SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
December 28, 1994
LADD FURNITURE, INC.
(Exact name of registrant as specified in its charter)
North Carolina 0-11577 56-1311320
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
One Plaza Center, Box HP-3, High Point, North Carolina 27261-1500
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (910) 889-0333
N/A
(Former name or former address, if changed since last report.)
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ITEM 1. Changes in Control of Registrant.
Not Applicable.
ITEM 2. Acquisition or Disposition of Assets.
Not Applicable.
ITEM 3. Bankruptcy or Receivership.
Not Applicable.
ITEM 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
ITEM 5. Other Events.
On December 28, 1994, LADD Furniture, Inc. ("LADD")
entered into equipment lease financings with BOT Financial
Corporation and UnionBanc Leasing Corporation, both of which
equipment lease agreements were effective as of December 15,
1994. The transactions involve the sale and leaseback of
approximately $14.6 million of manufacturing equipment by LADD
and three of its wholly-owned subsidiaries, Fournier Furniture,
Inc., American Furniture Company, Incorporated and Lea
Industries, Inc. The lease term is for an initial term of 48
months, with one renewal term of 21 months, and provides for the
right of repurchase of the equipment at the end of the lease
term.
ITEM 6. Resignations of Registrant's Directors.
Not Applicable.
ITEM 7. Financial Statements and Exhibits.
a) Exhibits
10.1 Equipment Leasing Agreement
dated as of December 15, 1994
between BOT Financial
Corporation and LADD
Furniture, Inc.
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10.2 Equipment Leasing Agreement
dated as of December 15, 1994
between UnionBanc Leasing
Corporation and LADD
Furniture, Inc.
ITEM 8. Change in Fiscal Year.
Not Applicable.
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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 hereunto duly authorized.
LADD FURNITURE, INC.
Date: January 17, 1995 By: /s/William S. Creekmuir
William S. Creekmuir
Title: Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
EXHIBIT 10.1
EQUIPMENT LEASING AGREEMENT
EQUIPMENT LEASING AGREEMENT dated as of December 15, 1994
(herein, as amended and supplemented from time to time, called
"this Lease"), between BOT FINANCIAL CORPORATION, a Delaware
corporation (herein called "Lessor"), having a principal place of
business at 125 Summer Street, Boston, Massachusetts 02110, and
LADD FURNITURE, INC., a North Carolina corporation (herein called
"Lessee"), having its principal place of business at One Plaza
Center, High Point, North Carolina 27261.
In consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. Definitions. Unless the context otherwise requires,
the following terms shall have the following meanings for all
purposes of this Lease and shall be equally applicable to both
the singular and the plural forms of the terms herein defined:
"Acceptance Date" for each Item of Equipment means the
date on which Lessee has unconditionally accepted such Item for
lease hereunder, as evidenced by Lessee's execution and delivery
of a Lease Supplement for such Item dated such date.
"Acquisition Cost" of each Item of Equipment means an
amount equal to the sum of (i) the total cost paid by Lessor for
such Item, plus (ii) all excise, sales and use taxes paid by
Lessor on or with respect to the acquisition of such Item, plus
(iii) all costs and expenses approved and paid by Lessor in
connection with the delivery and installation of such Item.
"Acquisition Period" means the period specified as such
on each consecutively numbered Exhibit A now or hereafter
attached hereto and made a part hereof.
"Assignee" shall have the meaning given to such term in
Section 14(b) hereof.
"Basic Rent" means the rent payable for each Item of
Equipment during (i) the Basic Term thereof pursuant to Section
7(b) hereof, and (ii) each Renewal Term thereof pursuant to
Section 28(a) hereof.
"Basic Term" for each Item of Equipment means the
period consisting of the number of months set forth for the type
of Equipment to which such Item relates on the Related Exhibit A
for such Item.
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"Basic Term Commencement Date" for each Item of
Equipment means the date specified as such on the Related Exhibit
A for such Item.
"Business Day" means any day other than a day on which
banking institutions in the State of North Carolina are
authorized by law to close.
"Casualty Loss Value" of each Item of Equipment shall
have the meaning given to such term in Section 16(b) hereof.
"End of Term Rental Adjustment" shall have the meaning
given to such term in Section 29(d) hereof.
"Equipment" means the equipment of the type(s)
described on each consecutively numbered Exhibit A now or
hereafter attached hereto and made a part hereof and leased or to
be leased by Lessor to Lessee hereunder or ordered by Lessor for
lease to Lessee hereunder, together with any and all accessions,
additions, improvements and replacements from time to time
incorporated or installed therein which are the property of
Lessor pursuant to the terms of this Lease.
"Estimated Residual Value" for any Item of Equipment
shall mean an amount obtained by multiplying (i) the percentage
set forth in the Related Exhibit A for such Item under the
caption "Estimated Residual Value Percentage" applicable to the
Basic Term or Renewal Term then ending, by (ii) the Acquisition
Cost for such Item.
"Event of Default" means any of the events referred to
in Section 22 hereof.
"Event of Loss" with respect to any Item of Equipment
means (i) the loss of such Item of Equipment or any substantial
part thereof, or (ii) the theft or disappearance of such Item of
Equipment for a period in excess of 45 days during the Term, or
existing at the expiration or earlier termination of the Term, or
(iii) the destruction, damage beyond repair, or rendition of such
Item of Equipment or any substantial part thereof permanently
unfit for normal use for any reason whatsoever, or (iv) the
condemnation, confiscation, seizure, or requisition of use or
title to such Item of Equipment or any substantial part thereof
by any governmental authority under the power of eminent domain
or otherwise.
"Guarantor" means any guarantor of Lessee's obligations
hereunder.
"Guaranty" means any guaranty of Lessee's obligations
hereunder executed by Guarantor.
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"Interim Rent" means the rent payable for each Item of
Equipment for the Interim Term thereof pursuant to Section 7(a)
hereof.
"Interim Term" for each Item of Equipment means the
period commencing on the Acceptance Date for such Item (unless
the Acceptance Date is the Basic Term Commencement Date, in which
case there shall be no Interim Term for such Item) and ending on
the date immediately prior to the Basic Term Commencement Date.
"Item of Equipment" or "Item" means a single unitary
item of the Equipment.
"Lease Supplement" means a Lease Supplement
substantially in the form attached hereto as Exhibit B, to be
executed by Lessor and Lessee with respect to an Item or Items of
Equipment as provided in Section 4 hereof, evidencing that such
Item or Items are leased hereunder.
"Lien" means liens, mortgages, encumbrances, pledges,
charges and security interests of any kind.
"Maximum Acquisition Cost" means the amount specified
as such on each consecutively numbered Exhibit A now or hereafter
attached hereto and made a part hereof.
"Maximum Lessee Risk Amount" for any Item of Equipment
shall mean the percentage set forth in the Related Exhibit A for
such Item under the caption "Maximum Lessee Risk Percentage"
applicable to the Basic Term or Renewal Term then ending,
multiplied by the Acquisition Cost for such Item.
"Maximum Lessor Risk Amount" for any Item of Equipment
shall mean the percentage set forth in the Related Exhibit A for
such Item under the caption "Maximum Lessor Risk Percentage"
applicable to the Basic Term or Renewal Term then ending,
multiplied by the Acquisition Cost for such Item.
"Maximum Term" for each Item of Equipment shall mean
the maximum number of months, in aggregate, of the Basic Term and
all Renewal Terms of such Item of Equipment, as specified in the
Related Exhibit A applicable to such Item of Equipment.
"Net Proceeds of Sale" shall have the meaning given to
such term in Section 29(d) hereof.
"Person" means any individual, corporation,
partnership, joint venture, association, joint stock company,
trust, trustee(s) of a trust, unincorporated organization, or
government or governmental authority, agency or political
subdivision thereof.
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"Purchase Option Amount" shall have the meaning given
to such term in Section 28(b) hereof.
"Reinvestment Premium" for any Item of Equipment, as of
any determination date, shall mean the excess, if any, of (a) the
net present value of the sum of (i) all payments of Rent
remaining to be paid after such determination date through the
expiration of the Maximum Term of such Item, that would have been
payable for such Item following such determination date if this
Lease had been renewed through and inclusive of the expiration of
the Maximum Term of such Item, and (ii) the Estimated Residual
Value applicable to such Item at such expiration of the Maximum
Term (together, the sum of (i) and (ii) being referred to as the
"Discounted Payments"), each discounted at a rate equal to the
then current yield for direct obligations of the United States
Treasury having a maturity equal to the average life of the
Discounted Payments, over (b) the Estimated Residual Value
applicable to such Item at such time of determination.
"Related Exhibit A" means, with respect to an Item of
Equipment, the particular numbered Exhibit A now or hereafter
attached hereto and made a part hereof to which such Item relates
as specified in Section 4 hereof.
"Renewal Term" for each Item of Equipment means each
period following the end of the Basic Term for such Item with
respect to which Lessee has the option to renew this Lease
pursuant to Section 28(a) hereof.
"Rent" means Interim Rent and Basic Rent.
"Rent Payment Date" for each Item of Equipment means
(i) for the Basic Term thereof, each date on which a payment of
Basic Rent is due and payable for such Item pursuant to Section
7(b) hereof, (ii) for the Interim Term thereof (if any), the
Basic Term Commencement Date for such Item, and (iii) for each
Renewal Term thereof, each date on which a payment of Basic Rent
is due and payable for such Item as provided in Section 28(a)
hereof.
"Rental Period" for each Item of Equipment means (i)
for the Interim Term of such Item, the period from and inclusive
of the Acceptance Date for such Item to, but not inclusive of,
the Basic Term Commencement Date for such Item, (ii) for the
Basic Term of such Item, each period for which a payment of Basic
Rent is to be made for such Item during the Basic Term thereof as
set forth on the Related Exhibit A for such Item (opposite the
reference to Rental Periods for Basic Term), and (iii) for each
Renewal Term of such Item, each period for which a payment of
Basic Rent is to be made for such Item during such Renewal Term
as set forth on the Related Exhibit A for such Item (opposite the
reference to Rental Periods for Renewal Term).
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"Supplemental Payments" means all amounts, liabilities
and obligations which Lessee assumes or agrees to pay hereunder
to Lessor or others, including payments of Casualty Loss Value,
indemnities, and any Reinvestment Premium that may become payable
by Lessee hereunder, but excluding Basic Rent and Interim Rent.
"Term" means the full term of the Lease with respect to
each Item of Equipment, including the Interim Term (if any), the
Basic Term, and each Renewal Term.
"Termination Date" for any Item of Equipment, means the
last day of the Basic Term of such Item, or if the Term of such
Item has been renewed pursuant to Section 28(a), the last day of
the Renewal Term of such Item.
"Termination Value" of each Item of Equipment as of any
Termination Value Payment Date means an amount determined by
multiplying the Acquisition Cost of such Item of Equipment by the
percentage set forth opposite such Termination Value Payment Date
on the Schedule of Termination Values attached to the Related
Exhibit A for such Item.
"Termination Value Payment Date" of each Item of
Equipment shall mean the Basic Term Commencement Date for such
Item and each monthly anniversary of the Basic Term Commencement
Date for such Item and shall be as set forth in the Schedule of
Termination Values attached to the Related Exhibit A for such
Item.
The words "this Lease", "herein", "hereunder", "hereof" or other
like words mean and include this Equipment Leasing Agreement,
each Related Exhibit A, each Lease Supplement, and each amendment
and supplement hereto and thereto.
2. Agreement for Lease of Equipment. Subject to, and upon
all of the terms and conditions of this Lease, Lessor hereby
agrees to lease to Lessee and Lessee hereby agrees to lease from
Lessor each Item of Equipment for the Term with respect to such
Item. Provided that no Event of Default has occurred and is
continuing hereunder, Lessor agrees that it shall not interfere
with Lessee's quiet enjoyment and use of any Item of Equipment
leased hereunder during the Term thereof.
3. Conditions Precedent. Lessor shall have no obligation
to purchase any Item of Equipment and to lease the same to Lessee
unless each of the following conditions are fulfilled to the
satisfaction of Lessor: (i) no event which is (or with notice or
lapse of time or both would become) an Event of Default has
occurred and is continuing, nor has any information come to
Lessor's attention from which Lessor could reasonably and in good
faith infer that such event might occur; (ii) no material adverse
change in the financial condition of Lessee (or of any Guarantor)
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which, in Lessor's good faith opinion, would impair the ability
of Lessee to pay and perform its obligations under this Lease (or
of any Guarantor to pay and perform such obligations) has
occurred since the date specified as the Financial Condition
Reference Date on the Related Exhibit A for such Item; (iii) such
Item of Equipment is reasonably acceptable to Lessor, and is free
of all Liens, other than any Lien specifically excepted in
Section 15 hereof; (iv) the Acceptance Date for such Item of
Equipment is a date within the Acquisition Period specified on
the Related Exhibit A for such Item and Lessee has executed and
delivered to Lessor the Related Exhibit A for such Item; (v) the
Acquisition Cost of such Item of Equipment, when added to the
total Acquisition Cost of all Equipment of the type to which such
Item relates and which has been leased hereunder, or ordered by
Lessor for lease hereunder, will not be such an amount so as to
cause the Maximum Acquisition Cost specified on the Related
Exhibit A for such Item to be exceeded; (vi) Lessor has received
an invoice for such Item of Equipment from the seller thereof,
approved for payment by Lessee, showing Lessor as the purchaser
of such Item, or, if Lessee is the seller of such Item, a bill of
sale for such Item from Lessee to Lessor in form and substance
satisfactory to Lessor, together with evidence, satisfactory to
Lessor, within sixty (60) days following the Acceptance Date of
such Items, of Lessee's payment to the original seller of such
Items in an amount at least equal to ninety percent (90%) of the
Acquisition Cost of such Items, and a Lease Supplement for such
Item, duly executed by Lessee, and dated the Acceptance Date for
such Item; (vii) if such Item of Equipment is subject to motor
vehicle titling and registration laws, Lessor has received a copy
of the application for certificate of title therefor, as filed
with, and bearing the filing stamp of, the appropriate department
of motor vehicles or other appropriate state authority, and a
copy of the manufacturer's statement or certificate of origin
therefor, reflecting Lessor or its nominee as owner and whomever
Lessor shall have designated (if any) as first lienholder; and
(viii) Lessor shall have received such other documents, opinions,
certificates and waivers, in form and substance satisfactory to
Lessor, as Lessor may require.
4. Delivery, Acceptance and Leasing of Equipment. Lessor
shall not be liable to Lessee for any failure or delay in
obtaining any Item of Equipment or making delivery thereof.
Forthwith upon delivery of each Item of Equipment to Lessee,
Lessee will inspect such Item, and unless Lessee gives Lessor
prompt written notice of any defect in or other proper objection
to such Item, Lessee shall promptly upon completion of such
inspection execute and deliver to Lessor a Lease Supplement for
such Item, dated the Acceptance Date of such Item. The execution
by Lessor and Lessee of a Lease Supplement for an Item of
Equipment shall (a) evidence that such Item is leased under, and
is subject to all of the terms, provisions and conditions of,
this Lease, and (b) constitute Lessee's unconditional and
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irrevocable acceptance of such Item for all purposes of this
Lease. An Item of Equipment shall be conclusively deemed to
relate to the particular numbered Exhibit A now or hereafter
attached hereto and made a part hereof on which is set forth (i)
a description of such Item or the type of Equipment to which such
Item relates and (ii) the Acquisition Period within which the
Acceptance Date for such Item has occurred.
5. Term. The Interim Term (if any) for each Item of
Equipment shall commence on the Acceptance Date thereof, and,
unless sooner terminated pursuant to the provisions hereof, shall
end on the date immediately prior to the Basic Term Commencement
Date thereof. The Basic Term for each Item of Equipment shall
commence on the Basic Term Commencement Date thereof and, unless
this Lease is sooner terminated with respect to such Item (or all
Equipment) pursuant to the provisions hereof, shall end on the
date specified therefor in the Lease Supplement for such Item.
If not sooner terminated pursuant to the provisions hereof, the
Term for each Item of Equipment shall end on the last day of the
Basic Term thereof, or if this Lease is renewed pursuant to
Section 28(a) hereof, on the last day of the last Renewal Term
thereof.
6. Return of Equipment.
(a) Upon the expiration or earlier termination of the Term
with respect to each Item of Equipment (unless Lessee has
exercised its purchase option with respect thereto pursuant to
Section 28(b) hereof), Lessee will, at its expense, surrender and
deliver possession of each Item of Equipment to Lessor at a
location chosen by Lessor within seven hundred (700) miles of the
then location of such Item of Equipment. At the time of such
return to Lessor, each Item of Equipment (and each part or
component thereof) shall (i) be free and clear of all Liens,
other than any Lien granted or placed thereon by Lessor or any
Assignee, and (ii) be in compliance with the Return Condition
Requirements specified on the Related Exhibit A for such Item.
If any Item of Equipment is originally equipped with tires, such
Item shall, in addition to satisfying the requirements of the
preceding sentence, be returned with all tires installed thereon,
with each tire having at least fifty percent (50%) or more
average remaining tread for each Item of Equipment thereon.
(b) Until each such Item of Equipment has been returned to
Lessor in the condition and as otherwise provided in this Section
6, Lessee shall continue to pay Lessor, on the same dates on
which Basic Rent for such Item was payable during the Basic Term
thereof (or, if the Term of such Item has been renewed, the most
recent Renewal Term thereof), the same Basic Rent for such Item
that was payable on the last Rent Payment Date of the Basic Term
thereof, or if the Term of such Item has been renewed pursuant to
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Section 28(a), the same Basic Rent that was payable on the last
Rent Payment Date during the most recent Renewal Term.
(c) The provisions of this Section 6 are of the essence of
this Lease and upon application to any court of equity having
jurisdiction in the premises, Lessor shall be entitled to a
decree against Lessee requiring specific performance of the
covenants of Lessee set forth in this Section 6.
7. Rent.
(a) Interim Rent. Lessee hereby agrees to pay Lessor
Interim Rent for each Item of Equipment as to which there is an
Interim Term, payable on the Rent Payment Date of the Interim
Term for such Item, in the amount obtained by multiplying (i) the
Acquisition Cost of such Item by (ii) the percentage set forth
(opposite the Interim Rent Percentage reference) on the Related
Exhibit A for such Item, by (iii) the number of days from and
including the Acceptance Date for such Item through the end of
the Interim Term for such Item.
(b) Basic Rent. Lessee hereby agrees to pay Lessor Basic
Rent for each Item of Equipment during the Basic Term thereof at
the times and on the Rent Payment Dates set forth on the Related
Exhibit A for such Item and in an amount obtained by multiplying
(i) the Acquisition Cost of such Item by (ii) the percentage of
Acquisition Cost set forth (opposite the Basic Rent Percentage
reference) on such Related Exhibit A.
(c) Supplemental Payments. Lessee also agrees to pay to
Lessor, or to whomsoever shall be entitled thereto as expressly
provided herein, all Supplemental Payments, promptly as the same
shall become due and owing, and in the event of any failure on
the part of Lessee so to pay any such Supplemental Payment
hereunder Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the case
of nonpayment of Rent.
(d) Method of Payment. All payments of Rent and
Supplemental Payments required to be made by Lessee to Lessor
shall be made by check or in good funds. In the event of any
assignment to an Assignee pursuant to Section 14(b) hereof, all
payments which are assigned to such Assignee, whether Rent,
Supplemental Payments or otherwise, shall be paid in such manner
as shall be designated by Lessor or such Assignee. Time is of
the essence in connection with the payment of Rent and
Supplemental Payments.
8. Net Lease. This Lease is a net lease. Lessee
acknowledges and agrees that Lessee's obligations hereunder,
including, without limitation, its obligations to pay Rent for
all Equipment leased hereunder and to pay all Supplemental
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Payments payable hereunder, shall be unconditional and
irrevocable under any and all circumstances, shall not be subject
to cancellation, termination, modification or repudiation by
Lessee, and shall be paid and performed by Lessee without notice
or demand and without any abatement, reduction, diminution,
setoff, defense, counterclaim or recoupment whatsoever,
including, without limitation, any abatement, reduction,
diminution, setoff, defense, counterclaim or recoupment due or
alleged to be due to, or by reason of, any past, present or
future claims which Lessee may have against Lessor, any Assignee,
any manufacturer or supplier of the Equipment or any part or Item
thereof, or any other Person for any reason whatsoever or any
defect in the Equipment or any part or Item thereof, or the
condition, design, operation or fitness for use thereof, or any
damage to, or any loss or destruction of, the Equipment or any
part or Item thereof, any Liens or rights of others with respect
to the Equipment or any part or Item thereof, or any prohibition
or interruption of or other restriction against Lessee's use,
operation or possession of the Equipment or any part or Item
thereof, for any reason whatsoever, or any interference with such
use, operation or possession by any Person or entity, or any
default by Lessor in the performance of its obligations herein
contained, or any other indebtedness or liability, howsoever and
whenever arising, of Lessor, or of any Assignee, or of Lessee to
any other Person, or by reason of insolvency, bankruptcy or
similar proceedings by or against Lessor, any Assignee or Lessee,
or for any other reason whatsoever, whether similar or dissimilar
to any of the foregoing, any present or future law to the
contrary notwithstanding; it being the intention of the parties
hereto that all Rent and Supplemental Payments payable by Lessee
hereunder shall continue to be payable in all events and in the
manner and at the times herein provided, without notice or
demand, unless the obligation to pay the same shall be terminated
pursuant to the express provisions of this Lease. Lessee retains
its rights and remedies against Lessor or any Assignee for breach
of covenant, representation or warranty, negligence or wilful
malfeasance.
9. Grant of Security Interest; Equipment to be and Remain
Personal Property. This Lease is a lease intended as security.
