessor at least 60 days prior to their respective expiration dates.
Lessor does not assume any liability for loss of or damage to the contents or
personal property contained in any Vehicles, and Lessee hereby releases and
saves Lessor free from any and all liability for loss of or damage to any
contents or personal property contained in said Vehicles regardless of the
circumstances under which such loss or damage may occur.
ll.B INDEMNITIES: The term "Liabilities" as used herein shall include any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements of whatsoever kind and nature,
including legal fees and expenses, (whether or not any of the transactions
contemplated hereby are consummated), imposed on, incurred by or asserted
against Lessor (which term as used herein shall include Lessor's successors,
assigns, agents, employees and servants) or the Vehicles (whether by way of
strict or absolute liability or otherwise), and in any way relating to or
arising out of this lease or the selection, manufacture, purchase, acceptance,
ownership, delivery, non-delivery, lease, possession, use, operation, condition,
servicing, maintenance, repair, improvement, alteration, replacement, storage,
return other disposition of the Vehicles including, but not limited to, (i)
claims as a result of latent, patent or other defects, whether or not
discoverable by Lessor and Lessee; (ii) claims for patent, trademark or
copyright infringement; (iii) tort claims of any kind, (whether based on strict
liability, on Lessor's alleged negligence or otherwise), including claims for
injury or damage to property or injury or death to any person (including
Lessee's employees); and (iv) claims for any interruption of service or loss of
business or anticipatory profits, or consequential damages. Lessor shall have no
responsibility or liability to Lessee, its successors or assigns, or any other
person with respect to any and all Liabilities and, irrespective of any
insurance coverage and commencing on the date each Vehicle is ready for delivery
to Lessee, Lessee hereby assumes liability for, and hereby agrees, at its sole
cost and expense, to indemnify, defend, protect, save and keep harmless Lessor
from and against any and all Liabilities. Where a Vehicle is operated by Lessee
with a trailer or other equipment not covered by this Lease, then in such event,
Lessee warrants that such trailer or other equipment will be in good operating
condition, compatible in all respects with the Vehicles with which such trailer
or other equipment is to be used, and in all respects in full compliance with
all federal, state and local statutes, ordinances, rules or regulations covering
said trailer or other equipment, including but not limited to all licensing and
operating requirements. Lessee hereby assumes liability for, and hereby agrees,
at its sole cost and expense, to indemnify, defend, protect, save and keep
harmless Lessor from and against any and all costs, expenses, damages,
(including damages for loss of any Vehicles leased hereunder) and Liabilities
resulting from Lessee's failure to properly connect, operate or maintain such
trailer or other equipment or to comply with any of the foregoing requirements
or from any other cause. Lessee agrees to give Lessor prompt written notice of
any claim or liability hereunder indemnified against.
ll.C LESSEE'S TAX RELATED INDEMNITIES to Lessor are as follows:
(1) General Indemnity. Lessee agrees to pay and to indemnify and hold Lessor
harmless, on an after-tax basis, from and against all sales, use, personal
property, leasing, leasing use, stamp or other taxes, levies, imposts, duties,
charges or withholdings of any nature (together with any penalties, fines or
interest thereon) now or hereafter imposed against Lessor, Lessee or the
Vehicles or any part thereof or upon the purchase, ownership, delivery, leasing,
possession, use, operation, return or other disposition thereof, or upon the
rentals, receipts or earnings arising therefrom, or upon or with respect to this
Lease (excluding, however, Federal and State taxes on, or measured by, the net
income of Lessor). Lessee agrees to file, on behalf of Lessor, all required tax
returns concerning the Vehicles with all appropriate governmental agencies and
to furnish to Lessor a copy of each such return, including evidence of payment,
promptly after the due date of each such filing; provided, that, in the event
Lessee is not permitted to file any such return on behalf of Lessor, then Lessee
agrees to prepare and forward each such return to Lessor in a timely manner with
instructions to Lessor with respect to the filing thereof.
(2) Income Tax Indemnity. Lessee and Lessor agree that Lessor shall be entitled
to accelerated cost recovery (or depreciation) deductions with respect to the
Vehicles, and if and only if as the result of the acts or omissions of the
Lessee, either the United States government or any state tax authority disallow,
eliminate, reduce, recapture, or disqualify, in whole or in part, any benefits
consisting of accelerated cost recovery (or depreciation) deduction with respect
to any Vehicle, Lessee shall then indemnify Lessor by payment to Lessor, upon
demand, of a sum which shall be equal to the amount necessary to permit Lessor
to receive (on an after-tax basis over the full term of this Lease) the same
after-tax cash flow and after-tax yield assumed by Lessor in evaluating the
transactions contemplated by this Lease (referred to hereafter as 'Economic
Return") that Lessor would have realized had there not been a loss or
disallowance of such benefits, together with, on an after-tax basis, any
interest or penalties which may be assessed by the governmental authority with
respect to such loss or disallowance. In addition, if Lessee shall make any
addition or improvement to any Vehicle, and as a result thereof, Lessor is
required to include an additional amount in its taxable income, Lessee shall
also pay to Lessor, upon demand, an amount which shall be equal to the amount
necessary to permit Lessor to receive (on an after-tax basis over the full term
of this Lease) the same Economic Return that Lessor would have realized had such
addition or improvement not been made.
(3) Payment and Enforceability. All amounts payable by Lessee pursuant to
subsection ll.C.(l) or ll.C.(2) shall be payable directly to Lessor except to
the extent paid to a governmental agency or taxing authority. All the
indemnities contained in subsection ll.C.(l) or ll.C.(2) shall continue in full
force and effect notwithstanding the expiration or other termination of this
Lease in whole or in part and are expressly made for the benefit of, and shall
be enforceable by, Lessor. Lessee's obligations under subsection ll.C.(l) and
ll.C.(2) shall be that of primary obligor irrespective of whether Lessor shall
also be indemnified with respect to the same matter under some other agreement
by another party.
(4) Duration. The obligations of Lessee under subsection ll.C. are expressly
made for the benefit of, and shall be enforceable by, Lessor without necessity
of declaring this Lease in default and Lessor may initially proceed directly
against Lessee under this subsection ll.C. without first resorting to any other
rights of indemnification it may have. In the event that, during the continuance
of this Lease, an event occurs which gives rise to a liability pursuant to this
subsection ll.C., such liability shall continue, notwithstanding the expiration
or termination of this Lease, until all payments or reimbursements with respect
to such liability are made.
ll.D ALL OF LESSEE'S obligations, indemnities and liabilities under this Section
11 shall survive the expiration or termination of this Lease. Notwithstanding
anything else herein to the contrary, in the event that Lessee fails to procure
or maintain insurance as above provided or fails to perform any other of
Lessee's duties or obligations as set forth in this Lease, Lessor may, but shall
have no obligation to, obtain such insurance at Lessee's expense and perform
such other duties and obligations of Lessee and any amounts expended therefor
shall be due and payable immediately as Additional Rent. Lessee shall not use or
permit the use of any Vehicle at any time when the insurance described above is
not in effect.
12.A EXPENSE OF OPERATION AND MAINTERNCE of Vehicles in accordance with
manufacturer's recommendations and in condition satisfactory to Lessor,
including but not limited to, cost of fuel, oil, grease, repairs, maintenance,
tires, tubes, storage, parking, tolls, fines and penalties shall be the
responsibility and obligation of Lessee. Lessee shall reimburse Lessor if Lessor
shall pay any of such operating or maintenance expenses. If tires or parts are
removed from a Vehicle, Lessee shall provide comparable replacements therefor
and such replacements shall become part of the Vehicles by accession. Lessor may
inspect the Vehicles and Lessee's books and records relating thereto at any time
during Lessor's usual business hours. Lessee agrees to remove all markings from
the Vehicles, at Lessee's expense, prior to the return of the Vehicles to
Lessor.
12.B ADDITIONAL EQUIPMENT REQUIRED BY LAW. In the event that subsequent to the
Delivery Date of a Vehicle any federal, state or local law, ordinance, rule or
regulation shall require the installation of any additional equipment or
accessories, including but not limited to anti-pollution and/or safety devices,
or in the event that any other modifications of the Vehicles shall be required
by virtue of such law, ordinance, rule or regulation, then and in any of such
events, Lessee shall pay the full cost thereof, including installation expenses.
Lessor may, at its option, arrange for the installation of such equipment or the
performance of such modifications, and Lessee agrees to pay the full cost
thereof as Additional Rent, immediately upon receipt of an invoice for same.
13. NO WARRANTIES; LIMITATION ON LIABILITY: Lessee acknowledges and agrees (i)
that the Vehicles are of a size, design, capacity and manufacture selected by
Lessee, (ii) that the Lessor is not the manufacturer or seller of the Vehicles
or the manufacturer's or seller's agent and (iii) that LESSEE LEASES THE
VEHICLES "AS-IS" AND THAT LESSOR HAS NOT MADE, AND DOES NOT HEREBY MAKE, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION,
QUALITY, MATERIAL, WORKMANSHIP, DESIGN, CAPACITY, MERCHANTABILITY, DURABILITY,
FITNESS OR SUITABILITY OF THE VEHICLES FOR ANY USE OR PURPOSE OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED WITH RESPECT TO THE
VEHICLES. IN NO EVENT SHALL LESSOR BE LIABLE FOR LOSS OF OR DAMAGE TO CARGO,
LOSS OF PROFITS OR BUSINESS OR FOR INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES
OF ANY NATURE, HOWSOEVER CAUSED. Provided Lessee is not in default hereunder,
during the term of this Lease as to any Vehicle, Lessor hereby assigns to Lessee
any rights Lessor may have under any manufacturer's or seller's warranty, to the
extent that such assignment may be made without impairing Lessor's ability to
assert such rights in its own name under such warranty.
14.A DEFAULT under this Lease shall occur in the event (i) Lessee shall fail to
pay when due any part of the Monthly Rentals, Additional Rents or Adjusted Rents
payable hereunder or to provide or maintain the insurance required hereby; (ii)
any of Lessee's warranties or representations shall be or become untrue or
breached; (iii) Lessee shall fail, after fifteen days notice thereof, to correct
any failure in the due performance and observance of any other of the covenants
and obligations of Lessee hereunder; (iv) Lessee shall default under any other
agreement with Lessor or its affiliates; (v) Lessee transfers a substantial
portion of its assets other than in the ordinary course of business; (vi) a
voluntary or involuntary petition under any statute relating to bankruptcy,
reorganization or receivership or under any other statute relating to the relief
of debtors shall be filed by or against Lessee or any guarantor of Lessee's
obligations hereunder; or (vii) Lessee or any guarantor of Lessee's obligations
hereunder shall make an assignment for the benefit of creditors, admit in
writing to being insolvent or, if Lessee or such guarantor is a natural person,
if such person shall die.
14.B LESSOR'S REMEDIES:
(1) In the event of such default described above, Lessor shall have no further
obligation to lease vehicles to Lessee and, at the option of Lessor, all rights
of Lessee hereunder and in and to the Vehicles shall forthwith terminate. Upon
such termination Lessee agrees that Lessor may, without notice to Lessee, either
take possession of any or all Vehicles (with or without legal process) or
require Lessee to return all Vehicles forthwith to Lessor at such location as
Lessor shall designate. Lessee authorizes Lessor and Lessor's agents to enter
any premises where the Vehicles may be found for the purpose of repossessing the
same. If Lessor retakes possession of any of the Vehicles and at the time of
such retaking there shall be in, upon, or attached to the Vehicles any property,
goods, or things of value belonging to Lessee or in the custody or control of
Lessee, Lessor is hereby authorized to take possession of such property, goods,
and things of value and hold the same for Lessee or to place such property,
goods, or things of value in public storage for the account of, and the expense
of, Lessee. Lessor may at its option (i) sell any or all of the vehicles which
are returned or repossessed pursuant to this Section and hold Lessee liable for
Adjusted Rental as provided in Section 9, or (ii) lease any or all of the
Vehicles to a person other than Lessee for such term and such rental as Lessor
may elect in its sole discretion, and apply the proceeds of such lease, after
first deducting all costs and expenses relating to the termination of this Lease
and the retaking of the vehicles, to Lessee's obligations hereunder; provided,
however, that Lessee shall pay to Lessor immediately upon demand, as liquidated
damages for loss of bargain and not as a penalty, a sum with respect to each
such Vehicle which represents the excess of the present value at the time of
termination of all Monthly Rentals which would otherwise have accrued hereunder
to the end of the Maximum Term for such Vehicle over the present value at the
time of termination of all Monthly Rentals which would otherwise have accrued
hereunder to the end of the Maximum Term for such Vehicle over the present value
of the aggregate of the rentals to be paid for such Vehicle by such third party
for such period (such present values to be computed in each case on the basis of
a discount factor equal to the per annum lending rate publicly announced from
time to time by Continental Illinois National Bank and Trust Company of Chicago
as its prime rate, base rate or reference rate for unsecured loans of the
shortest maturity to corporate borrowers in effect on the date this Lease is
terminated by Lessor, from the respective dates upon which such Monthly Rentals
would have been payable hereunder had this Lease not been terminated). In
addition to the other remedies set forth herein, if any vehicle is not returned
to Lessor, or if Lessor is prevented from taking possession thereof, Lessee
shall pay to Lessor immediately upon demand the Final Adjustment Amount as
provided in Section 9, as if such vehicle had been sold on the date this Lease
was terminated, and the amount of net sale proceeds therefor were zero.
(2) Whether or not the Vehicles are returned to, sold or leased by Lessor,
Lessor shall also recover from Lessee all unpaid Monthly Rentals, Additional
Rents and Adjusted Rents then due or owing together with all costs and expenses,
including attorneys' fees, incurred by Lessor in the enforcement of its rights
and remedies under this Lease. In addition, Lessor may retain as liquidated
damages all Monthly Rentals and Additional Rents and sale proceeds received,
including any refunds and other sums which otherwise would be payable to Lessee,
and a sum equal to the aggregate of all Monthly Rentals and other amounts,
including but not limited to any early termination fee customarily charged by
Lessor, (the due dates of which Rentals and other amounts Lessor may accelerate
at its option) which would have been due during the period ending, for each
Vehicle, on the earliest date on which Lessee could have effectively terminated
this Lease as to such Vehicle pursuant to Section 3 if Lessee had not defaulted,
in sum total not to exceed the Economic Return.
(3) The remedies in this Lease provided in favor of Lessor shall not be deemed
exclusive or alternative, but shall be cumulative and shall be in addition to
all other remedies in its favor existing at law or in equity. Lessee hereby
waives any right to trial by jury in any action relating to this Lease, as well
as any requirements of law, now or hereafter in effect, which might limit or
modify any of the remedies herein provided, to the extent that such waiver is
permitted by law. The failure of Lessor to exercise any of the rights granted it
hereunder shall not constitute a waiver of any such right or establish a custom
or course of dealing. Except as expressly allowed in Section 5, above,
15. EXCEPT AS EXPRESSLY allowed in Section 5, above, neither this lease, any
rights or obligations hereunder, nor any rights in or to the Vehicles may be
assigned or subleased by Lessee without the prior written consent of Lessor and
no such assignment or sublease shall be valid or binding on Lessor. Lessor may
assign this Lease or an interest hereunder or in the Vehicles for any purpose
without consent of or notice to Lessee.
