<PAGE> 1
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 QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-77728
PENDA CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0463658
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2344 WEST WISCONSIN STREET, PORTAGE, WISCONSIN 53901-0449
(Address of principal executive offices) (Zip Code)
(608) 742-5301
(Registrant's telephone number, including area code)
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 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
--- ---
At July 15, 1998, the Registrant had 1,016,624.2679 shares of $0.01 par value
common stock outstanding.
<PAGE> 2
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of that term in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Additional written or oral
forward-looking statements may be made by the Company from time to time, in
filings with the Securities Exchange Commission or otherwise. Statements
contained herein that are not historical facts are forward-looking statements
made pursuant to the safe harbor provisions referenced above.
Forward-looking statements may include, but are not limited to,
projections of revenues, income or losses, capital expenditures, plans for
future operations, financing needs or plans, compliance with financial covenants
in loan agreements, plans for liquidation or sale of assets or businesses, plans
relating to products or services of the Company, assessments of materiality,
predictions of future events, the ability to obtain additional financing, the
Company's ability to meet obligations as they become due, the impact of pending
and possible litigation, as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and similar expressions are intended
to identify forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties, including, but not limited to,
the impact of leverage, dependence on major customers, reliance on sales of new
trucks, fluctuating demand for passenger cars and light trucks, ability to
develop complementary products, risks in product and technology development,
fluctuating resin prices, competition, litigation, labor disputes, capital
requirements, and other risk factors detailed in the Company's Securities and
Exchange Commission filings, some of which cannot be predicted or quantified
based on current expectations.
Consequently, future events and actual results could differ materially
from those set forth in, contemplated by, or underlying the forward-looking
statements. Statements in this Quarterly Report, particularly "Part 1 Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations", and "Part 2, Item 1 Legal Proceedings" describe factors, among
others, that could contribute to or cause such differences.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained herein, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PENDA CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,213 $ 4,460
Accounts receivable, net
13,157 9,536
Inventories, net
4,881 4,941
Refundable income taxes
2,655 3,173
Deferred income taxes
539 539
Other
315 145
----------------- ---------------
Total current assets 28,760 22,794
Property, plant and equipment
Land and improvements
735 735
Buildings and improvements
7,079 7,079
Machinery and equipment
18,423 18,598
Furniture and fixtures
1,128 1,242
Construction in progress
1,324 538
----------------- ---------------
28,689 28,192
Less accumulated depreciation 10,282 8,960
----------------- ---------------
Net property, plant and equipment 18,407 19,232
Goodwill and other intangible assets, net 92,802 94,349
Other 45 7
----------------- ---------------
Total assets $ 140,014 $ 136,382
================= ===============
</TABLE>
3
<PAGE> 4
PENDA CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
-------------------- ------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,036 $ 2,890
Accrued interest
2,925 2,927
Employee compensation
1,211 881
Current maturities of long-term debt
641 631
Other accrued liabilities
2,426 1,636
-------------------- ------------------
Total current liabilities 10,239 8,965
Long-term debt, less current portion
82,375 82,498
Deferred income taxes
8,110 7,639
-------------------- ------------------
Total liabilities 100,724 99,102
-------------------- ------------------
Shareholders' equity:
Common stock
10 10
Additional paid-in capital
24,990 24,990
Retained earnings
14,102 12,032
Foreign currency translation adjustment
188 248
-------------------- ------------------
Total shareholders' equity 39,290 37,280
-------------------- ------------------
Total liabilities and shareholders' equity $ 140,014 $ 136,382
==================== ==================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
PENDA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, JUNE 30,
(UNAUDITED) (UNAUDITED)
--------------------------- ---------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $ 22,737 $ 19,060 $ 41,128 $ 37,938
Cost of sales 13,457 12,864 25,623 26,323
----------- ------------ ------------ ----------
Gross profit 9,280 6,196 15,505 11,615
Selling expenses 2,189 1,538 3,482 2,742
General and administrative expenses 1,378 1,328 2,511 2,583
Amortization 773 773 1,547 1,544
----------- ------------ ------------ ----------
Operating income 4,940 2,557 7,965 4,746
Interest expense 2,244 2,355 4,491 4,619
Other (income) expense, net 115 (209) 227 (63)
----------- ------------ ------------ ----------
Income before income taxes 2,581 411 3,247 190
Provision for income taxes 992 176 1,177 121
----------- ------------ ------------ ----------
Net income $ 1,589 $ 235 $ 2,070 $ 69
=========== ============ ============ ==========
Earnings per share of common stock
Basic $ 1.56 $ 0.24 $ 2.04 $ 0.07
=========== ============ ============ ==========
Diluted $ 1.56 $ 0.24 $ 2.04 $ 0.07
=========== ============ ============ ==========
Weighted average common shares outstanding
Basic 1,017 996 1,017 997
=========== ============ ============ ==========
Diluted 1,017 996 1,017 997
=========== ============ ============ ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
PENDA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
------------------------------------------------
1998 1997
--------------------- --------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,070 $ 69
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,596 1,530
Amortization 1,547 1,544
Deferred income taxes 471 266
Changes in assets and liabilities, net of effects
from purchase of business assets:
Accounts receivable (3,621) 1,316
Inventories 60 (374)
Refundable income taxes 518 351
Accounts payable 146 (1,888)
Accrued interest (2) (15)
Other 852 (1,485)
--------------- --------------
Net cash provided by operating activities 3,637 1,314
--------------- --------------
INVESTING ACTIVITIES:
Purchase of business assets - (2,000)
Capital expenditures (771) (166)
Proceeds from insurance claims - 298
--------------- --------------
Net cash used in investing activities (771) (1,868)
--------------- --------------
FINANCING ACTIVITIES:
Net proceeds, revolving credit borrowings - 1,000
Payments on capital leases (113) (105)
Purchase of common stock - (109)
--------------- --------------
Net cash (used in) provided by financing activities (113) 786
--------------- --------------
Net increase in cash and cash equivalents 2,753 232
Cash and cash equivalents at beginning of period: 4,460 1,970
=============== ==============
Cash and cash equivalents at end of period: $ 7,213 $ 2,202
=============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Penda Corporation (the "Company" or "Penda") is one of the world's
largest manufacturers and suppliers of pickup truck accessories serving original
equipment manufacturers ("OEMs") and the automotive aftermarket (the
"aftermarket"). The Company manufacturers thermoformed high-density polyethylene
plastic pickup truck bedliners that are designed to both enhance the vehicle's
appearance and help protect truck beds from damage, thereby extending the useful
life and increasing the resale value of the pickup truck. The Company also
manufactures fiberglass accessory products for pickup trucks, vans, and Class 8
trucks that are sold by truck dealers, specialty automotive stores, other
retailers, and OEMs. Other truck accessories including bed mats, tailgate
liners, hood protectors, side window air deflectors, cargo tie-downs, toolboxes,
and cargo liners designed for sport utility vehicles and other light trucks are
also distributed through the Company's OEM and aftermarket distribution systems
These financial statements have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange Commission (the
"SEC") and, in the opinion of the Company, include all adjustments (all of which
are normal and recurring in nature) necessary to present fairly the financial
position, results of operations and cash flows of the Company for the interim
periods presented. These financial statements include the accounts of the
Company's wholly-owned subsidiaries, and all significant intercompany
transactions have been eliminated. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. These unaudited consolidated financial statements should
be read in conjunction with the annual consolidated financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 as filed with the SEC.
2. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Finished goods $ 2,828 $ 2,922
Work in process 499 534
Raw materials and supplies 2,059 2,013
Less allowance for inventory obsolescence (505) (528)
--------- ---------
$ 4,881 $ 4,941
========= =========
</TABLE>
3. FOREIGN CURRENCY TRANSLATION
Prior to January 1, 1997, the functional currency of the Company's
Mexican subsidiary was the Mexican peso; accordingly, assets and liabilities
were translated using the current exchange rate and the income statement was
translated using the weighted average exchange rate for the year. Resulting
translation adjustments were recorded directly to a separate component of
shareholders' equity.
As a result of changes in its operations, the Company has determined
that the U.S. dollar is the functional currency of its Mexican subsidiary. The
change in functional currency required the application of the current rate
translation method, wherein all assets and liabilities are translated using the
quoted period-end exchange rate and all revenues are translated at the average
rate of exchange in effect during the period.
The functional currency of the Company's Australian subsidiary is the
Australian dollar; accordingly, assets and liabilities are translated using the
current exchange rate and the income statement is translated using the weighted
average exchange rate for the year. Resulting translation adjustments are
recorded directly to a separate component of shareholders equity.
7
<PAGE> 8
4. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting
Standards Board (SFAS) No. 130, Reporting Comprehensive Income which establishes
new rules for the reporting and display of comprehensive income and its
components: however, the adoption of this statement had no impact on the
Company's net income or shareholders' equity. SFAS No.130 requires the
securities and foreign currency translation adjustments, which prior to adoption
was reported separately in shareholders' equity to be included in other
comprehensive income. Prior year financial statements have been reclassified to
conform to the requirements of SFAS No. 130.
