Master Lease Agreement Processing Equipment Schedule - General Electric Capital Corp. and Star Scientific Inc.
SLB/CS(R070101)4122182001 *LEAS8760*
PROCESSING EQUIPMENT SCHEDULE
SCHEDULE NO. 001
DATED THIS ____________
TO MASTER LEASE AGREEMENT
DATED AS OF ____________________
Lessor & Mailing Address:
General Electric Capital Corporation
1000 Windward Concourse Suite 403
Alpharetta, GA 30005
Lessee & Mailing Address:
Star Scientific, Inc.
801 Liberty Way
Chester, VA 23836
This Schedule is executed pursuant to, and incorporates by reference the terms
and conditions of, and capitalized terms not defined herein shall have the
meanings assigned to them in, the Master Lease Agreement identified above
("Agreement" said Agreement and this Schedule being collectively referred to as
"Lease"). This Schedule, incorporating by reference the Agreement, constitutes a
separate instrument of lease.
A. Equipment: Subject to the terms and conditions of the Lease, Lessor agrees to
Lessee the Equipment described below (the "Equipment").
Model and
Number Capitalized Manufacturer Serial Type of
of Units Lessor's Cost Number Equipment
*1 $532,429.00* Fette 659 P3200 TSC
Double-Sided
Rotary Press
** $1,267,580.00* All-Fill Moist Snuff
Filling System
* $1,647,510.00* All-Fill Packaging Line
2 Complete Tobacco Lines more fully described in Exhibit 1 attached together
with (a) all machinery, equipment, tooling, components, attachments, parts,
fittings, accessories, replacements, upgrades, now existing or hereafter
becoming a part thereof and (b) to the extent related to any Line including all
additions, attachments, accessories and accessions thereto, and any and all
substitutions, replacements or exchanges therefor, and all insurance and/or
other proceeds thereof by and between Lessee and Lessor whether now owned or
hereafter acquired.
Equipment referenced above is located at the following locations *168 Duckworth
Dr., Chase City, Mecklenberg County, VA 23924
**16 South Market St., Petersburg, Petersburg (Ind. City), VA 23803
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B. Financial Terms
1. Advance Rent (if any): $109,870.70
2. Capitalized Lessor's Cost: $3,447,519.00
3. Basic Term (No. of Months): 60 Months
4. Basic Term Lease Rate Factor: .01593475
5. Basic Term Commencement Date: July 1, 2001
6. Lessee Federal Tax ID No.: 521402131
7. Last Delivery Date: July 1, 2001
8. Daily Lease Rate Factor: .00072001
9. First Termination Date: Thirty-six (36) months after the Basic Term
Commencement Date.
10. Interim Rent: For the period from and including the Lease Commencement Date
to but not including the Basic Term Commencement Date ("Interim Period"), Lessee
shall pay as rent ("Interim Rent") for each unit of Equipment, the product of
the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit
times the number of days in the Interim Period. Interim Rent shall be due on the
Lease Commencement Date.
11. Basic Term Rent: Commencing on July 1, 2001 and on the same day of each
month thereafter (each, a "Rent Payment Date") during the Basic Term, Lessee
shall pay as rent ("Basic Term Rent") the product of the Basic Term Lease Rate
Factor times the Capitalized Lessor's Cost of all Equipment on this Schedule.
C. Tax Benefits Depreciation Deductions:
1. Depreciation method is the 200% declining balance method, switching to
straight line method for the 1st taxable year for which using the straight line
method with respect to the adjusted basis as of the beginning of such year will
yield a larger allowance.
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2. Recovery Period: 7 years.
3. Basis: 100% of the Capitalized Lessor's Cost.
D. Property Tax
APPLICABLE TO EQUIPMENT LOCATED IN VIRGINIA: Lessee agrees that it will not list
any of such Equipment for property tax purposes or report any property tax
assessed against such Equipment until otherwise directed in writing by Lessor.
Upon receipt of any property tax bill pertaining to such Equipment from the
appropriate taxing authority, Lessor will pay such tax and will invoice Lessee
for the expense. Upon receipt of such invoice, Lessee will promptly reimburse
Lessor for such expense. Lessor may notify Lessee (and Lessee agrees to follow
such notification) regarding any changes in property tax reporting and payment
responsibilities.
