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PARTICIPATION AGREEMENT
Dated as of December 29, 1994
Among
THE CONTINENTAL INSURANCE
COMPANY,
FIRST FIDELITY BANK, N.A., not in its individual
capacity except as expressly stated herein,
but solely as Trustee,
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and
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as Purchaser
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PARTICIPATION AGREEMENT dated as of December 29, 1994
(as amended, modified or supplemented, the "Participation
Agreement"), among THE CONTINENTAL INSURANCE COMPANY, a New
Hampshire corporation (together with its successors and permitted
assigns, the "Lessee"); FIRST FIDELITY BANK, N.A., a national
banking association, not in its individual capacity except as
expressly stated herein, but solely as Trustee under that certain
Declaration of Trust dated of even date herewith (together with
its successors and permitted assigns, the "Trustee"); and THE CIT
GROUP/EQUIPMENT FINANCING, INC., a New York corporation, as
Purchaser (together with its successors and permitted assigns,
the "Purchaser"). Capitalized terms used in this Participation
Agreement and not defined herein shall have the meanings set
forth in Appendix A hereto.
Preliminary Statement
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Lessee owns or leases certain leasehold improvements
(the "Equipment") the description and location of which is
incorporated in the Lease (as hereinafter defined). The Lessee
will lease, or sublease, as the case may be, the Equipment to the
Trustee pursuant to a prime lease, substantially in the form of
Exhibit A hereto (as the same may be amended, modified, or
supplemented from time to time, the "Prime Lease").
Concurrently, the Trustee shall sublease or sub-sublease, as the
case may be, the Equipment to the Lessee pursuant to a lease
agreement, substantially in the form of Exhibit B hereto (as the
same may be amended, modified or supplemented from time to time,
the "Lease").
The Trustee will hold its leasehold interest in the
Equipment and its rights under the Prime Lease, the Lease and
related documents in trust pursuant to a declaration of trust,
substantially in the form of Exhibit C hereto (as the same may be
amended, modified or supplemented from time to time, the
"Declaration of Trust"). In order to finance the payment of
Prime Lease Rent, and the payment of rent under substantially
similar leases between the Trustee and The Buckeye Union
Insurance Company ("Buckeye") and between the Trustee and
Firemen's Insurance Company of Newark, New Jersey ("Firemen's")
(those leases being referred to as the "Buckeye Prime Lease" and
the "Firemen's Prime Lease," respectively) the Trustee will issue
to the Purchaser equipment trust notes of three series
(collectively, the "Notes") as provided in the Declaration of
Trust. The Notes, in the aggregate principal amount of
$30,000,000.00, will be issued to pay the Prime Lease Rent, and
rent payable by the Trustee under the Buckeye Prime Lease and the
Firemen's Prime Lease and the Notes shall be issued, be dated,
mature and be payable as provided in the Declaration of Trust.
The Notes shall be secured by the trust estate held pursuant to
the Declaration of Trust, including, as applicable, a guaranty
given by The Continental Corporation (herein called the
"Guarantor") of the Lessee's obligations to make payments under
the Lease substantially in the form of Exhibit D hereto (the
"Lease Guaranty") and a security interest in the Lessee's
interest in the Equipment pursuant to the security interest
granted by the Lessee in the Lease. The Prime Lease, the Lease,
the Declaration of Trust, the Notes, the Lease Guaranty, and this
Participation Agreement are herein sometimes collectively called
the "Operative Documents."
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NOW, THEREFORE, in consideration of the agreements
herein and in the other Operative Documents and in reliance upon
the representations and warranties set forth herein and therein,
the parties agree as follows:
ARTICLE I
FINANCING
SECTION 1.01. Agreement to Issue and Purchase.
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(a) Subject to the terms and conditions of this Article
I, on the Closing Date the Purchaser shall advance to the Trustee
the amount of $30,000,000.00, and the Trustee shall issue to the
Purchaser in consideration therefor Notes in the aggregate
principal amount of $30,000,000.
SECTION 1.02. Closing Date. The closing of the
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transactions specified herein shall take place at 10:00 A.M. on
December 29, 1994 or on such other date, and in such manner and
in such place as the Trustee, the Purchaser, the Guarantor, and
the Lessee shall mutually agree (the "Closing Date").
SECTION 1.03. Closing. On the Closing Date, subject
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to the satisfaction of the conditions set forth in Section 2.01
of this Participation Agreement:
(a) The Operative Documents shall be duly authorized,
executed and delivered by the parties thereto; and
(b) The Purchaser shall make payment for the Notes
issued at the Closing Date at a price equal to the principal
amount thereof by transfer of immediately available funds in the
amount of $30,000,000.00 to the account of the Trustee at First
Fidelity Bank, N.A., ABA No. 031201467, account #0666249910 (with
a reference to Corporate Trust/Continental Insurance account,
Attention: Diane Sutherland, Corporate Trust Administrator (203)
929-5552); and the Trustee shall advance, as prepayment of the
full amount of the Prime Lease Rent and rent payable under the
Buckeye Prime Lease and the Firemen's Prime Lease, an aggregate
of $30,000,000 to the accounts of the Lessee, Buckeye and
Firemen's as follows:
$25,874,397.00 to the account of Lessee at Chemical
Bank, ABA # 021000128, Account No. 140050093;
$1,125,603.00 to the account of Buckeye at Chemical
Bank, ABA # 021000128, Account No. 140008557; and
$3,000,000.00 to the account of Firemen's at Chemical
Bank, ABA # 021000128, Account No. 144085584.
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ARTICLE II
CONDITIONS TO CLOSING AND FUNDING
SECTION 2.01. General Conditions Precedent to Closing.
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The obligations of the Purchaser set forth in Section 1.03 shall
be subject to the satisfaction on or before the Closing Date of
the following conditions precedent:
(a) Due Authorization, Execution and Delivery. The
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Operative Documents shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full
force and effect. No condition or event shall exist or have
occurred which would constitute an Event of Default under any of
the Operative Documents;
(b) Representations. The representations and
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warranties of each party set forth in the Operative Documents
shall be true and correct on the Closing Date, and the Trustee,
the Guarantor and the Lessee shall each have delivered an
Officer's Certificate to such effect dated the Closing Date;
(c) Opinions. The Purchaser shall have received the
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following opinions, dated the Closing Date and addressed to it:
(i) an opinion of Arnold & Porter, special
counsel to the Guarantor, in form and substance
reasonably satisfactory to the Purchaser and its
special counsel;
(ii) an opinion of counsel to the Guarantor, in
form and substance reasonably satisfactory to the
Purchaser and its special counsel;
(iii) an opinion of Arnold & Porter, special
counsel to the Lessee, in form and substance reasonably
satisfactory to the Purchaser and its special counsel;
(iv) an opinion of counsel to the Lessee, in form
and substance reasonably satisfactory to the Purchaser
and its special counsel;
(v) an opinion of Bingham, Dana & Gould, special
counsel to the Trustee, in form and substance
satisfactory to the Purchaser and its special counsel.
(d) Proceedings Satisfactory and Other Evidence. All
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corporate and other proceedings taken or to be taken in
connection with the transactions contemplated by the Operative
Documents and all documents, papers and authorizations relating
thereto shall be satisfactory to the Purchaser and its special
counsel. The Purchaser and its special counsel shall receive
copies of such documents and papers as the Purchaser or its
special counsel has
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reasonably requested, in form and substance satisfactory to
the Purchaser and its special counsel, including but not limited
to the Operative Documents;
(e) Legality. The execution and delivery of the Notes
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by the Trustee shall not be prohibited by any applicable law or
governmental regulations (including, without limitation,
Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System) and shall not subject the Purchaser to any tax
(other than a tax paid or payable by the Lessee pursuant to the
Lease or taxes on the income of the Purchaser), penalty,
liability or other onerous condition under or pursuant to any
applicable law or governmental regulations, and the Purchaser
shall receive such certificates or other evidence as it may
request to establish compliance with this condition;
(f) Condition and Use of Equipment. The Equipment or
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any item thereof, shall not have suffered a casualty, damage or
destruction which has a material adverse effect on the Equipment
taken as a whole.
(g) Documents relating to the Equipment. The Lessee
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shall deliver an Officer's Certificate to the Trustee and the
Purchaser with respect to title (to the extent such property
constitutes personal property) to and location and condition of
the Equipment and such other documents relating to the Equipment
as may be requested by the Purchaser, all in form and substance
reasonably satisfactory to the Purchaser;
(h) Insurance. All insurance policies required by
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Section 4 of the Lease shall be in full force and effect, and
certificates of the insurers evidencing the coverage of such
policies and stating that the policies name the Trustee as
additional insured and name the Trustee as loss payee for all
damage amounts in excess of $1,000,000.00 shall be delivered to
the Trustee and the Purchaser in accordance with such Section;
and
(i) Taxes. All taxes, fees, and other charges, if
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any, which become due and payable in connection with the
execution, delivery, recording, publishing, registration and
filing of the Operative Documents and the financing statements
shall have been paid.
SECTION 2.02. Conditions Subsequent to the Closing.
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Within 30 days following the Closing Date, the Operative
Documents (or financing statements relating thereto) shall have
been duly filed, registered, recorded or published at the expense
of Lessee in such manner and in all places necessary or
appropriate to publish notice and protect the validity and
effectiveness thereof and to establish, perfect, preserve and
protect the rights of the parties thereto.
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ARTICLE III
PLACEMENT OF THE NOTES
SECTION 3.01. General. The parties hereto expect that
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some or all the Notes will be placed with a Person or Persons
other than the Purchaser prior to their maturity, and the Lessee
consents and agrees to such placement, provided that the Notes
shall not be placed with more than 10 Persons.
SECTION 3.02. Placement. The Lessee, the Trustee and
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the Purchaser agree to negotiate, each at its own respective
expense, the substance, and the execution and delivery, of such
further documents or supplements to the Operative Documents which
may be necessary or proper to carry out the placement of the
Notes, provided that any changes effected by such documents or
supplements are to be within the scope of the present economic
terms of the transaction and are not to contain any additional
covenants, representations or warranties burdensome on any of the
parties.
ARTICLE IV
REPRESENTATIONS
SECTION 4.01. Lessee Representations. The Lessee
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represents and warrants to the Trustee and the Purchaser that the
following statements are true and correct:
(a) Organization and Authority.
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(i) The Lessee is a corporation, duly
incorporated, validly existing and in good standing
under the laws of the State of New Hampshire.
(ii) The Lessee has all requisite power,
authority, legal right and all necessary licenses to
own or hold under lease and use its property (including
the Equipment except for lease of the property located
at 200 S. Wacker Drive, Chicago, Illinois, 60606) and
to carry on its business as now conducted and as
presently proposed to be conducted.
(iii) Except for the property located at 200
S. Wacker Drive, Chicago, Illinois, 60606, and to the
extent set forth in each applicable Landlord's Waiver
and Consent, the Lessee has all requisite power and
authority to execute and deliver each Operative
Document to which it is a party and any other agreement
entered into or document delivered in connection with
the transactions contemplated by the Operative
Documents and to comply with the terms thereof and
perform its obligations thereunder; and
(iv) The Lessee is duly qualified and authorized
to do business as a foreign corporation in each
jurisdiction in which an item of Equipment is located
and in each other jurisdiction in which the character
of its property or the nature of its activities makes
such qualification necessary except for such
jurisdictions
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wherein a failure to so qualify or be authorized to do
business would not have a material adverse effect on
its business or activities taken as a whole.
(b) Financial Statements.
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(i) Copies of financial statements of the Lessee
delivered by the Lessee to the Purchaser have been
prepared in conformity with the Statutory Accounting
Principles prescribed and permitted by the Department
of Insurance which present fairly the financial
position of the Lessee, as of such date and the results
of its operations for such period; and
(ii) Copies of financial statements of The
Continental Corporation delivered by the Lessee or The
Continental Corporation to the Purchaser have been
prepared in conformity with generally accepted
accounting principles applied consistently throughout
the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as
the case may be, and disclosed therein); and
(iii) Since the date of the financial
statements referred to in (i) and (ii), there has been
no change in the business, profits, property or
condition (financial or otherwise of the Lessee or The
Continental Corporation) except changes in the ordinary
course of business, none of which individually or in
the aggregate is materially adverse and except for the
Merger.
(c) Full Disclosure. There is no fact which the
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Lessee has not disclosed in writing or is publicly available to
the parties hereto which materially adversely affects the
property, business, affairs or condition (financial or otherwise)
of the Lessee or the ability of the Lessee to perform its
obligations under any Operative Document to which it is a party
or any other agreement which it has entered into in connection
with any transaction contemplated by an Operative Document.
(d) Pending Litigation. There are no actions, suits
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or proceedings pending, or, to the best knowledge of the Lessee,
threatened against or affecting the Lessee in any court or before
any government which is reasonably likely to materially adversely
affect the property, business, profits or condition (financial or
otherwise) of the Lessee or the ability of the Lessee to perform
its obligations under the Operative Documents to which it is a
party. The Lessee is not in default with respect to any order of
any government, foreign or domestic, or any agency, regulatory
body, instrumentality or subdivision of such government, which
could materially and adversely affect the Lessee's business,
consolidated financial position or consolidated results or
operations.
(e) Title and Liens. To the extent the Equipment
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constitutes personal property, the Lessee owns the Equipment,
free and clear of any lien, claim, encumbrance,
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security interest, restrictions or any other right of a third
party in and to such Equipment, except for Permitted Encumbrances
or except to the extent that such rights are created by the
Operative Documents, except for the property located at 200 S.
Wacker Drive, Chicago, Illinois, 60606. Except to the extent set
forth in the applicable Landlord's Waiver and Consent, Lessee has
the full legal power, right and authority to lease the Equipment
to Trustee under the Prime Lease.