Lessee hereby grants to Lessor a security interest in the
Equipment and all proceeds thereof as collateral security for the
payment and performance by Lessee of Lessee's obligations as
Lessee hereunder. It is the intention and understanding of both
Lessor and Lessee, and Lessee shall take all such actions as may
be required to assure, that the Equipment shall be and at all
times remain personal property, notwithstanding the manner in
which the Equipment may be attached or affixed to realty. Lessee
shall obtain and record such instruments and take such steps as
may be necessary to prevent any Person from acquiring any rights
in the Equipment by reason of the Equipment being claimed or
deemed to be real property. Lessee shall cause each Item of
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Equipment subject to motor vehicle titling and registration laws
to be titled in the name of Lessee, as owner, with Lessor to be
shown as sole lienholder, and shall cause all certificates of
title to be promptly furnished to Lessor.
10. Use of Equipment; Compliance with Laws. Lessee agrees
that the Equipment will be used and operated solely in the
conduct of its business and in compliance with any and all
insurance policy terms, conditions and provisions and with all
statutes, laws, ordinances, rules and regulations of any Federal,
state or local governmental body, agency or authority applicable
to the use and operation of the Equipment, including, without
limitation, environmental, noise and pollution laws (including
notifications and reports). Lessee shall procure and maintain in
effect all licenses, registrations, certificates, permits,
approvals and consents required by Federal, state or local laws
or by any governmental body, agency or authority in connection
with the ownership, delivery, installation, use and operation of
each Item of Equipment, including without limitation, those
required by environmental, noise and pollution laws (including
notifications and reports), and including, in the case of any
Item subject to motor vehicle titling and registration laws, all
titles, registrations, registration plates, permits, licenses,
and all renewals thereof. The Equipment will at all times be and
remain in the possession and control of Lessee. Lessee shall not
change the location of any Item of Equipment as specified in the
Lease Supplement with respect thereto without delivering prior
written notice to Lessor of the new location to which such Item
will be moved and receiving Lessor's prior written consent to
such move. The Equipment shall in no event be located outside of
the continental limits of the United States. Lessee shall use
and operate the Equipment or cause it to be used and operated
only by personnel authorized by Lessee, and Lessee shall use
every reasonable precaution to prevent loss or damage to each
Item of Equipment from fire and other hazards.
11. Maintenance and Repair of Equipment. Lessee agrees, at
its own cost and expense, to keep, repair, maintain and preserve
the Equipment in good order and operating condition, reasonable
wear and tear excepted and in compliance with such maintenance
and repair standards and procedures as are customarily followed
by Lessee with respect to similar items of equipment, and as
otherwise may be required to enforce warranty claims against each
vendor and manufacturer of each Item of Equipment, and in
compliance with all requirements of law applicable to the
maintenance and condition of the Equipment, including, without
limitation, environmental, noise and pollution laws and
regulations (including notifications and reports). Lessee shall
maintain the exterior and interior of the Equipment in good
appearance, reasonable wear and tear excepted Lessee shall, at
its own cost and expense, supply the necessary power and other
items required in the operation of the Equipment and make
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available to Lessor all maintenance records for inspection, upon
reasonable prior notice, at Lessee's place of business where the
applicable Item of Equipment is located, at reasonable times and
intervals during Lessee's regular business hours. Lessee hereby
waives any right now or hereafter conferred by law to make
repairs on the Equipment at the expense of Lessor.
12. Replacements; Alterations; Modifications. In case any
Item of Equipment (or any equipment, part or appliance therein)
is required to be altered, added to, replaced or modified in
order to comply with any laws, regulations, requirements or rules
("Required Alteration") pursuant to Sections 10 or 11 hereof,
Lessee agrees to make such Required Alteration at its own
expense. In the event such Required Alteration is readily
removable without causing material damage to the Item of
Equipment, and is not a part, item of equipment or appliance
which replaces any part, item of equipment or appliance
originally incorporated or installed in or attached to such Item
of Equipment on the Acceptance Date therefor or any part, item of
equipment or appliance in replacement of or substitution for any
such original part, item of equipment or appliance, any such
Required Alteration shall be and remain the property of Lessee.
To the extent such Required Alteration is not readily removable
without causing material damage to the Item of Equipment to which
such Required Alteration has been made, or is a part, item of
equipment or appliance which replaces any part, item of equipment
or appliance originally incorporated or installed in or attached
to such Item of Equipment on the Acceptance Date therefor or any
part, item of equipment or appliance in replacement of or
substitution for any such original part, item of equipment or
appliance, the same shall immediately be and become the property
of Lessor and subject to the terms of this Lease. Lessee agrees
that, within 45 days after the close of any calendar quarter in
which Lessee has made any Required Alterations, Lessee will give
written notice thereof to Lessor describing, in reasonable
detail, the Required Alterations and specifying the cost thereof
with respect to each Item of Equipment and the date or dates when
made. Any parts installed or replacements made by Lessee upon
any Item of Equipment pursuant to its obligation to maintain and
keep the Equipment in good order, operating condition and repair
under Section 11 hereof shall be considered accessions to such
Item of Equipment and title thereto or security interest therein
shall be immediately vested in Lessor. Except as required or
permitted by the provisions of this Section 12, Lessee shall not
materially modify an Item of Equipment without the prior written
authority and approval of Lessor.
12A. Early Termination; Substitution. (a) So long as no
Event of Default shall have occurred and be continuing hereunder,
Lessee shall have the right at its option on any Rent Payment
Date during the Basic Term, on at least ninety days' prior
written notice to Lessor, to terminate this Lease with respect to
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any Item of Equipment then leased hereunder if, in Lessee's good
faith opinion, as evidenced by a certificate of its President or
chief financial officer, such Item shall have become no longer
useful, or surplus, to Lessee in its business, with such
termination to be effective on the Rent Payment Date specified in
such notice (the "Termination Value Payment Date"). During the
period from the giving of such notice until the date thirty (30)
days prior to the Termination Value Payment Date, Lessee, as
agent for Lessor, shall use its reasonable efforts (but no less
effort than used to sell equipment Lessee owns itself) to secure
the highest obtainable bids for the purchase of such Item and in
the event it receives any bid during such period, Lessee shall
promptly certify to Lessor in writing the amount and terms of
such bid and the name and address of the party submitting such
bid. On the Termination Value Payment Date (but in no event
prior to Lessor's receipt of the amounts specified in the next
succeeding sentence), Lessee shall deliver possession of such
Item to the bidder, if any, which shall have submitted the
highest bid during such period, and Lessor shall, without
recourse or warranty, simultaneously therewith sell such Item on
an "as-is", "where-is" basis for cash to such bidder. The total
selling price realized at such sale shall be paid to and retained
by Lessor and, in addition, on the Termination Value Payment Date
Lessee shall pay to Lessor the sum of (i) the Basic Rent due and
payable for such Item on the Termination Value Payment Date, plus
(ii) all accrued and unpaid Interim Rent and Basic Rent owing for
such Item for all Rental Periods prior to the Rental Period for
which the Basic Rent payment specified in the next preceding
sub-clause (i) is payable, plus (iii) the excess, if any, of the
Termination Value of such Item as of the Rent Payment Date
coincident with the Termination Value Payment Date over the Net
Proceeds of Sale of such Item, plus (iv) any sales or excise
taxes on or measured by such sale, plus (v) all accrued and
unpaid Supplemental Payments owing by Lessee with respect to such
Item as of the Termination Value Payment Date, including the
Reinvestment Premium, if any. If no sale of such Item shall have
occurred on or as of the Termination Value Payment Date, this
Lease (including the provisions of this Section 12A) shall
continue in full force and effect with respect to such Item. In
the event of any such sale and the receipt by Lessor of the
amounts described above, and upon compliance by Lessee with the
provisions of this Section 12A, the obligations of Lessee to pay
Basic Rent hereunder with respect to such Item of Equipment so
sold shall cease for any Rental Period that commences on or after
the Termination Value Payment Date and the Term with respect to
such Item shall end effective as of the Termination Value Payment
Date. Lessor may, but shall be under no duty to, solicit bids,
inquire into the efforts of Lessee to obtain bids or otherwise
take any action in connection with any such sale other than the
duty to transfer to the purchaser named in the highest bid
certified by Lessee to Lessor, without recourse or warranty, on
an "as-is", "where-is" basis, all of Lessor's right, title and
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interest in and to the Item of Equipment so sold against receipt
by Lessor of the payments (Item by Item) provided for herein.
Anything herein to the contrary notwithstanding, if Lessee shall
exercise its said right of termination as provided in this
Section 12A, Lessor may, in its sole discretion, elect to retain
such Item by giving Lessee written notice to such effect within
thirty (30) days following Lessor's receipt of the written notice
from Lessee hereinabove provided, in which event (a) no sale of
such Item shall occur pursuant to this Section 12A, (b) Lessee
shall deliver such Item to Lessor in accordance with the
provisions of Section 6 hereof and shall continue to pay Basic
Rent for such Item on each Rent Payment Date to and inclusive of
(and the Term of such Item shall terminate on) the Rent Payment
Date next following the date on which such delivery occurs.
(b) In lieu of making all payments referenced in sub-
clauses (i) through (v) above, Lessee may, provided no Event of
Default has occurred and is continuing, on or prior to the date
on which such payments would have otherwise been due, convey, or
cause to be conveyed to Lessor, as replacement for any Item of
Equipment with respect to which Lessee has exercised it
termination option pursuant to Section 12A(a), good and
marketable title to a replacement item of equipment (a
"Replacement Item") free and clear of all liens, claims, security
interests and encumbrances and having a value and utility at
least equal, and being in as good operating condition as, such
Item of Equipment so terminated, assuming such Item was in the
condition and repair required by the terms of this Lease. Prior
to or at the time of any such conveyance, Lessee, at its own
expense, shall furnish, or cause to be furnished to Lessor a bill
of sale, in form and substance satisfactory to Lessor, with
respect to such Replacement Item and execute a supplement hereto
identifying such Replacement Item as subject to this Lease. Upon
full compliance by Lessee with the terms of this Section 12A,
Lessor will transfer to Lessee, without recourse or warranty, on
an "as-is", "where-is" basis, all of Lessor's right, title and
interest in and to the Item of Equipment so replaced. For all
purposes hereof, each such Replacement Item shall, after such
conveyance be deemed part of the property leased hereunder and
shall be deemed an "Item of Equipment" as defined herein.
13. Identification Marks; Inspection. Lessee agrees, upon
the request of Lessor, to place markings on the Equipment by
stencil or by a metal tag or plate affixed thereto showing
plainly, distinctly and conspicuously Lessor's security interest
therein; provided, however, that such identification markings are
to be placed so as not to interfere with the usefulness of such
Item of Equipment. If during the Term any such identification
marking shall at any time be defaced or destroyed, Lessee shall
immediately cause such defaced or destroyed identification
marking to be restored or replaced. Lessee shall not allow the
name of any Person other than Lessee or its affiliates to be
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placed upon any Item of Equipment as a designation which might be
interpreted as indicating a claim of ownership thereto or a
security interest therein by such Person other than Lessor or any
Assignee. Lessee shall make the Equipment available to Lessor
for inspection and shall also make Lessee's records pertaining to
the Equipment available to Lessor for inspection upon reasonable
prior notice, at Lessee's place of business where the applicable
Item of Equipment is located, at reasonable times and intervals
during Lessee's regular business hours.
14. Assignments and Subleasing.
(a) By Lessee. LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR, SUBLEASE OR OTHERWISE RELINQUISH POSSESSION OF
ANY ITEM OF EQUIPMENT, OR ASSIGN, TRANSFER OR ENCUMBER ITS
RIGHTS, INTERESTS OR OBLIGATIONS HEREUNDER AND ANY ATTEMPTED
SUBLEASE, RELINQUISHMENT, ASSIGNMENT, TRANSFER OR ENCUMBERING BY
LESSEE SHALL BE NULL AND VOID. Lessee may, without Lessor's
consent, sublease any Item of Equipment to any affiliate or
wholly-owned subsidiary of Lessee provided that (i) no Event of
Default has occurred and is continuing hereunder, (ii) any such
sublease shall be subject and subordinate in all respects to this
Lease and the rights of Lessor (and any Assignee) hereunder,
(iii) the sublease term shall in no event exceed the then
remaining portion of the Term of such Item of Equipment, and any
Renewal Term thereof, (iv) Lessee will provide Lessor with the
name and address of each such sublessee and the location of each
subleased Item of Equipment, which location will in no event be
outside of the continental limits of the United States, and (v)
Lessee shall, and shall cause any such sublessee to, execute and
deliver such instruments (including sublease agreements and
Uniform Commercial Code financing statements) as may be
reasonably requested by Lessor in connection with any such
sublease, and to provide copies of each sublease agreement to
Lessor upon Lessor's written request. No such subleasing by
Lessee will reduce any of the obligations of Lessee hereunder or
the rights of Lessor (and any Assignee) hereunder, and all of the
obligations of Lessee hereunder shall be and remain primary and
shall continue in full force and effect as the obligations of a
principal and not of a guarantor or surety. Any sublease shall,
if requested by Lessor (or any Assignee) be assigned by Lessee
(with such assignment to be consented to by the sublessee
thereof) to Lessor or any such Assignee.
(b) In the event Lessee shall sell, convey or transfer to
any person, all or substantially all of the assets as an entirety
of any affiliate or wholly-owned subsidiary to whom Lessee has
subleased any Items of Equipment pursuant to Section 14(a) above,
the successor corporation formed by such sale, conveyance or
transfer shall succeed to, and be substituted for, and may
exercise every right and power of, Lessee under this Lease with
respect to all, but not less than all, of the Items of Equipment
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so subleased, with the same effect as if such successor
corporation had been named as a Lessee herein, provided that such
successor corporation shall execute and deliver to Lessor and
each Assignee an agreement containing an effective assumption by
such successor corporation of the due and punctual performance
and observance of each covenant and condition of this Lease;
provided, however, that Lessee shall not be released from its
obligations hereunder with respect to such Items of Equipment,
which obligations shall at all times remain primary and direct,
without the prior written consent of Lessor. In the event such
consent is withheld by Lessor, Lessee may have the option, upon
ten (10) days prior written notice) to terminate this Lease on
date designated in such notice (a "termination date"), with
respect to all, but not less than all, of the Items of Equipment
subleased to such successor entity, by purchasing the such Items
of Equipment from Lessor for an amount with respect to each such
Item, payable in immediately available funds, equal to the sum of
(i) the Estimated Residual Value of such Item of Equipment on
such termination date, plus (ii) the Basic Rent due and payable
for such Item of Equipment on such termination date, if Basic
Rent for such Item is payable in arrears, plus (x) any applicable
sales, excise or other taxes imposed as a result of such sale
(other than gross or net income taxes attributable to such sale),
plus (y) any Supplemental Payments then due and owing to Lessor
hereunder, plus, in the event that Lessee exercises this
termination option prior to the end of the Maximum Term, (z) the
Reinvestment Premium. Lessor's sale of each Item of Equipment
shall be on an as-is, where-is basis, without any representation
or warranty by, or recourse to, Lessor.
(c) By Lessor. Lessor may, at any time, without notice to,
or the consent of, Lessee sell, assign or transfer or grant a
security interest in all or any part of Lessor's rights,
obligations, title or interest in, to and under the Equipment or
any Item(s) thereof, this Lease, any Lease Supplement and/or any
Rent and Supplemental Payments payable under this Lease or any
Lease Supplement. Any entity to whom any such sale, assignment,
transfer or grant of security interest is made is herein called
an "Assignee" and any such sale, assignment, transfer or grant of
security interest is herein called an "assignment". An Assignee
may re-assign and/or grant a security interest in any of such
rights, obligations, title or interest assigned to such Assignee.
Lessee agrees to execute related acknowledgments and other
documents that may be reasonably requested by Lessor or an
Assignee. Each Assignee shall have and may enforce all of the
rights and benefits of Lessor hereunder with respect to the
Item(s) of Equipment and related Lease Supplement(s) covered by
the assignment, including, without limitation, the provisions of
Section 8 hereof and Lessee's representations and warranties
under Section 21 hereof. Lessee acknowledges that any such
assignment will not materially change its duties or materially
increase its burdens or risks hereunder. Each such assignment
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<PAGE>
shall be subject to Lessee's rights hereunder so long as no Event
of Default has occurred and is occurring hereunder and in no
event shall there be more than two (2) Assignees (or, one (1)
Assignee, together with Lessor) at any one time during the term
of this Lease. Lessee shall be under no obligation to any
Assignee except upon written notice of such assignment from
Lessor or, in the case of a reassignment, from the Assignee.
Upon written notice to Lessee of any such assignment, Lessee
agrees to pay the Rent and Supplemental Payments with respect to
the Item(s) of Equipment covered by such assignment to such
Assignee in accordance with the instructions specified in such
notice without any abatement, defense, setoff, counterclaim or
recoupment whatsoever, and to otherwise comply with all notices,
directions and demands which may be given by Lessor or such
Assignee with respect to such Item(s), in accordance with the
provisions of this Lease. Notwithstanding any such assignment,
all obligations of Lessor to Lessee under this Lease shall be and
remain enforceable by Lessee against Lessor and any Assignee to
whom an assignment hereunder has been made.
15. Liens. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to
(i) the Equipment or any part or Item thereof, Lessor's title
thereto, or any interest therein, or (ii) this Lease or any of
Lessor's interests hereunder, except any Lien granted or placed
thereon by Lessor or any Assignee. Lessee, at its own expense,
will promptly pay, satisfy and otherwise take such actions as may
be necessary to keep this Lease and the Equipment free and clear
of, and to duly discharge or eliminate or bond in a manner
satisfactory to Lessor and each Assignee, any such Lien not
excepted above if the same shall arise at any time. Lessee will
notify Lessor and each Assignee in writing promptly upon becoming
aware of any tax or other Lien (other than any lien excepted
above) that shall attach to the Equipment or any Item of
Equipment, and of the full particulars thereof.
16. Loss, Damage or Destruction.
(a) Risk of Loss, Damage or Destruction. Lessee hereby
assumes all risk of loss, damage, theft, taking, destruction,
confiscation, requisition or commandeering, partial or complete,
of or to each Item of Equipment, however caused or occasioned,
such risk to be borne by Lessee with respect to each Item of
Equipment from the date of this Lease, and continuing until such
Item of Equipment has been returned to Lessor in accordance with
the provisions of Section 6 hereof or has been purchased by
Lessee in accordance with the provisions of Section 28 hereof.
Lessee agrees that no occurrence specified in the preceding
sentence shall impair, in whole or in part, any obligation of
Lessee under this Lease, including, without limitation, the
obligation to pay Rent.
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(b) Payment of Casualty Loss Value Upon an Event of Loss.
If an Event of Loss occurs with respect to an Item of Equipment
during the Term thereof, Lessee shall give Lessor prompt written
notice thereof and shall pay to Lessor promptly upon the earlier
of (aa) receipt of payment for such Event of Loss from Lessee's
insurance carrier or (bb) sixty days after such Event of Loss or
(cc) the last day of the Rental Period in which such Event of
Loss occurs if there is no succeeding Rent Payment Date, the sum
of (i) all unpaid Interim Rent and Basic Rent payable for such
Item of Equipment on a pro rata basis with respect to Basic Rent
in the event that such payment does not occur on a Rent Payment
Date, such pro rata amount computed by multiplying the
Acquisition Cost of the Equipment subject to the Event of Loss by
the next preceding Casualty Loss Value Percentage and the product
thereof multiplied by the Interim Rent Percentage and the product
thereof multiplied by the number of days from the preceding Rent
Payment Date to the date of payment by the Lessee hereunder, plus
(ii) the Casualty Loss Value of such Item of Equipment as of (x)
the Rent Payment Date next preceding or coincident with the date
of such Event of Loss if Basic Rent for such Item of Equipment is
payable in advance, or (y) the Rent Payment Date next following
the date of such Event of Loss if Basic Rent for such Item of
Equipment is payable in arrears, plus (iii) the Basic Rent
payable for such Item of Equipment for the Rental Period in which
such Event of Loss has occurred, if Basic Rent for such Item is
payable in arrears, plus (iv) all other Supplemental Payments due
for such Item of Equipment as of the date of payment of the
amounts specified in the foregoing clauses (i), (ii) and (iii).
Any payments received at any time by Lessor from any insurer or
other party (except Lessee) as a result of the occurrence of such
Event of Loss will be applied in reduction of Lessee's obligation
to pay the foregoing amounts, if not already paid by Lessee, or,
if already paid by Lessee, will be applied to reimburse Lessee
for its payment of such amount, unless an Event of Default shall
have occurred and be continuing. Upon payment in full of such
Casualty Loss Value, Basic Rent, Interim Rent (if applicable) and
Supplemental Payments, (A) the obligation of Lessee to pay Rent
hereunder with respect to such Item of Equipment shall terminate
and the Term of such Item shall thereupon terminate, and (B)
Lessee shall, as agent for Lessor, as soon as practicable,
dispose of such Item or Items of Equipment in a manner reasonably
acceptable to Lessor. As used in this Lease, the term "Casualty
Loss Value" of any Item of Equipment as of any Rent Payment Date
means an amount determined by multiplying the Acquisition Cost of
such Item of Equipment by the percentage set forth opposite such
Rent Payment Date on the schedule of Casualty Loss Values
attached to and made a part of the Related Exhibit A for such
Item.
(c) Substitution of Equipment Upon an Event of Loss.
