MASTER EQUIPMENT LEASE AGREEMENT
BETWEEN
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
AND
THE CATO CORPORATION
January 27, 1995
TABLE OF CONTENTS
1. Definitions 1
2. Agreement for Lease of Equipment; Covenant of Quiet
Enjoyment 7
3. Conditions Precedent 7
(a) Initial Lease Supplement 7
(b) Subsequent Lease Supplements 8
(c) Additional Requirements 8
4. Delivery and Acceptance of Equipment 9
5. Basic Term; Renewal Term; Early Purchase Option; Early
Termination Option 9
(a) Basic Term 9
(b) Renewal Term 9
(c) Early Purchase Option 10
(d) Early Termination Option 10
7. Payments 11
(a) Basic Payments 11
(b) Supplemental Payments 11
(c) Method of Payment 11
8. Net Lease 11
9. Lessor's Title; Lessee's Title; Grant of Security Interest 12
(a) Lessor's Title; Lessee's Title 12
(b) Grant of Security Interest 12
10. Use of Equipment; Compliance with Laws 12
11. Operation and Maintenance of Equipment 13
12. Replacement of Parts; Alterations; Modifications and
Additions 13
13. Identification; Inspection; Reports; Change of Chief
Executive
Office and/or Name 14
(a) Identification 14
(b) Inspection 14
(c) Reports 14
(d) Change of Chief Executive Office 14
14. Assignment, Sublease or Transfer; Assignment; Consolidation
and
Merger 14
(a) Assignment, Sublease or Other Transfer by Lessee 14
(b) Assignment By Lessor 14
(c) Consolidation, Merger, Conveyance, Transfer and
Lease By
Lessee 15
15. Liens; Permitted Contests 16
16. Loss, Damage or Destruction 17
(a) Risk of Loss, Damage or Destruction 17
(b) Event of Loss with Respect to Equipment 17
(c) Application of Other Payments Upon Event of Loss 18
(d)Application of Payments Not Relating to an Event of Loss 19
17. Insurance 19
(a) Coverage 19
(b) Policy 20
(c) Evidence of Insurance 21
(d) Annual Insurance Certificate 21
18. General Tax Indemnity 21
19. General Indemnity 22
20. NO WARRANTIES 23
21. Lessee's Representations, Warranties and Covenants 24
(a) Due Organization and Existence 24
(b) Power and Authority 24
(c) Due Authorization 24
(d) Enforceability 25
(e) No Consents 25
(f) No Liens 25
(g) Perfection of Security Interest 25
(h) Financial Statements 25
(i) No Litigation 25
(j) Income Tax Return 25
(k) ERISA 26
(l) Investment Company 26
(m) Taxes 26
(n) No Offer to Sell or Assign 26
(o) Invoices 26
(p) Adverse Contract 26
(q) Misrepresentation 26
(r) Solvency 26
(s)Equipment Representations, Warranties and Indemnities 26
(t) Chief Executive Office 26
(u) Trade Names 26
22. Events of Default 26
(a) Payment 27
(b) Certain Covenants 27
(c) Other Covenants 27
(d) Default under Other Documents - Lessee 27
(e) Bankruptcy; Insolvency - Lessee 27
(f) Misrepresentation - Lessee 28
23. Remedies Upon Default 28
(a) Return of Equipment 28
(b) Sell, Use, Lease or Otherwise Employ Equipment 28
(c)Excess of Termination Value over Fair Market Sales Value 28
(d) Excess of Termination Value over Sales Proceeds 28
(e) Rescission 29
24. Lessor's Right to Perform for Lessee 29
25. Late Charges 29
26. Further Assurances 29
27. Transaction Costs, Fees and Expenses 29
28. Notices 30
29. End of Term Purchase Options 30
(a) Lessee Retention/Purchase or Third Party Purchase 30
(b) Lessee's Retention/Purchase 30
(c) Third Party Purchase 31
(d) End of Term Adjustment 31
(e) Settlement Terms 31
30. Federal and State Tax Consequences 33
31. Financial Information 33
32. Miscellaneous 33
33. Interest Rate Calculations 34
34. Personal Property Taxes 34
Exhibit
A - Lease Supplement and Acceptance Certificate
B - UCC Filing Offices
C - Trade Names
MASTER EQUIPMENT LEASE AGREEMENT
THIS MASTER EQUIPMENT LEASE AGREEMENT dated as of January
27, 1995 (as supplemented, amended modified, restated or replaced
from time to time the "Agreement") is between NATIONSBANC LEASING
CORPORATION OF NORTH CAROLINA, a North Carolina corporation (the
"Lessor"), having its principal place of business at NationsBank
Corporate Center, 100 North Tryon Street, NC1-007-12-01,
Charlotte, North Carolina 28255-0001 and THE CATO CORPORATION, a
Delaware corporation (the "Lessee"), having its principal place
of business at 8100 Denmark Road, Charlotte, North Carolina
28273.
WITNESSETH:
WHEREAS, Lessee has requested Lessor to purchase the Lessor
Titled Equipment (as defined hereinafter) and Lessee has
purchased the Lessee Titled Equipment and, simultaneously with
such acquisition, Lessee has requested Lessor to lease the
Equipment to Lessee for use in its operations; and
WHEREAS, Lessor is willing to purchase and lease the
Equipment subject to the terms and conditions hereinafter set
forth, and Lessee has agreed to lease the Equipment from Lessor
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions. Unless the context otherwise
requires, the following terms shall have the following meanings
for all purposes of this Agreement and shall be equally
applicable to both the singular and the plural forms of the terms
herein defined:
"Acceptance Date" means, with respect to any Equipment, the
Basic Payment Date on which Lessor executes the Lease Supplement
applicable to such item of Equipment and Lessee unconditionally
accepts such Equipment for lease hereunder, as evidenced by the
execution and delivery of such Lease Supplement related to such
Equipment and dated such date.
"Acquisition Cost" means, with respect to any Equipment, an
amount equal to the sum of (a) the total cost paid by Lessor (or
Lessee, in its capacity as Lessor's agent) for or in connection
with such Equipment (including without limitation, such amounts
paid by Lessor to Lessee respecting Lessee Titled Equipment),
plus (b) all excise, sales and use taxes and registration fees
paid by Lessor on or with respect to the acquisition of such
Equipment, less (c) the total cost paid by Lessor for or in
connection with any such particular items of Equipment which have
been the subject of an Event of Loss and for which an amount
equal to the Termination Value for such particular items of
Equipment has been paid in full to Lessor.
"Acquisition Expiration Date" means the date set forth in
the respective Lease Supplement or such other dates as determined
by Lessor in connection with any other Equipment.
"Affiliate" means a Person (other than a Subsidiary) which
directly or indirectly through one or more intermediaries
controls or is controlled by, or is under common control with,
Lessee, the Guarantor or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting stock, by contract or
otherwise.
"Appraisal Procedure" means the following procedure for
determining the Fair Market Sales Value of any property or any
other amount which may, pursuant to any provision of any
Transaction Document, be determined by such procedure: if either
party to this Agreement shall have given written notice to the
other party requesting determination of such value by the
Appraisal Procedure, the parties shall consult for the purpose of
appointing a qualified independent appraiser by mutual agreement.
If no such appraiser is so appointed within fifteen (15) days
after such notice is given, each party shall appoint a qualified
independent appraiser within twenty (20) days of the giving of
such notice. If one (1) party, but not the other, appoints an
appraiser pursuant to the preceding sentence, then the
appropriately appointed appraiser shall conduct the appraisal.
Any appraiser or appraisers appointed pursuant to the foregoing
procedure shall be instructed to determine such value within
thirty (30) days after his or their appointment. If the parties
shall have appointed a single appraiser, his determination of
values shall be final. If two (2) appraisers shall be appointed,
the values determined shall be averaged. The parties shall share
equally the costs and expenses of the appraiser or the
appraisers, as the case may be.
"Assignee" means any Person to whom Lessor or any assignee
has made any assignment, sale or transfer referred to in Section
14(b) hereof.
"Bank" shall mean NationsBank, N.A. (Carolinas), its
successors or assigns.
"Basic Payment" means the amounts payable for the Equipment
during the Term pursuant to Section 7(a) hereof.
"Basic Payment Date" means, with respect to any Equipment,
each of the dates set forth on the appropriate Lease Supplement
with respect to such Equipment.
"Basic Payment Factor" means, with respect to any Equipment,
the Basic Payment Factor set forth on each Lease Supplement with
respect to such Equipment.
"Basic Payment Period" means, with respect to any Equipment,
each period from the date immediately succeeding a Basic Payment
Date to the next occurring Basic Payment Date, except that the
initial Basic Payment Period under each Lease Supplement shall
also include the date of execution of such Lease Supplement.
"Basic Term" means with respect to any Equipment, the period
set forth in the applicable Lease Supplement with respect to such
Equipment.
"Business Day" means any day on which Lessor is open for the
transaction of business with the public of the nature required by
the Transaction Documents.
"Casualty Loss Value Date" means the last day of each Basic
Payment Period.
"Code" means the Internal Revenue Code of 1986, as
supplemented, amended, modified, restated or replaced from time
to time, and all rules and regulations promulgated thereunder.
"Consolidated Subsidiary" means at any date any Subsidiary
or other entity the accounts of which would be consolidated with
those of Lessee in its consolidated financial statements if such
statements were prepared as of such date.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of Lessee and its Consolidated
Subsidiaries, less their consolidated Intangible Assets, all
determined as of such date. For purposes of this definition
"Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (a) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business
made within twelve (12) months after the acquisition of such
business) in the book value of any assets owned by Lessee or a
Consolidated Subsidiary and (b) all goodwill, patents,
trademarks, service marks, trade names, copyrights, organization
or developmental expenses and other intangible assets.
"Default" means any event which with the giving of notice or
the passage of time or both would result in an Event of Default.
"Early Termination Date" means the last day of the Basic
Term or the last day of the Renewal Term, if any, on which Lessee
exercises its early termination option under Section 5(d) hereof.
"Equipment" means all items of the equipment described in
Annex A to the various Lease Supplements executed by Lessor and
Lessee in connection with this Agreement, together with any Parts
(including without limitation replacement Parts) which may from
time to time be incorporated in such equipment or other property
and title to which shall have vested in Lessor (including without
limitation all Lessor Titled Equipment and Lessee Titled
Equipment).
"ERISA" means the Employee Retirement Income Security Act of
1974, as supplemented, amended, modified, restated or replaced
from time to time, and all rules and regulations promulgated
thereunder.
"Event of Default" shall have the meaning given to such term
in Section 22 hereof.
"Event of Loss" means, with respect to any Equipment, any of
the following events: (a) loss of any Equipment or of the use
thereof due to theft or disappearance during the Term, or the non-
existence of any Equipment at the expiration or termination of
the Term prior to its expiration, (b) destruction, damage beyond
repair, or rendition of any Equipment permanently or temporarily
for longer than a commercially reasonable period of time, unfit
for normal use for any reason whatsoever, (c) any damage to any
Equipment which results in an insurance settlement with respect
to such Equipment on the basis of a total loss, or (d) the
condemnation, confiscation, seizure, or requisition of use or
title to any Equipment by any governmental authority under the
power of eminent domain or otherwise.
"Expiration Date" means, with respect to any Equipment, the
last day of the Term, unless this Agreement is sooner terminated
pursuant to the provisions hereof.
"Fair Market Sales Value" means, with respect to any
Equipment, the value which would obtain in an arm's length
transaction between an informed and willing buyer (other than a
lessee currently in possession or a used equipment dealer) and an
informed and willing seller under no compulsion, respectively, to
buy or sell. If the parties are unable to agree on the Fair
Market Sales Value within thirty (30) days of Lessor's giving of
notice as specified in Section 23(c) hereof, such Fair Market
Sales Value shall be determined by the Appraisal Procedure.
"Improvement" shall have the meaning given to such term in
Section 12 hereof.
"Indemnified Party" shall have the meaning given to such
term in Section 18 hereof.
"Lease Supplement" means a Lease Supplement and Acceptance
Certificate substantially in the form of Exhibit A hereto, to be
executed by Lessor and Lessee for each item of the Equipment
accepted under the terms of this Agreement on each Acceptance
Date, in accordance with the provisions of Section 4 hereof.
"Lessee Titled Equipment" means the Equipment accepted by
Lessee for lease pursuant to Lease Supplement and Acceptance
Certificate No. 1, titled solely in Lessee's name and subject to
the terms and conditions of this Agreement.
"Lessor Titled Equipment" means the Equipment accepted by
Lessee for lease subsequent to Lease Supplement and Acceptance
Certificate No. 1, titled solely in Lessor's name (or in the name
of Lessor's agent on behalf of Lessor) and subject to the terms
and conditions of this Agreement.
"Lien" means any interest in property securing any
obligation owed to, or claimed by, a Person other than the owner
of the property, whether such interest is based on the common
law, statute or contract, and including, without limitation, the
lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes.
"Loan Agreement" shall have the meaning set forth in Section
22(d) hereof.
"Maximum Cost" means, with respect to any Equipment, an
amount specified by Lessee for such Equipment and approved by
Lessor and set forth in the Lease Supplement.
"Maximum Lessee Risk Amount" means, with respect to any
Equipment, the percentage set forth in Annex C of each Lease
Supplement applicable to such particular Equipment under the
heading Maximum Lessee Risk Amount Percentage multiplied by the
Acquisition Cost of such Equipment.
"Maximum Lessor Risk Amount" means, with respect to any
Equipment, the percentage set forth in Annex C of each Lease
Supplement applicable to such particular Equipment under the
heading Maximum Lessor Risk Amount Percentage multiplied by the
Acquisition Cost of such Equipment.
"Net Proceeds of Sale" means the net amount received by
Lessor from a third party purchaser of all (but not less than
all) the Equipment described on a particular Lease Supplement
pursuant to a sale of all (but not less than all) such Equipment
under Section 29 hereof.