(f) No Conflict or Default. The execution and
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delivery by the Lessee, and compliance by the Lessee with all of
the provisions, of each Operative Document to which it is a party
will not conflict with, result in any breach of any of the
provisions of or constitute a default under the provisions of any
material agreement to which the Lessee is a party or by which it
may be bound or which is applicable to any of its property, or
results in the creation of any lien upon any property of the
Lessee, except as may have been created by any provision of any
Operative Document and except for Permitted Encumbrances, or
result in a violation of its charter or any applicable law.
(g) Enforceability. Each Operative Document to which
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the Lessee is a party when executed and delivered by the Lessee,
will constitute the legal, valid and binding obligation of the
Lessee enforceable against the Lessee in accordance with its
terms (except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and by
general principles of equity).
(h) Consents. No consent, approval, authorization or
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declaration of or filing with any governmental authority is
required for the valid execution, delivery or performance by the
Lessee of this Participation Agreement or the other Operative
Documents.
(i) Compliance with Law. The Lessee is not in
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violation of any law to which it is subject, which violation or
failure is likely to have a material adverse effect on the
business, profits, property or condition (financial or otherwise)
of the Lessee.
(j) Status. The Lessee is not an "investment company"
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or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940.
(k) ERISA. The execution and delivery by the Lessee
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of the Operative Documents entered into in connection therewith
will not involve any prohibited transaction within the meaning of
ERISA or Section 4975 of the Code. The Lessee has not incurred
any liability to the PBGC or an Employee Plan under Title IV of
ERISA (a "Plan").
(l) Taxes. The Lessee has filed all federal, state
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and local tax returns that it is required to file, has filed all
information returns it is required to file and has paid all taxes
shown thereon to be due, including interest and penalties, except
to the extent the same have become due and payable but are not
yet delinquent, adequate reserves have been provided for the
same, or the amount, applicability or validity of the same is
currently being contested in
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good faith by appropriate proceedings, and no lien has attached
(except with respect to taxes not yet due and payable) and no
foreclosure, distraint, sale or similar proceedings have been
commenced.
SECTION 4.02. Trustee Representations. The Trustee,
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in its individual capacity and not as Trustee (except with
respect to subsection (g) below which is made by the Trustee
solely in its capacity as Trustee and not individually),
represents and warrants to the Lessee, the Guarantor and the
Purchaser that the following statements are true and correct:
(a) Organization and Authority.
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(i) The Trustee is a national banking association
duly organized, validly existing and in good standing
under the laws of the United States of America; and
(ii) The Trustee has all requisite corporate power
and authority to act as Trustee under the Declaration
of Trust and to execute and deliver each Operative
Document to which it is a party and to comply with the
terms thereof and perform its obligations thereunder.
(b) Pending Litigation. There are no actions, suits
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or proceedings pending, or, to the best knowledge of the Trustee,
threatened against or affecting the Trustee in any court or
before any governmental body which involve the possibility of
materially adversely affecting the property, business, prospects,
profits or condition (financial or otherwise) of the Trustee or
the ability of the Trustee to perform its obligations under any
Operative Document to which it is a party or any other agreement
which it has entered into in connection with any transaction
contemplated by any Operative Document.
(c) Authorization; No Conflict. The execution,
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delivery and performance by the Trustee of, and compliance by the
Trustee with all of the provisions of, each Operative Document to
which it is a party and any other agreement entered into in
connection with any transaction contemplated by the Operative
Documents are within the corporate powers of the Trustee and are
legal and authorized under United States federal law governing
banking and trust matters and Connecticut State law and will not
conflict with, result in any breach of any of the provisions of,
or constitute a default under, any agreement, its articles of
association or bylaws or other instrument to which the Trustee is
a party or by which it may be bound or applicable to any of its
property, or result in a violation of any applicable United
States federal law governing banking and trust matters or
Connecticut State law.
(d) Enforceability. Each of the Operative Documents
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to which the Trustee is a party, and any other agreement entered
into in connection with any transaction contemplated by any
Operative Document, has been duly authorized by all necessary
action on the part of the Trustee, and is or will be the legal,
valid and binding obligation of the Trustee enforceable
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against the Trustee in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and that
the equitable remedy of specific performance and other equitable
remedies are subject to the discretion of the court).
(e) No Default. No event has occurred and no
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condition exists which, upon consummation of the transactions
contemplated by any Operative Document, would constitute an Event
of Default by the Trustee. The Trustee is not in violation in
any respect of any term of any agreement, its articles of
association or any other instrument to which it is a party or by
which it or any of its property may be bound or affected.
(f) Consents. The nature of the Trustee, its
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execution and delivery of each Operative Document to which it is
a party, its consummation of the transactions contemplated
thereby, its compliance with the terms thereof or any
circumstance in connection with the transactions contemplated
thereby does not required under United States federal law
governing banking and trust matters or Connecticut State law the
consent of any person or the approval or authorization of, or
filing, registration or qualification with, any government on the
part of the Trustee (other than such as have been obtained) as a
condition to the execution, delivery and performance of the
Operative Documents to which the Trustee is a party or any other
agreement which it has entered into in connection with the
transactions contemplated by any Operative Document.
(g) Notes. The Notes have been duly authorized by all
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necessary corporate action on the part of the Trustee, have been
validly issued and constitute the legal, valid and binding
obligations of the Trustee (acting solely as Trustee under the
Declaration of Trust, and not in its individual capacity) and are
enforceable against the Trustee in accordance with their terms
and the terms of the Declaration of Trust and this Participation
Agreement.
SECTION 4.03. Representation of the Purchaser. The
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Purchaser represents to the Lessee and the Guarantor that no part
of the funds being used by the Purchaser to pay the purchase
price of the Notes hereunder constitutes assets allocated to any
"separate account" (as defined in Section 3 of ERISA) maintained
by the Purchaser. The Purchaser acknowledges that the Notes have
not been registered under the Securities Act of 1933, as amended
(the "Act"), and agrees that it shall not resell the Notes except
pursuant to a registration under the Act or an exemption
therefrom.
ARTICLE V
COVENANTS
SECTION 5.01. Lessee Covenants.
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(a) Financial Statements. The Lessee will deliver, or
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cause to be delivered, to the Trustee and the Purchaser:
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(i) such financial statements as are required by
Section 14 of the Lease;
(ii) promptly upon becoming aware of the existence
of (A) any condition or event which constitutes a Default or
an Event of Default, a written notice from a duly authorized
officer of the Lessee specifying the nature and period of
existence thereof and (B) any directive from the
Commissioner of the Department of Insurance specifying any
corrective action to be taken which could have a material
adverse effect on the Lessee's business taken as a whole, or
any special examinations or investigations not in the
ordinary course, which are performed or taken by the
Commissioner a result of which such a directive could issue,
a copy of such directive and/or written notice of such
examinations or investigations together with, in each case,
written notice of what action the Lessee is taking or
proposes to take with respect thereto;
(iii) at the same time as it delivers the
annual financial statements described in the Lease, an
Officers' Certificate signed by its Chief Financial Officer
or Chief Accounting Officer stating that the signers have
reviewed the Operative Documents to which it is a party and
its transactions and condition during the preceding fiscal
year and that such review has not disclosed nor do the
signers know of any Event of Default under or breach of any
Operative Documents to which it is a party or, if an Event
of Default exists, specifying the nature and the period of
such Event of Default and the action, if any, it has taken,
is taking or proposes to take with respect thereto.
(b) Corporate Existence. The Lessee shall do or cause
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to be done all things necessary to preserve and keep in full
effect its existence, rights (charter and statutory) and
franchises as an insurance company under the laws of a state of
the United States and to preserve and keep in full effect its
qualifications as a foreign corporation in each jurisdiction in
which the character of its property or the nature of its business
or activities makes such qualification necessary, except for such
jurisdictions wherein a failure to so qualify would not have a
material adverse effect on the business, affairs, property or
condition (financial or otherwise) of the Lessee and its
Subsidiaries taken as a whole.
(c) Compliance with Regulation. The Lessee shall
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deliver to the Trustee and the Purchaser copies of each notice of
any violation by Lessee of any judgment, decree or order of any
court of governmental or regulatory authority, bureau, agency or
official having jurisdiction over the Lessee if such violations
would have a material adverse effect on the business, affairs,
property or condition (financial or otherwise) of the Lessee and
its Subsidiaries taken as a whole.
(d) Notice of Default. The Lessee shall give notice
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to the Trustee of any Event of Default under any of the Operative
Documents by any party thereto promptly after the Lessee obtains
Actual Knowledge of the same. For purposes of this subsection
(d), "Actual
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Knowledge" means actual knowledge of the Vice President-
Treasurer, an Executive Vice President or a Senior Vice President
of the Lessee.
(e) No State Prohibition. The Lessee shall not be
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prohibited by action of any state or any subdivision, department
or agency thereof from engaging in any type of insurance business
at any time where the effect of such prohibition would have a
material adverse effect on the business, affairs, property or
condition (financial or otherwise) of the Lessee and its
Subsidiaries taken as a whole.
(f) Maintenance of Insurance Business. At all times a
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substantial portion of the Lessee's business shall be the
insurance business.
(g) No Regulatory Intervention. At no time shall the
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insurance department of any state having jurisdiction over the
business of the Lessee take any action to exercise control over
the business and operations of the Lessee or cause the Lessee to
take any action which, in the reasonable opinion of the Trustee
or the Purchaser, will be likely to result in a material adverse
change in the business and operations of the Lessee taken as a
whole.
(h) Obligations Under the Lease. Lessee acknowledges
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and agrees that its obligation to make payments to the Trustee
under the Lease are absolute and unconditional and are
independent of Lessee's use or enjoyment of the Equipment or
performance by the Trustee of any of its obligations under the
Lease or otherwise. The Lessee agrees to make all Lease Payments
to the Trustee regardless of any defense, claim, set-off,
recoupment, abatement or other right, existing or future, which
the Lessee may have against the Trustee or any other person or
entity.
SECTION 5.02. Operative Documents; Further Assurance.
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Each of the parties hereto does hereby covenant and agree well
and truly to abide by, perform and be governed and restricted by
each and all of the matters provided for by each of the Operative
Documents to which it is a party and, subject to the terms and
conditions thereof, to use its best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable in connection therewith. The
Lessee, the Trustee, and the Purchaser will, upon reasonable
request and at the expense of the Lessee, execute and deliver
such further instruments and do such further acts as may be
necessary or proper to carry out more effectively the purposes of
this Participation Agreement, the Prime Lease, the Lease, the
Lease Guaranty, the Declaration of Trust and the Notes and the
transactions contemplated hereby and thereby, provided that the
Lessee shall not be responsible for any costs or expenses
associated with the voluntary transfer or assignment of the Notes
by the by any holder of the Notes, including without limitation,
the Purchaser. The Lessee, the Trustee, and the Purchaser may at
any time, subject to the conditions and restrictions contained in
this Participation Agreement, enter into supplements which shall
form a part hereof, when required or permitted by any of the
provisions of this Participation Agreement to cure any ambiguity,
or to cure, correct or supplement any defection or inconsistent
provision contained herein or in any other Operative Document.
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ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default. Any of the following
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shall constitute an Event of Default hereunder:
(a) non-payment of any amount due on the Notes when
such payment shall become due if such non-payment continues for a
period of five days;
(b) an Event of Default with respect to the Guarantor
or the Lessee under any Operative Document to which it is a
party, including, without limitation, an Event of Default under
the Lease arising from an "Event of Default" under certain
agreements of Buckeye and Firemen's described in the Lease;
(c) a breach by the Lessee of any covenant contained
in this Participation Agreement and such breach continues for a
period of thirty (30) days after Lessee receives notice of such
breach;
(d) an event shall occur or a condition shall arise
that would constitute grounds for an appropriate United States
district court to appoint a trustee to administer a Plan or for
the PBGC to initiate proceedings to terminate any Plan if such
appointment or termination would materially adversely affect the
business, operations, property or financial or other condition of
the Lessee alone or of the Lessee and its respective Subsidiaries
taken as a whole, and no action is taken by Lessee to cure such
event for a period of more than thirty (30) days;
(e) if any representation or warranty of the Lessee
set forth in this Participation Agreement or in any Operative
Document shall prove to be incorrect in any material respect as
of the time when the same shall have been made.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Survival. Except as otherwise expressly
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provided, the parties' obligations under the representations,
warranties and agreements in this Participation Agreement and in
any certificate or other instrument delivered by any party or on
such party's behalf pursuant to this Participation Agreement
shall terminate upon the payment in full of any amounts then and
thereafter due on the Notes and due under any of the Operative
Documents. Such rights and obligations shall survive the
execution and delivery of any Operative Document, any issuance or
disposition of the Notes, any disposition of any interest in the
Equipment or the termination of any Operative Documents and shall
continue in effect regardless of any investigation made by or on
behalf of any party hereto and notwithstanding that any party may
waive compliance with any other provision of any Operative
Document.
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SECTION 7.02. Notices. Unless otherwise specifically
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provided in any Operative Document, all notices, consents,
directions, approvals, instructions, requests and other
communications given to any party hereto under any Operative
Document shall be in writing to such party at the address set
forth below or at such address as such party shall designate by
notice to each of the other parties hereto. Any notice so
addressed and delivered by personal service, mailed postage
prepaid via United States certified mail, return receipt
requested, or sent via commercial courier, for next day delivery
return receipt requested, shall be deemed to have been given when
delivered to such party by personal service or, if so mailed or
sent via commercial courier, on the second succeeding business
day.
Purchaser:
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The CIT Group/Equipment Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: Ron Haase
and to:
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The CIT Group/Equipment Financing, Inc.
900 Ashwood Parkway
Atlanta, Georgia 30338
Attention: Vice President of Credit
with a copy to:
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Harry D. Mercer, Esq.
Hahn Loeser & Parks
3300 BP America Bldg.
200 Public Square
Cleveland, Ohio 44114
Trustee:
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First Fidelity Bank, N.A
5 Research Drive
Shelton, Connecticut 06484
Attention: W. Jeffrey Kramer
with a copy to:
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James G. Scantling, Esq.