Provided no Event of Default has occurred and is continuing, in
lieu of payment of the amounts indicated in sub-clause (b) above,
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Lessee may, on or prior to the date on which such payments would
have otherwise been due, convey, or cause to be conveyed to
Lessor, as replacement for any Item of Equipment with respect to
which an Event of Loss has occurred, good and marketable title to
a Replacement Item free and clear of all liens, claims, security
interests and encumbrances and having a value and utility at
least equal, and being in as good operating condition as, such
Item of Equipment with respect to which the Event of Loss has
occurred, assuming such Item was in the condition and repair
required by the terms of this Lease. Prior to or at the time of
any such conveyance, Lessee, at its own expense, shall furnish,
or cause to be furnished to Lessor a bill of sale, in form and
substance satisfactory to Lessor, with respect to such
Replacement Item and execute a supplement hereto identifying such
Replacement Item as subject to this Lease. Upon full compliance
by Lessee with the terms of this sub-clause (c), Lessor will
transfer to Lessee, without recourse or warranty, on an "as-is",
"where-is" basis, all of Lessor's right, title and interest in
and to the Item of Equipment so replaced. For all purposes
hereof, each such Replacement Item shall, after such conveyance
be deemed part of the property leased hereunder and shall be
deemed an "Item of Equipment" as defined herein.
(d) Application of Payments Not Relating to an Event of
Loss. Any payments (including, without limitation, insurance
proceeds) received at any time by Lessor or Lessee from any
governmental authority or other party with respect to any loss or
damage to any Item or Items of Equipment not constituting an
Event of Loss, will be applied directly in payment of repairs or
for replacement of property in accordance with the provisions of
Section 11 and 12 hereof, if not already paid by Lessee, or if
already paid by Lessee and no Event of Default shall have
occurred and be continuing, shall be applied to reimburse Lessee
for such payment, and any balance remaining after compliance with
the provisions of said Sections with respect to such loss or
damage shall be retained by Lessee.
17. Insurance. Lessee will cause to be carried and
maintained, at its sole expense, with respect to the Equipment at
all times during the Term thereof and until the Equipment has
been returned to Lessor (a) physical damage insurance (including
theft and collision insurance in the case of all Items of
Equipment consisting of motor vehicles) insuring against all
risks of physical loss or damage to the Equipment, in an amount
not less than the greater of the Casualty Loss Value of the
Equipment or the replacement value of the Equipment, and (b)
insurance against liability for bodily injury, death and property
damage resulting from the use and operation of the Equipment in
an amount not less than $5,000,000 per occurrence, in each case
with exclusions and deductibles acceptable to Lessor and no
greater than those applicable to insurance on similar equipment
owned by Lessee. Such insurance policy or policies will name
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Lessor and each Assignee as the sole loss payees with respect to
such Equipment, as their interests may appear, on all policies
referred to in clause (a) of the preceding sentence, and will
name Lessor and each Assignee as additional insureds on all
policies referred to in clause (b) of the preceding sentence.
Such policies will provide that the same may not be invalidated
against Lessor or any Assignee by reason of any violation of a
condition or breach of warranty of the policies or the
application therefor by Lessee, that the policies may be
cancelled or materially altered or reduced in coverage (except as
otherwise permitted under the terms of this Lease) by the insurer
only after thirty (30) days' prior written notice to Lessor and
each Assignee, and that the insurer will give written notice to
Lessor and each Assignee in the event of nonpayment of premium by
Lessee when due. The policies of insurance required under this
Section shall be valid and enforceable policies issued by
insurers of recognized responsibility acceptable to Lessor and
each Assignee and authorized to do an insurance business in the
state in which each Item of Equipment is located. In the event
that any of such policies referred to in clause (b) of the first
sentence of this Section shall now or hereafter provide coverage
on a "claims-made" basis, Lessee shall continue to maintain such
policies in effect for a period of not less than three (3) years
after the expiration of the Term of the last Item of Equipment
leased to Lessee hereunder. Upon the execution of this Lease and
thereafter not less than thirty (30) days prior to the expiration
dates of any expiring policies theretofore furnished under this
Section, certificates of the insurance coverage required by this
Section and, if requested by Lessor or any Assignee, copies of
the policies evidencing such insurance coverage, shall be
delivered by Lessee to Lessor and each other named loss payee
and/or additional insured. Any certificate of insurance issued
with respect to a blanket policy covering other equipment not
subject to this Lease shall specifically describe the Equipment
as being included therein and covered thereby to the full extent
of the coverages and amounts required hereunder. If Lessee shall
fail to cause the insurance required under this Section to be
carried and maintained, Lessor or any Assignee may provide such
insurance and Lessee shall reimburse Lessor or any such Assignee,
as the case may be, upon demand for the cost thereof as a
Supplemental Payment hereunder.
18. General Tax Indemnity. Lessee agrees to pay, defend
and indemnify and hold Lessor, each Assignee and their respective
successors and assigns harmless on an after-tax basis from any
and all Federal, state, local and foreign taxes, fees,
withholdings, levies, imposts, duties, assessments and charges of
any kind and nature whatsoever, together with any penalties,
fines or interest thereon (herein called "taxes or other
impositions") howsoever imposed, whether levied or imposed upon
or asserted against Lessor, any Assignee, Lessee, the Equipment,
any Item of Equipment, or any part thereof, by any Federal, state
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or local government or taxing authority in the United States, or
by any taxing authority or governmental subdivision of a foreign
country, upon or with respect to (a) the Equipment, or any Item
of Equipment or any part thereof, (b) the manufacture,
construction, ordering, purchase, ownership, delivery, leasing,
subleasing, re-leasing, possession, use, maintenance,
registration, re-registration, titling, re-titling, licensing,
documentation, return, repossession, sale or other application or
disposition of the Equipment, or any Item of Equipment or any
part thereof, (c) the rentals, receipts or earnings arising from
the Equipment or any Item of Equipment or any part thereof, or
(d) this Lease, each Lease Supplement, the Rent and/or
Supplemental Payments payable by Lessee hereunder; provided,
however, that the foregoing indemnity shall not apply to any
taxes or other impositions based upon or measured solely by
Lessor's or any Assignee's net income, receipts, capital, net
worth, excess profits or items of tax preference, including
minimum taxes and withholding taxes measured by income, and which
are imposed or levied by any Federal, state or local taxing
authority in the United States. Lessee will promptly notify
Lessor of all reports or returns required to be made with respect
to any tax or imposition with respect to which Lessee is required
to indemnify hereunder, and will promptly provide Lessor with all
information necessary for the making and timely filing of such
reports or returns. Lessor will promptly notify Lessee of all
reports or returns of which it has knowledge that are required to
be made with respect to any tax or imposition with respect to
which Lessee is required to indemnify hereunder, and of which
Lessee does not have knowledge, and will promptly provide Lessee
with all information necessary for the making and timely filing
of such reports or returns. If Lessor requests that any such
reports or returns be prepared and filed by Lessee, Lessor will
promptly forward to Lessee, upon receipt by Lessor, all forms and
information received from the applicable taxing authority
necessary to prepare and make such filing and will cooperate with
Lessee in preparing and making such filing. Subject to the
foregoing, Lessee will prepare and file the same if permitted by
applicable law to file the same, and if not so permitted, Lessee
shall prepare such reports or returns for signature by Lessor,
and shall forward the same, together with immediately available
funds for payment of any tax or other imposition due, to Lessor,
at least ten (10) days in advance of the date such payment is to
be made. Lessor will promptly notify Lessee of any valuation
notice received by Lessor and provide copies of such notices to
Lessee to allow Lessee the right of an appeal before the
expiration of applicable deadlines. Should Lessor fail to so
notify Lessee, Lessor agrees to indemnify Lessee for any
increased taxes payable by Lessee due solely as a result, and
only to the extent, of any valuation increase for which Lessee
was prevented from appealing. Throughout the Term of this Lease,
Lessee has Lessor's permission to appeal the values of any and
all property covered by this Lease within the limits of the law.
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Upon written request, Lessee shall furnish Lessor with copies of
all paid receipts or other appropriate evidence of payment for
all taxes or other impositions paid by Lessee pursuant to this
Section 18. All of the indemnities contained in this Section 18
shall continue in full force and effect notwithstanding the
expiration or earlier termination of this Lease in whole or in
part, including the expiration or termination of the Term with
respect to any Item (or all) of the Equipment, and are expressly
made for the benefit of, and shall be enforceable by, Lessor and
each Assignee.
19. Indemnification. Without duplication of indemnities
contained or excluded in Section 18 hereof, Lessee hereby assumes
liability for, and does hereby agree to indemnify, protect, save,
defend, and hold harmless Lessor, each Assignee, and their
respective officers, directors, stockholders, successors,
assigns, agents and servants (each such party being herein, for
purposes of this Section 19, called an "indemnified party") on an
after-tax basis from and against any and all obligations, fees,
liabilities, losses, damages, penalties, claims, demands,
actions, suits, judgments, costs and expenses, including
reasonable legal expenses, of every kind and nature whatsoever,
imposed on, incurred by, or asserted against any indemnified
party, in any way relating to or arising out of (a) the
manufacture, construction, ordering, purchase, acceptance or
rejection, ownership, titling or retitling, registration or
re-registration, delivery, leasing, subleasing, re-leasing,
possession, use, operation, storage, removal, return,
repossession, sale or other disposition of the Equipment or any
Item of Equipment, or any part thereof, including, without
limitation, any of such as may arise from (i) loss or damage to
any property or death or injury to any persons, (ii) patent or
latent defects in the Equipment (whether or not discoverable by
Lessee or any indemnified party), (iii) any claims based on
absolute or strict liability in tort, (iv) any claims based on
patent, trademark, tradename or copyright infringement, and (v)
any claims based upon any non-compliance with or violation of any
Federal, state or local environmental control, noise, pollution
or hazardous substances laws, rules, regulations or requirements,
including, without limitation, all costs, fines and penalties
arising from any such violation or noncompliance, or from the
failure to report to any applicable governing regulatory
authority any spills, discharges or maintenance of hazardous
waste substances, and including all costs and expenses of
clean-up and removal of spills and hazardous waste substances; or
(b) any failure on the part of Lessee to perform or comply with
any of the terms of this Lease; or (c) any power of attorney
issued to Lessee to license, relicense, title, retitle, register
or re-register Items of Equipment subject to motor vehicle
titling and registration laws, and any towing charges, parking
tolls, fines, parking and speeding tickets, odometer
certifications and other civil and criminal motor vehicle
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violations with respect to any such Item, and all penalties and
interest applicable thereto, provided, however, that Lessee shall
not be required to indemnify any indemnified party for any
matters which arise as a direct result of the gross negligence or
willful misconduct of such indemnified party. Lessee shall give
each indemnified party prompt notice of any occurrence, event or
condition known to Lessee as a consequence of which any
indemnified party may be entitled to indemnification hereunder.
Lessee shall forthwith upon demand of any such indemnified party
reimburse such indemnified party for amounts expended by it in
connection with any of the foregoing or pay such amounts
directly. Lessee shall be subrogated to an indemnified party's
rights in any matter with respect to which Lessee has actually
reimbursed such indemnified party for amounts expended by it or
has actually paid such amounts directly pursuant to this Section
19. In case any action, suit or proceeding is brought against
any indemnified party in connection with any claim indemnified
against hereunder, such indemnified party will, promptly after
receipt of notice of the commencement of such action, suit or
proceeding, notify Lessee thereof, enclosing a copy of all papers
served upon such indemnified party, but failure to give such
notice or to enclose such papers shall not relieve Lessee from
any liability hereunder, unless such failure is a direct result
of the gross negligence or willful misconduct of such indemnified
party, in which case such relief shall be solely with respect to
such indemnified party. Lessee may, and upon such indemnified
party's request will, at Lessee's expense, resist and defend such
action, suit or proceeding, or cause the same to be resisted or
defended by counsel selected by Lessee and reasonably
satisfactory to such indemnified party and in the event of any
failure by Lessee to do so, Lessee shall pay all costs and
expenses (including, without limitation, attorney's fees and
expenses) incurred by such indemnified party in connection with
such action, suit or proceeding. The provisions of this Section
19, and the obligations of Lessee under this Section 19, shall
apply from the date of the execution of this Lease
notwithstanding that the Term may not have commenced with respect
to any Item of Equipment, and shall survive and continue in full
force and effect notwithstanding the expiration or earlier
termination of this Lease in whole or in part, including the
expiration of termination of the Term with respect to any Item
(or all) of the Equipment, and are expressly made for the benefit
of, and shall be enforceable by, each indemnified party.
20. NO WARRANTIES. LESSOR HEREBY LEASES THE EQUIPMENT TO
LESSEE AS-IS AND EXPRESSLY DISCLAIMS AND MAKES NO REPRESENTATION
OR WARRANTY, EITHER EXPRESSED OR IMPLIED, AS TO THE DESIGN,
CONDITION, QUALITY, CAPACITY, MERCHANTABILITY, DURABILITY,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF, OR ANY
OTHER MATTER CONCERNING, THE EQUIPMENT. LESSEE HEREBY WAIVES ANY
CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY
IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR FOR ANY
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LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR
EXPENSE CAUSED BY THE EQUIPMENT OR BY LESSEE'S LOSS OF USE
THEREOF FOR ANY REASON WHATSOEVER. So long and only so long as
an Event of Default shall not have occurred and be continuing,
and so long and only so long as the Equipment shall be subject to
this Lease and Lessee shall be entitled to possession of the
Equipment hereunder, Lessor authorizes Lessee, at Lessee's
expense, to assert for Lessor's account, all rights and powers of
Lessor under any manufacturer's, vendor's or dealer's warranty on
the Equipment or any part thereof and Lessor will cooperate with
Lessee in connection with such assertion to the extent deemed
reasonably necessary by Lessee; provided, however, that Lessee
shall indemnify, protect, save, defend and hold harmless Lessor
from and against any and all claims, and all costs, expenses,
damages, losses and liabilities incurred or suffered by Lessor in
connection therewith, as a result of, or incident to, any action
by Lessee pursuant to the foregoing authorization.
21. Lessee's Representations and Warranties. Lessee hereby
represents and warrants that (a) Lessee is a corporation duly
organized, validly existing and in good standing under the laws
of its state of incorporation set forth above, and is qualified
to do business in, and is in good standing in, each state or
other jurisdiction in which the nature of its business makes such
qualification necessary, or where the failure to so qualify would
have a material adverse effect on such business (including each
state or other jurisdiction in which the Equipment or any part
thereof will be located); (b) Lessee has the corporate power and
authority to execute and perform this Lease and to lease the
Equipment hereunder, and has duly authorized the execution,
delivery and performance of this Lease; (c) the leasing of the
Equipment from Lessor by Lessee, the execution and delivery of
this Lease, each Lease Supplement, and other related instruments,
documents and agreements, and the compliance by the Lessee with
the terms hereof and thereof, and the payments and performance by
Lessee of all of its obligations hereunder and thereunder (i)
have been duly and legally authorized by appropriate corporate
action taken by Lessee, (ii) are not in contravention of, and
will not result in a violation or breach of, any of the terms of
Lessee's Certificate of Incorporation (or equivalent document),
its By-Laws, or of any provisions relating to shares of the
capital stock of Lessee, and (iii) will not violate or constitute
a breach of any provision of law, any order of any court or other
agency of government, or any indenture, agreement or other
instrument to which Lessee is a party, or by or under which
Lessee or any of Lessee's property is bound, or be in conflict
with, result in a breach of, or constitute (with due notice
and/or lapse of time) a default under any such indenture,
agreement or instrument, or result in the creation or imposition
of any Lien upon any of Lessee's property or assets; (d) this
Lease has been executed by the duly authorized officer or
officers of Lessee and delivered to Lessor and constitutes, and
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when executed by the duly authorized officer or officers of
Lessee and delivered to Lessor each Lease Supplement and related
instruments, documents and agreements with respect to each Item
of Equipment will constitute, the legal, valid and binding
obligations of Lessee, enforceable in accordance with their
terms, subject to limitations imposed upon such enforceability by
bankruptcy, insolvency, reorganization, moratorium or other laws
of general applicability relating to or affecting creditors'
rights; (e) neither the execution and delivery of this Lease or
any Lease Supplement by Lessee, nor the payment and performance
by Lessee of all of its obligations hereunder and thereunder,
requires the consent or approval of, the giving of notice to, or
the registration, filing or recording with, or the taking of any
other action in respect of, any Federal, state, local or foreign
government or governmental authority or agency or any other
Person; (f) no mortgage, deed of trust, or other Lien which now
covers or affects, or which may hereafter cover or affect, any
property or interest therein of Lessee, now attaches or hereafter
will attach to the Equipment or any Item of the Equipment, the
proceeds thereof or this Lease, or in any manner affects or will
affect adversely Lessor's rights and security interest therein;
(g) there is no litigation or other proceeding now pending or, to
the best of Lessee's knowledge, threatened, against or affecting
the Lessee, in any court or before any regulatory commission,
board or other administrative governmental agency which would
directly or indirectly adversely affect or impair the title of
Lessor to the Equipment, or which, if decided adversely to
Lessee, would materially adversely affect the business operations
or financial condition of Lessee; and (h) all balance sheets,
statements of profit and loss and other financial data that have
been delivered to Lessor with respect to Lessee (i) are complete
and correct in all material respects, (ii) accurately present the
financial condition of Lessee on the dates for which, and the
results of its operations for the periods for which, the same
have been furnished, and (iii) have been prepared in accordance
with generally accepted accounting principles consistently
followed throughout the periods covered thereby; and there has
been no material adverse change in the condition of Lessee,
financial or otherwise, since the date of the most recent
financial statements delivered to Lessor with respect to Lessee,
other than as disclosed to Lessor by Lessee and (i) Lessee holds
all licenses, certificates and permits (including any applicable
environmental permits) from governmental authorities necessary to
use and operate the Equipment in accordance with the provisions
of this Lease.
22. Events of Default. Any of the following events shall
constitute an Event of Default:
(a) Lessee shall fail to make any payment of Interim Rent
or Basic Rent or any Supplemental Payment within five (5)
business days after the same is due and payable; or
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(b) Lessee shall fail to observe or perform any of the
covenants, agreements or obligations of Lessee set forth in
Sections 6, 14(a), 17, 28 or 29 hereof; or
(c) Lessee shall fail to perform or observe any other
covenant, condition, or agreement to be performed or observed by
it under this Lease, or in any agreement or certificate furnished
to Lessor or any Assignee in connection herewith, and such
failure shall continue unremedied for thirty (30) days after
written notice to Lessee specifying such failure and demanding
the same to be remedied; or
(d) Lessee (or any Guarantor) shall be in default (i) under
any lease, loan agreement or other agreement, instrument or
document heretofore, now or hereafter entered into between Lessee
(or any Guarantor) and Lessor, or between Lessee (or any
Guarantor) and any parent, subsidiary or affiliate of Lessor, and
such default shall have been declared by the party entitled to
declare the same, or (ii) under any promissory note heretofore,
now or hereafter executed by Lessee (or any Guarantor) and
delivered to any party referred to in clause (i) above evidencing
a loan made by any such party to Lessee (or any Guarantor); or
any obligation of Lessee (or of any Guarantor) to any Person
(other than Lessor, or any parent, subsidiary or affiliate of
Lessor, and other than any Guarantor) in excess of $5,000,000
relating to the payment of borrowed money or the payment of rent
or hire under any lease agreement, shall be actually accelerated
prior to the maturity thereof or result in cancellation or
termination of any such lease, by reason of a default in payment
or performance by Lessee (excluding any such default which is
being contested in good faith by Lessee (or any Guarantor) by
appropriate proceedings and the liability for which has not been
reduced to judgment); or an attachment or other Lien shall be
filed or levied against a material part of the property of Lessee
(or any Guarantor) in the aggregate and such judgment shall
continue unstayed and in effect, or such attachment or Lien shall
continue undischarged or unbonded, for a period of 45 days; or
(e) Lessee (or any Guarantor) shall become insolvent or
make an assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver; or a trustee or a receiver
shall be appointed for Lessee (or for any Guarantor) or for a
substantial part of its property without its consent and shall
not be dismissed for a period of 90 days; or any petition for the
relief, reorganization or arrangement of Lessee (or any
Guarantor), or any other petition in bankruptcy or for the
liquidation, insolvency or dissolution of Lessee (or any
Guarantor), shall be filed by or against Lessee (or any
Guarantor) and, if filed against Lessee (or any Guarantor), shall
be consented to or be pending and not dismissed for a period of
60 days, or an order for relief under any bankruptcy or
insolvency law shall be entered by any court or governmental
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authority of competent jurisdiction with respect to Lessee (or
any Guarantor); or any execution or writ or process shall be
issued under any action or proceeding against Lessee whereby any
of the Equipment may be taken or restrained; or Lessee's (or any
Guarantor's) corporate existence shall cease; or Lessee shall
(whether in one transaction or a series of transactions), without
Lessor's prior written consent, sell, transfer, dispose of,
pledge or otherwise encumber, all or substantially all of its
assets or property, or consolidate or merge with any other
entity, or become the subject of, or engage in, a leveraged
buy-out or any other form of corporate reorganization such that
Lessee or any surviving corporation of Lessee shall have a
Tangible Net Worth of less than $75,000,000; or
(f) any representation, warranty, statement or
certification made by Lessee under this Lease or in any Lease
Supplement or in any document or certificate furnished Lessor or
any Assignee in connection herewith or pursuant hereto (or made
by any Guarantor under any Guaranty or other document or
certificate furnished to Lessor or any Assignee by any
Guarantor), shall prove to be untrue or incorrect in any material
respect when made, or shall be breached.
As used in this Section 22, "Tangible Net Worth" means the
total of the par value of common stock and any class or series of
preferred stock (after deduction for treasury stock), additional
paid-in capital, general contingency reserves and retained
earnings or deficit of Lessee, determined in accordance with
generally accepted accounting principles, minus the following
items (without duplication of deductions), if any, appearing on
the balance sheet of Lessee: (i) the book value of all assets
(including, without limitation, goodwill) which would be treated
as intangibles under generally accepted accounting principles;
and (ii) any write-up in the book amount of any existing asset
resulting from a re-evaluation thereof from the book amount
entered upon acquisition in excess of that permitted under
generally accepted accounting principles.
