GENERAL TERMS AND CONDITIONS
1. DELIVERY OF EQUIPMENT
By execution of each EIR with respect to each item of equipment delivered to Lessee under this Agreement, Lessee conclusively acknowledges receipt thereof in good and leasable condition. Lessee agrees to return such equipment to Lessor in as good condition as received from Lessor, normal wear and deterioration excepted, and to execute Lessor’s EIR upon redelivery to Lessor identifying and acknowledging any changes in the condition of the equipment while on lease to Lessee. Any changes in the equipment which could have been prevented by normal maintenance shall not constitute normal wear and deterioration and shall be deemed to be damage.
2. RENTAL AND OTHER CHARGES
- Lessee agrees to pay rental charges for the equipment in the amount(s) set forth in this Agreement from the day such equipment is delivered and/or interchanged to Lessee until the day such equipment is returned to Lessor. However, if the equipment is not returned in good condition, Lessee agrees to pay for the cost of any necessary repairs together with rental charges through the date such repairs are approved by Lessee. Further, in the event no fixed lease term is specified for the equipment, Lessor may, upon written notice to Lessee, (i) prospectively adjust the initial rental charges to Lessor’s then current average spot lease rate for such equipment on or after the 18-month anniversary of the lease out date of such equipment, or (ii) require that Lessee redeliver the equipment within 30 days of such notice in accordance with the redelivery provisions set forth herein. In the event a fixed lease term is specified for the equipment, Lessor may (unless otherwise provided elsewhere in this Agreement), upon written notice to Lessee (i) prospectively adjust the rental charges for such equipment to Lessor’s then current average spot lease rate for such equipment on or after the 6 month anniversary of the expiration of the fixed term, or (ii) require that Lessee redeliver the equipment within 30 days of such notice in accordance with the redelivery provisions set forth herein.
- Lessee shall return all equipment to Lessor’s terminal at the point(s) of termination designated herein or to locations otherwise specified upon 90 days’ advance written notice by the Lessor to Lessee. Furthermore, upon such redelivery, Lessee agrees to pay Lessor the applicable equipment drop-off charge(s) shown herein, or, if no such charges are specified herein, the applicable drop-off charges for like type equipment contained in Lessor’s current drop-off charge schedule. Lessor may close any redelivery locations or reduce the monthly redelivery limits for any depot locations (i) with immediate effect by giving written notice thereof to Lessee if such closures or quantity reductions are due to circumstances beyond Lessor’s control, including, but not limited to, changes in applicable law or natural disasters, or (ii) upon sixty days’ prior written notice for any other reason.
- All service charges incurred in transferring the equipment including, but not limited to, handling charges, transportation charges and chassis use fees, and all service charges imposed by any bank or other organization in connection with payment of monies due to Lessor, shall be for the account of Lessee.
- Unless otherwise indicated herein, all payments due to Lessor shall be payable in United States Dollars and shall be paid to Lessor within fifteen (15) days of the date of Lessor’s invoice(s), at the address for Lessor shown herein. In the event Lessor’s invoice(s) is/are not paid when due, Lessor may, without prejudice to any other remedy it may have, charge, as additional rental, a service charge at the rate of the lesser of eighteen (18) percent per annum or the maximum amount permitted by applicable law, until the balance is paid in full.
- It is expressly understood and agreed that (i) equipment furnished to Lessee hereunder is necessary to and leased for use aboard vessels owned, operated, chartered and/or managed by Lessee for ocean transportation of goods and for land transportation incidental thereto, (ii) equipment furnished to Lessee hereunder is made available not only on the credit of the Lessee but also on the credit of such vessels as aforesaid, and (iii) to the extent permitted by law, Lessor has and may assert maritime liens against such vessels for any breach of Lessee’s obligations to Lessor with respect to such equipment as set forth in this Agreement.
3. RISK OF LOSS AND DAMAGE
Lessee is liable to Lessor for all damage to or loss or destruction of the equipment subsequent to its delivery to Lessee and prior to its return to Lessor except that caused by normal wear and deterioration. Normal wear and deterioration shall not include damage caused by forklifts or other handling equipment.