The components of comprehensive income, net of related tax are as
follows:
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1998 December 31, 1997
---------------------- ----------------------
<S> <C> <C>
Net Income $ 2,070 $ 69
Foreign currency translation adjustments (60) 31
---------------------- ----------------------
Comprehensive income $ 2,010 $ 100
====================== ======================
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations included as Item 7 of Part II of the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
RESULTS OF OPERATIONS
Comparison of Quarters Ended June 30, 1998 and 1997
NET SALES: Net sales increased $3.7 million, or 19.3%, from $19.0
million in the second quarter of 1997 to $22.7 million in the second quarter of
1998. This increase is due to increased aftermarket sales as well as the start
of sales to General Motors.
COST OF GOODS SOLD AND GROSS PROFIT: Cost of sales increased $0.6
million, or 4.6% from $12.9 million in the second quarter of 1997 to $13.5
million in the second quarter of 1998. The increase is related to improved sales
volumes, offset by the impact of the Company's cost reduction program. Gross
profit increased $3.1 million, or 49.8% from $6.2 million in the second quarter
of 1997 to $9.3 million in the second quarter of 1998. Gross profit margins
increased from 32.5% in the second quarter of 1997 to 40.8% the second quarter
of 1998. This improvement resulted from the Company's cost reduction efforts
plus stabilization of pricing as a result of the Company's sales and marketing
efforts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses increased $0.7 million, or 24.5% from $2.9 million in
the second quarter of 1997 to $3.6 million in the second quarter of 1998. As a
percentage of sales, selling, general and administrative expenses increased from
15.0% in the second quarter of 1997 to 15.7% in the second quarter of 1998. This
increase was due to additional marketing expenses related to a spring
promotional campaign on bedliners, black Hide-a-Hooks, and Tri-Step running
boards.
OPERATING INCOME: As a result, operating income increased $2.4 million
or 93.2% from $2.5 million in the second quarter of 1997 to $4.9 million in the
second quarter of 1998.
INTEREST EXPENSE: Interest expense decreased $0.1 million or
4.7% from $2.3 million in the second quarter of 1997 to $2.2 million in the
second quarter of 1998.
8
<PAGE> 9
Comparison of Six Months Ended June 30, 1998 and 1997
NET SALES: Net sales increased $3.2 million, or 8.4%, from $37.9
million in the first six months of 1997 to $41.1 million in the first six months
of 1998. This increase is due to improved aftermarket sales as well as the start
of sales to General Motors, partially offset by the loss of the Ford business in
February, 1997.
COST OF GOODS SOLD AND GROSS PROFIT: Cost of sales decreased $0.7
million, or 2.7% from $26.3 million in the first six months of 1997 to $25.6
million in the first six months of 1998. The decrease is related to the reduced
raw material costs and the impact of the Company's cost reduction program. Gross
profit increased $3.9 million, or 33.5% from $11.6 million in the first six
months of 1997 to $15.5 million in the first six months of 1998. Gross profit
margins increased from 30.6% in the first six months of 1997 to 37.7% the first
six months of 1998. This improvement resulted from the Company's cost reduction
efforts plus stabilization of pricing as a result of the Company's sales and
marketing efforts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses increased $0.7 million, or 12.5% from $5.3 million in
the first six months of 1997 to $6.0 million in the first six months of 1998. As
a percentage of sales, selling, general and administrative expenses increased
from 14.0% in the first six months of 1997 to 14.6% in the first six months of
1998. This increase was due to additional marketing expenses related to a spring
promotional campaign on bedliners, black Hide-a-Hooks, and Tri-Step running
boards.
OPERATING INCOME: As a result, operating income increased $3.2 million
or 67.8% from $4.8 million in the first six months of 1997 to $8.0 million in
the first six months of 1998.
INTEREST EXPENSE: Interest expense decreased $0.1 million or 2.8%
from $4.6 million in the first six months of 1997 to $4.5 million in the first
six months of 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements for its operations are
working capital (principally inventory and accounts receivable) and capital
expenditures. In addition, the Company has annual note payments of $400,000 and
semi-annual interest (only) payments due on its unsecured 10.75% Senior Notes
due in 2004 ("Notes") and, if used, quarterly payments due on its revolving
Credit Facility. The Company's working capital at June 30, 1998 was $18.5
million compared to $13.8 million at December 31, 1997.
The Company's consolidated debt-to-equity ratio declined to 2.11:1 at
June 30, 1998 from 2.23:1 at December 31, 1997. At June 30, 1998, the Company
had approximately $83.0 million of outstanding debt, including $80.0 million of
senior notes payable, $1.6 million in various notes payable and $1.4 million in
capital lease obligations. During the first six months of 1998, the Company
borrowed and repaid $1.0 million under its revolving credit facility. As of July
15, 1998, the Company had no outstanding borrowings and $16.5 million of
borrowing ability available under the Credit Facility.
Management believes that funds generated from operations and funds
available under the Credit Facility will be sufficient to satisfy the Company's
debt service obligations, working capital requirements and commitments for
capital expenditures through at least 1998, but that any significant
acquisitions by the Company would generally require additional financing. There
can be no assurance that such acquisition financing will be available to the
Company on satisfactory terms.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
9
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is subject to legal proceedings and
other claims arising in the ordinary course of its business. The Company
maintains insurance coverage against claims in an amount which it believes to be
adequate. The Company believes that it is not presently a party to any such
ordinary course litigation the outcome of which would have a material adverse
effect on its financial condition or results of operations. Set forth below is
an update of material developments in certain non-ordinary course litigation
more fully described in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, incorporated herein by reference.
CLASS ACTION LAWSUITS
The Company, along with various other manufacturers of pickup truck
bedliners, is a defendant in certain class action lawsuits. The plaintiffs in
these lawsuits allege that the bedliners manufactured by the defendants are
defective and unreasonably dangerous because they allegedly prevent the
discharge of static electricity which can accumulate on or in portable fuel
containers, thereby creating the potential for fire or explosion. Settlement
discussions are continuing in connection with this lawsuit. In the event that
settlement discussions terminate, the Company intends to vigorously defend these
lawsuits.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - See below
(b) No reports on Form 8K have been filed for the quarter ended June 30, 1998.
Exhibit Description
10.1 Master Lease between Penda Corporation and Firstar Equipment Finance
Corporation dated December 26, 1995.
27.1 Financial Data Schedule (for SEC use only)
10
<PAGE> 11
SIGNATURES
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.
PENDA CORPORATION
Date: July 23, 1998 By: /s/ Jack L. Thompson
--------------------
Jack L. Thompson
President and Chief Executive Officer
(Principal Executive Officer)
Date: July 23, 1998 By: /s/ Leo. E. Waner
-----------------
Leo E. Waner
Vice President - Chief Financial Officer
(Principal Financial and Accounting Officer)
11
<PAGE> 12
EXHIBIT 10.1
MASTER LEASE BETWEEN PENDA CORPORATION AND FIRSTAR EQUIPMENT FINANCE CORPORATION
DATED DECEMBER 26, 1995
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT ("MLA") by and between FIRSTAR EQUIPMENT FINANCE
CORPORATION ("Lessor"), whose address is 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202 and Penda Corporation ("Lessee") whose address is 2344 West
Wisconsin Street, Portage, WI 53901-0449.
1. DEFINITIONS. For purposes of this MLA: (a) "Schedule" shall mean each
Lease Schedule executed by the parties now or hereafter, and all attachments
thereto; (b) "Equipment" shall mean all units of equipment and other property
described in the Schedule(s), and all accessories, upgrades, additions,
substitutions, replacement parts, tools, software licenses, contract rights,
subleases, permits, licenses, chattel paper, warranty and maintenance agreements
and general intangibles pertaining thereto now or hereafter arising, and all
proceeds from any of the foregoing (including any insurance proceeds); and (c)
"MLA" shall mean this Master Lease Agreement and all Schedules, and attachments
thereto, and any other written agreements by and between Lessor and Lessee with
respect to this MLA, the Schedule(s) or the Equipment plus any insurance
agreements regarding the Equipment, any opinions of counsel, any disclaimers
regarding the Equipment, and any guaranties and/or letters of credit relating to
Lessee's obligations under the MLA, and any amendments to any of the foregoing.
2. LEASE OF EQUIPMENT. Subject to the conditions set forth herein, Lessee
agrees to lease from Lessor the Equipment described in each Schedule. Lessee
shall be deemed to have unconditionally accepted the Equipment upon Lessee's
execution of each Schedule. If Lessee shall fail to accept any item within sixty
(60) days from delivery, Lessor has the right to decline to lease such Equipment
to Lessee and Lessee shall be solely responsible (on its own account) to satisfy
all obligations to the manufacturer/vendor regarding such non-accepted Equipment
(and regardless of the non-conformity of such Equipment). In the event Lessor
orders the Equipment on behalf of Lessee, Lessor shall have no liability to
Lessee for any delay or failure by the manufacturer/vendor to deliver any of the
Equipment to Lessee. Notwithstanding anything to the contrary herein, Lessor is
not obligated to lease any item of Equipment to Lessee in the event: (a) Lessee
has not obtained the appropriate license, permit, and certificate as required
under federal, state or local environmental laws; or (b) delivery, installation
and/or testing expenses for any item of Equipment exceed ten (10) percent of the
total cost of such Equipment. To the extent Lessor has reason to believe the
Equipment is being used in violation of applicable environmental laws, Lessor
has the right to enter the premises where the Equipment is located and conduct
an environmental audit of Lessee's operation of the Equipment and the handling
of any materials or effluents associated therewith; and Lessee agrees to
cooperate fully with such environmental audit and bear all costs associated
therewith.