23. Remedies Upon Default. Upon the occurrence of any
Event of Default and at any time thereafter so long as the same
shall be continuing, Lessor may exercise one or more of the
following remedies as Lessor in its sole discretion shall elect:
(a) Lessor may terminate or cancel this Lease, without
prejudice to any other remedies of Lessor hereunder, with respect
to all or any Item of Equipment, and whether or not this Lease
has been so terminated or cancelled, may enter the premises of
Lessee or any other party to take immediate possession of the
Equipment and remove all or any Item of Equipment by summary
proceedings or otherwise, or may cause Lessee, at Lessee's
expense, to store, maintain, surrender and deliver possession of
the Equipment or such Item in the same manner as provided in
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Section 6 hereof, all without liability to Lessor for or by
reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or
otherwise;
(b) Lessor may hold, keep idle or lease to others the
Equipment or any Item of Equipment, as Lessor in its sole
discretion may determine, free and clear of any rights of Lessee
and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto,
except that Lessee's obligation to pay Basic Rent for any Rental
Periods commencing after Lessee shall have been deprived of
possession pursuant to this Section 23 shall be reduced by the
net proceeds, if any, received by Lessor from leasing the
Equipment or such Item to any Person other than Lessee for the
same Rental Periods or any portion thereof;
(c) Lessor may sell the Equipment or any Item of Equipment
at public or private sale as Lessor may determine, free and clear
of any rights of Lessee, and Lessee shall pay to Lessor, as
liquidated damages for loss of a bargain and not as a penalty (in
lieu of the Basic Rent due for the Equipment or Item(s) so sold
for any Rental Period commencing after the date on which such
sale occurs), the sum of (i) all unpaid Interim Rent and Basic
Rent payable for each Item of Equipment for all Rental Periods
through the date on which such sale occurs, plus (ii) an amount
equal to the excess, if any, of (x) the Casualty Loss Value of
the Equipment or Item(s) so sold, computed as of the Rent Payment
Date coincident with or next preceding the date of such sale,
over (y) the net proceeds of such sale, plus interest at the rate
specified in Section 25 hereof on the amount of such excess from
the Rent Payment Date as of which such Casualty Loss Value is
computed until the date of actual payment, plus (iii) all unpaid
Supplemental Payments due with respect to each Item of Equipment
so sold;
(d) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under
subsection (a) or (b) above with respect to any Item(s) of
Equipment, Lessor, by written notice to Lessee specifying a
payment date, may demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor, on the payment date specified in such
notice, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Basic Rent due for any Item(s) of
Equipment for any Rental Period commencing after the payment date
specified in such notice and in lieu of the exercise by Lessor of
its remedies under subsection (b) above in the case of a re-lease
of such Item(s) or under subsection (c) above with respect to a
sale of such Item(s)), the sum of (i) all unpaid Interim Rent and
Basic Rent payable for such Item(s) for all Rental Periods
through the payment date specified in such notice, plus (ii) all
unpaid Supplemental Payments due with respect to such Item(s) as
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of the payment date specified in such notice, plus (iii) an
amount, with respect to each such Item, equal to the Casualty
Loss Value of such Item(s) computed as of the Rent Payment Date
coincident with or next preceding the payment date specified in
such notice; provided, however, that with respect to any such
Item(s) returned to or repossessed by Lessor, the amount
recoverable by Lessor pursuant to the foregoing shall be reduced
(but not below zero) by an amount equal to the fair market sales
value of such Item(s) as of the date on which Lessor has obtained
possession of such Item(s); and
(e) Lessor may exercise any other right or remedy which may
be available to it under applicable law or proceed by appropriate
court action to enforce the terms hereof or to recover damages
for the breach hereof or to rescind this Lease.
In addition, Lessee shall be liable for all reasonable costs
and expenses, including attorney's fees, incurred by Lessor or
any Assignee by reason of the occurrence of any Event of Default
or the exercise of Lessor's remedies with respect thereto,
including all costs and expenses incurred in connection with the
return of the Equipment subject to the distance requirements of
and otherwise, in accordance with Section 6 hereof or in placing
the Equipment in the condition required by said Section. For the
purpose of subsection (d) above, the "fair market sales value" of
any Item of Equipment shall mean such value as has been
determined by an independent nationally recognized qualified
appraiser selected by Lessor. Except as otherwise expressly
provided above, no remedy referred to in this Section 23 is
intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such
remedies shall not constitute the exclusive election of such
remedies and shall not preclude the simultaneous or later
exercise by Lessor of any or all of such other remedies. No
express or implied waiver by Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default. To the extent permitted by
applicable law, Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise which may require Lessor to
sell, lease or otherwise use the Equipment in mitigation of
Lessor's damages as set forth in this Section or which may
otherwise limit or modify any of Lessor's rights and remedies in
this Section 23.
24. Lessor's Right to Perform for Lessee. If Lessee fails
to make any Supplemental Payment required to be made by it
hereunder or fails to perform or comply with any of its
agreements contained herein, Lessor may itself, after notice to
Lessee, make such payment or perform or comply with such
agreement, and the amount of such payment and the amount of the
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reasonable expenses of Lessor incurred in connection with such
payment or the performance of or compliance with such agreement,
as the case may be, together with interest thereon at the rate
specified in Section 25 hereof, shall, if not paid by Lessee to
Lessor on demand, be deemed a Supplemental Payment hereunder;
provided, however, that no such payment, performance or
compliance by Lessor shall be deemed to cure any Event of Default
hereunder.
25. Late Charges. Lessee shall pay to Lessor, upon demand,
to the extent permitted by applicable law, interest on any
installment of Basic Rent or Interim Rent not paid when due, and
on any Supplemental Payment or other amount payable under this
Lease which is not paid when due, for any period for which any of
the same is overdue (without regard to any grace period) at a
rate equal to the higher of (a) 9.20 percent per annum, or (b)
the Prime Rate as announced by Chase Manhattan Bank in New York.
26. Further Assurances. Lessee will promptly and duly
execute and deliver to Lessor and any Assignee such other
documents and assurances, including, without limitation, such
amendments to this Lease as may be reasonably required by Lessor
and by any Assignee, and Uniform Commercial Code financing
statements and continuation statements, and will take such
further action as Lessor or any Assignee may from time to time
reasonably request in order to carry out more effectively the
intent and purposes of this Lease and to establish and protect
the rights and remedies created or intended to be created in
favor of Lessor and of any Assignee and their respective rights,
title and interests in and to the Equipment.
27. Notices. All notices provided for or required under
the terms and provisions hereof shall be in writing, and any such
notice shall be deemed given when personally delivered or when
deposited in the United States mails, with proper postage
prepaid, for first class certified mail, return receipt
requested, addressed (i) if to Lessor or Lessee, at their
respective addresses as set forth herein or at such other address
as either of them shall, from time to time, designate in writing
to the other, and (ii) if to any Assignee, to the address of such
Assignee as such Assignee shall designate in writing to Lessor
and Lessee.
28. Lessee's Renewal and Purchase Options; Third Party
Sale.
(a) Lessee's Renewal Option. If (i) no Event of Default
shall have occurred and be continuing and (ii) this Lease shall
not have been earlier terminated, Lessee shall be entitled, at
its option, to renew this Lease with respect to all, but not less
than all, Items of Equipment then subject to this Lease for the
Renewal Term(s) specified on the Related Exhibit A for such Item.
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The first Renewal Term with respect to each such Item of
Equipment will commence at the expiration of the Basic Term of
such Item, and each succeeding Renewal Term will commence at the
expiration of the next preceding Renewal Term. All of the
provisions of this Lease, including the Basic Rent Percentage,
shall be applicable during each Renewal Term for each such Item
of Equipment, except that Basic Rent during each Renewal Term
shall be payable at the times and on the Rent Payment Dates set
forth on said Related Exhibit A. If Lessee intends not to
exercise said renewal option with respect to any of said Renewal
Terms, Lessee shall give written notice to Lessor to such effect
at least one hundred twenty (120) days prior to the expiration of
the Basic Term of the Item(s) of Equipment whose Basic Term first
expires hereunder, in the case of the first Renewal Term, and at
least one hundred twenty (120) days prior to the expiration of
the then current Renewal Term of the Item(s) of Equipment whose
Basic Term first expires hereunder, in the case of the then next
succeeding Renewal Term. If Lessee fails to give such written
notice to Lessor with respect to any of said Renewal Terms, it
shall be conclusively presumed that Lessee has elected to
exercise said renewal option with respect to said Renewal Term.
In the event Lessee elects not to exercise said renewal option
(unless Lessor has otherwise agreed in writing or Lessee has
exercised its purchase option under Section 28(b) hereof) each
such Item of Equipment shall be returned to Lessor in accordance
with the provisions of Section 6(a) hereof (unless delivered to a
bidder in accordance with Section 28(c) hereof) and until each
such Item has been so returned or delivered Lessee shall continue
to pay Lessor the Basic Rent for each such Item as specified in
Section 6(b) hereof.
(b) Lessee's Purchase Option. If (i) no Event of Default
shall have occurred and be continuing, and (ii) this Lease shall
not have been earlier terminated, Lessee shall be entitled, at
its option, upon written notice to Lessor, as hereinafter
provided, to purchase all, but not less than all, Items of
Equipment then subject to this Lease, on the Termination Date for
each such Item of Equipment, for an amount (the "Purchase Option
Amount"), with respect to each Item of Equipment, payable in
immediately available funds, equal to the sum of (v) the
Estimated Residual Value of such Item of Equipment applicable to
the Basic Term or Renewal Term thereof then ending, plus (w) the
Basic Rent due and payable for such Item of Equipment on the
Termination Date, if Basic Rent for such Item is payable in
arrears, plus (x) any applicable sales, excise or other taxes
imposed as a result of such sale (other than gross or net income
taxes attributable to such sale), plus (y) any Supplemental
Payments then due and owing to Lessor hereunder, plus, in the
event that Lessee exercises its purchase option hereunder prior
to the end of the Maximum Term, (z) the Reinvestment Premium.
Lessor's sale of each Item of Equipment shall be on an as-is,
where-is basis, without any representation or warranty by, or
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recourse to, Lessor. If Lessee intends to exercise said purchase
option, Lessee shall give written notice to Lessor to such effect
at least one hundred twenty (120) days prior to the expiration of
the Basic Term of the Item(s) of Equipment whose Basic Term first
expires hereunder, or, if Lessee has renewed this Lease pursuant
to Section 28(a) hereof, then at least one hundred twenty (120)
days prior to the expiration of the then current Renewal Term of
the Item(s) of Equipment whose Basic Term first expires
hereunder. If Lessee gives such written notice to Lessor same
shall constitute a binding obligation of Lessee to purchase all
of such Items of Equipment and to pay Lessor the Purchase Option
Amount on the Termination Date thereof.
(c) Third Party Sale of Equipment.
(i) Remarketing Obligations. In the event Lessee does
not exercise either its option to renew this Lease or to purchase
the Equipment pursuant to this Section, then Lessee shall have
the obligation during the last one hundred twenty (120) days of
the Basic Term, or the then current Renewal Term, if applicable
(the "Remarketing Period"), to obtain bona fide bids for not less
than all Items of Equipment then subject to this Lease from
prospective purchasers who are financially capable of purchasing
such Items of Equipment for cash on an as-is, where-is basis,
without recourse or warranty. All bids received by Lessee prior
to the end of the Basic Term, or Renewal Term if applicable, of
such Item(s) of Equipment shall be immediately certified to
Lessor in writing, setting forth the amount of such bid and the
name and address of the person or entity submitting such bid.
Notwithstanding the foregoing, Lessor shall have the right, but
not the obligation, to seek bids for the Equipment during the
Remarketing Period.
(ii) Sale of Equipment to Third Party Buyer. On the
Termination Date, provided that all the conditions hereof have
been met, Lessor shall sell (or cause to be sold) all Items of
Equipment then subject to this Lease, for cash to the bidder, if
any, who shall have submitted the highest cash bid during the
Remarketing Period on an as-is, where-is basis and without
recourse or warranty, and upon receipt by Lessor of the sales
price Lessor shall instruct Lessee to deliver and Lessee shall
deliver such Item(s) of Equipment to such bidder in accordance
with Section 6 hereof; provided, that (x) any such sale to a
third party shall be consummated, and the sales price for such
Item shall be paid to Lessor in immediately available funds, on
or before the Termination Date; and (y) Lessor shall not be
obligated to sell such Equipment (I) if the Net Proceeds of Sale
of such Item(s) is less than the aggregate Maximum Lessor Risk
Amount applicable to such Item(s) as of the Termination Date or
(II) if Lessor has not received the amounts, if any, payable by
Lessee pursuant to Section 29(a) and, if applicable, Section
29(c).
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29. End of Term Rental Adjustment.
(a) Third Party Sale of Equipment. This Section 29(a)
shall apply only if, with respect to any Item(s) of Equipment, a
sale of such Item(s) to a third party pursuant to Section 28(c)
hereof has been consummated on the Termination Date. If the Net
Proceeds of Sale of such Item(s) is less than the aggregate
Estimated Residual Value of such Item(s) as of such Termination
Date, Lessee shall, on the Termination Date, pay to Lessor as an
End of Term Rental Adjustment, in immediately available funds, an
amount equal to such deficiency (a "Deficiency") as an adjustment
to the Rent payable under this Lease for such Item, plus the
Basic Rent due and payable for such Item(s) of Equipment on the
Termination Date, if Basic Rent for such Item(s) is payable in
arrears, plus any Supplemental Payments then due and owing to
Lessor hereunder; provided, however, that if no Event of Default
or event which, with notice or passage of time or both would
constitute an Event of Default, shall have occurred and be
continuing hereunder, the amount of the Deficiency payable by
Lessee with respect to such Item(s) shall not exceed the
aggregate Maximum Lessee Risk Amount then applicable to such
Item(s). If the Net Proceeds of Sale of such Item(s) of
Equipment exceeds the aggregate Estimated Residual Value of such
Item(s) and if no Event of Default or event which, with notice or
passage of time or both would constitute an Event of Default,
shall have occurred and be continuing hereunder and Lessee shall
have paid Lessor on or before the Termination Date the Basic Rent
due and payable for such Item(s) of Equipment on the Termination
Date, if Basic Rent for such Item(s) is payable in arrears, plus
all Supplemental Payments then due and owing with respect to such
Item(s), plus any amounts due pursuant to Section 29(c) hereof,
Lessor shall pay to Lessee an amount equal to such excess as an
adjustment to the Rent payable under this Lease for such Item(s).
(b) Lessee Payment. If a sale of all Items of Equipment
then subject to this Lease either to the Lessee pursuant to
Section 28(b) hereof or to a third party pursuant to Section
28(c) hereof has not been consummated on the Termination Date
with respect thereto for any reason, then the Lessee shall, on
the Termination Date of such Items, pay to Lessor as an End of
Term Rental Adjustment, in immediately available funds, as an
adjustment to the Rent payable under the Lease for such Items, an
amount equal to (i) the Maximum Lessee Risk Amount of all of such
Items, if on the Termination Date no Event of Default or event
which, with notice or passage of time or both would constitute an
Event of Default, shall have occurred and be continuing
hereunder, or (ii) the Estimated Residual Value of all of such
Items, if on the Termination Date an Event of Default or event
which, with notice or passage of time or both would constitute an
Event of Default, shall have occurred and be continuing
hereunder, plus, in either case, the Basic Rent due and payable
for such Item(s) of Equipment on the Termination Date, if Basic
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Rent for such Item(s) is payable in arrears, plus all
Supplemental Payments then due and owing with respect to such
Item(s). Upon delivery of the payment set forth in (ii) above,
Lessor shall deliver title to the Equipment to Lessee. Lessee
shall remain liable for the payment of, and upon the consummation
by Lessor of the sale of any Item(s) of Equipment after the
Termination Date thereof, Lessee shall pay, or reimburse Lessor
for the payment of, all applicable sales, excise or other taxes
imposed as a result of such sale, other than gross or net income
taxes attributable to such sale, and such obligation shall
survive the termination of this Lease.
(c) Reinvestment Premium. In the event a Termination Date
of any Item of Equipment occurs prior to the last day of the
Maximum Term hereof relating to such Item, Lessee shall pay to
Lessor on the Termination Date of such Item in immediately
available funds, in addition to any other obligations hereunder,
the Reinvestment Premium relating to such Item.
(d) Certain Definitions.
(i) "End of Term Rental Adjustment" means the amounts
payable as adjustments to Rent pursuant to Section 29(a) or, as
applicable, 29(b).
(ii) "Net Proceeds of Sale" means with respect to each
Item of Equipment sold by Lessor to a third party pursuant to
Section 28(c), the net amount of the proceeds of sale of such
Item, after deducting from the gross proceeds of such sale (i)
all sales taxes and other taxes (excluding income taxes on or
measured by Lessor's income) as may be applicable to the sale or
transfer of such Item, (ii) all reasonable fees, costs and
expenses of such sale incurred by Lessor and (iii) any other
amounts for which, if not paid, Lessor would be liable or which,
if not paid, would constitute a Lien on such Item.
(e) Time of the Essence. The provisions of Sections 28 and
29 are of the essence of this Lease, and time is of the essence
for any payment and performance of the obligations of the Lessee
set forth therein.
30. Financial Information. Lessee agrees to furnish Lessor
(a) as soon as available, and in any event within 120 days after
the last day of each fiscal year of Lessee, a copy of the
consolidated balance sheet of Lessee and its consolidated
subsidiaries as of the end of such fiscal year, and related
consolidated statements of income and shareholders' equity of
Lessee and its consolidated subsidiaries for such fiscal year,
audited by an independent certified public accounting firm of
recognized standing, each on a comparative basis with
corresponding statements for the prior fiscal year, and a copy of
Lessee's form 10-K, if any, filed with the Securities and
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Exchange Commission for such fiscal year; (b) within 45 days
after the last day of each fiscal quarter of Lessee (except the
last such fiscal quarter), a copy of the balance sheet as of the
end of such quarter, and statement of income and shareholders'
equity covering the fiscal year to date of Lessee and its
consolidated subsidiaries, each on a comparative basis with the
corresponding period of the prior year, all in reasonable detail
and certified by the treasurer or principal financial officer of
Lessee, together with a copy of Lessee's form 10-Q, if any, filed
with the Securities and Exchange Commission for such quarterly
period; (c) contemporaneously with its transmittal to each
stockholder of Lessee and to the Securities and Exchange
Commission, all such other financial statements and reports as
Lessee shall send to its stockholders and to the Securities and
Exchange Commission; (d) as soon as available to Lessee, the
notice of any adjustment resulting from any audit of the books
and/or records of Lessee by any taxing authority having
jurisdiction over Lessee in the event that such adjustment
involves an amount greater than or equal to $10,000,000; and (e)
such additional financial information as Lessor may reasonably
request concerning Lessee.
31. Expenses. Lessee agrees, whether or not the
transactions contemplated by this Lease are consummated, to pay
(or reimburse Lessor for the payment of) fees and expenses
relating to the titling and registration of any Item(s) of
Equipment incurred by or on behalf of Lessor in connection with
the negotiation and documentation of this Lease, any Guaranty and
any other related instruments and documents.
32. Owner for Income Tax Purposes. Lessor agrees that
Lessee shall be deemed the owner of the Equipment for federal,
state and local income tax purposes.
33. No Reliance. Lessee hereby acknowledges that in
negotiating the terms of this Lease and all other related
agreements and documents, it has sought, obtained and relied upon
such accounting, actuarial, tax and legal advice from its own or
other independent sources as it has deemed necessary.
34. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating or diminishing Lessor's
rights under the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, Lessee
hereby waives any provision of law which renders any provision of
this Lease prohibited or unenforceable in any respect. No term
or provision of this Lease may be amended, altered, waived,
discharged or terminated orally, but may be amended, altered,
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<PAGE>
waived, discharged or terminated only by an instrument in writing
signed by a duly authorized officer of the party against which
the enforcement of the amendment, alteration, waiver, discharge
or termination is sought. Lessee's Initial's. A waiver on
any one occasion shall not be construed as a waiver on a future
occasion. All of the covenants, conditions and obligations
contained in this Lease shall be binding upon and shall inure to
the benefit of the respective successors and assigns of Lessor
and (subject to the restrictions of Section 14(a) hereof) Lessee.
If there is more than one Lessee named herein, the liability of
each Lessee shall be joint and several. This Lease, each Lease
Supplement and each related instrument, document, agreement and
certificate, collectively constitute the complete and exclusive
statement of the terms of the agreement between Lessor and Lessee
with respect to the acquisition and leasing of the Equipment, and
cancel and supersede any and all prior oral or written
understandings with respect thereto.
35. Venue; Governing Law. Lessee agrees that at Lessor's
sole election any suit, action or proceeding brought by Lessor
against Lessee in connection with or arising out of this Lease
may be brought in any federal or state court in the Commonwealth
of Massachusetts, and Lessee waives personal service of all
process upon it and consents that service of process may be made
by telecopy, mail or messenger directed to it at its address set
forth above and that service so made shall be deemed to be
completed upon the earlier of actual receipt or five (5) days
after the same shall have been posted to Lessee's said address.
Nothing herein contained shall affect Lessor's right to serve
legal process in any other manner permitted by law or to bring
any suit, action or proceeding against Lessee or its property in
the courts of any other jurisdiction. This Lease shall in all
respects be governed by, and constructed in accordance with, the
laws of the Commonwealth of Massachusetts, including all matters
of construction, validity and performance.