"Option Election Notice Date" means the date occurring
ninety (90) days prior to the final day of the Basic Term or the
final Renewal Term, if any.
"Overall Transaction" means all of those transactions
referred to in, provided for in, or contemplated by, this
Agreement, including, without limitation, the financing,
operation and management of the Equipment.
"Overdue Rate" means the lesser of the maximum rate
permitted by applicable law and a per annum interest rate equal
to the Prime Rate plus two percent (2%).
"Parts" means all appliances, parts, instruments,
appurtenances, accessories and miscellaneous property of whatever
nature that may from time to time be incorporated or installed in
or attached to or otherwise part of the Equipment.
"Payments" means, collectively, Basic Payments and
Supplemental Payments.
"Permitted Contest" means any contest by Lessee with respect
to any Permitted Lien or any Taxes or Other Impositions incurred
with respect to which Lessee has provided a legal opinion from
outside counsel to Lessor stating in substance that the position
adopted by Lessee in its contest has merit and has a reasonable
likelihood of success, and so long as Lessee shall contest, in
good faith and at its expense, the existence, the amount or the
validity thereof, the amount of the damages caused thereby, or
the extent of its liability therefor, by appropriate proceedings
which do not result in (a) the collection of, or other
realization upon, the Permitted Lien or any Taxes or Other
Impositions so contested, (b) the sale, forfeiture or loss of any
item of Equipment, any Part, the Payments or any portion thereof,
or under any document, instrument, agreement or contract entered
into in relation hereto or otherwise in relation to the
Equipment, (c) any interference with the use of any item of
Equipment or any Part thereof, or (d) any interference with the
payment of the Payments or any portion thereof.
"Permitted Lien" means a Lien permitted by the provisions of
Section 15 hereof.
"Permitted Sublease" means a sublease (a) to which Lessor
has given its prior written consent (which consent shall not be
unreasonably withheld), (b) the sublessee with respect to which
shall be organized under the laws of the United States or any
state thereof and shall have its principal place of business in
the United States, (c) the term of which shall in no event exceed
the then remaining portion of the Term, (d) immediately prior to
the commencement of the term of which, and after giving effect to
which, there shall exist no Default or Event of Default and (e)
which shall contain unconditional payment provisions and
provisions relating to insurance, maintenance, operation in
accordance with applicable laws and insurance requirements,
possession, delivery and return conditions (insofar as the
general condition of the Equipment is concerned), events of
default, remedies and Permitted Liens on the Equipment which
provide for benefits and protections to Lessee, as lessor, which
are substantially similar to the benefits and protections
provided to Lessor by such provisions of this Agreement.
"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.
"Prime Rate" means the per annum rate of interest
established from time to time by the Bank at its principal office
as its Prime Rate. Any change in the interest rate resulting
from a change in the Prime Rate shall become effective as of
12:01 a.m. of the Business Day on which each change in the Prime
Rate is announced by the Bank. The Prime Rate is a reference
rate used by the Bank in determining interest rates on certain
loans and is not intended to be the lowest rate of interest
charged on any extension of credit to any debtor.
"Renewal Term" shall have the meaning given to such term in
Section 5(b) hereof.
"Replacement" shall have the meaning given to such term in
Section 12 hereof.
"Replacement Item" means any item of equipment conveyed to
Lessor pursuant to Section 16(b) hereof in replacement of any
item of Equipment.
"Required Alteration" shall have the meaning given to such
term in Section 12 hereof.
"Sales Expenses" means (a) all property, excise, sales and
use taxes and other taxes (as such may be applicable to the sale
or transfer of the Equipment), (b) all fees, costs and expenses
of such sale or transfer of the Equipment (including, without
limitation, registration fees and fees, costs and expenses of
attorneys or those associated with transportation, storage,
security or insurance) incurred by Lessor and (c) any and all
other amounts incurred in connection with such sale or transfer
of the Equipment for which, if not paid, Lessor would be liable
or which, if not paid, would constitute a Lien on the Equipment,
or any Part.
"Seller" means each seller executing a Warranty Bill of Sale
in favor of Lessor with respect to any Equipment.
"Solvent" means, when used with respect to any Person, that
at the time of determination:
(i) the fair value of its assets is in excess of
the total amount of its liabilities, including without
limitation, contingent liabilities and obligations which
would be required to be reflected as a liability on its
financial statements (including any footnotes thereto) in
accordance with generally accepted accounting principles;
and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Subsidiary" of any Person means any corporation of which
more than fifty percent (50%) of the voting rights of the
outstanding capital stock at the time of determination is owned
directly or indirectly by such Person or one of the Subsidiaries
of such Person.
"Supplemental Payments" means all amounts, liabilities and
obligations which Lessee assumes or agrees to pay hereunder to
Lessor or others, including, without limitation, payments of
Termination Value, interim rental payments and indemnities, but
excluding Basic Payments.
"Taxes or Other Impositions" shall have the meaning given to
such term in Section 18 hereof.
"Term" shall mean the Basic Term and any Renewal Term(s).
"Termination Value" means, with respect to any Equipment, an
amount determined by multiplying the Acquisition Cost of such
Equipment by the Termination Value Percentage for such Equipment
as of the Expiration Date; provided, however, to the extent the
Expiration Date is not a Basic Payment Date, the Termination
Value Percentage shall be determined as of the immediately
preceding Basic Payment Date.
"Termination Value Percentage" means each termination value
percentage identified on Annex B to each Lease Supplement for the
applicable Basic Payment Date.
"Third Party Purchaser" means a third party purchaser of the
Equipment which is selected by Lessee, is reasonably acceptable
to Lessor, is financially capable of purchasing the Equipment and
is not an Affiliate or a Subsidiary of Lessee.
"Transaction Costs" means all the costs, fees and expenses
referenced in Section 27 hereof.
"Transaction Documents" means this Agreement, each Lease
Supplement, each Warranty Bill of Sale and the Uniform Commercial
Code financing statements (and with respect to each of the
foregoing, all supplements, amendments and modifications thereto)
whether heretofore, now or hereafter executed.
"Warranty Bill of Sale" means each warranty bill of sale, in
form and substance satisfactory to Lessor, referring to various
items of the Equipment duly executed by a Seller thereof in favor
of Lessor and dated as of the Acceptance Date for such Equipment.
The words "this Agreement", "herein", "hereunder", "hereof",
or other like words mean and include this Agreement and the Lease
Supplements and any amendments and supplements hereto or thereto.
SECTION 2. Agreement for Lease of Equipment; Covenant of
Quiet Enjoyment. Subject to, and upon all of the terms and
conditions of this Agreement, Lessor hereby agrees to lease to
Lessee and Lessee hereby agrees to lease from Lessor, each item
of the Equipment from and including the Acceptance Date therefor
for the duration of the Term. Provided that no Event of Default
has occurred and is continuing, Lessor agrees that it shall not
interfere with Lessee's quiet enjoyment and use of the Equipment
during the Term.
SECTION 3. Conditions Precedent.
(a) Initial Lease Supplement. The obligations of
Lessor to purchase, or to cause its agent to purchase, the
Equipment specified on the Lease Supplement dated as of the date
hereof, to reimburse Lessee with respect to any Lessee Titled
Equipment and to lease the Equipment to Lessee and enter into the
Overall Transaction are subject to the delivery to Lessor on or
prior to the date hereof of the following documents each in form
and substance satisfactory to Lessor:
(i) an officer's certificate from Lessee: (A)
certifying Lessee's articles of incorporation, by-laws and
resolutions, with such resolutions authorizing the Overall
Transaction and Lessee's execution, delivery and performance
of this Agreement; (B) containing an incumbency
certification of Lessee with the name(s), title(s) and
specimen signature(s) of the person or persons authorized on
behalf of Lessee to execute this Agreement; (C) stating that
no material adverse change has occurred in the condition of
Lessee (financial or otherwise) since July 30, 1994 which
would impair the ability of Lessee to pay and perform its
obligations under this Agreement; and (D) stating that no
Default or Event of Default shall have occurred and be
continuing as of such date;
(ii) a written opinion of counsel for Lessee;
(iii) a certificate of insurance evidencing the
coverages required under Section 17 hereof with respect to
the Equipment referenced in the Lease Supplement dated as of
the date hereof;
(iv) the Lease Supplement, duly executed by
Lessee, and dated as of the date hereof with respect to the
Equipment accepted by Lessee and subjected to the terms of
this Agreement as of the date hereof;
(v) Uniform Commercial Code filings as deemed
appropriate by Lessor's counsel duly executed by Lessee;
(vi) (intentionally omitted);
(vii) good standing certificates from the Secretary
of State of Lessee's state of incorporation, the state of
Lessee's principal place of business and the state(s) where
the Equipment shall be used as set forth in the applicable
Lease Supplement;
(viii) (intentionally omitted);
(ix) UCC-11 lien search results and all releases
of liens as required by Lessor;
(x) tax lien searches against Lessee and all
releases of such liens as required by Lessor;
(xi) judgment lien searches against Lessee and all
releases of such liens as required by Lessor; and
(xii) a closing fee of one-half of one percent
(.5%) of Acquisition Cost.
(b) Subsequent Lease Supplements. The obligations of
Lessor to purchase Equipment on the respective Acceptance Date(s)
therefor after the date hereof and to enter into the Lease
Supplement with respect thereto is subject to the delivery to
Lessor on such Acceptance Date of the following documents each in
form and substance satisfactory to Lessor:
(i) the Lease Supplement, duly executed by Lessee
and dated such Acceptance Date with respect to the Equipment
accepted by Lessee and subjected to the terms of this
Agreement on such Acceptance Date;
(ii) Uniform Commercial Code filings as deemed
appropriate by Lessor's counsel duly executed by Lessee;
(iii) a Warranty Bill of Sale specifically
referring to each item of the Equipment accepted by Lessee
and subjected to the terms of this Agreement on such date,
duly executed by the Seller thereof in favor of Lessor, or
its agent, and dated such Acceptance Date or such other date
as is acceptable to Lessor;
(iv) a written opinion of counsel for Lessee;
(v) certificates dated as of such Acceptance Date
from officers of Lessee stating that there has been no
material adverse change in the business, conditions or
operations (financial or otherwise) of Lessee and its
respective Consolidated Subsidiaries from that reflected in
the financial statements referenced in Sections 3(a)(i) and
(ii), that no Default or Event of Default shall have
occurred and be continuing from the date of the Agreement to
the respective Acceptance Date and that the representations
and warranties of Lessee in the Agreement are true and
correct as of such date;
(vi) a certificate of insurance evidencing the
coverages required under Section 17 hereof with respect to
the Equipment referenced in the Lease Supplement dated as of
such Acceptance Date;
(vii) (intentionally omitted);
(viii) UCC-11 lien search results and all releases
of liens as required by Lessor;
(ix) tax lien searches against Lessee and all
releases of such liens as required by Lessor;
(x) judgment lien searches against Lessee and all
releases of such liens as required by Lessor; and
(xi) a closing fee of one-half of one percent
(.5%) of Acquisition Cost.
(c) Additional Requirements. The obligations of
Lessor to purchase the items of Equipment on the respective
Acceptance Dates therefor and to enter into the respective Lease
Supplement are also subject to:
(i) the absence on the Acceptance Date of any
Liens on the Equipment, other than any Permitted Lien of the
type specified in Sections 15(a) or (b) hereof;
(ii) the aggregate Acquisition Cost of all
Equipment will not exceed the Maximum Cost;
(iii) the Acceptance Date shall be a date between
and inclusive of the date hereof and the Acquisition
Expiration Date;
(iv) Lessee shall have paid all fees and expenses
due and owing with respect to the Overall Transaction;
(v) in its sole discretion, Lessor shall have
agreed in writing to purchase items of Equipment in excess
of the original commitment of $25,000,000 or after the
Expiration Date and Lessor shall have obtained all internal
approvals as Lessor shall have deemed necessary and/or
appropriate; and
(vi) Lessor shall have received such other
documents, appraisals, certificates, financing statements
and other items, in form and substance satisfactory to
Lessor, as Lessor may require.
SECTION 4. Delivery and Acceptance of Equipment. Lessor
shall not be liable to Lessee for any failure or delay in
obtaining the Equipment or making delivery thereof. Lessor
hereby appoints Lessee as Lessor's agent for the sole and limited
purpose of acquiring and accepting delivery of each item of the
Lessor Titled Equipment and paying for the same. By the
Acceptance Date for any item of the Equipment (including without
limitation Lessor Titled Equipment and Lessee Titled Equipment),
Lessee shall have promptly inspected each item of Equipment, and
unless Lessee gives Lessor prompt written notice of any defect in
or other proper objection to any item of such Equipment, Lessee
shall promptly upon completion of such inspection execute and
deliver to Lessor the Lease Supplement, dated the Acceptance
Date. Lessee (in its capacity as agent for Lessor respecting
Lessor Titled Equipment and in its individual capacity respecting
Lessee Titled Equipment) shall also pay to the Seller the
Acquisition Cost of the Seller's Equipment referenced in the
applicable Lease Supplement if all of the conditions precedent
specified in Section 3 hereof have been fulfilled to Lessor's
satisfaction. The execution of the Lease Supplement by Lessee
and Lessor shall evidence that each item of Equipment has been
accepted under this Agreement, upon and subject to all of the
terms, conditions and provisions hereof and shall constitute
Lessee's unconditional and irrevocable acceptance of the
Equipment for all purposes under this Agreement. Lessee's
execution of the Lease Supplement shall constitute Lessee's
acknowledgement and agreement that, as between Lessor and Lessee,
each item of Equipment has been inspected to Lessee's
satisfaction, is in good operating order, repair and condition,
is of a size, design, capacity and manufacture selected by
Lessee, that each item of Equipment is duly certified or licensed
by any governmental entity which is charged with issuing such
certificates or licenses, that Lessee is satisfied that each item
of Equipment is suitable for its purpose, that Lessor has made no
warranty, expressed or implied, with respect to any item of
Equipment and that Lessee has unconditionally accepted each item
of Equipment under this Agreement.