3. TERM OF LEASE AND RENT. The term of each lease of the Equipment is
described in each Schedule and commences upon the date Lessee accepts the
Equipment in accordance with Section 2 above. The rent for the Equipment is
designated in each Schedule. Lessee shall pay Lessor said rent at the times set
forth in each Schedule and at the office of Lessor (unless Lessor designates in
writing otherwise). All payments received by Lessor shall first be applied to
any accrued late charge(s) and other non-rental obligations owed by Lessee
hereunder, and then to any unpaid rents. Time is of the essence as to the
payment of rent and all other monies due Lessor hereunder. THIS MLA AND EACH
SCHEDULE ARE NON-CANCELABLE AND NON-TERMINABLE BY EITHER PARTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN, AND LESSEE MAY NOT PREPAY ANY RENTS OR OTHER
OBLIGATIONS HEREUNDER WITHOUT THE WRITTEN CONSENT OF LESSOR.
4. USE, MAINTENANCE, AND MODIFICATION OF EQUIPMENT. (a) Lessee shall use the
Equipment in a careful manner, within its recommended capacities and only for
the purpose(s) for which it is designed. Lessee shall comply with all laws,
regulations and ordinances relating to the possession and use of the Equipment
(including, without limitation, job safety, health, fire and environmental
laws). At Lessee's expense, Lessee shall keep the Equipment in good repair and
working order (including, without limitation, providing any and all parts,
mechanisms, environments and software required or recommended by the
manufacturer and/or supplier of the Equipment). Lessor shall have no obligation
to deliver, install, test, adjust, maintain or service the Equipment or provide
substitute or replacement Equipment; and Lessee shall arrange for and bear the
full cost of all such matters. At any time upon Lessor's request, Lessee shall
provide Lessor with a satisfactory certificate(s) from a qualified
12
<PAGE> 13
third party that the Equipment has been properly maintained and complies with
all applicable health, safety and environmental laws.
(b) Without the prior written consent of Lessor, Lessee shall not make any
alterations, additions or improvements to the Equipment unless such
modifications do not: (i) impair the originally intended function or use of any
unit of Equipment; (ii) impair any maintenance agreement(s), warranties or
licenses with respect to any unit of Equipment; or (iii) cause material damage
to any unit of Equipment upon removal ("Permitted Modifications"). Lessee also
grants Lessor a right of first refusal as to the lease of any upgrades or
additions to the Equipment. Lessee shall remove all Permitted Modifications upon
return of the Equipment without damage to the Equipment; all Permitted
Modifications and other additions to the Equipment not so removed shall be
deemed the sole property of Lessor.
5. OWNERSHIP AND INSPECTION OF EQUIPMENT. The Equipment shall at all times
remain the exclusive property of Lessor. Lessee shall have no right, title or
interest in the Equipment except as expressly set forth herein. Lessee shall
give Lessor immediate notice of any attempt by third parties to seize any unit
of Equipment. Lessee shall not change or remove any insignia lettering or
identification on the Equipment; and shall keep for safe-keeping any manuals,
drawings, specifications, computer disks, maintenance agreements and records or
any other written information regarding the Equipment (and any associated
hardware or software). Lessor may supply Lessee with labels or other markings
stating that the Equipment is owned by Lessor, and Lessee shall promptly affix
same to the Equipment in a prominent place. Lessee shall maintain the Equipment
as removable personal property notwithstanding the fact that the Equipment (or
any part thereof) may become attached to, imbedded in, or resting on any real
property or any building thereon. At any time during Lessee's ordinary business
hours, Lessor shall have the right to enter the premises where the Equipment is
located to inspect and/or test the Equipment, and show the Equipment to
prospective purchasers and lessees; and Lessee shall cooperate with Lessor in
conducting such activities. Lessee shall not impose any restrictions on Lessor's
access to the Equipment.
6. LOSS OF AND DAMAGE TO THE EQUIPMENT (STIPULATED LOSS VALUE). Until such
time as Lessor accepts physical surrender of the Equipment from Lessee in
writing, Lessee hereby assumes the entire risk of loss and damage to the
Equipment from every cause whatsoever (notwithstanding the existence of any
insurance on the Equipment in favor of Lessor). If any unit of Equipment is
damaged, Lessee shall place such Equipment in good repair and working order to
the satisfaction of Lessor. If any unit of Equipment is determined by Lessor to
be lost, stolen or damaged beyond repair, Lessee shall (at Lessor's option): (i)
replace such Equipment with equipment of equivalent value, utility and
characteristics; or (ii) pay Lessor in cash the greater of the fair market value
of such Equipment or the "Stipulated Loss Value" for such unit of Equipment as
set forth in the Schedule. Upon Lessee's payment in good funds of the amount
required, this MLA shall terminate with respect to such unit of Equipment and
Lessee shall be deemed the owner of such Equipment "AS IS" and "WHERE IS"
WITHOUT ANY WARRANTY (EXPRESS OR IMPLIED) BY LESSOR WITH RESPECT TO ANY MATTER
WHATSOEVER (INCLUDING MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE)
EXCEPT THAT LESSOR HAS NOT CAUSED ANY SECURITY INTEREST, LIEN OR ENCUMBRANCE TO
ATTACH AGAINST SUCH EQUIPMENT.
7. INSURANCE. Lessee shall insure the Equipment to Lessor's satisfaction
against all risks of loss and damage, and shall carry comprehensive public
liability and property damage insurance satisfactory to Lessor. Lessee shall pay
the premiums for all such insurance, and shall deliver to Lessor satisfactory
written evidence of the required insurance coverage at the time Lessee accepts
the Equipment. Lessor shall have the exclusive right, and Lessee hereby appoints
Lessor as Lessee's attorney-in-fact (coupled with an interest), to make and
settle any claims under, receive any payments on, and execute and endorse any
documents, checks or drafts respecting any insurance (and proceeds therefrom)
regarding the Equipment. In the event any insurance proceeds are paid or payable
with respect to any unit of Equipment, such insurance proceeds shall be applied
(at Lessor's option) toward: (i) the replacement, restoration or repair of such
Equipment; or (ii) satisfaction of Lessee's obligations hereunder.
8. PAYMENT OF TAXES, FEES & LESSOR'S EXPENSES. (a) Lessee shall keep the
Equipment free and clear of all security interests, liens, encumbrances and
claims of any kind; and Lessee shall promptly pay all municipal, state and
federal taxes (including unitary taxes, receipts taxes, and apportionment
taxes), assessments and/or charges (including any governmental charges to audit
Lessor's records regarding this MLA or the Equipment except Lessor's income tax
records) which may now or hereafter be imposed regarding the acquisition,
ownership,
13
<PAGE> 14
lease, sale, possession, use or transfer of the Equipment; excluding
any federal or Wisconsin taxes imposed on or measured by Lessor's general income
except to the extent provided in each Schedule. At Lessee's own expense, Lessee
shall obtain, prepare and deliver to Lessor: (i) all returns and/or filings
required by applicable law pertaining to such governmental taxes, assessments,
and/or charges; and, (ii) all licenses, certificates, registrations and/or
permits required for the ownership, possession and/or use of the Equipment
("Certificates"). Lessee shall maintain and renew all such Certificates, and
shall take all necessary steps necessary to avoid the cancellation, suspension
and/or revocation of such Certificates, and/or any material adverse amendment
thereto.
(b) Lessee shall promptly pay all costs, charges, expenses and obligations
of every kind and nature (including reasonable attorneys' fees of outside and
in-house counsel) incurred by or on behalf of Lessor regarding the exportation,
importation, shipment, delivery, possession, use, lease, tax treatment, return,
repossession, storage and transfer of any unit of Equipment whenever and however
arising, and for any termination and/or amendment of this MLA or any Schedule,
and for the exercise of any rights or remedies with respect to MLA. In the event
Lessee fails to procure or maintain the insurance required under Section 7
above, or fails to promptly pay any amounts required to be paid by Lessee
herein, Lessor shall have the right (but shall not be obligated) to procure such
insurance and/or pay such amounts on behalf of Lessee. In such event, Lessee
shall promptly reimburse Lessor for the amount thereof on demand. If Lessee
fails to pay any amount(s) when due hereunder, such amount(s) shall accrue
interest until paid at 6% per annum plus the prime rate as announced by Firstar
Bank Milwaukee, N.A. from time to time or the highest rate permitted by law
(whichever is lower).
9. WARRANTIES. (a) Lessee warrants that it is duly organized and in good
standing under the laws of its state of incorporation; that Lessee is qualified
to do business in those states wherein the Equipment is located; that the
execution of this MLA and each Schedule has been duly authorized; and that the
execution and performance of this MLA or any Schedule by Lessee will not cause
Lessee to be in default under any material agreements or in violation of any
applicable laws.
(b) LESSEE REPRESENTS TO LESSOR THAT LESSEE HAS SELECTED THE TYPE, QUANTITY
AND SUPPLIER OF THE EQUIPMENT; AND THAT THE EQUIPMENT IS OF A DESIGN, SIZE,
QUALITY AND CAPACITY REQUIRED BY LESSEE, AND IS SUITABLE FOR LESSEE'S PURPOSES.