16. LESSEE AGREES that at any time and from time to time, after the execution
and delivery of this Lease, it shall, upon request of Lessor, execute and
deliver such further documents and do such further acts and things as Lessor may
reasonably request in order fully to effect the purposes of this Lease and to
protect Lessor's interest in the vehicles, including, but not limited to,
furnishing any and all information necessary to enable Lessor or its insurer to
defend itself in any litigation arising in connection herewith. Lessee hereby
authorizes Lessor to insert serial numbers, delivery and Monthly Rental due
dates, and other data on the Schedules, Delivery Receipts and other documents
relating hereto when such numbers, date and data become known to Lessor.
17. NOTICES required or permitted to be given hereunder shall be given in
writing either personally or by registered or certified mail addressed to the
respective party at its address listed on page one hereof or, if such party has
previously given notice of a change of address, to the address specified in the
last such notice of change of address. Notices shall be deemed received when
delivered if personally delivered or, if mailed, two business days after deposit
postage prepaid in the United States mails.
18. THIS LEASE will become effective only upon acceptance by Lessor. This form
is intended for general use throughout the United States. Any provision of this
Lease which is prohibited or unenforceable in any jurisdiction shall be
ineffective in such jurisdiction to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. It is the
intention of the parties hereto that this contract constitute a lease for tax
and other purposes; however, if for purposes of perfection, this contract is
interpreted by any court as a lease intended as security, Lessee hereby grants
to Lessor a security interest in the vehicles. THIS AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. This Lease and any Schedules
and other documents relating hereto may be modified only in a writing signed by
the party against whom enforcement is sought. No vehicle dealer nor any employee
or agent of any dealer or of any other person has authority to make any
representations to Lessee on Lessor's behalf as to the performance of the
Vehicles, or as to any provision of this Lease or as to any other matter
whatsoever. Lessee has no authority to, and shall not, make any warranty or
representation concerning the Vehicles to any person on Lessor's behalf.
Date: August 25, 1999 LESSEE:
PLM International, Inc.
LESSOR: Associates Leasing, Inc. By: /s/ Richard K Brock
By: /s/ Joseph M. Pitch Title: Acting Chief Financial
Officer
Title: Vice President
<PAGE>
FLEET CAPITAL LEASING
MASTER EQUIPMENT LEASE AGREEMENT No. 33092
LESSOR: FLEET CAPITAL CORPORATION LESSEE: PLM RENTAL, INC.
a Rhode Island corporation a Delaware corporation
Address: 50 Kennedy Plaza Address: One Market Plaza,
Providence, Rhode Island 02903-2305 Steuart Tower, Suite 800
San Francisco, California 94105
1. LEASE OF EQUIPMENT
Subject to the terms and conditions set forth herein (the "Master Lease")
and in any Lease Schedule incorporating the terms of this Master Lease (each, a
"Lease Schedule"), Lessor agrees to lease to Lessee, and Lessee agrees to lease
from Lessor, the items and units of personal property described in each such
Lease Schedule, together with all replacements, parts, additions, accessories
and substitutions therefor (collectively, the "Equipment"). As used in this
Lease, the term "Item of Equipment" shall mean each functionally integrated and
separately marketable group or unit of Equipment subject to this Lease. Each
Lease Schedule shall constitute a separate, distinct and independent lease of
Equipment and contractual obligation of Lessee. References to "the Lease," "this
Lease" or "any Lease" shall mean and refer to any Lease Schedule which
incorporates the terms of this Master Lease, together with all exhibits,
addenda, schedules, certificates, riders and other documents and instruments
executed and delivered in connection with such Lease Schedule or this Master
Lease, all as the same may be amended or modified from time to time. The
Equipment is to be delivered at the location specified or referred to in the
applicable Lease Schedule. The Equipment shall be deemed to have been accepted
by Lessee for all purposes under this Lease upon Lessor's receipt of an
Acceptance Certificate with respect to such Equipment, executed by Lessee after
receipt of all other documentation required by Lessor with respect to such
Equipment. Lessor shall not be liable or responsible for any failure or delay in
the delivery of the Equipment to Lessee for whatever reason. As used in this
Lease, "Acquisition Cost" shall mean (a) with respect to all Equipment subject
to a Lease Schedule, the amount set forth as the Acquisition Cost in the Lease
Schedule and the Acceptance Certificate applicable to such Equipment; and (b)
with respect to any item of Equipment, the total amount of all vendor or seller
invoices (including Lessee invoices, if any) for such item of Equipment,
together with all acquisition fees and costs of delivery, installation, testing
and related services, accessories, supplies or attachments procured or financed
by Lessor from vendors or suppliers thereof (including items provided by Lessee)
relating or allocable to such item of Equipment ("Related Expenses"). As used in
this Lease with respect to any Equipment, the terms "Acceptance Date," "Rental
Payment(s)," "Rental Payment Date(s)," "Rental Payment Numbers," "Rental Payment
Commencement Date," "Lease Term" and "Lease Term Commencement Date" shall have
the meanings and values assigned to them in the Lease Schedule and the
Acceptance Certificate applicable to such Equipment.
2. TERM AND RENT
The Lease Term for any Equipment shall be as specified in the applicable
Lease Schedule. Rental Payments shall be in the amounts and shall be due and
payable as set forth in the applicable Lease Schedule. Lessee shall, in
addition, pay interim rent to Lessor on a pro-rata, per-diem basis from the
Acceptance Date to the Lease Term Commencement Date set forth in the applicable
Acceptance Certificate, payable on such Lease Term Commencement Date. If any
rent or other amount payable hereunder shall not be paid within 10 days of the
date when due, Lessee shall pay as an administrative and late charge an amount
equal to 5% of the amount of any such overdue payment. In addition, Lessee shall
pay overdue interest on any delinquent payment or other amounts due under the
Lease (by reason of acceleration or otherwise) from 30 days after the due date
until paid at the rate of 1 1/2% per month or the maximum amount permitted by
applicable law, whichever is lower. All payments to be made to Lessor shall be
made to Lessor in immediately available funds at the address shown above, or at
such other place as Lessor shall specify in writing. THIS IS A NON-CANCELABLE,
NON-TERMINABLE LEASE OF EQUIPMENT FOR THE ENTIRE LEASE TERM PROVIDED IN EACH
LEASE SCHEDULE HERETO.
3. POSSESSION; PERSONAL PROPERTY
No right, title or interest in the Equipment shall pass to Lessee other
than the right to maintain possession and use of the Equipment for the Lease
Term (provided no Event of Default has occurred) free from interference by any
person claiming by, through, or under Lessor. The Equipment shall always remain
personal property even though the Equipment may hereafter become attached or
affixed to real property. Lessee agrees to give and record such notices and to
take such other action at its own expense as may be necessary to prevent any
third party (other than an assignee of Lessor) from acquiring or having the
right under any circumstances to acquire any interest in the Equipment or this
Lease
4. DISCLAIMER OF WARRANTIES
LESSOR IS NOT THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, NOR THE AGENT
THEREOF, AND MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO ANY
MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OF THE
EQUIPMENT, ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS
CAPACITY OR DURABILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE
MANUFACTURE OR ASSEMBLY OF THE EQUIPMENT, OR THE CONFORMITY OF THE EQUIPMENT TO
THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER RELATING THERETO, OR
PATENT INFRINGEMENTS, AND LESSOR HEREBY DISCLAIMS ANY SUCH WARRANTY. LESSOR IS
NOT RESPONSIBLE FOR ANY REPAIRS OR SERVICE TO THE EQUIPMENT, DEFECTS THEREIN OR
FAILURES IN THE OPERATION THEREOF. Lessee has made the selection of each item of
Equipment and the manufacturer and/or supplier thereof based on its own judgment
and expressly disclaims any reliance upon any statements or representations made
by Lessor. For so long as no Event of Default for event or condition which, with
the passage of time or giving of notice, or both, would become such an Event of
Default) has occurred and is continuing, Lessee shall be the beneficiary of, and
shall be entitled to, all rights under any applicable manufacturer's or vendor's
warranties with respect to the Equipment, to the extent permitted by law.
If the Equipment is not delivered, is not properly installed, does not
operate as warranted, becomes obsolete, or is unsatisfactory for any reason
whatsoever, Lessee shall make all claims on account thereof solely against the
manufacturer or supplier and not against Lessor, and Lessee shall nevertheless
pay all rentals and other sums payable hereunder. Lessee acknowledges that
neither the manufacturer or supplier of the Equipment, nor any sales
representative or agent thereof, is an agent of Lessor, and no agreement or
representation as to the Equipment or any other matter by any such sales
representative or agent of the manufacturer or supplier shall in any way affect
Lessee's obligations hereunder.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS Lessee represents and and
warrants to and covenants with Lessor that:
(a) Lessee has the form of business organization indicated above and is duly
organized and existing in good standing under the laws of the state listed in
the caption of this Master Lease and is duly qualified to do business wherever
necessary to carry on its present business and operations and to own its
property; (b) this Lease has been duly authorized by all necessary action on the
part of Lessee consistent with its form of organization, does not require any
further shareholder or partner approval, does not require the approval of, or
the giving notice to, any federal, state, local or foreign governmental
authority and does not contravene any law binding on Lessee or contravene any
certificate or articles of incorporation or by-laws or partnership certificate
or agreement, or any agreement, indenture, or other instrument to which Lessee
is a party or by which it may be bound; (c) this Lease has been duly executed
and delivered by authorized officers or partners of Lessee and constitutes a
legal, valid and binding obligation of Lessee enforceable in accordance with its
terms; (d) Lessee has not and will not, directly or indirectly, create, incur or
permit to exist any lien, encumbrance, mortgage, pledge, attachment or security
interest on or with respect to the Equipment or this Lease (except those of
persons claiming by, through or under Lessor); (e) the Equipment will be used
solely in the conduct of Lessee's business and, unless subleased in the ordinary
course of Lessee's business, will remain in the Lessee's locations shown on the
applicable Lease Schedule unless Lessor otherwise agrees in writing and Lessee
has completed all notifications, filings, recordings and other actions in such
new location as Lessor may reasonably request to protect Lessor's interest in
the Equipment; (f) there are no pending or threatened actions or proceedings
before any court or administrative agency which materially adversely affect
Lessee's financial condition or operations, and all credit, financial and other
information provided by Lessee or at Lessee's direction is, and all such
information hereafter furnished will be, true, correct and complete in all
material respects; and (g) Lessor has not selected, manufactured or supplied the
Equipment to Lessee and has acquired any Equipment subject hereto solely in
connection with this Lease and Lessee has received and approved the terms of any
purchase order or agreement with respect to the Equipment.
6. INDEMNITY
Lessee assumes the risk of liability for, and hereby agrees to indemnify
and hold safe and harmless, and covenants to defend, Lessor, its employees,
servants and agents from and against: (a) any and all liabilities, losses,
damages, claims and expenses (including legal expenses of every kind and nature)
arising out of the manufacture, purchase, shipment and delivery of the Equipment
to Lessee, acceptance or rejection, ownership, titling, registration, leasing,
possession, operation, use, return or other disposition of the Equipment,
including, without limitation, any liabilities that may arise from patent or
latent defects in the Equipment (whether or not discoverable by Lessee), any
claims based on absolute tort liability or warranty and any claims based on
patent, trademark or copyright infringement; (b) any and all loss or damage of
or to the Equipment; and (c) any obligation or liability to the manufacturer or
any supplier of the Equipment arising under any purchase orders issued by or
assigned to Lessor.
7. TAXES AND OTHER CHARGES
Lessee agrees to comply with all laws, regulations and governmental orders
related to this Lease and to the Equipment and its use or possession, and to pay
when due, and to defend and indemnify Lessor against liability for all license
fees, assessments, and sales, use, property, excise, privilege and other taxes
(including any related interest or penalties) or other charges or fees now or
hereafter imposed by any governmental body or agency upon any Equipment, or with
respect to the manufacturing, ordering, shipment, purchase, ownership, delivery,
installation, leasing, operation, possession, use, return, or other disposition
thereof or the rentals hereunder (other than taxes on or measured solely by the
net income of Lessor). Any fees, taxes or other lawful charges paid by Lessor
upon failure of Lessee to make such payments shall at Lessor's option become
immediately due from Lessee to Lessor.
If any Lease Schedule is denominated as a "True Lease Schedule," then, with
respect to the Equipment set forth on such True Lease Schedule, Lessee hereby
covenants and agrees that Lessor shall be entitled to the following tax benefits
(the "Tax Benefits"), Lessor will be entitled to cost recovery deductions under
Section 168 of the Internal Revenue Code of 1986, as amended (the "Code"), using
a 200% declining balance method of depreciation switching to the straight line
method for the first taxable year for which such method will yield larger
depreciation deductions, and assuming a half-year convention and zero salvage
value, for the applicable recovery period for such Equipment as set forth in the
True Lease Schedule with respect to such Equipment. Lessee further acknowledges
and agrees that Lessor has entered into such True Lease Schedule on the
assumption that Lessor will be taxed throughout the Lease Term of the True Lease
Schedule at Lessor's federal corporate income tax rate existing on the date of
such Lease Schedule (the "Assumed Tax Rate"). With respect to Equipment set
forth on any such True Lease Schedule, Lessee agrees that: Lessee will not claim
that Lessee is the owner of the Equipment subject thereto or that Lessee is
otherwise entitled to all or any of the Tax Benefits; Lessee will not take any
action inconsistent with Lessor's anticipated Tax Benefits; and the Equipment
will not constitute "public utility property" or "tax-exempt use property"
within the meaning of sections 168(i)(1 0) or 168(h) of the Code. If , as the
result of any act, omission and/or misrepresentation of Lessee, there shall be a
loss, disallowance, recapture or delay in claiming all or any portion of the Tax
Benefits with respect to the Equipment, or there shall be included in Lessor's
gross income for Federal, state or local income tax purposes any amount on
account of any addition, modification or improvement to or in respect of any of
the Equipment made or paid for by Lessee, or if there shall be a change in the
Assumed Tax Rate (any loss, disallowance, recapture, delay, inclusion or change
being herein called a "Tax Loss"), then thirty (30) days after written notice to
Lessee by Lessor that a Tax Loss has occurred, Lessee shall pay Lessor a lump
sum amount which, after deduction of all taxes required to be paid by Lessor
with respect to the receipt of such amount, will provide Lessor with an amount
necessary to maintain Lessor's after-tax economic yield and overall net
after-tax cash flows at least at the same level that would have been available
if such Tax Loss had not occurred, plus any interest, penalties or additions to
tax which may be imposed in connection with such Tax Loss. In lieu of paying
such Tax Loss in a lump sum, Lessor may require, or upon Lessee's request, may
agree, in Lessor's sole discretion, that such Tax Loss shall be paid in equal
periodic payments over the applicable remaining Lease Term with respect to such
Equipment with each Rental Payment due and payable with respect to such
Equipment. A Tax Loss shall conclusively be deemed to have occurred if either
(a) a deficiency shall have been proposed by the Internal Revenue Service or
other taxing authority having jurisdiction, or (b) tax counsel for Lessor has
rendered an opinion to Lessor that such Tax Loss has so occurred. The foregoing
indemnities and covenants set forth in Sections 6 and 7 of this Master Lease
shall continue in full force and effect and shall survive the expiration or
earlier termination of the Lease.
