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EXHIBIT 10.19
[LOGO]
DEUTSCHE BANK MEDIUM TERM LEASE
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PARTICIPATION AGREEMENT
among
FRESENIUS USA, INC.,
as Lessee,
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity, except as expressly
stated herein, but solely as Owner Trustee,
and
DEUTSCHE BANK A.G., NEW YORK AND/OR CAYMAN ISLANDS BRANCHES,
as Investor
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Dated as of March 31, 1995
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FRESENIUS USA, INC. EQUIPMENT LEASE PROGRAM
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................................................................... 1
SECTION 2. INVESTOR CONTRIBUTIONS........................................................................ 1
SECTION 3. SUMMARY OF TRANSACTIONS....................................................................... 1
3.1. Operative Agreements.......................................................................... 1
3.2. Equipment Purchase and Lease.................................................................. 1
SECTION 4. THE CLOSINGS.................................................................................. 2
4.1. Initial Closing Date.......................................................................... 2
4.2. Closing Dates................................................................................. 2
4.3. Owner Trustee Authorization................................................................... 2
SECTION 5. CONDITIONS TO CLOSING DATES................................................................... 2
5.1. General....................................................................................... 2
5.2. Procedures for Funding........................................................................ 2
5.3. Conditions to the Investor's Obligations to Make Investor Contributions for
the Acquisition of Equipment.................................................................. 3
SECTION 6. CONDITIONS TO INITIAL CLOSING DATE............................................................ 5
6.1. Conditions to the Lessor's and the Investor's Obligations..................................... 5
(a) Operative Agreements................................................................. 5
(b) Taxes................................................................................ 6
(c) Opinions of Counsel.................................................................. 6
(d) Governmental Approvals............................................................... 6
(e) Litigation........................................................................... 6
(f) Legal Requirements................................................................... 6
(g) Lessee's Officer's Certificates...................................................... 6
(h) Lessee's Resolutions and Incumbency Certificate, etc................................. 7
(i) Initial Closing Date................................................................. 7
(j) No Material Adverse Change........................................................... 7
(k) Preliminary Appraisal................................................................ 7
(l) Investor Approval.................................................................... 7
(m) Due Diligence........................................................................ 7
(n) Opinion of Investor's Internal Counsel............................................... 7
(o) Quarterly Tax Payment Schedule and Lease Funding Balance
Schedule............................................................................. 8
6.2. Conditions to the Lessee's Obligations........................................................ 8
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(a) Legal Requirements................................................................... 8
(b) Litigation........................................................................... 8
(c) Operative Agreements................................................................. 8
(d) Lessor's Officer's Certificate....................................................... 8
(e) Lessor's Resolutions and Incumbency Certificate, etc................................. 9
(f) Opinion of Counsel................................................................... 9
(g) Investor's Officers' Certificate..................................................... 9
(h) Opinion of Investor's Counsel........................................................ 9
SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE CLOSING
DATES......................................................................................... 9
7.1. Representations and Warranties of the Investor................................................ 9
(a) Due Organization, etc................................................................ 9
(b) Authorization; No Conflict........................................................... 9
(c) Enforceability, etc.................................................................. 10
(d) Litigation........................................................................... 10
(e) Defaults............................................................................. 10
(f) Regulation........................................................................... 10
(g) Lessor Liens......................................................................... 10
(h) No Employee Benefit Plans............................................................ 10
(i) Offer of Interests................................................................... 11
7.2. Representations and Warranties of the Owner Trustee........................................... 11
(a) Due Organization, etc................................................................ 11
(b) Authorization; No Conflict........................................................... 11
(c) Enforceability, etc.................................................................. 11
(d) Litigation........................................................................... 12
(e) Lessor Liens......................................................................... 12
(f) Defaults............................................................................. 12
(g) Securities Act....................................................................... 12
(h) Chief Place of Business.............................................................. 12
(i) Federal Reserve Regulations.......................................................... 12
(j) Investment Company Act............................................................... 13
(k) Taxes................................................................................ 13
7.3. Representations and Warranties of the Lessee.................................................. 13
(a) Corporate Status..................................................................... 13
(b) Corporate Power and Authority........................................................ 13
(c) No Violation......................................................................... 13
(d) Judgments; Litigation................................................................ 14
(e) Governmental and Other Approvals..................................................... 14
(f) True and Complete Disclosure......................................................... 14
(g) Tax Returns and Payments............................................................. 14
(h) Patents, etc......................................................................... 15
(i) Environmental and Other Regulations.................................................. 15
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(j) Lease................................................................................ 15
(k) Offer of Securities, etc............................................................. 16
(l) Bankruptcy........................................................................... 16
(m) Use of Funds......................................................................... 16
(n) No Misstatement or Omission.......................................................... 16
(o) Location............................................................................. 16
(p) Title................................................................................ 16
(q) Security Interest.................................................................... 16
(r) Insurance............................................................................ 17
(s) Equipment Operational................................................................ 17
(t) Service and Facilities............................................................... 17
(u) Conditions Precedent Satisfied....................................................... 17
(v) Conveyance Not Void Or Voidable...................................................... 17
(w) Solvency............................................................................. 17
(x) Personal Property.................................................................... 17
(y) Depreciation of the Equipment........................................................ 17
(z) Transaction Expense Amortization..................................................... 18
SECTION 8. COVENANTS OF THE LESSEE....................................................................... 18
SECTION 9. PAYMENT OF CERTAIN EXPENSES................................................................... 23
9.1. Transaction Expenses.......................................................................... 23
9.2. Brokers' Fees and Stamp Taxes................................................................. 24
SECTION 10. OTHER COVENANTS AND AGREEMENTS................................................................ 25
10.1. Cooperation with the Lessee................................................................... 25
10.2. Covenants of the Owner Trustee and the Investor............................................... 25
(a) Discharge of Liens................................................................... 25
(b) Trust Agreement...................................................................... 25
(c) Successor Owner Trustee.............................................................. 26
(d) Indebtedness; Other Business......................................................... 26
(e) No Violation......................................................................... 26
(f) No Voluntary Bankruptcy.............................................................. 26