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Bingham, Dana & Gould
100 Pearl Street
Hartford, Connecticut 06103
Lessee:
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The Continental Insurance Company
180 Maiden Lane
New York, New York 10038
Attention: General Counsel
and to:
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The Continental Insurance Company
180 Maiden Lane
New York, New York 10038
Attention: Francis M. Colalucci, Vice President and Treasurer
with a copy to:
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Porfirio F. Ramirez, Jr., Esq.
Arnold & Porter
399 Park Avenue
New York, New York 10022-4690
SECTION 7.03. Severability. If any provision hereof
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shall be invalid, illegal or unenforceable in any jurisdiction,
the remaining provisions shall continue to be valid and
enforceable and such provision shall continue to be valid and
enforceable in any other jurisdiction.
SECTION 7.04. Amendment. No party hereto shall be
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bound by any amendment, supplement, waiver or modification of any
term hereof unless such party shall have consented to it in
writing.
SECTION 7.05. Headings. The headings of the Articles,
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Sections and subsections hereof are for convenience and shall not
affect the meaning of this Participation Agreement.
SECTION 7.06. Benefit. The parties hereto and their
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permitted successors and assigns, but no others, shall be bound
hereby and entitled to the benefit hereof.
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SECTION 7.07. Counterparts. The parties may sign this
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Participation Agreement in any number of counterparts and on
separate counterparts, each of which shall be an original but all
of which together shall constitute one and the same instrument.
SECTION 7.08. Governing Law. This Participation
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Agreement shall be governed by and construed in accordance with
the law of the State of New York without regard to its conflict
of laws rules.
SECTION 7.09. Business Day. If the date scheduled for
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any payment or action under any Operative Documents shall not be
a business day, such payment shall be made or such action shall
be taken on the next succeeding business day.
SECTION 7.10. The Trustee. Except for liability for
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its representations and warranties in Section 4.02 (other than
subsection (g) thereof), the Trustee does not enter into this
Agreement in its individual capacity, but solely as Trustee under
the Declaration of Trust and shall be liable hereunder only from
the Trust Estate. Each party agrees for itself and its
successors and assigns that it will look solely to the assets,
income and proceeds of the Trust Estate for the satisfaction of
any such liability of the Trustee hereunder, and waives any right
it may have to satisfy any such liability from any other assets
of the Trustee, in its individual capacity.
SECTION 7.11. Home Office Payment. So long as the
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Purchaser, any Affiliate of the Purchaser or a bank or
institutional investor is the owner of any beneficial interest in
the Notes, the Trustee will cause all amounts which become due
and payable on such interest to be paid by bank wire transfer of
immediately available funds, or at the option of the Purchaser,
or any such Affiliate, bank or institutional investor, by check
of the Trustee, duly mailed, delivered or made at such address or
account within the United States provided in writing to the
Trustee.
SECTION 7.12. Satisfaction and Termination. If and
-----------------------------
when the Notes shall have become due and payable (whether by
lapse of time or by acceleration or by prepayment), and there
shall have been paid the full amount due on the Notes for
principal and interest, and if there shall have been paid all
other sums payable pursuant to the provisions hereof and of the
Declaration of Trust, then and in that case the Declaration of
Trust and all agreements therein contained shall cease and
terminate and, at the request of the Lessee, and at the cost and
expense of the Lessee, the Trustee shall execute and deliver such
instruments as shall be reasonably requested to satisfy and
terminate the Declaration of Trust.
SECTION 7.13. Costs and Expenses.
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(a) Transaction Costs. The Lessee shall pay and save
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all other parties and the holder from time to time of the Notes
harmless against any liability for the payment of the following
fees, expenses, disbursements and costs incurred in connection
with the preparation, execution and delivery of any Operative
Document or of any amendment or supplement thereto or any waivers
thereof, including:
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(i) the reasonable fees, expenses and
disbursements of the Trustee, the Purchaser or of their
counsel for services rendered to the Trustee or the
Purchaser, in connection with such transactions,
provided that no such fees, expenses and disbursements
of the Trustee, the Purchaser or of their counsel are
incurred in connection with the placement of the Notes
as contemplated by Article III hereof;
(ii) the reasonable out-of-pocket expenses of the
Trustee and the Purchaser and their Affiliates incurred
in connection with such transactions; and
(iii) all fees and expenses in connection with
any inspection, printing and other document
reproduction and distribution expenses, sales taxes, if
any, any documentary, stamp or other similar taxes,
fees or excise, including interest and penalties and
all filing fees in connection with the execution,
delivery or performance of any Operative Document or
the recording or filing of instruments and financing
statements described in this Participation Agreement.
(b) Compensation and Reimbursement. The Lessee agrees
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(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it under the Operative
Documents (which compensation shall not be limited by any
provisions of law in regard to the compensation of a trustee of
an express trust); (b) to reimburse the Trustee for all
reasonable expenses, disbursements and advances incurred or made
by it in accordance with any provisions of the Operative
Documents (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any such
17
expense, disbursement or advance as may be attributable to its
own gross negligence, willful misconduct or bad faith; and (c) to
indemnify the Trustee and to hold it harmless against, any loss,
liability or expense incurred without negligence, willful
misconduct or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust
created by the Declaration of Trust or the performance of its
duties under the Operative Documents, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers
or duties thereunder.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be duly executed by their officers thereunto duly
authorized as of the day and year first above written.
THE CONTINENTAL INSURANCE COMPANY
By ____________________________________
Title:
FIRST FIDELITY BANK, N.A.,
not in its individual capacity
except as expressly stated
herein, but solely as Trustee
By __________________________
Title:
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
By __________________________
Title:
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PARTICIPATION AGREEMENT
Dated as of December 29, 1994
APPENDIX A - DEFINITIONS
"Affiliate" when used with respect to a Person, means
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any other Person (1) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, such Person, (2) which beneficially owns or hold 5% or
more of any class of the voting stock of such Person or (3) 5% or more
of the voting stock (or in the case of a Person which is not a
corporation, 5% of more of the equity interest) of which is
beneficially owned or held by such Person or any of its subsidiaries.
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 the ownership of voting stock,
by contract or otherwise.
"Declaration of Trust" means the Declaration of Trust
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dated as of December 29, 1994 by the Trustee as trustee thereunder.
"Default" means any event which with the lapse of
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time, or giving of notice, or both would become an Event of Default.
"Department of Insurance" means the Insurance
--------------------------
Department of the State of New Hampshire.
"Event of Default" means any of the events specified in
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Section 6.01 of this Participation Agreement or in Section 10 of the
Lease or any material default by the Guarantor under the Lease
Guaranty, provided that any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been satisfied.
"ERISA" means the Employee Retirement Income Security
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Act of 1974, as amended from to time to time.
"Guarantor" means The Continental Corporation, a New
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York Corporation.
"Landlord's Waiver and Consent" means either of the
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Landlord's Waiver and Consent of Sudler-Steiner Cranbury Limited
Partnership relating to those items of Equipment located at One
Continental Drive, Cranbury, New Jersey or the Landlord's Waiver and
Consent of Greycas, Inc., relating to those items of Equipment located
at 3501 Route 66, Neptune, New Jersey.
"Lease" means the Master Agreement of Lease dated as
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of December 29, 1994 between the Trustee as Lessor and The Continental
Insurance Company, as Lessee, together with Schedule of Leased
Equipment No. 1 dated as of December 29, 1994, thereunder.
"Lease Payments" means the rent and all other amounts
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payable by the Lessee under the Lease, including, without limitation,
all rent payable during any renewal term of the Lease
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and all amounts payable in the event Lessee exercises any end of term
options or the Lease is terminated for any reason prior to the end of
the Maximum Lease Term (as that term is defined in the Lease).
"Merger" means the transaction described in the
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Agreement, dated December 6, 1994, between the Guarantor and CNA
Financial Corporation ("CNA Financial") under which CNA Financial will
acquire the Guarantor through a merger with a wholly-owned CNA
Financial subsidiary, including the investment, under separate
agreement, whereby CNA has agreed to invest $275,000,000.00 in the
Guarantor, which investment has been made as of the date hereof.
"Notes" means the Secured Promissory Notes issued, or
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any note issued in replacement thereof, and, unless the context
otherwise specifies or requires, outstanding under this Participation
Agreement.
"Officer" means, the president, any vice president or
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any other duly authorized and responsible officer of such corporation
or entity.
"Officer's Certificate" or "Officers' Certificate" of
--------------------- ---------------------
a Person means a certificate signed by an Officer or Officers of such
Person.
"PBGC" means the Pension Benefit Guarantee Corporation
----
or any entity succeeding to any or all of its functions under ERISA.
"Permit" means any action, approval, certificate of
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occupancy, consent, waiver, exemption, variance, franchise, order,
permit, authorization, right or license of or from a government or
agency or subdivision thereof.
"Permitted Encumbrance" means, with respect to the
---------------------
Equipment: (i) the respective rights of the Lessee and the Trustee
under the Lease and the Prime Lease; (ii) liens for taxes either not
yet due or being contested in good faith and by appropriate
proceedings so long as such proceedings do to involve any danger of
the sale, forfeiture or loss of, or the loss of the use of, such item
of Equipment or any interest therein and so long as such Lessee shall
be maintaining adequate reserves on its books for the payment of such
taxes to the extent such taxes are federal or state income taxes;
(iii) inchoate materialmen's, mechanics', workmen's, repairmen's,
employees' or other like liens arising in the ordinary course of
business and securing obligations which are not delinquent or which
are being contested by such Lessee in good faith and by appropriate
proceedings so long as such proceedings do not involve any danger of
the sale, forfeiture or loss of, or the loss of the use of, such item
of Equipment or any interest therein and (iv) any liens securing
obligations of landlords of locations at which the Equipment is
located to third parties.
"Person" means any individual, corporation,
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partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government.
"Prime Lease Rent" means the aggregate rent payable
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under the Prime Lease.
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"Purchaser" means The CIT Group/Equipment Financing,
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Inc., a corporation organized under the laws of the State of New York.
"Statutory Accounting Principles" or "SAP" means the
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standard accounting principles prescribed or permitted by the
insurance commissioner (or other similar authority) in the
jurisdiction of domicile of any insurance company incorporated in any
jurisdiction of the United States for the preparation of annual
statements and other financial reports by insurance companies of the
same type as such company applied consistently throughout the periods
reflected therein (except as approved by such officers, as the case
may be, and disclosed therein).
"Subsidiary" shall mean any corporation more than 50%
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of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time
owned by any Person directly or indirectly through Subsidiaries.
"Trust Estate" shall have the meaning assigned it in
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the Declaration of Trust.
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This is Counterpart No. of 3 serially numbered, manually
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executed counterparts. To the extent that this document
constitutes chattel paper under the Uniform Commercial Code
("UCC"), no security interest in this document may be created
through the transfer and possession of any counterpart other
than Counterpart No. 1.
Master Lease
MASTER AGREEMENT OF LEASE ("Master Lease") dated as of December 29, 1994
between First Fidelity Bank, N. A., not in its individual capacity, but
solely as Trustee (Lessor), having a place of business at 5 Research Drive,
Shelton, Connecticut 06484, and THE CONTINENTAL INSURANCE COMPANY
("Lessee"), having a place of business at 180 Maiden Lane, New York, New
York 10038,
Lessee wants to lease from Lessor leasehold improvements to be described in
the schedule of leased equipment (as amended, modified or supplemented, the
"Schedule"). Lessor is willing to lease such leasehold improvements to
Lessee at the rent, for the term and upon the conditions provided
hereinafter. The Schedule executed by Lessor and Lessee which is identified
as being entered into pursuant to this Master Lease shall be deemed to
incorporate by reference all the terms and conditions of this Master Lease
except as provided in such Schedule. The term "Lease" when used herein
shall refer to the Schedule, which incorporates this Master Lease.
1. Equipment Leased and Term.
This Lease shall cover such leasehold improvements as is described in the
Schedule executed by or pursuant to the authority of Lessee, accepted by
Lessor in writing and identified as a part of this Lease (which leasehold
improvements with all replacement parts, additions, repairs, accessions and
accessories incorporated therein and/or affixed thereto is hereinafter
called the "Equipment"). Lessor hereby leases to Lessee and Lessee hereby
hires and takes from Lessor, upon and subject to the covenants and
conditions hereinafter contained, the Equipment described in the Schedule.
The Initial Lease Term with respect to any item of Equipment shall be for
the period as set forth in the Schedule. The Initial Lease Term together
with all renewal terms provided for in the Schedule constitute the "Maximum
Lease Term."
2. Rent.
The aggregate rent payable with respect to the Equipment shall be the amount
shown on the Schedule as the "Aggregate Rent." Lessee shall pay to Lessor
the Aggregate Rent for the Equipment for the full period and term for which
the Equipment is leased, such rent to be payable at such times and in such
amounts for the Equipment as shown in the Schedule.
All rent and other amounts payable hereunder shall be paid at Lessor's place
of business shown above, or such other place as Lessor may designate by
written notice to the Lessee. All rent and other amounts shall be paid
without notice or demand and without abatement, deduction or set off of any
amount whatsoever. This is a non-cancelable net lease, and the obligation
of Lessee to make payments hereunder is absolute and unconditional. Lessee
shall not be entitled to any abatement or reduction of payments hereunder
for any reason including, without limitation, any existing or future offset
or claim which may be asserted by Lessee.
3. No Warranties by Lessor; Maintenance and Compliance with Laws.
Lessor, not being the manufacturer of the Equipment, nor manufacturer's
agent, MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO
THE FITNESS, QUALITY, DESIGN, CONDITION, CAPACITY, SUITABILITY,
MERCHANTABILITY OR PERFORMANCE OF THE EQUIPMENT OR OF THE MATERIAL OR
WORKMANSHIP THEREOF, IT BEING AGREED THAT THE EQUIPMENT IS LEASED "AS IS"
AND THAT ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE BY
LESSEE AT ITS SOLE RISK AND EXPENSE; Lessee accordingly agrees not to assert
any claim whatsoever against Lessor based thereon. Lessee further agrees,
regardless of cause, not to assert any claim whatsoever against Lessor for
loss of anticipatory profits or consequential damages. Lessor shall have no
obligation to install, erect, test, adjust or service the Equipment. Lessee
shall look to the manufacturer and/or seller of the Equipment for any claims
related to the Equipment. "Seller" as used in this Lease means the supplier
from which Lessee originally acquired any item of Equipment.