8. DEFAULT
Lessee shall be in default of this Lease upon the occurrence of any one or
more of the following events (each an "Event of Default"):
(a) Lessee shall fail to make any payment, of rent or otherwise, under any
Lease within 10 days of the date when due; or (b) Lessee shall fail to obtain or
maintain any of the insurance required under any Lease; or (c) Lessee shall fail
to perform or observe any covenant, condition or agreement under any Lease, and
such failure continued for 10 days after notice thereof to Lessee; or (d) Lessee
shall default in the payment or performance of any indebtedness or obligation to
Lessor or any affiliated person, firm or entity controlling, controlled by or
under common control with Lessor, under any loan, note, security agreement,
lease, guaranty, title retention or conditional sales agreement or any other
instrument or agreement evidencing such indebtedness with Lessor or such other
affiliated person, firm or entity affiliated with Lessor; or (e) any
representation or warranty made by Lessee herein or in any certificate,
agreement, statement or document hereto or hereafter furnished to Lessor in
connection herewith, including without limitation, any financial information
disclosed to Lessor, shall prove to be false or incorrect in any material
respect; or (f) death or judicial declaration of incompetence of Lessee, if an
individual; the commencement of any bankruptcy, insolvency, arrangement,
reorganization, receivership, liquidation or other similar proceeding by or
against Lessee or any of its properties or businesses, or the appointment of a
trustee, receiver, liquidator or custodian for Lessee or any of its properties
of business, or if Lessee suffers the entry of an order for relief under Title 1
1 of the United States Code; or the making by Lessee of a general assignment or
deed of trust for the benefit of creditors, or (g) Lessee shall default in any
payment or other obligation to any third party and any applicable grace or cure
period with respect thereto has expired; or (h) Lessee shall terminate its
existence by merger, consolidation, sale of substantially all of its assets or
otherwise; or (i) if Lessee is a privately held corporation, and more than 50%
of Lessee's voting capital stock, or effective control of Lessee's voting
capital stock, issued and outstanding from time to time, is not retained by the
holders of such stock on the date of this Lease without the consent of Lessor,
which consent shall not be unreasonably withheld; or (j) if Lessee is a publicly
held corporation, there shall be a change in the ownership of Lessee's stock
without the consent of Lessor, which consent shall not be unreasonably withheld,
such that Lessee is no longer subject to the reporting requirements of the
Securities Exchange Act of 1 934, or no longer has a class of equity securities
registered under Section 12 of the Securities Act of 1933; or (k) Lessor shall
determine, in its sole discretion and in good faith, that there has been a
material adverse change in the financial condition of the Lessee since the date
of this Lease, or that Lessee's ability to make any payment hereunder promptly
when due or otherwise comply with the terms of this Lease or any other agreement
between Lessor and Lessee is impaired; or (1) any event or condition set forth
in subsections (b) through .(k) of this Section 8 shall occur with respect to
any guarantor or other -person responsible, in whole or in part, for payment or
performance of this Lease; or (m) any event or condition set forth in
subsections (d) through (j) shall occur with respect to any affiliated person,
firm or entity controlling, controlled by or under common control with Lessee.
Lessee shall promptly notify Lessor of the occurrence of any Event of Default or
the occurrence or existence of any event or condition which, upon the giving of
notice of lapse of time, or both, may become an Event of Default.
9. REMEDIES; MANDATORY PREPAYMENT.
Upon the occurrence of any Event of Default, Lessor may, at its sole option
and discretion, exercise one or more of the following remedies with respect to
any or all of the Equipment: (a) cause Lessee to promptly return, at Lessee's
expense, any or all Equipment to such location as Lessor may designate in
accordance with the terms of Section 18 of this Master Lease, or Lessor, at its
option, may enter upon the premises where the Equipment is located and take
immediate possession of and remove the same by summary proceedings or otherwise,
all without liability to Lessor for or by reason of damage to property or such
entry or taking possession except for Lessor's gross negligence or willful
misconduct; (b) sell any or all Equipment at public or private sale or otherwise
dispose of, hold, use, operate, lease to others or keep idle the Equipment, all
as Lessor in its sole discretion may determine and all free and clear of any
rights of Lessee; (c) remedy such default, including making repairs or
modifications to the Equipment, for the account and expense of Lessee, and
Lessee agrees to reimburse Lessor for all of Lessor's costs and expenses
immediately upon Lessor's presentation of invoices for any such costs and
expenses; (d) by written notice to Lessee, terminate the Lease with respect to
any or all Lease Schedules and the Equipment subject thereto, as such notice
shall specify, and, with respect to such terminated Lease Schedules and
Equipment, declare immediately due and payable and recover from Lessee, as
liquidated damages for loss of Lessor's bargain and not as a penalty, an amount
equal to the Stipulated Loss Value, calculated as of the next following Rental
Payment Date; (e) apply any deposit or other cash collateral or sale or
remarketing proceeds of the Equipment at any time to reduce any amounts due to
Lessor, and (f) exercise any other right or remedy which may be available to
Lessor under applicable law, or proceed by appropriate court action to enforce
the terms hereof or to recover damages for the breach hereof, including
reasonable attorneys' fees and court costs. Notice of Lessor's intention to
accelerate, notice of acceleration, notice of nonpayment, presentment, protest,
notice of dishonor, or any other notice whatsoever are hereby waived by Lessee
and any endorser, guarantor, surety or other party liable '.n any capacity for
any of the Lessee's obligations under or in respect of the Lease. No remedy
referred to in this Section 9 shall be exclusive, but each shall be cumulative
and in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity.
The exercise or pursuit by Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise or pursuit by Lessor of any or
all such other remedies, and all remedies hereunder shall survive termination of
this Lease. At any sale of the Equipment pursuant to this Section 9, Lessor may
bid for the Equipment. Notice required, if any, of any sale or other disposition
hereunder by Lessor shall be satisfied by the mailing of such notice to Lessee
at least seven (7) days prior to such sale or other disposition. In the event
Lessor takes possession and disposes of the Equipment, the proceeds of any such
disposition shall be applied in the following order: (1) to all of Lessor's
costs, charges and expenses incurred in taking, removing, holding, repairing and
selling or leasing the Equipment; (2) to the extent not previously paid by
Lessee, to pay Lessor for any damages then remaining unpaid hereunder; (3) to
reimburse Lessee for any sums previously paid by Lessee as damages hereunder;
and (4) the balance, if any, shall be retained by Lessor. A termination shall
occur only upon written notice by Lessor and only with respect to such Equipment
as Lessor shall specify in such notice. Termination under this Section 9 shall
not affect Lessee's duty to perform Lessee's obligations hereunder to Lessor in
full. Lessee agrees to reimburse Lessor on demand for any and all costs and
expenses incurred by Lessor in enforcing its rights and remedies hereunder
following the occurrence of an Event of Default, including, without limitation,
reasonable attorney's fees, and the costs of repossession, storage, insuring,
reletting, selling and disposing of any and all Equipment.
The term "Stipulated Loss Value" with respect to any item of Equipment
shall mean the Stipulated Loss Value as set forth in any Schedule of Stipulated
Loss Values attached to and made a part of the applicable Lease Schedule. If
there is no such Schedule of Stipulated Loss Values, then the Stipulated Loss
Value with respect to any item of Equipment on any Rental Payment Date during
the Lease Term shall be an amount equal to the sum of: (a) all Rental Payments
and other amounts then due and owing to Lessor under the Lease, together with
all accrued interest and late charges thereon calculated through and including
the date of payment; plus (b) the net present value of: (i) all Rental Payments
then remaining unpaid for the Lease Term, plus (ii) the amount of any purchase
obligation with respect to such item of Equipment or, if there is no such
obligation, then the fair market value of such item of Equipment at the end of
the Lease Term, as estimated by Lessor in its sole discretion (accounting for
the amount of any unpaid Related Expenses for such item of Equipment and, with
respect to any such item of Equipment that has been attached to or installed on
or in any other property leased or owned by Lessee, such value shall be
determined on an installed basis, in place and in use), all discounted to net
present value at a discount rate equal to the 1-year Treasury Constant Maturity
rate as published in the Selected Interest Rates table of the Federal Reserve
statistical release H.15(519) for the week ending immediately prior to the
original Acceptance Date for such Equipment.
Lessee is or may become indebted under or in respect of one or more leases,
loans, notes, credit agreements, reimbursement agreements, security agreements,
title retention or conditional sales agreements, or other documents, instruments
or agreements, whether now existing or hereafter arising, evidencing Lessee's
obligations for the payment of borrowed money or other financial accommodations
("Obligations") owing to FCC, or to one or more affiliated persons, firms or
entities controlling, controlled by or under common control with Lessor
("Affiliates"). If Lessee pays or prepays all or substantially all of its
Obligations owing to any Affiliate, whether or not such payment or prepayment is
voluntarily or involuntarily made by Lessee before or after any default or
acceleration of such Obligations, then Lessee shall pay, at Lessor's option and
immediately upon notice from Lessor, all or any part of Lessee's Obligations
owing to Lessor, including but not limited to Lessee's payment of Stipulated
Loss Value for all or any Lease Schedules as set forth in such notice from
Lessor.
10. ADDITIONAL SECURITY
For so long as any obligations of Lessee shall remain outstanding under any
Lease, Lessee hereby grants to Lessor a security interest in all of Lessee's
rights in and to Equipment subject to such Lease from time to time, to secure
the prompt payment and performance when due (by reason of acceleration or
otherwise) of each and every indebtedness, obligation or liability of Lessee, or
any affiliated person, firm, or entity controlling, controlled by, or under
common control with Lessee, owing to Lessor, whether now existing or hereafter
arising, including but not limited to all of such obligations under or in
respect of any Lease. The extent to which Lessor shall have a purchase money
security interest in any item of Equipment under a Lease which is deemed to
create a security interest under Section 1-201(37) of the Uniform Commercial
Code shall be determined by reference to the Acquisition Cost of such item
financed by Lessor. In order more fully to secure its rental payments and all
other obligations to Lessor hereunder, Lessee hereby grants to Lessor a security
interest in any deposit of Lessee to Lessor under Section 3(d) of any Lease
Schedule hereto. Such security deposit shall not bear interest, may be
commingled with other funds of Lessor and shall be immediately restored by
Lessee if applied under Section 9. Upon expiration of the term of this Lease and
satisfaction of all of Lessee's obligations, the security deposit shall be
returned to Lessee. The term "Lessor" as used in this Section 10 shall include
any affiliated person, firm or entity controlling, controlled by or under common
control with Lessor.
11. NOTICES
Any notices or demands required or permitted to be given under this Lease
shall be given in writing and by regular mail and shall become effective when
deposited in the United States mail with postage prepaid to Lessor to the
attention of Customer Accounts, and to Lessee at the address set forth above, or
to such other address as the party to receive notice hereafter designates by
such written notice.
12. USE; MAINTENANCE; INSPECTION; LOSS AND DAMAGE
During the Lease Term for each item of Equipment, Lessee shall, unless
Lessor shall otherwise consent in writing: (a) permit each item of Equipment to
be used only within the continental United States , and occasionally within
Canada (i.e., not more than 10% of all units of Equipment located in Canada at
any one time; not more than 10% mileage within Canada for each unit of Equipment
on an annual basis) by qualified personnel solely for business purposes and the
purpose for which it was designed, provided, however, that in no event shall any
Equipment be maintained or garaged in Canada, and Lessee shall, at its sole
expense, service, repair, overhaul and maintain each item of Equipment in the
same condition as when received, ordinary wear and tear excepted, in good
operating order, consistent with prudent industry practice (but, in no event
less than the same extent to which Lessee maintains other similar equipment in
the prudent management of its assets and properties) and in compliance with all
applicable laws, ordinances, regulations, and conditions of all insurance
policies required to be maintained by Lessee under the Lease and all manuals,
orders, recommendations, instructions and other written requirements as to the
repair and maintenance of such item of Equipment issued at any time by the
vendor and/or manufacturer thereof; (b) maintain conspicuously on any Equipment
such labels, plates, decals or other markings as Lessor may reasonably require,
stating that Lessor is owner of such Equipment; (c) furnish to Lessor such
information concerning the condition, location, use and operation of the
Equipment as Lessor may request; (d) permit any person designated by Lessor to
visit and inspect any Equipment and any records maintained in connection
therewith, provided, however, that the failure of Lessor to inspect the
Equipment or to inform Lessee of any noncompliance shall not relieve Lessee of
any of its obligations hereunder; (e) if any Equipment does not comply with the
requirements of this Lease Lessee shall, within 30 days of written notice from
Lessor, bring such Equipment into compliance; (f) not use any Equipment, nor
allow the same to be used, for any unlawful purpose, nor in connection with any
property or material that would subject the Lessor to any liability under any
state or federal statute or regulation pertaining to the production, transport,
storage, disposal or discharge of hazardous or toxic waste or materials; and (g)
make no additions, alterations, modifications or improvements (collectively,
"Improvements") to any item of Equipment that are not readily removable without
causing material damage to such item of Equipment or which will cause the value,
utility or useful life of such item of Equipment to materially decline. If any
such Improvement is made and cannot be removed without causing material damage
or decline in value, utility or useful life (a "NonSeverable Improvement"), then
Lessee warrants that such Non-Severable Improvement shall immediately become
Lessor's property upon being installed and shall be free and clear of all liens
and encumbrances and shall become Equipment subject to all of the terms and
conditions of the Lease. All such Improvements that are not Non-Severable
Improvements shall be removed by Lessee prior to the return of the item of
Equipment hereunder or such Improvements shall also become the sole and absolute
property of Lessor without any further payment by Lessor to Lessee and shall be
free and clear of all liens and encumbrances whatsoever. Lessee shall repair all
damage to any item of Equipment caused by the removal of any Improvement so as
to restore such item of Equipment to the same condition which existed prior to
its installation and as required by this Lease.