SECTION 5. Basic Term; Renewal Term; Early Purchase Option;
Early Termination Option.
(a) Basic Term. The Basic Term for each item of
Equipment shall commence on the Acceptance Date set forth in the
applicable Lease Supplement, and, unless sooner terminated or
extended for the initial Renewal Term (in either case in
accordance with the provisions of this Agreement), shall
terminate on the date occurring one year from the Acceptance
Date.
(b) Renewal Term. So long as such renewal shall not
be prohibited by any applicable law or governmental regulation,
Lessee may (at its option) at the expiration of the Basic Term,
renew the lease of all but not less than all of the Equipment
subject to a particular Lease Supplement for not more than six
(6) renewal terms, each of one (1) year duration (each such term,
a "Renewal Term"). Such option to renew shall be exercised by
Lessee giving notice of renewal to Lessor (which notice shall be
irrevocable) at least 90 days (but not more than 180 days) prior
to the expiration of the Basic Term and each of the first five
(5) Renewal Terms, if any. If Lessee fails to give such a notice
within the permitted time period, Lessee shall be deemed to have
requested a Renewal Term extension. All of the provisions of
this Agreement shall be applicable during each Renewal Term,
Anything in this Section 5(b) to the contrary notwithstanding,
unless Lessor otherwise consents in writing, this Agreement may
not be renewed for any Renewal Term if a Default or an Event of
Default shall have occurred and be continuing on the day
preceding the first day of such Renewal Term.
(c) Early Purchase Option. So long as no Default or
Event of Default shall have occurred and be continuing, Lessee
may (at its option) at the expiration of the Basic Term or any
Renewal Term, retain all (but not less than all) of the Lessee
Titled Equipment and purchase all (but not less than all) of the
Lessor Titled Equipment for the aggregate Termination Value on
that date as set forth in Annex B to each Lease Supplement, plus
(i) all Basic Payments then due and owing and (ii) all
Supplemental Payments then due and owing or accrued. Such option
to retain and purchase shall be exercised by Lessee giving notice
to Lessor (which notice shall be irrevocable) at least 90 days
(but not more than 180 days) prior to the expiration of the Basic
Term or any Renewal Term. If Lessee fails to give such a notice
within the permitted time period, Lessee shall be deemed to have
requested a Renewal Term extension as set forth in Section 5(b)
hereof.
(d) Early Termination Option. To the extent no
Default or Event of Default shall have occurred and be
continuing, and upon a reasonable determination by the board of
directors of Lessee that the Equipment subject to a particular
Lease Supplement is obsolete or surplus for the purposes of
Lessee, Lessee may terminate this Agreement on any Early
Termination Date upon ninety (90) days' prior written notice to
Lessor. Lessee may exercise such early termination option to the
extent the following conditions are met: (i) Lessee arranges for
the sale of all but not less than all of the Equipment to a Third
Party Purchaser which is financially capable of purchasing the
Equipment; (ii) on the Early Termination Date, such Third Party
Purchaser pays Lessor the previously agreed purchase amount in
good, immediately available funds; (iii) in the event that such
purchase amount is less than the Termination Value determined as
of the Basic Payment Date immediately preceding the Early
Termination Date, Lessee shall pay Lessor the difference between
such purchase amount and such Termination Value; (iv) on the
Early Termination Date, Lessee shall pay all Basic Payments then
due and owing and all Supplemental Payments then due and owing or
accrued; (v) Lessee on a timely basis shall pay, or cause to be
paid, all Sales Expenses associated with such sale of the
Equipment; and (vi) Lessee shall deliver such Equipment to the
Third Party Purchaser in accordance with the provisions of
Section 6 hereof as if such Third Party Purchaser were the
Lessor; provided, further, that if the purchase amount paid by
the Third Party Purchaser (as referenced in Section 5(d)(ii)
hereof is in excess of the Termination Value referenced in
Section 5(d)(iii) hereof, Lessor may retain any such excess to
the extent, but only to the extent, Lessor has not been paid in
full all amounts owed to Lessor under this Section 5(d) and after
confirming receipt of all such amounts, Lessor shall promptly
return to Lessee the remainder, if any, of such excess. Upon
receipt of all funds then due and owing to Lessor hereunder,
Lessor shall sell the Lessor Titled Equipment to such Third Party
Purchaser on an "as-is, where-is" basis and deliver a bill of
sale and all other documentation reasonably necessary to transfer
to such Third Party Purchaser all of Lessor's right, title and
interest in and to the Lessor Titled Equipment and Lessee shall
transfer the Lessee Titled Equipment to such Third Party
Purchaser pursuant to a bill of sale and other documentation
reasonably satisfactory to Lessor reflecting a transfer of title
regarding the Lessee Titled Equipment consistent with the
obligations of Lessee hereunder to keep the Equipment free and
clear of Liens.
SECTION 6. End of Term Delivery of Equipment.
If this Agreement shall be in full force and effect and
Lessee shall not have elected to purchase the Lessor Titled
Equipment and retain the Lessee Titled Equipment in accordance
with Section 5(c) or with Section 29 hereof, then on the
Expiration Date Lessee shall deliver, at Lessee's expense, all
requested Equipment to Lessor (or to a third party to which the
Equipment shall be sold pursuant to Sections 5(d) or 29) to a
location or locations within the continental United States as
specified in writing by Lessor or such third party. The terms of
this Section 6 shall apply to Lessee's delivery of the Equipment.
At the time of such return to Lessor or delivery to the third
party, each item of Equipment (and each part or component
thereof) shall (i) be in good operating order, and in the repair
and condition as when originally delivered to Lessee, ordinary
wear and tear from proper use thereof excepted, and refurbished
where necessary, (ii) be capable of being immediately operated by
a third party purchaser or third party lessee without further
inspection, repair, replacement, alteration or improvement, (iii)
be in accordance and compliance with any and 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 such item of Equipment, and (iv) be free and clear
of all Liens, other than those granted or placed thereon by
Lessor.
SECTION 7. Payments.
(a) Basic Payments. Lessee hereby agrees to pay
Lessor Basic Payments for the Equipment from and including the
Acceptance Date for each item of Equipment and throughout the
Term, in consecutive quarterly installments, with each
installment in an amount equal to the Basic Payment Factor set
forth on the Lease Supplement applicable to such items of
Equipment hereto multiplied by the Acquisition Cost thereof.
(b) Supplemental Payments. Lessee agrees to pay
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 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 Basic Payments.
(c) Method of Payment. If the date that any Payment
is due is other than a Business Day, the Payment otherwise
payable on such date shall be payable on the next succeeding
Business Day. All Basic Payments and Supplemental Payments
required to be made by Lessee to Lessor hereunder shall be made
in immediately available funds and in United States dollars. In
the event of any assignment to an Assignee pursuant to Section
14(b) hereof, all payments which are assigned to such Assignee,
whether Basic Payments, Supplemental Payments or otherwise, shall
be paid in the same manner specified herein for payments to
Lessor at such address as shall be designated by such Assignee.
Time is of the essence in connection with the payment of Basic
Payments and Supplemental Payments.
SECTION 8. Net Lease. This Agreement is a net lease and
Lessee acknowledges and agrees that Lessee's obligations
hereunder, including, without limitation, its obligations to pay
all Payments payable hereunder, shall be absolute and
unconditional under any and all circumstances and shall be paid
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, or the manufacturer of any item of the
Equipment, any Part or unit or component of the Equipment, or any
other Person for any reason whatsoever. Except to the extent
expressly provided herein, and without in any manner limiting the
generality of the foregoing sentence, the obligations and
liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including,
without limitation: (a) any defect in any item of the Equipment,
any Part or unit or component of the Equipment, or the condition,
design, operation or fitness for use thereof; (b) any damage to,
or any loss, abandonment, salvage, scrapping or destruction of,
any item of the Equipment, any Part or unit or component of the
Equipment; (c) any Liens or rights of others with respect to any
item of the Equipment, any Part or unit or component of the
Equipment; (d) any prohibition or interruption of or other
restriction against Lessee's use, operation or possession of any
item of the Equipment, any Part or unit or component of the
Equipment, for any reason whatsoever, or any interference with
such use, operation or possession by any Person or entity;
(e) any failure by Lessor to perform any of its obligations
herein contained; (f) any other indebtedness or liability,
howsoever and whenever arising, of Lessor or of any Assignee or
of Lessee to any other Person; (g) any insolvency, bankruptcy or
similar proceedings by or against Lessor, any Assignee, any
guarantor of Lessee's obligations or Lessee; or (h) 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 the Basic Payments 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 Agreement.
SECTION 9. Lessor's Title; Lessee's Title; Grant of
Security Interest.
(a) Lessor's Title; Lessee's Title. Title to each
item of Lessee Titled Equipment shall at all times remain in
Lessee and title to each item of Lessor Titled Equipment shall at
all times remain in Lessor. At no time during the Term for any
Equipment shall title become vested in any other party; provided,
notwithstanding the foregoing, Lessor shall be entitled to
exercise its rights under Section 35 hereof.
(b) Grant of Security Interest. This Agreement is a
lease intended as security. To secure the prompt payment and
performance when due of each and every obligation of Lessee from
time to time due and owing to Lessor under this Agreement or
under any of the other Transaction Documents, Lessee hereby
grants to Lessor a lien and security interest in and a right to
set-off against (and acknowledges and agrees that Lessor has and
shall continue to have a continuing lien and security interest in
and a right of set-off against) any and all right, title and
interest of Lessee in, to and under the following: (i) this
Agreement and each and every other Transaction Document and each
of Lessee's right, title and interest hereunder and thereunder,
whether such right, title or interest is now existing or
hereafter arising; (ii) each and every item of equipment,
fixtures and other personal property located at the sites set
forth in Annex A to the respective Lease Supplements executed in
connection with this Agreement from time to time (including
without limitation all of the Lessee Titled Equipment and the
Lessor Titled Equipment), together with all accessories,
equipment, parts and appurtenances pertaining or attached
thereto, whether now owned or hereafter acquired, and all
substitutions and renewals of any type or kind and additions,
improvements, accessions and accumulations to any and all of the
foregoing; and (iii) any and all proceeds of any kind or type
with respect to any of the items referenced in this Section 9(b),
including without limitation insurance proceeds.
SECTION 10. Use of Equipment; Compliance with Laws. Lessee
agrees that each item of Equipment will be used and operated only
(a) for purposes or operations in the ordinary course of its
business and at the location(s) set forth in the applicable Lease
Supplement and (b) in the manner set forth in, and in accordance
with, the terms, conditions and provisions of the insurance
policy or policies providing the coverages specified in Section
17 hereof. In no event shall Lessee use or operate any item of
Equipment, or knowingly permit any item of Equipment to be used
or operated, for any purpose for which such item of Equipment is
not designed or reasonably suitable, or in any fashion that may
reasonably subject such item of Equipment to any Liens, other
than Permitted Liens, or in any area excluded from coverage by
any such insurance policy or policies. Lessee further agrees
that each item of Equipment will be used and operated in the
conduct of Lessee's business and in compliance with all statutes,
law, ordinances, rules and regulations of any federal, state,
local or foreign government or governmental authority having
jurisdiction with respect to the use, operation, maintenance,
condition and occupancy of any item of Equipment (including,
without limitation, all zoning, environmental protection,
pollution, sanitary and safety laws). Lessee will not load, use,
operate, or store any item of Equipment, or knowingly permit the
loading, using, operating or storing of any item of Equipment, in
a negligent manner or otherwise in violation of this Agreement or
so as to void any of the insurance coverages specified in Section
17 hereof respecting any item of Equipment. Lessee shall procure
and maintain in effect all licenses, certificates, permits,
approvals and consents required by federal, state, local or
foreign laws or by any governmental body, agency or authority, in
connection with the delivery, use, operation, maintenance,
condition and occupancy of each item of Equipment. The Equipment
will at all times be and remain in the control of Lessee except
as Lessee's relinquishment of control of an item of Equipment is
specifically permitted by this Agreement and except while an item
of Equipment is undergoing maintenance. To the extent that any
applicable law requires the licensing or certification of an
operator of any item of the Equipment, each such operator shall
be duly licensed and currently certificated and qualified to
operate such item of Equipment and authorized by the terms of (in
accordance with the provisions and requirements of) the insurance
policy or policies providing the coverages specified in Section
17 hereof.
SECTION 11. Operation and Maintenance of Equipment. Lessee
agrees, at its own cost and expense, to keep, repair, maintain
and preserve the Equipment in good order and operating condition,
and in compliance with such maintenance and repair standards and
procedures as are set forth in the manufacturer's manuals
pertaining to the 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 the maintenance
and repair standards of Lessee for similar equipment and with
prudent industry standards and with all requirements of law
applicable to the maintenance and condition of the Equipment.
Lessee shall, at its own cost and expense, supply the necessary
power and other items required in the operation of the Equipment.
Lessee hereby waives any right now or hereafter conferred by law
to make repairs on the Equipment at the expense of Lessor.
SECTION 12. Replacement of Parts; Alterations;
Modifications and Additions. In case any part, component or unit
of the Equipment is required to be altered or modified, or any
equipment or appliance is required to be altered, added, replaced
or modified on any item of Equipment or in either case in order
to comply with the 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. Such Required Alteration shall immediately be and
become the property of Lessor hereunder and subject to the terms
of this Agreement. Lessee agrees that, within thirty (30) days
after the close of any calendar quarter in which Lessee has made
any material Required Alteration, Lessee will give written notice
thereof to Lessor describing, in reasonable detail, the Required
Alteration and specifying the cost thereof and the date or dates
when made. All parts, equipment and appliances incorporated or
installed in or attached to any item of Equipment in connection
with servicing, repairing, maintaining and overhauling any item
of Equipment pursuant to the requirements of Sections 10 or 11
hereof ("Replacement") shall be considered accessions to such
item of Equipment and shall immediately, without further act, be
and become the property of Lessor and part of the Equipment.