No oral agreement, guaranty, promise, condition, representation or warranty
shall be binding; all prior conversations, agreements or representations
related hereto and/or to the Equipment are integrated herein. Lessee
agrees, at its own cost and expense:
55-SA-2279 (12/94) Master Lease - Continental Lease Page 1 of 8
(a) to pay all charges and expenses in connection with the operation of
each item of Equipment;
(b) to comply with all governmental laws, ordinances, regulations,
requirements and rules with respect to the use, maintenance and
operation of the Equipment; and
(c) to make all repairs and replacements required to be made to maintain
the Equipment in good condition, reasonable wear and tear excepted.
4. Insurance.
Lessee shall maintain at all times on the Equipment, at its expense, all-risk
physical damage insurance and comprehensive general liability insurance
(covering bodily injury and property damage exposures including, but not
limited to, contractual liability and products liability) in such amounts,
against such risks, in such form and with such insurers as shall be
reasonably satisfactory to Lessor; provided, that the amount of all-risk
physical damage insurance shall not on any date be less than the greater of
the full replacement value or the Liquidated Damages Amount (as defined in
Section 11). Each physical damage insurance policy shall name Lessor as loss
payee for all damage amounts in excess of $1,000,000, and each liability
insurance policy shall name Lessor as additional insured. All insurance
for loss or damage shall provide that the proceeds thereof shall be payable
directly to Lessor for all damage amounts in excess of $1,000,000. Each
insurance policy shall require that the insurer give Lessor at least thirty
(30) days prior written notice of any alteration in or cancellation of the
terms of the policy and require that Lessor's interests be continued insured
regardless of any breach or violation by Lessee or others of any warranties,
declarations or conditions contained in such insurance policy. In no event
shall Lessor be responsible for premiums, warranties or representations to
any insurer or any agent thereof. Lessee shall furnish to Lessor a
certificate or other evidence satisfactory to Lessor that such insurance
coverage is in effect, but Lessor shall be under no duty to ascertain the
existence or adequacy of such insurance. The insurance maintained by
Lessee shall be primary without any right of contribution from insurance
which may be maintained by Lessor. Lessee shall be liable for all
deductible portions of all required insurance. Lessor may (but without any
obligation to do so), at its own expense, for its own benefit, purchase
insurance in excess of that required under this Lease Agreement.
5. Loss and Damage.
Lessee assumes and shall bear the entire risk of any partial or complete
loss with respect to the Equipment from any and every cause whatsoever
including theft, loss, damage, destruction or governmental taking, whether
or not such loss is covered by insurance or caused by any default or neglect
of Lessee. Lessee agrees to give Lessor prompt notice of any damage to or
loss of any Equipment.
If any item of Equipment is lost, totally destroyed, damaged beyond repair
or taken by governmental action (a "casualty loss") the rent due and to
become due thereon shall not abate and Lessee shall at its own expense
replace the lost or destroyed Equipment in accordance with the terms of this
Section. Lessee shall, within thirty days after the date of the casualty
loss, (i) acquire items of equipment equal in number to the items of lost or
destroyed Equipment, of the same or an improved make and model, owned by
Lessee free and clear of all liens, claims and encumbrances and having a
value, utility and remaining useful life at least equal to, and being in as
good condition as, the lost or destroyed items of Equipment, (ii) cause each
such replacement item of equipment to be leased to Lessor on the same terms
and conditions as provided in Schedule of Leased Equipment No. 1 to that
certain Prime Master Lease (the "Prime Master Lease") dated of even date
herewith between Lessee as Prime Lessor and Lessor as Prime Lessee for a
term equal to the term then remaining under the Prime Master Lease, (iii) if
requested by Lessor, execute and deliver to Lessor a supplement to the
related Schedule under this Master Lease confirming that such replacement
item of equipment is for all purposes Equipment subject to such Schedule,
and (iv) take such other action as Lessor may reasonably request, including
filing UCC financing statements and fixture filings with appropriate filing
offices. Each replacement item of equipment shall be deemed upon its
acquisition by Lessee to be and become part of the leasehold improvements
hereunder subject to the terms and conditions hereof and each such
replacement item of equipment shall be deemed an item of Equipment under its
related Schedule whether or not a supplement to that effect is signed and
delivered by Lessee. In the event of partial destruction of any Equipment,
the rent due and to become due thereon shall not abate and Lessee shall, at
its own expense, cause such Equipment to be restored to usable condition, or
Lessee may replace such damaged Equipment in accordance with the procedure
set forth above as though the damaged Equipment was totally destroyed.
Lessor shall, upon receiving satisfactory evidence of replacement due to a
casualty loss or restoration due to partial loss, promptly pay to Lessee the
proceeds of any insurance or compensation actually received by Lessor by
reason of such damage and shall upon Lessee's request execute and deliver
such releases and other instruments as may be necessary to release such
replaced equipment or parts from this Lease. Lessor shall not be obligated
to undertake by litigation or otherwise the collection of any claim against
any person for loss of or governmental taking of the Equipment, but Lessor
will cooperate with Lessee at Lessee's expense to pursue such claims.
The total or partial destruction of any Equipment or the total or partial
loss of use or possession thereof to Lessee shall not release or relieve
Lessee from its obligations hereunder, including the duty to pay the
Aggregate Rent herein provided.
55-SA-2279 (12/94) Master Lease - Continental Lease Page 2 of 8
6. Taxes.
Lessee agrees that, during the term of this Lease, in addition to the
Aggregate Rent and all other amounts provided herein to be paid, it will
promptly pay all taxes, assessments and other governmental charges
(including penalties and interest, if any, and fees for titling or
registration, if required) levied or assessed:
(a) upon the interest of Lessee in the Equipment or upon the use or
operation thereof or on the earnings arising therefrom; and
(b) against Lessor on account of its acquisition or ownership of or
interest in the Equipment or any part thereof, or the use or operation
thereof or the leasing thereof to Lessee, or the Aggregate Rent herein
provided for, or the earnings arising therefrom, exclusive, however, of
any taxes based on net income of Lessor.
Lessee agrees to file, in behalf of Lessor, all required tax returns and
reports concerning the Equipment (but no returns or reports, if any,
required to be filed by Lessor as a result of its status as a trustee) with
all appropriate governmental agencies, and within not more than 45 days
after the due date of such filing to send Lessor confirmation, in form
satisfactory to Lessor, of such filing. If any report, return or property
listing, or any fee, tax or assessment is, by law, required to be filed by,
assessed or billed to, or paid by Lessor, Lessee will, at Lessee's expense,
do all things required by Lessor to be done (to the extent permitted by law)
in connection therewith. Lessee may, in good faith and with due diligence,
contest taxes, assessments or governmental charges related to the Equipment
or this Lease, provided, however, that no item of Equipment will be subject
to a lien, forfeiture, sale or diminution in value in connection with such
contested tax or other charge during any such contest.
7. Lessor's Interest, No Merger of Title, Return and Inspection of
Equipment.
Lessor's interest in and right to use and possess the Equipment arises under
the Prime Master Lease. Lessee will at all times protect and defend, at its
own cost and expense, the rights and interests of Lessor in the Equipment
under the Prime Master Lease from and against all claims, liens and legal
processes of creditors of Lessee and, to the extent such property
constitutes personal property, and except for the property located at 200 S.
Wacker Drive, Chicago, Illinois, keep all the Equipment free and clear from
any and all such claims, liens and processes.
There shall be no merger of this Lease nor of the property interest in the
Equipment created by this Lease with the ownership of or other property
interest in the Equipment or any item thereof by reason of the fact that the
same corporation, firm or other entity may acquire, own or hold, directly or
indirectly, this Lease or the property interest created by this Lease or any
interest in such leasehold or ownership, and no such merger shall occur
unless and until all corporations, firms and other entities having any
ownership or other property interest in the Equipment or any item thereof
shall join in a written instrument effecting such merger.
Upon the expiration or termination of this Lease with respect to any item of
Equipment:
(a) if the relevant Schedule sets forth return provisions, Lessee shall
return the Equipment as provided in such Schedule; or
(b) if the relevant Schedule does not contain return provisions, Lessee at
Lessee's sole expense shall return such Equipment unencumbered to
Lessor at the place where the rent is payable or to such other place as
Lessor and Lessee agree upon, and in the same condition as when
received by Lessee, reasonable wear and tear resulting from use thereof
alone excepted.
Lessor shall have the right (but not the obligation) from time to time
during reasonable business hours after reasonable prior notice (written or
otherwise) to Lessee to enter upon Lessee's premises or elsewhere for the
purpose of confirming the existence, condition and proper maintenance of the
Equipment.
8. Possession, Use and Changes in Location of Equipment.
So long as Lessee shall not be in default under the Lease (taking into
account applicable periods of notice and grace) it shall be entitled to the
possession and use of the Equipment in accordance with the terms of this
Lease. The Equipment shall be used in the conduct of the lawful business of
Lessee, and no item of Equipment shall be removed from its location shown on
the Schedule, without the prior written consent of Lessor, such consent to
not be unreasonably withheld. Lessee shall not, without Lessor's prior
written consent (such consent to not be unreasonably withheld), part with
possession or control of the Equipment or attempt or purport to sell,
pledge, mortgage or otherwise encumber any of the Equipment or otherwise
dispose of or encumber any interest under this Lease. In the event Lessor
agrees to the relocation of any Equipment, Lessee shall sign and deliver
such documents and take such other steps, at Lessee's expense, as Lessor may
request, including filing UCC financing statements and fixture filings.
55-SA-2279 (12/94) Master Lease - Continental Lease Page 3 of 8
9. Performance of Obligations of Lessee by Lessor.
In the event that the Lessee shall fail duly and promptly to perform any of
its obligations under the provisions of Sections 3, 4, 5, 6, 7 or 8 of this
Lease, taking into account applicable periods of notice and grace, Lessor
may, at its option but without any obligation to do so, perform the same for
the account of Lessee without thereby waiving such default, and any amount
paid or expense (including reasonable attorneys' fees), penalty or other
liability incurred by Lessor in such performance, together with interest at
the rate of 1 1/2% per month thereon (but in no event greater than the
highest rate permitted by relevant law) until paid by Lessee to Lessor,
shall be payable by Lessee upon demand as additional rent for the Equipment.
10. Default.
An Event of Default shall occur if:
(a) Lessee fails to pay when due any installment of rent and such failure
continues for a period of 5 days; or
(b) Lessee shall fail to perform or observe any covenant, condition or
agreement to be performed or observed by it hereunder and such failure
continues uncured for 15 days after the earlier of written notice
thereof to Lessee by Lessor or actual knowledge of such failure by the
Vice President-Treasurer or an Executive Vice President or Senior Vice
President of Lessee; or
(c) Lessee ceases doing business as a going concern, makes an assignment
for the benefit of creditors, admits in writing its inability to pay
its debts as they become due, files a voluntary petition in bankruptcy,
is adjudicated a bankrupt or an insolvent, files a petition seeking for
itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar arrangement under any present or
future statute, law or regulation or files an answer admitting the
material allegations of a petition filed against it in any such
proceeding, consents to or acquiesces in the appointment of a trustee,
receiver, or liquidator of it or of all or any substantial part of its
assets or properties, or if it or its shareholders shall take any
action looking to its dissolution or liquidation; or
(d) within 60 days after the commencement of any proceedings against Lessee
seeking reorganization, arrangement, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law
or regulation, such proceedings shall not have been dismissed, or if
within 60 days after the appointment without Lessee's consent or
acquiescence of any trustee, receiver or liquidator of it or of all or
any substantial part of its assets and properties, such appointment
shall not be vacated; or
(e) Lessee removes, sells, transfers, encumbers, parts with possession or
sublets the Equipment or any item thereof; or
(f) one or more judgments or decrees shall be entered against the Lessee,
The Continental Corporation or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance or
reinsurance) of $25,000,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or
(g) (i) The Continental Corporation fails to pay or to perform or is
otherwise in default under any term, covenant or agreement on its part
to be performed (the "failure") under that certain Credit Agreement
(the "Credit Agreement") dated as of December 30, 1993, among The
Continental Corporation, the lenders from time to time parties thereto,
Chemical Bank and Citibank, N.A., as Co-Agents, and Chemical Bank, as
Administrative Agent, as amended by the Amendment dated as of March 30,
1994, the Second Amendment dated as of June 30, 1994, the Third
Amendment dated as of September 29, 1994, the Fourth Amendment dated as
of November 22, 1994 and the Fifth Amendment effective as of December
15, 1994 (which Lessee represents and warrants are the only amendments
to the Credit Agreement as of the date of this Lease), as such
agreement may be further amended, modified or supplemented, and (ii)
such failure constitutes an "Event of Default" as defined in the Credit
Agreement which Event of Default would entitle any party or parties to,
or the holders of any indebtedness issued pursuant to, the Credit
Agreement, directly or indirectly, together or individually, to
accelerate any of the indebtedness evidenced or secured thereby; or
(h) Lessee fails to pay or to perform any term, covenant or agreement on
its part to be performed under that certain Participation Agreement
dated as of December 28, 1988, among Lessee, The Connecticut Bank and
Trust Company, National Association, as Trustee, and Citibank, N.A., as
Purchaser, as amended, modified or supplemented, or any agreement or
instrument evidencing, securing or relating to any refinancing of all
or part of the indebtedness evidenced thereby or any other replacement
thereof and such failure on the part of Lessee constitutes a default
under the corresponding agreement or instrument entitling any other
party thereto or holder thereof to accelerate the indebtedness
evidenced or secured thereby; or
(i) Lessee fails to notify Lessor promptly of any "Event of Default" (as
defined therein) by The Continental Corporation or by Lessee under any
of the agreements or instruments identified in subsections (g) or (h)
of this Section; or
55-SA-2279 (12/94) Master Lease - Continental Lease Page 4 of 8
(j) an "Event of Default" (as defined therein) occurs with respect to The
Buckeye Union Insurance Company ("Buckeye") under that certain Schedule of
Leased Equipment No. 1 dated of even date herewith to that certain Master
Agreement of Lease dated of even date herewith between First Fidelity Bank,
N.A., not in its individual capacity, but solely as Trustee, as Lessor and
Buckeye as Lessee as such Lease may be amended, modified or supplemented
(the "Buckeye Lease") or an "Event of Default" (as defined therein) occurs
with respect to Firemen's Insurance Company of Newark, New Jersey
("Firemen's") under that certain Schedule of Leased Equipment No. 1 dated
of even date herewith to that certain Master Agreement of Lease dated of
even date herewith between First Fidelity Bank, N.A., not in its individual
capacity, but solely as Trustee, as Lessor and Firemen's as Lessee as such
Lease may be amended, modified or supplemented (the "Firemen's Lease"); or
(k) an "Event of Default" (as defined therein) under that certain Participation
Agreement as such Agreement may be amended or modified (the "Participation
Agreement") among Lessor, Lessee and The CIT Group/Equipment Financing,
Inc. dated of even date herewith.