Lessee hereby assumes all risk of loss, damage or destruction for whatever
reason to the Equipment from and after the earlier of the date (i) on which the
Equipment is ordered or (ii) Lessor pays the purchase price of the Equipment,
and continuing until the Equipment has been returned to, and accepted by, Lessor
in the condition required by Section 18 hereof upon the expiration of the Lease
Term. If during the Lease Term all or any portion of an item of Equipment shall
become lost, stolen, destroyed, damaged beyond repair or rendered permanently
unfit for use for any reason, or in the event of any condemnation, confiscation,
theft or seizure or requisition of title to or use of such item, Lessee shall
immediately pay to Lessor an amount equal to the Stipulated Loss Value of such
item of Equipment, as of the next following Rental Payment Date.
13. INSURANCE
Lessee shall procure and maintain insurance in such amounts and upon such
terms and with such companies as Lessor may approve, during the entire Lease
Term and until the Equipment has been returned to, and accepted by, Lessor in
the condition required by Section 18 hereof, at Lessee's expense, provided that
in no event shall such insurance be less than the following coverages and
amounts: (a) Worker's Compensation and Employer's Liability Insurance, in the
full statutory amounts provided by law; (b) Comprehensive General Liability
Insurance including product/completed operations and contractual liability
coverage, with minimum limits of $1,000,000 each occurrence, and Combined Single
Limit Body Injury and Property Damage, $1,000,000 aggregate, where applicable;
and (c) All Risk Physical Damage Insurance, including earthquake and flood, on
each item of Equipment, in an amount not less than the greater of the Stipulated
Loss Value of the Equipment or (if available) its full replacement value. Lessor
will be included as an additional insured and loss payee as its interest may
appear. Such policies shall be endorsed to provide that the coverage afforded to
Lessor shall not be rescinded, impaired or invalidated by any act or neglect of
Lessee. Lessee agrees to waive Lessee's right and its insurance carrier's rights
of subrogation against Lessor for any and all loss or damage.
In addition to the foregoing minimum insurance coverage, Lessee shall
procure and maintain such other insurance coverage as Lessor may require from
time to time during the Lease Term. All policies shall be endorsed or contain a
clause requiring the insurer to furnish Lessor with at least 30 days' prior
written notice of any cancellation or non-renewal of coverage. Upon execution of
this Lease, Lessee shall furnish Lessor with a certificate of insurance or other
evidence satisfactory to Lessor that such insurance coverage is in effect,
provided, however, that Lessor shall be under no duty either to ascertain the
existence of or to examine such insurance coverage or to advise Lessee in the
event such insurance coverage should not comply with the requirements hereof. In
case of failure of Lessee to procure or maintain insurance, Lessor may at its
option obtain such insurance, the cost of which will be paid by the Lessee as
additional rentals. Lessee further agrees to give Lessor prompt notice of any
damage to or loss of, the Equipment, or any part thereof.
14. LIMITATION OF LIABILITY
Lessor shall have no liability in connection with or arising out of the
ownership, leasing, furnishing, performance or use of the Equipment or any
special, indirect, incidental or consequential damages of any character,
including, without limitation, loss of use of production facilities or
equipment, loss of profits, property damage or lost production, whether suffered
by Lessee or any third party.
15. FURTHER ASSURANCES
Lessee shall promptly execute and deliver to Lessor such further documents
and take such further action as Lessor may require in order to more effectively
carry out the intent and purpose of this Lease. Lessee shall provide to Lessor,
within 120 days after the close of each of Lessee's fiscal years, and, upon
Lessor's request, within 45 days of the end of each quarter of Lessee's fiscal
year, a copy of its financial statements prepared in accordance with generally
accepted accounting principles and, in the case of annual financial statements,
audited by independent certified public accountants, and in the case of
quarterly financial statements certified by Lessee's chief financial officer.
Lessee shall execute and deliver to Lessor upon Lessor's request any and all
schedules, forms and other reports and information as Lessor may deem necessary
or appropriate to respond to requirements or regulations imposed by any
governmental authorities. Lessee shall execute and deliver to Lessor upon
Lessor's request such further and additional documents, instruments and
assurances as Lessor deems necessary (a) to acknowledge and confirm, for the
benefit of Lessor or any assignee or transferee of any of Lessor's rights, title
and interests hereunder (an "Assignee"), all of the terms and conditions of all
or any part of this Lease and Lessor's or Assignee's rights with respect
thereto, and Lessee's compliance with all of the terms and provisions hereof and
(b) to preserve, protect and perfect Lessor's or Assignee's right, title or
interest hereunder and in any Equipment, including, without limitation, such UCC
financing statements or amendments, corporate resolutions, certificates of
compliance, notices of assignment or transfers of interests, and restatements
and reaffirmations of Lessee's obligations and its representations and
warranties with respect thereto as of the dates requested by Lessor from time to
time. In furtherance thereof, Lessor may file or record this Lease or a
memorandum or a photocopy hereof (which for the purposes hereof shall be
effective as a financing statement) so as to give notice to third parties, and
Lessee hereby appoints Lessor as its attorney-in-fact to execute, sign, file and
record UCC financing statements and other lien recordation documents with
respect to the Equipment where Lessee fails or refuses to do so after Lessor's
written request, and Lessee agrees to pay or reimburse Lessor for any filing,
recording or stamp fees or taxes arising from any such filings
16. ASSIGNMENT; SUBLEASING
This Lease and all rights of Lessor hereunder shall be assignable by Lessor
absolutely or as security, without notice to Lessee, subject to the rights of
Lessee hereunder for the use and possession of the Equipment for so long as no
Event of Default has occurred and is continuing hereunder. Any such assignment
shall not relieve Lessor of its obligations hereunder unless specifically
assumed by the assignee, and LESSEE AGREES IT SHALL NOT ASSERT ANY DEFENSE,
RIGHTS OF SET-OFF OR COUNTERCLAIM AGAINST ANY ASSIGNEE TO WHICH LESSOR SHALL
HAVE ASSIGNED ITS RIGHTS AND INTERESTS HEREUNDER, NOR HOLD OR ATTEMPT TO HOLD
SUCH ASSIGNEE LIABLE FOR ANY OF LESSOR'S OBLIGATIONS HEREUNDER. No such
assignment shall materially increase Lessee's obligations hereunder. LESSEE
SHALL NOT ASSIGN OR DISPOSE OF ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE
OR ENTER INTO ANY SUBLEASE (EXCEPT AS PROVIDED BELOW) WITH RESPECT TO ANY OF THE
EQUIPMENT WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF LESSOR.
Any provision of this Lease to the contrary notwithstanding, Lessee may
rent or lease each item of Equipment in the regular course of its business to
one or more of Lessee's commercial customers (each, an "End User") in the
ordinary course of Lessee's business, all pursuant to one or more leases or
rental agreements pertaining to the Equipment (individually and collectively
referred to hereinafter as a "Lease Agreement"), the terms and conditions of
which shall in all respects be subject to the prior approval of Lessor and
Lessor's Assignee, and pursuant to which all of the rights of Lessee, and any
End Users in and to the Equipment and the Lease Agreements shall be subject and
subordinate to all of the rights, title and interests of Lessor and Lessor's
Assignee therein. Attached hereto as Exhibits A and B are forms of Lease
Agreements for use between Lessee and End Users, each of which have been
approved by Lessor. Lessee shall, promptly upon Lessor's periodic request (not
more frequently than four times per year), submit to Lessor a report listing the
description, serial number, title state, title number, model year, age, original
cost, capital repairs, daily, weekly and monthly lease rate, lease term, and End
User name and location for each Item of Equipment then subject to this Lease and
a Lease Agreement. Such report shall be certified by a duly authorized officer
of Lessee.
To further secure payment of all indebtedness, obligations and liabilities
of Lessee owing to Lessor, of every kind and description, and all interest,
taxes, fees, charges, expenses and attorneys fees chargeable to Lessee or
incurred by Lessor in connection with this Lease (the "Obligations"), Lessee
agrees:
i. to assign and grant, and does hereby assign and grant, to Lessor and
Lessor's Assignee a security interest in any and all Lease Agreements,
accounts, chattel paper, instruments and general intangibles relating
to the use, operation, lease or rental of the Equipment, whether now
existing or hereafter arising, together with all rights arising
thereunder, including all payments due and to become due thereunder,
and proceeds of all of the foregoing, all of which shall constitute
additional collateral subject to the terms and provisions of this
Lease (the Equipment and Lease Agreements are collectively referred to
hereinafter as the "Collateral");
ii. upon the occurrence of an Event of Default under this Lease and the
request of Lessor or Lessor's Assignee, to mark all Lease Agreements
with such legends as may be specified by Lessor or Lessor's Assignee
to the effect that they are subject and subordinate to this Lease, and
to deliver originals of each Lease Agreement to Lessor's Assignee so
that or Lessor's Assignee shall be assured of perfection of its
security interest therein by possession of all chattel paper forming a
part of the Lease Agreement; and
iii. to do, make, execute and deliver all such additional and further acts,
assurances and instruments as Lessor's Assignee may require in order
to vest in and assure to Lessor's Assignee its rights in the
Collateral, including without limitation, execution and delivery of
such financing statements as Lessor's Assignee may request to perfect
and continue the security interests granted or otherwise contemplated
herein.
Upon the occurrence of an Event of Default under this Lease, Lessor or
Lessor's Assignee shall have the right to notify and direct any End User to make
all payments due under any Lease Agreement directly to Lessor, and Lessor shall
have full authority to take possession and control of the cash and non-cash
proceeds thereof, with full power to settle or compromise disputed claims
thereon, and to apply the same to Lessee's Obligations hereunder in such manner
and order as Lessor shall determine in its sole discretion. Lessee hereby agrees
to provide Lessor with an adequate supply of executed, but undated and
unaddressed forms of Notice of Assignment, in substantially the form of Exhibit
C attached hereto, which Lessee hereby irrevocably authorizes Lessor to complete
and send to each End User upon the occurrence of an Event of Default under this
Lease. Each Lease Agreement shall provide that it shall terminate, at the option
of Lessor, upon the expiration or earlier termination of this Lease (by reason
of acceleration after the occurrence of an Event of Default or otherwise) with
respect to the Equipment subject to such Lease Agreement.
Lessee further warrants and represents that: (i) any Lease Agreement is and
shall be a true lease and not a lease intended as security, as defined in the
Uniform Commercial Code in effect in the State of Rhode Island (the "UCC"); (ii)
each Lease Agreement is and shall be genuine and executed by the parties
identified therein, which parties shall be duly authorized to execute such Lease
Agreements; (iii) each Lease Agreement is and shall be the exclusive Lease
Agreement executed in connection with the rental of the Equipment to the End
User and for the time period identified therein; (iv) all information in each
Lease Agreement or supplied by Lessee to Lessor in connection with each Lease
Agreement is and shall be true and correct; (v) each Lease Agreement and the
Equipment is and shall be free and clear of all liens and encumbrances of any
kind other than those provided herein; (vi) the obligations of End User to make
payment under a Lease Agreement shall be free and clear of any and all defenses,
offsets or counterclaims which may be asserted by End User or any other party
against Lessee; (vii) Lessee has not and will not, without the prior written
consent of Lessor, accept in excess of one month advance rent under any Lease
Agreement; (viii) Lessee will not allow the Equipment to be removed from the
location(s) permitted in this Lease, and will not modify amend or extend the
time for payment or waive performance in any material respect under any Lease
Agreement without the express prior written consent of Lessor; and (ix) Lessee
shall maintain business records concerning the Equipment and the Lease
Agreements satisfactory in all respects to Lessor, and to allow Lessor to
inspect and copy all such business records during regular business hours. Lessee
further agrees to allow and ensure Lessor access to the Equipment in order to
inspect and photograph the Equipment at each location where Lessee or any End
User conducts its business or where the Equipment may then be located.
Upon Lessee's failure to pay or perform any of its Obligations owing to
Lessor, or the occurrence of an Event of Default thereunder, Lessor: (a) may
exercise all of the rights and remedies set forth in this Lease or any Lease
Agreement; (b) shall have the right to notify any End User under any Lease
Agreement to make payments directly Lessor; (c) Lessor is hereby constituted and
appointed as Lessee's true and lawful attorney-in-fact of with full power: (i)
to endorse the name of Lessee upon any instruments of payment (including
payments made under any policy of insurance) that may come into possession of
Lessor in full or partial payment of any amount owing under or in respect of
this Lease or any Lease Agreement; and (ii) to sell, assign, sue for, collect or
compromise payment of all or any part of the Collateral in the name of Lessee or
in its own name, or to make any other disposition of Collateral, or any part
thereof, which disposition may be for cash, credit or any combination thereof,
(it being understood and agreed that Lessor nor its agents shall be liable for
any acts or omissions or for any error of judgment or mistake of fact or law in
its capacity as such attorney-in-fact, and that-this power of attorney is
coupled with an interest and shall be irrevocable so long as any obligations
shall remain outstanding). Lessor shall have, in addition to any other rights
and remedies contained in this Lease, any Lease Agreement, and any other
agreements, guarantees, notes, instruments and documents now or hereafter
executed by Lessee and delivered to Lessor, all of the rights and remedies of a
secured party under the Uniform Commercial Code and any applicable laws, all of
which shall be deemed cumulative and not alternative and are not exclusive of
any other remedies provided by law.
17. LESSEE'S OBLIGATION UNCONDITIONAL
This Lease is a net lease and Lessee hereby agrees that it shall not be
entitled to any abatement of rents or of any other amounts payable hereunder by
Lessee, and that its obligation to pay all rent and any other amounts owing
hereunder shall be absolute and unconditional under all circumstances,
including, without limitation, the following circumstances: (i) any claim by
Lessee to any right of set-off, counterclaim, recoupment, defense or other right
which Lessee may have against Lessor, any seller or manufacturer of any
Equipment or anyone else for any reason whatsoever; (ii) the existence of any
liens, encumbrances or rights of others whatsoever with respect to any
Equipment, whether or not resulting from claims against Lessor not related to
the ownership of such Equipment; or (iii) any other event or circumstances
whatsoever. Each Rent Payment or other amount paid by Lessee hereunder shall be
final and Lessee will not seek to recover all or any part of such payment from
Lessor for any reason whatsoever.