(g) Change of Chief Place of Business.................................................... 26
10.3. Computation of Rent........................................................................... 26
(a) Basis of Rental Rates................................................................ 26
(b) Overdue Rate......................................................................... 26
(c) Calculation.......................................................................... 27
(d) Inability to Determine Eurodollar Rate............................................... 27
10.4. Increased Costs, Illegality, etc.............................................................. 27
(a) Costs................................................................................ 27
(b) Capital Standards.................................................................... 28
(c) Illegality........................................................................... 28
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10.5 Funding Indemnity............................................................................. 28
10.6. Notice of Amounts Payable; Relocation......................................................... 29
(a) Notice............................................................................... 29
(b) Relocation........................................................................... 29
SECTION 11. OPERATING LEASE............................................................................... 29
11.1. Election to Provide Operating Lease........................................................... 29
11.2. Rejection..................................................................................... 30
11.3. Conditions to the Investor's and the Lessor's Obligations..................................... 30
11.4. Expenses...................................................................................... 31
11.5. Notices and Documentation..................................................................... 31
SECTION 12. TRANSFER OF INTEREST.......................................................................... 31
12.1. Restrictions on Transfer...................................................................... 31
12.2. Effect of Transfer............................................................................ 32
SECTION 13. INDEMNIFICATION............................................................................... 32
13.1. General Indemnity............................................................................. 32
13.2. General Tax Indemnity......................................................................... 34
(a) Indemnification...................................................................... 34
(b) Payments............................................................................. 34
(c) Reports and Returns.................................................................. 34
(d) Withholding Taxes.................................................................... 35
(e) Contests of Impositions.............................................................. 36
13.3. Special Income Tax Indemnity.................................................................. 37
(a) Indemnity............................................................................ 37
(b) Computation of Indemnity and Gross-Up; Payment....................................... 38
(c) Certain Adjustments.................................................................. 38
(d) Verification......................................................................... 38
(e) Contests............................................................................. 39
SECTION 14. MISCELLANEOUS................................................................................. 39
14.1. Survival of Agreements........................................................................ 39
14.2. No Broker, etc................................................................................ 39
14.3. Notices....................................................................................... 39
14.4. Counterparts.................................................................................. 40
14.5. Amendments and Termination.................................................................... 40
14.6. Headings, etc................................................................................. 41
14.7. Parties in Interest........................................................................... 41
14.8. GOVERNING LAW................................................................................. 41
14.9. Severability.................................................................................. 41
14.10. Liability Limited............................................................................. 41
14.11. Further Assurances............................................................................ 41
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14.12. Confidentiality................................................................................ 42
14.13. Lessee Reliance on Own Experts................................................................. 42
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EXHIBITS AND SCHEDULES
Exhibit A Form of Notice of Closing Date
Exhibit B Reserved
Exhibit C Form of Officer's Certificate
Exhibit D Determination of Operating Lease Basic Rent
Exhibit E Lease Funding Balance Calculation
Exhibit E-1 Form of Quarterly Tax Payment Schedule
Exhibit E-2 Form of Lease Funding Balance Schedule
Schedule 1 - A Form of Opinion of Ropes & Gray to be delivered on each
Closing Date other than the Initial Closing Date
Schedule 1 - B Form of Opinion of Robert E. Farrell to be delivered on each Closing Date
other than the Initial Closing Date
Schedule 1 - C Form of Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol to be
delivered on each Closing Date other than the Initial Closing Date
Schedule 2 - A Form of Opinion of Ropes & Gray to be delivered on the Initial Closing
Date
Schedule 2 - B Form of Opinion of Robert E. Farrell to be delivered on the Initial Closing
Date
Schedule 2 - C Form of Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol to be
delivered on the Initial Closing Date
Schedule 3 Form of Opinion of Local Counsel to Owner Trustee
Schedule 4 Form of Opinion of Internal Counsel to Investor
Schedule 5 Form of Opinion of Counsel to Lessor
Schedule 6 Debt and Contingent Obligations
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PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (this "Agreement"), dated as of
March 31, 1995, among FRESENIUS USA, INC., a Massachusetts corporation, as
lessee (the "Lessee"), FIRST SECURITY BANK OF UTAH, N.A., a national banking
association, not in its individual capacity (in its individual capacity, the
"Trust Company"), except as expressly stated herein, but solely as Owner Trustee
(the "Owner Trustee" or the "Lessor"), and DEUTSCHE BANK A.G., NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES, duly licensed branches of Deutsche Bank A.G., a German
corporation, as investor (the "Investor").
In consideration of the premises and of the mutual agreements
herein contained and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS.
For the purposes hereof, capitalized terms used herein and not
otherwise specifically defined herein shall have the meanings ascribed to them
in Appendix A hereto.
SECTION 2. INVESTOR CONTRIBUTIONS.
Subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties of each of the parties hereto
contained herein or made pursuant hereto, on each Closing Date, the Investor
shall make an investment in the Trust (each, an "Investor Contribution") in an
amount in immediately available funds equal to the total Equipment Cost set
forth in the Notice of Closing Date delivered by the Lessee with respect to such
Closing Date pursuant to Section 5.2 hereof plus the Transaction Expenses
associated with such Closing Date and payable by the Investor pursuant to
Section 9.1 hereof.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. Operative Agreements. On the Initial Closing Date, each
of the respective parties hereto and thereto shall execute and deliver this
Agreement, the Lease, the Trust Agreement and such other documents, instruments,
certificates and opinions of counsel as agreed to by the parties hereto.
3.2. Equipment Purchase and Lease. On each Closing Date and
subject to the terms and conditions of this Agreement (a) the Investor will make
an Investor Contribution in accordance with Section 2 hereof and the terms and
provisions of the Trust Agreement, (b) the Owner Trustee will purchase the
applicable items of Equipment identified by the Lessee pursuant
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to one or more Equipment Schedules executed pursuant to the Lease for a purchase
price equal to the total Equipment Cost set forth in the Notice of Closing Date,
(c) the Lessor will simultaneously lease all of its right, title and interest in
such Equipment to the Lessee and (d) the Owner Trustee will pay all of the
Transaction Expenses payable by the Investor pursuant to Section 9.1 hereof and
with respect to which the Investor has made an Investor Contribution.
SECTION 4. THE CLOSINGS.
4.1. Initial Closing Date. The Initial Closing Date shall
occur on March 31, 1995 or such other date as the parties may agree. All
documents and instruments required to be delivered on the Initial Closing Date
shall be delivered at the offices of Winston & Strawn, 35 W. Wacker Drive,
Chicago, Illinois, or at such other location as may be determined by the
Investor and the Lessee.
4.2. Closing Dates. The Lessee shall deliver to the Owner
Trustee and the Investor a Notice of Closing Date, appropriately completed, in
the form of Exhibit A hereto in connection with each Closing Date pursuant to
Section 5.2 hereof ("Notice of Closing Date"). Subject to the satisfaction of
the conditions contained in Section 5, such Closing Date shall occur on the date
set forth in the Notice of Closing Date. There shall be a maximum of six Closing
Dates under this Agreement. Each Interim Closing Date and the Final Closing Date
shall occur on a Payment Date.
4.3. Owner Trustee Authorization. The Investor agrees that,
with respect to the Initial Closing Date and each other Closing Date, the
satisfaction or waiver of the conditions contained in Sections 6 and 5.3 hereof,
as applicable, shall constitute, without further act, authorization and
direction by the Investor to the Owner Trustee to take the actions specified in
Section 2.1 of the Trust Agreement.