11. Remedies.
Upon the occurrence of an Event of Default, Lessor shall have all the rights and
remedies provided by applicable law and by this Lease. Notwithstanding that
this Agreement is a lease, Lessor may nevertheless at its option choose those
rights and remedies of a secured party under the Uniform Commercial Code. In
addition, Lessor, at its option, may:
(a) declare all sums due and to become due hereunder immediately due and
payable, but in no event shall the Lessee, upon demand by Lessor for
payment of the unpaid rent, upon acceleration of the maturity thereof or
otherwise, be obligated to pay any amount in excess of the lesser of that
permitted by law or the Liquidated Damages Amount (as that term is defined
below);
(b) proceed by appropriate court action or actions or other proceedings either
at law or equity to enforce performance by the Lessee of any and all
covenants of this Lease and to recover damages for the breach thereof or
exercise any other right or remedy available to Lessor at law or in equity,
provided, however, that such damages shall in no event exceed the
Liquidated Damages Amount;
(c) demand that Lessee deliver the Equipment forthwith to Lessor at Lessee's
expense at such place as Lessor may designate;
(d) cancel this Lease as to any or all of the Equipment;
(e) without notice or liability or legal process, by itself and/or by its
agents, enter into any premises of or under control or jurisdiction of
Lessee or any agent of Lessee where the Equipment may be or by Lessor is
believed to be, and repossess all or any item thereof, disconnecting and
separating all thereof from any other property and using all force
necessary or permitted by applicable law so to do, Lessee hereby expressly
waiving all further rights to possession of the Equipment and all claims
for injuries suffered through or loss caused by such repossession; and
(f) sell or lease the Equipment at a time and location of its choosing provided
that the Lessor acts in good faith and in a commercially reasonable manner;
and
(g) demand that Lessee pay, and Lessee shall be entitled to recover
immediately, as liquidated damages for loss of a bargain and not as a
penalty, the "Liquidated Damages Amount." The Liquidated Damages Amount
shall be an amount equal to the sum of (i) the rent then due for the
Equipment, plus (ii) all rent to become due thereon during the remaining
term of the Lease, discounted to present value at the Discount Rate (as
that term is defined in the Schedule), plus (iii) the product of the
Maximum Purchase Price Percentage (set forth in the Schedule) which would
be applicable if Lessee elected to purchase Lessor's interest in the
Equipment at the end of the lease term then in effect multiplied by the
Lessor's Equipment Cost at the beginning of the Initial Lease Term,
discounted to present value at the Discount Rate, plus (iv) the
Breakfunding Fee (as defined in Section 16 below), plus (v) the amount of
all commercially reasonable costs and expenses incurred by Lessor in
exercising any of its remedies hereunder, including reasonable attorneys'
fees and costs incurred in connection therewith or otherwise resulting from
any default of Lessee.
Notwithstanding Lessor's right to recover the Liquidated Damages Amount, if any
statute governing the proceeding in which damages are to be proved specifies the
amount of such claim, Lessor shall be entitled to prove as and for damages for
the breach an amount equal to that allowed under such statute. The provisions
of this Section shall be without prejudice to any rights given to the Lessor by
such statute to prove any amounts allowed thereby. Should any proceedings be
instituted by or against Lessor for monies due to Lessor hereunder and/or for
possession of any or all the Equipment or for any other relief or should any
other actions be taken by or against Lessor to collect any monies due hereunder
or to enforce any rights hereunder, Lessee shall pay all costs and expenses
incurred by Lessor in connection with such proceeding or other action including,
without limitation, reasonable attorneys' fees. No remedy of Lessor hereunder
shall be exclusive of any remedy herein or by law provided, but each shall be
cumulative and in addition to every other remedy.
55-SA-2279 (12/94) Master Lease - Continental Lease Page 5 of 8
12. Indemnity.
Lessee agrees that Lessor shall not be liable to Lessee for, and Lessee shall
indemnify and save Lessor (in both its individual and fiduciary capacities), its
agents and employees and any assignee harmless from and against any and all
liability, loss, damage,
55-SA-2279 (12/94) Master Lease - Continental Lease Page 6 of 8
expense (including reasonable legal fees and expenses), causes of action, suits,
claims or judgments arising from or caused directly or indirectly by:
(a) Lessee's failure to promptly perform any of its obligations under the
provisions of Sections 3, 4, 5, 6, 7, 8 and 14 of this Lease; or
(b) injury to persons or damage to property resulting from or based upon actual
or alleged use, operation, delivery or transportation of any or all of the
Equipment or its location or condition; or
(c) inadequacy of the Equipment, or any part thereof, for any purpose or any
deficiency or defect therein or the use or maintenance thereof or any
repairs, servicing or adjustments thereto or any delay in providing or
failure to provide any thereof or any interruption or loss of service or
use thereof.
Lessee shall, at its own cost and expense, defend any and all suits which may be
brought against Lessor, either alone or in conjunction with others upon any such
liability or claim or claims. Lessee shall satisfy, pay and discharge any and
all judgments and fines that may be recovered against Lessor in any such action
or actions. Lessor shall give Lessee written notice of any such claim or
demand. Lessee agrees that its obligations under this Section 12 shall survive
the expiration or termination of this Lease.
13. No Assignment by Lessee, Assignment to Successor Trustee, Notices and
Waivers.
Lessee shall not assign this Lease or its interests hereunder or enter into any
sub-lease with respect to the Equipment covered hereby without the prior written
consent of Lessor, such consent not to be unreasonably withheld, provided,
however, that no such assignment or sublease shall relieve Lessee of its
obligations hereunder.
In the event of the resignation or removal of the First Fidelity Bank, N.A., as
Trustee under that certain Declaration of Trust (the "Declaration of Trust")
dated of even date herewith, and appointment of a successor trustee in
accordance with the terms thereof, Lessor may assign all its rights and
obligations hereunder to the successor trustee which shall, for all purposes
from the date of such assignment, be substituted for First Fidelity Bank, N.A.,
as Lessor hereunder. The successor trustee shall have and be entitled to
exercise any and all rights and powers of Lessor hereunder and shall be
obligated to perform all of Lessor's obligations hereunder. Any assignment of
this Lease by First Fidelity Bank, N.A., as Trustee, to a successor trustee
shall, from the date of such assignment, relieve First Fidelity Bank, N.A., of
any further obligations or liability to Lessee hereunder.
All notices to Lessor shall be delivered in person to an officer of the Lessor,
or shall be sent to Lessor at its address shown herein by certified mail or by
commercial courier in either case with return receipt requested. All notices to
Lessee shall be in writing and shall be delivered by regular mail, certified
mail return receipt requested or commercial courier to Lessee's address shown
herein or at any subsequent address of which Lessee has given notice to Lessor
as provided herein. A waiver of a default shall not be a waiver of any other or
a subsequent default.
14. Financial Statements.
Lessee shall furnish or cause to be furnished to Lessor financial statements as
follows:
(a) GAAP financial statements:
--------------------------
(i) as soon as available, but in any event within 120 days after the end
of each fiscal year of The Continental Corporation, a copy of the consolidated
balance sheet of The Continental Corporation and its consolidated subsidiaries
as at the end of such year and the related consolidated statements of income and
retained earnings and of cash flows for such year, set forth in each case in
comparative form with the same information as of the end of and for the previous
year, all as reported on by KPMG Peat Marwick or other independent certified
public accountants of nationally recognized standing; and
(ii) as soon as available, but in any event not later than 60 days after
the end of each of the first three quarterly periods of each fiscal year of The
Continental Corporation, an unaudited consolidated balance sheet of The
Continental Corporation and its consolidated subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of income and retained
earnings and of cash flows of The Continental Corporation and its consolidated
subsidiaries for such quarter and the portion of the fiscal year through the end
of such quarter, set forth in each case in comparative form with the same
information for the corresponding date or period in the previous year, certified
by the chief financial officer or Treasurer of The Continental Corporation as
being fairly stated in all material respects (subject to normal year-end audit
adjustments);
all such financial statements to be prepared in reasonable detail and in
accordance with generally accepted accounting principles applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein); and
55-SA-2279 (12/94) Master Lease - Continental Lease Page 7 of 8
(b) SAP financial statements:
-------------------------
(i) as soon as possible, but in any event within 120 days after the end of
each fiscal year of Lessee and each other Reporting Insurance Subsidiary (as
defined below) of The Continental Corporation, a copy of the consolidated
Statutory Statement of Lessee and its affiliated fire and casualty insurers for
such fiscal year, subscribed and sworn to and certified by officers of Lessee or
such other Reporting Insurance Subsidiary as required by applicable law; and
(ii) as soon as possible, but in any event within 60 days after the end of
each of the first three fiscal quarters of each fiscal year of each Reporting
Insurance Subsidiary, a copy of the consolidated Statutory Statement of Lessee
and its affiliated fire and casualty insurers for such fiscal quarter, certified
by officers of Lessee or such other Reporting Insurance Subsidiary as required
by applicable law;
all such financial statements to be prepared in accordance with the standard
accounting principles prescribed or permitted by the insurance commissioner (or
other similar authority) in the jurisdiction of domicile of any insurance
company incorporated in any jurisdiction of the United States for the
preparation of annual statements and other financial reports by insurance
companies of the same type as such company ("SAP") applied consistently
throughout the periods reflected therein (except as approved by such officers,
as the case may be, and disclosed therein). "Statutory Statement" as used in
this Section means, for any subsidiary of The Continental Corporation which is
an insurance company, for each fiscal year of such subsidiary, the most recent
annual statement, prepared in accordance with SAP, as required to be filed with
the appropriate regulatory authority and, for each fiscal quarter of such
subsidiary, the quarterly statement, as required to be filed with the
appropriate regulatory authority, which quarterly statement shall be prepared in
accordance with SAP. Reporting Insurance Subsidiary means each of the following
entities: The Continental Insurance Company, The Buckeye Union Insurance
Company, The Fidelity and Casualty Company of New York, Firemen's Insurance
Company of Newark, New Jersey, and National-Ben Franklin Insurance Company of
Illinois.
15. Further Assurances; Termination of Credit Agreement.
(a) Lessee shall execute and deliver to Lessor, upon Lessor's request such
documents, instruments and assurances and take any such action as Lessor
deems necessary or advisable for the confirmation or perfection of this
Lease and Lessor's rights hereunder or in order for Lessor to effect any
assignment or syndication of any rights, obligations, title or interest in
any Equipment or under this Lease or any related instrument or document,
provided, however, that in no event shall Lessee be required for purposes
of the immediately preceding clause to execute or deliver any such further
documents, instruments or assurances or take such further action to the
extent that such would increase the obligations or reduce the rights of
Lessee as of the date of this Lease. Lessee may not terminate the Schedule
except as provided therein without the written consent of Lessor.
(b) In the event the Credit Agreement referred to in Section 10(g) is
terminated or replaced, Lessee shall notify Lessor of such event within 10
days of its occurrence. In such notice (the "Covenant Notice") Lessee
shall advise Lessor as to whether Lessee will agree, by amendment of this
Lease, to provide the Lessor with the same financial covenants as appear in
Sections 6.1(a) and 6.1(b) of the Credit Agreement as in effect on the date
of this Lease, so that a violation of such covenants would thereafter be an
Event of Default hereunder taking into account such period of grace as is
provided under Section 10(b) hereof. If the Lessee agrees in the Covenant
Notice to provide such covenants, the Lessor shall promptly cause the
necessary amendment(s) to this Lease to be prepared and signed by the
parties hereto (at Lessee's expense).
16. Lease Irrevocability, Breakfunding Fee and Late Charges.
This Lease is irrevocable for the full terms thereof as set forth in the
Schedule and for the Aggregate Rent therein reserved and the rent shall not
abate by reason of termination of Lessee's right of possession and/or the taking
of possession by the Lessor or for any other reason. If for any reason this
Lease is terminated prior to the end of the Maximum Lease Term, Lessee shall pay
Lessor an amount (the "Breakfunding Fee") equal to the Make Whole Premium
defined in Section 6.3 of the Declaration of Trust plus any reasonable out of
pocket costs and expenses incurred in connection with such termination. Any
payment of rent or other amounts payable under this Lease not made when due
shall bear late charges thereon calculated at the rate of 1 1/2% per month, but
in no event greater than the highest rate permitted by relevant law.
17. Purchase, Renewal or Other End of Term Option.
So long as no Event of Default has occurred and is continuing under the Lease,
then Lessee may exercise such purchase, renewal or other end of term options in
accordance with the terms and conditions set forth in the Schedule.