LESSOR IS NOT A MANUFACTURER OR SUPPLIER OF THE EQUIPMENT NOR AN AGENT OF THE
MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, AND LESSOR DOES NOT ENDORSE OR
PROMOTE ANY ITEM OF EQUIPMENT. NO REPRESENTATIONS OR PROMISES MADE BY ANY
MANUFACTURER, SUPPLIER OR DISTRIBUTOR OF THE EQUIPMENT SHALL BE BINDING ON
LESSOR. LESSOR MAKES NO WARRANTY OR REPRESENTATION (EITHER EXPRESS OR IMPLIED)
TO LESSEE AS TO THE FITNESS, QUALITY, DESIGN, CONDITION, CAPACITY, SAFETY,
SUITABILITY, MERCHANTABILITY OR PERFORMANCE OF THE EQUIPMENT (INCLUDING ITS
CONFORMITY WITH APPLICABLE LAW AND REGULATIONS), TITLE TO THE EQUIPMENT, OR ANY
OTHER MATTER WHATSOEVER. LESSEE AGREES THAT THE EQUIPMENT IS LEASED "AS IS" AND
"WHERE IS" AND THAT ALL RISKS REGARDING THE EQUIPMENT ARE TO BE BORNE SOLELY BY
LESSEE INCLUDING, WITHOUT LIMITATION, ANY LOSSES OR DAMAGES DUE TO ACTS OF GOD,
STRIKES, GOVERNMENTAL ACTION OR OBSOLESCENCE. LESSOR SHALL NOT BE LIABLE TO
LESSEE OR ANY OTHER PARTY FOR ANY CLAIM OR MATTER PERTAINING TO THE EQUIPMENT
WHATSOEVER INCLUDING, WITHOUT LIMITATION, ANY LOSS OR DAMAGE (DIRECT, INDIRECT
OR CONSEQUENTIAL) FROM BUSINESS INTERRUPTION, LOSS OF PROFITS, NONDELIVERY OR
LATE DELIVERY OF THE EQUIPMENT, IMPROPER INSTALLATION OR DESIGN OF THE
EQUIPMENT, FAILURE OR IMPROPER OPERATION OF THE EQUIPMENT, BREACH OF ANY
WARRANTY OR REPRESENTATION MADE BY THE MANUFACTURER AND/OR SUPPLIER OF THE
EQUIPMENT, OR ANY INJURY TO PERSONS OR PROPERTY. LESSOR MAKES NO
REPRESENTATIONS, WARRANTIES OR PROMISES WITH REGARD TO THE TAX OR ACCOUNTING
TREATMENT OF THIS LEASE OR LEASE SCHEDULE, OR THE INTERESTS OF LESSOR AND LESSEE
AS REGARDS THE EQUIPMENT.
(c) Lessee acknowledges that it has reviewed and approved all contracts and
agreements pertaining to Lessor's acquisition of the Equipment prior to leasing
the Equipment, and that Lessee accepts the terms and limitations of any
warranties, license and/or provisions contained therein. To the extent
assignable by Lessor, all warranties and licenses made by the manufacturer
and/or supplier of the Equipment are hereby assigned to Lessee for the lease
term applicable to such Equipment. At Lessee's sole expense and in Lessee's own
name only, Lessor hereby
14
<PAGE> 15
authorizes Lessee to enforce any such warranties or licenses made with respect
to the Equipment upon written notice to Lessor; and Lessor is under no
obligation to enforce any warranties or license regarding the Equipment.
Notwithstanding the foregoing, Lessee shall not commence any legal proceedings
to enforce any warranty or license except upon the prior written consent of
Lessor (which consent shall not be unreasonably withheld). Lessor makes no
representations or warranties as to the existence, sufficiency or enforceability
of any warranties or licenses regarding the Equipment; and Lessee's and
Sub-Lessee's sole remedy for any defect in or nonconformity of the Equipment is
against the manufacturer/vendor thereof.
10. INDEMNITY. Notwithstanding the existence of any insurance in favor of
Lessor, Lessee shall promptly defend, indemnify and save Lessor harmless from
and against: (a) any and all loss of or damage to the Equipment (except ordinary
wear and tear resulting from proper use of the Equipment); and (b) any claim,
action, demand, proceeding, or liability for any damage, loss, injury, cost or
expense (including reasonable attorney's fees) which Lessor may be subject to:
(i) relating to the construction, importation, exportation, delivery,
installation, ownership, sale, lease, transfer, storage, nonacceptance,
rejection, return, or repossession of the Equipment (or any part thereof); (ii)
resulting from the use, maintenance, repair, replacement, operation or condition
of the Equipment (or any part thereof); (iii) arising by reason of any act or
omission of Lessee or Lessee's violation of any law, regulation or ordinance
pertaining to the Equipment; (iv) as a result of any claim for patent,
copyright, trademark or other proprietary right infringement relating to the
Equipment or the use thereof; (v) as a result of any tort, negligence or strict
liability claim respecting the Equipment and/or the use thereof (including,
without limitation, any contribution and/or subrogation claims relating
thereto); or (vi) as a result of any third party claim to the Equipment. The
foregoing collectively called the "Indemnity Claims." Lessee agrees to give
Lessor prompt written notice of any Indemnity Claims described in this Section
10. Notwithstanding the foregoing, Lessee shall not be obligated to indemnify
Lessor for any Indemnity Claim caused proximately by the willful misconduct of
Lessor.
11. RETURN OF EQUIPMENT. Upon the termination or cancellation of this MLA or
of any Schedule (as applicable) whether by passage of time or otherwise, Lessee
shall promptly return to Lessor all (and only all) of the Equipment subject to
this MLA or the Schedule (as applicable) in good repair and working order
(excepting only ordinary wear and tear resulting from the proper use of the
Equipment) assembled and packed for shipment per the manufacturer's
specifications, and containing all engineering and product changes prescribed or
recommended by the manufacturer thereof prior to return of the Equipment. Upon
request by Lessor and at Lessee's expense, Lessee shall deliver such Equipment
to any place designated by Lessor within the continental United States. At
Lessor's option, Lessee shall permit Lessor to store such Equipment (or any unit
thereof) at its then existing location at no charge to Lessor. If for any reason
Lessee shall fail to return any unit of Equipment as specified by Lessor, Lessee
shall pay to Lessor rent equal to 150% of the Base Rate set forth in the
applicable Schedule(s) for each month or fraction thereof that such Equipment
remains unreturned (Post-Termination Rent). Lessee agrees that such
Post-Termination is not a penalty, but liquidated damages for Lessor's inability
to take possession of the Equipment for reletting or resale, and for the
increased risk of damage to and loss of the Equipment. Acceptance by Lessor of
any Post-Termination Rent shall not constitute a renewal of this MLA or the
applicable Schedule, nor a waiver of any default under this MLA or the
applicable Schedule, nor a waiver of any of Lessor's rights and remedies.
12. DEFAULT. Any of the following shall constitute an event of default
hereunder: (a) Lessee's failure to pay any amounts when due; (b) the
unauthorized removal of any unit of Equipment from the location(s) described in
the Schedule(s); (c) Lessee's unpermitted assignment of any interest in this MLA
or in the Equipment; (d) Lessee (or any guarantor of Lessee's obligations
hereunder) making an assignment for the benefit of its creditors, or becoming
subject to any proceedings under the U.S. Bankruptcy Code or any state
reorganization, receivership, insolvency or dissolution proceedings; (e) the
filing of any lien, levy attachment or judgment affecting the Equipment which
has not been released or stayed on appeal within ten (10) business days of
Lessee's knowledge thereof, or for which a bond satisfactory to Lessor in the
full amount of such lien, levy attachment or judgment has not been obtained in
favor of Lessor within ten (10) business days of Lessee's knowledge thereof; (f)
Lessee's failure to cure any breach of any other provision of this MLA within
ten (10) business days of Lessee's knowledge thereof or of Lessee's receipt of
Lessor's written notice thereof (whichever occurs earlier); (g) Lessee (or any
guarantor of Lessee's obligations hereunder) making any misrepresentations to
Lessor now or hereafter; (h) Lessee being in default under any material
agreement for the payment of money which has not been cured as provided; or (i)
any adverse material change in Lessee's financial condition or business
operations (or that of any guarantor of Lessee's obligations hereunder), or any
material change in the ownership of Lessee. Upon the occurrence of an event of
default, this MLA shall be deemed unconditionally terminated or canceled (at
Lessor's option) and expired.