SECTION 5. CONDITIONS TO CLOSING DATES.
5.1. General. To the extent funds have been made available to
the Owner Trustee as an Investor Contribution, the Owner Trustee will make an
advance of such funds in accordance with the terms and conditions of this
Agreement and the other Operative Agreements to allow the Owner Trustee at the
direction of the Lessee to acquire Equipment in accordance with the terms of
this Agreement.
5.2. Procedures for Funding. (a) Not less than three (3)
Business Days prior to a Closing Date, the Lessee shall deliver to the Lessor
and the Investor a Notice of Closing Date.
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(b) The Notice of Closing Date shall: (i) be irrevocable, (ii)
request funds in an amount not to exceed the remaining Investor Commitment (or
such lesser amount as shall be equal to the total Equipment Cost as set forth in
the Equipment Schedules being delivered with respect to such Closing Date) for
the payment of the Equipment Cost previously incurred by the Lessee or owing to
a third party vendor in respect of the purchase of Equipment and not previously
purchased by the Lessor pursuant hereto, and (iii) indicate the desired Closing
Date.
(c) So long as no Default or Event of Default has occurred and
is continuing and subject to satisfaction of the conditions precedent set forth
in Section 5.3 hereof and, with respect to the Initial Closing Date, Section 6.1
hereof on such Closing Date, (i) the Investor shall make an Investor
Contribution in an amount equal to the requested funds specified in the Notice
of Closing Date plus the Transaction Expenses associated with such Closing Date
and payable by the Investor pursuant to Section 9.1 hereof; and (ii) the total
amount of such Investor Contribution shall be used by the Lessor to pay the
applicable portion of the Equipment Cost and to pay such Transaction Expenses.
5.3. Conditions to the Investor's Obligations to Make Investor
Contributions for the Acquisition of Equipment. The obligation of the Investor
to make an Investor Contribution on a Closing Date for the purpose of providing
funds to the Lessor necessary to acquire Equipment is subject to (i) the Initial
Closing Date having occurred or occurring simultaneously therewith and the
actions to be taken in connection therewith having been taken and (ii) the
satisfaction or waiver of the following additional conditions precedent:
(a) the correctness on such Closing Date of the
representations and warranties of the Owner Trustee and the Lessee contained
herein and in each of the other Operative Agreements;
(b) the performance by the parties hereto (other than the
Investor) of their respective agreements contained herein and in the other
Operative Agreements to be performed by them on or prior to such Closing Date;
(c) the Lessee shall have delivered to the Owner Trustee and
the Investor a fully executed counterpart of the Notice of Closing Date,
appropriately completed;
(d) title to each item of Equipment being acquired by the
Lessor on such Closing Date shall conform to the representations and warranties
set forth in Section 7.3(s) hereof;
(e) the Lessee shall have delivered one or more Equipment
Schedules, executed by the Lessee and the Lessor, with respect to the Equipment
being acquired by the Lessor on such Closing Date, with a copy thereof to the
Investor;
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(f) the Lessee shall have delivered copies of original
invoices, a Bill of Sale and a Purchase Agreement Assignment with respect to the
Equipment being acquired by the Lessor on such Closing Date to the Lessor;
(g) Ropes & Gray, special counsel to the Lessee, shall have
issued to the Lessor and the Investor its opinion to the effect and in the form
set forth on Schedule 1-A hereto;
(h) Robert E. Farrell, General Counsel to the Lessee, shall
have issued to the Lessor and the Investor his opinion to the effect and in the
form set forth on Schedule 1 - B hereto;
(i) Reboul, MacMurray, Hewitt, Maynard & Kristol, special New
York counsel to the Lessee, shall have issued to the Lessor and the Investor its
opinion to the effect and in the form set forth on Schedule 1 - C hereto;
(j) local counsel to the Owner Trustee reasonably acceptable
to the Investor and the Lessee shall have issued its opinion to the effect and
in the form set forth in Schedule 3 hereto;
(k) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and no Default
or Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Investor Contribution requested by the Notice of
Closing Date;
(l) any financing statements under the Uniform Commercial Code
required by the Lease shall have been filed, if necessary, in such locations as
to enable the Lessee's counsel to render its opinion referred to in Section
5.3(g) hereof;
(m) with respect to each Interim Closing Date and the Final
Closing Date, the conditions set forth in Sections 6.1 (b), (d), (e), (f), (g),
(h) and (j) hereof shall have been satisfied on such Closing Date as well as the
Initial Closing Date;
(n) with respect to the Final Closing Date, the Final Closing
Date shall have occurred no later than June 30, 1995;
(o) with respect to the Final Closing Date, the Investor shall
have received the Final Appraisal and shall be satisfied that the Final
Appraisal meets the requirements set forth in the definition of such term;
(p) the Investor and the Lessor shall have received the
insurance certificates required by Section 14 of the Lease;
(q) the Lessee shall have delivered to the Owner Trustee and
the Investor an Officer's Certificate stating that each one of the foregoing
provisions set forth in Sections 5.3(a)
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(as to the Lessee), (b) (as to the Lessee), (c), (d), (e), (f), (k),(l), (o) (as
to the Final Closing Date) and (p) hereof has been complied with;
(r) in the case of the Investor, on the Final Closing Date, it
shall have received a favorable final opinion of Winston & Strawn, special
counsel to the Investor, dated the Final Closing Date, addressed to the Investor
and covering such Federal tax matters as the Investor may reasonably request;
(s) the Lessee shall have delivered to the Lessor such
landlord estoppels and waivers and mortgagee waivers as the Lessor or the
Investor shall have requested with respect to the real property where the
Equipment being acquired by the Lessor on such Closing Date will be located;
(t) with respect to the Final Closing Date, the Lessor shall
have delivered to the Lessee a final Quarterly Tax Payment Schedule and Lease
Funding Balance Schedule in the forms attached hereto as Exhibits E-1 and E-2,
respectively. The Quarterly Tax Payment Schedule and Lease Funding Balance
Schedule delivered by the Lessor on the Final Closing Date shall differ from
those delivered by the Lessor on the Initial Closing Date under Section 6.1(p)
hereof solely as a result of a change between the Initial Closing Date and the
Final Closing Date of (i) Equipment Cost; (ii) Transaction Expenses and (iii)
the Amortization Component; and
(u) with respect to the first Closing Date after the Initial
Closing Date, the Lessor and the Investor shall have received the results of an
environmental audit of the premises of the Lessee where the Equipment will be
located, including a Phase I environmental survey, prepared by an independent
environmental audit firm reasonably acceptable to the Investor, together with a
letter from such firm addressed to the Lessor and the Investor permitting them
to rely thereon, and the results of such survey shall be satisfactory to the
Investor in its sole discretion.