- DAMAGE. In the event Lessee fails to repair damage to the equipment prior to returning it to Lessor, Lessor or its authorized depot will present a repair estimate to Lessee or Lessee’s local agent for approval. Lessee shall be liable to Lessor for the cost of such repairs and for rental charges for the equipment which shall continue until the day on which Lessee or its authorized agent approves the repairs as set forth in the estimate. Lessee will, at Lessor’s request, make payment of repair costs directly to the appropriate repair company and pay any and all storage charges incurred as a result of Lessee’s failure to approve repairs on a timely basis.
- LOSS OR TOTAL DAMAGE. In the event of loss, theft or destruction of the equipment (an “Event of Loss”) or damage thereto, including radiation contamination, which Lessor, in its sole discretion, shall determine is not structurally or economically repairable (an “Event of Constructive Loss”), rental charges for the affected equipment shall terminate (1) upon receipt by Lessor of written notice from Lessee of an Event of Loss, or (2) upon issuance by Lessor of a written notice to Lessee of an Event of Constructive Loss, provided in either event that payment of the Casualty Value for a like item of equipment (as set forth herein or in Lessor’s then current Casualty Value Schedule) is made to Lessor within 30 days of such notice. If payment is not made within such 30 days, rental charges shall continue unabated until payment of the Casualty Value is received by Lessor. General payments by Lessee shall not be applied to charges for the Casualty Value of equipment unless so specified by Lessee. Further, if any equipment is subject to an Event of Loss or Event of Constructive Loss prior to the expiration of any fixed term specified for such equipment, Lessor shall have the right but not the obligation to supply a like item of equipment to Lessee, whereupon Lessee agrees either (1) to lease such substitute equipment, or (2) if Lessee elects not to lease the substitute equipment, to pay Lessor any shortfall between the historic rental charges for the original item of equipment and the contractual rental charges for said fixed term.
4. OPERATION, MAINTENANCE AND REPAIR
- Lessee shall use the equipment properly and shall, at its sole cost and expense, maintain the equipment in good repair and safe operating condition. Such maintenance shall include but not be limited to the replacement of all badly worn or broken parts with new parts of equivalent design and material, as well as the abrasive cleaning, priming and top coating of all corroded areas on a routine, as needed basis. Lessee shall be liable for any repairs wrongly made or incompatible with the standards set forth in the Repair Manuals issued from time to time by the Institute of International Container Lessors. Lessee shall be responsible for all cleaning and decontamination costs with respect to equipment contaminated by cargo radiation or otherwise and for removal of all debris and shoring from any Containers leased hereunder prior to their return to Lessor. Lessee shall be liable for all costs and losses to Lessor arising out of Lessee’s failure to repair or maintain the equipment in good condition. If the foregoing obligations are performed by Lessor, all expenses relating thereto will be for the account of Lessee.
- Lessee shall use the equipment in accordance with good operating practices and so as to comply with all loading limitations, handling procedures and operating instructions prescribed by the manufacturer(s) thereof and by Lessor, including, but not limited to, current Regulations and Recommendations of the International Organization of Standardization and applicable local regulations, and shall prevent usage which may damage or shorten the life of the equipment such as excessive impact and unbalanced loading. Lessee shall not use the equipment for storage or transportation of materials which could damage or contaminate the equipment including, without limitation, unprotected corrosive substances, poorly secured materials or bulk commodities which may corrode, oxidize, severely dent, puncture, contaminate, stain or damage the equipment, or which could pose a risk of harm to the health and safety of individuals, including without limitation, explosives, fireworks or other combustibles.
- Container(s) supplied hereunder shall be used solely in international trade unless the use thereof in domestic transportation of goods is expressly permitted elsewhere in this Agreement.
- Receipt or delivery of equipment or any other act by an agent or employee of, or independent contractor engaged by, Lessee shall be deemed to be the act of Lessee and shall be binding upon Lessee.
- Lessor’s equipment is identified by appropriate lettering and numbering, which Lessee agrees not to change or obliterate. Notwithstanding the foregoing, at the written request of Lessor, Lessee shall change or supplement such marks as Lessor shall request. Lessee may, however, add other markings as may be required, provided that such additional markings will be removed and the surface of the equipment shall be in the same condition as prior to the addition of such markings when the equipment is redelivered to Lessor. If Lessee fails to remove such additional markings, Lessor shall remove such markings at Lessee’s cost.