Any purchase or renewal option price stated as "fair market value" ("FMV") for
any item of Equipment on the Schedule shall be determined by an independent
third party appraiser selected by Lessee on the basis of, and shall be equal in
amount to, the value which would be obtained in an arm's length transaction
between an informed and willing buyer-user (other than
55-SA-2279 (12/94) Master Lease - Continental Lease Page 8 of 8
a Lessee currently in possession and a used Equipment dealer) and an informed
and willing seller/lessor under no compulsion to sell/lease.
18. Legal Expenses and Closing Costs.
Lessee shall pay all reasonable costs and expenses, including, without
limitation legal fees and expenses, incurred by Lessor, Lessor's lender and any
broker, consultant or agent engaged by Lessor in connection with the
negotiation, structuring, documentation, closing or financing of this Lease or
any documents related hereto. Lessee shall pay such amounts to Lessor, or to
such parties as Lessor may direct, as such expenses are incurred, provided,
however, that no such payment shall be due prior to the date on which Lessee
executes this Lease.
19. Liability of Lessor.
It is expressly agreed, anything herein to the contrary notwithstanding, that
each and all of the representations, warranties, undertakings and agreements
herein made on the part of Lessor are made and intended not as personal
representations, warranties, undertakings and agreements by First Fidelity Bank,
N.A., or for the purpose or with the intention of binding said bank personally,
but are made and intended for the purpose of binding only the Trust Estate (as
that term is defined in the Declaration of Trust), and this Lease is executed
and delivered by said bank not in its own right but solely in the exercise of
the powers expressly conferred upon it as trustee under the Declaration of
Trust.
20. Security Interest.
Lessee hereby grants Lessor a security interest in all of Lessee's right, title
and interest in and to the Equipment and all proceeds thereof, including any
proceeds of insurance referred to in Section 4 hereof, as security for all of
Lessee's indebtedness and obligations owing under the Lease and the
Participation Agreement, all of the indebtedness and obligations of Buckeye
under the Buckeye Lease and under that certain Participation Agreement dated of
even date herewith among Buckeye, Lessor and CIT and all of the indebtedness and
obligations of Firemen's under the Firemen's Lease and under that certain
Participation Agreement dated of even date herewith among Firemen's, Lessor and
CIT. "Proceeds" shall have the meaning set forth in the Uniform Commercial Code
and shall include without limitation all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash or liquidated claims including
insurance proceeds and condemnation awards.
21. Miscellaneous.
All amounts to be reduced to present value shall be discounted at the Discount
Rate set forth in the Schedule.
If any provision of this Lease is contrary to, prohibited by or deemed invalid
under applicable laws or regulations of any jurisdiction, such provision shall
be inapplicable and deemed omitted but shall not invalidate the remaining
provisions hereof. This Lease shall be governed by and construed in accordance
with the laws (but not the choice of law rules) of the State of New York.
This Lease contains the entire agreement between the parties with respect to the
Equipment, and may not be altered, modified, terminated or discharged except by
a writing signed by the party against whom such alteration, modification,
termination or discharge is sought. The parties may sign this Master Lease in
any number of counterparts and on separate counterparts, each of which shall be
an original, but all of which together shall constitute one and the same
instrument. To the extent 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.
With respect to this Lease or any document contemplated by this Lease, the
parties agree that the execution and transmittal of any such document by
facsimile shall be of the same binding effect on the party so executing the
document as the handwritten execution upon an original copy of the document.
The parties agree that they will promptly forward to the others an executed
original of any document transmitted by facsimile, but that the failure of a
party to do so or the absence of arrival of any such executed document shall
have no effect on the binding nature of the document transmitted by facsimile.
Lessee is a corporation, and this Lease is executed by authority of its Board of
Directors.
55-SA-2279 (12/94) Master Lease - Continental Lease Page 9 of 8
Lessor: Lessee:
FIRST FIDELITY BANK, N.A., THE CONTINENTAL INSURANCE COMPANY
not in its individual capacity, but
solely as Trustee
By: By:
---------------------------------- --------------------------------
Name: Name:
-------------------------------- ------------------------------
Title: Title:
------------------------------- -----------------------------
55-SA-2279 (12/94) Master Lease - Continental Lease Page 10 of 8
This is Counterpart No. of 3 serially numbered,
--------
manually executed counterparts. To the extent that this
document constitutes chattel paper under the Uniform
Commercial Code ("UCC"), no security interest in this
document may be created through the transfer and possession
of any counterpart other than Counterpart No. 1.
Prime Master Lease
AGREEMENT OF LEASE ("Prime Master Lease") dated as of December 29, 1994 between
The Continental Insurance Company ("Prime Lessor"), having a place of business
at 180 Maiden Lane, New York, New York 10038, and First Fidelity Bank, N.A., not
in its individual capacity but solely as Trustee, ("Prime Lessee"), having a
place of business at 5 Research Drive, Shelton, Connecticut 06484.
Prime Lessee wants to lease from Prime Lessor leasehold improvements to be
described in the schedule of leased equipment (as such schedule may be modified,
amended or supplemented, the "Schedule"). Prime Lessor is willing to lease such
leasehold improvements to Prime Lessee at the rent, for the term and upon the
conditions provided hereinafter. The Schedule executed by Prime Lessor and
Prime Lessee which is identified as being a part of this Lease shall be deemed
to incorporate by reference all the terms and conditions of this Lease except as
provided in the Schedule. The term "Prime Lease" when used herein shall refer
to the Schedule which incorporates this Prime Master Lease.
1. Equipment Leased and Term.
This Prime Lease shall cover such leasehold improvements as is described in the
Schedule executed by or pursuant to the authority of Prime Lessee, accepted by
Prime Lessor in writing and identified as a part of this Prime Lease (which
leasehold improvements with all replacement parts, additions, repairs,
accessions and accessories incorporated therein and/or affixed thereto is
hereinafter called the "Equipment"). Prime Lessor hereby leases to Prime Lessee
and Prime Lessee hereby hires and takes from Prime Lessor, upon and subject to
the covenants and conditions hereinafter contained, the Equipment described in
the Schedule.
2. Rent.
The aggregate rent payable with respect the Equipment shall be the amount shown
on the Schedule as the "Aggregate Rent." Prime Lessee shall pay to Prime Lessor
the Aggregate Rent for the Equipment for the full period and term for which the
Equipment is leased, such rent to be payable at such times and in such amounts
for the Equipment as shown in the Schedule.
Prime Lessee may prepay the Aggregate Rent payable with respect to all, but not
less than all, of the Equipment at any time during the term of this Prime Lease
by paying to Prime Lessor an amount equal to the Aggregate Rent remaining,
discounted to present value at the rate of ten percent (10%) per annum (the
"Prepayment Amount"). Upon receipt by Prime Lessor of the Prepayment Amount,
Prime Lessee shall, without further payment of rent, be entitled for the
remaining term of this Prime Lease to the use and possession of the Equipment in
accordance with the terms of this Prime Lease.
All rent shall be paid at Prime Lessor's place of business shown above, or such
other place as Prime Lessor may designate by written notice to the Prime Lessee.
All rent shall be paid without notice or demand and without abatement, deduction
or set off of any amount whatsoever. This is a non-cancelable lease, and the
obligation of Prime Lessee to make the payments hereunder is absolute and
unconditional. Prime Lessee shall not be entitled to any abatement or reduction
of payments hereunder for any reason including, without limitation, any existing
or future offset or claim which may be asserted by Prime Lessee. The operation
and use of the Equipment shall be at the risk of Prime Lessor, except that
during the term of any sublease permitted hereby, the operation and use of the
Equipment shall be at the risk of the sublessee under such sublease.
3. No Warranties by Prime Lessor; Maintenance and Compliance with Laws.
Prime Lessor, not being the manufacturer of the Equipment, nor manufacturer's
agent, MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE
FITNESS, QUALITY, DESIGN, CONDITION, CAPACITY, SUITABILITY, MERCHANTABILITY OR
PERFORMANCE OF THE EQUIPMENT OR OF THE MATERIAL OR WORKMANSHIP THEREOF, IT BEING
AGREED THAT THE EQUIPMENT IS LEASED "AS IS" AND THAT ALL SUCH RISKS, AS BETWEEN
PRIME LESSOR AND PRIME LESSEE, ARE TO BE BORNE BY PRIME LESSEE AT ITS SOLE RISK
AND EXPENSE; Prime Lessee accordingly agrees not to assert any claim whatsoever
against Prime Lessor based thereon. Prime Lessee further agrees, regardless of
cause, not to assert any claim whatsoever against Prime Lessor for loss of
anticipatory profits or consequential damages. Prime Lessor shall have no
obligation to install, erect, test, adjust or service the Equipment. Prime
Lessee shall look to the manufacturer and/or the seller of the Equipment for any
claims related thereto. Prime Lessor hereby acknowledges that any
manufacturer's and/or seller's warranties are for the benefit of both Prime
Lessor and Prime Lessee. "Seller" as used herein means the supplier from which
Prime Lessor acquires any item of Equipment.
55-SA-2279 (11/94) Master Lease - Prime Continental Lease Page 1 of 6
No oral agreement, guaranty, promise, condition, representation or warranty
shall be binding; all prior conversations, agreements or representations related
hereto and/or to the Equipment are integrated herein. Prime Lessee agrees, at
its own cost and expense:
(a) to pay or cause to be paid all charges and expenses in connection with the
operation of each item of Equipment;
(b) to comply or cause compliance with all governmental laws, ordinances,
regulations, requirements and rules with respect to the use, maintenance
and operation of the Equipment; and,
(c) subject to the provisions of Sections 4 and 5 hereof, to make or cause to
be made in the normal course of its operation all repairs and replacements
required to be made to maintain the Equipment in good condition, reasonable
wear and tear excepted.
4. Insurance.
Prime Lessor shall maintain at all times on the Equipment, at its expense,
all-risk physical damage insurance and comprehensive general liability insurance
(covering bodily injury and property damage exposures including, but not limited
to, contractual liability and products liability) in such amounts, against such
risks, in such form and with such insurers as shall be satisfactory to Prime
Lessee; provided, that the amount of all-risk physical damage insurance shall
not on any date be less than the full replacement value of the Equipment. Each
physical damage insurance policy shall name Prime Lessee as loss payee for all
damage amounts in excess of $1,000,000.00, and each liability insurance policy
shall name Prime Lessee as additional insured. All insurance for loss or damage
shall provide that the proceeds thereof shall be payable directly to Prime
Lessee for all damage amounts in excess of $1,000,000.00. Each insurance policy
shall also require that the insurer give Prime Lessee at least thirty (30) days
prior written notice of any alteration in or cancellation of the terms of such
policy and require that Prime Lessee's interests be continued insured regardless
of any breach or violation by Prime Lessor or others of any warranties,
declarations or conditions contained in such insurance policy. In no event
shall Prime Lessee under the terms hereof be responsible for premiums,
warranties or representations to any insurer or any agent thereof. Prime Lessor
shall furnish to Prime Lessee a certificate or other evidence satisfactory to
Prime Lessee that such insurance coverage is in effect, but Prime Lessee shall
be under no duty to ascertain the existence or adequacy of such insurance. The
insurance maintained by Prime Lessor shall be primary without any right of
contribution from insurance which may be maintained by Prime Lessee. Prime
Lessor shall be liable for all deductible portions of all required insurance.
Prime Lessee may (but without obligation to do so), at its own expense, for its
own benefit, purchase insurance in excess of that required under this Prime
Lease Agreement.
5. Loss or Damage.
Prime Lessor assumes and shall bear the entire risk of any partial or complete
loss with respect to the Equipment from any and every cause whatsoever including
theft, loss, damage, destruction or governmental taking (but not including
reasonable wear and tear from normal operation), whether or not such loss is
covered by insurance or caused by any default or neglect of Prime Lessee,
provided, however, that during the term of any sublease permitted herein, all
risk of loss shall be on the sublessee under such sublease. Prime Lessee agrees
to give Prime Lessor prompt notice of any damage to or loss of any Equipment of
which Prime Lessee receives notice.
If any item of Equipment is lost, totally destroyed, damaged beyond repair or
taken by governmental action at a time when there is no permitted sublease in
effect, Prime Lessor shall, so long as no Event of Default has occurred and
remains continuing hereunder, replace the lost or destroyed Equipment in
accordance with the terms of this Section and shall, within thirty days after
the date of the casualty, (i) acquire good and marketable title to those items
of equipment, equal in number to the items of lost or destroyed Equipment, of
the same or an improved make and model, free and clear of all liens, claims and
encumbrances and having a value, utility and remaining useful life at least
equal to, and being in as good condition as the lost or destroyed items of
Equipment, and (ii) if requested by Prime Lessee, execute and deliver to Prime
Lessee a supplement to the related Schedule confirming that such replacement
item of equipment is for all purposes Equipment subject to such Schedule. Prime
Lessor may take such action as it may reasonably determine at its expense with
respect to such replacement equipment, including filing UCC financing
statements, fixture filings and amendments to existing financing statements and
fixture filings with appropriate filing offices and Prime Lessee shall cooperate
with respect thereto. Each replacement item of equipment shall be deemed part
of the property leased hereunder subject to the terms and conditions hereof and
each such replacement item of equipment shall be deemed an item of Equipment for
all purposes under its related Schedule.
In the event of partial destruction of any Equipment at a time when there is no
permitted sublease in effect, the rent due and to become due thereon shall not
abate and Prime Lessor shall, at its own expense, cause such Equipment to be
restored to usable condition, but Prime Lessee shall, upon receiving
satisfactory evidence of such restoration, promptly pay Prime Lessor the
proceeds of any insurance or compensation received by reason of such damage up
to the amount expended by Prime Lessor in making the repair. Prime Lessor shall
determine in the exercise of its reasonable judgment, subject to Prime Lessee's
approval, whether the Equipment is damaged beyond repair. However, if the
estimated cost of restoring such Equipment exceeds 50% of the unmatured rent
therefor, such Equipment shall be deemed, for all purposes hereof, to be totally
destroyed and the obligations of Prime Lessor therefor shall be as set forth in
the preceding paragraph of this Section.