18. RETURN OF EQUIPMENT
Upon the expiration or earlier termination of the Lease Term with respect
to any Equipment, and provided that Lessee has not validly exercised any
purchase option with respect thereto, Lessee shall: (a) return the Equipment to
a location and in the manner designated by the Lessor within the continental
United States, including, as reasonably required by Lessor, securing
arrangements for the disassembly and packing for shipment by an authorized
representative of the manufacturer of the Equipment, shipment with all parts and
pieces on a carrier designated or approved by Lessor, and then reassembly
(including, if necessary, repair and overhaul) by such representative at the
return location in the condition the Equipment is required to be maintained by
the Lease and in such condition as will make the Equipment immediately able to
perform all functions for which the Equipment was originally designed (or as
upgraded during the Lease Term), and immediately qualified for the
manufacturer's (or other authorized servicing representative's) then-available
service contract or warranty; (b) cause the Equipment to qualify for all
applicable licenses or permits necessary for its operation for its intended
purpose and to comply with all specifications and requirements of applicable
federal, state and local laws, regulations and ordinances; (c) upon Lessor's
request, provide suitable storage, acceptable to Lessor, for the Equipment for a
period not to exceed 180 days from the date of return; (d) cooperate with Lessor
in attempting to remarket the Equipment, including display and demonstration of
the Equipment to prospective purchasers or lessees, and allowing Lessor to
conduct any private or public sale or auction of the Equipment on Lessee's
premises. All costs incurred in connection with any of the foregoing shall be
the sole responsibility of the Lessee. During any period of time from the
expiration or earlier termination of the Lease until the Equipment is returned
in accordance with the provisions hereof or until Lessor has been paid the
applicable purchase option price if any applicable purchase option is exercised,
Lessee agrees to pay to Lessor additional per them rent ("Holdover Rent"),
payable promptly on demand in an amount equal to 125% of the highest monthly
Rental Payment payable during the Lease Term divided by 30, provided, however,
that nothing contained herein and no payment of Holdover Rent hereunder shall
relieve Lessee of its obligation to return the Equipment upon the expiration or
earlier termination of the Lease.
19. RELATED LEASE SCHEDULES
In the event that any Equipment subject to a Lease shall become attached
to, affixed to, or used in connection with Equipment subject to any other Lease
hereunder (each a "Related Lease Schedule"), Lessee agrees that: (a) if Lessee
elects to exercise any purchase option, early termination option, renewal
option, purchase obligation or early purchase option under any Lease; or (b) if
Lessee elects to return the Equipment under any Lease in accordance therewith,
then, in either case, Lessor shall have the right, in its discretion, to require
the same disposition for all Equipment subject to a Related Lease Schedule.
20. MISCELLANEOUS; ENFORCEABILITY AND GOVERNING LAW
The term "Lessee" as used in the Lease shall mean and include any and all
Lessees who sign below, each of whom shall be jointly and severally liable under
the Lease. This Master Lease will not be binding on Lessor until accepted and
executed by Lessor, notice of which is hereby waived by Lessee. Any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given. Time is of the essence in the payment and performance of
all of Lessee's obligations under the Lease. The captions in this Lease are for
convenience only and shall not define or limit any of the terms hereof.
Any provisions of this Lease which are unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
unenforceability without invalidating the remaining provisions hereof, and any
such unenforceability in any jurisdiction shall not render unenforceable such
provisions in any other jurisdiction. To the extent permitted by applicable law,
Lessee hereby waives; (a) any provisions of law which render any provision
hereof unenforceable in any respect; (b) all rights and remedies under Rhode
Island General Laws Sections 6A-2.1-508 through 522 or corresponding provisions
of the Uniform Commercial Code article or division pertaining to personal
property leasing in any jurisdiction in which enforcement of this Lease is
sought.
THIS LEASE AND THE LEGAL RELATIONS OF THE PARTIES HERETO SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF RHODE ISLAND, WITHOUT REGARD TO PRINCIPLES REGARDING THE CHOICE OF LAW.
LESSEE HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF RHODE ISLAND AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF RHODE
ISLAND FOR THE PURPOSES. OF ANY SUIT, -ACTION OR OTHER -PROCEEDING ARISING OUT
OF ITS OBLIGATIONS HEREUNDER, AND EXPRESSLY WAIVES ANY OBJECTIONS THAT IT MAY
HAVE TO THE VENUE OF SUCH COURTS. LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS LEASE. Any action
by Lessee against Lessor for any cause of action relating to this Lease shall be
brought within one year after any such cause of action first arises.
THIS LEASE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES CONCERNING
THE LEASE OF THE EQUIPMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. LESSEE
ACKNOWLEDGES AND CERTIFIES THAT NO SUCH ORAL AGREEMENTS EXIST. THIS LEASE MAY
NOT BE AMENDED, NOR MAY ANY RIGHTS UNDER THE LEASE BE WAIVED, EXCEPT BY AN
INSTRUMENT IN WRITING SIGNED BY THE PARTY CHARGED WITH SUCH AMENDMENT OR WAIVER.
Executed and delivered by duly authorized representatives of the parties
hereto as of the date set forth below.
DATED AS OF: SEPTEMBER 23, 1999
FLEET CAPITAL CORPORATION PLM RENTAL, INC.
By: /s/Robert H. Cormier By: /s/ Richard K Brock
Title: Vice President Title: Acting CFO, V.P. and
Corporate Controller
<PAGE>
Amendment #2
To
Master lease #46494 dated April 2, 1999 (the "Lease")
Between
Wells Fargo Equipment Finance, Inc. ("Lessor")
And
PLM International, Inc. ("Lessee")
Lessor and Lessee hereby agree to amend the Lease as follows:
1. Paragraph 17(i) is amended by inserting the following to the beginning
thereof, "without Lessor's prior written consent which shall not be unreasonably
withheld, conditioned or delayed provided there is no material adverse change in
Lessee's credit worthiness as a result thereof,".
2. "Paragraph 17(j) is amended by inserting the following to the beginning
thereof, "without Lessor's prior written consent which shall not be unreasonably
withheld, conditioned or delayed provided the credit worthiness of the new
entity is equal or better than Lessee's as of the date of this lease,".
3. Paragraph 17 is further amended by adding the following to the end
thereof:
(k) Lessee shall fail to have closed the sale its subsidiary
operation, American Finance Group, Inc., by March 31, 2000, however, Lessor
retains the right to grant Lessee an extension to this date at Lessor's
sole discretion, which shall not be unreasonably withheld.
(l) Lessee's ration of Earnings Before Interest and Taxes (EBIT) to
Interest Expense shall be no less than 1.35 to 1.0. Lessee's Net Income
shall be no less than $1.00 for any two consecutive quarters.
(m) Lessee's Tangible Net Worth Leverage defined as Total Liabilities
to Tangible Net Worth shall be no greater than 3.0 to 1.0.
EBIT, Net Income and Tangible Net Worth shall be calculated in accordance
with GAAP.
4. Except as modified herein, the terms and conditions of the Lease remain
the same.
Dated: October 12, 1999
WELLS FARGO EQUIPMENT FINANCE, INC. PLM INTERNATIONAL, INC.
By: Sheryl L. Parranto By: /s/ Richard K Brock
Its: Officer Its: Chief Financial Officer
<PAGE>
MASTER LEASE AGREEMENT
U.S. BANCORP
THIS LEASE, DATED AS OF SEPTEMBER 22, 1999, IS MADE BY AND BETWEEN U.S. BANCORP
LEASING & FINANCIAL, HEREAFTER REFERRED TO AS "LESSOR," AND PLM RENTAL, INC.,
HEREAFTER REFERRED TO AS "LESSEE."
LESSOR AND LESSEE COVENANT AND AGREE AS FOLLOWS:
1. PROPERTY LEASED. Lessor agrees to lease to Lessee and Lessee agrees to
lease from Lessor the personal property ("Property") together with any
replacements, additions, repairs, now or hereafter incorporated therein as
described in any Schedule to Master Lease Agreement ("Schedule") now or
hereafter executed by the parties hereto, the terms of which are incorporated
herein.
2. TERM. This Lease shall become effective on the execution hereof by
Lessor. The Term of this Lease may consist of an "Interim Term" and a "Base
Term" in regard to each Schedule. The Interim Term for each Schedule shall begin
on the date that Lessee executes a Delivery and Acceptance Certificate in
connection with any item of Property or provides to Lessor written approval for
payment for such item of Property. Each Interim Term shall continue until the
Base Term Commencement Date set forth in each Schedule. The Base Term for each
Schedule shall begin on the Base Term Commencement Date and shall continue for
the period specified in each Schedule. During each Interim Term if any, Lessee
shall pay rental ('Interim Rental") in the amount set forth in each Schedule
plus applicable tax thereon.
3. RENT, PAYMENT AND TAXES. Rental payments are specified in each Schedule.
All rents shall be payable by Lessee each month on or before the payment date
shown in each Schedule at Lessor's address herein, or as otherwise directed by
Lessor, without notice or demand and without abatement set-off or deduction of
any amount whatsoever. Lessee shall pay when due all taxes, fees, assessments,
or other charges, however designated, now or hereafter levied or based upon the
rentals, ownership, use, possession, leasing, operation, control, or maintenance
of the Property, whether or not paid or payable by Lessor, excluding Lessor's
income, franchise and business and occupation taxes, and shall supply Lessor
with proof of payment satisfactory to Lessor at least seven (7) days before
delinquency. At its option, Lessor may pay any tax, assessment insurance
premium, expense, repair, release, confiscation expense, lien, encumbrance, or
other charge or fee payable hereunder by Lessee, and any amount so paid shall be
repayable by Lessee on demand.
For any payment due hereunder which is not paid within ten (10) days after
the date such payment is due, Lessee agrees to pay a late charge calculated
thereon at a rate of five percent (5.0%) of such overdue amount. The parties
hereto agree that: a) the amount of such late charge represents a reasonable
estimate of the cost that Lessor would incur in processing each delinquent
payment by Lessee and that such late charge shall be paid as liquidated damages
for each delinquent payment; and, b) the payment of late charges and the payment
of Default Interest are distinct and separate from one another. Acceptance of
any late charge or interest shall not constitute a waiver of default with
respect to the overdue amount or prevent Lessor from exercising any other
available rights and remedies. Payments received shall be applied first to
delinquent amounts due, including late charges, then to current installments. If
any such rental payment is made by check and such check is returned to Lessor
for any reason, including without limitation, insufficient funds in Lessee's
account then Lessee shall be assessed a fee of $25.00 in addition to any other
late charge or any other fee which may be applicable.
If the Property is located in a jurisdiction which imposes any "Sales,"
"Use," or "Rental" tax, Lessor shall collect such tax from Lessee and remit such
tax to the appropriate taxing authority or Lessee shall remit such tax directly
to the appropriate taxing authority. Such requirement may only be waived if
Lessee is exempt from such tax under applicable laws or regulations. Lessee is
responsible for ensuring that such exemption is properly documented in
accordance with such laws and regulations and that such documentation is
provided to Lessor at the inception of each Schedule.
If the Property is subject to Personal Property Taxes, both Lessee and
Lessor are required to advise the proper taxing authorities of all leased
property. Lessee agrees that it will report the Property as having an original
cost as set forth on each Schedule and as Property leased from U.S. BANCORP
LEASING & FINANCIAL. If Lessor receives an invoice from the taxing authorities
for applicable Personal Property Taxes, Lessor shall pay any such taxes directly
and Lessee agrees to reimburse Lessor for all such taxes paid by Lessor. If
Lessee receives such invoice, Lessee agrees to promptly remit such tax directly
to the taxing authority and maintain proof of payment Upon termination of each
Schedule, Lessor will, if applicable, estimate Personal Property Taxes on the
Property based upon the most recent tax assessment of the Property or on the tax
rates and taxable value calculations as available from the appropriate taxing
jurisdiction. In the event that the actual personal property tax bill is within
$500.00 of such estimate, then Lessor shall not seek reimbursement from Lessee
for any underpayment and Lessor may retain any overpayment. If the difference
between such estimate and the actual tax bill exceeds $500.00, Lessor shall
refund or Lessee shall remit the entire difference.
4. LOSS OR DAMAGE. No loss or damage to the Property, or any part of it
shall impair any obligation of Lessee hereunder. Lessee assumes all risk of
damage to or loss of the Property, however caused, while in transit and during
the term hereof. If any Property is totally destroyed, Lessee may substitute
property of like kind and value (subject to approval by Lessor in its sole
discretion) or may pay to Lessor the proportionate value of that item of
Property relative to the total cost of the Property plus recovery of applicable
tax benefits, less the amount of any recovery received by Lessor from any
insurance or other source.
5. OWNERSHIP, LOCATION, MAINTENANCE AND USE. Lessee transfers to Lessor all
right title and interest, including any and all ownership interest which Lessee
may have in or to the Property. Lessee represents and wan-ants that it has the
legal right to make such transfer and that such transfer does not constitute a
transfer of all or substantially all of the assets of Lessee, and that such
transfer does not constitute all or a portion of a 'bulk transfer" under the
Uniform Commercial Code. It is agreed between the parties hereto that Lessor
shall be the owner of, and hold title to, the Property for all purposes
throughout each Schedule. At its own risk, Lessee shall use or permit the use of
the Property primarily at the location specified in the Schedule and, without
Lessor's prior written consent shall not loan, sublet remove from such location,
part with possession or otherwise dispose of the Property. Lessee shall at its
sole expense maintain the Property in good repair, appearance and functional
order and in compliance with any manufactures and regulatory maintenance and
performance standards, shall keep complete records and documents regarding its
use, maintenance and repair, shall not use or permit the use of the Property in
any unintended, injurious or unlawful manner, shall not permit use or operation
of the Property by any one other than Lessee's qualified employees and shall not
change or alter the Property without Lessor's written consent. Lessee shall not
create, cause, or permit any kind of claim levy, lien or legal process on the
Property, and shall forthwith satisfy, remove and procure the release thereof.
The Property is and always shall remain personal property. Lessee shall not
cause or permit the Property to be used or located in such a manner that it
might be deemed a fixture. Lessee shall secure from each person not a party
hereto who might secure an interest, lien or other claim in the Property, a
waiver thereof. Lessee shall affix and maintain, at its expense, in a prominent
and visible location, all ownership notices supplied by Lessor. Lessee shall
permit Lessor to mark the Property in a manner sufficient to identify the
Property as Lessor's Property.
6. LEASE. This is a non-cancelable contract of lease only and nothing
herein or in any other document executed in conjunction herewith shall be
construed as conveying or granting to Lessee any option to acquire any right
title or interest, legal or equitable, in or to the Property, other than use,
possession and quiet enjoyment of the Property, subject to and upon full
compliance with the provisions hereof Lessee and Lessor agree that this Lease is
a "Finance Lease" as defined by the Uniform Commercial Code Article 2A, the
Uniform Personal Property Leasing Act. Notwithstanding the foregoing, Lessee
hereby grants to Lessor a security interest in and to the Property as security
for all Lessees obligations to Lessor of every kind and nature.
Lessee hereby acknowledges that all of the leased Property was selected by
Lessee from Supplier(s) chosen by Lessee. Lessee is familiar with all Supply
Contract rights provided by the Supplier(s) and is aware that the Supplier(s)
may be contacted for a full description of any rights Lessee may have under any
Supply Contract. Providing Lessee is not in Default under this Lease, Lessor
hereby assigns to Lessee without recourse, all rights arising under any
warranties applicable to the Property provided by the manufacturer or any other
person. All proceeds of any warranty claim from the manufacturer or any other
person shall first be used to repair the affected Property.