SECTION 6. CONDITIONS TO INITIAL CLOSING DATE.
6.1. Conditions to the Lessor's and the Investor's
Obligations. The obligations of the Lessor and the Investor to consummate the
transactions contemplated by this Agreement, including the obligation to execute
and deliver the applicable Operative Agreements to which each is a party on the
Initial Closing Date, are subject to (i) the accuracy and correctness on the
Initial Closing Date of the representations and warranties of the other parties
hereto contained herein, (ii) the accuracy and correctness on the Initial
Closing Date of the representations and warranties of the other parties hereto
contained in any other Operative Agreement or certificate delivered pursuant
hereto or thereto, (iii) the performance by the other parties hereto of their
respective agreements contained herein and in the other Operative Agreements and
to be performed by them on or prior to the Initial Closing Date and (iv) the
satisfaction or waiver by the Lessor and the Investor of all of the following
conditions on or prior to the Initial Closing Date:
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(a) Operative Agreements. Each of the Operative Agreements to
be entered into on the Initial Closing Date shall have been duly authorized,
executed and delivered by the parties thereto, other than the Lessor and the
Investor, and shall be in full force and effect, and no default, other than
defaults of the Lessor or the Investor which have not been caused by another
party hereto or thereto, shall exist thereunder (both before and after giving
effect to the transactions contemplated by the Operative Agreements), and the
Lessor and the Investor each shall have received a fully executed copy of each
of the Operative Agreements;
(b) Taxes. All taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of the
Operative Agreements shall have been paid or provisions for such payment shall
have been made to the satisfaction of the Lessor and the Investor;
(c) Opinions of Counsel. (i) Ropes & Gray, special counsel to
the Lessee, shall have issued to the Lessor and the Investor his opinion to the
effect and in the form set forth on Schedule 2 - A hereto; (ii) Robert E.
Farrell, General Counsel to the Lessee, shall have issued to the Lessor and the
Investor its opinion to the effect and in the form set forth on Schedule 2 - B
hereto; (iii) Reboul, MacMurray, Hewitt, Maynard & Kristol, special new York
counsel to the Lessee, shall have issued to the Lessor and the Investor its
opinion to the effect and in the form set forth on Schedule 2 -C hereto; (iv) in
the case of the Investor, it shall have received a favorable preliminary opinion
of Winston & Strawn, special counsel to the Investor, dated the Initial Closing
Date, addressed to the Investor and covering such Federal tax matters as the
Investor may reasonably request; and (v) in the case of the Investor, it shall
have received the opinion of Ray, Quinney & Nebeker, special counsel to the
Lessor, addressed to the Lessee, the Lessor or the Investor and to the effect
and in the form set forth on Schedule 5 hereto;
(d) Governmental Approvals. All necessary (or, in the
reasonable opinion of the Investor or its counsel, advisable) Governmental
Actions in each case required by any law or regulation since the date hereof,
shall have been obtained or made and be in full force and effect;
(e) Litigation. No action or proceeding shall have been
instituted, nor shall any action or proceeding be threatened, before any
Governmental Authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental Authority (i) to set aside,
restrain, enjoin or prevent the full performance of this Agreement, any other
Operative Agreement or any transaction contemplated hereby or thereby or (ii)
which is reasonably likely to have a Material Adverse Effect;
(f) Legal Requirements. In the reasonable opinion of the
Lessor and the Investor and their counsel, the transactions contemplated by the
Operative Agreements do not and will not violate any Legal Requirements and do
not and will not subject the Lessor or the Investor to any adverse statutory or
regulatory prohibitions or constraints, in each case enacted, imposed, adopted
or proposed since the date of the execution of the Commitment Letter;
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(g) Lessee's Officer's Certificates. The Lessor and the
Investor shall each have received an Officer's Certificate, dated as of the
Initial Closing Date, of the Lessee stating that (a) each and every
representation and warranty of the Lessee contained in the Operative Agreements
to which it is a party is true and correct on and as of the Initial Closing
Date; (b) no Default or Event of Default has occurred and is continuing under
any Operative Agreement; (c) each Operative Agreement to which the Lessee is a
party is in full force and effect with respect to it; and (d) the Lessee has
duly performed and complied with all covenants, agreements and conditions
contained herein or in any Operative Agreement required to be performed or
complied with by it on or prior to the Initial Closing Date;
(h) Lessee's Resolutions and Incumbency Certificate, etc. The
Lessor and the Investor shall each have received (a) a certificate of the
Secretary or an Assistant Secretary of the Lessee attaching and certifying as to
(1) the resolutions of the Executive Committee of the Board of Directors of the
Lessee duly authorizing the execution, delivery and performance by the Lessee of
each Operative Agreement to which it is a party, (2) its certificate of
incorporation and by-laws, the former being certified as of a recent date by the
Secretary of State of the State of its incorporation, and (3) the incumbency and
signature of persons authorized to execute and deliver on its behalf the
Operative Agreements to which it is a party and (b) a good standing certificate
from the appropriate officer of the States of California and Utah as to the
Lessee's good standing in such state;
(i) Initial Closing Date. The Initial Closing Date shall occur
no later than March 31, 1995;
(j) No Material Adverse Change. As of the Initial Closing
Date, there shall not have occurred any material adverse change in the business,
prospects, operations or financial or other condition of the Lessee and its
Subsidiaries since the date of the execution of the Commitment Letter;
(k) Preliminary Appraisal. The Preliminary Appraisal shall
have been delivered to the Investor, and the Investor shall be satisfied that
the Preliminary Appraisal meets the requirements set forth in the definition of
such term;
(l) Investor Approval. The Investor shall have obtained all
required internal approvals, including credit approval with respect to the
Lessee and the transactions contemplated by the Operative Agreements;
(m) Due Diligence. The Investor shall have completed all due
diligence investigations with respect to the Lessee and the Equipment and the
transactions contemplated by the Operative Agreements and shall be satisfied
with the results thereof in its sole discretion;
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(n) Opinion of Investor's Internal Counsel. In the case of the
Lessor, it shall have received the opinion of Jeffrey T. Welch, internal counsel
to the Investor, addressed to the Lessor and the Lessee and to the effect and in
the form set forth on Schedule 4; and
(o) Quarterly Tax Payment Schedule and Lease Funding Balance
Schedule. The Lessor shall have delivered to the Lessee a preliminary Quarterly
Tax Payment Schedule and Lease Funding Balance Schedule in the forms attached
hereto as Exhibits E-1 and E-2, respectively.