Lessee may, without the prior written consent of Lessor, affix or
install any accessory, equipment or device on the Equipment or
make any improvement or addition thereto other than a Required
Alteration or Replacement ("Improvement"); provided that, (a) a
nonremovable Improvement may only be made to the Equipment if
such Improvement does not reduce the value of the Equipment and
(b) any other Improvement may only be made to the Equipment if
such Improvement is readily removable without causing damage to
the Equipment or impairing the value, utility or condition the
Equipment would have had if such Improvement had not been so
affixed or installed. Improvements shall be considered
accessions to the Equipment and shall immediately without further
act, be and become the property of Lessor and part of the
Equipment. At the time title to any replacement Part, equipment
or appliance has become vested in Lessor pursuant to the
provisions of this Section 12, title to the part, equipment or
appliance replaced thereby shall thereupon vest in Lessee in its
individual capacity.
SECTION 13. Identification; Inspection; Reports; Change of
Chief Executive Office and/or Name.
(a) Identification. If requested by Lessor, Lessee
shall, promptly after each Acceptance Date, mark each item of the
Equipment accepted under this Agreement on such date so as to
identify that such item is owned by Lessor.
(b) Inspection. Lessor shall have the right on any
Business Day during normal business hours and upon reasonable
notice to Lessee to inspect (i) the Equipment (wherever located)
and (ii) Lessee's records with respect thereto; provided,
however, Lessor will conduct no such inspection which in Lessor's
reasonable judgment is likely to disrupt Lessee's business
operations. Upon receipt of Lessor's notice requesting to
inspect certain Equipment, Lessee shall promptly notify Lessor of
the location of the Equipment and shall make all necessary
arrangements to facilitate the inspection.
(c) Reports. Upon Lessor's written request, Lessee
shall furnish Lessor with an accurate statement showing the then
current location of each item of the Equipment.
(d) Change of Chief Executive Office and/or Name.
Lessee shall give Lessor written notice on or prior to the date
as of which Lessee shall change (i) its chief executive office
from the address referenced therefor in this Agreement and/or
(ii) its name. Lessee shall stipulate the new address and/or its
new name in such notice.
SECTION 14. Assignment, Sublease or Transfer; Assignment;
Consolidation and Merger.
(a) Assignment, Sublease or Other Transfer by Lessee.
LESSEE WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR
(WHICH SHALL BE GIVEN OR WITHHELD IN LESSOR'S SOLE DISCRETION),
ASSIGN, SUBLEASE OR OTHERWISE TRANSFER ITS RIGHTS OR OBLIGATIONS
WITH RESPECT TO ANY OF THE EQUIPMENT, HEREUNDER OR UNDER ANY OF
THE OTHER TRANSACTION DOCUMENTS AND ANY ATTEMPTED ASSIGNMENT,
SUBLEASE OR OTHER TRANSFER BY LESSEE WITHOUT SUCH LESSOR CONSENT
SHALL BE NULL AND VOID.
With respect to any sublease for which Lessor provides its
written consent, such sublease must be a Permitted Sublease, no
such sublease by Lessee will reduce any of the obligations of
Lessee hereunder or the rights of Lessor 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. Lessee shall
furnish to Lessor not later than the effective date of such
sublease (i) new insurance certificates from Lessee's insurance
broker, in form and substance satisfactory to Lessor, indicating
compliance with the insurance provisions of this Agreement and
(ii) an officer's certificate from Lessee naming the sublessee
and specifying the address for the sublessee's chief executive
office. Lessee shall, and shall cause such sublessee to, execute
and deliver such instruments to the appropriate Person for filing
and to deliver copies of the same to Lessor (including sublease
agreements and Uniform Commercial Code financing statements) as
may be requested by Lessor in connection with any such sublease.
(b) Assignment By Lessor. Lessor may at any time (i)
assign, sell or transfer, in whole or in part, Lessor's right,
title and interest in, to and under this Agreement and any Lease
Supplement, including, without limitation, the right to receive
any or all Payments payable under this Agreement and under any
Lease Supplement with respect to the Equipment and (ii) sell or
transfer all of Lessor's right, title and interest in and to the
Equipment. Any such assignee, purchaser or transferee of
Lessor's rights (an "Assignee") shall have all of Lessor's right,
title and interest hereunder to the extent that the same relate
to the interest of the Assignee covered by the assignment,
including, without limitation, the right to receive such
Assignee's portion of the Basic Payments payable for the
Equipment sold or transferred for all Basic Payment Periods
commencing on or after the date of such assignment, the right to
receive such Assignee's portion of the Supplemental Payments
which are payable as a result of acts or events which occur on or
after the date of such assignment and the right to enforce,
either in such Assignee's name or in Lessor's name, but without
cost or expense to Lessor, all of Lessor's rights hereunder
assigned to such Assignee. Any Assignee may re-assign all or a
portion of its right, title and interest received in accordance
with the terms hereof. Any such assignment shall be subject to
Lessee's rights hereunder so long as no Event of Default has
occurred and is continuing hereunder; provided, however, Lessee
shall be deemed to have released Lessor from any liability under
this Agreement arising after the effective date of the assignment
and shall thereafter look solely to the Assignee for obligations
hereunder arising after such effective date. Lessee shall be
under no obligation to any Assignee except upon written notice of
such assignment from Lessor. Upon written notice from Lessor to
Lessee of such assignment, Lessee agrees to pay the Basic
Payments and Supplemental Payments to the Assignee in accordance
with the terms of this Agreement supplemented by the instructions
specified in such notice, to give all notices which are required
or permitted to be given by Lessee to Lessor hereunder to the
Person(s) specified to receive the same in such notice of
assignment and to otherwise comply with all reasonable notices,
directions and demands which may be given by such Assignee in
accordance with the provisions of this Agreement. Lessee agrees
to deliver to any Assignee an acknowledgement of the assignment
together with an opinion of Lessee's counsel regarding the
validity and enforceability of this Agreement and each Lease
Supplement against Lessee, an incumbency certificate of Lessee
and such authorizing resolutions as such Assignee may reasonably
request; provided, however, all out-of-pocket fees and expenses
incurred by Lessee in connection with the production or delivery
of the foregoing documents referenced previously in this sentence
shall be for the account of Lessor or such Assignee, as agreed to
by such parties.
Lessor may also transfer all, but not less than all, of
Lessor's right, title and interest in, to and under the other
Transaction Documents to the Assignee and after the effective
date of such transfer, the Assignee shall have all of Lessor's
right, title and interest under such other Transaction Documents.
(c) Consolidation, Merger, Conveyance, Transfer and
Lease By Lessee. Lessee shall not consolidate with or merge into
any other corporation or convey, transfer or lease substantially
all of its stock or assets as an entirety or in one or more
parcels to any Person or Persons unless:
(i) Lessee is the surviving entity of any such
consolidation or merger and the requirements of Sections
14(c)(ii)(B)-(D) are satisfied; or
(ii) (A) the corporation formed by such
consolidation or into which Lessee is merged, or the Person
which acquires by conveyance, transfer or lease of
substantially all of the stock or assets of Lessee as an
entirety, shall be a Solvent corporation organized and
existing under the laws of the United States or any state
thereof or the District of Columbia and shall execute and
deliver to Lessor an agreement containing an effective
assumption by such successor, transferee or lessee
corporation of the due and punctual performance and
observance of each covenant and condition of this Agreement;
provided any conveyance, transfer or lease of substantially
all of its stock or assets shall not release Lessee from its
obligations under this Agreement, which obligations shall at
all times remain primary and direct;
(B) immediately prior to and after giving
effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;
(C) immediately after giving effect to such
transaction, the consolidated tangible net worth
(computed on the same basis as the Consolidated
Tangible Net Worth) of the corporation formed by such
consolidation or into which Lessee is merged or the
Person which acquired by conveyance, transfer or lease
substantially all the stock or assets of Lessee as an
entirety, as the case may be, shall not be less than
one hundred percent (100%) of the Consolidated Tangible
Net Worth of Lessee as reflected in the then most
recent financial statement furnished by Lessee pursuant
hereto prior to such consolidation, merger, conveyance,
transfer or lease; and
(D) Lessee shall have delivered to Lessor a
certificate signed by an officer, who may be the
President, any Vice President, the Chief Executive
Officer or the Chief Financial Officer, stating that
such consolidation, merger, conveyance, transfer or
lease and the assumption agreement mentioned in clause
14(c)(ii)(A) above comply with the requirements of this
Section 14(c) and that all conditions precedent herein
provided for relating to such transaction have been
complied with.
Upon any consolidation or merger in which Lessee is not the
surviving corporation, or any conveyance, transfer or lease of
substantially all the stock or assets of Lessee as an entirety,
in each case in accordance with this Section 14(c), the successor
corporation formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for (but without release of
Lessee from any of its obligations hereunder with respect to any
conveyance, transfer or lease of substantially all the stock or
assets of Lessee as an entirety), and may exercise every right
and power of, Lessee under this Agreement with the same effect as
if such successor corporation had been named as a Lessee herein.
SECTION 15. Liens; Permitted Contests. Lessee will not
directly or indirectly create, incur, assume or suffer to exist
any Lien on or with respect to any item of Equipment, or Lessor's
title (or Lessee's title) thereto, except the following
(collectively, the "Permitted Liens"): (a) any Lien granted to
Lessor hereunder or granted or placed thereon by Lessor as a
result of an assignment pursuant to Section 14(b) hereof, (b) any
Lien resulting from an independent act of or claim against Lessor
which does not result from, arise out of or relate to the
manufacture, acquisition, ownership, operation, repair,
maintenance, storage, usage or leasing of such item of Equipment
or this Agreement or any Lease Supplement or any Default or Event
of Default, (c) any Lien for Taxes or Other Impositions either
not yet delinquent or which are the subject of a Permitted
Contest, and (d) any materialmen's, mechanics', workmen's,
repairmen's or employees' lien or any other like Lien arising in
the ordinary course of business, which is not delinquent or the
subject of a Permitted Contest. Lessee, at its own expense, will
promptly pay, satisfy and otherwise take such actions as may be
necessary to keep each item of Equipment free and clear of, and
to duly discharge or eliminate or bond in a manner satisfactory
to Lessor, any such Lien not excepted above if the same shall
arise at any time. Lessee will maintain each Lien on the
Equipment granted hereunder in favor of Lessor as a first
priority, perfected security interest. Lessee will notify Lessor
and any Assignee in writing promptly upon becoming aware of any
Taxes or Other Impositions or other Lien (other than any Lien
excepted above) that shall attach to any item of Equipment and of
the full particulars thereof.
Lessee shall pay, and save Lessor harmless against, any and
all losses, judgments, decrees and costs (including, without
limitation, all reasonable attorneys' fees and expenses) in
connection with any Permitted Contest and shall promptly after
the final settlement, compromise or determination (including any
appeals) of such contest, fully pay and discharge the amounts
which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith,
together with all penalties, fines, interests, costs and expenses
thereof or in connection therewith, and perform all acts, the
performance of which shall be ordered or decreed as a result
thereof.
SECTION 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 the Equipment, however caused or
occasioned, such risk to be borne by Lessee with respect to the
Equipment from the Acceptance Date therefor, and continuing until
the Equipment has been delivered in accordance with the
provisions of Section 6 hereof or has been purchased by Lessee or
a third party in accordance with the provisions of Sections 5 or
29 hereof. Lessee agrees that no occurrence specified in the
preceding sentence shall impair, in whole or in part, any
obligation of Lessee under this Agreement, including, without
limitation, the obligation to make Payments.
(b) Event of Loss with Respect to Equipment. (i) Upon
the occurrence of an Event of Loss with respect to any item of
Equipment during the Term, Lessee shall forthwith (and in any
event within ten (10) days after such occurrence) give Lessor
written notice of such Event of Loss and of its election to
perform one of the following options (it being agreed that if
Lessee shall not have given Lessor notice of such election within
such ten (10) days after such occurrence, Lessee shall be deemed
to have elected to perform the option set forth in the following
clause (B)), provided that Lessee shall not have the right to
select the option set forth in the following clause (A) if a
Default or Event of Default shall have occurred and be continuing
and in such circumstance shall be deemed to have selected the
option set forth in the following clause (B):
(A) As promptly as practicable, and in any event
within thirty (30) days of the occurrence of such Event of
Loss, Lessee shall convey or cause to be conveyed to Lessor
pursuant to Section 16(b)(ii), and to be leased by Lessee
hereunder in replacement for such item of Equipment, a
replacement item (the "Replacement Item"), such Replacement
Item to be free and clear of all Liens (other than Permitted
Liens) and to have a value and utility at least equal to,
and be in as good operating condition as, the item of
Equipment with respect to which such Event of Loss occurred,
assuming such item of Equipment was of the value and utility
and in the condition and repair required by the terms hereof
immediately prior to the occurrence of such Event of Loss;
provided that, if Lessee shall not perform its obligation to
effect such replacement under this clause (A) during the
period of time provided herein, then Lessee shall promptly
give notice to Lessor, and shall be deemed (whether or not
Lessee shall have so given such notice) to have elected to
perform the option set forth in clause (B) below by the date
and pursuant to the terms specified in said clause.
(Notwithstanding such Event of Loss, Lessee's obligation to
pay Basic Payments shall continue.)