16
<PAGE> 16
13. REMEDIES. (a) Upon the occurrence of an event of default hereunder,
Lessor shall have the non-exclusive option to: (i) declare the present value of
the aggregate rents or the Stipulated Loss Values payable under any or all of
the Schedules immediately due and payable; (ii) declare all other amount(s) due
Lessor hereunder immediately due and payable; (iii) declare the present value of
the residual value of all the Equipment to be immediately due and payable (the
"residual value" of the Equipment for these purposes is deemed to be twenty
percent (20%) of the Equipment's original cost or the appraised fair market
value of the Equipment at the end of the originally scheduled lease term,
whichever is greater); (iv) take possession of the Equipment and remove same
from its existing location(s) without notice to or consent of Lessee; and store
and/or dispose (by public sale or otherwise) of the Equipment at its then
existing location(s) at no charge to Lessor; or (v) assert any other remedies
available to Lessor at law or in equity (including, without limitation, under
the Uniform Commercial Code). For purposes of computing present value hereunder,
the discount rate shall be a rate per annum equal to the highest published Ask
Yield of any U.S. Treasury Bond, Note or Bill set forth in The Wall Street
Journal, Treasury Bonds, Notes and Bills section, having a maturity date closest
to the originally scheduled termination date of the applicable Schedule. Any
return and/or repossession of the Equipment shall not waive or impair any of
Lessor's rights or remedies. Except as otherwise provided for herein or by law,
all amount(s) due Lessor after an event of default shall be due and payable
without any notice or demand by Lessor, and without regard to any action taken
by Lessor regarding the Equipment. All amounts payable herein by Lessee after an
event of default shall bear interest until paid at the rate of 2% per annum plus
the prime rate as announced from time to time by Firstar Bank Milwaukee, N.A. or
the highest rate permitted by law (whichever is lower). Lessee releases Lessor
from any requirement to post a bond or surety regarding any repossession or
disposition of the Equipment.
(b) In the event Lessor accepts in writing return of any unit of Equipment,
Lessor shall use its best efforts for a period of sixty (60) days thereafter to
sell and/or release such Equipment, and Lessee agrees that such attempt shall
fully satisfy Lessor's obligation to mitigate its damages. After deducting all
expenses of retaking, repairing, holding, transporting, selling and/or reletting
the Equipment, the net proceeds (if any) from such sale or reletting by Lessor
shall be applied against Lessee's obligations hereunder (without regard to the
fact that each Schedule constitutes a separate lease of property). The proceeds
of any sale, re-lease or other disposition (if any) shall be applied in the
following priorities: (i) First, to pay all Lessor's costs, charges and expenses
in taking, removing, holding, repairing, selling, re-leasing and disposing of
the Equipment; (ii) second, to the extent not previously paid by Lessee (or by a
guarantor of Lessee's obligations hereunder) to pay Lessor all amounts due from
Lessee hereunder; (iii) third, to reimburse to Lessee (or any guarantor) any
sums previously paid as damages to Lessor by Lessee (or such guarantor); and
(iv) lastly, any surplus shall be retained by Lessor (except as to Equipment
leased under Schedules which are not deemed true leases, wherein any surplus
shall be retained by Lessee). Lessor shall have the right to seek a deficiency
from Lessee notwithstanding Lessor's repossession or abandonment of the
Equipment, or Lessor's sale or reletting the Equipment to a third party. After
an event of default, Lessee hereby irrevocably appoints Lessor as its
attorney-in-fact (coupled with an interest) to do all things necessary to
carryout Lessee's obligations under this MLA and with respect to the Equipment.
All remedies granted to Lessor herein and at law are cumulative, and may be
exercised concurrently or separately. No right or remedy is exclusive of any
other right or remedy. Notwithstanding any repossession, reletting or sale of
any unit of Equipment by Lessor and/or termination of this MLA, Lessee shall
remain fully liable for the performance of its obligations herein.
(c) To the extent permitted by law, Lessee unconditionally and irrevocably
waives any and all recession rights and remedies granted Lessee under Article 2A
of the Uniform Commercial Code.
14. ASSIGNMENT. This MLA shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the parties hereto (whether by operation of
law or by agreement) except as provided for herein. Upon written notice to
Lessee, any or all of Lessor's rights and obligations under this MLA (or any
part thereof) and/or any or all of the Lessor's rights and interest in the
Equipment (or any part thereof) may be sold, assigned or pledged to a third
party without the consent of Lessee. Lessee acknowledges that any such sale,
assignment, or pledge of any or all of Lessor's rights and/or obligations
hereunder and/or rights and interests in the Equipment shall not be deemed to
materially change Lessee's duties or obligations hereunder nor increase the
burdens or risks imposed on Lessee for purposes of Article 2A of the Uniform
Commercial Code. Notwithstanding the foregoing, no sale, assignment, or transfer
by Lessor of this MLA (or any part thereof) or the Equipment (or any part
thereof) shall interfere with Lessee's right of quiet enjoyment under this MLA
except in the event of a default hereunder. No breach or default by Lessor
hereunder shall excuse the full and timely performance by Lessee of its
obligations
16
<PAGE> 17
under this MLA to any successor or assignee of Lessor. Lessee agrees to execute
a written acknowledgment of the matters set forth herein in favor of (and to the
satisfaction of such successor or assignee) upon request. EXCEPT AS IS EXPRESSLY
PROVIDED FOR HEREIN, LESSEE SHALL NOT ASSIGN, TRANSFER, OR PLEDGE ANY RIGHT,
INTEREST OR OBLIGATION UNDER THIS MLA (OR ANY PART THEREOF) OR ANY RIGHT OR
INTEREST IN THE EQUIPMENT (OR ANY PART THEREOF), NOR PERMIT THE EQUIPMENT (OR
ANY PART THEREOF) TO BE SUBLEASED OR USED BY ANY PARTY OTHER THAN LESSEE AND ITS
EMPLOYEES. UPON ANY SUCH UNPERMITTED ASSIGNMENT, TRANSFER, PLEDGE, OR USE, THIS
MLA SHALL IMMEDIATELY TERMINATE OR BE CANCELED AND LESSEE SHALL BE DEEMED IN
DEFAULT HEREUNDER. TO THE EXTENT THIS MLA IS ASSIGNABLE OR ASSUMABLE BY
OPERATION OF LAW WITHOUT THE CONSENT OF LESSOR, THIS MLA MUST BE ASSIGNED AND/OR
ASSUMED IN ITS ENTIRETY.
15. NET LEASE. THIS MLA CONSTITUTES A NET LEASE, AND LESSEE'S OBLIGATION TO
PAY THE RENTS AND OTHER AMOUNTS DUE HEREUNDER (AND THE CONTINUING EFFECTIVENESS
AND ENFORCEABILITY OF THIS MLA) ARE ABSOLUTE, UNCONDITIONAL AND INDEPENDENT
OBLIGATIONS NOT SUBJECT TO ABATEMENT, DIMINUTION, SUSPENSION, DEFERMENT OR
REDUCTION OF, OR OFFSET AGAINST, LESSEE'S OBLIGATIONS HEREUNDER FOR ANY REASON
INCLUDING WITHOUT LIMITATION: (1) ANY CLAIMS OF LESSEE AGAINST LESSOR, OR THE
MANUFACTURER OR SUPPLIER OF THE EQUIPMENT; (2) ANY DEFECT IN, DAMAGE TO, OR LOSS
OR DESTRUCTION OF ANY UNIT OF EQUIPMENT HOWEVER ARISING; OR (3) ANY INTERFERENCE
WITH LESSEE'S USE OF ANY UNIT OF EQUIPMENT BY ANY THIRD PARTY (INCLUDING ANY
GOVERNMENTAL BODY) EXCEPT AS EXPRESSLY SET FORTH HEREIN. IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT ALL RENTS AND OTHER AMOUNTS PAYABLE BY
LESSEE TO LESSOR HEREUNDER SHALL CONTINUE TO BE PROMPTLY AND UNCONDITIONALLY
PAID IN ALL EVENTS (EXCEPT ONLY AS LESSEE'S OBLIGATION TO PAY RENT MAY BE
TERMINATED PURSUANT TO SECTION 6 ABOVE).
16. PARTICIPATIONS. At Lessor's sole discretion and without notice to or the
consent of Lessee, Lessor may sell a participation in this MLA and/or any
Schedule (or any part thereof), to a participant on terms satisfactory to
Lessor, and lessor may distribute to actual and potential participants any
information regarding Lessee, this MLA, the Equipment, and any guarantor of
Lessee's obligation under this MLA. To the extent of such participation(s), each
Participant shall be entitled to all of the benefits and/or rights enjoyed by
Lessor under this MLA (including, without limitation, all indemnity and
reimbursement obligations of Lessee hereunder)..
17. LATE PAYMENT CHARGE/RESUMPTION OF MLA. Notwithstanding Section 12.
above, in the event Lessee fails to make any payment required hereunder or under
any Schedule when due, termination of this MLA shall be rescinded and the
nonpayment default deemed cured only if (a) Lessor receives the amount of such
late payment within five (5) days of the payment due date; or (b) if the payment
is more than five (5) days (but less than thirty (30) days) past due, Lessor
receives the amount of such late payment, plus a late payment charge of the
greater of 5 percent of the amount of such late payment or $50.00.
18. ADDITIONAL DOCUMENTS. Lessee shall execute and deliver to Lessor such
other documents as Lessor may reasonably deem necessary to evidence or protect
Lessor's interests in the Equipment and under this MLA. Upon request by Lessor,
Lessee shall verify in writing the exact location of the Equipment and identify
any unit of Equipment moved since the date of any previous verification, and
provide Lessor with a current set of Lessee's financial statements and with
maintenance information regarding the Equipment.
