Exhibit 10.19
[BANK OF AMERICA LOGO]
LEASE NUMBER
BANC OF AMERICA LEASING & CAPITAL, LLC LEASE AGREEMENT 15689 - 00400
THIS LEASE AGREEMENT (this "Agreement") dated as of July 26, 2005 between BANC
OF AMERICA LEASING & CAPITAL, LLC ("Lessor"), a Delaware limited liability
company having an office at 2059 Northlake Parkway, 4 South, Tucker, GA 30084,
and Fred's Stores of Tennessee, Inc. ("Lessee"), a Tennessee corporation, having
their chief executive office at 4300 New Getwell Road, Memphis, Tennessee 38118.
1. LEASE AGREEMENT; SCHEDULES; TITLE. Subject to the terms and conditions
hereof, Lessor shall lease to Lessee, and Lessee shall lease from Lessor, the
items of personal property (collectively with all attachments and accessories
thereto, the "Units") described in one or more schedules (each, a "Schedule";
each Schedule, together with this Agreement as it pertains thereto, a "Lease")
which incorporate by reference this Agreement. Each Schedule shall constitute a
separate and independent lease and contractual obligation of Lessee. Upon
delivery and acceptance by Lessee of each Unit, Lessee shall execute and deliver
the Schedule relating to the Unit, with all information required on the Schedule
fully completed, identifying and accepting the Unit. Lessee hereby assigns to
Lessor all of Lessee's interest in any purchase orders, invoices or other
contracts of sale with respect to the Units provided that Lessor assumes no
obligations under such agreements other than the obligation to pay for the Units
if Lessee has complied with the terms of this Agreement. Lessee hereby conveys
whatever right, title and interest it may have in the Units to the Lessor
hereunder.
2. TERM OF LEASE; RENTALS. The lease term with respect to any Unit shall consist
of an "Interim Term" (if any) and a "Base Term" as specified in the Schedule
covering such Unit. Lessee shall pay rent for the Interim Term ("Interim Rent")
and for the Base Term ("Base Rent") as specified in the applicable Schedule.
3. NET LEASE; DISCLAIMER OF WARRANTIES. EACH LEASE IS A NET LEASE. ALL COSTS,
EXPENSES AND OTHER LIABILITIES ASSOCIATED WITH THE UNITS SHALL BE BORNE SOLELY
BY LESSEE. LESSEE'S OBLIGATION TO PAY RENT AND ALL OTHER OBLIGATIONS UNDER ANY
LEASE ARE ABSOLUTE AND UNCONDITIONAL, AND NOT SUBJECT TO ANY ABATEMENT,
DEFERMENT, REDUCTION, SETOFF, DEFENSE, COUNTERCLAIM OR RECOUPMENT FOR ANY REASON
WHATSOEVER. NO LEASE SHALL TERMINATE, EXCEPT AS EXPRESSLY PROVIDED HEREIN, NOR
SHALL THE OBLIGATIONS OF LESSEE BE AFFECTED, BY REASON OF ANY DEFECT OR DAMAGE
TO, OR ANY DESTRUCTION, LOSS, THEFT, FORFEITURE, GOVERNMENTAL REQUISITION OR
OBSOLESCENCE OF ANY UNIT, REGARDLESS OF CAUSE. LESSEE ACKNOWLEDGES THAT LESSOR
IS NOT A MERCHANT OR MANUFACTURER, OR AGENT OF ANY SUCH PERSON, OR ENGAGED IN
THE SALE OR DISTRIBUTION OF THE UNITS, AND HAS NOT MADE, AND DOES NOT HEREBY
MAKE, ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY, PERFORMANCE,
CONDITION, FITNESS OR SUITABILITY FOR LESSEE'S PURPOSES OF ANY OF THE UNITS, OR
MAKE ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE UNITS. LESSOR
SHALL NOT BE LIABLE TO LESSEE FOR, NOR SHALL LESSEE'S OBLIGATIONS UNDER ANY
LEASE BE AFFECTED BY, ANY LOSS, CLAIM, LIABILITY, COST, DAMAGE OR EXPENSE OF ANY
KIND CAUSED, OR ALLEGED TO BE CAUSED, DIRECTLY OR INDIRECTLY, BY ANY UNIT, OR BY
ANY INADEQUACY OF THE UNIT FOR ANY PURPOSE, OR BY ANY DEFECT IN, THE USE OR
MAINTENANCE OF, ANY REPAIRS, SERVICING OR ADJUSTMENTS OF, OR ANY INTERRUPTION OR
LOSS OF SERVICE OR USE OF, ANY UNIT, OR ANY LOSS OF BUSINESS, PROFITS,
CONSEQUENTIAL OR OTHER DAMAGE OF ANY NATURE. Lessor hereby transfers and assigns
to Lessee, to the extent allowable by law, for and during the lease term of each
Schedule, a non-exclusive interest in the Unit warranties, if any, of the
manufacturer, and hereby authorizes Lessee, when there exists no Event of
Default, to enforce such warranties and to obtain at its own expense the
customary services furnished by the manufacturer in connection with the Units.