- Lessee shall be responsible for the cost of removal of any intentional or unintentional amendments, alterations, or modifications made to the equipment and for returning the equipment to the same condition in which it was originally received by Lessee.
- Lessee shall at its expense comply with all laws, regulations and orders which in any way affect the equipment or its use, operation or storage. Lessor shall have no responsibility for compliance with any such laws, regulations or orders, including, without limitation, all such laws, regulations or orders as may relate to customs, transportation, handling, safety and labor regulation. Without limiting the generality of Lessee’s obligations to comply with laws, Lessee specifically agrees that in the performance of this agreement, it shall comply with all applicable export and import laws and regulations and related use restrictions, including but not limited to the U.S. Export Administration Regulations (E.A.R.) promulgated by the U.S. Department of Commerce and codified at 15 C.F.R. §§ 730-774, the International Traffic In Arms Regulations (“ITAR”) promulgated by the U.S. Department of State and codified at 22 C.F.R Parts 120-130, and the regulations pertaining to sanctions programs and Specially Designated Nationals and Blocked Persons (“SDN List”) administered by the U.S. Department of the Treasury, and all other similar applicable rules, regulations and statutes restricting provision of certain items or services to certain end-users or certain locations.
- Lessee shall at its expense comply with all rules and practices of ports, depots, storage areas and transportation companies consistent with the other requirements of this Section 4.
- Lessor shall deliver Containers to Lessee which fully comply with the rules and standards of the International Convention for Safe Containers (“CSC”). Such Containers shall have affixed CSC plates or CSC plates with an ACEP (Approved Continuous Examination Program) mark. It shall be the obligation of Lessee to comply with the CSC in all respects and Lessee shall have and exercise Lessor’s responsibilities under the CSC including, without limitation, plating (design-type approval to be obtained and plates to be provided by Lessor), maintenance, examination, re-examination and marking of each Container. Such examination or re-examination shall be performed in accordance with the Rules and Regulations for the Safety Approval of Cargo Containers of the United States Department of Transportation. Lessee shall also comply with the Customs Conventions on Containers, 1956 and 1972, including, without limitation, all obligations of the operator relating to temporary admission, transport of goods under customs seal, maintenance of records and reporting to governmental authorities.
5. DEFAULT, REMEDIES UPON DEFAULT
- Should Lessee (i) default in the timely payment of any sum due to Lessor with respect to the equipment, or (ii) default in the performance of its other obligations with respect to the equipment hereunder or under any other lease contract(s) made between Lessor and Lessee, or (iii) suffer any distress, execution or other legal process which has the effect of a levy on any of the equipment leased hereunder or thereunder, or (iv) cease doing business as a going concern, become insolvent, commit an act of bankruptcy, or become the subject of any proceeding under any applicable Bankruptcy Act, or (v) be seized or nationalized or should any of Lessee’s assets be seized by a government or government instrumentality; then Lessor may without notice and without relieving Lessee of its obligations hereunder, terminate the leasing of the equipment, invoke the default provisions hereof and/or of any other leases made between Lessor and Lessee, declare the balance of all rental accrued and to be accrued hereunder and thereunder to be due and payable, demand and retake possession of the equipment and all other equipment leased by Lessor to Lessee free of any claims of Lessee, assert maritime or other liens against Lessee’s property wherever it may be found, and exercise any other right or remedy available to Lessor under applicable law. In the event Lessor terminates the leasing of equipment or invokes the aforesaid default remedies, Lessee shall no longer be in possession of Lessor’s equipment with Lessor’s consent, and the rental payable therefor shall immediately increase to the spot lease rates charged by Lessor for like type equipment at the time of default. Lessee shall immediately notify Lessor of the exact location of the equipment. If Lessee fails to redeliver such equipment to Lessor within twenty days of Lessor’s demand for redelivery, Lessor may retake possession of any or all of its equipment in the possession of Lessee, and for such purpose may enter upon any premises belonging to or in the occupation or control of Lessee. LESSEE HEREBY WAIVES ANY AND ALL RIGHTS TO A JUDICIAL HEARING PRIOR TO LESSOR’S REPOSSESSION OF THE EQUIPMENT.