19. GOVERNING LAW & CONSTRUCTION. (a) THIS MLA AND EACH SCHEDULE REPRESENTS
THE ENTIRE AGREEMENT OF THE PARTIES AND THEIR PROVISIONS SHALL NOT BE MODIFIED,
SUPPLEMENTED OR WAIVED IN ANY MANNER EXCEPT BY THE WRITTEN CONSENT OF THE
PARTIES. This MLA shall be construed without regard to any presumption or rule
requiring construction against the party causing this MLA to be drafted. If more
than one Lessee is named in this MLA (or any Schedule), the liability of such
Lessees shall be joint and several. If any provision of this MLA or the
application thereof to any party is held invalid or unenforceable for any
reason, the other provisions of this MLA and their application shall be
unaffected thereby, and shall remain in full force and effect. No delay on the
part of Lessor in exercising any right, power, or remedy hereunder shall operate
as a waiver thereof; and no single or partial exercise of any right, power
17
<PAGE> 18
or remedy by Lessor hereunder shall preclude any further exercise thereof (or
the exercise of any other right, power, or remedy). THE VALIDITY, INTERPRETATION
AND ENFORCEMENT OF THIS MLA SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
WISCONSIN (IRRESPECTIVE OF SUCH STATE'S CHOICE OF LAWS RULES). THE PARTIES AGREE
THAT THE MLA AND EACH SCHEDULE ARE DEEMED TO BE EXECUTED, EFFECTIVE AND
PERFORMED IN THE STATE OF WISCONSIN BY VIRTUE OF LESSOR EXECUTING AND ACCEPTING
THE MLA AND EACH SCHEDULE IN SUCH STATE AND ALL RENTAL PAYMENTS BEING PAID TO
LESSOR IN SUCH STATE. ALL CLAIMS AND OTHER MATTERS RELATING TO THIS MLA AND THE
EQUIPMENT (AS BETWEEN LESSOR AND LESSEE) SHALL BE HEARD IN ANY STATE OR FEDERAL
COURT LOCATED IN MILWAUKEE COUNTY, WISCONSIN; AND THE PARTIES HEREBY CONSENT TO
THE EXCLUSIVE PERSONAL JURISDICTION OF SUCH COURTS, AND WAIVE TRIAL BY JURY.
NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR LESSOR'S RIGHT TO SERVE LEGAL
PROCESS IN ANY MANNER OR LESSOR'S RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST LESSEE OR THE EQUIPMENT IN THE COURTS OF ANY OTHER JURISDICTION.
(b) LESSEE'S OBLIGATIONS TO LESSOR HEREUNDER ARE SECURED BY ALL THE
EQUIPMENT (TO THE EXTENT NOT OWNED BY LESSOR), NOTWITHSTANDING THE INDEPENDENCE
OF THE INDIVIDUAL SCHEDULES OR THE DATE OF THEIR EXECUTION.
20. NOTICES. The giving of all notices required herein shall be sufficient
if made in writing and delivered personally, sent via facsimile (transmission
confirmed) or mailed to the party involved at the address hereinafter set forth
(or at such other address as each party may provide in writing). If mailed, such
notice shall be deemed given when deposited in the U.S. mail fully addressed
with postage prepaid.
21. SURVIVAL OF OBLIGATIONS. The indemnity and reimbursement obligations set
forth in this MLA shall survive termination of this MLA and satisfaction of
Lessee's obligations hereunder.
Dated at Milwaukee, Wisconsin this 26 day of December, 1995.
Penda Corporation FIRSTAR EQUIPMENT FINANCE CORPORATION
By: /s/Earle W. Wirth By: /s/William Engelking
-------------------- -------------------------
Name/Title: Earle W Wirth, CFO Name/Title: William Engelking, Assistant Vice
President
Address: 2344 West Wisconsin Street; Portage, WI 53901-0449
Attested By: /s/Peter C. Brockway
-----------------------
(Assistant) Secretary
Peter C. Brockway
18
<PAGE> 19
LEASE SCHEDULE 9001#
TO MASTER LEASE AGREEMENT (MLA)
A. EQUIPMENT LEASED: See Attachment A (Acceptance Certificate).
B. TOTAL EQUIPMENT COST: $1,940,000.
C. TERM: The term of this Schedule commences on December 26, 1995, ("Base
Lease Commencement Date") and expires on December 26, 2000 ("Initial
Term"). Unless sooner terminated as set forth in the MLA and at Lessor's
option, this Schedule shall be automatically renewed in its entirety on a
monthly/annual (strike one) basis ("Renewal Term") unless Lessee gives
Lessor written notice of non-renewal sixty (60) days prior to the
expiration of the Initial Term of this Schedule (and of any Renewal
Term).
D. BASE RENT: As rent for the Equipment described in this Schedule, Lessee
shall pay Lessor the sum of $28,776.02 ("Base Rent") per month in arrears
from the Base Lease Commencement Date. The first Base Rent payment shall
be due on January 26, 1996, and the remaining Base Rent payments shall be
due on the same day of every month thereafter during the Initial Term of
this Schedule (and any Renewal Term).
E. LOCATION: The Equipment shall be located at 2344 West Wisconsin Street,
Portage, WI in the County of Columbia, and shall not be removed therefrom
without the prior written consent of Lessor.
F. PERMITS, LICENSES OR ENVIRONMENTAL REGULATIONS PERTAINING TO THE
EQUIPMENT: Please identify in a separate writing whether any of the
Equipment subject to this Schedule requires any permit, certificate or
license for its ownership, use and/or operation: (1) Under federal, state
or local environmental, health or safety laws (e.g., as a result of
generating any hazardous wasters, effluence's or discharges, or disposing
of same); or (2) Under any software, servicing or maintenance agreement
with a third party. A copy of any such permit, certificate, license or
agreement must also be attached hereto.
G. INSURANCE/STIPULATED LOSS VALUE: The insurance requirements regarding the
Equipment are set forth in Attachment B hereto. The Stipulated Loss
Values during the Initial Term of this Schedule for each unit of
Equipment lost, stolen, destroyed or damaged beyond repair ("Stipulated
Loss Values") are set forth in Attachment C hereto.
H. INCORPORATION BY REFERENCE: The Master Lease Agreement (MLA) executed by
Lessee is incorporated herein in its entirety, and Lessee hereby
reaffirms all of the representations and warranties contained in said
MLA. This Schedule constitutes a separate and independent lease of
property from any other Lease Schedule. If any provisions of this
Schedule conflict with any provisions of the MLA, the provisions of this
Schedule shall prevail. Lessee hereby authorizes Lessor to complete any
part of this Schedule which has been left blank. The following documents
are part of this Schedule and are incorporated by reference herein:
(X) ATTACHMENT A: ACCEPTANCE CERTIFICATE
(X) ATTACHMENT B: REQUIRED INSURANCE
(X) ATTACHMENT C: STIPULATED LOSS VALUES
(X) RIDER #1A PURCHASE/RENEWAL OPTION (FIXED)
( ) RIDER #1B LEASE PURCHASE, RENEWAL AND RESALE OPTIONS/EARLY
TERMINATION
( ) RIDER #2A TAX INDEMNITY, LEASE RENEWAL AND PURCHASE OPTION
(FAIR MARKET VALUE)
( ) RIDER #2B TAX INDEMNITY, LEASE RENEWAL AND PURCHASE OPTION
(SPLIT OPTION PRICE)
19
<PAGE> 20
( ) RIDER #2C TAX INDEMNITY, LEASE RENEWAL AND PURCHASE OPTION
(PREAPPRAISED FAIR MARKET VALUE)
( ) RIDER #2D TAX INDEMNITY, LEASE RENEWAL AND PRUCHASE OPTION
(PREAPPRAISED FMV CAP)
( ) RIDER #3A MOTOR VEHICLE OPERATING LEASE (TRAC) & CERTIFICATE
( ) RIDER#3B MOTOR VEHICLE OPERATING LEASE (SHARED-RISK TRAC)
If Rider #1A or #1B is attached to this Schedule, the parties agree this
Schedule constitutes a security agreement under Article 9 of the Uniform
Commercial Code ("UCC") and Lessee grants to Lessor a security interest in the
Equipment. If Rider #2A, #2B, #2C, #2D, #3A or #3B is attached to this Schedule,
the parties agree this Schedule constitutes a "finance lease" under UCC Article
2A to the extent UCC Article 2A applies to this Schedule If any provisions of
any Rider conflict with the provisions of the MLA or this Schedule, the
provisions of the Rider shall prevail.
I. ORAL MODIFICATIONS: Lessee agrees that the MLA and this Schedule may only be
modified, rescinded or terminated upon the prior written consent of Lessee.
PENDA CORPORATION
(LESSEE)
By: /s/Earle W. Wirth
------------------------
Earle W. Wirth CFO
(PRINT OR TYPE NAME AND TITLE)
Accepted at Milwaukee, Wisconsin, this 26th day of December, 1995.