6.2. Conditions to the Lessee's Obligations. The obligations
of the Lessee to consummate the transactions contemplated by this Agreement,
including the obligation to execute and deliver the Operative Agreements to
which it is a party on the Initial Closing Date, are subject to (i) the accuracy
and correctness on the Initial Closing Date of the representations and
warranties of the other parties hereto contained herein, (ii) the accuracy and
correctness on the Initial Closing Date of the representations and warranties of
the other parties hereto contained in any other Operative Agreement or
certificate delivered pursuant hereto or thereto, (iii) the performance by the
other parties hereto of their respective agreements contained herein and in the
other Operative Agreements, in each case to be performed by them on or prior to
the Initial Closing Date, and (iv) the satisfaction or waiver by the Lessee of
all of the following conditions on or prior to the Initial Closing Date:
(a) Legal Requirements. In the reasonable opinion of the
Lessee and its counsel, the transactions contemplated by the Operative
Agreements do not violate any Legal Requirements and shall not subject the
Lessee to any adverse regulatory prohibitions or constraints, in each case
enacted, imposed, adopted or proposed since the date hereof;
(b) Litigation. No action or proceeding shall have been
instituted nor shall any action or proceeding be threatened, before any
Governmental Authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental Authority to set aside, restrain,
enjoin or prevent the full performance of this Agreement, any other Operative
Agreement or any transaction contemplated hereby or thereby;
(c) Operative Agreements. Each of the Operative Agreements
shall have been duly authorized, executed and delivered by the parties thereto,
other than the Lessee, and shall be in full force and effect, and no Default,
other than Defaults of the Lessee, shall exist thereunder, and the Lessee shall
have received a fully executed copy of each of the Operative Agreements;
(d) Lessor's Officer's Certificate. The Lessee shall have
received an Officer's Certificate of the Lessor, dated as of the Initial Closing
Date, stating that (i) each and every representation and warranty of the Lessor
contained in the Operative Agreements to which it is a party is true and correct
on and as of the Initial Closing Date; (ii) each Operative Agreement to which
the Lessor is a party is in full force and effect with respect to it; and (iii)
the Lessor has
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duly performed and complied with all covenants, agreements and conditions
contained herein or in any Operative Agreement required to be performed or
complied with by it on or prior to the Initial Closing Date;
(e) Lessor's Resolutions and Incumbency Certificate, etc. The
Lessee shall have received (i) a certificate of the Secretary, an Assistant
Secretary, Trust Officer or Vice President of the Lessor attaching and
certifying as to (A) the signing resolutions, (B) its articles of incorporation,
(C) its by-laws and (D) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Agreements to which it is a
party and (ii) a good standing certificate from the Office of the Comptroller of
the Currency as to the Lessor's good standing as a corporation in such state;
(f) Opinion of Counsel. Ray, Quinney & Nebeker, special
counsel to the Lessor, shall have issued to the Lessee, the Lessor and the
Investor its opinion to the effect and in the form set forth on Schedule 5;
(g) Investor's Officers' Certificate. The Lessee shall have
received an Officers' Certificate of the Investor, dated as of the Initial
Closing Date, stating that (i) each and every representation and warranty of the
Investor contained in the Operative Agreements to which it is a party is true
and correct on and as of the Initial Closing Date; (ii) each Operative Agreement
to which the Investor is a party is in full force and effect with respect to it;
and (iii) the Investor has duly performed and complied with all covenants,
agreements and conditions contained herein or in any Operative Agreement
required to be performed or complied with by it on or prior to the Initial
Closing Date; and
(h) Opinion of Investor's Counsel. The Lessee shall have
received the opinion of internal counsel to the Investor required by Section 6.1
(n) hereof.
SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE CLOSING
DATES.
7.1. Representations and Warranties of the Investor. Effective
as of the Initial Closing Date and each other Closing Date, the Investor
represents and warrants to each of the other parties hereto that:
(a) Due Organization, etc. The Investor is duly licensed as a
branch of Deutsche Bank A.G., a German corporation, and is in good standing
under the laws of the State of New York and the Cayman Islands and has the power
and authority to carry on its business as now conducted and to enter into and
perform its obligations under each Operative Agreement to which it is or is to
be a party and each other agreement, instrument and document to be executed and
delivered by it on or before each Closing Date in connection with or as
contemplated by each such Operative Agreement to which it is or will be a party.
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(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is or will be a party have
been duly authorized by all necessary action on its part and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of the terms and provisions
thereof (i) requires or will require any approval of the stockholders of, or
approval or consent of any trustee or holders of any indebtedness or obligations
of, the Investor which have not been obtained, (ii) contravenes or will
contravene any Legal Requirement applicable to or binding on it (except no
representation or warranty is made as to any Legal Requirement to which it may
be subject solely as a result of the activities of the Lessee) as of the date
hereof, (iii) does or will contravene or result in any breach of or constitute
any default under, or result in the creation of any Lien upon any item of
Equipment (other than Liens created by the Operative Agreements) under its
certificate of incorporation or any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement or other
agreement or instrument to which it is a party or by which it or its properties
are bound or affected or (iv) does or will require any Governmental Action by
any Governmental Authority (other than arising solely by reason of the business,
condition or activities of the Lessee or any Affiliate thereof).
(c) Enforceability, etc. Each Operative Agreement to which it
is or will be a party has been, or will be, duly executed and delivered by it
and constitutes, or upon execution and delivery will constitute, a legal, valid
and binding obligation enforceable against it in accordance with the terms
thereof.
(d) Litigation. There is no action or proceeding pending or,
to its knowledge, threatened against it before any Governmental Authority that
questions the validity or enforceability of any Operative Agreement to which it
is or will become a party or that, if adversely determined, would materially and
adversely affect its ability to perform its obligations under the Operative
Agreements to which it is a party.
(e) Defaults. No Default or Event of Default under the
Operative Agreements attributable to it has occurred and is continuing.
(f) Regulation. It is not a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or a
"public utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended, or a "public utility" within the meaning of the Federal Power
Act, as amended. It is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act or an
"investment adviser" within the meaning of the Investment Advisers Act of 1940,
as amended.
(g) Lessor Liens. The Equipment being acquired by the Lessor
on any Closing Date will be free and clear of Lessor Liens attributable to the
Investor on such Closing Date.
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(h) No Employee Benefit Plans. The Investor is not an Employee
Benefit Plan, and no part of the funds used by it to make an Investor
Contribution to the Owner Trustee hereunder constitute assets of an Employee
Benefit Plan or its related trust.
(i) Offer of Interests. It is acquiring its interest in the
Trust Estate for its own account for investment and not with a view to any
distribution (as such term is used in Section 2(11) of the Securities Act)
thereof, and if in the future it should decide to dispose of its interest in the
Trust Estate, it understands that it may do so only in compliance with the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder and any applicable state securities laws.
