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On October 31, 1990, West One executed a lease with ICC for
an IBM 580 mainframe computer (the 580) for a 5-year term (the
Second Lease). Under the Second Lease, West One was required to
make 60 monthly payments, each in the total amount of $182,484,
consisting of $128,709 for the Second Lease and $53,775 for the
rollover charge. The form of Supplement used by ICC refers, as
does the Supplement for the Second Lease, to the charge for
canceling an old lease as a rollover charge that is to be billed
monthly along with the lease payments under the Second Lease.
Under the description of the equipment to be leased, the
Supplement for the Second Lease provides: "Option S financing
for ICC lease termination of the 3090/74299 complex is contingent
upon ICC financing of the 9021/580. If the 9021/580 is not
financed via ICC, the ICC lease termination charges for the 3090
complex will be due under quote #E320999A" (the document
containing this alternative quote has not been located).
Although ICC does not have a fixed formula for calculating a
termination charge and takes a number of factors into account in
determining its negotiating position with the terminating lessee,
the termination charge is generally less if the lessee agrees to
obtain financing from ICC for replacement equipment.3
3 The consistent terminology of the Agreement and the
Supplement lead us to conclude that the references therein to
financing the replacement equipment include entry into a lease
therefor.
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