- Lessee shall continue to pay rental charges for equipment until (i) the equipment is returned to Lessor in as good condition as received, normal wear and deterioration excepted, or (ii) the equipment is repaired and fit for subsequent rental, or (iii) settlement for the equipment is made. In the event Lessor retakes possession of all or any part of the equipment, Lessee authorizes Lessor to take possession of any property in, on, or attached to such equipment that is not the property of Lessor, and without liability for its care or safekeeping, to place that property in storage at the risk and expense of Lessee, except for equipment under sublease by Lessee to a third party provided the third party is not in default of its obligations to Lessee as sublessor. The non-delivery of the Containers within the 20-day period upon demand by Lessor shall constitute event of default of this Agreement and the Lessee shall further pay Lessor the Casualty Value of any equipment that has not been returned within such 20-day period provided that Lessee has not advised Lessor of the location of such equipment. Upon return or repossession of the equipment, or upon settlement, Lessee will pay immediately to Lessor, as liquidated damages for loss of a bargain, which the parties agree are fair and reasonable under the circumstances existing at the time this Agreement is entered into, and not as a penalty, and in lieu of any further payments of rent for the equipment, the following: (aa) all rent and other amounts due for the equipment as of such date of return or repossession, (bb) US$200.00 per Container as a settlement for future lease payments Lessor would have realized had Lessee performed its obligations under this agreement in accordance with this Agreement’s terms, and (cc) any and all incidental damages suffered by Lessor as result of Lessee’s default (including all internal and out-of-pocket costs of Lessor related to the exercise of its remedies, including legal fees and litigation expenses) less any expenses saved by Lessor in consequence of the default.
- Without in any way limiting the obligations of Lessee hereunder, Lessee hereby irrevocably appoints Lessor as the agent and attorney-in-fact of Lessee, with full power and authority at any time that Lessee is obligated to deliver possession of any equipment to Lessor, to demand and take possession of such equipment in the name and on behalf of Lessee from whomsoever shall be at the time in possession of such equipment.
- Lessee hereby irrevocably waives any immunity from jurisdiction to which it might otherwise be entitled (including but not limited to any immunity afforded to Lessee by the United States Foreign Sovereign Immunities Act or any similar legislation, rules or regulations of any other countries having applicability to Lessee) in any action arising out of or relating to the equipment or to this Agreement which may be instituted in any court or arbitration proceedings in or outside of the United States of America. Lessee further irrevocably waives any immunity from pre-judgment arrest and attachment and from the execution or enforcement of any judgment obtained in any legal action or arbitration proceeding worldwide.
- Termination of the leasing of the equipment as a result of Lessee’s default shall not relieve Lessee of any liabilities or obligations to Lessor accrued prior to such default and Lessee shall in any event remain fully liable for reasonable damages as provided by law, and for all costs and expenses incurred by Lessor on account of such default including all costs of recovering equipment, legal costs and reasonable attorney’s fees. Nothing in this paragraph shall be construed to waive any remedy or relief available to Lessor hereunder, in equity, in admiralty, or at law upon the occurrence of any event set forth in this section.
- Any forbearance by Lessor to enforce its rights hereunder in the event of a default by Lessee shall not constitute a waiver of Lessor’s rights, nor shall said forbearance waive Lessor’s rights with respect to any other failure by Lessee to comply strictly with its obligations to Lessor.
6. LIMITATION OF WARRANTIES
- THE EQUIPMENT IS LEASED AS IS. PROVIDED THAT LESSEE COMPLIES FULLY WITH ITS OBLIGATIONS UNDER THIS AGREEMENT, LESSOR WARRANTS THAT LESSEE SHALL HAVE QUIET POSSESSION OF THE EQUIPMENT. SAVE AS AFORESAID NO REPRESENTATIONS OR WARRANTIES WHATSOEVER OF ANY KIND HAVE BEEN OR ARE GIVEN BY LESSOR IN RELATION TO THE EQUIPMENT, AND ALL REPRESENTATIONS AND WARRANTIES WHETHER EXPRESS OR IMPLIED, WHETHER IN RELATION TO THE FITNESS OF THE EQUIPMENT FOR ANY PARTICULAR PURPOSE OR COUNTRY, OR WHETHER IN RELATION TO MERCHANTABILITY OR AS TO DESCRIPTION, STATE, QUALITY, OR CONDITION OF THE EQUIPMENT AT DELIVERY OR AT ANY OTHER TIME ARE HEREBY WAIVED, EXCLUDED AND EXTINGUISHED.