4. USE, MAINTENANCE, LOCATION. Lessee shall use, operate, protect and maintain
the Units in good operating order, repair, condition and appearance, and in
compliance with all applicable insurance policies, laws, ordinances, rules,
regulations and manufacturer's recommended procedures, and shall maintain
comprehensive records regarding the Units. The Units shall be used solely for
commercial or business purposes, and not for any consumer, personal, home, or
family purpose, and shall not be abandoned. Lessee shall not, through
modifications, alterations or otherwise, impair the value or originally intended
function of any Unit without Lessor's prior consent. Any replacement or
substitution of parts, improvements, upgrades, or additions to the Units made by
Lessee shall become and remain the property of Lessor and subject to the Lease,
except that if no Event of Default exists, Lessee may at its expense remove
improvements or additions provided by Lessee that can be readily removed without
impairing the value and function of the Unit. If requested by Lessor, Lessee
shall cause each Unit to be plainly marked to disclose Lessor's ownership, as
specified by Lessor. Lessee shall not change the location or base of any Unit
specified in its Schedule without Lessor's prior consent. Lessee shall notify
Lessor at least 30 days before changing the location of its chief executive
office.
5. LOSS AND DAMAGE. Lessee assumes all risk of, and shall promptly notify Lessor
of any occurrence of, any damage to or loss, theft, confiscation, or destruction
of (together, "Casualty") each Unit from any cause whatsoever from the date the
Unit is shipped by the vendor or manufacturer or otherwise made available to
Lessee ("Shipment Date"). If any Unit suffers a Casualty from the Shipment Date
until the Acceptance Date (as defined in the applicable Schedule), Lessee shall
pay Lessor any sum required to be paid under any Progress Payment Agreement
entered into between Lessor and Lessee in relation to such Unit. If any Unit
suffers a Casualty on or after its Acceptance Date, Lessee shall, if the
Casualty is damage that is reparable in the judgment of Lessor, at its own
expense promptly place the same in good repair, condition or working order, and,
if the Unit is lost, stolen, confiscated, destroyed or damaged beyond repair
("Total Loss"), on the rent payment date following such occurrence (or, if none,
within 30 days) pay Lessor the Stipulated Loss Value (as defined in the
applicable Schedule) therefor, together with all other amounts owing under the
Lease with respect to the Unit. Upon such payment, (a) the Lease of the Unit
shall
terminate and Lessor thereupon shall become entitled to possession of the Unit
and (b) Lessee shall become entitled to proceeds of insurance maintained by
Lessee to the extent of such payment, any excess proceeds to be retained by
Lessor. If less than all Units in the applicable Schedule suffer Total Loss, the
remaining Base Rent under the Schedule shall be reduced as reasonably calculated
by Lessor and notified to Lessee.
6. INSURANCE. Lessee, at its own expense, shall keep each Unit insured against
all risks for the value of the Unit, and in no event for less than the
Stipulated Loss Value of the Unit, and shall maintain public liability insurance
against such risks and for such amounts as Lessor may require. All such
insurance shall be in such form and with such companies as Lessor shall approve,
shall specify Lessor and Lessee as insureds and shall provide that such
insurance may not be canceled as to Lessor or altered in any way that would
affect the interest of Lessor without at least 30 days' prior written notice to
Lessor (10 days' in the case of nonpayment of premium). All insurance shall be
primary, without right of contribution from any other insurance carried by
Lessor, shall contain waiver of subrogation and "breach of warranty" provisions
satisfactory to Lessor, shall provide that all amounts payable by reason of loss
or damage to the Units shall be payable solely to Lessor, unless Lessor
otherwise agrees, and shall contain such other endorsements as Lessor may
reasonably require. Lessee shall provide Lessor with evidence satisfactory to
Lessor of the required insurance upon the execution of any Schedule and promptly
upon any renewal of any required policy.