(B) On the Casualty Loss Value Date next following the
earlier of thirty (30) days after the occurrence of such
Event of Loss and the date of receipt of insurance proceeds
in respect of such occurrence, Lessee shall pay Lessor the
sum of (i) the Termination Value (computed as of the
Casualty Loss Value Date next following the date of such
Event of Loss) for all the Equipment then subject to the
Event of Loss, plus (ii) all accrued and unpaid Basic
Payments (and/or any pro rata portion thereof) owing for all
Basic Payment Periods (and/or any pro rata portion thereof)
prior to such Casualty Loss Value Date, plus (iii) all
Supplemental Payments then accrued and unpaid or due and
owing. Upon payment in full of amounts specified in clauses
(i) through (iii) of the preceding sentence, (A) the
obligation of Lessee to pay Basic Payments hereunder, with
respect to such item of Equipment for all Basic Payment
Periods commencing after the occurrence of such Event of
Loss shall terminate, (B) the Term shall end with respect to
such item of Equipment, and (C) Lessor shall transfer to
Lessee, or Lessee's designee, its title to such item of
Lessor Titled Equipment consistent with the settlement terms
of Section 29(e) hereof.
(ii) Conveyance of Replacement Equipment. Prior
to or at the time of any conveyance of a Replacement Item,
Lessee, at its own expense, will furnish, or cause to be
furnished, to the Lessor the following documents (in form
and substance satisfactory to Lessor) which shall have been
duly authorized, executed and delivered by the respective
parties thereto and shall be in full force and effect on the
date of such conveyance:
(A) with respect to any such Replacement
Item, a full warranty bill of sale and Uniform
Commercial Code financing statements and such other
evidence of title as Lessor or its counsel may
reasonably request;
(B) a supplement to this Agreement, and if a
Permitted Sublease is in force and effect to such
Permitted Sublease, in each case covering such
Replacement Item, duly executed by Lessee and the
sublessee under the Permitted Sublease, if any;
(C) such evidence of compliance with the
insurance provisions of this Agreement with respect to
such Replacement Item, as Lessor may reasonably
request, including an independent insurance broker's
report (stating the opinion of such insurance broker
that such insurance complies with the terms of this
Agreement) with certificates of insurance; and
(D) such other documents and evidence with
respect to Lessee as Lessor or its counsel, may
reasonably request in order to establish the
consummation of the transactions contemplated by this
Section 16(b), the taking of all corporate proceedings
in connection with and compliance with the conditions
set forth in this Section 16(b), in each case in form
and substance satisfactory to Lessor.
Upon full compliance by Lessee with the terms of this
Section 16(b), Lessor shall convey to Lessee in its individual
capacity, at Lessee's cost and expense, all of Lessor's right,
title and interest, as-is, where-is, without recourse or
warranty, express or implied, in and to such replaced item of
Lessor Titled Equipment, with respect to which Event of Loss
occurred. No Event of Loss with respect to an item of Equipment
under the circumstances contemplated by the terms of this Section
16(b) shall result in any reduction in Basic Payments or Lessee's
obligation to pay Basic Payments hereunder.
Lessee further agrees to take such further action as Lessor
may reasonably request with respect to such Replacement Item to
perfect the interest of Lessor in such Replacement Item.
(c) Application of Other Payments Upon Event of Loss.
Any payments for damages to the Equipment (including, without
limitation, insurance proceeds) received at any time by Lessor or
by Lessee from any insurer, governmental authority or other party
as a result of the occurrence of an Event of Loss will be applied
as follows: (i) any such payments received at any time by Lessee
shall be promptly paid to Lessor for application pursuant to the
following provisions of this Section 16(c); (ii) so much of such
payments as shall not exceed the amounts required to be paid by
Lessee pursuant to Section 16(b) hereof shall be applied in
reduction of Lessee's obligation to pay such amount, if not
already paid by Lessee, or, if already paid by Lessee, shall be
applied to reimburse Lessee for its payment of such amount,
unless a Default or an Event of Default shall have occurred and
be continuing; and (iii) the balance, if any, of such payments
remaining thereafter shall be paid to or retained by Lessee,
unless a Default or an Event of Default shall have occurred and
be continuing.
(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
insurer, governmental authority or other party with respect to
any condemnation, confiscation, theft or seizure of, or
requisition of title to or use of, or loss or damage to, any item
of the Equipment not constituting an Event of Loss, will be
applied (if no Default or Event of Default shall have occurred
and be continuing) directly in payment of repairs or for
replacement of property in accordance with the provisions of
Sections 11 and 12 hereof, if not already paid by Lessee, or if
already paid by Lessee and if no Default or 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 said Sections 11 and 12 with respect to
such loss or damage shall be paid to or retained by Lessee.
SECTION 17. Insurance.
(a) Coverage. Lessee shall:
(i) maintain property damage insurance for the
Equipment in an amount not less than Termination Value for
all property damage and loss including, without limitation,
loss, vandalism, malicious mischief, damage from fire, and
normal extended coverage perils customarily included in
policies available with respect to property comparable to
the Equipment;
(ii) maintain comprehensive general public
liability, including blanket contractual, personal injury,
property damage and loss of use of property of others,
insurance applicable to the Equipment in such amounts
usually carried by Lessee but in any event with a combined
single limit of not less than Termination Value or such
other amount as is mutually agreed to by Lessee and Lessor,
as such agreement shall be reflected in the Lease Supplement
applicable to certain Equipment; and
(iii) maintain such other insurance with respect to
the Equipment in such amounts and against such insurable
hazards as is usually carried by Lessee, but any loss of the
type customarily covered by the policies described in
Sections 17(a)(i) and (ii) whether actually covered in whole
or in part by such policies, shall be the responsibility of
Lessee and the absence of such coverage shall not relieve
Lessee from any of its obligations under any of the
documents or agreements related to the Overall Transaction.
All insurance policies carried in accordance with this
Section 17(a) (excepting any self-insurance permitted under this
Agreement) shall be maintained with insurers of recognized
responsibility and standing in the industry.
Any insurance policies carried in accordance with this
Section 17 shall be subject only to (A) exclusions of the sort
existing in the insurance policies in effect on the Acceptance
Date and (B) deductible amounts and/or retentions not in excess
of $100,000 per occurrence with respect to comprehensive general
public liability insurance and $10,000 per occurrence with
respect to property insurance.
Notwithstanding anything to the contrary in this Section 17,
(i) Lessee shall at all times maintain insurance with respect to
the Equipment in accordance with its standard corporate minimum
practice with respect to other similar equipment and (ii) any
loss of the type customarily covered by the policies described in
Sections 17(a), whether actually covered in whole or in part by
such policies, shall be the responsibility of Lessee and the
absence of such coverage shall not relieve Lessee from any of its
obligations under any of the documents or agreements related to
the Overall Transaction.
(b) Policy. Any insurance policy maintained by Lessee
pursuant to Section 17(a) hereof (excepting any self-insurance
permitted under this Agreement) shall:
(i) specify Lessor, as its interest may appear,
as a loss payee with respect to property damage insurance
and as an additional insured with respect to liability
insurance;
(ii) include effective waivers by the insurer of
all claims for insurance premiums or commissions or (if such
policies provide for the payment thereof) additional
premiums or assessments against Lessor;
(iii) provide that in respect of the interests of
Lessor such policies shall not be invalidated by any action
or inaction of Lessee or any other Person (except for
nonpayment of premiums, in which case Lessor shall receive
at least thirty (30) days prior written notice of such
nonpayment from the respective insurance carriers prior to
the invalidation of any insurance coverage referenced
hereunder) and shall insure the rights and interests of
Lessor regardless of, and any claims for losses shall be
payable notwithstanding:
(A) any act of negligence, including,
without limitation, any breach of any condition or
warranty in any policy of insurance, by Lessee, Lessor
or any other Person;
(B) the use of the Equipment for purposes
more hazardous than permitted by the terms of the
policy;
(C) any foreclosure or other proceeding or
notice of sale relating to the Equipment; or
(D) any change in the title to or ownership
of the Equipment;
(iv) provide that such insurance shall be primary
insurance and that the insurers under such insurance
policies shall be liable under such policies without right
of contribution from any other insurance coverage effected
by or on behalf of Lessor under any other insurance policies
covering a loss that is also covered under the insurance
policies maintained by Lessee pursuant to this Section 17
and shall expressly provide that all provisions thereof,
except the limits of liability (which shall be applicable to
all insureds as a group) and liability for premiums (which
shall be solely a liability of the Lessee), shall operate in
the same manner as if there were a separate policy covering
each insured;
(v) provide that any material adverse change
therein shall not be effective as to Lessor until at least
thirty (30) days after receipt by Lessor of written notice
thereof and provide that any cancellation thereof shall not
be effective as to Lessor until receipt by Lessor of written
notice of cancellation at thirty (30) days before the
effective date of cancellation;
(vi) waive any right of subrogation of the
insurers against Lessor and waive any right of the insurers
to any setoff or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any
liability of Lessor;
(vii) provide that the whole or any part of the
right, title and interest of Lessor or Lessee therein may be
assigned; and
(viii) subject to Section 17(a) hereof, be reasonably
satisfactory to Lessor in all other material respects.
(c) Evidence of Insurance. Lessee shall deliver to
Lessor by the Acceptance Date for each item of the Equipment
certificates of insurance evidencing the provisions described in
Sections 17(a) and 17(b)(i-vii) hereof executed by the insurer or
its duly authorized agent.
(d) Annual Insurance Certificate. By the annual
anniversary of the Acceptance Date for each item of the Equipment
of each year commencing with January 27, 1995, and within thirty
(30) days after any material adverse change (including, without
limitation, any material increase in deductible and/or retention
amounts) in the information set forth in the certificates
provided pursuant to Section 17(c) hereof, Lessee shall deliver
to Lessor a certificate of insurance with respect to the same
items as described in Section 17(c).
SECTION 18. General Tax Indemnity. Lessee hereby assumes
liability for, and does hereby agree, whether or not any of the
transactions contemplated hereby are consummated, to indemnify,
protect, save, defend, exonerate, pay and hold harmless Lessor,
each Assignee and each of their respective officers, directors,
stockholders, successors, assigns, agents and servants (each such
party may be referred to herein as an "Indemnified Party") on an
after-tax basis (at the then highest marginal federal and
applicable state, local and foreign income tax rates) 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 therein (herein called "Taxes or Other
Impositions") howsoever imposed, whether levied or imposed upon
or asserted against an Indemnified Party, Lessee or the Equipment
by any federal, state 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, (b) the manufacture, construction, ordering, purchase,
acceptance or rejection, ownership, delivery, leasing,
re-leasing, subleasing, possession, use, operation, maintenance,
storage, registration or re-registration, titling or re-titling,
licensing or re-licensing, documentation, removal, return, sale
(including, without limitation, sale to Lessee by an Indemnified
Party pursuant to the terms hereof) or other applications or
dispositions thereof, (c) the payments, receipts or earnings
arising from the Equipment, or (d) this Agreement, any document,
instrument, agreement or contract entered into in relation hereto
or otherwise in relation to the Equipment or any payments payable
by Lessee or to an Indemnified Party hereunder or pursuant to any
document, instrument, agreement or contract entered into in
relation hereto or otherwise in relation to the Equipment;
provided, however, that the foregoing indemnity shall not apply
to any taxes imposed solely as the result of the gross negligence
or willful misconduct of an Indemnified Party or to the extent
based upon or measured by an Indemnified Party's net income or
gross receipts, which gross receipts tax is in the nature of a
tax on net income (unless such tax is a Covered Income Tax as
hereinafter defined), and which are imposed or levied by any
federal, state or local taxing authority in the United States.
For purposes of this Agreement, a "Covered Income Tax" shall mean
an income tax (including, without limitation, a tax imposed upon
gross income or receipts) imposed on an Indemnified Party by any
state or local taxing authority (excluding the United States
federal government) in whose jurisdiction, an Indemnified Party
(including, without limitation, for this purpose all entities
with which it is combined, integrated or consolidated in such
taxing authority's jurisdiction) would not engage in business,
would not maintain an office or other place of business, and
would not otherwise be located therein, but for an Indemnified
Party's role in the Overall Transaction, with respect to the
Equipment, its manufacture, construction, ordering, purchase,
acceptance or rejection, ownership, delivery, leasing, re-
leasing, subleasing, possession, use, operation, maintenance,
storage, registration or re-registration, titling or re-titling,
licensing or re-licensing, documentation, removal, return, sale
(including, without limitation, sale to Lessee by an Indemnified
Party pursuant to the terms hereof) or other applications or
dispositions thereof, or the presence of Lessee in such
jurisdiction.
Each Indemnified Party shall furnish Lessee with copies of
any requests for information received by such Indemnified Party
from any taxing authority relating to any Taxes or Other
Impositions with respect to which Lessee is required to indemnify
hereunder, and if a claim is made against such Indemnified Party
for any such Taxes or Other Impositions, with respect to which
Lessee is liable for a payment or indemnity hereunder, such
Indemnified Party shall give Lessee notice in writing at least 30
days (or if such Indemnified Party receives notice of such claim
within 30 days of the date a response is required, promptly upon
such receipt) prior to the expiration of the time period for
responding to such claim. Lessee may, at its sole cost and
expense, either in its own name or in the name of such
Indemnified Party, contest the validity, applicability or amount
of any such Taxes or Other Impositions by means of a Permitted
Contest; provided, however, that Lessee shall not be entitled to
pursue such a Permitted Contest without Lessor's prior written
consent (i) beyond the first level of appellate review or (ii) if
the contested amount is greater than $250,000.00. In all cases
except those expressly described in the proviso to the
immediately preceding sentence, an Indemnified Party shall have
the absolute right in its sole discretion to terminate any
Permitted Contest. Lessee shall pay, and save such Indemnified
Party harmless against, any and all losses, judgments, decrees
and costs (including, without limitation, all reasonable
attorneys' fees and expenses) in connection with any Permitted
Contest and shall promptly after the final settlement, compromise
or determination (including, without limitation, any appeals) of
such Permitted Contest, fully pay and discharge the amounts which
shall be levied, assessed, charged or imposed or be determined to
be payable therein or in connection therewith, together with all
penalties, fines, interests, costs and expenses thereof or in
connection therewith, and perform all acts, the performance of
which shall be ordered or decreed as a result thereof. If an
Indemnified Party shall obtain a refund of any amount paid by
Lessee pursuant to this Section 18, such Indemnified Party shall
pay to Lessee the amount of such refund, together with the amount
of any interest actually received by Lessor on account of such
refund. Lessee will promptly notify the appropriate Indemnified
Party of all reports or returns required to be made with respect
to any Taxes or Other Impositions with respect to which Lessee is
required to indemnify hereunder, and will promptly provide such
Indemnified Party with all information necessary for the making
and timely filing of such reports or returns by such Indemnified
Party. If an Indemnified Party requests that any such reports or
returns be prepared and filed by Lessee, 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 such Indemnified Party, and shall
forward the same, together with immediately available funds for
payment of any Taxes or Other Impositions due, to such
Indemnified Party, at least 10 days in advance of the date such
payment is to be made. Upon written request, Lessee shall
furnish an Indemnified Party 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. The
provisions of this Section 18 and all of the indemnities and
obligations of Lessee contained in this Section 18 shall apply to
the Equipment and each component thereof and shall apply from the
date of execution of this Agreement and shall continue in full
force and effect notwithstanding the expiration or earlier
termination of this Agreement or any other documents,
instruments, agreements or contracts entered into in relation
hereto or otherwise in relation to the Equipment or any component
of the Equipment and are expressly made for the benefit of, and
shall be enforceable by, each Indemnified Party.