E. Article 2A Notice
IN ACCORDANCE WITH THE REQUIREMENTS OF ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE
AS ADOPTED IN THE APPLICABLE STATE, LESSOR HEREBY MAKES THE FOLLOWING
DISCLOSURES TO LESSEE PRIOR TO EXECUTION OF THE LEASE, (A) THE PERSON(S)
SUPPLYING THE EQUIPMENT IS Fette America, Inc., All Fill, and Richmond Plastics
Inc. (THE "SUPPLIER(S)"), (B) LESSEE IS ENTITLED TO THE PROMISES AND WARRANTIES,
INCLUDING THOSE OF ANY THIRD PARTY, PROVIDED TO THE LESSOR BY SUPPLIER(S), WHICH
IS SUPPLYING THE EQUIPMENT IN CONNECTION WITH OR AS PART OF THE CONTRACT BY
WHICH LESSOR ACQUIRED THE EQUIPMENT AND (C) WITH RESPECT TO SUCH EQUIPMENT,
LESSEE MAY COMMUNICATE WITH SUPPLIER(S) AND RECEIVE AN ACCURATE AND COMPLETE
STATEMENT OF SUCH PROMISES AND WARRANTIES, INCLUDING ANY DISCLAIMERS AND
LIMITATIONS OF THEM
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OR OF REMEDIES. TO THE EXTENT PERMITTED BY APPLICABLE LAW, LESSEE HEREBY WAIVES
ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON A LESSEE IN ARTICLE 2A AND ANY
RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE WHICH MAY LIMIT OR
MODIFY ANY OF LESSOR'S RIGHTS OR REMEDIES UNDER THE DEFAULT AND REMEDIES SECTION
OF THE AGREEMENT.
F. Stipulated Loss and Termination Value Table*
# of base payments termination value % of cost stipulated loss value % of cost
1 102.076 106.007
2 101.198 105.110
3 100.301 104.194
4 99.384 103.258
5 98.453 102.307
6 97.504 101.339
7 96.540 100.355
8 95.559 99.356
9 94.564 98.341
10 93.550 97.308
11 92.519 96.257
12 91.468 95.187
13 90.400 94.099
14 89.315 92.995
15 88.212 91.873
16 87.090 90.732
17 85.952 89.575
18 84.795 88.398
19 83.620 87.203
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20 82.428 85.992
21 81.219 84.764
22 79.995 83.521
23 78.756 82.262
24 77.500 80.987
25 76.229 79.697
26 74.941 78.389
27 73.637 77.066
28 72.316 75.726
29 70.979 74.370
30 69.625 72.996
31 68.255 71.607
32 66.867 70.200
33 65.462 68.775
34 64.042 67.337
35 62.609 65.884
36 61.161 64.417
37 59.699 62.935
38 58.218 61.435
39 56.723 59.921
40 55.213 58.391
41 53.685 56.844
42 52.141 55.281
43 50.583 53.703
44 49.006 52.107
45 47.409 50.491
46 45.801 48.863
47 44.179 47.222
48 42.544 45.568
49 40.895 43.900
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50 39.229 42.214
51 37.549 40.515
52 35.856 38.802
53 34.144 37.071
54 32.419 35.327
55 30.788 33.677
56 29.194 32.064
57 27.601 30.451
58 26.008 28.838
59 24.414 27.226
60 22.821 25.613
*The Stipulated Loss Value or Termination Value for any unit of Equipment shall
be the Capitalized Lessor's Cost of such unit multiplied by the appropriate
percentage derived from the above table. In the event that the Lease is for any
reason extended, then the last percentage figure shown above shall control
throughout any such extended term.
G. Modifications and Additions for This Schedule Only
For purposes of this Schedule only, the Agreement is amended as follows:
1. The LEASING Section subsection (b) of the Lease is hereby deleted in its
entirety and the following substituted in its stead:
b) The obligation of Lessor to purchase the Equipment from Lessee and to lease
the same to Lessee shall be subject to receipt by Lessor, on or prior to the
earlier of the Lease Commencement Date or Last Delivery Date therefor, of each
of the following documents in form and substance satisfactory to Lessor: (i) a
Schedule for the Equipment, (ii) evidence of insurance which complies with the
requirements of the INSURANCE
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Section of the Lease, and (iii) such other documents as Lessor may reasonably
request. Once the Schedule is signed, the Lessee may not cancel the Lease.
2. The DELIVERY, USE AND OPERATION Section subsection (a) of the Lease shall be
deleted and the following substituted in its stead:
The parties acknowledge that this is a sale/leaseback transaction and the
Equipment is in Lessee's possession as of the Lease Commencement Date.