7. INDEMNITIES. (a) General Indemnity. Lessee shall indemnify, on an after-tax
basis, Lessor, its successors and assigns, and their respective officers,
directors, employees, agents and affiliates ("Indemnified Persons") against all
claims, liabilities, losses and expenses whatsoever (except those directly and
primarily caused by the Indemnified Person's gross negligence or willful
misconduct), including reasonable attorneys' fees and allocated costs of
internal counsel (together, "Attorney Costs"), in any way relating to or arising
out of this Agreement, the Units or the Leases at any time, or the ordering,
acquisition, rejection, installation, possession, maintenance, use, ownership,
condition, destruction, return, or disposition of the Units, including such
matters based in negligence and strict liability in tort, environmental
liability, statutory liability, or infringement or Lessee's breach of any
representation, warranty or covenant contained herein or any other agreement
related hereto.
(b) General Tax Indemnity. Lessee shall pay or reimburse Lessor and its
successors and assigns on demand for, and indemnify and hold Lessor harmless
from, on an after-tax basis, all taxes, assessments, fees and other governmental
charges paid or required to be paid by Lessor or Lessee in any way arising out
of or related to the Units or the Leases, before, during or after the lease
term, including foreign, Federal, state, county and municipal fees, taxes and
assessments, and property, value-added, sales, use, gross receipts, excise,
stamp and documentary taxes, and all related penalties, fines, additions to tax
and interest charges (together, "Impositions"), excluding only Federal and state
taxes based on Lessor's net income unless such taxes are in lieu of any
Imposition Lessee would otherwise be required to pay hereunder. Lessee shall
timely pay any Imposition for which Lessee is primarily responsible under law
and any other Imposition not payable or not paid by Lessor, but Lessee shall
have no obligation to pay any such Imposition that Lessee is contesting in good
faith and by appropriate legal proceedings, the nonpayment of which does not, in
the opinion of Lessor, result in a material risk of adverse effect on the title,
property, use, disposition or other rights of Lessor with respect to the Units.
Lessee shall furnish on Lessor's request proof of payment of any Imposition paid
by Lessee.
(c) Special Tax Indemnity. (i) All references to "Lessor" in this Section 7(c)
shall include (A) Lessor's successors and assigns, and (B) each member of the
affiliated group of corporations, as defined in Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), of which Lessor or such successor
or assign is at any time a member.
(ii) Lessor shall be treated for Federal, state and local income tax
purposes as the owner of the Units and shall be entitled to take into
account in computing its income tax liabilities all items of income,
deduction (including depreciation consistent with Lessee's representation
in the applicable Schedule), credit, gain or loss relating to ownership of
the Units as are provided to owners of similar equipment under the Code
and applicable state and local tax laws as in effect on the Acceptance
Date of such Units (collectively, the "Tax Benefits").
(iii) If (A) Lessor loses, is delayed in claiming, is required to
recapture (other than in connection with a sale of the Unit following the
end of the lease term, provided Lessee is not then in default), is not
allowed or does not claim as a result of a written opinion of Lessor tax
counsel to the effect that Lessor's claiming of such Tax Benefits probably
would not be upheld by a court if the matter were litigated (that is, that
the chances of a finding against Lessor are at least as great as the
chances of a finding in favor of Lessor) all or any portion of any Tax
Benefits, under any circumstances, at any time and for any reason, or (B)
Lessor is required under Section 467 of the Code or otherwise to include
in its gross income with respect to any Lease or Unit any amount at any
time other than rentals and other amounts as and when accrued in
accordance with the express terms of the Lease (together, "Tax Loss"),
then, upon Lessor's demand and at Lessor's option, either: (x) all further
rental payments with respect to such Unit, if any, shall be increased by
an amount, or (y) Lessee shall pay to Lessor a lump sum amount, which
shall in either case maintain the net economic after-tax yield, cash-flow
and rate of return Lessor originally anticipated, based on an assumed
combined Federal, state and local income tax rate for Lessor of 38.20% and
other assumptions originally used by Lessor in evaluating the transaction
and setting the rental therefor and the other terms thereof. Lessee shall
also pay to Lessor on demand all interest, costs (including Attorney
Costs), penalties and additions to tax associated with the Tax Loss.