SECTION 19. General Indemnity. Lessee hereby assumes
liability for, and does hereby agree, whether or not any of the
transactions contemplated hereby are consummated, to indemnify,
protect, save, defend, exonerate, pay and hold harmless each
Indemnified Party on a net after-tax basis (at the then highest
marginal federal and applicable state, local and foreign income
tax rates) from and against any and all obligations, fees,
liabilities, losses, interest, damages, punitive damages,
penalties, fines, claims, demands, actions, suits, judgments,
costs and expenses, including, without limitation, reasonable
legal fees and expenses (including, without limitation, such
legal fees and expenses incurred in connection with the
enforcement of this Agreement or any other Transaction Document),
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, delivery, leasing,
re-leasing, subleasing, possession, use, operation, maintenance,
storage, registration or re-registration, titling or re-titling,
licensing or re-licensing, documentation, removal, return, sale
(including, without limitation, sale by an Indemnified Party to
Lessee pursuant to the terms hereof) or other applications or
dispositions thereof, including, without limitation, any of such
as may arise from (i) loss or damage to any property or death or
injury to any Person, (ii) patent or latent defects in the
Equipment (whether or not discoverable by Lessee or any
Indemnified Party), (iii) any claims based on strict liability in
tort or otherwise, (iv) any claims based on patent, trademark or
copyright infringement, and (v) any claims based on liability
arising under the applicable environmental or noise or pollution
control law or regulation, (b) any failure on the part of Lessee
to perform or comply with any of the terms of this Agreement or
any document, instrument, agreement or contract entered into in
relation hereto or otherwise in relation to the Equipment but
excluding any claim based upon any failure on the part of an
Indemnified Party to comply with its obligations under this
Agreement or any document, instrument, agreement or contract
entered into by such Indemnified Party in relation hereto or
otherwise in relation to the Equipment or (c) any claims,
encumbrances, security interests, liens or legal processes
regarding such Indemnified Party's title to or interest in the
Equipment. Lessee shall not be required to indemnify any
Indemnified Party for any claims resulting from acts which would
constitute the willful misconduct or gross negligence 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 is or is
reasonably likely to be entitled to indemnification hereunder.
The indemnification provided in this Section 19 shall
specifically apply to and include claims or actions brought by or
on behalf of employees of Lessee and Lessee hereby expressly
waives, as against any Indemnified Party, any immunity to which
Lessee may otherwise be entitled under any industrial or worker's
compensation laws. Lessee shall promptly upon request of any
such Indemnified Party (but in any event within 15 days of such
request) 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, 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. 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, reasonable 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 all of the indemnities and the
obligations of Lessee under this Section 19, shall apply to the
Equipment and each component thereof and shall apply from the
date of the execution of this Agreement and shall survive the
expiration or earlier termination of this Agreement and all
documents, instruments, agreements and contracts entered into in
relation hereto or otherwise in relation to the Equipment or any
component of the Equipment and are expressly made for the benefit
of, and shall be enforceable by, each Indemnified Party
SECTION 20. NO WARRANTIES. LESSOR LEASES THE EQUIPMENT TO
LESSEE ON AN AS-IS, WHERE-IS BASIS AND EXCEPT AS OTHERWISE
EXPRESSLY STATED IN THIS AGREEMENT LESSOR EXPRESSLY DISCLAIMS AND
MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESSED OR IMPLIED,
AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE
EQUIPMENT, THE DESIGN OR CONDITION OF EQUIPMENT, ITS
MERCHANTABILITY, DURABILITY, SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF
THE EQUIPMENT, OR THE CONFORMITY OF THE EQUIPMENT TO THE
PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER OR ORDERS
RELATING THERETO, OR ANY OTHER MATTER CONCERNING, ANY ITEM OF THE
EQUIPMENT OR THE FINANCING THEREOF (WHICH DISCLAIMER LESSEE
HEREBY ACKNOWLEDGES). LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING,
WITHOUT LIMITATION, INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR
EXPENSE CAUSED BY ANY ITEM OF THE EQUIPMENT OR BY LESSEE'S LOSS
OF USE THEREOF FOR ANY REASON WHATSOEVER. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, LESSOR SHALL NOT BE LIABLE OR
RESPONSIBLE FOR ANY DEFECTS, EITHER PATENT OR LATENT (WHETHER OR
NOT DISCOVERABLE BY LESSEE), IN ANY ITEM OF THE EQUIPMENT, OR FOR
ANY DIRECT OR INDIRECT DAMAGE TO PERSONS OR PROPERTY RESULTING
THEREFROM, OR FOR LESSEE'S LOSS OF USE OF ANY ITEM OF THE
EQUIPMENT OR FOR ANY INTERRUPTION IN LESSEE'S BUSINESS CAUSED BY
LESSEE'S INABILITY TO USE ANY ITEM OF THE EQUIPMENT 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 all of the Equipment described in a
particular Lease Supplement shall be subject to this Agreement
and Lessee shall be entitled to possession of the Equipment
hereunder, Lessor authorizes Lessee, at Lessee's sole expense, to
assert for Lessor's account, all rights and powers of Lessor
under any manufacturer's, vendor's or dealer's warranty on any
item of Equipment; 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.
SECTION 21. Lessee's Representations, Warranties and
Covenants. Lessee hereby represents, warrants and covenants to
Lessor that:
(a) Due Organization and Existence. Lessee is a
corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation, and is
qualified to do business in each jurisdiction in which such
qualification is necessary in order for Lessee to carry on its
business and to perform its obligations hereunder, and is in good
standing under the laws of each jurisdiction in which the failure
to be in good standing would have a material adverse effect on
the condition (financial or otherwise) of Lessee;
(b) Power and Authority. Lessee has the corporate
power and authority to execute and perform this Agreement and the
other Transaction Documents to which Lessee is a party and to
lease the Equipment hereunder, and has duly authorized the
execution, delivery and performance of this Agreement and the
other Transaction Documents to which Lessee is a party;
(c) Due Authorization. The leasing of the Equipment
from Lessor by Lessee, the execution and delivery by Lessee of
this Agreement and each Transaction Document to which it is a
party, and the compliance by Lessee with the terms hereof and
thereof, and the payment 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 articles
of incorporation, by-laws or of any provisions of any agreements
relating to shares of the capital stock of Lessee, and (iii) will
not violate or constitute a breach of any provisions of law
applicable to Lessee, any order, writ, injunction, decree,
determination or award of any court or other agency of government
applicable to Lessee, or any indenture, agreement or other
instrument to which Lessee is a party, or by or under which
Lessee or the Guarantor or any of Lessee's property is bound, or
be in conflict with, result in a breach of, or constitute (with
due notice or lapse of time) a default under any such indenture,
agreement or any instrument, or result in the creation or
imposition of any Lien upon any of Lessee's property or assets;
(d) Enforceability. This Agreement, each Lease
Supplement and every other Transaction Document have been (or in
the case of future Lease Supplements, will be) executed by the
duly authorized officer or officers of Lessee and delivered to
Lessor and constitute (or in the case of future Lease
Supplements, will constitute) the legal, valid and binding
obligation of Lessee, enforceable in accordance with its terms;
(e) No Consents. Except as set forth in subsection
(g) below, neither the execution and delivery of this Agreement,
or any other Transaction Document by Lessee nor the payment and
performance by Lessee of all of its obligations hereunder and
thereunder, nor the sale of the Equipment by any Seller to Lessor
for the purpose of leasing the same to Lessee under this
Agreement requires the consent or approval of, the giving of
notice to, the registration, filing or recording with or the
taking of any action that has not already been taken and
completed in respect of, any federal, state, local or foreign
government or governmental authority or agency;
(f) No Liens. No mortgage, deed of trust, or other
Lien (other than the Lien granted to Lessor hereunder) 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 any item of Equipment, or in any manner
affects or will affect adversely Lessor's rights and interests
therein;
(g) Perfection of Security Interest. Except for the
filing of Uniform Commercial Code financing statements with the
filing offices referenced in Exhibit B, no further action,
including any filing or recording of any document (including,
without limitation, any additional financing statements under
Article 9 of the Uniform Commercial Code of any applicable
jurisdiction) is necessary in order to establish and perfect
Lessor's title to and interest in, the Equipment as against
Lessee or any third parties in any applicable jurisdiction;
(h) Financial Statements. All balance sheets,
statements of profit and loss and other financial data that have
been delivered to Lessor with respect to the Lessee (and its
Subsidiaries) (i) are complete and correct in all material
respects, (ii) accurately present the financial condition of the
Lessee (and its Subsidiaries) on the dates for which, and the
results of their respective 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; all
balance sheets disclose all known material liabilities, direct
and contingent, as of their respective dates, and there has been
no change in the condition of Lessee (and its Subsidiaries),
financial or otherwise, since the date of the most recent
financial statements delivered to Lessor with respect to the
Lessee (and its Subsidiaries), other than changes in the ordinary
course of business, none of which changes, either separately or
in the aggregate, has been materially adverse;
(i) No Litigation. There is no litigation or any
other proceedings now pending or, to the knowledge of Lessee,
threatened, against or affecting 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 and interest of Lessor in and to the
Equipment, or which, in the reasonable opinion of Lessee's
management, is likely to affect materially and adversely, the
business, properties, operations or condition of Lessee
(financial or otherwise), other than as disclosed in Lessee's
consolidated financial statements;
(j) Income Tax Return. Lessee has filed all United
States income tax returns which are required to be filed, and has
paid, or made provisions for the payment of, all taxes which have
or may become due pursuant to said returns or pursuant to any
assessment received by Lessee, except such taxes, if any, as are
being contested by means of a Permitted Contest;
(k) ERISA. The Lessee has not entered into the
Overall Transaction, directly or indirectly, in connection with
any arrangement in any way involving any employee benefit plan or
related trust to which it is a party in interest, all within the
meaning of the ERISA and the Code;
(l) Investment Company. Lessee is not an "investment
company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as
amended;
(m) Taxes. All sales, use, documentation or similar
taxes, fees or other charges due and payable prior to or as of
the date of each Lease Supplement shall be paid prior to or as of
the date of each Lease Supplement to the extent such are in
connection with the sale to and purchase by Lessor of the
Equipment or the leasing of the Equipment by Lessor to Lessee;
(n) No Offer to Sell or Assign. Lessee has not
offered any interest in this Agreement, the Payments, or the
Equipment or any similar security for sale to, or solicited
offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any prospective purchaser,
other than Lessor;
(o) Invoices. In connection with each Lease
Supplement, Lessee shall deliver or cause to be delivered to
Lessor true, correct and complete copies of all purchase
agreements, offering documents and invoices for the Equipment;
(p) Adverse Contract. Lessee is not a party to, or
bound by, any contract, agreement or instrument or subject to any
corporate restriction that would conflict with this Agreement or
any other Transaction Document or a breach of which would likely
have a material adverse effect on the business, properties,
operations or condition (financial or otherwise) of Lessee;
(q) Misrepresentation. Neither this Agreement nor any
other Transaction Document contains any misrepresentation or
untrue statement of fact or omits to state any material fact
necessary to make any of such Transaction Documents not
misleading;
(r) Solvency. Lessee is Solvent and it will remain
Solvent after giving effect to its entering into this Agreement
and each other Transaction Document to which it is a party and
carrying out any of the Overall Transaction;
(s) Equipment Representations, Warranties and
Indemnities. Lessee is not a party to, or a beneficiary of, any
contract, agreement or other document providing for any
representation, warranty, covenant or indemnity relating to the
Equipment and effective subsequent to the date hereof, and Lessee
shall promptly notify Lessor in writing if Lessee hereinafter
becomes such a party or a beneficiary;
(t) Chief Executive Office. The chief executive
office of Lessee is located at 8100 Denmark Road, Charlotte,
North Carolina 28273 and has been located at such address for no
less than the four (4) months prior to the date hereof; and
(u) Trade Names. Lessee has not, and does not, use
any trade name or any other name in the conduct of its business
except for (i) its name set forth on the signature page hereof
and (ii) the names listed on Exhibit C attached hereto.