3. BILL OF SALE
Lessee, in consideration of the Lessor's payment of the amount set forth in B2.
above, which includes any applicable sales taxes (which payment Lessee
acknowledges), hereby grants, sells, assigns, transfers and delivers to Lessor
the Equipment along with whatever claims and rights Seller may have against the
manufacturer and/or Supplier of the Equipment, including but not limited to all
warranties and representations. At Lessors request Lessee will cause Supplier to
deliver to Lessor a written statement wherein the Supplier (i) consents to the
assignment to Lessor of whatever claims and rights Lessee may have against
Supplier, (ii) agrees not to retain any security interest, lien or other
encumbrance in or upon the Equipment at any time, and to execute such documents
as Lessor may request to evidence the release of any such encumbrance, and (iii)
represents and warrants to Lessor (x) that Supplier has previously conveyed full
title to the Equipment to Lessee, (y) that the Equipment was delivered to Lessee
and installation completed, and (z) that the final purchase price of the
Equipment (or a specified portion of such purchase price) has been paid by
Lessee.
Lessor is purchasing the Equipment for leasing back to Lessee pursuant to the
Lease. Lessee represents and warrants to Lessor that (i) Lessor will acquire by
the terms of this Bill of Sale good title to the Equipment free from all liens
and encumbrances whatsoever; (ii) Lessee has the right to sell the Equipment;
and (iii) the Equipment has been delivered to Lessee in good order and
condition, and conforms to the specifications, requirements
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and standards applicable thereto; and (iv) the equipment has been accurately
labeled, consistent with the requirements of 40 CFR part 82 Subpart E, with
respect to products manufactured with a controlled (ozone-depleting) substance.
Lessee agrees to save and hold harmless Lessor from and against any and all
federal, state, municipal and local license fees and taxes of any kind or
nature, including, without limiting the generality of the foregoing, any and all
excise, personal property, use and sales taxes, and from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions and suits
resulting therefrom and imposed upon, incurred by or asserted against Lessor as
a consequence of the sale of the Equipment to Lessor.
4. ACCEPTANCE
Pursuant to the provisions of the Lease, as it relates to this Schedule, Lessee
hereby certifies and warrants that (i) all Equipment listed above has been
delivered and installed (if applicable); (ii) Lessee has inspected the
Equipment, and all such testing as it deems necessary has been performed by
Lessee, Supplier or the manufacturer; and (iii) Lessee accepts the Equipment for
all purposes of the Lease, the purchase documents and all attendant documents.
Lessee does further certify that as of the date hereof (i) Lessee is not in
default under the Lease; (ii) the representations and warranties made by Lessee
pursuant to or under the Lease are true and correct on the date hereof and (iii)
Lessee has reviewed and approves of the purchase documents for the Equipment, if
any.
5. EQUIPMENT SPECIFIC PROVISIONS
MAINTENANCE PROVISIONS: In addition to the provisions provided for in the
MAINTENANCE Section of the Lease, Lessee shall, at its expense:
(a) maintain the Equipment in a manner and frequency suggested by the
manufacturer.
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(b) maintain the Equipment in an operable state and shall not discontinue
operation of the Equipment throughout the Lease term.
(c) maintain the Equipment to industry standards.
(d) maintain the Equipment in a similar manner and fashion as if the Equipment
were owned by the Lessee.
(e) maintain the Equipment under a preventive maintenance program by qualified
professionals who possess a working knowledge of the mechanical operation of the
Equipment including electrical systems, motors, drives, controls, accessories,
lubricants and all other items necessary to make the machine operate to its
original manufacturer's specifications.
(f) have the Equipment meet all local, state, and federal laws, regulations and
codes that regulate the use and operation of such Equipment and will not
contribute to or be used in any way as to directly or indirectly violate any
local, state or federal law including Food and Drug Administration and
Environmental Protection Agency.
(g) maintain a maintenance log on the Equipment showing all routine and
non-routine maintenance and repairs. Said log shall list in summary form
maintenance, repairs or modifications performed on the Equipment, the date any
and all of such service and by whom the service was performed. This log shall be
made available to the Lessor at its request during normal working hours or the
Lessee.
INSPECTION: The REPORTS Section subsection (c) of the Lease is deleted and
replaced with the following:
(c) Lessor at its sole discretion, may from time to time, inspect the Equipment
at the Lessors sole expense. If any discrepancies are found as they pertain to
the general
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condition of the Equipment as required hereunder, the Lessor will, communicate
these discrepancies to the Lessee in writing. The Lessee shall have thirty (30)
days to rectify these discrepancies at his sole expense. The Lessee should pay
all expenses for a re-inspection by a Lessor appointed expert if corrective
measures are required.