- LESSEE’S OBLIGATIONS UNDER THIS AGREEMENT ARE ABSOLUTE AND SHALL NOT BE AFFECTED BY ANY CIRCUMSTANCE OR EVENT BEYOND LESSEE’S CONTROL OF WHATEVER NATURE.
- Lessee will not suffer to be created, nor permit to be continued, nor fail to discharge, any lien or encumbrance incurred by Lessee or its agents against the equipment covered hereunder, nor shall Lessee or its agents procure any document of title which might at any time encumber the owner’s title to or infringe upon Lessor’s possessory rights to the equipment at expiration or earlier termination of the leasing thereof to the Lessee.
All billings, payments and written notices from either party to the other shall be given to the addresses shown herein, to Lessee’s local agent, or to such other address as may be designated in writing by either party from time to time and shall be deemed to have been received upon delivery to the party to whom they are directed.
8. TAXES, FEES AND FINES
- Lessee shall pay all taxes (other than taxes on Lessor’s net income) and charges levied on the equipment or in connection with the use, storage, operation or possession by Lessee of the equipment or levied against or based upon the amount of rentals paid or to be paid with respect thereto, or any other taxes levied against or based upon the leasing thereof to Lessee or subsequent to delivery to Lessee, including, without limitation, withholdings of any nature, property, sales, use and excise taxes, duties, customs tariffs and impositions of federal, state, foreign and local governments and agencies. Taxes, duties, charges etc. levied on the equipment due solely to the ownership thereof shall be for Lessor’s account unless such taxes are assessed because of the presence of the equipment in a taxing jurisdiction as a result of Lessee’s use of the equipment.
- Lessee shall pay all charges incurred in ports, depots, storage areas or otherwise arising out of the use of the equipment.
- Lessee is not entitled to claim any investment tax credits or depreciation deductions or any other tax benefits normally associated with ownership of any of the equipment covered hereunder. Lessee hereby warrants that it will not claim any such investment tax credits, depreciation deductions or other such tax benefits.
- Lessee shall indemnify and hold Lessor harmless from all liability, damage, cost and expenses (including, without limitation, expenses in prosecuting or defending any claim or suit such as attorney’s fees, court costs and other expenses) arising out of (i) any failure of Lessee to comply with its obligations hereunder, (ii) any claim whether private or governmental, for personal injury or death, and for loss of or damage to person, property, cargo or vessels arising out of or incident to the ownership, selection, possession, leasing, operation, control, use, storage, loading, unloading, moving, maintenance, contamination delivery or return of the equipment, and (iii) the equipment and any loss of or damage thereto, or any forfeiture, seizure, or impounding of, or charge or lien on the equipment. Each party undertakes promptly to give notice to the other of such claims against it or actions against it, and Lessee agrees not to settle any action without the consent of Lessor.
- Lessee shall maintain third party liability insurance, cargo damage insurance, and all risk property loss and damage insurance (including General Average) with respect to all equipment covered hereunder. All such insurance shall be written by reputable underwriters and shall be in amounts and on terms which are satisfactory to Lessor. Lessee shall deliver certificates of insurance to Lessor evidencing the aforesaid coverages and naming Lessor as an additional insured and loss payee thereunder as its interests may appear.
10. SUBLEASING, DIRECT INTERCHANGING AND ASSIGNMENT
- LESSEE SHALL NOT HAVE THE RIGHT TO ASSIGN THIS AGREEMENT OR TO ASSIGN, SUBLET, RENT, DIRECTLY INTERCHANGE OR OTHERWISE HIRE OUT OR PART WITH POSSESSION OF THE EQUIPMENT TO ANY OTHER PARTY (OTHER THAN TO THE CARE OF CONNECTING CARRIERS IN THE NORMAL COURSE OF LESSEE’S BUSINESS) WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. ANY SUCH ASSIGNMENTS OR OTHER ACTIONS MENTIONED ABOVE ARE NULL AND VOID. ANY SUCH CONSENT OF LESSOR, IF GIVEN, SHALL NOT OPERATE TO RELIEVE LESSEE OF ANY OF ITS OBLIGATIONS HEREUNDER.