(iv) Lessee shall be under no obligation to make a payment under the
preceding paragraph (iii) relating to a Tax Loss to the extent that the
Tax Loss is caused by Lessor's failure to have sufficient taxable income
to benefit from any Tax Benefits. Lessor shall have no obligation to
contest any Tax Loss.
8. RETURN; EXTENSIONS; PURCHASES. (a) Upon any termination or expiration of the
lease term with respect to any Unit, Lessee shall, at its own expense, prepare
and adequately protect the Unit for shipment and either surrender it to Lessor
in place or, if instructed by Lessor, ship the Unit to Lessor, freight and
insurance pre-paid, at a place reasonably designated by Lessor, in the condition
required under Section 4 hereof and under the applicable Schedule, and able to
be put into immediate service and to perform at manufacturer's rated levels (if
any), together with all
related manuals, documents and records. If Lessee does not so surrender or
return a Unit to Lessor, in addition to all other rights and remedies available,
at Lessor's election, such Unit shall continue to be subject to all the terms
and conditions of the Lease, with rent and other charges continuing to accrue
and be payable under the Lease with respect to such Unit until it is so
surrendered or returned to Lessor, except that Base Rent shall accrue, payable
on demand, at the rate of 150% of the rate applicable in the last period for
which Base Rent was payable.
(b) Except as set forth in the applicable Schedule, Lessee has no right to
extend any Lease or purchase any Unit.
9. LESSEE REPRESENTATIONS AND AGREEMENTS. Lessee represents, warrants and agrees
as follows: Lessee is duly organized and is in good standing in all
jurisdictions where legally required in order to carry on its business, has duly
authorized the execution, delivery and performance of this Agreement, each
Schedule and all other documents contemplated hereby, which are, or upon
signing, will be binding on Lessee, do not and will not contravene any other
instrument or agreement to which Lessee is party and there is no pending
litigation, tax claim, proceeding or dispute that may adversely affect Lessee's
financial condition or impair its ability to perform its obligation under the
terms of this Agreement.
10. PERSONAL PROPERTY. The Units shall remain personal property at all times,
notwithstanding the manner in which they may be attached or affixed to realty,
and title shall at all times continue in Lessor. Lessee shall obtain and record
such instruments and take such steps as may be necessary (a) to prevent any
person from acquiring any right or lien in or on any Unit, whether by reason of
such Unit being deemed to be attached to real or other property, or otherwise,
and (b) to ensure Lessor's right of access to and removal of the Unit, in
accordance with the Lease.
11. DEFAULT AND REMEDIES. (a) Each of the following is an "Event of Default"
hereunder and under any and all Leases then in effect: (1) Lessee fails to pay
within five days of the day when due any installment of rent or other sum owing
by Lessee under any Lease; (2) Lessee fails to maintain insurance in respect of
any Unit as required herein, or sells, leases, subleases, assigns, conveys,
encumbers or suffers to exist any lien or charge against, any Unit without
Lessor's prior consent, or any Unit is subjected to levy, seizure or attachment;
(3) Lessee fails to perform and comply with any other covenant or obligation
under any Lease, or any progress payment, assignment, security or other
agreement related to any Lease or Unit (together, "Related Agreements") and, if
curable, such failure continues for 30 days after written notice thereof by
Lessor to Lessee, (4) any representation, warranty or other written statement
made to Lessor in connection with this Agreement, any Lease, Related Agreement,
or any guaranty, by Lessee or any person providing such guaranty ("Guarantor"),
including financial statements, proves to have been incorrect in any material
respect when made; (5) Lessee (x) enters into any merger or consolidation with,
or sells or transfers all, substantially all or any substantial portion of its
assets to, or enters into any partnership or joint venture other than in the
ordinary course of business with, any entity, (y) dissolves, liquidates or
ceases or suspends the conduct of business, or ceases to maintain its existence,
or (z) enters into or suffers any transaction or series of transactions as a
result of which Lessee is directly or indirectly controlled by persons or
entities not affiliates of Lessee as of the date of this Agreement; (6) Lessee