55-SA-2279 (11/94) Master Lease - Prime Continental Lease Page 2 of 6
Neither Prime Lessor nor Prime Lessee shall be obligated by the terms of this
Prime Lease to undertake by litigation or otherwise the collection of any claim
against any person for loss of or governmental taking of the Equipment, and the
obligation of Prime Lessor to replace such Equipment at Prime Lessor's expense
as provided in this Section 5 shall not be affected by the existence or non-
existence of any such claim.
The total or partial destruction of any Equipment or the total or partial loss
of use or possession thereof to Prime Lessee shall not release or relieve Prime
Lessee from its obligations hereunder, including the duty to pay the Aggregate
Rent herein provided.
6. Taxes.
Prime Lessor agrees that, during the term of this Prime Lease, it will promptly
pay all taxes, assessments and other governmental charges (including penalties
and interest, if any, and fees for titling or registration, if required) levied
or assessed:
(a) upon the interest of Prime Lessee in the Equipment or upon the use or
operation thereof or on the earnings arising therefrom; and
(b) against Prime Lessor on account of its acquisition or ownership of the
Equipment or any part thereof, or the use or operation thereof or the
leasing thereof to Prime Lessee, or the rent herein provided for, or the
earnings arising therefrom.
Prime Lessor agrees to file, in behalf of Prime Lessee, all required tax returns
and reports concerning the Equipment (but no returns or reports, if any,
required to be filed by Lessee as a result of the status as a trustee) with all
appropriate governmental agencies, and within not more than 45 days after the
due date of such filing to send Prime Lessee confirmation, in form satisfactory
to Prime Lessee, of such filing.
7. Prime Lessor's Title, Right of Inspection and Identification of Equipment.
To the extent the Equipment constitutes personal property and not a fixture, and
except for the property located at 200 S. Wacker Drive, Chicago, Illinois 60606,
Prime Lessor represents and warrants that it owns the Equipment free and clear
of all liens, claims and encumbrances except for the rights of Prime Lessee
under this Prime Lease. Throughout the term of this Prime Lease, title to the
Equipment shall at all times remain in Prime Lessor, and Prime Lessor will at
all times protect and defend, at its own cost and expense, the Equipment from
and against all claims, liens and legal processes of creditors of Prime Lessor
and keep all the Equipment free and clear from all such claims, liens and
processes. Prime Lessor's interest in and right to lease any Equipment not
constituting personal property arises under the Landlord's Waiver and Consent
forms listed on Exhibit A hereto. Except for the property located at 200 S.
Wacker Drive, Chicago, Illinois 60606, and to the extent set forth in Landlord's
Waiver and Consents, Prime Lessor has the full legal power, right and authority
to lease the Equipment to Prime Lessee. Upon the expiration or termination of
this Prime Lease with respect to any item of Equipment, Prime Lessee at Prime
Lessor's sole expense shall return such Equipment unencumbered to Prime Lessor
at the place where the rent is payable or to such other place as Prime Lessor
and Prime Lessee agree upon, and in the same condition as when received by Prime
Lessee, reasonable wear and tear resulting from use thereof alone excepted.
Prime Lessor shall have the right from time to time during reasonable business
hours to enter upon Prime Lessee's premises or elsewhere for the purpose of
confirming the existence, condition and proper maintenance of the Equipment.
8. Possession, Use and Changes in Location of Equipment.
So long as no Event of Default as defined herein has occurred and remains
continuing, Prime Lessee shall be entitled to the possession and use of the
Equipment in accordance with the terms of this Prime Lease. The Equipment shall
be used in the conduct of the lawful business of Prime Lessee, and no item of
Equipment shall be removed from its location shown on the Schedule, without the
prior written consent of Prime Lessor. Prime Lessee shall not, without Prime
Lessor's prior written consent, part with possession or control of the Equipment
or attempt or purport to sell, pledge, mortgage or otherwise encumber any of the
Equipment or otherwise dispose of or encumber any interest under this Prime
Lease except as provided in Section 13.
9. Performance of Obligations of Prime Lessee by Prime Lessor.
In the event that the Prime Lessee shall fail duly and promptly to perform any
of its obligations under the provisions of this Prime Lease, Prime Lessor may,
at its option, perform the same for the account of Prime Lessee without thereby
waiving such default, and any amount paid or expense (including reasonable
attorneys' fees), penalty or other liability incurred by Prime Lessor in such
performance, together with interest at the rate of 1 1/2% per month thereon (but
in no event greater than the highest rate permitted by relevant law) until paid
by Prime Lessee to Prime Lessor, shall be payable by Prime Lessee upon demand as
additional rent for the Equipment.
10. Default.
An Event of Default shall occur if:
(a) Prime Lessee fails to pay when due any installment of rent and such failure
continues for a period of 5 days;
55-SA-2279 (11/94) Master Lease - Prime Continental Lease Page 3 of 6
(b) Prime Lessee shall fail to perform or observe any covenant, condition or
agreement to be performed or observed by it hereunder and such failure
continues uncured for 15 days after written notice thereof to Prime Lessee
by Prime Lessor;
(c) Prime Lessee ceases doing business as a going concern, makes an assignment
for the benefit of creditors, admits in writing its inability to pay its
debts as they become due, files a voluntary petition in bankruptcy, is
adjudicated a bankrupt or an insolvent, files a petition seeking for itself
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar arrangement under any present or future statute, law
or regulation or files an answer admitting the material allegations of a
petition filed against it in any such proceeding, consents to or acquiesces
in the appointment of a trustee, receiver, or liquidator of it or of all or
any substantial part of its assets or properties, or if it or its
shareholders shall take any action looking to its dissolution or
liquidation;
(d) within 60 days after the commencement of any proceedings against Prime
Lessee seeking reorganization, arrangement, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceedings shall not have been dismissed, or if within 60
days after the appointment without Prime Lessee's consent or acquiescence
of any trustee, receiver or liquidator of it or of all or any substantial
part of its assets and properties, such appointment shall not be vacated;
or
(e) Prime Lessee attempts to remove, sell, transfer, encumber or part with
possession the Equipment or any item thereof except as provided in Section
13.
11. Remedies
Upon the occurrence of an Event of Default, Prime Lessor shall have all the
rights and remedies provided by applicable law and by this Prime Lease.
Notwithstanding that this Agreement is a lease and title to the Equipment is at
all times in Prime Lessor, Prime Lessor may nevertheless at its option choose
those rights and remedies of a secured party under the Uniform Commercial Code.
In addition, Prime Lessor, at its option, may:
(a) declare all sums due and to become due hereunder immediately due and
payable, but in no event shall the Prime Lessee, upon demand by Prime
Lessor for payment of the unpaid rent, upon acceleration of the maturity
thereof or otherwise, be obligated to pay any amount in excess of that
permitted by law;
(b) proceed by appropriate court action or actions or other proceedings either
at law or equity to enforce performance by the Prime Lessee of any and all
covenants of this Prime Lease and to recover damages for the breach
thereof;
(c) demand that Prime Lessee deliver the Equipment forthwith to Prime Lessor at
Prime Lessor's expense at such place as Prime Lessor may designate; and
(d) Prime Lessor and/or its agents may without notice or liability or legal
process, enter into any premises of or under control or jurisdiction of
Prime Lessee or any agent of Prime Lessee where the Equipment may be or by
Prime Lessor is believed to be, and repossess all or any item thereof,
disconnecting and separating all thereof from any other property and using
all force necessary or permitted by applicable law so to do, Prime Lessee
hereby expressly waiving all further rights to possession of the Equipment
and all claims for injuries suffered through or loss caused by such
repossession; Prime Lessor may sell or lease the Equipment at a time and
location of its choosing provided that the Prime Lessor acts in good faith
and in a commercially reasonable manner, but the Prime Lessor shall
nevertheless, be entitled to recover immediately as liquidated damages for
loss of the bargain and not as a penalty any unpaid rent that accrued on or
before the occurrence of the event of default plus an amount equal to the
difference between the aggregate unpaid rent reserved hereunder for the
unexpired term of this Prime Lease and the then aggregate fair market
rental value of all Equipment for such unexpired term, provided, however,
that if any statute governing the proceeding in which such damages are to
be proved specifies the amount of such claim, Prime Lessor shall be
entitled to prove as and for damages for the breach an amount equal to that
allowed under such statute. The provisions of this paragraph shall be
without prejudice to any rights given to the Prime Lessor by such statute
to prove any amounts allowed thereby. Should any proceedings be instituted
by or against Prime Lessee for monies due to Prime Lessor hereunder and/or
for possession of any or all of the Equipment or for any other relief,
Prime Lessee shall pay a reasonable sum as attorneys' fees.
No remedy of Prime Lessor hereunder shall be exclusive of any remedy herein or
by law provided, but each shall be cumulative and in addition to every other
remedy.
12. Indemnity.
Prime Lessee agrees that Prime Lessor shall not be liable to Prime Lessee for,
and Prime Lessee shall indemnify and save Prime Lessor harmless from and
against, any and all liability, loss, damage, expense, causes of action, suits,
claims or judgments arising from or caused directly or indirectly by Prime
Lessee's failure to promptly perform any of its obligations under the provisions
of this Prime Lease.
13. Assignment, Notices and Waivers.
55-SA-2279 (11/94) Master Lease - Prime Continental Lease Page 4 of 6
This Prime Lease and all rights of Prime Lessor hereunder shall be assignable by
Prime Lessor only with Prime Lessee's consent, such consent not to be
unreasonably withheld. After such assignment, Prime Lessor shall not be
assignee's agent for any purpose, Prime Lessee will settle all claims arising
out of alleged breach of warranties or otherwise, defenses, set-offs and
counterclaims it may have against Prime Lessor directly with Prime Lessor, and
not set up any such against Prime Lessor's assignee, Prime Lessor hereby
agreeing to remain responsible therefor. Prime Lessee, upon consenting to and
receiving notice of any such assignment, shall abide thereby and make payment as
may therein be directed. Following such assignment, solely for the purpose of
determining assignee's rights hereunder, the term "Prime Lessor" shall be deemed
to include or refer to Prime Lessor's assignee. Prime Lessee may assign this
Prime Lease or its interests hereunder or sublease the Equipment covered hereby.
No such assignment or sublease shall relieve Prime Lessee of any of its
obligations to Prime Lessor hereunder, except as provided in the immediately
succeeding paragraph of this Section.
In the event of the resignation or removal of the First Fidelity Bank, N.A., as
Trustee under that certain Declaration of Trust (the "Declaration of Trust")
dated of even date herewith, and appointment of a successor trustee in
accordance with the terms thereof, Prime Lessee may assign all its rights and
obligations hereunder to the successor trustee which shall, for all purposes
from the date of such assignment, be substituted for First Fidelity Bank, N.A.,
as Prime Lessee hereunder. The successor trustee shall have and be entitled to
exercise any and all rights and powers of Prime Lessee hereunder and shall be
obligated to perform all of Prime Lessee's obligations hereunder. Any
assignment of this Prime Lease by First Fidelity Bank, N.A., as Trustee, to a
successor trustee shall, from the date of such assignment, relieve First
Fidelity Bank, N.A., of any further obligations or liability to Prime Lessor
hereunder.
All notices to Prime Lessor shall be delivered in person to an officer of the
Prime Lessor, or shall be sent certified mail return receipt requested or by
courier to Prime Lessor at its address shown herein or at any later address last
known to the sender. All notices to Prime Lessee shall be in writing and shall
be delivered by mail at its address shown herein or at any later address last
known to the sender.
A waiver of a default shall not be a waiver of any other or a subsequent
default.
14. Further Assurances.
Prime Lessee shall execute and deliver to Prime Lessor, upon Prime Lessor's
request such instruments and assurances as Prime Lessor deems necessary or
advisable for the confirmation or perfection of this Prime Lease and Prime
Lessor's rights hereunder. Prime Lessee may not terminate the Schedule without
the written consent of Prime Lessor.
15. Prime Lease Irrevocability and Charges.
This Prime Lease is irrevocable for the full terms thereof as set forth in the
Schedule and for the aggregate rentals therein reserved and the rent shall not
abate by reason of termination of Prime Lessee's right of possession and/or the
taking of possession by the Prime Lessor or for any other reason. Any payment
not made when due shall, at the option of Prime Lessor, bear late charges
thereon calculated at the rate of 1 1/2% per month, but in no event greater than
the highest rate permitted by relevant law. Prime Lessee shall be responsible
for and pay to Prime Lessor a returned check fee, not to exceed the maximum
permitted by law, which fee will be equal to the sum of (i) the actual bank
charges incurred by Prime Lessor plus (ii) all other actual costs and expenses
incurred by Prime Lessor. The returned check fee is payable upon demand as
additional rent under this Prime Lease.
16. Liability of Prime Lessee.
It is expressly agreed, anything herein to the contrary notwithstanding, that
each and all of the representations, warranties, undertakings and agreements
herein made on the part of Prime Lessee are made and intended not as personal
representations, warranties, undertakings and agreements by First Fidelity Bank,
N.A., or for the purpose or with the intention of binding said bank personally,
but are made and intended for the purpose of binding only the Trust Estate (as
that term is defined in the Declaration of Trust), and this Prime Lease is
executed and delivered by said bank not in its own right but solely in the
exercise of the powers expressly conferred upon it as trustee under the
Declaration of Trust.
17. Miscellaneous.
If any provision of this Prime Lease is contrary to, prohibited by or deemed
invalid under applicable laws or regulations of any jurisdiction, such provision
shall be inapplicable and deemed omitted but shall not invalidate the remaining
provisions hereof. This Prime Lease shall be governed by and construed in
accordance with the laws (but not the choice of law rules) of the state of New
York.
This lease contains the entire agreement between the parties with respect to the
Equipment, and may not be altered, modified, terminated or discharged except by
a writing signed by the party against whom such alteration, modification,
termination or discharge is sought.