- Lessor may delegate, assign, pledge or encumber in whole or in part this Agreement, the equipment leased hereunder, and/or the rentals and other charges due with respect thereto. Lessee agrees to pay in full rentals and other charges as accrued to Lessor’s assignee, regardless of any defenses, counterclaims or set-offs which Lessee might have against Lessor.
- This agreement is binding upon the parties, their permitted successors and assigns and shall be construed and interpreted in accordance with the laws of the United States of America and, except where inconsistent therewith, with the laws of the State of California. With respect to any claim or controversy arising out of or relating to this agreement, Lessor may require that any dispute or proceeding arising out of or relating to this Agreement shall, at Lessor’s sole option and discretion, be brought only in state or federal courts having jurisdiction over the City and County of San Francisco or before the American Arbitration Association (“AAA”) in San Francisco under its Commercial Arbitration Rules, with the legal seat of such proceedings in San Francisco, California. Lessee consents to jurisdiction and venue in those courts and/or before the AAA. Lessor may opt to commence or allow proceedings in any other jurisdiction.
- The paragraph headings in this agreement are for convenience only and shall not be deemed to alter or affect any provision hereof.
- The equipment furnished hereunder is provided to Lessee under a net lease contract. Lessee waives any and all existing and future defenses, set-offs, or counterclaims against rental charges or payments due to Lessor with respect to the equipment, irrespective of the rights which Lessee may have against Lessor or any other party.
- Lessee agrees to supply on request from Lessor, equipment tracking reports produced in the regular course of Lessee’s business showing the location of all equipment on lease to Lessee from Lessor.
- Lessee agrees to supply audited and unaudited financial statements on request to Lessor and Lessor agrees to keep such statements confidential.
- This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and may be amended, modified or changed only by an additional agreement in writing executed by the parties hereto. If Lessee fails, however, to give to Lessor written objection to its contents within seven (7) days after this Agreement is received or if Lessee takes possession of any of the equipment provided hereunder and retains it after receipt of this Agreement then this Agreement shall be effective and binding upon Lessee whether or not signed.
- Any action by Lessee against Lessor for any default by Lessor under this Agreement, including breach of warranty or indemnity, shall be commenced within one (1) year after any such cause of action accrues.
- LESSEE ACKNOWLEDGES AND AGREES THAT LESSOR MAY SELL, ASSIGN, OR OTHERWISE TRANSFER, OR MAY HAVE SOLD, ASSIGNED, OR OTHERWISE TRANSFERRED, ALL OR PART OF ITS RIGHT, TITLE AND INTEREST IN THE EQUIPMENT AND THIS AGREEMENT TO A THIRD PARTY AND ACCORDINGLY LESSOR MAY BE AN AGENT OF, OR OTHERWISE ACTING ON BEHALF OF, SUCH THIRD PARTY WITH RESPECT TO THIS AGREEMENT.
- Lessor is the owner of the equipment, or manager of the equipment on behalf of various third party owners, leased hereunder at all times during the term of this agreement. For precautionary purposes, and to the extent that this agreement may be construed as a secured financing transaction, Lessee hereby grants to Lessor a first priority security interest in the equipment, accessions, additions, and appurtenances thereto. Lessee agrees promptly to execute and deliver any documents presented to Lessee by Lessor from time to time (including, but not limited to UCC financing statements, UCC continuation statements, and, if applicable, documents required by foreign jurisdictions) for the purpose of protecting Lessor’s and/or any third party owner’s or lender’s title to and/or interest in the equipment supplied under this agreement. All costs incurred in filing the documents as aforesaid shall be paid by Lessor.
- The parties may execute this Agreement, any amendment to this Agreement, or any waiver to this Agreement, in several counterparts. When executed and delivered, each counterpart will be an original. When together, all counterparts will constitute one instrument. In proving this Agreement, any amendment to this Agreement, or any waiver to this Agreement, a party only needs to produce or account for one counterpart signed by the party against whom enforcement is sought. The parties may deliver executed counterparts by facsimile or electronic transmission. Such deliveries will be as effective as an original executed counterpart.
CAI International, Inc.
CON-GEN (Rev. 2018-10-29)