7.2. Representations and Warranties of the Owner Trustee.
Effective as of the Initial Closing Date and each other Closing Date, Trust
Company in its individual capacity and as the Owner Trustee, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (i), (j) and
(k) are made solely in its capacity as the Owner Trustee:
(a) Due Organization, etc. It is a national banking
association duly organized and validly existing and in good standing under the
laws of the United States of America and has the power and authority to enter
into and perform its obligations under the Trust Agreement and has the corporate
and trust power and authority to act as the Owner Trustee and to enter into and
perform the obligations under each of the other Operative Agreements to which
Trust Company or the Owner Trustee, as the case may be, is or will be a party
and each other agreement, instrument and document to be executed and delivered
by it in connection with or as contemplated by each such Operative Agreement to
which Trust Company or the Owner Trustee, as the case may be, is or will be a
party.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is or will be a party,
either in its individual capacity or as the Owner Trustee, as the case may be,
has been duly authorized by all necessary action on its part, and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of the terms and provisions
thereof (i) does or will require any approval or consent of any trustee or
holders of any of its indebtedness or obligations or any other Person, (ii) does
or will contravene any current Requirement of Law, (iii) does or will contravene
or result in any breach of or constitute any default under, or result in the
creation of any Lien upon any of its property under, its charter or by-laws or
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement or other agreement or instrument to
which it is a party or by which it or its properties may be bound or affected,
or (iv) does or will require any Governmental Action by any Governmental
Authority.
(c) Enforceability, etc. The Trust Agreement and each other
Operative Agreement to which Trust Company or the Owner Trustee, as the case may
be, is or will be a
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party have been, or on or before the applicable Closing Date will be, duly
executed and delivered by Trust Company or the Owner Trustee, as the case may
be, and the Trust Agreement and each such other Operative Agreement to which
Trust Company or the Owner Trustee, as the case may be, is a party constitutes,
or upon execution and delivery will constitute, a legal, valid and binding
obligation enforceable against Trust Company or the Owner Trustee, as the case
may be, in accordance with the terms thereof.
(d) Litigation. There is no action or proceeding pending or,
to its knowledge, threatened to which it is or will be a party, either in its
individual capacity or as the Owner Trustee, before any Governmental Authority
that, if adversely determined, would adversely affect its ability, in its
individual capacity or as Owner Trustee, to perform its obligations under the
Operative Agreements to which it is a party or would question the validity or
enforceability of any of the Operative Agreements to which it is or will become
a party.
(e) Lessor Liens. The Equipment being acquired by the Lessor
on any Closing Date will be free and clear of Lessor Liens attributable to the
Trust Company or the Owner Trustee on such Closing Date.
(f) Defaults. No Default or Event of Default under the
Operative Agreements attributable to it has occurred and is continuing.
(g) Securities Act. Neither the Owner Trustee nor any Person
authorized by the Owner Trustee to act on its behalf has offered or sold any
interest in the Trust Estate or in any similar security relating to the
Equipment, or in any security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering as the offering
of the aforementioned securities to, or solicited any offer to acquire any of
the same from, any Person in violation of Section 5 of the Securities Act, and
neither the Owner Trustee nor any Person authorized by the Owner Trustee to act
on its behalf will take any action which would subject the issuance or sale of
any interest in the Trust Estate to the provisions of Section 5 of the
Securities Act or require the qualification of any Operative Agreement under the
Trust Indenture Act of 1939, as amended.
(h) Chief Place of Business. The Owner Trustee's chief place
of business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement and each
other Operative Agreement are kept are located at 79 South Main Street, Salt
Lake City, Utah 84111.
(i) Federal Reserve Regulations. The Owner Trustee is not
engaged principally in, and does not have as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Investor Contribution will be used by it to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock or for
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any purpose that violates, or is inconsistent with, the provisions of
Regulations G, T, U, or X of the Board of Governors of the Federal Reserve
System of the United States.
(j) Investment Company Act. The Owner Trustee is not an
"investment company" or a company controlled by an "investment company" within
the meaning of the Investment Company Act.
(k) Taxes. There are no Taxes payable by the Owner Trustee,
either in its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the execution and
delivery by the Trust Company, in its individual capacity or as Owner Trustee,
as the case may be, of this Agreement or the other Operative Agreements to which
it is a party; and there are no Taxes payable by the Trust Company, in its
individual capacity or as Owner Trustee, as the case may be, imposed by the
State of Utah or any political subdivision thereof in connection with the
acquisition of its interest in the Trust Estate (other than franchise or other
taxes based on or measured by any fees or compensation received by the Owner
Trustee for services rendered in connection with the transactions contemplated
hereby).
7.3. Representations and Warranties of the Lessee. Effective
as of the Initial Closing Date and each other Closing Date, the Lessee
represents and warrants to each of the other parties hereto that:
(a) Corporate Status. The Lessee (i) is a duly organized and
validly existing corporation in good standing under the laws of The Commonwealth
of Massachusetts and has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and (ii) has duly
qualified and is authorized to do business and is in good standing in all
jurisdictions (A) where the Equipment is located, and (B) where it is required
to be so qualified and where the failure to be so qualified would have a
Material Adverse Effect.
(b) Corporate Power and Authority. The Lessee has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Operative Agreements to which it is or will be a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Operative Agreements to which it is or will be a party, has
duly executed and delivered each Operative Agreement required to be executed and
delivered by it on the applicable Closing Date, and each such Operative
Agreement constitutes a legal, valid and binding obligation enforceable against
it in accordance with its terms.
(c) No Violation. Neither the execution, delivery and
performance by the Lessee of the Operative Agreements to which it is or will be
a party nor compliance with the terms and provisions thereof, nor the
consummation of the transactions contemplated therein (i) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality applicable to
the Lessee or any of its property or assets, (ii) will conflict or be
inconsistent with or result in any breach of any of
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the terms, covenants, conditions or provisions of, or constitute a default
under, or (other than pursuant to the Operative Agreements) result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of the Lessee pursuant to the terms of any
indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement
or other instrument to which the Lessee is a party or by which it or any of its
property or assets is bound or to which it may be subject, or (iii) will violate
any provision of the certificate of incorporation or by-laws of the Lessee.
(d) Judgments; Litigation. There are no material outstanding
judgments and there are no actions, suits or proceedings pending or, to the
knowledge of the Lessee, threatened with respect to the Lessee (i) to set aside,
restrain, enjoin or prevent the full performance of any Operative Agreement, or
(ii) that have a material risk of resulting in a Material Adverse Effect.
(e) Governmental and Other Approvals. No Governmental Action
by any Governmental Authority or authorization, registration, consent, approval,
waiver, notice or other action by, to or of any other Person is required to
authorize or is required in connection with (i) the execution, delivery or
performance by the Lessee of any Operative Agreement, except those which are
required to be made after the Initial Closing Date pursuant to regulatory
requirements to which the Lessee is subject, or (ii) the legality, validity,
binding effect or enforceability of any Operative Agreement, in each case,
except those which have been obtained.