7. GENERAL INDEMNIFICATION AND INSURANCE. Lessee assumes liability for, and
agrees to defend, indemnify and hold Lessor harmless from any claim, liability,
loss, cost expense, or damage of every nature (including, without limitation,
fines, forfeitures, penalties, settlements, and attorneys' fees) by or to any
person whomsoever, regardless of the basis, including wrongful, negligent or
improper act or misuse by Lessor, which directly or indirectly results from or
pertains to the leasing, manufacture, delivery, ownership, use, possession,
selection, performance, operation, inspection, condition (including without
limitation, latent or other defects, and whether or not discoverable),
improvements, removal, return or storage of the Property, except arising while
the Property is in the possession of Lessor.
Upon request of Lessor, Lessee shall assume the defense of all demands,
claims, or actions, suits and all proceedings against Lessor for which indemnity
is provided and shall allow Lessor to participate in the defense thereof. Lessor
shall be subrogated to all rights of Lessee for any matter which Lessor has
assumed obligation hereunder, and may settle any such demand, claim, or action
with Lessee's prior consent (which shall not be unreasonably withheld), and
without prejudice to Lessor's right to indemnification hereunder.
At its expense, Lessee shall maintain in force, at all times from shipment
of the Property to Lessee until surrender thereof, property damage insurance and
liability insurance with such deductibles and from such insurance carriers as
shall be satisfactory to Lessor. The Property must be insured against all risks
which are customarily insured against on the type of property leased hereunder.
The amount of Lessee's liability insurance shall not be less than $1,000,000.00.
Such insurance policies must name Lessor as an additional insured and loss
payee, and provide for ten (10) days advance written notice to Lessor of
modification or cancellation. Lessee shall, upon request deliver to Lessor
satisfactory evidence of the insurance coverage. In the event Lessee fails to do
so, Lessor may, at Lessor's option, in addition to any other rights available to
Lessor, obtain coverage, and any sum paid therefor by Lessor (including any
charges assessed by Lessor for such service) shall be immediately due and
payable to Lessor by Lessee.
8. INCOME TAX INDEMNITY. Lessee and Lessor hereby agree and assume as
follows:
(a) This Lease will be a lease for Federal and Oregon state income tax
purposes; Lessor will be treated as the purchaser, owner, lessor, and original
user of the Property and Lessee will be treated as the lessee of the Property
for such purposes.
(b) Lessor shall be entitled to depreciation deductions with respect to
each item of Property as provided by Section 167(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), determined under Section 168 of the Code by
using the applicable depreciation method, the applicable recovery period, and
the applicable convention, all as may be specified on the applicable Schedule
for the Property, and Lessor shall also be entitled to corresponding Oregon
depreciation deductions.
(c) For purposes of determining depreciation deductions, the Property shall
have an income tax basis equal to Lessor's cost for the Property specified on
the applicable Schedule, plus such expenses of the transaction incurred by
Lessor as may be included in basis under Section 10 1 2 of the Code.
(d) The maximum federal and Oregon income tax rates applicable to Lessor in
effect on the date of execution and delivery of a Schedule with respect to an
item or items of property will not change during the lease term applicable to
such Property.
If, as the result of the acts or omissions of the Lessee, the assumptions,
representations, warranties, or covenants of Lessee contained in this Lease or
in any other agreement relating to the Property shall prove to be incorrect and
(i) Lessor shall determine that it is not entitled to claim all or any portion
of the depreciation deductions in the amounts and in the taxable yearns
determined as specified in (b) and (c), above, or (ii) such depreciation
deductions are disallowed, adjusted, recomputed, reduced, or recapture, in whole
or in part, by the Internal Revenue Service or Oregon Department of Revenue
(such determination, disallowance, adjustment, recomputation, reduction, or
recapture being herein called a "Loss"), then Lessee shall pay to Lessor as an
indemnity and as additional rent such amount as shall, in the reasonable opinion
of Lessor, cause Lessor's after-tax economic yield (the "Net Economic Return")
to equal the Net Economic Return that would have been realized by Lessor if such
Loss had not occurred. The amount payable to Lessor pursuant to this section
shall be payable on the next succeeding rental payment date after written demand
therefor from Lessor accompanied by a written statement describing in reasonable
detail such Loss and the computation of the amount so payable.
9. INSPECTION AND REPORTS. Lessor shall have the right at any reasonable
time, to enter on Lessee's premises or elsewhere and inspect the Property and
any records and documents regarding its use, maintenance and repair. Upon
Lessor's request, but in no event later than thirty (30) days after such
request, Lessee will deliver all information requested by Lessor which Lessor
deems necessary to determine Lessee's current financial condition or faithful
performance of the terms hereof. Lessee shall give Lessor immediate notice and
copy of all tax notices, reports, or inquiries, and of all seizure, attachment,
or judicial process affecting or relating to the use, maintenance, operation,
possession or ownership of the Property.
10. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants
to Lessor that as of the date of this Lease and of each Schedule:
(a) Lessee has adequate power and capacity to enter into this Lease, any
Schedule, and any other documents required to be delivered in connection with
this Lease (collectively, the "Documents"); the Documents have been duly
authorized, executed and delivered by Lessee and constitute valid, legal and
binding agreements, enforceable in accordance with their terms; there are no
proceedings presently pending or threatened against Lessee which will impair its
ability to perform under the Lease; and all information supplied to Lessor is
accurate and complete.
(b) Lessee's entering into the Lease and leasing the Property does not and
will not; (i) violate any Judgment order, or law applicable to the Lease, Lessee
or Lessees organizational documents; or (ii) result in the creation of any lien,
security interest or other encumbrance upon the Property, other than as granted
hereunder.
(c) All information and representations furnished by Lessee to Lessor
concerning the Property are accurate and correct.
(d) All financial data of Lessee or of any consolidated group of companies
of which Lessee is a member ("Lessee Group"), delivered to Lessor have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis with prior periods and fairly present the financial position
and results from operations of Lessee, or of the Lessee Group, as of the stated
date and period(s). Since the date of the most recently delivered financial
data, there has been no material adverse change in the financial or operating
condition of Lessee or of the Lessee Group.
(e) If Lessee is a business entity, it is and will be validly existing and
in good standing under laws of the state of its organization; the persons
signing the Documents are acting with all necessary authority and hold the
offices indicated below their signatures, which are genuine.
11. ASSIGNMENT. LESSEE SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY
OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR ENTER INTO ANY SUBLEASE OF ALL
OR ANY PART OF THE LEASED PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR
WHICH SHALL NOT BE UNREASONABLY WITHHELD. IN CONNECTION WITH THE GRANTING OF
SUCH CONSENT AND THE PREPARATION OF NECESSARY DOCUMENTATION, A FEE SHALL BE
ASSESSED EQUAL TO ONE PERCENT (1%) OF THE TOTAL REMAINING BALANCE THEN DUE
HEREUNDER.
LESSEE AGREES THAT LESSOR MAY ASSIGN OR TRANSFER THIS LEASE OR LESSOR'S
INTEREST IN THE LEASED PROPERTY WITHOUT NOTICE TO LESSEE. Any assignee of Lessor
shall have all of the rights, but none of the obligations, of Lessor under this
Lease and Lessee will not assert against any assignee of Lessor any defense,
counter claim or offset that Lessee may have against Lessor. Lessee acknowledges
that any assignment or transfer by Lessor will not materially change Lessee's
duties or obligations under this Lease nor materially increase the burdens or
risks imposed on Lessee. Lessee shall cooperate with Lessor in executing any
documentation reasonably required by Lessor or any assignee of Lessor to
effectuate any such assignment.
12. SURRENDER. On the expiration or termination of the term specified in
each Schedule, unless Lessee shall exercise any purchase option granted in
connection with such Schedule, Lessee shall, at its risk and expense and
according to manufacturer's recommendations, assemble, prepare for delivery, and
deliver the applicable Property and all manuals, records, certificates and
documents regarding its use, maintenance and repair to any location specified by
Lessor within the continental United States. To the extent that any such
purchase option specifies that the purchase price shall be the "fair market
value' of the Property, the term "fair market value" shall be defined as the
value of the Property in continued use. Upon return of the Property any upgrades
and improvements shall become the property of Lessor. Any upgrades, parts or
improvements may only be removed from the Property if their removal shall not
impair the Property's ability to operate according to any manufacturers and
regulatory performance standards and specifications. The Property shall be
delivered unencumbered and free of any liens, charges, or other obligations
(including delivery expense and sales or use taxes, if any, arising from such
delivery) and shall be in good working order, in the same condition, appearance,
and functional order as when first leased hereunder, reasonable wear excepted,
and in the condition specified or described in the applicable Schedule. At
Lessor's request Lessee shall at Lessee's expense provide Lessor with a written
certification by an independent engineer or other recognized expert acceptable
to Lessor to the effect that the Property is in the condition required
hereunder. In lieu of delivery, Lessor may, at its option, direct Lessee to
dispose of all or a portion of the Property in a proper and lawful manner at a
recognized disposal site at Lessees sole cost and responsibility.
13. DEFAULT. Time is of the essence under this Lease, and Lessee shall be
in default in the event of any of the following ("Event of Default"): (a) any
failure to pay when due the full amount of any payment required hereunder,
including, without limitation, rent, taxes, liens, insurance, indemnification,
repair or other charge; (b) any misstatement or false statement in connection
with, or non-performance of any of Lessee's obligations, agreements, or
affirmations under or emanating from, this Lease which continues for more than
ten (10) days after written notice; (c) Lessee's death, dissolution, termination
of existence; (d) if any of the following actions or proceedings are not
dismissed within sixty (60) days after commencement: Lessee's insolvency,
becoming the subject of a petition in bankruptcy, either voluntary or
involuntary, or in any other proceeding under federal bankruptcy laws; making an
assignment for benefit of creditors; or being named in, or the Property being
subjected to a suit for the appointment of a receiver, (e) any failure to pay,
as and when due, any obligation of Lessee in excess of $250,000 (which is not
disputed by Lessee in good faith), whether or not to Lessor, arising
independently of this Lease; (f) any removal, sale, transfer, sublease,
encumbrance, seizure or levy of or upon the Property; or (g) bankruptcy,
insolvency, termination, death, dissolution, or default of any guarantor for
Lessee.
14. REMEDIES. Upon the occurrence of any Event of Default pursuant to
Section 13(a) which continues for more than ten (10) days and at any time
thereafter and upon the occurrence of any Event of Default pursuant to Sections
13(b) through (g) which continues for more than ten (10) days after written
notice and at any time thereafter, Lessor shall have all remedies provided by
law; and, without limiting the generality of the foregoing and without
terminating this Lease, Lessor, at its sole option, shall have the right at any
time to exercise concurrently, or separately, without notice to Lessee (unless
specifically stated), any one or all of the following remedies:
(a) Request Lessee to assemble the Property and make it available to Lessor
at a reasonable place designated by Lessor and put Lessor in possession thereof
on demand;
(b) Immediately and without legal proceedings or notice to Lessee, enter
the premises, take possession of, remove and retain the Property or render it
unusable (any such taking shall not terminate this Lease);
(c) Declare the entire amount of rent and other sums payable hereunder
immediately due and payable; however, in no event shall Lessor be entitled to
recover any amount in excess of the maximum permitted by applicable law;
Terminate the leasing of any or all items of Property. Such termination
shall occur only upon notice by Lessor and only as to such items of Property as
Lessor specifically elects to terminate. This Lease shall continue in full force
and effect as to any remaining items.
(e) Recover the sum of. (i) any accrued and unpaid rent, plus (ii) the
present value of all future rentals reserved in the Lease and contracted to be
paid over the unexpired term of the Lease, discounted at the rate of six percent
(6%); plus, (iii) the anticipated residual value of the Property as of the
expiration of this Lease or any renewal thereof, (iv) any indemnity payment if
then determinable; (v) all commercially reasonable costs and expenses incurred
by Lessor in any repossession, recovery, storage, repair, sale, re-lease or
other disposition of the Property, including reasonable attorneys' fees and
costs incurred in connection therewith or otherwise resulting from Lessee's
default (including any incurred at trial, on appeal or in any other proceeding);
and, (vi) the value of all tax benefits lost to Lessor as a result of Lessee's
default or the enforcement by Lessor of any remedy; plus interest on each of the
foregoing at a rate of fifteen percent (15.0%) per annum ("Default Interest");
and,
(f) In an effort to mitigate its damages, Lessor shall re-lease or sell any
or all of the Property at a public or private sale on such terms and notice as
Lessor shall deem reasonable. The proceeds of any sale or lease shall be applied
in the following order of priorities: (i) to pay all of Lessor's expenses in
taking, removing, holding, repairing and disposing of Property; then (ii) to pay
any late charges and interest accrued; then (iii) to pay accrued but unpaid rent
together with the anticipated residual value, future rent, interest and all
other due but unpaid sums (including any indemnification and sums due under
other Leases or agreements in default). Any remaining proceeds will reimburse
Lessee for payments which it made to reduce the amounts owed to Lessor in the
preceding sentence. Lessor shall keep any excess. If the proceeds of any sale or
lease are not enough to pay the amounts owed to Lessor under this Section,
Lessee shall pay the deficiency.
No remedy referred to in this paragraph is intended to be exclusive, but
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity.
15. LESSEE'S WAIVER. Upon the execution by Lessee of a Delivery and
Acceptance Certificate in connection with each Schedule hereto, to the extent
permitted by applicable law, Lessee hereby waives Lessee's rights to: (i) cancel
or repudiate this Lease; (ii) reject or revoke acceptance of the Property; (iii)
recover damages from Lessor for any breaches of warranty; (iv) claim, grant or
permit a security interest in the Property in Lessee's possession or control for
any reason; (v) deduct all or part of any claimed damages resulting from
Lessor's default if any, under this Lease; (vi) accept any partial delivery of
the property; (vii) "cover" by making any purchase or lease of or contract to
purchase or lease property in substitution for the Property; (viii) commence
legal action against Lessor for specific performance, replevin, sequestration,
claim and delivery or the like for the Property.
16. NOTICES, PAYMENTS AND G0VERNING LAW. All notices and payments shall be
mailed or delivered to the respective parties at the below address, or such
other address as a party may provide in writing from time to time. This Lease
shall be considered to have been made in the State of Oregon and shall be
interpreted, and the rights and liabilities of the parties determined, in
accordance with applicable federal law and the laws of the State of Oregon. In
the event of suit enforcing this Lease, Lessee agrees that venue may, at
Lessor's option, be laid in the county of Lessor's address below.
17. SEVERABILITY. If any of the provisions of this Lease are contrary to,
prohibited by, or held invalid under applicable laws, regulations or public
policy of any jurisdiction in which it is sought to be enforced, then that
provision shall be considered inapplicable and omitted but shall not invalidate
the remaining provisions. In no event shall this Lease be enforced in any way
which permits Lessor to charge or collect interest in excess of the maximum
lawful rate. Should interest collected exceed such rate, Lessor shall refund
such excess interest to Lessee. In such event Lessee agrees that Lessor shall
not be subject to any penalties provided by law for contracting for or
collecting interest in excess of the maximum lawful rate.