FIRSTAR LEASING SERVICES CORPORATION
(LESSOR)
By: /s/William Engelking
---------------------------
William Engelking
Title: Assisistant Vice President
20
<PAGE> 21
ATTACHMENT A
TO LEASE SCHEDULE
ACCEPTANCE CERTIFICATE
Dated: December 26, 1995
To-. Firstar Leasing Services Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Re: Lease Schedule #9001
We hereby warrant to you that all of the items of property described in the
above-referenced Lease Schedule (hereinafter "Equipment") are in good condition
and working order, and are hereby unconditionally and irrevocably accepted by
us. A description of the Equipment is attached hereto and incorporated herein by
reference. We acknowledge that we have reviewed and approved all contracts and
agreements pertaining to your acquisition of the Equipment ("Supply Contracts")
prior to leasing the Equipment, and that we accept the terms and limitations of
any warranties and/or provisions contained therein, You are hereby authorized to
pay for the Equipment per the applicable purchase order(s) and/or invoice(s). We
also warrant to you that all of the representations and warranties set forth in
our Master Lease Agreement (MLA) with you are hereby reaffirmed and restated,
and that we are not in default under the MLA as of the date above.
PENDA CORPORATION (LESSEE)
By:/s/ Earle W. Wirth CFO
----------------------
Earle W. Wirth Title
21
<PAGE> 22
ATTACHMENT B
TO LEASE SCHEDULE
LEASED EQUIPMENT INSURANCE REQUIREMENTS
A. Property Insurance Coverage (including physical damage insurance on
motor vehicles)
1. Insured values must be equal to the greater of the Equipment cost
or the fair market value of the Equipment at all times.
Valuation of loss must be on a replacement cost basis.
B. Coverage must include the following:
(a) Firstar Leasing Services Corporation ("Lessor"), 777 East Wisconsin
Avenue, Milwaukee, Wisconsin, 53202, named as sole loss payee with
respect to the Equipment.
(b) "Comprehensive" or "all risk" coverage. If the Equipment includes
steam boilers, hot water boilers, pipes, turbines or other
associated equipment, special property and liability coverage under
a separate policy (or endorsement if not covered under basic
property policy) may be necessary.
(c) Deductibles not larger than $1,000 per occurrence (unless otherwise
agreed to in writing by Lessor).
(d) Co-insurance clauses ranging form 80% to 100, but no lesser amount.
(e) A satisfactory lender's loss payable endorsement in favor of
Lessor.
(f) Thirty (30) days' prior written notice of cancellation,
non-renewal, material adverse change and addition of loss payees
is required to be given to Lessor by the insurer and/or agent.
(g) In-transit coverage is required if the Equipment is not
completely delivered at the time of Lessor's funding of the Lease
Schedule.
(h) If the Equipment is to be subleased or used by others (subject to
Lessor's prior written approval), a special insurance endorsement
by be required to permit such use.
(i) Property insurer must be licensed to do business in the State of
Wisconsin and have a Best's Key Rating of at least "B-".
(j) An endorsement stating that the property insurance in favor of
Lessor is the primary insurance's relating to the Equipment.
C. General Liability Coverage
1. Under the "New" occurrence form - (commercial General Liability),
coverage must include:
(a) $1,000,000 general aggregate;
(b) $1,000,000 products - completed operations aggregate;
(c) $1,000,000 personal injury and advertising injury; and
(d) $1,00,000 each occurrence limit.
2. Commercial Umbrella Coverage Minimum Limits: $1,000,000 each
occurrence, and $1,000,000 aggregate. Commercial umbrella coverage
must provide coverage at least in excess of the general liability
"occurrence form" described above in B.2.
3. Coverage must also include the following under any of the
above-described general liability policies:-(a) Lessor as
additional insured; (b) "broad form" general liability coverage or
similar form (including, but not limited to, premises and
operations, products and completed operations, employees as
insureds, blanket contractual liability, personal injury and
advertising liability), with owners and contractors coverage, if
necessary; (c) thirty (30) day prior written notice of
cancellation, non-renewal or adverse material change must be given
to Lessor by the insurer and/or the agent.
D. Motor Vehicle Liability Coverage
1. "Motor Vehicles" refers to trucks, trailers, semi-trailers, buses,
vans, private passenger cars, pick-up trucks, motorcycles, motor
scooters, farm machinery, bulldozers, forklifts, power cranes,
shovels, loaders, diggers, drills, road construction or resurfacing
equipment and all other vehicles designed for use on and off public
roads. All-terrain vehicles cannot be leased by Lessor without
special approval. As used herein, "all-terrain" vehicles" shall
include three-and four-wheeled, self-propelled recreational
vehicles principally designed for off-road use.
22
<PAGE> 23
2. Minimum property insurance coverage, See Section A above.
3. Minimum general liability coverage:
<TABLE>
<CAPTION>
Type of Lease
<S> <C>
Finance Lease $1,000,000
Tax Lease $5,000,000
TRAC Lease (Lessor shown as titleholder) $5,000,000
TRAC Lease (Lessee shown as titleholder;
Lessor as lienholder) $1,000,000
</TABLE>
23
<PAGE> 24
ATTACHMENT C 12/22/95
PENDA CORPORATION
TERM 60 MONTHS
INTEREST RATE 8.00%
PAYMENTS ARE MONTHLY IN ARREARS
<TABLE>
<CAPTION>
PAYMENT TOTAL PAYMENT INTEREST PRINCIPAL PAYMENT UNPAID PRINCIPAL STIPULATED LOSS
PAYMENT
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,940,000.00 105.0000%
1 $ 28,776.02 $ 12,934.61 $ 15,841.41 $ 1,924,158.59 104.1426%
2 $ 28,776.02 $ 12,828.99 $ 15,947.03 $ 1,908,211.56 103.2795%
3 $ 28,776.02 $ 12,722.67 $ 16,053.35 $ 1,892,158.21 102.4106%
4 $ 28,776.02 $ 12,615.63 $ 16,160.39 $ 1,875,997.82 101.5360%
5 $ 28,776.02 $ 12,507.89 $ 16,268.13 $ 1,859,729.69 100.6555%
6 $ 28,776.02 $ 12,399.42 $ 16,376.60 $ 1,843,353.09 99.7691%
7 $ 28,776.02 $ 12,290.23 $ 16,485.79 $ 1,826,867.30 98.8768%
8 $ 28,776.02 $ 12,180.32 $ 16,595.70 $ 1,810,271.60 97.9786%
9 $ 28,776.02 $ 12,069.67 $ 16,706.35 $ 1,793,565.25 97.0744%
10 $ 28,776.02 $ 11,958.28 $ 16,817.74 $ 1,776,747.51 96.1642%
11 $ 28,776.02 $ 11,846.15 $ 16,929.87 $ 1,759,817.64 95.2479%
12 $ 28,776.02 $ 11,733.28 $ 17,042.74 $ 1,742,774.90 94.3254%
13 $ 28,776.02 $ 11,619.65 $ 17,156.37 $ 1,725,618.53 93.3969%
14 $ 28,776.02 $ 11,505.26 $ 17,270.76 $ 1,708,347.77 92.4621%
15 $ 28,776.02 $ 11,390.11 $ 17,385.91 $ 1,690,961.86 91.5211%
16 $ 28,776.02 $ 11,274.19 $ 17,501.83 $ 1,673,460.03 90.5739%
17 $ 28,776.02 $ 11,157.50 $ 17,618.52 $ 1,655,841.51 89.6203%
18 $ 28,776.02 $ 11,040.03 $ 17,735.99 $ 1,638,105.52 88.6604%
19 $ 28,776.02 $ 10,921.78 $ 17,854.24 $ 1,620,251.28 87.6940%
20 $ 28,776.02 $ 10,802.74 $ 17,973.28 $ 1,602,278.00 86.7212%
21 $ 28,776.02 $ 10,682.91 $ 18,093.11 $ 1,584,184.89 85.7420%
22 $ 28,776.02 $ 10,562.28 $ 18,213.74 $ 1,565,971.15 84.7562%
23 $ 28,776.02 $ 10,440.84 $ 18,335.18 $ 1,547,635.97 83.7638%
24 $ 28,776.02 $ 10,318.59 $ 18,457.43 $ 1,529,178.54 82.7648%
25 $ 28,776.02 $ 10,195.53 $ 18,580.49 $ 1,510,598.05 81.7592%
26 $ 28,776.02 $ 10,071.65 $ 18,704.37 $ 1,491,893.68 80.7468%
27 $ 28,776.02 $ 9,946.94 $ 18,829.08 $ 1,473,064.60 79.7277%
28 $ 28,776.02 $ 9,821.40 $ 18,954.62 $ 1,454,109.98 78.7018%
29 $ 28,776.02 $ 9,695.02 $ 19,081.00 $ 1,435,028.98 77.6691%