The parties may sign this Prime Master Lease in any number of counterparts and
on separate counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument. To the extent this
document constitutes
55-SA-2279 (11/94) Master Lease - Prime Continental Lease Page 5 of 6
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.
With respect to this Prime Master Lease or any document contemplated by this
Prime Master Lease, the parties agree that the execution and transmittal of any
such document by facsimile shall be of the same binding effect on the party so
executing the document as the handwritten execution upon an original copy of the
document. The parties agree that they will promptly forward to the others an
executed original of any document transmitted by facsimile, but that the failure
of a party to do so or the absence of arrival of any such executed document
shall have no effect on the binding nature of the document transmitted by
facsimile.
This Prime Lease is executed by Prime Lessee by authority of the Declaration of
Trust.
Dated: December 29, 1994
Prime Lessor: Prime Lessee:
THE CONTINENTAL INSURANCE COMPANY FIRST FIDELITY BANK, N.A.,
not in its individual capacity, but
solely as Trustee
By Title By Title
---------------- ----------- ------------- -------------
55-SA-2279 (11/94) Master Lease - Prime Continental Lease Page 6 of 6
Schedule of Leased Equipment No. 1,
dated December 29, 1994
made pursuant to Master Agreement of Lease
dated December 29, 1994 ("Master Lease")
between First Fidelity Bank, N.A., not in its
individual capacity, but solely as Trustee ("Lessor")
and The Continental Insurance Company ("Lessee").
This is Counterpart No. of 3 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.
Pursuant to the Master Lease, which is incorporated herein by
reference, Lessee agrees to lease the below-described Equipment
from Lessor, its successors or permitted assigns, and Lessor, by
acceptance of this Lease, agrees to lease the Equipment to
Lessee, its successors or permitted assigns, on the terms set
forth in this Schedule of Leased Equipment (herein the
"Schedule").
1. Equipment Description: The Equipment to be leased pursuant
to this Schedule is described in Exhibit A to this Schedule,
which is incorporated herein by reference.
2. Aggregate Rent for the Initial Lease Term and Each Renewal Term:
$7,767,972.70
3. Monthly Rent (for Initial Lease Term and Each Renewal Term): $647,331.06
4. Commencement Date: December 29, 1994
5. Due Date of First Monthly Rent: January 29, 1995
6. Initial Lease Term: The initial term of this Lease for the
Equipment described in this Schedule shall expire 12 months
from the Commencement Date hereof.
7. Maximum Lease Term: The maximum term of this Lease for the
Equipment described in this Schedule shall be the Initial
Lease Term plus the three twelve-month renewal terms
permitted by this Schedule.
8. Rentals: For said Initial Term, and each renewal term, if
any, Lessee shall pay to Lessor the stated aggregate rent
payable thereunder in 12 equal, successive, monthly payments
as stated, of which the first is due on the first monthly
rent date set forth above, and the others on a like date of
each month thereafter, until fully paid.
9. Lessor's Equipment Cost: For the Initial Lease Term and for
each renewal term, if any, the Lessor's Equipment Cost shall
be the amount set forth below:
Initial Lease Term $25,874,397.00
First Renewal Term $21,599,397.73
Second Renewal Term $15,455,843.35
Third Renewal Term $ 8,717,281.85
10. Discount Rate: 9.28% percent per annum.
Page 1 of 4
11. Special Provisions:
(a) End of Term Options: So long as no Event of Default has occurred and is
continuing under the Lease, Lessee shall have the options set forth herein.
(i) Option to Renew. At the expiration of the Initial Lease Term or at
---------------
the expiration of any renewal term provided herein, Lessee may renew
this Lease with respect to all, but not less than all, of the
Equipment, on the terms and conditions of this Lease, for a renewal
term of twelve months at the monthly rent set forth in the Schedule;
provided, however, that Lessee may exercise this option only if
Buckeye and Firemen's make the same election to renew under the
Buckeye Lease and the Firemen's Lease, respectively; and provided
further that Lessee may not renew this Lease for more than three
consecutive twelve-month renewal terms beyond the expiration of the
Initial Lease Term. If Lessee desires to exercise this option, Lessee
shall give Lessor written notice of its election to renew at least 10
days prior to the expiration of the Initial Lease Term or such renewal
term then in effect. Such election shall be effective with respect to
all of the Equipment.
(ii) Option to Purchase. At the expiration of the Initial Lease Term or at
------------------
the expiration of any renewal term provided herein, Lessee may
purchase from Lessor all of Lessor's rights to and interests in all,
but not less than all, the Equipment as Prime Lessee under Schedule of
Leased Equipment No. 1 to that certain Prime Master Lease (said
Schedule and Prime Master Lease being referred to collectively herein
as the "Prime Lease") dated of even date herewith between Lessor as
Prime Lessee and Lessee as Prime Lessor; provided, however, that
Lessee may exercise this option only if Buckeye and Firemen's make the
same election to purchase under the Buckeye Lease and the Firemen's
Lease, respectively. If Lessee desires to exercise this option,
Lessee shall give Lessor written notice of its election at least 90
days prior to the expiration of the Initial Lease Term or such renewal
term then in effect. Such election shall be effective with respect to
all the Equipment subject to this Lease and the Prime Lease. At the
expiration of the lease term during which Lessee exercises this option
to purchase, Lessee shall pay to Lessor in cash the Maximum Purchase
Price, plus the Breakfunding Fee described in Section 16 of the Master
Lease. The Maximum Purchase Price shall be an amount equal to the
greater of (1) the fair market rental value of the Equipment for the
remaining term of said Prime Lease as determined by an independent
third-party appraiser selected by Lessee or (2) the product of
Lessor's Equipment Cost at the beginning of the Initial Term,
multiplied by the Maximum Purchase Price Percentage set forth below
corresponding to the lease term at the end of which Lessee exercises
this option:
Option Exercised Maximum Purchase Lessor's Maximum
at End of Price Percentage Equipment Cost Purchase Price
--------- ---------------- -------------- --------------
Initial Lease Term 78.35% $25,874,397.00 $20,273,311.32
First Renewal Term 54.61% $25,874,397.00 $14,129,756.95
Second Renewal Term 28.57% $25,874,397.00 $7,391,195.45
Third Renewal Term Fair Market Value
Lessee shall bear all costs related to any appraisal of the Equipment.
Upon receipt of the Maximum Purchase Price, Lessor shall transfer and
assign to Lessee all of Lessor's rights to and interests in the
Equipment and under the Prime Lease without recourse or warranty.
Lessor shall not be required to make and may specifically disclaim any
Page 2 of 4
representation or warranty as to the condition of the Equipment or any
other matters. Notwithstanding any election of Lessee to purchase,
the provisions of this Lease shall continue in full force and effect
until the transfer and assignment of interests contemplated herein is
completed.
(iii) Option to Return. At the expiration of the Initial Lease Term or at
-----------------
the expiration of any renewal term provided herein, Lessee may return
to Lessor all, but not less than all, of the Equipment, in accordance
with the return provisions set forth in the Lease; provided, however,
that Lessee may exercise this option only if Buckeye and Firemen's
make the same election to return under the Buckeye Lease and the
Firemen's Lease, respectively. If Lessee desires to exercise this
option, Lessee shall give Lessor written notice of its election to
return the Equipment at least 365 days prior to the expiration of the
Initial Lease Term or such renewal term then in effect. On the date
Lessee gives such notice, Lessee shall pay to Lessor in cash a deposit
(the "Deposit") to cover the costs of crating, shipping, storing or
refurbishing the Equipment. The Deposit shall be an amount equal to
ten and one-half percent of the Lessor's Equipment Cost if the Lessee
exercises this option at the end of the initial Lease Term or, if the
Lessee exercises this option at the end of a renewal term, an amount
equal to ten percent of the Lessor's Equipment Cost for the renewal
term at the end of which Lessee has elected to return the Equipment.
Lessor may, in Lessor's sole discretion, refund the Deposit to Lessee
if Lessor determines that Lessee has complied in all respects with the
return provisions set forth in this Lease. Such election to return
the Equipment shall be effective with respect to all of the Equipment.
At the expiration of the Lease Term during which Lessee exercises this
option, Lessee shall return the Equipment to Lessor in accordance with
the return provisions set forth in the Lease, and Lessee shall pay to
Lessor in cash the Termination Fee, plus the Breakfunding Fee. The
Termination Fee shall be an amount equal to the product of the
Lessor's Equipment Cost at the beginning of the Initial Term
multiplied by the Termination Fee Percentage set forth below
corresponding to the lease term during which Lessee exercises this
Option:
Option Exercised at End of Termination Fee Percentage Lessor's Equipment Cost
-------------------------- -------------------------- ------------------------
Initial Lease Term 67.37% $25,874,397.00
First Renewal Term 51.07% $25,874,397.00
Second Renewal Term 27.63% $25,874,397.00
Third Renewal Term 0% $25,874,397.00
(iv) If Lessee fails to exercise any of the options set forth herein, or if
Buckeye and Firemen's fail to exercise simultaneously with Lessee the
same option under the Buckeye Lease and the Firemen's Lease,
respectively, then at the expiration of the Initial Lease Term or any
renewal term, this Lease shall be automatically renewed with respect
to all the Equipment on the terms and conditions of this Lease, for a
renewal term of twelve months at the monthly rent set forth in the
Schedule; provided, however, that this Lease shall not be renewed for
more than three consecutive twelve-month renewal terms beyond the
expiration of the Initial Lease Term.
(b) Return Provisions: Lessee shall, if Lessee intends to terminate the Lease
at the termination of the Initial Lease Term or at the termination of any
renewal term prior to the expiration of the Maximum Lease Term (the
"Termination Date"), at its expense, de-install, pack and return all the
Equipment to Lessor at such locations within the continental United States
as shall be designated by Lessor. Lessee shall have each item of Equipment
restored, reconditioned, refurbished or refinished so as to be in the same
operating order, repair, condition and appearance as when it was new
(subject to ordinary wear and tear) with all subsequent engineering changes
prescribed by the manufacturer of the Equipment or any maintenance
Page 3 of 4
contractor approved by Lessor incorporated in the Equipment. All Equipment
will be cleaned and cosmetically acceptable, with no noticeable cracks,
scratches or other visual or mechanical damage and in such condition that
it may be immediately installed and placed into use. Lessee shall ensure
that all Equipment and equipment operations conform to all applicable
local, state and federal laws and health and safety guidelines. At
Lessor's request, Lessee shall at its expense within 30 days of the
Termination Date assemble the Equipment in an appropriate storage facility.
While the Equipment is being stored by Lessee, and until it is returned as
herein provided, Lessee shall continue at its expense to insure the
Equipment as provided in the Lease and shall continue to bear the risk of
loss with respect to the Equipment as provided in the Lease.
In the event Lessee exercises none of the end of term options set forth
herein, then at the expiration of the Maximum Lease Term, Lessee shall
return the Equipment in accordance with the return provisions set forth in
the Master Lease as if no return provisions were set forth in this
Schedule.
This Schedule of Leased Equipment together with its Exhibits and Riders, if any,
and the Master Lease incorporated herein by reference constitute the entire
agreement between the parties as to the Lease and Equipment.
With respect to this Schedule or any document contemplated by this Schedule, the
parties agree that the execution and transmittal of any such document by
facsimile shall be of the same binding effect on the party so executing the
document as the handwritten execution upon an original copy of the document.
The parties agree that they will promptly forward to the others an executed
original of any document transmitted by facsimile, but that the failure of a
party to do so or the absence of arrival of any such executed document shall
have no effect on the binding nature of the document transmitted by facsimile.
The parties may sign this Schedule in any number of counterparts and on separate
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. To the extent 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.
Accepted:
LESSOR: LESSEE:
FIRST FIDELITY BANK, N.A., THE CONTINENTAL INSURANCE COMPANY
not in its individual capacity, but
solely as Trustee
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
Page 4 of 4
Schedule of Leased Equipment No. 1,
dated December 29, 1994
made pursuant to Master Agreement of Lease
dated December 29, 1994 ("Prime Master Lease")
between The Continental Insurance Company ("Prime Lessor")
and First Fidelity Bank, N.A., not in its
individual capacity, but solely as Trustee ("Prime Lessee").
This is Counterpart No. of 3 serially numbered, manually executed
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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.
Pursuant to the Prime Master Lease, which is incorporated herein by reference,
Prime Lessee agrees to lease the below-described Equipment from Prime Lessor,
its successors or assigns, and Prime Lessor, by acceptance of this Prime Lease,
agrees to lease the Equipment to Prime Lessee, on the terms set forth in this
Schedule of Leased Equipment (herein the "Schedule").
1. Equipment Description: The Equipment to be leased pursuant to this
Schedule is described in Exhibit A to this Schedule, which is incorporated
herein by reference.
2. Aggregate Rent for the Lease Term: $ 41,031,847.20
3. Monthly Rent: $ 341,932.06
4. Commencement Date: December 29, 1994
5. Due Date of First Annual Rent: January 29, 1995
6. Lease Term: The term of this Prime Lease for the Equipment described in
this Schedule shall be 10 years from the Commencement Date hereof.
7. Rentals: For said Lease Term or any portion thereof, Prime Lessee shall
pay to Prime Lessor the stated Aggregate Rent payable thereunder in 10
equal, successive, annual payments as stated, of which the first is due on
the first annual rent date set forth above, and the others on a like date
of each year thereafter, until fully paid.
This Schedule of Leased Equipment together with its Exhibits and Riders, if any,
and the Prime Master Lease incorporated herein by reference constitute the
entire agreement between the parties as to the Prime Lease and Equipment.
Accepted:
LESSOR: LESSEE:
THE CONTINENTAL INSURANCE COMPANY FIRST FIDELITY BANK, N.A.,
not in its individual capacity, but
solely
as Trustee
By:______________________________ By:_______________________________
Name:____________________________ Name:_____________________________
Title:___________________________ Title:____________________________