36. Non-Utilization Fee. In the event that the Acquisition
Cost of all Equipment purchased by Lessor on or prior to December
31, 1995 is less than Fifteen Million Dollars ($15,000,000),
Lessee shall pay to Lessor, upon receipt of an invoice therefor
from Lessor, a non-utilization fee in the amount of Twenty-Five
Thousand Dollars ($25,000).
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Lease to be duly executed by their duly authorized
representatives as of the date first above written.
BOT FINANCIAL CORPORATION
Attest: (Lessor)
By:
Assistant Clerk Title:
(Corporate Seal)
LADD FURNITURE, INC.
Attest: (Lessee)
By:
Secretary Title:
(Corporate Seal)
COUNTERPART NO. OF SERIALLY NUMBERED MANUALLY EXECUTED
COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS DOCUMENT
CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO
SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE
TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART
NO. 1.
EXHIBIT 10.2
EQUIPMENT LEASING AGREEMENT
EQUIPMENT LEASING AGREEMENT dated as of December 15, 1994
(herein, as amended and supplemented from time to time, called
"this Lease"), between UNIONBANC LEASING CORPORATION, a
California corporation (herein called "Lessor"), having a
principal place of business at 125 Summer Street, Boston,
Massachusetts 02110, and LADD FURNITURE, INC., a North Carolina
corporation (herein called "Lessee"), having its principal place
of business at One Plaza Center, High Point, North Carolina
27261.
In consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. Definitions. Unless the context otherwise requires,
the following terms shall have the following meanings for all
purposes of this Lease and shall be equally applicable to both
the singular and the plural forms of the terms herein defined:
"Acceptance Date" for each Item of Equipment means the
date on which Lessee has unconditionally accepted such Item for
lease hereunder, as evidenced by Lessee's execution and delivery
of a Lease Supplement for such Item dated such date.
"Acquisition Cost" of each Item of Equipment means an
amount equal to the sum of (i) the total cost paid by Lessor for
such Item, plus (ii) all excise, sales and use taxes paid by
Lessor on or with respect to the acquisition of such Item, plus
(iii) all costs and expenses approved and paid by Lessor in
connection with the delivery and installation of such Item.
"Acquisition Period" means the period specified as such
on each consecutively numbered Exhibit A now or hereafter
attached hereto and made a part hereof.
"Assignee" shall have the meaning given to such term in
Section 14(b) hereof.
"Basic Rent" means the rent payable for each Item of
Equipment during (i) the Basic Term thereof pursuant to Section
7(b) hereof, and (ii) each Renewal Term thereof pursuant to
Section 28(a) hereof.
"Basic Term" for each Item of Equipment means the
period consisting of the number of months set forth for the type
of Equipment to which such Item relates on the Related Exhibit A
for such Item.
<PAGE>
"Basic Term Commencement Date" for each Item of
Equipment means the date specified as such on the Related Exhibit
A for such Item.
"Business Day" means any day other than a day on which
banking institutions in the State of North Carolina are
authorized by law to close.
"Casualty Loss Value" of each Item of Equipment shall
have the meaning given to such term in Section 16(b) hereof.
"End of Term Rental Adjustment" shall have the meaning
given to such term in Section 29(d) hereof.
"Equipment" means the equipment of the type(s)
described on each consecutively numbered Exhibit A now or
hereafter attached hereto and made a part hereof and leased or to
be leased by Lessor to Lessee hereunder or ordered by Lessor for
lease to Lessee hereunder, together with any and all accessions,
additions, improvements and replacements from time to time
incorporated or installed therein which are the property of
Lessor pursuant to the terms of this Lease.
"Estimated Residual Value" for any Item of Equipment
shall mean an amount obtained by multiplying (i) the percentage
set forth in the Related Exhibit A for such Item under the
caption "Estimated Residual Value Percentage" applicable to the
Basic Term or Renewal Term then ending, by (ii) the Acquisition
Cost for such Item.
"Event of Default" means any of the events referred to
in Section 22 hereof.
"Event of Loss" with respect to any Item of Equipment
means (i) the loss of such Item of Equipment or any substantial
part thereof, or (ii) the theft or disappearance of such Item of
Equipment for a period in excess of 45 days during the Term, or
existing at the expiration or earlier termination of the Term, or
(iii) the destruction, damage beyond repair, or rendition of such
Item of Equipment or any substantial part thereof permanently
unfit for normal use for any reason whatsoever, or (iv) the
condemnation, confiscation, seizure, or requisition of use or
title to such Item of Equipment or any substantial part thereof
by any governmental authority under the power of eminent domain
or otherwise.
"Guarantor" means any guarantor of Lessee's obligations
hereunder.
"Guaranty" means any guaranty of Lessee's obligations
hereunder executed by Guarantor.
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"Interim Rent" means the rent payable for each Item of
Equipment for the Interim Term thereof pursuant to Section 7(a)
hereof.
"Interim Term" for each Item of Equipment means the
period commencing on the Acceptance Date for such Item (unless
the Acceptance Date is the Basic Term Commencement Date, in which
case there shall be no Interim Term for such Item) and ending on
the date immediately prior to the Basic Term Commencement Date.
"Item of Equipment" or "Item" means a single unitary
item of the Equipment.
"Lease Supplement" means a Lease Supplement
substantially in the form attached hereto as Exhibit B, to be
executed by Lessor and Lessee with respect to an Item or Items of
Equipment as provided in Section 4 hereof, evidencing that such
Item or Items are leased hereunder.
"Lien" means liens, mortgages, encumbrances, pledges,
charges and security interests of any kind.
"Maximum Acquisition Cost" means the amount specified
as such on each consecutively numbered Exhibit A now or hereafter
attached hereto and made a part hereof.
"Maximum Lessee Risk Amount" for any Item of Equipment
shall mean the percentage set forth in the Related Exhibit A for
such Item under the caption "Maximum Lessee Risk Percentage"
applicable to the Basic Term or Renewal Term then ending,
multiplied by the Acquisition Cost for such Item.
"Maximum Lessor Risk Amount" for any Item of Equipment
shall mean the percentage set forth in the Related Exhibit A for
such Item under the caption "Maximum Lessor Risk Percentage"
applicable to the Basic Term or Renewal Term then ending,
multiplied by the Acquisition Cost for such Item.
"Maximum Term" for each Item of Equipment shall mean
the maximum number of months, in aggregate, of the Basic Term and
all Renewal Terms of such Item of Equipment, as specified in the
Related Exhibit A applicable to such Item of Equipment.
"Net Proceeds of Sale" shall have the meaning given to
such term in Section 29(d) hereof.
"Person" means any individual, corporation,
partnership, joint venture, association, joint stock company,
trust, trustee(s) of a trust, unincorporated organization, or
government or governmental authority, agency or political
subdivision thereof.
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"Purchase Option Amount" shall have the meaning given
to such term in Section 28(b) hereof.
"Reinvestment Premium" for any Item of Equipment, as of
any determination date, shall mean the excess, if any, of (a) the
net present value of the sum of (i) all payments of Rent
remaining to be paid after such determination date through the
expiration of the Maximum Term of such Item, that would have been
payable for such Item following such determination date if this
Lease had been renewed through and inclusive of the expiration of
the Maximum Term of such Item, and (ii) the Estimated Residual
Value applicable to such Item at such expiration of the Maximum
Term (together, the sum of (i) and (ii) being referred to as the
"Discounted Payments"), each discounted at a rate equal to the
then current yield for direct obligations of the United States
Treasury having a maturity equal to the average life of the
Discounted Payments, over (b) the Estimated Residual Value
applicable to such Item at such time of determination.
"Related Exhibit A" means, with respect to an Item of
Equipment, the particular numbered Exhibit A now or hereafter
attached hereto and made a part hereof to which such Item relates
as specified in Section 4 hereof.
"Renewal Term" for each Item of Equipment means each
period following the end of the Basic Term for such Item with
respect to which Lessee has the option to renew this Lease
pursuant to Section 28(a) hereof.
"Rent" means Interim Rent and Basic Rent.
"Rent Payment Date" for each Item of Equipment means
(i) for the Basic Term thereof, each date on which a payment of
Basic Rent is due and payable for such Item pursuant to Section
7(b) hereof, (ii) for the Interim Term thereof (if any), the
Basic Term Commencement Date for such Item, and (iii) for each
Renewal Term thereof, each date on which a payment of Basic Rent
is due and payable for such Item as provided in Section 28(a)
hereof.
"Rental Period" for each Item of Equipment means (i)
for the Interim Term of such Item, the period from and inclusive
of the Acceptance Date for such Item to, but not inclusive of,
the Basic Term Commencement Date for such Item, (ii) for the
Basic Term of such Item, each period for which a payment of Basic
Rent is to be made for such Item during the Basic Term thereof as
set forth on the Related Exhibit A for such Item (opposite the
reference to Rental Periods for Basic Term), and (iii) for each
Renewal Term of such Item, each period for which a payment of
Basic Rent is to be made for such Item during such Renewal Term
as set forth on the Related Exhibit A for such Item (opposite the
reference to Rental Periods for Renewal Term).
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<PAGE>
"Supplemental Payments" means all amounts, liabilities
and obligations which Lessee assumes or agrees to pay hereunder
to Lessor or others, including payments of Casualty Loss Value,
indemnities, and any Reinvestment Premium that may become payable
by Lessee hereunder, but excluding Basic Rent and Interim Rent.
"Term" means the full term of the Lease with respect to
each Item of Equipment, including the Interim Term (if any), the
Basic Term, and each Renewal Term.
"Termination Date" for any Item of Equipment, means the
last day of the Basic Term of such Item, or if the Term of such
Item has been renewed pursuant to Section 28(a), the last day of
the Renewal Term of such Item.
"Termination Value" of each Item of Equipment as of any
Termination Value Payment Date means an amount determined by
multiplying the Acquisition Cost of such Item of Equipment by the
percentage set forth opposite such Termination Value Payment Date
on the Schedule of Termination Values attached to the Related
Exhibit A for such Item.
"Termination Value Payment Date" of each Item of
Equipment shall mean the Basic Term Commencement Date for such
Item and each monthly anniversary of the Basic Term Commencement
Date for such Item and shall be as set forth in the Schedule of
Termination Values attached to the Related Exhibit A for such
Item.
The words "this Lease", "herein", "hereunder", "hereof" or other
like words mean and include this Equipment Leasing Agreement,
each Related Exhibit A, each Lease Supplement, and each amendment
and supplement hereto and thereto.
2. Agreement for Lease of Equipment. Subject to, and upon
all of the terms and conditions of this Lease, Lessor hereby
agrees to lease to Lessee and Lessee hereby agrees to lease from
Lessor each Item of Equipment for the Term with respect to such
Item. Provided that no Event of Default has occurred and is
continuing hereunder, Lessor agrees that it shall not interfere
with Lessee's quiet enjoyment and use of any Item of Equipment
leased hereunder during the Term thereof.
3. Conditions Precedent. Lessor shall have no obligation
to purchase any Item of Equipment and to lease the same to Lessee
unless each of the following conditions are fulfilled to the
satisfaction of Lessor: (i) no event which is (or with notice or
lapse of time or both would become) an Event of Default has
occurred and is continuing, nor has any information come to
Lessor's attention from which Lessor could reasonably and in good
faith infer that such event might occur; (ii) no material adverse
change in the financial condition of Lessee (or of any Guarantor)
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<PAGE>
which, in Lessor's good faith opinion, would impair the ability
of Lessee to pay and perform its obligations under this Lease (or
of any Guarantor to pay and perform such obligations) has
occurred since the date specified as the Financial Condition
Reference Date on the Related Exhibit A for such Item; (iii) such
Item of Equipment is reasonably acceptable to Lessor, and is free
of all Liens, other than any Lien specifically excepted in
Section 15 hereof; (iv) the Acceptance Date for such Item of
Equipment is a date within the Acquisition Period specified on
the Related Exhibit A for such Item and Lessee has executed and
delivered to Lessor the Related Exhibit A for such Item; (v) the
Acquisition Cost of such Item of Equipment, when added to the
total Acquisition Cost of all Equipment of the type to which such
Item relates and which has been leased hereunder, or ordered by
Lessor for lease hereunder, will not be such an amount so as to
cause the Maximum Acquisition Cost specified on the Related
Exhibit A for such Item to be exceeded; (vi) Lessor has received
an invoice for such Item of Equipment from the seller thereof,
approved for payment by Lessee, showing Lessor as the purchaser
of such Item, or, if Lessee is the seller of such Item, a bill of
sale for such Item from Lessee to Lessor in form and substance
satisfactory to Lessor, together with evidence, satisfactory to
Lessor, within sixty (60) days following the Acceptance Date of
such Items, of Lessee's payment to the original seller of such
Items in an amount at least equal to ninety percent (90%) of the
Acquisition Cost of such Items, and a Lease Supplement for such
Item, duly executed by Lessee, and dated the Acceptance Date for
such Item; (vii) if such Item of Equipment is subject to motor
vehicle titling and registration laws, Lessor has received a copy
of the application for certificate of title therefor, as filed
with, and bearing the filing stamp of, the appropriate department
of motor vehicles or other appropriate state authority, and a
copy of the manufacturer's statement or certificate of origin
therefor, reflecting Lessor or its nominee as owner and whomever
Lessor shall have designated (if any) as first lienholder; and
(viii) Lessor shall have received such other documents, opinions,
certificates and waivers, in form and substance satisfactory to
Lessor, as Lessor may require.
4. Delivery, Acceptance and Leasing of Equipment. Lessor
shall not be liable to Lessee for any failure or delay in
obtaining any Item of Equipment or making delivery thereof.
Forthwith upon delivery of each Item of Equipment to Lessee,
Lessee will inspect such Item, and unless Lessee gives Lessor
prompt written notice of any defect in or other proper objection
to such Item, Lessee shall promptly upon completion of such
inspection execute and deliver to Lessor a Lease Supplement for
such Item, dated the Acceptance Date of such Item. The execution
by Lessor and Lessee of a Lease Supplement for an Item of
Equipment shall (a) evidence that such Item is leased under, and
is subject to all of the terms, provisions and conditions of,
this Lease, and (b) constitute Lessee's unconditional and
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irrevocable acceptance of such Item for all purposes of this
Lease. An Item of Equipment shall be conclusively deemed to
relate to the particular numbered Exhibit A now or hereafter
attached hereto and made a part hereof on which is set forth (i)
a description of such Item or the type of Equipment to which such
Item relates and (ii) the Acquisition Period within which the
Acceptance Date for such Item has occurred.
5. Term. The Interim Term (if any) for each Item of
Equipment shall commence on the Acceptance Date thereof, and,
unless sooner terminated pursuant to the provisions hereof, shall
end on the date immediately prior to the Basic Term Commencement
Date thereof. The Basic Term for each Item of Equipment shall
commence on the Basic Term Commencement Date thereof and, unless
this Lease is sooner terminated with respect to such Item (or all
Equipment) pursuant to the provisions hereof, shall end on the
date specified therefor in the Lease Supplement for such Item.
If not sooner terminated pursuant to the provisions hereof, the
Term for each Item of Equipment shall end on the last day of the
Basic Term thereof, or if this Lease is renewed pursuant to
Section 28(a) hereof, on the last day of the last Renewal Term
thereof.
6. Return of Equipment.
(a) Upon the expiration or earlier termination of the Term
with respect to each Item of Equipment (unless Lessee has
exercised its purchase option with respect thereto pursuant to
Section 28(b) hereof), Lessee will, at its expense, surrender and
deliver possession of each Item of Equipment to Lessor at a
location chosen by Lessor within seven hundred (700) miles of the
then location of such Item of Equipment. At the time of such
return to Lessor, each Item of Equipment (and each part or
component thereof) shall (i) be free and clear of all Liens,
other than any Lien granted or placed thereon by Lessor or any
Assignee, and (ii) be in compliance with the Return Condition
Requirements specified on the Related Exhibit A for such Item.
If any Item of Equipment is originally equipped with tires, such
Item shall, in addition to satisfying the requirements of the
preceding sentence, be returned with all tires installed thereon,
with each tire having at least fifty percent (50%) or more
average remaining tread for each Item of Equipment thereon.
(b) Until each such Item of Equipment has been returned to
Lessor in the condition and as otherwise provided in this Section
6, Lessee shall continue to pay Lessor, on the same dates on
which Basic Rent for such Item was payable during the Basic Term
thereof (or, if the Term of such Item has been renewed, the most
recent Renewal Term thereof), the same Basic Rent for such Item
that was payable on the last Rent Payment Date of the Basic Term
thereof, or if the Term of such Item has been renewed pursuant to
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Section 28(a), the same Basic Rent that was payable on the last
Rent Payment Date during the most recent Renewal Term.
(c) The provisions of this Section 6 are of the essence of
this Lease and upon application to any court of equity having
jurisdiction in the premises, Lessor shall be entitled to a
decree against Lessee requiring specific performance of the
covenants of Lessee set forth in this Section 6.
7. Rent.
(a) Interim Rent. Lessee hereby agrees to pay Lessor
Interim Rent for each Item of Equipment as to which there is an
Interim Term, payable on the Rent Payment Date of the Interim
Term for such Item, in the amount obtained by multiplying (i) the
Acquisition Cost of such Item by (ii) the percentage set forth
(opposite the Interim Rent Percentage reference) on the Related
Exhibit A for such Item, by (iii) the number of days from and
including the Acceptance Date for such Item through the end of
the Interim Term for such Item.
(b) Basic Rent. Lessee hereby agrees to pay Lessor Basic
Rent for each Item of Equipment during the Basic Term thereof at
the times and on the Rent Payment Dates set forth on the Related
Exhibit A for such Item and in an amount obtained by multiplying
(i) the Acquisition Cost of such Item by (ii) the percentage of
Acquisition Cost set forth (opposite the Basic Rent Percentage
reference) on such Related Exhibit A.
(c) Supplemental Payments. Lessee also agrees to pay to
Lessor, or to whomsoever shall be entitled thereto as expressly
provided herein, all Supplemental Payments, promptly as the same
shall become due and owing, and in the event of any failure on
the part of Lessee so to pay any such Supplemental Payment
hereunder Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the case
of nonpayment of Rent.
(d) Method of Payment. All payments of Rent and
Supplemental Payments required to be made by Lessee to Lessor
shall be made by check or in good funds. In the event of any
assignment to an Assignee pursuant to Section 14(b) hereof, all
payments which are assigned to such Assignee, whether Rent,
Supplemental Payments or otherwise, shall be paid in such manner
as shall be designated by Lessor or such Assignee. Time is of
the essence in connection with the payment of Rent and
Supplemental Payments.
8. Net Lease. This Lease is a net lease. Lessee
acknowledges and agrees that Lessee's obligations hereunder,
including, without limitation, its obligations to pay Rent for
all Equipment leased hereunder and to pay all Supplemental
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Payments payable hereunder, shall be unconditional and
irrevocable under any and all circumstances, shall not be subject
to cancellation, termination, modification or repudiation by
Lessee, and shall be paid and performed by Lessee without notice
or demand and without any abatement, reduction, diminution,
setoff, defense, counterclaim or recoupment whatsoever,
including, without limitation, any abatement, reduction,
diminution, setoff, defense, counterclaim or recoupment due or
alleged to be due to, or by reason of, any past, present or
future claims which Lessee may have against Lessor, any Assignee,
any manufacturer or supplier of the Equipment or any part or Item
thereof, or any other Person for any reason whatsoever or any
defect in the Equipment or any part or Item thereof, or the
condition, design, operation or fitness for use thereof, or any
damage to, or any loss or destruction of, the Equipment or any
part or Item thereof, any Liens or rights of others with respect
to the Equipment or any part or Item thereof, or any prohibition
or interruption of or other restriction against Lessee's use,
operation or possession of the Equipment or any part or Item
thereof, for any reason whatsoever, or any interference with such
use, operation or possession by any Person or entity, or any
default by Lessor in the performance of its obligations herein
contained, or any other indebtedness or liability, howsoever and
whenever arising, of Lessor, or of any Assignee, or of Lessee to
any other Person, or by reason of insolvency, bankruptcy or
similar proceedings by or against Lessor, any Assignee or Lessee,
or for any other reason whatsoever, whether similar or dissimilar
to any of the foregoing, any present or future law to the
contrary notwithstanding; it being the intention of the parties
hereto that all Rent and Supplemental Payments payable by Lessee
hereunder shall continue to be payable in all events and in the
manner and at the times herein provided, without notice or
demand, unless the obligation to pay the same shall be terminated
pursuant to the express provisions of this Lease. Lessee retains
its rights and remedies against Lessor or any Assignee for breach
of covenant, representation or warranty, negligence or wilful
malfeasance.
9. Grant of Security Interest; Equipment to be and Remain
Personal Property. This Lease is a lease intended as security.
Lessee hereby grants to Lessor a security interest in the
Equipment and all proceeds thereof as collateral security for the
payment and performance by Lessee of Lessee's obligations as
Lessee hereunder. It is the intention and understanding of both
Lessor and Lessee, and Lessee shall take all such actions as may
be required to assure, that the Equipment shall be and at all
times remain personal property, notwithstanding the manner in
which the Equipment may be attached or affixed to realty. Lessee
shall obtain and record such instruments and take such steps as
may be necessary to prevent any Person from acquiring any rights
in the Equipment by reason of the Equipment being claimed or
deemed to be real property. Lessee shall cause each Item of
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Equipment subject to motor vehicle titling and registration laws
to be titled in the name of Lessee, as owner, with Lessor to be
shown as sole lienholder, and shall cause all certificates of
title to be promptly furnished to Lessor.