undertakes any general assignment for the benefit of creditors or commences any
voluntary case or proceeding for relief under the Bankruptcy Code, or any other
law for the relief of debtors, or takes any action to authorize or implement any
of the foregoing; (7) the filing of any petition or application against Lessee
under any law for the relief of debtors, including proceedings under the
Bankruptcy Code, or for the subjection of property of Lessee to the control of
any court, receiver or agency for the benefit of creditors if such petition or
application is consented to by Lessee or not dismissed within 60 days from the
date of filing; (8) any payment default or other event of default occurs under
any other bilateral or multi-lateral lease, or credit, or other agreement or
instrument to which Lessee and Lessor or any affiliate of Lessor are now or
hereafter party; (9) any payment default or other event of default occurs under
any other lease, or credit, or other agreement or instrument or any combination
thereof to which Lessee is now or hereafter party and under which there is
outstanding (on a present value basis for all future rent, in the case of
leases), owing or committed an aggregate amount greater than $100,000.00; (10)
the repudiation of or breach or default under any guaranty relating to any
Lease; or (11) the occurrence of any event described in clauses (5), (6), (7),
(8) or (9) of this Section with reference to "any Guarantor" in lieu of
"Lessee", or any Guarantor dies.
(b) Upon the occurrence of an Event of Default and in addition to all other
rights and remedies provided herein or under law, all of which rights and
remedies are cumulative and not exclusive, Lessor may: (i) proceed by
appropriate court action or actions, either at law or in equity, to enforce
performance by Lessee of the applicable covenants under any or all Leases, or
(ii) terminate any and all Leases, repossess the Units, and recover direct,
incidental, consequential and other damages for the breach thereof and, at its
election, dispose of the Units by lease, sale or otherwise, and pursue any and
all other remedies provided upon breach of personal property leases under the
Uniform Commercial Code of the state specified in Section 16(k) of this
Agreement (whether or not otherwise applicable) or as provided by other
applicable law. Lessor may recover from Lessee all Attorney Costs in the amount
of 15% of all amounts due on or after the time of such breach or default (but
not to exceed the amount actually incurred). To determine any present value
quantity for purposes of this Section, the applicable discount rate shall be the
then-current bond-equivalent yield per annum for United States Government
Treasury obligations of maturity corresponding to the weighted average life,
rounded to the second decimal place, of the discounted payment stream (or, if no
maturity exactly corresponds to such rounded weighted average life, the discount
rate shall be interpolated from the yields of the two most closely corresponding
published maturities). In the alternative, at its election, Lessor may enforce
as liquidated damages and not as a penalty, payment of an amount equal to all
accrued and unpaid rent plus the Stipulated Loss Value of any and all Units.
(c) The exercise or partial exercise of, or failure to exercise, any remedy
shall not restrict Lessor from further exercise of that remedy or any other
remedy otherwise available. To the extent permitted by applicable law, Lessee
waives any right to require Lessor to sell, release or otherwise use or dispose
of any Units or otherwise mitigate Lessor's damages, or that may otherwise limit
or modify any of Lessor's rights or remedies.
12. ASSIGNMENT, ETC. (a) Lessor (and any subsequent assignee) may assign or
transfer any or all of Lessor's interest in any Lease, Unit or the
rentals therefrom without notice to Lessee. Lessee agrees that the rights of any
assignee shall not be affected by any breach or default of Lessor or of any
prior assignee. Lessee further agrees that (i) no such assignee shall be
required to assume any of the obligations of Lessor under any Lease except the
obligation in respect of the application of any insurance monies received by
such assignee as provided above, and the obligation of non-interference as
provided below, and (ii) any assignee expressly assuming the obligations of
Lessor shall thereupon be responsible for Lessor's duties under the applicable
Lease accruing after any such assignment and Lessor shall be released from such
duties. Lessor may disclose to any potential or actual assignee or transferee
any information regarding Lessee, any Guarantor and their affiliates.