18. SURVIVAL. All of Lessor's rights, privileges and indemnities contained
herein shall survive the expiration or other termination of the Lease and any
Schedules, and the rights, privileges and indemnities contained herein are
expressly made for the benefit of, and shall be enforceable by, Lessor, its
successors and assigns.
19. LESSOR'S DISCLAIMERS. Lessor has obtained the Property based on
specifications furnished by the Lessee. Lessor does not deal in property of this
kind or otherwise hold itself or its agents out as having knowledge or skill
peculiar to the Property. Lessee acknowledges that it has relied on its own
skill and experience in selecting property suitable to the Lessee's particular
needs or purposes and has neither relied upon the skill or judgment of Lessor
nor believes that Lessor or its agents possess any special skill or judgment in
the selection of Property for Lessees particular purposes. Further, Lessee has
not notified Lessor of Lessee's particular needs in using the Property.
Lessee understands and agrees that neither the Supplier(s) nor any salesman
or any agent of the Supplier(s) is an agent of Lessor. No salesman or agent of
supplier is authorized to waive or alter any term or condition of this Lease,
and no representation as to the Property or any other matter by the Supplier
shall in any way affect Lessee's duty to pay the rent and perform its
obligations as set forth in this Lease. Lessor shall not be liable to Lessee for
any incidental, consequential, or indirect damages or for any act, neglect,
omission, breach or default by any third party.
LESSOR ASSUMES NO RESPONSIBILITY FOR AND MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE TITLE, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, QUALITY, WORKMANSHIP, OR THE SUITABILITY, SAFETY,
ADEQUACY, OPERATION, USE OR PERFORMANCE OF THE PROPERTY OR AS TO ITS
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR AS TO PATENT, TRADEMARK
OR COPYRIGHT INFRINGEMENT. ANY DELAY IN DELIVERY SHALL NOT AFFECT THE VALIDITY
OF THIS LEASE.
LESSOR SHALL NOT BE LIABLE TO LESSEE FOR ANY REPRESENTATION, CLAIM, BREACH
OF WARRANTY, EXPENSE OR LOSS DIRECTLY OR INDIRECTLY CAUSED BY ANY PERSON,
INCLUDING LESSOR, IN ANY WAY RELATED TO THE PROPERTY.
20. ENTIRE AGREEMENT, WAIVERS, SUCCESSORS, NOTICE. This Lease and any
Schedule expressly referring hereto (each, a "Transaction") contain the entire
agreement of the parties and shall not be qualified or supplemented by course of
dealing. However, in any case where the Lessor takes an assignment from a vendor
of its security interest in the same Property, the terms of the Transaction
shall be incorporated into the assigned agreement and shall prevail over any
inconsistent terms therein but shall not be construed to create a new contract.
No waiver or modification by Lessor of any of the terms or conditions hereof
shall be effective unless in writing signed by an officer of Lessor. No waiver
or indulgence by Lessor of any default or deviation by Lessee of any required
performance shall be a waiver of Lessor's right to subsequent or other full and
timely performance. This Lease shall be binding on the parties hereto and their
respective successors and assigns and shall inure to the benefit of such
successors and assigns. Paragraph headings shall not be considered a part of
this Lease.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LESSOR
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE LESSEE'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY LESSOR TO
BE ENFORCEABLE.
BY INITIALING THIS SECTION, LESSEE ACKNOWLEDGES THAT LESSEE RAS READ THE
ABOVE PARAGRAPHS UNDER SECTION 19, LESSORS DISCLAIMERS, AND SECTION 20, ENTIRE
AGREEMENT, AND FULLY UNDERSTANDS THEIR CONTENT.
INITIALED: /s/ RKB
21. POWER OF ATTORNEY. LESSEE HEREBY AUTHORIZES AND APPOINTS LESSOR AS ITS
ATTORNEY-IN-FACT TO COMPLETE, AMEND AND EXECUTE ON LESSEE'S BEHALF FINANCING
STATEMENTS IN CONNECTION WITH THIS LEASE AND TO CONFORM THE DESCRIPTION OF THE
PROPERTY (INCLUDING SERIAL NUMBERS) IN ANY SUCH FINANCING STATEMENTS OR OTHER
DOCUMENTATION. LESSEE WILL ALSO PROMPTLY EXECUTE AND DELIVER TO LESSOR SUCH
FURTHER DOCUMENTS AND TAKE FURTHER ACTION AS LESSOR MAY REQUEST TO MORE
EFFECTIVELY CARRY OUT THE INTENT AND PURPOSE OF T'HIS LEASE.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Master Lease
Agreement to be duly executed as of the day and year first above written.
PLM RENTAL, INC. (LESSEE)
By: /s/ Richard K Brock
Chief Financial Officer
U.S. BANCORP LEASING &
FINANCIAL (LESSOR)
By: /s/Rick DiStephanco
Its: Senior Vice President
Address for All Notices:
U.S. BANCORP LEASING & FINANCIAL
P.O. BOX 2177, 7659 S.W. MOHAWK STREET
TUALATIN, OREGON 97062-2177
<PAGE>
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into on this
__ day of August, 1999, by and between PLM INTERNATIONAL, INC., its successors
and/or assigns (the "Company"), and _____________ ("Employee").
WHEREAS, Employee currently holds the position(s) of __________ of the
Company; and
WHEREAS, in the event any person or group proposes a change in control
transaction (as defined in Section 2 of this Agreement), the Board of Directors
would consider such proposal in order to determine whether it was fair and in
the best interest of the shareholders; and
WHEREAS, any such consideration by the Board of Directors may lead to
uncertainty regarding the future path of the Company and the long-term prospects
for executive employment with the Company; and
WHEREAS, the Company's Board of Directors believes it is important to
the enhancement of shareholder value that, notwithstanding such uncertainty,
Employee act vigorously and constructively in any negotiations being conducted
in connection with a change in control transaction to achieve the result most
favorable to the Company's shareholders and continue to manage the on-going
business of the Company in order to achieve the most positive results
attainable; and
WHEREAS, as an inducement for Employee to remain in the employ of the
Company before and after a change in control transaction, this Agreement
provides for certain incentives for Employee upon a change in control and for
certain severance benefits to be paid and provided to Employee in the event
Employee's employment is terminated without cause (as defined herein) following
or resulting from a change in control transaction.
NOW, THEREFORE, in consideration of the above premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree as follows:
1. Term. The term of this Agreement shall commence on the date hereof
and shall continue (i) until December 31, 1999 so long as no Change in Control
(as defined below) has occurred on or before December 31, 1999; or (ii) until
all obligations under this Agreement have been met in the event a Change in
Control has occurred on or before December 31, 1999.
<PAGE>
2. Change in Control.
A. For the purposes of this Agreement only, the term "Change
in Control" shall mean the occurrence of any one of the following events:
(i) Any person or group (a "Person"), within the
meaning of Sections 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), acquiring
"beneficial ownership" ("Beneficial Ownership"), as defined in
Rule 13d-3 under the Exchange Act, of securities of the
Company representing more than fifty percent (50%) of the
combined voting power of the Company's then outstanding
securities; provided, however, in determining whether a Change
in Control has occurred, voting securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition
by (a) an employee benefit plan (or trust forming a part
thereof) maintained by the Company or any corporation or other
Person of which a majority of its voting power or its voting
equity securities or equity interests is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (b) the Company or its Subsidiaries, or (c) any
Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(ii) A merger, consolidation or reorganization
(collectively, a "Transaction") involving the Company unless
such Transaction is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a Transaction involving
the Company where:
(a) The stockholders of the Company
immediately before such Transaction own, directly or
indirectly, immediately following such Transaction,
at least fifty percent (50%) of the combined voting
power of the outstanding voting securities of the
corporation resulting from such Transaction (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the voting
securities of the Company immediately before such
Transaction, or
(b) No Person, other than (1) the Company,
(2) any Subsidiary, or (3) any employee benefit plan
(or any trust forming a part thereof) maintained by
the Company or any Subsidiary, has Beneficial
Ownership of more than fifty percent (50%) of the
combined voting power of the Surviving Corporation's
then outstanding voting securities;
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary of the Company);
provided however, that in no event shall the sale or other
disposition of the Company's subsidiary American Finance
Group, Inc. (AFG) by itself, or the sale or other disposition
of the Company's subsidiary PLM Rental, Inc. (PLMR) by itself,
be deemed to be a sale or other disposition of all or
substantially all of the assets of the Company for the
purposes of this Agreement; and further provided however, that
in the event either AFG or PLMR is sold or otherwise disposed
of during the term of this Agreement, then the later sale or
other disposition of PLMR (in the case of an earlier sale or
disposition of AFG) or AFG (in the case of an earlier sale or
disposition of PLMR) shall be deemed to be a sale or other
disposition of all or substantially all of the assets of the
Company; or
(iv) The stockholders of the Company approve a plan
of dissolution or liquidation of the Company.
B. In the event that a Change in Control transaction as
defined in this Agreement occurs, and such transaction is also deemed to be a
Change in Control as defined in and under the Employment Agreement (the
"Employment Agreement") dated as of _________ between the Company and Employee
(specifically, a majority of the members of the Continuing Directors of the
Board of Directors of the Company does not approve the Change in Control event
specifically for purposes of the Employment Agreement), then the terms and
conditions of the Employment Agreement, including but not limited to Sections
10.2, 11, 12 and 13 thereof, shall govern and supercede this Agreement.
3. Stock Options and Grants.
A. Upon the occurrence of a Change in Control, any and all
options to purchase stock and grants of stock (common or otherwise) in the
Company granted to Employee pursuant to any plan or otherwise, including options
granted pursuant to the 1988 Management Stock Compensation Plan and/or the 1998
Management Stock Compensation Plan, and any and all grants of stock in the
Company granted to Employee pursuant to the 1996 Mandatory Management Stock
Bonus Plan (collectively, any or all of these plans shall be referred to herein
as the "Stock Plans"), shall become immediately accelerated and fully vested and
any restrictions on such options and grants shall, to the extent permissible
under applicable securities laws, fully lapse. The Company shall endeavor to
cause any restrictions on the options or grants not lapsed by operation of this
Section 3 to so lapse.
B. Upon the vesting of all such options and grants (whether
pursuant to this Section 3 or Section 6(C)(ii) below) and, in the case of
options, so long as such options have not expired, Employee may elect by written
notice to the Company at any time following such vesting that the Company
"cash-out" such options and/or grants by paying to Employee within five (5) days
of the notice the value of the options and/or grants so long as Employee
surrenders to the Company, and agrees to the cancellation of, the options or
grants. The value of the options and/or grants shall be calculated based on the
higher of (i) the price paid to the Company's shareholders in connection with a
tender offer that results in a Change in Control or (ii) the average daily
closing price of the common stock of the Company for the ten days preceding the
date of the Change in Control (or if the accelerated vesting occurs pursuant to
Section 6(C)(ii), for the ten days preceding the Date of Termination (as defined
below)), less (in the case of options only) the exercise price of the option. In
the event Employee does not elect to "cash-out" pursuant to Section 3(B), then
Employee's rights regarding such options and grants shall be as set forth in the
Stock Plans and agreements governing such options and grants, except that
Employee shall be deemed to be fully vested and any restrictions on such options
and grants shall remain fully lapsed.
4. Termination By Company In Connection With a Change in Control.
A. In the event that Employee's employment is terminated by
the Company subsequent to or resulting from a Change in Control for a reason
other than Cause or Disability, the Company shall pay Employee the Severance
Benefits specified in Section 6(C).
B. For purposes of this Agreement, "Cause" shall be limited
to:
(i) The willful and continued failure by Employee to
perform his/her day to day responsibilities substantially in
the same manner as performed prior to the Change in Control
(other than any failure resulting from Employee's incapacity
due to physical or mental illness), which has not been cured
within ten (10) days after written demand for substantial
performance is delivered by the Company to Employee, which
demand specifically identifies the manner in which Employee
has not substantially performed his/her day to day
responsibilities. The financial condition of the Company
(including any subsidiary, division or department thereof),
and/or Employee's contribution thereto, shall not be
considered for the purposes of determining whether Employee
has willfully failed to perform his/her day to day
responsibilities;
(ii) A willful and intentional act or omission by
Employee which is, in the reasonable determination of the
Company, materially injurious to the Company, monetarily or
otherwise. For purposes of subsection (i) above and this
subsection (ii), no act or omission on Employee's part shall
be considered willful and intentional unless done, or omitted
to be done, by him/her not in good faith and without the
reasonable belief that his/her action(s) or omission(s) was in
the best interests of the Company; or
(iii) The conviction of Employee of, or his/her
admission or plea of nolo contendere to, a crime involving an
act of moral turpitude, which is a felony or which results or
is intended to result, directly or indirectly, in gain or
personal enrichment of Employee, relatives of Employee, or
their affiliates at the expense of the Company;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 4(B), "Cause" shall not be deemed to include a refusal by Employee
to execute any certificate or document that Employee in good faith determines
contains any untrue statement of a material fact.
C. For the purposes of this Agreement, Disability shall mean
if, as a result of Employee's incapacity due to physical or mental illness,
Employee shall have been absent or substantially absent from his/her duties
hereunder for a period of six (6) consecutive months, and within thirty (30)
days after a Notice of Termination (as hereinafter defined) is given, which
Notice of Termination may be given before or after the end of such six month
period, Employee shall not have returned to the performance of his/her duties
hereunder on a full-time basis, Employee's employment shall terminate upon the
expiration of such thirty (30) days. Employee's absence or substantial absence
from his/her duties will be treated as resulting from incapacity due to physical
or mental illness if Employee is "totally disabled from his/her own occupation."
Total disability from Employee's own occupation will exist where (i) because of
sickness or injury, Employee cannot perform the important duties of his/her
occupation, (ii) Employee is either receiving Doctor's Care or has furnished
written proof acceptable to the Company that further Doctor's Care would be of
no benefit, and (iii) Employee does not work at all. Doctor's Care means regular
and personal care of a Doctor which, under prevailing medical standards, is
appropriate for the condition causing the disability.
5. Termination by Employee.
A. Employee may terminate his/her employment during the term
of this Agreement upon thirty (30) days' Notice of Termination to the Company
for any reason. If Employee terminates his/her employment hereunder subsequent
to a Change in Control and such termination is made for any of the reasons
listed in Section 5(B) (such reason(s) to be detailed in the Notice of
Termination), such termination shall be deemed to have been done for good reason
("Good Reason") and the Company shall pay Employee the Severance Benefits
specified in Section 6(C), below.