10. Use of Equipment; Compliance with Laws. Lessee agrees
that the Equipment will be used and operated solely in the
conduct of its business and in compliance with any and all
insurance policy terms, conditions and provisions and with all
statutes, laws, ordinances, rules and regulations of any Federal,
state or local governmental body, agency or authority applicable
to the use and operation of the Equipment, including, without
limitation, environmental, noise and pollution laws (including
notifications and reports). Lessee shall procure and maintain in
effect all licenses, registrations, certificates, permits,
approvals and consents required by Federal, state or local laws
or by any governmental body, agency or authority in connection
with the ownership, delivery, installation, use and operation of
each Item of Equipment, including without limitation, those
required by environmental, noise and pollution laws (including
notifications and reports), and including, in the case of any
Item subject to motor vehicle titling and registration laws, all
titles, registrations, registration plates, permits, licenses,
and all renewals thereof. The Equipment will at all times be and
remain in the possession and control of Lessee. Lessee shall not
change the location of any Item of Equipment as specified in the
Lease Supplement with respect thereto without delivering prior
written notice to Lessor of the new location to which such Item
will be moved and receiving Lessor's prior written consent to
such move. The Equipment shall in no event be located outside of
the continental limits of the United States. Lessee shall use
and operate the Equipment or cause it to be used and operated
only by personnel authorized by Lessee, and Lessee shall use
every reasonable precaution to prevent loss or damage to each
Item of Equipment from fire and other hazards.
11. Maintenance and Repair of Equipment. Lessee agrees, at
its own cost and expense, to keep, repair, maintain and preserve
the Equipment in good order and operating condition, reasonable
wear and tear excepted and in compliance with such maintenance
and repair standards and procedures as are customarily followed
by Lessee with respect to similar items of equipment, and as
otherwise may be required to enforce warranty claims against each
vendor and manufacturer of each Item of Equipment, and in
compliance with all requirements of law applicable to the
maintenance and condition of the Equipment, including, without
limitation, environmental, noise and pollution laws and
regulations (including notifications and reports). Lessee shall
maintain the exterior and interior of the Equipment in good
appearance, reasonable wear and tear excepted Lessee shall, at
its own cost and expense, supply the necessary power and other
items required in the operation of the Equipment and make
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available to Lessor all maintenance records for inspection, upon
reasonable prior notice, at Lessee's place of business where the
applicable Item of Equipment is located, at reasonable times and
intervals during Lessee's regular business hours. Lessee hereby
waives any right now or hereafter conferred by law to make
repairs on the Equipment at the expense of Lessor.
12. Replacements; Alterations; Modifications. In case any
Item of Equipment (or any equipment, part or appliance therein)
is required to be altered, added to, replaced or modified in
order to comply with any laws, regulations, requirements or rules
("Required Alteration") pursuant to Sections 10 or 11 hereof,
Lessee agrees to make such Required Alteration at its own
expense. In the event such Required Alteration is readily
removable without causing material damage to the Item of
Equipment, and is not a part, item of equipment or appliance
which replaces any part, item of equipment or appliance
originally incorporated or installed in or attached to such Item
of Equipment on the Acceptance Date therefor or any part, item of
equipment or appliance in replacement of or substitution for any
such original part, item of equipment or appliance, any such
Required Alteration shall be and remain the property of Lessee.
To the extent such Required Alteration is not readily removable
without causing material damage to the Item of Equipment to which
such Required Alteration has been made, or is a part, item of
equipment or appliance which replaces any part, item of equipment
or appliance originally incorporated or installed in or attached
to such Item of Equipment on the Acceptance Date therefor or any
part, item of equipment or appliance in replacement of or
substitution for any such original part, item of equipment or
appliance, the same shall immediately be and become the property
of Lessor and subject to the terms of this Lease. Lessee agrees
that, within 45 days after the close of any calendar quarter in
which Lessee has made any Required Alterations, Lessee will give
written notice thereof to Lessor describing, in reasonable
detail, the Required Alterations and specifying the cost thereof
with respect to each Item of Equipment and the date or dates when
made. Any parts installed or replacements made by Lessee upon
any Item of Equipment pursuant to its obligation to maintain and
keep the Equipment in good order, operating condition and repair
under Section 11 hereof shall be considered accessions to such
Item of Equipment and title thereto or security interest therein
shall be immediately vested in Lessor. Except as required or
permitted by the provisions of this Section 12, Lessee shall not
materially modify an Item of Equipment without the prior written
authority and approval of Lessor.
12A. Early Termination; Substitution. (a) So long as no
Event of Default shall have occurred and be continuing hereunder,
Lessee shall have the right at its option on any Rent Payment
Date during the Basic Term, on at least ninety days' prior
written notice to Lessor, to terminate this Lease with respect to
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any Item of Equipment then leased hereunder if, in Lessee's good
faith opinion, as evidenced by a certificate of its President or
chief financial officer, such Item shall have become no longer
useful, or surplus, to Lessee in its business, with such
termination to be effective on the Rent Payment Date specified in
such notice (the "Termination Value Payment Date"). During the
period from the giving of such notice until the date thirty (30)
days prior to the Termination Value Payment Date, Lessee, as
agent for Lessor, shall use its reasonable efforts (but no less
effort than used to sell equipment Lessee owns itself) to secure
the highest obtainable bids for the purchase of such Item and in
the event it receives any bid during such period, Lessee shall
promptly certify to Lessor in writing the amount and terms of
such bid and the name and address of the party submitting such
bid. On the Termination Value Payment Date (but in no event
prior to Lessor's receipt of the amounts specified in the next
succeeding sentence), Lessee shall deliver possession of such
Item to the bidder, if any, which shall have submitted the
highest bid during such period, and Lessor shall, without
recourse or warranty, simultaneously therewith sell such Item on
an "as-is", "where-is" basis for cash to such bidder. The total
selling price realized at such sale shall be paid to and retained
by Lessor and, in addition, on the Termination Value Payment Date
Lessee shall pay to Lessor the sum of (i) the Basic Rent due and
payable for such Item on the Termination Value Payment Date, plus
(ii) all accrued and unpaid Interim Rent and Basic Rent owing for
such Item for all Rental Periods prior to the Rental Period for
which the Basic Rent payment specified in the next preceding
sub-clause (i) is payable, plus (iii) the excess, if any, of the
Termination Value of such Item as of the Rent Payment Date
coincident with the Termination Value Payment Date over the Net
Proceeds of Sale of such Item, plus (iv) any sales or excise
taxes on or measured by such sale, plus (v) all accrued and
unpaid Supplemental Payments owing by Lessee with respect to such
Item as of the Termination Value Payment Date, including the
Reinvestment Premium, if any. If no sale of such Item shall have
occurred on or as of the Termination Value Payment Date, this
Lease (including the provisions of this Section 12A) shall
continue in full force and effect with respect to such Item. In
the event of any such sale and the receipt by Lessor of the
amounts described above, and upon compliance by Lessee with the
provisions of this Section 12A, the obligations of Lessee to pay
Basic Rent hereunder with respect to such Item of Equipment so
sold shall cease for any Rental Period that commences on or after
the Termination Value Payment Date and the Term with respect to
such Item shall end effective as of the Termination Value Payment
Date. Lessor may, but shall be under no duty to, solicit bids,
inquire into the efforts of Lessee to obtain bids or otherwise
take any action in connection with any such sale other than the
duty to transfer to the purchaser named in the highest bid
certified by Lessee to Lessor, without recourse or warranty, on
an "as-is", "where-is" basis, all of Lessor's right, title and
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interest in and to the Item of Equipment so sold against receipt
by Lessor of the payments (Item by Item) provided for herein.
Anything herein to the contrary notwithstanding, if Lessee shall
exercise its said right of termination as provided in this
Section 12A, Lessor may, in its sole discretion, elect to retain
such Item by giving Lessee written notice to such effect within
thirty (30) days following Lessor's receipt of the written notice
from Lessee hereinabove provided, in which event (a) no sale of
such Item shall occur pursuant to this Section 12A, (b) Lessee
shall deliver such Item to Lessor in accordance with the
provisions of Section 6 hereof and shall continue to pay Basic
Rent for such Item on each Rent Payment Date to and inclusive of
(and the Term of such Item shall terminate on) the Rent Payment
Date next following the date on which such delivery occurs.
(b) In lieu of making all payments referenced in sub-
clauses (i) through (v) above, Lessee may, provided no Event of
Default has occurred and is continuing, on or prior to the date
on which such payments would have otherwise been due, convey, or
cause to be conveyed to Lessor, as replacement for any Item of
Equipment with respect to which Lessee has exercised it
termination option pursuant to Section 12A(a), good and
marketable title to a replacement item of equipment (a
"Replacement Item") free and clear of all liens, claims, security
interests and encumbrances and having a value and utility at
least equal, and being in as good operating condition as, such
Item of Equipment so terminated, assuming such Item was in the
condition and repair required by the terms of this Lease. Prior
to or at the time of any such conveyance, Lessee, at its own
expense, shall furnish, or cause to be furnished to Lessor a bill
of sale, in form and substance satisfactory to Lessor, with
respect to such Replacement Item and execute a supplement hereto
identifying such Replacement Item as subject to this Lease. Upon
full compliance by Lessee with the terms of this Section 12A,
Lessor will transfer to Lessee, without recourse or warranty, on
an "as-is", "where-is" basis, all of Lessor's right, title and
interest in and to the Item of Equipment so replaced. For all
purposes hereof, each such Replacement Item shall, after such
conveyance be deemed part of the property leased hereunder and
shall be deemed an "Item of Equipment" as defined herein.
13. Identification Marks; Inspection. Lessee agrees, upon
the request of Lessor, to place markings on the Equipment by
stencil or by a metal tag or plate affixed thereto showing
plainly, distinctly and conspicuously Lessor's security interest
therein; provided, however, that such identification markings are
to be placed so as not to interfere with the usefulness of such
Item of Equipment. If during the Term any such identification
marking shall at any time be defaced or destroyed, Lessee shall
immediately cause such defaced or destroyed identification
marking to be restored or replaced. Lessee shall not allow the
name of any Person other than Lessee or its affiliates to be
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placed upon any Item of Equipment as a designation which might be
interpreted as indicating a claim of ownership thereto or a
security interest therein by such Person other than Lessor or any
Assignee. Lessee shall make the Equipment available to Lessor
for inspection and shall also make Lessee's records pertaining to
the Equipment available to Lessor for inspection upon reasonable
prior notice, at Lessee's place of business where the applicable
Item of Equipment is located, at reasonable times and intervals
during Lessee's regular business hours.
14. Assignments and Subleasing.
(a) By Lessee. LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR, SUBLEASE OR OTHERWISE RELINQUISH POSSESSION OF
ANY ITEM OF EQUIPMENT, OR ASSIGN, TRANSFER OR ENCUMBER ITS
RIGHTS, INTERESTS OR OBLIGATIONS HEREUNDER AND ANY ATTEMPTED
SUBLEASE, RELINQUISHMENT, ASSIGNMENT, TRANSFER OR ENCUMBERING BY
LESSEE SHALL BE NULL AND VOID. Lessee may, without Lessor's
consent, sublease any Item of Equipment to any affiliate or
wholly-owned subsidiary of Lessee provided that (i) no Event of
Default has occurred and is continuing hereunder, (ii) any such
sublease shall be subject and subordinate in all respects to this
Lease and the rights of Lessor (and any Assignee) hereunder,
(iii) the sublease term shall in no event exceed the then
remaining portion of the Term of such Item of Equipment, and any
Renewal Term thereof, (iv) Lessee will provide Lessor with the
name and address of each such sublessee and the location of each
subleased Item of Equipment, which location will in no event be
outside of the continental limits of the United States, and (v)
Lessee shall, and shall cause any such sublessee to, execute and
deliver such instruments (including sublease agreements and
Uniform Commercial Code financing statements) as may be
reasonably requested by Lessor in connection with any such
sublease, and to provide copies of each sublease agreement to
Lessor upon Lessor's written request. No such subleasing by
Lessee will reduce any of the obligations of Lessee hereunder or
the rights of Lessor (and any Assignee) hereunder, and all of the
obligations of Lessee hereunder shall be and remain primary and
shall continue in full force and effect as the obligations of a
principal and not of a guarantor or surety. Any sublease shall,
if requested by Lessor (or any Assignee) be assigned by Lessee
(with such assignment to be consented to by the sublessee
thereof) to Lessor or any such Assignee.
(b) In the event Lessee shall sell, convey or transfer to
any person, all or substantially all of the assets as an entirety
of any affiliate or wholly-owned subsidiary to whom Lessee has
subleased any Items of Equipment pursuant to Section 14(a) above,
the successor corporation formed by such sale, conveyance or
transfer shall succeed to, and be substituted for, and may
exercise every right and power of, Lessee under this Lease with
respect to all, but not less than all, of the Items of Equipment
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so subleased, with the same effect as if such successor
corporation had been named as a Lessee herein, provided that such
successor corporation shall execute and deliver to Lessor and
each Assignee an agreement containing an effective assumption by
such successor corporation of the due and punctual performance
and observance of each covenant and condition of this Lease;
provided, however, that Lessee shall not be released from its
obligations hereunder with respect to such Items of Equipment,
which obligations shall at all times remain primary and direct,
without the prior written consent of Lessor. In the event such
consent is withheld by Lessor, Lessee may have the option, upon
ten (10) days prior written notice) to terminate this Lease on
date designated in such notice (a "termination date"), with
respect to all, but not less than all, of the Items of Equipment
subleased to such successor entity, by purchasing the such Items
of Equipment from Lessor for an amount with respect to each such
Item, payable in immediately available funds, equal to the sum of
(i) the Estimated Residual Value of such Item of Equipment on
such termination date, plus (ii) the Basic Rent due and payable
for such Item of Equipment on such termination date, if Basic
Rent for such Item is payable in arrears, plus (x) any applicable
sales, excise or other taxes imposed as a result of such sale
(other than gross or net income taxes attributable to such sale),
plus (y) any Supplemental Payments then due and owing to Lessor
hereunder, plus, in the event that Lessee exercises this
termination option prior to the end of the Maximum Term, (z) the
Reinvestment Premium. Lessor's sale of each Item of Equipment
shall be on an as-is, where-is basis, without any representation
or warranty by, or recourse to, Lessor.
(c) By Lessor. Lessor may, at any time, without notice to,
or the consent of, Lessee sell, assign or transfer or grant a
security interest in all or any part of Lessor's rights,
obligations, title or interest in, to and under the Equipment or
any Item(s) thereof, this Lease, any Lease Supplement and/or any
Rent and Supplemental Payments payable under this Lease or any
Lease Supplement. Any entity to whom any such sale, assignment,
transfer or grant of security interest is made is herein called
an "Assignee" and any such sale, assignment, transfer or grant of
security interest is herein called an "assignment". An Assignee
may re-assign and/or grant a security interest in any of such
rights, obligations, title or interest assigned to such Assignee.
Lessee agrees to execute related acknowledgments and other
documents that may be reasonably requested by Lessor or an
Assignee. Each Assignee shall have and may enforce all of the
rights and benefits of Lessor hereunder with respect to the
Item(s) of Equipment and related Lease Supplement(s) covered by
the assignment, including, without limitation, the provisions of
Section 8 hereof and Lessee's representations and warranties
under Section 21 hereof. Lessee acknowledges that any such
assignment will not materially change its duties or materially
increase its burdens or risks hereunder. Each such assignment
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shall be subject to Lessee's rights hereunder so long as no Event
of Default has occurred and is occurring hereunder and in no
event shall there be more than two (2) Assignees (or, one (1)
Assignee, together with Lessor) at any one time during the term
of this Lease. Lessee shall be under no obligation to any
Assignee except upon written notice of such assignment from
Lessor or, in the case of a reassignment, from the Assignee.
Upon written notice to Lessee of any such assignment, Lessee
agrees to pay the Rent and Supplemental Payments with respect to
the Item(s) of Equipment covered by such assignment to such
Assignee in accordance with the instructions specified in such
notice without any abatement, defense, setoff, counterclaim or
recoupment whatsoever, and to otherwise comply with all notices,
directions and demands which may be given by Lessor or such
Assignee with respect to such Item(s), in accordance with the
provisions of this Lease. Notwithstanding any such assignment,
all obligations of Lessor to Lessee under this Lease shall be and
remain enforceable by Lessee against Lessor and any Assignee to
whom an assignment hereunder has been made.
15. Liens. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to
(i) the Equipment or any part or Item thereof, Lessor's title
thereto, or any interest therein, or (ii) this Lease or any of
Lessor's interests hereunder, except any Lien granted or placed
thereon by Lessor or any Assignee. Lessee, at its own expense,
will promptly pay, satisfy and otherwise take such actions as may
be necessary to keep this Lease and the Equipment free and clear
of, and to duly discharge or eliminate or bond in a manner
satisfactory to Lessor and each Assignee, any such Lien not
excepted above if the same shall arise at any time. Lessee will
notify Lessor and each Assignee in writing promptly upon becoming
aware of any tax or other Lien (other than any lien excepted
above) that shall attach to the Equipment or any Item of
Equipment, and of the full particulars thereof.
16. Loss, Damage or Destruction.
(a) Risk of Loss, Damage or Destruction. Lessee hereby
assumes all risk of loss, damage, theft, taking, destruction,
confiscation, requisition or commandeering, partial or complete,
of or to each Item of Equipment, however caused or occasioned,
such risk to be borne by Lessee with respect to each Item of
Equipment from the date of this Lease, and continuing until such
Item of Equipment has been returned to Lessor in accordance with
the provisions of Section 6 hereof or has been purchased by
Lessee in accordance with the provisions of Section 28 hereof.
Lessee agrees that no occurrence specified in the preceding
sentence shall impair, in whole or in part, any obligation of
Lessee under this Lease, including, without limitation, the
obligation to pay Rent.
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(b) Payment of Casualty Loss Value Upon an Event of Loss.
If an Event of Loss occurs with respect to an Item of Equipment
during the Term thereof, Lessee shall give Lessor prompt written
notice thereof and shall pay to Lessor promptly upon the earlier
of (aa) receipt of payment for such Event of Loss from Lessee's
insurance carrier or (bb) sixty days after such Event of Loss or
(cc) the last day of the Rental Period in which such Event of
Loss occurs if there is no succeeding Rent Payment Date, the sum
of (i) all unpaid Interim Rent and Basic Rent payable for such
Item of Equipment on a pro rata basis with respect to Basic Rent
in the event that such payment does not occur on a Rent Payment
Date, such pro rata amount computed by multiplying the
Acquisition Cost of the Equipment subject to the Event of Loss by
the next preceding Casualty Loss Value Percentage and the product
thereof multiplied by the Interim Rent Percentage and the product
thereof multiplied by the number of days from the preceding Rent
Payment Date to the date of payment by the Lessee hereunder, plus
(ii) the Casualty Loss Value of such Item of Equipment as of (x)
the Rent Payment Date next preceding or coincident with the date
of such Event of Loss if Basic Rent for such Item of Equipment is
payable in advance, or (y) the Rent Payment Date next following
the date of such Event of Loss if Basic Rent for such Item of
Equipment is payable in arrears, plus (iii) the Basic Rent
payable for such Item of Equipment for the Rental Period in which
such Event of Loss has occurred, if Basic Rent for such Item is
payable in arrears, plus (iv) all other Supplemental Payments due
for such Item of Equipment as of the date of payment of the
amounts specified in the foregoing clauses (i), (ii) and (iii).
Any payments received at any time by Lessor from any insurer or
other party (except Lessee) as a result of the occurrence of such
Event of Loss will be applied in reduction of Lessee's obligation
to pay the foregoing amounts, if not already paid by Lessee, or,
if already paid by Lessee, will be applied to reimburse Lessee
for its payment of such amount, unless an Event of Default shall
have occurred and be continuing. Upon payment in full of such
Casualty Loss Value, Basic Rent, Interim Rent (if applicable) and
Supplemental Payments, (A) the obligation of Lessee to pay Rent
hereunder with respect to such Item of Equipment shall terminate
and the Term of such Item shall thereupon terminate, and (B)
Lessee shall, as agent for Lessor, as soon as practicable,
dispose of such Item or Items of Equipment in a manner reasonably
acceptable to Lessor. As used in this Lease, the term "Casualty
Loss Value" of any Item of Equipment as of any Rent Payment Date
means an amount determined by multiplying the Acquisition Cost of
such Item of Equipment by the percentage set forth opposite such
Rent Payment Date on the schedule of Casualty Loss Values
attached to and made a part of the Related Exhibit A for such
Item.
(c) Substitution of Equipment Upon an Event of Loss.
Provided no Event of Default has occurred and is continuing, in
lieu of payment of the amounts indicated in sub-clause (b) above,
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Lessee may, on or prior to the date on which such payments would
have otherwise been due, convey, or cause to be conveyed to
Lessor, as replacement for any Item of Equipment with respect to
which an Event of Loss has occurred, good and marketable title to
a Replacement Item free and clear of all liens, claims, security
interests and encumbrances and having a value and utility at
least equal, and being in as good operating condition as, such
Item of Equipment with respect to which the Event of Loss has
occurred, assuming such Item was in the condition and repair
required by the terms of this Lease. Prior to or at the time of
any such conveyance, Lessee, at its own expense, shall furnish,
or cause to be furnished to Lessor a bill of sale, in form and
substance satisfactory to Lessor, with respect to such
Replacement Item and execute a supplement hereto identifying such
Replacement Item as subject to this Lease. Upon full compliance
by Lessee with the terms of this sub-clause (c), Lessor will
transfer to Lessee, without recourse or warranty, on an "as-is",
"where-is" basis, all of Lessor's right, title and interest in
and to the Item of Equipment so replaced. For all purposes
hereof, each such Replacement Item shall, after such conveyance
be deemed part of the property leased hereunder and shall be
deemed an "Item of Equipment" as defined herein.
