Equipment Lease
This Equipment Lease ("Lease") is made effective
as of ____________ (Date), by and between _________________
("Lessor") and _____________________ ("Lessee"). I
The agreement of the parties is as follows:
1. Equipment subject
to Lease. Lessor shall lease
the Equipment (“Equipment”) listed in Exhibit 1.
2. Payment Terms. The Lessee shall make ___ payments of
$________, for a total amount of $________. Payments shall be due on the first
day of each month, with the first payment due on __________________. The lease
payments shall be due without further notice to Lessee of any payment being
due.
3. Late Charge. A late charge of 5% of the payment shall be
due if any Lease payment is not received within 10 days of the due date. In addition, interest will be charged at the
rate of 1.5% per month, or 18% per year, on any unpaid balances.
4. Insufficient Check Charge.
Lessee shall be charged $25 for each check that is returned to the
Lessor for lack of sufficient or collectible funds or for any other reason
whatsoever.
5. Security Deposit. Lessee shall pay a security deposit of two
payments or $ _______, at the time this Lease is signed. This deposit will be returned to the Lessee
at the termination of this Lease, subject to the option of the Lessor applying
it against Lease charges and damages.
Any amounts refundable to the Lessee shall be paid at the time this
Lease is terminated. The security
deposit shall bear interest at an annual rate of 6% from the date paid to the
Lessor until the date refunded, based on the total amount of the security
deposit.
6. Lease Term. This Lease shall begin on the above effective
date and shall terminate on ______________ (Date), unless otherwise terminated
in a manner consistent with the terms of this Lease.
7. Location or
locations of the Equipment. The
equipment shall be located at
____________________________________________________________________during the
lease term, and shall not be removed from that location without the Lessor's
prior written consent.
8. Operation and
Care of Equipment. The equipment
must be used and operated in a careful and appropriate manner. Its use must comply with all laws,
ordinances, and regulations relating to the possession, use, or maintenance of
the equipment, including registration and/or licensing requirements, if any.
9. Maintenance and
Repair. Lessee shall maintain at the
Lessee's cost, the equipment in good repair and operating condition, allowing
for reasonable wear and tear. Such costs
shall include labor, material, parts, and any similar items.
10. Alternations. Lessee shall make no alterations to the
equipment without the prior written consent of Lessor. All alterations shall be the property of
Lessor and subject to the terms of this Lease.
11. Right of Inspection. Lessor
shall have the absolute right to inspect the Equipment during Lessee's normal
business hours.
12. Equipment Return at the end of
the Lease. At the end of the Lease
term, the Lessee shall be obligated to return the equipment to the Lessor at
the Lessee's expense.
13. Renewal Option of the Lessee. If Lessee is not in default upon the
expiration of this lease, the Lessee shall have the option to renew this Lease
for a similar term on such terms as the parties may mutually agree upon at the
time of such renewal, the end of the Lease period covered in this Agreement.
14. Purchase Option. If Lessee is not in default under this Lease,
the Lessee shall have the option to purchase items of equipment at the end of
the lease term for the price specified for such items of equipment in the
attached Exhibit 1. Lessee shall
exercise this option by providing written notice to the Lessor of such intent
at least 30 days prior to the end of the lease term.
15. Equipment Acceptance by Lessee. Lessee shall inspect each item of equipment
delivered pursuant to this Lease. The
Lessee shall immediately notify the Lessor of any discrepancies between such
item of equipment and the description of the equipment in the Equipment
Schedule. If the Lessee fails to provide
such notice before accepting delivery of the equipment, the Lessee will be
conclusively presumed to have accepted the equipment as specified in Exhibit 1.
16. Ownership and Legal Status of
Equipment. Equipment will be deemed
to be personal property, regardless of the manner in which it may be attached
to any other property. Lessor shall be
deemed to have retained title to the equipment at all times, unless the Lessor
transfers the title by sale. The Lessee
shall immediately advise the Lessor regarding any notice of any claim, levy,
lien, or legal process filed or issued against the equipment.
17. No Warranty. Lessor
makes no warranties, express or implied, as to the equipment leased. Lessee
assumes the responsibility for the condition of the equipment.
18. Risk of Loss or Damage and
Insurance. Lessee assumes all risk
of loss or damage to the equipment from any cause, and agrees to return it to
the Lessor in the condition received from the Lessor, with the exception of
normal wear and tear, unless otherwise provided in this Lease. Lessee shall provide evidence of insurance of
the equipment and make Lessor a Named party on the insurance policy. Any lapse of insurance shall be considered a
default under the terms of this Agreement.
19. Indemnity of Lessor for
Loss or Damages. Unless otherwise provided in this Lease, if
the equipment is damaged or lost, Lessor shall have the option of requiring the
Lessee to repair the equipment to a state of good working order, or replace
equipment with like equipment in good repair, which equipment shall become the
property of the Lessor and subject to this Lease.
20. Liability and Indemnity. Liability for injury, disability, and death
of workers and other persons caused by operating, handling, or transporting the
equipment during the term of this Lease is the obligation of Lessee, and Lessee
shall indemnify and hold Lessor harmless from and against all such
liability. Lessee shall maintain
liability insurance of at least $1 million as further discussed in Section 18
above, entitled “Risk of Loss or Damage and Insurance.
21. Taxes and Fees. During the term of this Lease, the Lessee
shall pay all applicable taxes, assessments, and license and registration fees
on the equipment.
22. Default. The occurrence of any of the following shall
constitute a default under this Lease:
A.
Failure
to make a required payment under this Lease when due.
B.
Violation
of any other provision or requirement that is not corrected within 10 days
after written notice of the violation is given.
C. The insolvency or bankruptcy of Lessee.
D.
The subjection of any of Lessee's property
to any levy, seizure, assignment, application or sale for or by any creditor or
government agency.
23. Rights upon Default. In addition to any other rights afforded the
Lessor by law, if the Lessee is in default under this Lease, without notice to
or demand on the Lessee, the Lessor may take possession of the equipment as
provided by law, deduct the costs of recovery (including attorney fees and
legal costs), repair, and related costs, and hold the Lessee responsible for
any deficiency. The rights and remedies
of the Lessor provided by law and this Agreement shall be cumulative in nature. Lessor shall be obligated to re-lease the
equipment, or otherwise mitigate the damages from the default, only as required
by law.
Exhibit 1:
Equipment Schedule
Lease
End Purchase Price: (Should be
included; very important).
Equipment Lease
Review List
This
review list is provided to inform you about the document in question and assist
you in its preparation. This is a
standard straightforward lease agreement.
Be sure to file the appropriate local, county, and state liens (UCC
forms) against the equipment within the locals where the Equipment is kept by
Lessee, according to this Agreement.
This not only perfects your interest in the property but also warns off
other creditors of Lessee, so they do not attempt to attach the property. If they do, you will have a senior position.
Be sure to establish an
end of lease purchase price in Exhibit 1.
Do likewise for a renewal period of the Equipment. GE Capital, for example, has found releasing
Equipment very lucrative because the proper paperwork is in place and
continuation is quite simple because, by the end of the first lease period,
most equipment is worth more than its then supposed capital price. Therefore, you may be well advised from a
business perspective to encourage releasing for a reduced price at the end of
the lease. In this instance, inertia is
on your side since Lessee “has” the Equipment and it is always easier to
continue as is rather than getting new equipment, and so on.
1.
Make
multiple copies so you have several sets for your various files, including your
corporate records.
2. Be sure
to file liens, as appropriate, as described above against your equipment in the
appropriate jurisdictions.
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