RETURN PROVISIONS: In addition to the provisions provided for in the RETURN OF
EQUIPMENT Section of the Lease, and provided that Lessee has elected not to
exercise its option to purchase the Equipment, Lessee shall, at its expense:
(a) At least ninety (90) days and not more than one hundred twenty (120) days
prior to lease termination: (i) ensure Equipment has been maintained, and is
operating within manufacturer's specifications, as well as all local, state and
federal laws and regulations, including those of the Food and Drug
Administration and Environmental Protection Agency and; (ii) cause
manufacturer's representative or other qualified maintenance provider,
acceptable to Lessor, to perform a physical inspection and test of all the
components and capabilities of the Equipment and to provide a full inspection
report to Lessor.
(b) Upon lease termination: (i) fill to operation levels all internal fluids,
secure filler caps, seal disconnection hoses, reinstall, and match mark all
connections; (ii) have the manufacturer deinstall all equipment; (iii) properly
skid and pack and transport the Equipment per the manufacturer's requirements to
any location(s) within the continental United States as Lessor shall direct;
(iv) at lessor's choice, either (1) allow Lessor, at Lessor's expense, and
provided Lessor has provided reasonable notice to Lessee, arrange for an on-site
auction of the Equipment which will be conducted in a manner which will not
interfere with Lessee's business operations, or (2) at the request of Lessor,
provide safe, secure storage for the Equipment for sixty (60) days after
expiration or earlier termination of the Lease at an accessible location
satisfactory to Lessor.
H. Payment Authorization
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You are hereby irrevocably authorized and directed to deliver and apply the
proceeds due under this Schedule as follows:
Company Name Address Amount
Fette America, Inc. 400 Forge Way, Rockaway, NJ 07865 $372.700.00
All Fill 418 Creamery Way, Eaton, PA 19341 $513,894.00
Star Scientific, Inc. 801 Liberty Way, Chester, VA $1,292,366.26
General Electric Capital Corporation Security Deposit $1,268,558.74
This authorization and direction is given pursuant to the same authority
authorizing the above-mentioned financing.
Lessee hereby authorizes Lessor to file a financing statement and amendments
thereto describing the Equipment described in this Schedule and adding any other
collateral described herein and containing any other information required by the
applicable Uniform Commercial Code. Further, Lessee irrevocably grants to Lessor
the power to sign Lessee's name and generally to act on behalf of Lessee to
execute and file financing statements and other documents pertaining to any or
all of the Equipment.
Except as expressly modified hereby, all terms and provisions of the Agreement
shall remain in full force and effect. This Schedule is not binding or effective
with respect to the Agreement or Equipment until executed on behalf of Lessor
and Lessee by authorized representatives of Lessor and Lessee, respectively.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be executed
by their duly authorized representatives as of the date first above written.
LESSOR:
General Electric Capital Corporation
By: Mike Caruso
Name: Mike Caruso
Title: Sr. Risk Analyst
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LESSEE:
Star Scientific, Inc.
By: Christopher G. Miller
Name: Christopher G. Miller
Title: Chief Financial Officer
Exhibit 1
QUANTITY DESCRIPTION UNIT PRICE AMOUNT
1 Moist Snuff Filling System to include the following
equipment:
A. Stricklin Ribbon Blender ($180.00)
B. Palace Pkg Unscrambler Model CB-42/P-5438
C. Nerak Bucket Elevator NS-P2008-2401-100
D. All-Fill Belt Conveyor Serial #50230-1
E. System Vibrator Model BF-2-AS
F. All-Fill Rotary Filler Serial #50230
G. Alpha Checkweigher Serial #195178
H. Goring Kerr Metal Detector Model #DSP 2SS4X3
I. Palace Pkg Lidder Model # CB42/P-5439
J. Garvey Accumulating Conveyor Series #9700
K. Quadrell Labeler #Q60/CG12
L. All-Fill 900 Conveyor (added 5/16/01) Serial #700182
M. EDL Shrink Wrapper System #2000 - 3071-00R
QUANTITY DESCRIPTION UNIT PRICE AMOUNT
1 Complete Packaging Line for Aviva Tablets to Include the
Following Equipment:
A) Klockner Thermometer Model #1200
B) Scandia Cartoner Model #Ahm Serial #4558
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C) Schroeder Case Packer Model #2600
D) Revision (1) on Scandia Cartoner (3-26-01) @ $7,000
E) Revision (2) on Schroeder Case Packer (5-10-01) @ $14,200
F) Revision (3) on Schroeder Case Packer (6-27-01) @ $7,060.
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