(d) Application of Payments Not Relating to an Event of
Loss. Any payments (including, without limitation, insurance
proceeds) received at any time by Lessor or Lessee from any
governmental authority or other party with respect to any loss or
damage to any Item or Items of Equipment not constituting an
Event of Loss, will be applied directly in payment of repairs or
for replacement of property in accordance with the provisions of
Section 11 and 12 hereof, if not already paid by Lessee, or if
already paid by Lessee and no Event of Default shall have
occurred and be continuing, shall be applied to reimburse Lessee
for such payment, and any balance remaining after compliance with
the provisions of said Sections with respect to such loss or
damage shall be retained by Lessee.
17. Insurance. Lessee will cause to be carried and
maintained, at its sole expense, with respect to the Equipment at
all times during the Term thereof and until the Equipment has
been returned to Lessor (a) physical damage insurance (including
theft and collision insurance in the case of all Items of
Equipment consisting of motor vehicles) insuring against all
risks of physical loss or damage to the Equipment, in an amount
not less than the greater of the Casualty Loss Value of the
Equipment or the replacement value of the Equipment, and (b)
insurance against liability for bodily injury, death and property
damage resulting from the use and operation of the Equipment in
an amount not less than $5,000,000 per occurrence, in each case
with exclusions and deductibles acceptable to Lessor and no
greater than those applicable to insurance on similar equipment
owned by Lessee. Such insurance policy or policies will name
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Lessor and each Assignee as the sole loss payees with respect to
such Equipment, as their interests may appear, on all policies
referred to in clause (a) of the preceding sentence, and will
name Lessor and each Assignee as additional insureds on all
policies referred to in clause (b) of the preceding sentence.
Such policies will provide that the same may not be invalidated
against Lessor or any Assignee by reason of any violation of a
condition or breach of warranty of the policies or the
application therefor by Lessee, that the policies may be
cancelled or materially altered or reduced in coverage (except as
otherwise permitted under the terms of this Lease) by the insurer
only after thirty (30) days' prior written notice to Lessor and
each Assignee, and that the insurer will give written notice to
Lessor and each Assignee in the event of nonpayment of premium by
Lessee when due. The policies of insurance required under this
Section shall be valid and enforceable policies issued by
insurers of recognized responsibility acceptable to Lessor and
each Assignee and authorized to do an insurance business in the
state in which each Item of Equipment is located. In the event
that any of such policies referred to in clause (b) of the first
sentence of this Section shall now or hereafter provide coverage
on a "claims-made" basis, Lessee shall continue to maintain such
policies in effect for a period of not less than three (3) years
after the expiration of the Term of the last Item of Equipment
leased to Lessee hereunder. Upon the execution of this Lease and
thereafter not less than thirty (30) days prior to the expiration
dates of any expiring policies theretofore furnished under this
Section, certificates of the insurance coverage required by this
Section and, if requested by Lessor or any Assignee, copies of
the policies evidencing such insurance coverage, shall be
delivered by Lessee to Lessor and each other named loss payee
and/or additional insured. Any certificate of insurance issued
with respect to a blanket policy covering other equipment not
subject to this Lease shall specifically describe the Equipment
as being included therein and covered thereby to the full extent
of the coverages and amounts required hereunder. If Lessee shall
fail to cause the insurance required under this Section to be
carried and maintained, Lessor or any Assignee may provide such
insurance and Lessee shall reimburse Lessor or any such Assignee,
as the case may be, upon demand for the cost thereof as a
Supplemental Payment hereunder.
18. General Tax Indemnity. Lessee agrees to pay, defend
and indemnify and hold Lessor, each Assignee and their respective
successors and assigns harmless on an after-tax basis from any
and all Federal, state, local and foreign taxes, fees,
withholdings, levies, imposts, duties, assessments and charges of
any kind and nature whatsoever, together with any penalties,
fines or interest thereon (herein called "taxes or other
impositions") howsoever imposed, whether levied or imposed upon
or asserted against Lessor, any Assignee, Lessee, the Equipment,
any Item of Equipment, or any part thereof, by any Federal, state
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or local government or taxing authority in the United States, or
by any taxing authority or governmental subdivision of a foreign
country, upon or with respect to (a) the Equipment, or any Item
of Equipment or any part thereof, (b) the manufacture,
construction, ordering, purchase, ownership, delivery, leasing,
subleasing, re-leasing, possession, use, maintenance,
registration, re-registration, titling, re-titling, licensing,
documentation, return, repossession, sale or other application or
disposition of the Equipment, or any Item of Equipment or any
part thereof, (c) the rentals, receipts or earnings arising from
the Equipment or any Item of Equipment or any part thereof, or
(d) this Lease, each Lease Supplement, the Rent and/or
Supplemental Payments payable by Lessee hereunder; provided,
however, that the foregoing indemnity shall not apply to any
taxes or other impositions based upon or measured solely by
Lessor's or any Assignee's net income, receipts, capital, net
worth, excess profits or items of tax preference, including
minimum taxes and withholding taxes measured by income, and which
are imposed or levied by any Federal, state or local taxing
authority in the United States. Lessee will promptly notify
Lessor of all reports or returns required to be made with respect
to any tax or imposition with respect to which Lessee is required
to indemnify hereunder, and will promptly provide Lessor with all
information necessary for the making and timely filing of such
reports or returns. Lessor will promptly notify Lessee of all
reports or returns of which it has knowledge that are required to
be made with respect to any tax or imposition with respect to
which Lessee is required to indemnify hereunder, and of which
Lessee does not have knowledge, and will promptly provide Lessee
with all information necessary for the making and timely filing
of such reports or returns. If Lessor requests that any such
reports or returns be prepared and filed by Lessee, Lessor will
promptly forward to Lessee, upon receipt by Lessor, all forms and
information received from the applicable taxing authority
necessary to prepare and make such filing and will cooperate with
Lessee in preparing and making such filing. Subject to the
foregoing, Lessee will prepare and file the same if permitted by
applicable law to file the same, and if not so permitted, Lessee
shall prepare such reports or returns for signature by Lessor,
and shall forward the same, together with immediately available
funds for payment of any tax or other imposition due, to Lessor,
at least ten (10) days in advance of the date such payment is to
be made. Lessor will promptly notify Lessee of any valuation
notice received by Lessor and provide copies of such notices to
Lessee to allow Lessee the right of an appeal before the
expiration of applicable deadlines. Should Lessor fail to so
notify Lessee, Lessor agrees to indemnify Lessee for any
increased taxes payable by Lessee due solely as a result, and
only to the extent, of any valuation increase for which Lessee
was prevented from appealing. Throughout the Term of this Lease,
Lessee has Lessor's permission to appeal the values of any and
all property covered by this Lease within the limits of the law.
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Upon written request, Lessee shall furnish Lessor with copies of
all paid receipts or other appropriate evidence of payment for
all taxes or other impositions paid by Lessee pursuant to this
Section 18. All of the indemnities contained in this Section 18
shall continue in full force and effect notwithstanding the
expiration or earlier termination of this Lease in whole or in
part, including the expiration or termination of the Term with
respect to any Item (or all) of the Equipment, and are expressly
made for the benefit of, and shall be enforceable by, Lessor and
each Assignee.
19. Indemnification. Without duplication of indemnities
contained or excluded in Section 18 hereof, Lessee hereby assumes
liability for, and does hereby agree to indemnify, protect, save,
defend, and hold harmless Lessor, each Assignee, and their
respective officers, directors, stockholders, successors,
assigns, agents and servants (each such party being herein, for
purposes of this Section 19, called an "indemnified party") on an
after-tax basis from and against any and all obligations, fees,
liabilities, losses, damages, penalties, claims, demands,
actions, suits, judgments, costs and expenses, including
reasonable legal expenses, of every kind and nature whatsoever,
imposed on, incurred by, or asserted against any indemnified
party, in any way relating to or arising out of (a) the
manufacture, construction, ordering, purchase, acceptance or
rejection, ownership, titling or retitling, registration or
re-registration, delivery, leasing, subleasing, re-leasing,
possession, use, operation, storage, removal, return,
repossession, sale or other disposition of the Equipment or any
Item of Equipment, or any part thereof, including, without
limitation, any of such as may arise from (i) loss or damage to
any property or death or injury to any persons, (ii) patent or
latent defects in the Equipment (whether or not discoverable by
Lessee or any indemnified party), (iii) any claims based on
absolute or strict liability in tort, (iv) any claims based on
patent, trademark, tradename or copyright infringement, and (v)
any claims based upon any non-compliance with or violation of any
Federal, state or local environmental control, noise, pollution
or hazardous substances laws, rules, regulations or requirements,
including, without limitation, all costs, fines and penalties
arising from any such violation or noncompliance, or from the
failure to report to any applicable governing regulatory
authority any spills, discharges or maintenance of hazardous
waste substances, and including all costs and expenses of
clean-up and removal of spills and hazardous waste substances; or
(b) any failure on the part of Lessee to perform or comply with
any of the terms of this Lease; or (c) any power of attorney
issued to Lessee to license, relicense, title, retitle, register
or re-register Items of Equipment subject to motor vehicle
titling and registration laws, and any towing charges, parking
tolls, fines, parking and speeding tickets, odometer
certifications and other civil and criminal motor vehicle
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violations with respect to any such Item, and all penalties and
interest applicable thereto, provided, however, that Lessee shall
not be required to indemnify any indemnified party for any
matters which arise as a direct result of the gross negligence or
willful misconduct of such indemnified party. Lessee shall give
each indemnified party prompt notice of any occurrence, event or
condition known to Lessee as a consequence of which any
indemnified party may be entitled to indemnification hereunder.
Lessee shall forthwith upon demand of any such indemnified party
reimburse such indemnified party for amounts expended by it in
connection with any of the foregoing or pay such amounts
directly. Lessee shall be subrogated to an indemnified party's
rights in any matter with respect to which Lessee has actually
reimbursed such indemnified party for amounts expended by it or
has actually paid such amounts directly pursuant to this Section
19. In case any action, suit or proceeding is brought against
any indemnified party in connection with any claim indemnified
against hereunder, such indemnified party will, promptly after
receipt of notice of the commencement of such action, suit or
proceeding, notify Lessee thereof, enclosing a copy of all papers
served upon such indemnified party, but failure to give such
notice or to enclose such papers shall not relieve Lessee from
any liability hereunder, unless such failure is a direct result
of the gross negligence or willful misconduct of such indemnified
party, in which case such relief shall be solely with respect to
such indemnified party. Lessee may, and upon such indemnified
party's request will, at Lessee's expense, resist and defend such
action, suit or proceeding, or cause the same to be resisted or
defended by counsel selected by Lessee and reasonably
satisfactory to such indemnified party and in the event of any
failure by Lessee to do so, Lessee shall pay all costs and
expenses (including, without limitation, attorney's fees and
expenses) incurred by such indemnified party in connection with
such action, suit or proceeding. The provisions of this Section
19, and the obligations of Lessee under this Section 19, shall
apply from the date of the execution of this Lease
notwithstanding that the Term may not have commenced with respect
to any Item of Equipment, and shall survive and continue in full
force and effect notwithstanding the expiration or earlier
termination of this Lease in whole or in part, including the
expiration of termination of the Term with respect to any Item
(or all) of the Equipment, and are expressly made for the benefit
of, and shall be enforceable by, each indemnified party.
20. NO WARRANTIES. LESSOR HEREBY LEASES THE EQUIPMENT TO
LESSEE AS-IS AND EXPRESSLY DISCLAIMS AND MAKES NO REPRESENTATION
OR WARRANTY, EITHER EXPRESSED OR IMPLIED, AS TO THE DESIGN,
CONDITION, QUALITY, CAPACITY, MERCHANTABILITY, DURABILITY,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF, OR ANY
OTHER MATTER CONCERNING, THE EQUIPMENT. LESSEE HEREBY WAIVES ANY
CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY
IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR FOR ANY
22
<PAGE>
LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR
EXPENSE CAUSED BY THE EQUIPMENT OR BY LESSEE'S LOSS OF USE
THEREOF FOR ANY REASON WHATSOEVER. So long and only so long as
an Event of Default shall not have occurred and be continuing,
and so long and only so long as the Equipment shall be subject to
this Lease and Lessee shall be entitled to possession of the
Equipment hereunder, Lessor authorizes Lessee, at Lessee's
expense, to assert for Lessor's account, all rights and powers of
Lessor under any manufacturer's, vendor's or dealer's warranty on
the Equipment or any part thereof and Lessor will cooperate with
Lessee in connection with such assertion to the extent deemed
reasonably necessary by Lessee; provided, however, that Lessee
shall indemnify, protect, save, defend and hold harmless Lessor
from and against any and all claims, and all costs, expenses,
damages, losses and liabilities incurred or suffered by Lessor in
connection therewith, as a result of, or incident to, any action
by Lessee pursuant to the foregoing authorization.
21. Lessee's Representations and Warranties. Lessee hereby
represents and warrants that (a) Lessee is a corporation duly
organized, validly existing and in good standing under the laws
of its state of incorporation set forth above, and is qualified
to do business in, and is in good standing in, each state or
other jurisdiction in which the nature of its business makes such
qualification necessary, or where the failure to so qualify would
have a material adverse effect on such business (including each
state or other jurisdiction in which the Equipment or any part
thereof will be located); (b) Lessee has the corporate power and
authority to execute and perform this Lease and to lease the
Equipment hereunder, and has duly authorized the execution,
delivery and performance of this Lease; (c) the leasing of the
Equipment from Lessor by Lessee, the execution and delivery of
this Lease, each Lease Supplement, and other related instruments,
documents and agreements, and the compliance by the Lessee with
the terms hereof and thereof, and the payments and performance by
Lessee of all of its obligations hereunder and thereunder (i)
have been duly and legally authorized by appropriate corporate
action taken by Lessee, (ii) are not in contravention of, and
will not result in a violation or breach of, any of the terms of
Lessee's Certificate of Incorporation (or equivalent document),
its By-Laws, or of any provisions relating to shares of the
capital stock of Lessee, and (iii) will not violate or constitute
a breach of any provision of law, any order of any court or other
agency of government, or any indenture, agreement or other
instrument to which Lessee is a party, or by or under which
Lessee or any of Lessee's property is bound, or be in conflict
with, result in a breach of, or constitute (with due notice
and/or lapse of time) a default under any such indenture,
agreement or instrument, or result in the creation or imposition
of any Lien upon any of Lessee's property or assets; (d) this
Lease has been executed by the duly authorized officer or
officers of Lessee and delivered to Lessor and constitutes, and
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when executed by the duly authorized officer or officers of
Lessee and delivered to Lessor each Lease Supplement and related
instruments, documents and agreements with respect to each Item
of Equipment will constitute, the legal, valid and binding
obligations of Lessee, enforceable in accordance with their
terms, subject to limitations imposed upon such enforceability by
bankruptcy, insolvency, reorganization, moratorium or other laws
of general applicability relating to or affecting creditors'
rights; (e) neither the execution and delivery of this Lease or
any Lease Supplement by Lessee, nor the payment and performance
by Lessee of all of its obligations hereunder and thereunder,
requires the consent or approval of, the giving of notice to, or
the registration, filing or recording with, or the taking of any
other action in respect of, any Federal, state, local or foreign
government or governmental authority or agency or any other
Person; (f) no mortgage, deed of trust, or other Lien which now
covers or affects, or which may hereafter cover or affect, any
property or interest therein of Lessee, now attaches or hereafter
will attach to the Equipment or any Item of the Equipment, the
proceeds thereof or this Lease, or in any manner affects or will
affect adversely Lessor's rights and security interest therein;
(g) there is no litigation or other proceeding now pending or, to
the best of Lessee's knowledge, threatened, against or affecting
the Lessee, in any court or before any regulatory commission,
board or other administrative governmental agency which would
directly or indirectly adversely affect or impair the title of
Lessor to the Equipment, or which, if decided adversely to
Lessee, would materially adversely affect the business operations
or financial condition of Lessee; and (h) all balance sheets,
statements of profit and loss and other financial data that have
been delivered to Lessor with respect to Lessee (i) are complete
and correct in all material respects, (ii) accurately present the
financial condition of Lessee on the dates for which, and the
results of its operations for the periods for which, the same
have been furnished, and (iii) have been prepared in accordance
with generally accepted accounting principles consistently
followed throughout the periods covered thereby; and there has
been no material adverse change in the condition of Lessee,
financial or otherwise, since the date of the most recent
financial statements delivered to Lessor with respect to Lessee,
other than as disclosed to Lessor by Lessee and (i) Lessee holds
all licenses, certificates and permits (including any applicable
environmental permits) from governmental authorities necessary to
use and operate the Equipment in accordance with the provisions
of this Lease.
22. Events of Default. Any of the following events shall
constitute an Event of Default:
(a) Lessee shall fail to make any payment of Interim Rent
or Basic Rent or any Supplemental Payment within five (5)
business days after the same is due and payable; or
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<PAGE>
(b) Lessee shall fail to observe or perform any of the
covenants, agreements or obligations of Lessee set forth in
Sections 6, 14(a), 17, 28 or 29 hereof; or
(c) Lessee shall fail to perform or observe any other
covenant, condition, or agreement to be performed or observed by
it under this Lease, or in any agreement or certificate furnished
to Lessor or any Assignee in connection herewith, and such
failure shall continue unremedied for thirty (30) days after
written notice to Lessee specifying such failure and demanding
the same to be remedied; or
(d) Lessee (or any Guarantor) shall be in default (i) under
any lease, loan agreement or other agreement, instrument or
document heretofore, now or hereafter entered into between Lessee
(or any Guarantor) and Lessor, or between Lessee (or any
Guarantor) and any parent, subsidiary or affiliate of Lessor, and
such default shall have been declared by the party entitled to
declare the same, or (ii) under any promissory note heretofore,
now or hereafter executed by Lessee (or any Guarantor) and
delivered to any party referred to in clause (i) above evidencing
a loan made by any such party to Lessee (or any Guarantor); or
any obligation of Lessee (or of any Guarantor) to any Person
(other than Lessor, or any parent, subsidiary or affiliate of
Lessor, and other than any Guarantor) in excess of $5,000,000
relating to the payment of borrowed money or the payment of rent
or hire under any lease agreement, shall be actually accelerated
prior to the maturity thereof or result in cancellation or
termination of any such lease, by reason of a default in payment
or performance by Lessee (excluding any such default which is
being contested in good faith by Lessee (or any Guarantor) by
appropriate proceedings and the liability for which has not been
reduced to judgment); or an attachment or other Lien shall be
filed or levied against a material part of the property of Lessee
(or any Guarantor) in the aggregate and such judgment shall
continue unstayed and in effect, or such attachment or Lien shall
continue undischarged or unbonded, for a period of 45 days; or
(e) Lessee (or any Guarantor) shall become insolvent or
make an assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver; or a trustee or a receiver
shall be appointed for Lessee (or for any Guarantor) or for a
substantial part of its property without its consent and shall
not be dismissed for a period of 90 days; or any petition for the
relief, reorganization or arrangement of Lessee (or any
Guarantor), or any other petition in bankruptcy or for the
liquidation, insolvency or dissolution of Lessee (or any
Guarantor), shall be filed by or against Lessee (or any
Guarantor) and, if filed against Lessee (or any Guarantor), shall
be consented to or be pending and not dismissed for a period of
60 days, or an order for relief under any bankruptcy or
insolvency law shall be entered by any court or governmental
25
<PAGE>
authority of competent jurisdiction with respect to Lessee (or
any Guarantor); or any execution or writ or process shall be
issued under any action or proceeding against Lessee whereby any
of the Equipment may be taken or restrained; or Lessee's (or any
Guarantor's) corporate existence shall cease; or Lessee shall
(whether in one transaction or a series of transactions), without
Lessor's prior written consent, sell, transfer, dispose of,
pledge or otherwise encumber, all or substantially all of its
assets or property, or consolidate or merge with any other
entity, or become the subject of, or engage in, a leveraged
buy-out or any other form of corporate reorganization such that
Lessee or any surviving corporation of Lessee shall have a
Tangible Net Worth of less than $75,000,000; or
(f) any representation, warranty, statement or
certification made by Lessee under this Lease or in any Lease
Supplement or in any document or certificate furnished Lessor or
any Assignee in connection herewith or pursuant hereto (or made
by any Guarantor under any Guaranty or other document or
certificate furnished to Lessor or any Assignee by any
Guarantor), shall prove to be untrue or incorrect in any material
respect when made, or shall be breached.
As used in this Section 22, "Tangible Net Worth" means the
total of the par value of common stock and any class or series of
preferred stock (after deduction for treasury stock), additional
paid-in capital, general contingency reserves and retained
earnings or deficit of Lessee, determined in accordance with
generally accepted accounting principles, minus the following
items (without duplication of deductions), if any, appearing on
the balance sheet of Lessee: (i) the book value of all assets
(including, without limitation, goodwill) which would be treated
as intangibles under generally accepted accounting principles;
and (ii) any write-up in the book amount of any existing asset
resulting from a re-evaluation thereof from the book amount
entered upon acquisition in excess of that permitted under
generally accepted accounting principles.