SECTION 22. Events of Default. Any of the following events
shall constitute an "Event of Default" (whether any such event
shall be voluntary or involuntary, or come about or be effected
by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) Payment. Lessee shall fail to make (i) any Basic
Payments within five (5) days after verbal or written notice to
Lessee (as Lessor may elect in its sole discretion) that the same
is due and payable or (ii) any Supplemental Payment within ten
(10) days after receipt of written notice to Lessee that the same
is due and payable; or
(b) Certain Covenants. Lessee shall fail to observe
or perform any of the covenants or agreements of Lessee set forth
in Sections 6, 8, 14(a), 14(c), 15, 17 or 29 hereof; or
(c) Other Covenants. Lessee shall fail to perform or
observe any other covenant, condition, or agreement to be
performed or observed by it under this Agreement, or in any
agreement or certificate furnished to Lessor 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; provided, however, that if
Lessee shall have undertaken to cure any such failure and,
notwithstanding the reasonable diligence of Lessee in attempting
to cure such failure, such failure is not cured within said
thirty (30) day period but is curable with future due diligence,
there shall exist no Event of Default under this Section 22 for
such further time, not to exceed sixty (60) days, as may
reasonably be required to effect such cure, so long as Lessee is
proceeding with due diligence to cure such failure; or
(d) Default under Other Documents - Lessee. Lessee
shall be in default under any of the Transaction Documents to
which it is a party or with respect to any of the
representations, warranties, covenants or other provisions set
forth in that certain Amended and Restated Loan Agreement dated
as of December 16, 1994 (as the same may be amended, modified,
extended, replaced or substituted from the date hereof until the
final Basic Payment Date under the respective Lease Supplements,
the "Loan Agreement") among Lessee, CHW Corporation, Wachovia
Bank of North Carolina, N.A. and NationsBank of North Carolina,
N.A. (now known as NationsBank, N.A. (Carolinas)), as agent for
such lenders; provided, however, that (i) in the event the Loan
Agreement shall be refinanced or replaced by another credit
agreement, then so long as the Bank shall be a party thereto, the
representations, warranties, covenants and other provisions
hereunder shall be amended, and deemed to be replaced by, those
representations and warranties, covenants and other provisions
contained in such replacement credit agreement and (ii) if the
Loan Agreement is replaced and the Bank is not a party to such
replacement credit agreement or the Loan Agreement is terminated
and not replaced, then the representations, warranties, covenants
and other provisions shall be as provided herein as of the date
of such replacement or termination; or
(e) Bankruptcy; Insolvency - Lessee. Lessee shall
become insolvent or bankrupt 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 a substantial part of its property without its
consent and shall not be dismissed for a period of sixty (60)
days; or any petition for the relief, reorganization or
arrangement of Lessee or any other petition in bankruptcy or for
the liquidation, insolvency or dissolution of Lessee shall be
filed by or against Lessee and, if filed against Lessee shall be
consented to or be pending and not dismissed for a period of
sixty (60) days; or an order for relief under any bankruptcy or
insolvency law shall be entered by any court or governmental
authority of competent jurisdiction with respect to Lessee; or
any execution or writ of process shall be issued under any action
or proceeding against Lessee whereby any item of Equipment may be
taken or restrained; or Lessee's corporate existence shall cease;
or Lessee shall, without Lessor's prior written consent, sell,
transfer or dispose of, or pledge or otherwise encumber, all or
substantially all of its assets or property, or, except as
expressly permitted hereby, consolidate or merge with any other
entity, or engage in any form of corporate reorganization; or
(f) Misrepresentation - Lessee. Any material
representation, warranty, statement or certification made by
Lessee under this Agreement or in any other Transaction Document
to which Lessee is a party or in any document or certificate
furnished to Lessor in connection herewith or pursuant hereto)
shall prove to be untrue or incorrect when made in any material
respect, or shall be breached in any material respect.
SECTION 23. Remedies Upon Default. Upon the occurrence of
any Event of Default, Payments hereunder may be accelerated at
Lessor's sole election without further action and at any time
thereafter so long as the same shall be continuing, Lessor may
exercise one or more of the following remedies with respect to
the Equipment or any part thereof as Lessor in its sole
discretion shall elect:
(a) Return of Equipment. Lessor may cause Lessee,
upon the demand of Lessor and at Lessee's expense, to, and Lessee
shall, promptly return the Equipment (or any item thereof) as
Lessor may demand to Lessor at such location, in the manner and
condition required by, and otherwise in accordance with all the
provisions of, Section 6 hereof as if the Equipment were being
returned at the end of the Term; or Lessor, at its option, may
enter upon the premises where the Equipment is located or
believed to be located and take immediate possession of and
remove the Equipment (or any items thereof) without the necessity
for first instituting proceedings, or by summary proceedings or
otherwise, and Lessee shall comply therewith, all without
liability to Lessor for or by reason for such entry or taking
possession, whether for the restoration of damage to property
caused by such taking or otherwise;
(b) Sell, Use, Lease or Otherwise Employ Equipment.
Lessor may, by the exercise of its rights under Section 35 hereof
or otherwise, (i) sell or otherwise dispose of the Equipment, at
public or private sale and with or without notice to Lessee or
advertisement, as Lessor may determine or (ii) hold, use,
operate, lease to others or keep idle all or any part of the
Equipment as Lessor, in its sole discretion, may determine, in
the case of (i) or (ii) of this Section 23(b) free and clear of
any rights of Lessee except as hereinafter set forth in this
Section 23 and without any duty to account to Lessee with respect
to such action or inaction or for any proceeds with respect
thereto except to the extent required by Section 23(d) hereof in
the event Lessor elects to exercise its rights under said Section
23(d) in lieu of its rights under Section 23(b) hereof;
(c) Excess of Termination Value over Fair Market Sales
Value. Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under Sections
23(a) or (b) hereof with respect to the Equipment, Lessor, by
notice to Lessee specifying a payment date not earlier than the
next Basic Payment Date, may cause Lessee to 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 Payments for the Equipment due
after the specified payment date), any Payments with respect to
the Equipment due on or before or accrued as of such payment date
plus an amount equal to the excess, if any, of (i) the
Termination Value for all the Equipment, determined as of such
payment date over (ii) the Fair Market Sales Value for all the
Equipment, computed as of the payment date specified pursuant to
this Section 23(c), together with interest, to the extent
permitted by applicable law, at the Overdue Rate on such Payments
and the amount of such excess, if any, from such payment date
specified pursuant to this Section 23(c), to the date of actual
payment of all such Payments and other amounts;
(d) Excess of Termination Value over Sales Proceeds.
In the event Lessor, pursuant to Section 23(b) hereof, shall have
sold the Equipment, Lessor in lieu of exercising its rights under
Section 23(c) hereof with respect to the Equipment, may, if it
shall so elect, cause Lessee to pay Lessor, and Lessee shall pay
to Lessor, on the date of such sale, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the Basic
Payments for the Equipment due after the date on which such sale
occurs), any Payments with respect to the Equipment due on or
before or accrued as of such date of sale, plus the amount of any
deficiency of the net proceeds of such sale below the Termination
Value of all the Equipment, determined as of the date of such
sale, together with interest, to the extent permitted by
applicable law, at the Overdue Rate on all such Payments and the
amount of such deficiency from the date of such sale to the date
of actual payment of all such Payments and other amounts; or
(e) Rescission. Rescind this Agreement as to the
Equipment or exercise any other right or remedy which may be
available under applicable law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the
breach hereof.
In addition, Lessee shall be liable for any and all
Supplemental Payments due hereunder before or after any
termination hereof, including all costs and expenses (including,
without limitation, reasonable attorney's fees and disbursements)
incurred 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 in accordance with the terms of Section 6 hereof or
any appraisal of the Equipment. At any sale of the Equipment,
Lessor may bid for and purchase such property. 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 preclude the simultaneous or later
exercise by Lessor of any or all such other remedies. No express
or implied waiver by Lessor of any Event of Default hereunder
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,
otherwise than in accordance with the provisions of this Section
23, to sell, lease or otherwise use the Equipment in mitigation
of Lessor's damages or otherwise to limit or modify any of
Lessor's rights or remedies under this Section 23.
SECTION 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, make such payment
or perform or comply with such agreement, and the amount of such
payment and the amount of the 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.
SECTION 25. Late Charges. Lessee shall pay to Lessor, upon
demand, to the extent permitted by applicable law, interest on
any Basic Payment not paid when due, and on any Supplemental
Payment or other amount payable under this Agreement 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 Overdue Rate.
SECTION 26. Further Assurances. Lessor and Lessee agree to
cooperate in good faith and to execute and deliver such documents
and further assurances consistent with and in clarification of
the characterization and intent of the parties with respect to
the Overall Transactions.
SECTION 27. Transaction Costs, Fees and Expenses. Lessee
shall pay all out-of-pocket costs, fees and expenses of Lessor
and Lessee in connection with the negotiation, preparation,
execution, delivery and enforcement of the Transaction Documents
(and all amendments, modifications and supplements thereto in
connection with each Acceptance Date after the date hereof) and
all other such costs, fees and expenses of Lessor and Lessee in
connection with the Overall Transaction including without
limitation such costs, fees and expenses (a) of Moore & Van
Allen, (b) of any appraiser of the Equipment or any item thereof
and (c) associated with any and all filings, searches and
recordations necessary or appropriate in connection with the
Transaction Documents or the Overall Transaction.
SECTION 28. 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 with a nationally recognized overnight delivery
service, with the cost therefor prepaid, or in the United States
mails, with proper postage prepaid, for first class certified
mail, return receipt requested, addressed (a) 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 (b) if to any Assignee, to
the address of such Assignee as such Assignee shall designate,
from time to time, in writing to Lessor and Lessee.
If to Lessor: NationsBanc Leasing Corporation
of North Carolina
NationsBank Corporate Center
100 North Tryon Street, NC1-
007-12-01
Charlotte, North Carolina 28255-0001
Attention: Manager of Corporate Lease
Administration
Telephone: (704) 386-7783
Telecopy: (704) 386-0892
If to Lessee: The Cato Corporation
P.O. Box 34216
Charlotte, North Carolina 28234
Attention: Mr. V. Hollis Scott
Telephone: (704) 551-7266
Telecopy: (704) 551-7626
SECTION 29. End of Term Purchase Options.
(a) Lessee Retention/Purchase or Third Party Purchase.
If this Agreement shall not have been earlier terminated with
respect to the Equipment specified in a particular Lease
Supplement, Lessee shall elect one of the options described in
Sections 29(b or c) hereof upon written notice to Lessor
delivered not later than 120 days prior to the final day of the
Term for such Equipment; provided, that Lessee shall be deemed to
have elected the option described in Section 29(b) hereof if
Lessor does not receive such notice within the time periods
specified in the preceding clause; provided, further that (x)
Lessor shall not be bound by Lessee's election of the option
described in Section 29(c) hereof unless an officer of Lessee
certifies to Lessor that the Equipment is obsolete or surplus to
its needs and (y) Lessor shall not be bound by Lessee's election
of the option described in Section 29(c) hereof if a Default or
Event of Default is continuing at the Expiration Date; provided,
further that such election by Lessee once made shall be
irrevocable.
(b) Lessee's Retention/Purchase. On the Expiration
Date, Lessee shall retain all (but not less than all) of the
Lessee Titled Equipment and shall purchase all (but not less than
all) of the Lessor Titled Equipment referenced in the particular
Lease Supplement. Lessee shall pay Lessor an amount equal to the
aggregate Termination Value of all such Lessee Titled Equipment
and Lessor Titled Equipment. Lessee shall also pay all other
Basic Payments and Supplemental Payments then due and owing and
all Sales Expenses. Lessor's sale of the Lessor Titled Equipment
shall be on an as-is, where-is basis, without recourse to or
warranty by Lessor and otherwise in accordance with the
settlement terms of Section 29(e) hereof. If Lessee has
exercised its option under this Section 29(b), but has not prior
to or on the Expiration Date paid all amounts for which it is
obligated under this Section 29(b), then Lessor in its sole
discretion may elect to refuse to sell the Lessor Titled
Equipment to Lessee and Lessee shall immediately upon the request
of Lessor transfer good, marketable title to Lessor respecting
the Lessee Titled Equipment pursuant to a bill of sale and other
documentation reasonably satisfactory to Lessor reflecting a
transfer of title regarding the Lessee Titled Equipment
consistent with the obligations of Lessee hereunder to keep the
Equipment free and clear of Liens, or Lessor, in its sole
discretion, may exercise its rights under Section 35 hereof.
(c) Third Party Purchase. Lessee shall solicit bona
fide bids for all the Equipment referenced in a particular Lease
Supplement from bona fide prospective Third Party Purchasers. If
Lessee so elects and Lessor agrees, Lessor, acting as Lessee's
agent, shall solicit such bona fide prospective Third Party
Purchasers for all such Equipment. All bids received by Lessee
or Lessor prior to the end of the Term shall be immediately
certified to the other in writing, setting forth the amount of
such bid and the name and address of the Person submitting such
bid. If any bid is received from a bona fide prospective Third
Party Purchaser for an amount in excess of the Maximum Lessor
Risk Amount for all such Equipment, or if Lessor agrees in its
reasonable discretion to accept a bid for less than the Maximum
Lessor Risk Amount for all such Equipment, then on the Expiration
Date (i) Lessor shall sell the Lessor Titled Equipment on an
as-is, where-is basis, without recourse or warranty (and Lessee
shall transfer the Lessee Titled Equipment pursuant to a bill of
sale and other documentation reasonably satisfactory to Lessor
reflecting a transfer of title regarding the Lessee Titled
Equipment consistent with the obligations of Lessee hereunder to
keep the Equipment free and clear of Liens), to the highest
bidder, (ii) such bidder shall pay Lessor the bid amount for the
all such Equipment solely for the account of Lessor and (iii)
Lessee shall pay, or cause to be paid, all Basic Payments and
Supplemental Payments then due and owing and all Sales Expenses.
If Lessor (X) does not receive any bid in excess of the Maximum
Lessor Risk Amount for all such Equipment from a bona fide
prospective Third Party Purchaser and does not accept any bids
received for less than the Maximum Lessor Risk Amount for all
such Equipment, or (Y) does not receive the bid amount from the
Third Party Purchaser on or prior to the Expiration Date, then on
the Expiration Date, Lessee shall pay Lessor the Maximum Lessee
Risk Amount for all such Equipment (and all amounts referenced in
Section 29(c)(iii)), Lessee shall cause new verification of title
to be issued in Lessor's name with respect to all such Equipment,
and Lessee shall return such Equipment to Lessor in accordance
with Section 6 hereof.