(f) True and Complete Disclosure. All factual information
heretofore or contemporaneously furnished by the Lessee in writing to the
Independent Appraiser, the Investor or the Owner Trustee (including without
limitation all information contained in the Operative Agreements) for purposes
of or in connection with the Equipment, this Agreement or any transaction
contemplated herein is, and all other such factual information hereafter
furnished by or on behalf of such Persons in writing to the Independent
Appraiser, the Investor or the Owner Trustee will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information not misleading at such time in light of the circumstances under
which such information was provided. While the projected financial information
of the Lessee and its Subsidiaries prepared by the Lessee and delivered to the
Investor in connection with the consummation of this transaction was prepared in
good faith and, to the Lessee's knowledge, was reasonable when prepared, it is
based upon a number of assumptions, some of which may not materialize, and
unanticipated events may have occurred or may occur in the future which could
affect the actual results achieved by the by the Lessee and its Subsidiaries
during the period covered by such projections. Except as provided in the
immediately preceding sentence, no express or implied representation or warranty
is made with respect to the Lessee's projections. The Lessee does not intend to
update or otherwise revise such projections to reflect events or circumstances
after the date thereof. Such projections were not prepared with a view toward
compliance with published guidelines of the American Institute of Certified
Public Accountants or GAAP and have not been examined, reviewed or compiled by
the Lessee's independent public accountants.
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(g) Tax Returns and Payments. The Lessee and its Restricted
Subsidiaries have filed or caused to be filed all material tax returns and
reports which are required to be filed, and have paid all taxes shown to be due
and payable on said returns or on any assessments made against them or any of
their respective properties or assets, including the Equipment, and all other
taxes, fees and charges imposed on them or any of their respective properties by
any Governmental Authority other than those the amount or validity of which are
currently being contested in good faith by appropriate proceedings diligently
pursued and with respect to which reserves in conformity with GAAP have been
provided on the books of the Lessee and/or its Restricted Subsidiaries, as
applicable, and no tax Lien has been filed or received. There is no proposed tax
assessment against the Lessee and/or its Subsidiaries, as applicable, which
would reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Lessee and/or its Subsidiaries, as
applicable, in respect of taxes or other governmental changes are, in the
opinion of the Lessee, adequate.
(h) Patents, etc.. (i) The Lessee has obtained all patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights,
free from burdensome restrictions, that are necessary for the operation of the
Equipment as presently conducted and as proposed to be conducted, (ii) none of
such patents, trademarks, servicemarks, copyrights or licenses infringes upon
the rights of others, and (iii) the Lessee has not received any notice or claim
of such infringement from any third party.
(i) Environmental and Other Regulations. The Lessee is in
compliance in all material respects with all Environmental Laws relating to
pollution and environmental control or employee safety in all domestic
jurisdictions in which the Lessee is presently doing business, and the Lessee
will comply in all material respects with all such laws and regulations which
may be imposed in the future in jurisdictions in which the Lessee may then be
doing business. Notwithstanding the foregoing, (i) no Governmental Authority has
issued any notice of violation of or non-compliance with any Environmental Law
with respect to the Equipment; (ii) there are not now circumstances that may
reasonably be anticipated to prevent or interfere with the Lessee's ability to
operate and maintain the Equipment as contemplated by the Operative Agreements
in compliance with all applicable Environmental Laws; (iii) no Hazardous
Substance is or has been used in connection with the Equipment, and the
Equipment will not and has not been used in connection with the generation,
treatment or disposal of any Hazardous Substances, except, in both cases, as
necessary for the normal and customary use, operation and maintenance of the
Equipment as contemplated by the Operative Agreements and in compliance with all
applicable Environmental Laws; and (iv) there are no past, pending or, to the
best of the Lessee's knowledge after due inquiry, threatened claims, actions or
proceedings under any Environmental Laws (x) with respect to the Equipment or
(y) involving the Lessee which are reasonably likely to affect the ability of
the Lessee to use, operate or maintain the Equipment for its intended purposes
or to perform the Lessee's obligations under the Operative Agreements.
(j) Lease. Upon the execution and delivery of the applicable
Equipment Schedules, (i) the Lessee will have unconditionally accepted the
Equipment subject to such
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Equipment Schedules and will have a valid and subsisting leasehold interest in
the Equipment subject thereto, subject only to Permitted Liens, and (ii) no
offset will exist with respect to any Rent or other sums payable under the
Lease.
(k) Offer of Securities, etc. Neither the Lessee nor any
Person authorized to act on its behalf has, directly or indirectly, offered any
interest in the Equipment, the Trust Estate or any other interest similar
thereto (the sale or offer of which would be integrated with the sale or offer
of such interest in the Equipment or the Trust Estate), for sale to, or
solicited any offer to acquire any of the same from, any Person in violation of
the Securities Act.
(l) Bankruptcy. The Lessee has not filed a voluntary petition
in bankruptcy or been adjudicated a bankrupt or insolvent, or filed any petition
or answer seeking any reorganization, liquidation, receivership, dissolution or
similar relief under any bankruptcy, receivership, insolvency, or other law
relating to relief for debtors, or sought or consented to or acquiesced in the
appointment of any trustee, receiver, conservator or liquidator of all or any
part of its properties or its interest in any Equipment. No court of competent
jurisdiction has entered an order, judgment, or decree approving a petition
filed against the Lessee seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any federal or
state bankruptcy, receivership, insolvency or other law relating to relief for
debtors, and no other liquidator has been appointed for the Lessee or all or any
part of its properties or its interest in any Equipment, and no such action is
pending. The Lessee has not given notice to any Governmental Authority or any
Person of insolvency or pending insolvency, or suspension or pending suspension
of operations.
(m) Use of Funds. The Lessee shall not use the proceeds of any
Investor Contribution made available to it by the Lessor for any purpose other
than to reimburse itself for, or to repay indebtedness incurred by the Lessee in
order to finance, the cost of purchasing the Equipment being acquired by the
Lessor on the Closing Date related thereto.
(n) No Misstatement or Omission. The representations and
warranties of the Lessee set forth in the Operative Agreements are true and
correct in all respects on and as of each Closing Date. The Lessee is in
compliance with its obligations under the Operative Agreements and there exists
no Default or Event of Default under any of the Operative Agreements. No Default
or Event of Default will occur under any of the Operative Agreements as a result
of, or after giving effect to, the purchase of the Equipment being acquired by
the Lessor on a Closing Date requested by the Notice of Closing Date.
(o) Location. As of the applicable Closing Date, each item of
Equipment being acquired by the Lessor on such Closing Date is located at the
location set forth on the applicable Equipment Schedule, all of which are in the
continental United States.
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(p) Title. Upon the acquisition of Equipment on any Closing
Date, and at all times thereafter, the Lessor will have good and marketable
title to such Equipment, subject only to Permitted Liens and Lessor Liens.