23. Remedies Upon Default. Upon the occurrence of any
Event of Default and at any time thereafter so long as the same
shall be continuing, Lessor may exercise one or more of the
following remedies as Lessor in its sole discretion shall elect:
(a) Lessor may terminate or cancel this Lease, without
prejudice to any other remedies of Lessor hereunder, with respect
to all or any Item of Equipment, and whether or not this Lease
has been so terminated or cancelled, may enter the premises of
Lessee or any other party to take immediate possession of the
Equipment and remove all or any Item of Equipment by summary
proceedings or otherwise, or may cause Lessee, at Lessee's
expense, to store, maintain, surrender and deliver possession of
the Equipment or such Item in the same manner as provided in
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Section 6 hereof, all without liability to Lessor for or by
reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or
otherwise;
(b) Lessor may hold, keep idle or lease to others the
Equipment or any Item of Equipment, as Lessor in its sole
discretion may determine, free and clear of any rights of Lessee
and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto,
except that Lessee's obligation to pay Basic Rent for any Rental
Periods commencing after Lessee shall have been deprived of
possession pursuant to this Section 23 shall be reduced by the
net proceeds, if any, received by Lessor from leasing the
Equipment or such Item to any Person other than Lessee for the
same Rental Periods or any portion thereof;
(c) Lessor may sell the Equipment or any Item of Equipment
at public or private sale as Lessor may determine, free and clear
of any rights of Lessee, and Lessee shall pay to Lessor, as
liquidated damages for loss of a bargain and not as a penalty (in
lieu of the Basic Rent due for the Equipment or Item(s) so sold
for any Rental Period commencing after the date on which such
sale occurs), the sum of (i) all unpaid Interim Rent and Basic
Rent payable for each Item of Equipment for all Rental Periods
through the date on which such sale occurs, plus (ii) an amount
equal to the excess, if any, of (x) the Casualty Loss Value of
the Equipment or Item(s) so sold, computed as of the Rent Payment
Date coincident with or next preceding the date of such sale,
over (y) the net proceeds of such sale, plus interest at the rate
specified in Section 25 hereof on the amount of such excess from
the Rent Payment Date as of which such Casualty Loss Value is
computed until the date of actual payment, plus (iii) all unpaid
Supplemental Payments due with respect to each Item of Equipment
so sold;
(d) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under
subsection (a) or (b) above with respect to any Item(s) of
Equipment, Lessor, by written notice to Lessee specifying a
payment date, may demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor, on the payment date specified in such
notice, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Basic Rent due for any Item(s) of
Equipment for any Rental Period commencing after the payment date
specified in such notice and in lieu of the exercise by Lessor of
its remedies under subsection (b) above in the case of a re-lease
of such Item(s) or under subsection (c) above with respect to a
sale of such Item(s)), the sum of (i) all unpaid Interim Rent and
Basic Rent payable for such Item(s) for all Rental Periods
through the payment date specified in such notice, plus (ii) all
unpaid Supplemental Payments due with respect to such Item(s) as
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<PAGE>
of the payment date specified in such notice, plus (iii) an
amount, with respect to each such Item, equal to the Casualty
Loss Value of such Item(s) computed as of the Rent Payment Date
coincident with or next preceding the payment date specified in
such notice; provided, however, that with respect to any such
Item(s) returned to or repossessed by Lessor, the amount
recoverable by Lessor pursuant to the foregoing shall be reduced
(but not below zero) by an amount equal to the fair market sales
value of such Item(s) as of the date on which Lessor has obtained
possession of such Item(s); and
(e) Lessor may exercise any other right or remedy which may
be available to it under applicable law or proceed by appropriate
court action to enforce the terms hereof or to recover damages
for the breach hereof or to rescind this Lease.
In addition, Lessee shall be liable for all reasonable costs
and expenses, including attorney's fees, incurred by Lessor or
any Assignee by reason of the occurrence of any Event of Default
or the exercise of Lessor's remedies with respect thereto,
including all costs and expenses incurred in connection with the
return of the Equipment subject to the distance requirements of
and otherwise, in accordance with Section 6 hereof or in placing
the Equipment in the condition required by said Section. For the
purpose of subsection (d) above, the "fair market sales value" of
any Item of Equipment shall mean such value as has been
determined by an independent nationally recognized qualified
appraiser selected by Lessor. Except as otherwise expressly
provided above, no remedy referred to in this Section 23 is
intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such
remedies shall not constitute the exclusive election of such
remedies and shall not preclude the simultaneous or later
exercise by Lessor of any or all of such other remedies. No
express or implied waiver by Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default. To the extent permitted by
applicable law, Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise which may require Lessor to
sell, lease or otherwise use the Equipment in mitigation of
Lessor's damages as set forth in this Section or which may
otherwise limit or modify any of Lessor's rights and remedies in
this Section 23.
24. Lessor's Right to Perform for Lessee. If Lessee fails
to make any Supplemental Payment required to be made by it
hereunder or fails to perform or comply with any of its
agreements contained herein, Lessor may itself, after notice to
Lessee, make such payment or perform or comply with such
agreement, and the amount of such payment and the amount of the
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reasonable expenses of Lessor incurred in connection with such
payment or the performance of or compliance with such agreement,
as the case may be, together with interest thereon at the rate
specified in Section 25 hereof, shall, if not paid by Lessee to
Lessor on demand, be deemed a Supplemental Payment hereunder;
provided, however, that no such payment, performance or
compliance by Lessor shall be deemed to cure any Event of Default
hereunder.
25. Late Charges. Lessee shall pay to Lessor, upon demand,
to the extent permitted by applicable law, interest on any
installment of Basic Rent or Interim Rent not paid when due, and
on any Supplemental Payment or other amount payable under this
Lease which is not paid when due, for any period for which any of
the same is overdue (without regard to any grace period) at a
rate equal to the higher of (a) 9.20 percent per annum, or (b)
the Prime Rate as announced by Chase Manhattan Bank in New York.
26. Further Assurances. Lessee will promptly and duly
execute and deliver to Lessor and any Assignee such other
documents and assurances, including, without limitation, such
amendments to this Lease as may be reasonably required by Lessor
and by any Assignee, and Uniform Commercial Code financing
statements and continuation statements, and will take such
further action as Lessor or any Assignee may from time to time
reasonably request in order to carry out more effectively the
intent and purposes of this Lease and to establish and protect
the rights and remedies created or intended to be created in
favor of Lessor and of any Assignee and their respective rights,
title and interests in and to the Equipment.
27. Notices. All notices provided for or required under
the terms and provisions hereof shall be in writing, and any such
notice shall be deemed given when personally delivered or when
deposited in the United States mails, with proper postage
prepaid, for first class certified mail, return receipt
requested, addressed (i) if to Lessor or Lessee, at their
respective addresses as set forth herein or at such other address
as either of them shall, from time to time, designate in writing
to the other, and (ii) if to any Assignee, to the address of such
Assignee as such Assignee shall designate in writing to Lessor
and Lessee.
28. Lessee's Renewal and Purchase Options; Third Party
Sale.
(a) Lessee's Renewal Option. If (i) no Event of Default
shall have occurred and be continuing and (ii) this Lease shall
not have been earlier terminated, Lessee shall be entitled, at
its option, to renew this Lease with respect to all, but not less
than all, Items of Equipment then subject to this Lease for the
Renewal Term(s) specified on the Related Exhibit A for such Item.
29
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The first Renewal Term with respect to each such Item of
Equipment will commence at the expiration of the Basic Term of
such Item, and each succeeding Renewal Term will commence at the
expiration of the next preceding Renewal Term. All of the
provisions of this Lease, including the Basic Rent Percentage,
shall be applicable during each Renewal Term for each such Item
of Equipment, except that Basic Rent during each Renewal Term
shall be payable at the times and on the Rent Payment Dates set
forth on said Related Exhibit A. If Lessee intends not to
exercise said renewal option with respect to any of said Renewal
Terms, Lessee shall give written notice to Lessor to such effect
at least one hundred twenty (120) days prior to the expiration of
the Basic Term of the Item(s) of Equipment whose Basic Term first
expires hereunder, in the case of the first Renewal Term, and at
least one hundred twenty (120) days prior to the expiration of
the then current Renewal Term of the Item(s) of Equipment whose
Basic Term first expires hereunder, in the case of the then next
succeeding Renewal Term. If Lessee fails to give such written
notice to Lessor with respect to any of said Renewal Terms, it
shall be conclusively presumed that Lessee has elected to
exercise said renewal option with respect to said Renewal Term.
In the event Lessee elects not to exercise said renewal option
(unless Lessor has otherwise agreed in writing or Lessee has
exercised its purchase option under Section 28(b) hereof) each
such Item of Equipment shall be returned to Lessor in accordance
with the provisions of Section 6(a) hereof (unless delivered to a
bidder in accordance with Section 28(c) hereof) and until each
such Item has been so returned or delivered Lessee shall continue
to pay Lessor the Basic Rent for each such Item as specified in
Section 6(b) hereof.
(b) Lessee's Purchase Option. If (i) no Event of Default
shall have occurred and be continuing, and (ii) this Lease shall
not have been earlier terminated, Lessee shall be entitled, at
its option, upon written notice to Lessor, as hereinafter
provided, to purchase all, but not less than all, Items of
Equipment then subject to this Lease, on the Termination Date for
each such Item of Equipment, for an amount (the "Purchase Option
Amount"), with respect to each Item of Equipment, payable in
immediately available funds, equal to the sum of (v) the
Estimated Residual Value of such Item of Equipment applicable to
the Basic Term or Renewal Term thereof then ending, plus (w) the
Basic Rent due and payable for such Item of Equipment on the
Termination Date, if Basic Rent for such Item is payable in
arrears, plus (x) any applicable sales, excise or other taxes
imposed as a result of such sale (other than gross or net income
taxes attributable to such sale), plus (y) any Supplemental
Payments then due and owing to Lessor hereunder, plus, in the
event that Lessee exercises its purchase option hereunder prior
to the end of the Maximum Term, (z) the Reinvestment Premium.
Lessor's sale of each Item of Equipment shall be on an as-is,
where-is basis, without any representation or warranty by, or
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recourse to, Lessor. If Lessee intends to exercise said purchase
option, Lessee shall give written notice to Lessor to such effect
at least one hundred twenty (120) days prior to the expiration of
the Basic Term of the Item(s) of Equipment whose Basic Term first
expires hereunder, or, if Lessee has renewed this Lease pursuant
to Section 28(a) hereof, then at least one hundred twenty (120)
days prior to the expiration of the then current Renewal Term of
the Item(s) of Equipment whose Basic Term first expires
hereunder. If Lessee gives such written notice to Lessor same
shall constitute a binding obligation of Lessee to purchase all
of such Items of Equipment and to pay Lessor the Purchase Option
Amount on the Termination Date thereof.
(c) Third Party Sale of Equipment.
(i) Remarketing Obligations. In the event Lessee does
not exercise either its option to renew this Lease or to purchase
the Equipment pursuant to this Section, then Lessee shall have
the obligation during the last one hundred twenty (120) days of
the Basic Term, or the then current Renewal Term, if applicable
(the "Remarketing Period"), to obtain bona fide bids for not less
than all Items of Equipment then subject to this Lease from
prospective purchasers who are financially capable of purchasing
such Items of Equipment for cash on an as-is, where-is basis,
without recourse or warranty. All bids received by Lessee prior
to the end of the Basic Term, or Renewal Term if applicable, of
such Item(s) of Equipment shall be immediately certified to
Lessor in writing, setting forth the amount of such bid and the
name and address of the person or entity submitting such bid.
Notwithstanding the foregoing, Lessor shall have the right, but
not the obligation, to seek bids for the Equipment during the
Remarketing Period.
(ii) Sale of Equipment to Third Party Buyer. On the
Termination Date, provided that all the conditions hereof have
been met, Lessor shall sell (or cause to be sold) all Items of
Equipment then subject to this Lease, for cash to the bidder, if
any, who shall have submitted the highest cash bid during the
Remarketing Period on an as-is, where-is basis and without
recourse or warranty, and upon receipt by Lessor of the sales
price Lessor shall instruct Lessee to deliver and Lessee shall
deliver such Item(s) of Equipment to such bidder in accordance
with Section 6 hereof; provided, that (x) any such sale to a
third party shall be consummated, and the sales price for such
Item shall be paid to Lessor in immediately available funds, on
or before the Termination Date; and (y) Lessor shall not be
obligated to sell such Equipment (I) if the Net Proceeds of Sale
of such Item(s) is less than the aggregate Maximum Lessor Risk
Amount applicable to such Item(s) as of the Termination Date or
(II) if Lessor has not received the amounts, if any, payable by
Lessee pursuant to Section 29(a) and, if applicable, Section
29(c).
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29. End of Term Rental Adjustment.
(a) Third Party Sale of Equipment. This Section 29(a)
shall apply only if, with respect to any Item(s) of Equipment, a
sale of such Item(s) to a third party pursuant to Section 28(c)
hereof has been consummated on the Termination Date. If the Net
Proceeds of Sale of such Item(s) is less than the aggregate
Estimated Residual Value of such Item(s) as of such Termination
Date, Lessee shall, on the Termination Date, pay to Lessor as an
End of Term Rental Adjustment, in immediately available funds, an
amount equal to such deficiency (a "Deficiency") as an adjustment
to the Rent payable under this Lease for such Item, plus the
Basic Rent due and payable for such Item(s) of Equipment on the
Termination Date, if Basic Rent for such Item(s) is payable in
arrears, plus any Supplemental Payments then due and owing to
Lessor hereunder; provided, however, that if no Event of Default
or event which, with notice or passage of time or both would
constitute an Event of Default, shall have occurred and be
continuing hereunder, the amount of the Deficiency payable by
Lessee with respect to such Item(s) shall not exceed the
aggregate Maximum Lessee Risk Amount then applicable to such
Item(s). If the Net Proceeds of Sale of such Item(s) of
Equipment exceeds the aggregate Estimated Residual Value of such
Item(s) and if no Event of Default or event which, with notice or
passage of time or both would constitute an Event of Default,
shall have occurred and be continuing hereunder and Lessee shall
have paid Lessor on or before the Termination Date the Basic Rent
due and payable for such Item(s) of Equipment on the Termination
Date, if Basic Rent for such Item(s) is payable in arrears, plus
all Supplemental Payments then due and owing with respect to such
Item(s), plus any amounts due pursuant to Section 29(c) hereof,
Lessor shall pay to Lessee an amount equal to such excess as an
adjustment to the Rent payable under this Lease for such Item(s).
(b) Lessee Payment. If a sale of all Items of Equipment
then subject to this Lease either to the Lessee pursuant to
Section 28(b) hereof or to a third party pursuant to Section
28(c) hereof has not been consummated on the Termination Date
with respect thereto for any reason, then the Lessee shall, on
the Termination Date of such Items, pay to Lessor as an End of
Term Rental Adjustment, in immediately available funds, as an
adjustment to the Rent payable under the Lease for such Items, an
amount equal to (i) the Maximum Lessee Risk Amount of all of such
Items, if on the Termination Date no Event of Default or event
which, with notice or passage of time or both would constitute an
Event of Default, shall have occurred and be continuing
hereunder, or (ii) the Estimated Residual Value of all of such
Items, if on the Termination Date an Event of Default or event
which, with notice or passage of time or both would constitute an
Event of Default, shall have occurred and be continuing
hereunder, plus, in either case, the Basic Rent due and payable
for such Item(s) of Equipment on the Termination Date, if Basic
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Rent for such Item(s) is payable in arrears, plus all
Supplemental Payments then due and owing with respect to such
Item(s). Upon delivery of the payment set forth in (ii) above,
Lessor shall deliver title to the Equipment to Lessee. Lessee
shall remain liable for the payment of, and upon the consummation
by Lessor of the sale of any Item(s) of Equipment after the
Termination Date thereof, Lessee shall pay, or reimburse Lessor
for the payment of, all applicable sales, excise or other taxes
imposed as a result of such sale, other than gross or net income
taxes attributable to such sale, and such obligation shall
survive the termination of this Lease.
(c) Reinvestment Premium. In the event a Termination Date
of any Item of Equipment occurs prior to the last day of the
Maximum Term hereof relating to such Item, Lessee shall pay to
Lessor on the Termination Date of such Item in immediately
available funds, in addition to any other obligations hereunder,
the Reinvestment Premium relating to such Item.
(d) Certain Definitions.
(i) "End of Term Rental Adjustment" means the amounts
payable as adjustments to Rent pursuant to Section 29(a) or, as
applicable, 29(b).
(ii) "Net Proceeds of Sale" means with respect to each
Item of Equipment sold by Lessor to a third party pursuant to
Section 28(c), the net amount of the proceeds of sale of such
Item, after deducting from the gross proceeds of such sale (i)
all sales taxes and other taxes (excluding income taxes on or
measured by Lessor's income) as may be applicable to the sale or
transfer of such Item, (ii) all reasonable fees, costs and
expenses of such sale incurred by Lessor and (iii) any other
amounts for which, if not paid, Lessor would be liable or which,
if not paid, would constitute a Lien on such Item.
(e) Time of the Essence. The provisions of Sections 28 and
29 are of the essence of this Lease, and time is of the essence
for any payment and performance of the obligations of the Lessee
set forth therein.
30. Financial Information. Lessee agrees to furnish Lessor
(a) as soon as available, and in any event within 120 days after
the last day of each fiscal year of Lessee, a copy of the
consolidated balance sheet of Lessee and its consolidated
subsidiaries as of the end of such fiscal year, and related
consolidated statements of income and shareholders' equity of
Lessee and its consolidated subsidiaries for such fiscal year,
audited by an independent certified public accounting firm of
recognized standing, each on a comparative basis with
corresponding statements for the prior fiscal year, and a copy of
Lessee's form 10-K, if any, filed with the Securities and
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Exchange Commission for such fiscal year; (b) within 45 days
after the last day of each fiscal quarter of Lessee (except the
last such fiscal quarter), a copy of the balance sheet as of the
end of such quarter, and statement of income and shareholders'
equity covering the fiscal year to date of Lessee and its
consolidated subsidiaries, each on a comparative basis with the
corresponding period of the prior year, all in reasonable detail
and certified by the treasurer or principal financial officer of
Lessee, together with a copy of Lessee's form 10-Q, if any, filed
with the Securities and Exchange Commission for such quarterly
period; (c) contemporaneously with its transmittal to each
stockholder of Lessee and to the Securities and Exchange
Commission, all such other financial statements and reports as
Lessee shall send to its stockholders and to the Securities and
Exchange Commission; (d) as soon as available to Lessee, the
notice of any adjustment resulting from any audit of the books
and/or records of Lessee by any taxing authority having
jurisdiction over Lessee in the event that such adjustment
involves an amount greater than or equal to $10,000,000; and (e)
such additional financial information as Lessor may reasonably
request concerning Lessee.
31. Expenses. Lessee agrees, whether or not the
transactions contemplated by this Lease are consummated, to pay
(or reimburse Lessor for the payment of) fees and expenses
relating to the titling and registration of any Item(s) of
Equipment incurred by or on behalf of Lessor in connection with
the negotiation and documentation of this Lease, any Guaranty and
any other related instruments and documents.
32. Owner for Income Tax Purposes. Lessor agrees that
Lessee shall be deemed the owner of the Equipment for federal,
state and local income tax purposes.
33. No Reliance. Lessee hereby acknowledges that in
negotiating the terms of this Lease and all other related
agreements and documents, it has sought, obtained and relied upon
such accounting, actuarial, tax and legal advice from its own or
other independent sources as it has deemed necessary.
34. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating or diminishing Lessor's
rights under the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, Lessee
hereby waives any provision of law which renders any provision of
this Lease prohibited or unenforceable in any respect. No term
or provision of this Lease may be amended, altered, waived,
discharged or terminated orally, but may be amended, altered,
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waived, discharged or terminated only by an instrument in writing
signed by a duly authorized officer of the party against which
the enforcement of the amendment, alteration, waiver, discharge
or termination is sought. Lessee's Initial's. A waiver on
any one occasion shall not be construed as a waiver on a future
occasion. All of the covenants, conditions and obligations
contained in this Lease shall be binding upon and shall inure to
the benefit of the respective successors and assigns of Lessor
and (subject to the restrictions of Section 14(a) hereof) Lessee.
If there is more than one Lessee named herein, the liability of
each Lessee shall be joint and several. This Lease, each Lease
Supplement and each related instrument, document, agreement and
certificate, collectively constitute the complete and exclusive
statement of the terms of the agreement between Lessor and Lessee
with respect to the acquisition and leasing of the Equipment, and
cancel and supersede any and all prior oral or written
understandings with respect thereto.
35. Venue; Governing Law. Lessee agrees that at Lessor's
sole election any suit, action or proceeding brought by Lessor
against Lessee in connection with or arising out of this Lease
may be brought in any federal or state court in the Commonwealth
of Massachusetts, and Lessee waives personal service of all
process upon it and consents that service of process may be made
by telecopy, mail or messenger directed to it at its address set
forth above and that service so made shall be deemed to be
completed upon the earlier of actual receipt or five (5) days
after the same shall have been posted to Lessee's said address.
Nothing herein contained shall affect Lessor's right to serve
legal process in any other manner permitted by law or to bring
any suit, action or proceeding against Lessee or its property in
the courts of any other jurisdiction. This Lease shall in all
respects be governed by, and constructed in accordance with, the
laws of the Commonwealth of Massachusetts, including all matters
of construction, validity and performance.
36. Non-Utilization Fee. In the event that the Acquisition
Cost of all Equipment purchased by Lessor on or prior to December
31, 1995 is less than Fifteen Million Dollars ($15,000,000),
Lessee shall pay to Lessor, upon receipt of an invoice therefor
from Lessor, a non-utilization fee in the amount of Twenty-Five
Thousand Dollars ($25,000).
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IN WITNESS WHEREOF, the parties hereto have caused this
Lease to be duly executed by their duly authorized
representatives as of the date first above written.
UNIONBANC LEASING CORPORATION
Attest: (Lessor)
By:
Assistant Clerk Title:
(Corporate Seal)
LADD FURNITURE, INC.
Attest: (Lessee)
By:
Secretary Title:
(Corporate Seal)
COUNTERPART NO. OF SERIALLY NUMBERED MANUALLY EXECUTED
COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS DOCUMENT
CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO
SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE
TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART
NO. 1.