(d) End of Term Adjustment. If the Net Proceeds of
Sale are more than the Termination Value of all Equipment for the
Expiration Date, Lessor shall, on the Expiration Date, pay Lessee
an amount equal to such excess as an adjustment to the Payments
payable under this Agreement, provided that Lessor shall have the
right to offset against such adjustment payable by Lessor, any
amounts then due and payable from Lessee to Lessor. If the Net
Proceeds of Sale are less than the Termination Value for the
Expiration Date or if no sale occurs, Lessee shall, on the
Expiration Date pay to Lessor, an amount equal to such deficiency
as an adjustment to the Payments payable under this Agreement,
but in no event shall the amount Lessee is required to pay Lessor
with respect to such deficiency exceed the Maximum Lessee Risk
Amount for all the Equipment which has such Expiration Date.
(e) Settlement Terms. In the event that Lessee
retains or purchases any Equipment from Lessor pursuant to
Section 16(b)(i)(B) or Section 29(b) hereof, Lessor and Lessee
hereby agree that the following provisions shall apply:
(i) Representations and Warranties of Lessee.
Lessee shall represent, warrant, covenant and agree with
Lessor as of the date of any retention by Lessee of any
Lessee Titled Equipment or any sale of Lessor Titled
Equipment by Lessor to Lessee, except where specific
reference is made to another date or dates, that:
(A) Lessee has the full right, power and
authority to purchase such Lessor Titled Equipment from
Lessor as provided in this Agreement, to retain the
Lessee Titled Equipment and to carry out Lessee's
obligations under this Agreement (as such pertain to
the retention or sale of such Equipment), and all
requisite action necessary to authorize Lessee to enter
into the purchase of such Equipment or the retention of
such Equipment and to carry out Lessee's obligations
with respect thereto has been, or on or before the date
of any sale of such Equipment to Lessee or any
retention of such Equipment by Lessee, will have been,
taken;
(B) Lessee acknowledges that:
(1) Lessee is purchasing such
Lessor Titled Equipment, and such Equipment shall
be conveyed and transferred to the Lessee, "AS-IS,
WHERE-IS, AND WITH ALL FAULTS AND SPECIFICALLY AND
EXPRESSLY WITHOUT ANY RECOURSE OR WARRANTIES,
REPRESENTATIONS, COVENANTS OR GUARANTEES,
EXPRESSED OR IMPLIED, OF ANY KIND, NATURE, OR TYPE
WHATSOEVER FROM OR ON BEHALF OF LESSOR", provided,
that Lessor shall represent that it has not
voluntarily incurred any Liens on such Lessor
Titled Equipment other than Liens provided for in
the Transaction Documents. Lessee acknowledges
that it has not relied, and is not relying, on any
information, document, sales brochures, or other
literature, sketches, projection, pro forma,
statement, representation, guarantee, or warranty
(whether express or implied, or oral or written,
or material or immaterial) that may have been
given by, or made by, or on behalf of, Lessor;
(2) Lessee shall not be entitled
to, and should not rely on, Lessor or Lessor's
agents as to (a) the quality, nature, adequacy, or
physical condition of any Equipment; (b) the
quality of any labor or materials relating in any
way to such Equipment; or (c) the condition of
title to such Equipment;
(3) EXCEPT AS EXPRESSLY SET FORTH
IN THE PROVISO IN SUBPARAGRAPH (1) ABOVE (WITH
RESPECT TO VOLUNTARILY INCURRED LIENS), LESSOR HAS
NOT, DOES NOT, AND WILL NOT, WITH RESPECT TO ANY
EQUIPMENT, MAKE ANY WARRANTIES OR REPRESENTATIONS,
EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF
LAW, INCLUDING BUT NOT IN ANY WAY LIMITED TO, ANY
WARRANTY OF CONDITION, MERCHANTABILITY,
HABITABILITY, OR FITNESS FOR A PARTICULAR USE, OR
WITH RESPECT TO THE VALUE, PROFITABILITY, OR
MARKETABILITY OF SUCH EQUIPMENT; and
(4) Without in any way limiting
the generality of the preceding subparagraphs (1)
through (3), Lessee specifically acknowledges and
agrees that Lessee hereby waives, releases, and
discharges any claim Lessee has, might have had,
or may have against Lessor with respect to the
condition of such Equipment, patent or latent, the
actual or potential income or profits to be
derived from such Equipment, and any other state
of facts which exists with respect to such
Equipment.
(ii) Survival Beyond Closing. The representations
and warranties of Lessee contained in this Agreement as set
forth in Section 29(e)(i) shall survive the closing of the
sale of any Equipment to the Lessee.
(iii) Seller. At the sale of any Lessor Titled
Equipment to Lessee, Lessor shall deliver or cause to be
delivered to Lessee, at Lessee's sole cost and expense
(except as provided to the contrary), a bill of sale of such
Lessor Titled Equipment, duly executed by Lessor.
SECTION 30. Federal and State Tax Consequences. It is
expressly agreed that for federal and state income tax purposes
the parties entered into the transaction contemplated by this
Agreement intending such transaction to be characterized as a
mere financing and for Lessee to be considered the owner of the
Equipment for such tax purposes; provided, however, Lessor makes
no representation or warranty as to the availability of such tax
treatment. Consistent with this, Lessee intends to claim the
cost recovery deductions associated with the Equipment, and
Lessor agrees not to take an inconsistent position on its federal
or state income tax returns.
SECTION 31. Financial Information. Lessee agrees to
furnish Lessor (a) as soon as available, and in any event within
ninety (90) days after the last day of each fiscal year of the
Lessee, (i) a copy of the consolidated balance sheet of the
Lessee and its Consolidated Subsidiaries as of the end of such
fiscal year, and related consolidated statements of income and
retained earnings of the Lessee and its Consolidated Subsidiaries
for such fiscal year, certified by an independent certified
public accounting firm of recognized standing, each on a
comparative basis with corresponding statements for the prior
fiscal year, or (ii) a copy of the Lessee's Form 10-K filed with
the Securities and Exchange Commission for such fiscal year (if
the Lessee is subject to the reporting requirements under the
rules and regulations promulgated by the Securities and Exchange
Commission), and (b) within forty-five (45) days after the last
day of each fiscal quarter of the Lessee (except the last such
fiscal quarter), (i) a copy of the consolidated balance sheet as
of the end of such quarter, and statement of income covering the
fiscal year to date of the 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 the Lessee, or
(ii) a copy of the Lessee's Form 10-Q filed with the Securities
and Exchange Commission, all such other financial statements and
reports as the Lessee shall send to the Securities and Exchange
Commission.
SECTION 32. Miscellaneous. Any provision of this Agreement
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. No term or provision of
this Agreement may be amended, altered, waived, discharged or
terminated orally, but only by an instrument in writing signed by
a duly authorized officer or the party against which the
enforcement of the amendment, alteration, waiver, discharge or
termination is sought. 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 Agreement
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. This Agreement may
be executed in as many counterparts as shall be determined by the
parties hereto when so executed, each such counterpart shall be
binding on both parties hereto, notwithstanding that both parties
are not signatories to the same counterpart. This Agreement,
each Lease Supplement and each related instrument, document,
agreement and certificate collectively constitute the entire
agreement of Lessor and Lessee with respect to the financing of
the Equipment, and cancel and supersede any and all prior oral or
written understandings with respect thereto. THIS AGREEMENT AND
EACH OTHER TRANSACTION DOCUMENT SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NORTH CAROLINA, INCLUDING, WITHOUT LIMITATION, ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. LESSEE AND LESSOR HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION, AND THE
VENUE, OF A NORTH CAROLINA STATE OR FEDERAL COURT LOCATED IN
MECKLENBURG COUNTY, NORTH CAROLINA FOR ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT. LESSEE AND LESSOR HEREBY IRREVOCABLY AGREE
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD OR DETERMINED IN SUCH NORTH CAROLINA COURT, OR TO THE
EXTENT PERMITTED BY LAW, SUCH FEDERAL COURT. LESSEE AND LESSOR
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY ACTION OR PROCEEDING.
SECTION 33. Interest Rate Calculations. All rate
calculations made pursuant to this Agreement (including, without
limitation, any calculation of a late charge, the Overdue Rate)
shall be computed on the basis of the actual number of days
elapsed over a year of 360 days.
SECTION 34. Personal Property Taxes. Lessor and Lessee
hereby agree that to the extent permitted by law (a) Lessee will
file all returns and other appropriate documentation in regard to
personal property taxes on the Equipment, (b) pay all such
personal property taxes and (c) reimburse Lessor for any and all
such personal property taxes previously paid by Lessor.
SECTION 35. Power of Attorney. The Lessee hereby
constitutes and appoints the Lessor its true and lawful attorney-
in-fact for the limited purpose of executing all documentation
deemed necessary or advisable by Lessor or its counsel in the
exercise of the Lessor's remedies under this Agreement to
transfer title of all Lessee Titled Equipment to Lessor or with
respect to Lessor's right to retain the Equipment pursuant to
Section 29(c) hereof.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives
as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By:________________________________
Name: George L. Robinson, Jr.
Title: Vice President
THE CATO CORPORATION
By:________________________________
Name: _________________________
Title:__________________________
COUNTERPART NO. _____ OF 4 SERIALLY NUMBERED MANUALLY EXECUTED
COUNTERPARTS. TO THE EXTENT 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 A
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO. __
This Lease Supplement and Acceptance Certificate is dated
_______________ and is executed by NATIONSBANC LEASING
CORPORATION OF NORTH CAROLINA, a North Carolina corporation
("Lessor") and THE CATO CORPORATION, a Delaware corporation
("Lessee"), pursuant to Section 4 of the Master Equipment Lease
Agreement, dated as of ________, 199__ between Lessee and Lessor
(the "Agreement"). All capitalized terms used herein but not
defined herein shall have the meanings given to such terms in the
Agreement.
Lessee hereby acknowledges and agrees that the equipment
specified on Annex A hereto (the "Equipment") has been delivered
to Lessee on or prior to the date hereof at the delivery place
described below, and that, as between Lessor and Lessee, the
Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c)
is of a size, design, capacity and manufacture selected by
Lessee, (d) is suitable for Lessee's purposes, (e) has been
unconditionally accepted by Lessee on the date hereof, for all
purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee
further acknowledges, agrees and certifies that Lessor has made
no representation, warranty, covenant or guarantee of any type or
kind, expressed or implied, with respect to the Equipment and
that the insurance policies, certificates or other documents
evidencing the coverages required under the Agreement have been
delivered to Lessor.
Lessee hereby leases from Lessor the Equipment upon and
subject to all of the terms, conditions and provisions of the
Agreement, and Lessor and Lessee further agree and state as
follows:
1. Delivery Place and Location for the Equipment:
_______________________.
2. As of the date hereof, the Acquisition Cost is $__________.
3. The Acquisition Expiration Date for the Equipment set forth
on Annex A hereto is ________________, 1995.
4. The Basic Term for the Equipment commences on
_______________, and ends on _____________, both dates inclusive,
unless sooner terminated in accordance with the provisions of the
Agreement.
5. The Basic Payment Factor is _____%.
6. The Basic Payment Dates are ______________, ____________,
_____________ and _____________ during the Term. Each Basic
Payment shall be payable on the last day of each Basic Payment
Period to which such Basic Period corresponds.
7. The Basic Payment for the Equipment for each quarterly
period is in an amount equal to the Basic Payment Factor
multiplied by the aggregate Acquisition Cost for the Equipment
described in Annex A hereto.
8. The Termination Value Percentages for the Equipment during
the Term are set forth on Annex B hereto.
9. This Lease Supplement and Acceptance Certificate may be
executed in as many counterparts as shall be determined by the
parties hereto when so executed, and each such counterpart shall
be binding on both parties hereto, notwithstanding that both
parties are not signatories to the same counterpart.
10. The liability insurance coverage referenced in Section
17(a)(ii) of the Agreement and applicable exclusively to the
Equipment identified in this Lease Supplement shall be maintained
in any event with a combined single limit of not less than
$____________.
IN WITNESS WHEREOF, the parties hereto have caused this
Lease Supplement and Acceptance Certificate No. __ to be executed
by their duly authorized representatives as of the date first
above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By:_______________________________
Name: ________________________
Title: ________________________
THE CATO CORPORATION
By:_______________________________
Name: ________________________
Title: ________________________
COUNTERPART NO. _____ OF _____ SERIALLY NUMBERED MANUALLY
EXECUTED COUNTERPARTS. TO THE EXTENT 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.
Annex A to
Lease Supplement
(Equipment Description and Location)
Any and all right, title and interest of Debtor in and to the
equipment, fixtures and other personal property (collectively,
the "Equipment") located at the sites referenced below in this
Annex A, together with all accessories, equipment, parts and
appurtenances pertaining or attached thereto, whether now owned
or hereafter acquired, and all substitutions and renewals of any
type or kind and additions, improvements, accessions and
accumulations to any and all of the foregoing.
The sites referenced in the prior paragraph shall include the
following:
___________________________________________
___________________________________________
___________________________________________
Annex B to
Lease Supplement
(Termination Value)
Termination Value
Termination Date Percentage
*
*Expressed as a percentage of aggregate Acquisition Cost for the
Equipment described in Annex A.
Annex C to
Lease Supplement
(Maximum Risk Amounts)
Maximum Lessor Maximum Lessee
Risk Amount Risk Amount
Risk Amount Date Percentage *
Percentage *
*Expressed as a percentage of aggregate Acquisition Cost for the
Equipment described in Annex A.
Annex D to
Lease Supplement
(Equipment Locations)
EXHIBIT B
UCC FILING OFFICES
[REFERENCED IN SECTION 21(G)]
EXHIBIT C
TRADE NAMES
[REFERENCED IN SECTION 21(U)]2