B. Reasons constituting "Good Reason" shall include:
(i) Any breach by the Company of any material
provision of this Agreement which has not been cured within
ten (10) days after written notice detailing such
non-compliance is given by Employee to the Company;
(ii) Any demonstrable and material diminution of the
base and/or incentive compensation, duties, responsibilities,
authority or powers of Employee as they relate to any
positions or offices held by Employee during the term of this
Agreement; provided that Employee provides a reasonable
description of any such diminution(s) and a statement that
Employee finds, in good faith, such diminution to be a
material diminution and that, as such, he/she elects to
terminate his/her employment hereunder for Good Reason;
(iii) The failure of the Company to include Employee
in any Employee Benefit Plan or Incentive Compensation Plan
for which Employee has previously participated or would
reasonably expect to participate in. Employee may reasonably
expect to participate in an Employee Benefit Plan or Incentive
Compensation Plan if, without limitation, other employees of
the Company with similar titles, levels of responsibilities or
salaries participate or have participated in such plan; or
(iv) Any requirement by the Company that Employee
relocate his/her primary business office to a geographical
area greater than twenty (20) miles from the Company 's
principal executive offices as existing on January 1, 1999, or
if Employee is based in an office other than the Company's
principal executive offices, twenty (20) miles from the
Company's office where Employee is based as of January 1,
1999.
C. In the event Employee terminates his/her employment for
Good Reason and the Company disputes that the termination was for Good Reason,
the Company shall have the burden of proving that any such reason was not "Good
Reason".
6. Compensation Upon Termination.
A. Termination For Cause. Following a Change in Control, if
Employee's employment is terminated for Cause as defined in this Agreement, the
Company shall pay Employee his/her full Base Salary (and any accrued but unused
vacation and personal days) through the Date of Termination at the rate in
effect at the time Notice of Termination is given, and the Company shall have no
further obligations to Employee under this Agreement. The rights, limitations
and obligations of each of the Employee and the Company under any other
agreement or plan, including but not limited to any stock option or bonus plan,
deferred compensation plan and related agreement(s), as of the Date of
Termination shall remain in full force and effect.
B. Termination for Disability. Following a Change in Control,
if Employee's employment is terminated for Disability as defined in this
Agreement, the Company shall pay to Employee his/her full Base Salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given. The Company shall also pay to Employee any accrued but unused vacation
and personal days, and the Company shall also provide benefits to Employee
pursuant to the standard policy of the Company with respect to terminated
disabled employees. The rights, limitations and obligations of each of the
Employee and the Company under any other agreement or plan, including but not
limited to any stock option or bonus plan, deferred compensation plan and
related agreement(s), as of the Date of Termination shall remain in full force
and effect.
C. Termination Without Cause or Termination by Employee For
Good Reason. If, (a) subsequent to or resulting from a Change in Control the
Company terminates Employee's employment hereunder other than for Cause or
Disability, or (b) subsequent to a Change in Control Employee terminates his/her
employment for Good Reason, the Company shall, in addition to paying Employee
his/her full Base Salary through the Date of Termination at the rate in effect
at the time the Notice of Termination is given and any accrued but unused
vacation and personal days (as required by law), pay to Employee within seven
(7) business days of the Date of Termination, and provide to Employee, the
following severance benefits:
(i) The Company shall pay to Employee a lump sum
amount equal to _________ (__) months of Employee's Base
Salary at the highest rate in effect during the twelve (12)
months immediately preceding the Date of Termination, less
customary payroll deductions;
(ii) Any and all options to purchase stock (common or
otherwise) in the Company granted to Employee following a
Change in Control pursuant to any plan or otherwise, and any
and all grants of stock in the Company granted to Employee
following a Change in Control pursuant to any plan or
otherwise, shall become immediately accelerated and fully
vested and any restrictions on such options, grants or
equivalent or similar rights shall, to the extent permissible
under applicable securities laws, fully lapse. The Company
shall endeavor to cause any restrictions on the options,
grants or equivalent or similar rights not lapsed by operation
of this Section 6(C) to so lapse. Employee shall have the same
rights in such accelerated and vested options and grants as
provided in Section 3(B) and the Company shall pay to Employee
the value of the options and/or grants upon receipt of
Employee's written notice of his/her election to "cash-out"
pursuant to Section 3(B);
(iii) At the Employee's election by written notice to
the Company made within four (4) business days following the
Date of Termination, the Company shall pay to Employee in a
lump sum the total amount of any Monthly Executive
Compensation Benefit payments that are payable under the
Executive Deferred Compensation Agreement (the "Executive
Deferred Compensation Agreement") dated as of ______, between
the Company and Employee, which amount shall have been
determined pursuant to the terms of Sections 5(a) and 5(b) of
the Executive Deferred Compensation Agreement after taking
into consideration the automatic acceleration of vesting as
provided in Section 10.1, including Section 10.1(a) and
10.1(b), of the Executive Deferred Compensation Agreement. In
the event Employee does not elect to a lump sum payment of the
total amount of any Monthly Executive Compensation Benefit
payments that are payable under the Executive Deferred
Compensation Agreement, then such amounts shall be paid
pursuant to the terms of such Executive Deferred Compensation
Agreement; and
(iv) Employee shall continue to participate in all
life insurance, medical, health, dental and disability plans,
programs or arrangements ("Insurance Plans") in which Employee
participated immediately prior to the Date of Termination on
the same terms as Employee participated immediately prior to
the Date of Termination for the shorter period of (a) months
from the Date of Termination or (b) Employee's commencement of
full time employment with a new company that provides Employee
with benefits at least as favorable as those provided by the
Company; provided that Employee's continued participation is
possible under the general terms and provisions of such plans
and programs and Employee will continue to be obligated to pay
the same employee portion of any premium and any deductible
and/or co-payments associated with such insurance Plans as was
required immediately prior to the Date of Termination.
Employee's right to continued group benefits after any period
covered by the Company will be determined in accordance with
federal and state law.
(v) The payments and benefits provided for in this
Section 6(C) are in addition to, and shall not be deemed to be
in lieu of, any other payments and/or benefits to which
Employee is entitled, including without limitation any and all
payments and benefits under any other pension and retirement
plan and arrangement, supplemental pension and retirement plan
and arrangement, stock option plan(s), and/or insurance and
disability plans.
D. Other Termination by Employee. If following a Change in
Control Employee terminates his/her employment for any reason other than Good
Reason, the Company shall pay to Employee his/her full Base Salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given and any accrued but unused vacation and personal days, and the Company
shall have no further obligations to Employee under this Agreement. The rights,
limitations and obligations of each of the Employee and the Company under any
other agreement or plan, including but not limited to any stock option or bonus
plan, deferred compensation plan and related agreement(s), as of the Date of
Termination shall remain in full force and effect.
E. Termination Prior to a Change in Control. This Agreement
does not provide for the payment or provision of severance benefits in
connection with a termination by Employee or the Company prior to and not in
connection with a Change in Control. Employee's rights to any such benefits
shall continue to be governed by law or other written agreement, if any exists
between Employee and the Company, and nothing in this Agreement is intended to
change, or shall be construed as changing, any of the legal or contractual
rights of either party to terminate Employee's employment (for Cause, at-will,
for Good Reason, or otherwise) prior to and not in connection with a Change in
Control.
F. Section 280G. Notwithstanding any other provisions of this
Agreement or any other agreement between the Company and the Executive, in the
event that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company or any Person whose actions result in
a Change in Control or any Person affiliated with the Company or such Person)
(all such payments and benefits, including the severance benefits provided
hereunder, being hereinafter called "Total Payments") would not be deductible
(in whole or part), by the Company, an affiliate or Person making such payment
or providing such benefit as a result of section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), then, to the extent necessary to make
such portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of section 280G of the Code
in such other plan, arrangement or agreement), the benefits provided hereunder
shall be reduced (if necessary, to zero); provided, however, that,
notwithstanding the terms of any other plan or agreement, the Executive may
elect to have the benefits payable under any other plan or agreement reduced (or
eliminated) prior to any reduction of the benefits payable under this Agreement,
which may include, in the case of the Executive Deferred Compensation Agreement
(if Employee is a party to such agreement), an election to reduce the
Executive's Compensation Period under the Executive Deferred Compensation
Agreement (without increasing the amount determined under Section 1.1 of the
Executive Deferred Compensation Agreement as Executive's Monthly Deferred
Compensation Benefit).
(i) For purposes of this limitation, (a) no portion
of the Total Payments the receipt or enjoyment of which the
Executive shall have waived at such time and in such manner as
not to constitute a "payment" within the meaning of section
280G(b) of the Code shall be taken into account, (b) no
portion of the Total Payments shall be taken into account
that, in the opinion of tax counsel ("Tax Counsel") selected
by the Executive and reasonably accepted by the Company, does
not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of section
280G(b)(4)(A) of the Code, (c) the benefits payable under this
Agreement shall be reduced only to the extent necessary so
that the Total Payments (other than those referred to in
clauses (a) or (b)) in their entirety constitute reasonable
compensation for services actually rendered within the meaning
of section 280G(b)(4)(B) of the Code or are otherwise not
subject to disallowance as deductions by reason of section
280G of the Code, in the opinion of Tax Counsel, and (d) the
value of any noncash benefit or any deferred payment or
benefit included in the Total Payments shall be determined in
accordance with the principles of sections 280G(d)(3) and (4)
of the Code.
(ii) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding that, notwithstanding the good faith of the
Executive and the Company in applying the terms of this
Section 6(F), the Total Payments paid to or for the
Executive's benefit are in an amount that would result in any
portion of such Total Payments being subject to the Excise
Tax, then, if such repayment would result in (a) no portion of
the remaining Total Payments being subject to the Excise Tax
and (b) a dollar-for-dollar reduction in the Executive's
taxable income and wages for purposes of federal, state and
local income and employment taxes, the Executive shall have an
obligation to pay the Company upon demand an amount equal to
the sum of (x) the excess of the Total Payments paid to or for
the Executive's benefit over the Total Payments that could
have been paid to or for the Executive's benefit without any
portion of such Total Payments being subject to the Excise
Tax; and (y) interest on the amount set forth in clause (x) of
this sentence at the rate provided in section 1274(b)(2)(B) of
the Code from the date of the Executive's receipt of such
excess until the date of such payment.
(iii) By execution and delivery of this Agreement,
the provisions of Section 10.4 of the Executive Deferred
Compensation Agreement are hereby superseded and such section
is hereby declared null and void.
7. Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and, except as otherwise provided in Section 6(C)(iv),
no payment or benefit provided for in this Agreement shall be reduced by any
compensation earned by Employee as the result of employment by another employer
after the termination of his/her employment with the Company.
8. Other Definitions. The following definitions shall apply for
purposes of this Agreement:
A. Notice of Termination. Any purported termination by the
Company or by Employee shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon. Any purported termination of Employee's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of this paragraph shall not be effective.
B. Date of Termination. "Date of Termination" shall mean, as
applicable, (a) if Employee's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that Employee shall not
have returned to the performance of his/her duties on a full-time basis during
such thirty (30) day period), (b) the date specified in the Notice of
Termination in compliance with the terms of this Agreement, or (c) if no date is
specified, the date on which a Notice of Termination is given.
9. Successors; Binding Agreement.
A. The Company shall require any successors or assigns
(whether direct or indirect by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company expressly
to assume and agree to perform this Agreement in the same manner and to the same
extent as if they were an original party hereto, and this Agreement shall inure
to the benefit of any such successor or assign.
B. This Agreement shall inure to the benefit of and be
enforceable by Employee's executors, administrators, successors, heirs,
distributes, devisees and legatees.
10. Other Agreements. Except as expressly set forth herein, nothing in
this Agreement is intended to alter the obligations of the Company and/or the
Employee in connection with any other written agreement between the Company and
the Employee, including any employment agreement, option agreement, deferred
compensation agreement, confidentiality agreement or indemnity agreement.
11. Covenant Not to Compete. In consideration of the mutual terms and
agreements set forth herein, Employee hereby agrees that until the first
anniversary of Employee's Date of Termination, (i) Employee will not recruit any
employee of the Company or its subsidiaries or solicit or induce, or attempt to
solicit or induce, any employee of the Company or its subsidiaries, provided
that nothing herein shall preclude Employee from hiring any person who contacts
Employee for employment and who has not been employed by the Company or its
subsidiaries at any time during the preceding six months, and (ii) provided that
Employee has received the severance benefits described in Section 6(C) hereof,
Employee will not solicit, divert or take away, or attempt to solicit, divert or
take away, the business or patronage of any of existing clients, customers or
accounts of the Company or its Subsidiaries. For purposes of this Section 11, a
client, customer or account of the Company shall be deemed to be an existing
client, customer or account if such client, customer or account is a party to a
rental, term or master lease with the Company or is being invoiced on a regular
basis by the Company as of the Date of Termination.
12. Miscellaneous.
12.1 Written notices required by this Agreement shall be delivered to
the Company or Employee in person or sent by overnight courier or certified
mail, with a return receipt requested, to the Company's registered address and
to Employee's last shown address on the Company's records, respectively. Notice
sent by certified mail shall be deemed to be delivered two days after mailing,
and all other notices shall be deemed to be delivered when received.
12.2 This Agreement contains the full and complete understanding of the
parties regarding the subject matter contained herein and supersedes all prior
representations, promises, agreements and warranties, whether oral or written.
12.3 This Agreement shall be governed by and interpreted according to
the laws of the state of California.
12.4 The captions of the various sections of this Agreement are
inserted only for convenience and shall not be considered in construing this
Agreement.
12.5 This Agreement can be modified, amended or any of its terms waived
only by a writing signed by both parties.
12.6 If any provision of this Agreement shall be held invalid, illegal
or unenforceable, the remaining provisions of the Agreement shall remain in full
force and effect and the invalid, illegal or unenforceable provision shall be
limited or eliminated only to the extent necessary to remove such invalidity,
illegality or unenforceability in accordance with the applicable law at that
time.
12.7 In the event the Company is party to a transaction which is
otherwise intended to qualify for "pooling of interests accounting treatment,
then (A) this Agreement shall, to the extent practicable, be interpreted so as
to permit such accounting treatment, and (B) to the extent that the application
of clause (A) of this Section 12.7 does not preserve the availability of such
accounting treatment, then, to the extent that any provision of the Agreement
disqualifies the transaction as a "pooling" transaction (including if
applicable, the entire Agreement), such provision shall be null and void as of
the date hereof. All determinations under this Section 12.7 shall be made by the
accounting firm whose opinion with respect to "pooling of interests" is required
as a condition of consummation of such transaction.
12.8 If either party institutes an action to enforce the terms of this
Agreement, the prevailing party in such action shall be entitled to recover
reasonable attorneys' fee, costs and expenses.
12.9 No remedy made available to either party by any of the provisions
of this Agreement is intended to be exclusive of any other remedy. Each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder as well as those remedies existing at law, in equity, by statute
or otherwise.
IN WITNESS WHEREOF, the parties have executed this document under seal
as of the date specified above.
PLM INTERNATIONAL, INC. EMPLOYEE
By: __________________________ _________________________________
Its: __________________________
ATTEST: _______________________ ATTEST: _____________________