(b) LESSEE SHALL NOT ASSIGN, PLEDGE, HYPOTHECATE OR IN ANY WAY DISPOSE OF ALL OR
ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER ANY LEASE, OR ENTER INTO ANY
SUBLEASE OF ANY UNIT, WITHOUT LESSOR'S PRIOR WRITTEN CONSENT.
13. FINANCIAL AND OTHER DATA. (a) During the term of any Lease, Lessee shall (i)
maintain books and records in accordance with generally accepted accounting
principles ("GAAP") and prudent business practice, (ii) promptly and in no event
later than 120 days after each fiscal year end furnish Lessor annual audited
financial statements of Lessee and of any Guarantor, prepared in accordance with
GAAP consistently applied, together with an unqualified opinion of an
independent auditor, and (iii) at Lessor's request, furnish Lessor all other
financial information and reports reasonably requested by Lessor at any time,
including quarterly or other interim financial statements of Lessee and of any
Guarantor. Lessee shall furnish such other information as Lessor may reasonably
request at any time concerning Lessee, any Guarantor and their respective
affairs, or any Unit. Lessee shall promptly notify Lessor of any Event of
Default or event or circumstance which, with notice, lapse of time or both,
would be an Event of Default.
(b) Lessee represents and warrants that all information furnished and to be
furnished by Lessee or any Guarantor to Lessor is accurate, and that all
financial statements Lessee or any Guarantor has furnished and hereafter may
furnish to Lessor reasonably reflect and will reflect, as of their respective
dates, results of the operations and the financial condition of Lessee, such
Guarantor or any other entity they purport to cover.
(c) Credit and other information regarding Lessee, any Guarantor or their
affiliates may be shared by Lessor with its affiliates and agents.
14. INSPECTION; NON-INTERFERENCE. (a) Lessor, its agents and employees shall
have the right to enter any property where any Unit is located and inspect any
Unit, together with its related books and records, at any reasonable time. Such
right shall not impose any obligation on Lessor.
(b) So long as no Event of Default exists, Lessor shall not and each direct or
indirect assignee or transferee of Lessor agrees that it shall not, interfere
with the rights of use and enjoyment of the Units by Lessee.
15. OTHER CHARGES; APPLICATION. If Lessee fails to pay within ten days of the
date due any amount of regularly scheduled Interim Rent or Base Rent, Lessee
shall pay a late charge equal to five percent (5%) of the amount not timely
paid. Lessee shall pay interest at the per annum rate equal to the lesser of (a)
15% or (b) the highest rate permitted by applicable law ("Default Rate") on (i)
any sum other than regularly scheduled Interim Rent and Base Rent owing under
any Lease and not paid when due, and (ii) any amount required to be paid upon
termination of any Lease under Section 11 hereof. Payments received under any
Lease will be applied, first, to interest, fees and other amounts owing, other
than Interim Rent or Base Rent, then to Interim Rent or Base Rent, in order of
Acceptance Date.
16. MISCELLANEOUS. (a) Each Lease is and is intended to be a lease of personal
property for commercial and federal income tax purposes, and Lessee does not
acquire any right, title or interest in or to the Units, except the right to use
the same under the conditions of the applicable Lease. Lessee waives any right
to assert any lien or security interest on the Units in Lessee's possession or
control for any reason.
(b) Lessee's indemnity and reimbursement obligations, including under Section 7,
shall survive the termination or cancellation of any Lease or this Agreement.
(c) At Lessor's request, Lessee shall execute, deliver, file, and record such
financing statements and other documents, agreements and instruments as Lessor
shall deem necessary or advisable to protect Lessor's interest in the Units and
to effectuate the purposes of any Lease and the Related Agreements. Lessee
hereby irrevocably appoints Lessor as Lessee's agent and attorney-in-fact for
Lessee, coupled with an interest, (i) to execute, deliver, file, or record any
such item, and to take such action for Lessee and in Lessee's name, place and
stead, and (ii) to enforce claims relating to the Units against insurers,
vendors, and other persons, and to make, adjust, compromise, settle and receive
payment under such claims; without any obligation to do so.
(d) Time is of the essence.