30 $ 28,776.02 $ 9,567.80 $ 19,208.22 $ 1,415,820.76 76.6295%
31 $ 28,776.02 $ 9,439.74 $ 19,336.28 $ 1,396,484.48 75.5829%
32 $ 28,776.02 $ 9,310.82 $ 19,465.20 $ 1,377,019.28 74.5294%
33 $ 28,776.02 $ 9,181.04 $ 19,594.98 $ 1,357,424.29 73.4688%
34 $ 28,776.02 $ 9,050.39 $ 19,725.63 $ 1,337,698.66 72.4012%
35 $ 28,776.02 $ 8,918.87 $ 19,857.15 $ 1,317,841.51 71.3265%
36 $ 28,776.02 $ 8,786.48 $ 19,989.54 $ 1,297,851.97 70.2446%
37 $ 28,776.02 $ 8,653.20 $ 20,122.82 $ 1,277,729.15 69.1554%
38 $ 28,776.02 $ 8,519.04 $ 20,256.98 $ 1,257,472.17 68.0591%
39 $ 28,776.02 $ 8,383.98 $ 20,392.04 $ 1,237,080.13 66.9554%
40 $ 28,776.02 $ 8,248.02 $ 20,528.00 $ 1,216,552.12 65.8443%
41 $ 28,776.02 $ 8,111.15 $ 20,664.87 $ 1,195,887.25 64.7259%
42 $ 28,776.02 $ 7,973.37 $ 20,802.65 $ 1,175,084.60 63.5999%
43 $ 28,776.02 $ 7,834.67 $ 20,941.35 $ 1,154,143.25 62.4665%
44 $ 28,776.02 $ 7,695.05 $ 21,080.97 $ 1,133,062.28 61.3255%
</TABLE>
24
<PAGE> 25
ATTACHMENT C 12/22/95
PENDA CORPORATION
TERM 60 MONTHS
INTEREST RATE 8.00%
PAYMENTS ARE MONTHLY IN ARREARS
<TABLE>
<CAPTION>
PAYMENT TOTAL PAYMENT INTEREST PAYMENT PRINCIPAL PAYMENT UNPAID PRINCIPAL STIPULATED LOSS
#
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
45 $ 28,776.02 $ 7,554.49 $ 21,221.53 $ 1,111,840.75 60.1769%
46 $ 28,776.02 $ 7,413.00 $ 21,363.02 $ 1,090,477.73 59.0207%
47 $ 28,776.02 $ 7,270.57 $ 21,505.45 $ 1,068,972.28 57.8567%
48 $ 28,776.02 $ 7,127.19 $ 21,648.83 $ 1,047,323.45 56.6850%
49 $ 28,776.02 $ 6,982.85 $ 21,793.17 $ 1,025,530.28 55.5055%
50 $ 28,776.02 $ 6,837.54 $ 21,938.48 $ 1,003,591.80 54.3181%
51 $ 28,776.02 $ 6,691.27 $ 22,084.75 $ 981,507.05 53.1228%
52 $ 28,776.02 $ 6,544.03 $ 22,231.99 $ 959,275.06 51.9195%
53 $ 28,776.02 $ 6,395.80 $ 22,380.22 $ 936,894.84 50.7082%
54 $ 28,776.02 $ 6,246.58 $ 22,529.44 $ 914,365.40 49.4888%
55 $ 28,776.02 $ 6,096.37 $ 22,679.65 $ 891,685.75 48.2613%
56 $ 28,776.02 $ 5,945.16 $ 22,830.86 $ 868,854.89 47.0257%
57 $ 28,776.02 $ 5,792.94 $ 22,983.08 $ 845,871.81 45.7817%
58 $ 28,776.02 $ 5,639.70 $ 23,136.32 $ 822,735.49 44.5295%
59 $ 28,776.02 $ 5,485.44 $ 23,290.58 $ 799,444.91 43.2689%
60 $ 804,775.06 $ 5,330.15 $ 799,444.91 0.00 0.0000%
================== ================ =================
$ 2,502,560.24 $ 562,560.25 $ 1,939,999.99
================== ================ =================
</TABLE>
** THIS PAYMENT SCHEDULE SETS FORTH YOUR ESTIMATED PAYMENTS DURING THE INITIAL
TERM OF THE LEASE SCHEDULE AND IS FOR INFORMATIONAL PURPOSES ONLY. THE EXACT
AMOUNT OF YOUR PAYMENT WILL VARY DEPENDING UPON THE DATE THE PAYMENT IS
RECEIVED, ANY LATE PAYMENT CHARGES, THE INCLUSION OF ANY USE TAXES AND THE LIKE,
AND DOES NOT REFLECT THE AMOUNT WHICH YOU WOULD NEED TO PAY IN THE EVENT OF AN
EARLY PAYOUT. IN ADDITION, THIS PAYMENT SCHEDULE DOES NOT IMPLY ANY FIXED
PURCHASE OPTION PRICE REGARDING THE LEASED EQUIPMENT OR CONSTITUTE A MEASURE OF
THE DAMAGES IN THE EVENT OF A DESTRUCTION OR LOSS OF THE LEASED EQUIPMENT
COVERED BY THE LEASE SCHEDULE.
** AMORTIZATION BASED UPON 30/360 DAY BASIS
25
<PAGE> 26
RIDER #1A
TO LEASE SCHEDULE #9001
LEASE RENEWAL AND PURCHASE OPTION (FIXED)
1. RENEWAL: In the event this Schedule has been renewed pursuant to Section
C of the Schedule, Lessee shall pay to Lessor a monthly rental of N/A
during each Renewal Term payable on the first day of each month. In all
other respects, the Schedule and MLS shall remain unchanged, and in full
force and effect.
2. PURCHASE OPTION: Lessee agrees to purchase all (and only all) of the
equipment described in the Schedule for the sum of $776,000 payable by
certified check, unless Lessee provides Lessor with 90 days written
notice prior to the expiration of the Initial Term of the Schedule (or
of the Renewal Term) of Lessee's election not to purchase the Equipment.
Lessee shall pay all taxes, fees, costs, expenses and other charges of
any kind pertaining to its purchase of the Equipment.. Such amount must
be paid at the expiration of the Initial Term of the Schedule (or of the
Renewal Term). The equipment shall be purchased "AS IS" AND "WHERE IS"
WITH NO WARRANTIES (EXPRESSED OR IMPLIED) AS TO ANY MATTER WHATSOEVER,
EXCEPT THAT NO SECURITY INTEREST LIEN OR ENCLUMBRANCE AGAINST SUCH
EQUIPMENTY AHAS BEEN CREATED BY OR THROUGH LESSOR.
3. Lessee's ability to renew the Schedule and exercise the purchase option
described above are conditioned upon no event of default having occurred
under the MLA prior to Lessee's payment of the amount necessary to renew
the Schedule or to purchase the Equipment described therein.
Accepted by Initialing:
Lessor:/s/ WSE Lessee:/s/ EWW
-------------- --------------
WSE EWW
26
<PAGE> 27
ADDENDUM #1 TO LEASE SCHEDULE #9001
DATED December 26, 1995
TO MASTER LEASE AGREEMENT DATE DECEMBER 26, 1995
EARLY TERMINATION OF LEASE SCHEDULE
A. Notwithstanding anything to the contrary in the MLA or this Schedule,
Lessee may terminate its obligations under this Schedule prior to its
scheduled termination and purchase all of the equipment under this
Schedule from Lessor by paying to Lessor on that date an amount equal to
the present value of the remaining rent payments due under the Schedule
(using a discount rate equal to the highest ask yield of U.S. Treasury
Bonds, Bills or Notes published in the Wall Street Journal, Midwest
Edition, having a maturity equal to the remaining average life of the
Equipment as determined by Lessor), plus all accrued Rent and any other
amounts (including, without limitation, all taxes, fees and expenses)
payable by Lessor as a result of such termination and sale of the
Equipment described in such Schedule to Lessee ("Termination Price").
The Termination Price must be paid to lessor in good funds on the
anniversary date set forth above or Lessee's rights to early termination
granted hereunder shall expire as to such Schedule and be of no further
force and effect.
B. Upon receipt of the Termination Price in good funds by Lessor as
required herein, Lessor shall execute a bill of sale to L3ssee
evidencing Lessee's purchase of the Equipment, and a release of Lessee's
obligations under the Schedule. Lessor's sale of the Equipment to Lessee
shall be on an "AS IS" AND "WHERE IS" BASIS WITH NO WARRANTIES (EXPRESS
OR IMPLIED) AS TO ANY MATTER WHATSOEVER EXCEPT THAT THE EQUIPMENT IS
FREE AND CLEAR OF ANY SECURITY INTEREST, LIENS AND/OR ENCUMBRANCES
CREATED BY LESSOR.
C. Lessee's ability to terminate any Schedule is conditioned upon:
(1) Lessee providing Lessor with written notice 30 days prior to its
intent to early terminate this Schedule at least 30 days prior to
the anniversary of the Schedule set forth above ("Termination
Notice"); and
(2) No event of default existing under the MLA at the time Lessee
elects to terminate this Schedule.
Accepted by Initialing:
Lessor: /s/ WSE Lessee: /s/ EWW
-------- ------------
WSE EWW
27
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,213
<SECURITIES> 0
<RECEIVABLES> 13,656
<ALLOWANCES> (499)
<INVENTORY> 4,881
<CURRENT-ASSETS> 28,760
<PP&E> 28,689
<DEPRECIATION> (10,282)
<TOTAL-ASSETS> 140,014
<CURRENT-LIABILITIES> 10,239
<BONDS> 81,600
0
0
<COMMON> 10
<OTHER-SE> 39,280
<TOTAL-LIABILITY-AND-EQUITY> 140,014
<SALES> 41,128
<TOTAL-REVENUES> 41,128
<CGS> 25,623
<TOTAL-COSTS> 25,623
<OTHER-EXPENSES> 7,767
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,491
<INCOME-PRETAX> 3,247
<INCOME-TAX> 1,177
<INCOME-CONTINUING> 2,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,070
<EPS-PRIMARY> 2.04
<EPS-DILUTED> 2.04
</TABLE>