(e) The invalidity of any portion of this Agreement, any Schedule or Related
Agreement shall not affect the force and effect of the remaining valid portions
thereof. The term "including" is not limiting. The term "affiliate" includes any
entity controlling, controlled by or under common control with the referent
entity; "control" includes the ownership of 25% or more of the voting stock of
any entity. The term "guaranty" includes any guaranty, surety instrument,
indemnity, "keep-well" agreement or other instrument or arrangement providing
third party credit support to Lessor relating to any Lease or Unit.
(f) This Agreement, the Schedules, any approval letter by Lessor in relation
hereto and any replacement or successor letter thereto (together, the "Approval
Letter") and the Related Agreements, constitute the entire agreement between the
parties with respect to the leasing of the Units. Any amendment to such
documents must be made in writing and signed by the parties hereto or thereto.
Such documents may be executed in one or more counterparts. Where multiple
counterpart originals of any Schedule exist, only the counterpart marked
"Lessor's Copy" shall be deemed chattel paper and evidence a monetary obligation
of Lessee.
(g) All demands, notices, requests, consents, waivers and other communications
under this Agreement, any Lease, any Approval Letter or any Related Agreement
shall be in writing and shall be deemed to have been duly given when received,
personally delivered or three business days after being deposited in the mail,
first class postage prepaid, or the business day after delivery to an express
carrier, charges prepaid, or when sent by facsimile transmission or electronic
mail (with electronic confirmation of receipt), addressed to each party at the
address, electronic mail address or fax number set forth below the signature of
such party on the signature page, or at such other address or fax number as may
hereafter be furnished in writing by such party to the other.
(h) (i) To secure the payment and performance of its obligations under the Lease
relating to such Unit and the repayment of any advances, with interest and fees,
made by Lessor on account of the Unit, and (ii) as a separate grant of security,
to secure the payment and performance of its obligations under all other Leases
and all other lease, loan or other obligations owing by Lessee to Lessor, in
each case, now existing or hereafter arising, Lessee hereby grants to Lessor a
security interest in all of Lessee's right, title and interest in and to each
Unit, together with (A) all attachments, accessories and accessions to,
substitutions and replacements for, and products of, the Unit, (B) all rights to
chattel paper arising from the Unit, (C) all insurance, warranty and other
claims against third parties with respect to the Unit (including claims for rent
upon any lease of the Unit), (D) all software and other intellectual property
rights used or useful in connection therewith, (E) all proceeds of any of the
foregoing, including insurance proceeds, and (F) all books and records regarding
the foregoing, in each case, now existing or hereafter arising.
(i) To the extent permitted by applicable law, this is a "finance lease" under
the Article of the Uniform Commercial Code governing personal property leases.
Lessee waives any right (i) to cancel or repudiate any Lease, (ii) to reject or
revoke acceptance of any Unit, and (iii) to recover from Lessor any general or
consequential damages, for any reason whatsoever.
(j) To the extent specified in any Approval Letter, Lessee shall reimburse
Lessor upon demand for costs and expenses incurred by Lessor in connection with
the execution and delivery of this Agreement and the other documents
contemplated hereby. Lessee shall reimburse Lessor on demand for all costs and
expenses, including Attorney Costs, incurred in connection with any amendment of
any Lease or related document requested by Lessee, or any waiver.
(k) THIS AGREEMENT, EACH SCHEDULE AND (UNLESS OTHERWISE SPECIFIED THEREIN) THE
RELATED AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE INTERNAL
LAWS OF THE STATE OF GEORGIA, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF
WHICH, AND THE FEDERAL COURTS LOCATED THEREIN, THE PARTIES HERETO SUBMIT.
(l) LESSOR AND LESSEE EACH WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER AGAINST THE OTHER ON ANY MATTER HOWEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH ANY LEASE OR THE UNITS.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Agreement as of the
date first above written.
Banc of America Leasing & Capital, Fred's Stores of Tennessee,
LLC (Lessor) Inc. (Lessee)
By: /s/ Carol Jones By: /s/ Jerry A Shore
------------------------------------ ------------------------------
Printed Name: Carol Jones Printed Name: Jerry A Shore
Title: Vice-President Title: Vice-President
Address: 2059 Northlake Parkway, 4 South Address: 4300 New Getwell Road
Tucker, Georgia 30084 Memphis, Tennessee 38118
Facsimile: (770)270-8454 Facsimile: (901) 365-6815