(q) Security Interest. Upon filing of the Lessor Financing
Statements with respect to the Equipment being acquired by the Lessor on a
Closing Date in the filing offices designated by the Lessee, such Lessor
Financing Statements will have been filed with the appropriate Governmental
Authority and, to the extent the Lease is treated as a lease intended for
security under applicable law, will create a valid and perfected first priority
security interest in all of such Equipment in favor of the Lessor.
(r) Insurance. As of the applicable Closing Date, the Lessee
will have obtained insurance coverage for the Equipment being acquired by the
Lessor on such Closing Date which meet the requirements of Section 14.1 of the
Lease and all of such coverage will be in full force and effect.
(s) Equipment Operational. As of the applicable Closing Date,
the Equipment being acquired by the Lessor on such Closing Date (i) complies
with all Legal Requirements (including, without limitation, all zoning and land
use laws and Environmental Laws); and (ii) meets the specifications of all
manufacturer's warranties, provided that no third party shall be entitled to
rely upon the representation and warranty in clause (ii) above, except for
transferees and providers of financing pursuant to Section 12.1 (a) or (b)
hereof. As of the Final Closing Date, the Equipment shall have been completely
installed, equipped and tested and is fully operational for its intended
purposes, and the Equipment shall have been "placed in service" for tax purposes
during the second quarter of the Investor's taxable year in which the Final
Closing Date occurs.
(t) Service and Facilities. As of the applicable Closing Date,
all utility services and facilities necessary for the operation of the Equipment
being acquired by the Lessor on such Closing Date (including, without
limitation, gas, electrical, water and sewage services and facilities) are
available at the location where such Equipment has been installed.
(u) Conditions Precedent Satisfied. As of each Closing Date,
all conditions precedent contained in this Agreement and in the other Operative
Agreements relating to the acquisition of the Equipment being acquired by the
Lessor on such Closing Date have been satisfied in full or waived.
(v) Conveyance Not Void Or Voidable. The conveyance of any
Equipment effected by a Bill of Sale on a Closing Date is not void or voidable
under any applicable state or federal law.
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(w) Solvency. On each Closing Date, both before and after
giving effect to the transactions contemplated hereby, the Lessee will not be
insolvent within the meaning of any applicable law.
(x) Personal Property. Each item of Equipment is personal
property and is not, and will not be, attached to real estate in such a manner
that any item of Equipment constitutes, or will constitute, a fixture.
(y) Depreciation of the Equipment. (i) The Equipment will
qualify as property with respect to which the depreciation deductions provided
by Code Section 167(a) are determined pursuant to Code Section 168 using the
applicable depreciation method set forth in Code Section 168(b)(1) and the
applicable convention described in Code Section 168(d)(4)(A); (ii) approximately
8.7% of the Equipment will qualify as "3-year property," approximately 50.4% of
the Equipment will qualify as "5-year property" and approximately 40.9% of the
Equipment will qualify as "7-year property", each within the meaning of Code
Section 168(e)(1); and (iii) have a tax basis equal to 100% of Equipment Cost
(not taking into account the Transaction Expenses payable by the Investor
pursuant to Section 9.1 hereof).
(z) Transaction Expense Amortization. The Investor will be
entitled to amortize the Transaction Expenses payable by the Investor pursuant
to Section 9.1 hereof with respect to the Equipment on a basis not less rapid
than straight-line over a period not longer than the aggregate of the Basic Term
and a seven (7) year Operating Lease Term (excluding any Renewal Term).
(aa) Adverse Contracts. Neither the Lessee nor any of its
Subsidiaries is a party to or bound by, nor are any of the properties or assets
owned by it or used in the conduct of its business affected by, any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment, or
subject to any charter or other corporate resolution, which could have a
Material Adverse Effect.
(bb) No Default. Neither the Lessee nor any of its
Subsidiaries is in default under, or in violation of any term of, any agreement
binding on it which default or violation could have a Material Adverse Effect.
(cc) Financial Statements. The balance sheets, profit and loss
statements and other financial information of the Lessee and its consolidated
Subsidiaries for the period ending December 31, 1994, and heretofore furnished
to the Investor present fairly the consolidated financial condition of the
Lessee and each of its consolidated Subsidiaries as at the dates thereof.
(dd) No Material Adverse Effect. There has been no Material
Adverse Effect since the December 31, 1994, balance sheet and financial
statements of the Lessee and its Subsidiaries heretofore furnished to the
Investor.
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SECTION 8. COVENANTS OF THE LESSEE.
8.1. Affirmative Covenants. The Lessee covenants and agrees
that, so long as this Agreement remains in effect:
(a) Conduct of Business. The Lessee shall, and shall cause
each Restricted Subsidiary to, conduct its business in substantially the same
manner and in substantially the same fields as such business is carried on and
conducted on the date hereof.
(b) Corporate Existence. Except as otherwise provided in
Section 8.2(c) hereof, the Lessee shall, and shall cause each Restricted
Subsidiary to, maintain its corporate existence.
(c) Books and Records. The Lessee shall, and shall cause each
Restricted Subsidiary to, maintain its books and records in accordance with
GAAP, and permit the Investor to make or cause to be made, at the Investor's
expense, inspections and audits of any books, records and papers of the Lessee
and its Subsidiaries and to make extracts therefrom at all such reasonable times
and as often as the Investor may reasonably require.
(d) Corporate Name. The Lessee shall maintain as part of its
corporate name the "Fresenius" name.
(e) Consolidated EBITDA to Consolidated Interest Expense
Ratio. The Lessee shall maintain at the end of each calendar quarter a ratio of
its Consolidated EBITDA (computed for the previous twelve months) to
Consolidated Interest Expense (computed for the previous twelve months) of at
least 3:1 (all to be determined in accordance with GAAP consistently applied).
"Consolidated EBITDA" shall mean, for any period of determination thereof, the
consolidated net income (excluding any extraordinary gains) of the Lessee and
its Subsidiaries on a consolidated basis for such period before interest
expenses, provision for federal and state income taxes, depreciation and
amortization, in each case for such period. "Consolidated Interest Expense"
shall mean, for any period of determination thereof, the total interest expense
(including, without limitation, interest expense attributable to capitalized
leases in accordance with GAAP, but excluding from such total interest expense,
any interest paid to Fresenius AG) of the Lessee and its Subsidiaries for such
period determined on a consolidated basis.
(f) Consolidated Tangible Net Worth. The Lessee shall maintain
at all times Consolidated Tangible Net Worth in an amount not less than
$15,000,000 plus (i) one hundred percent (100%) of the net proceeds of the
issuance of any stock of the Lessee after the date hereof and (ii) fifty percent
(50%) of the consolidated net income of the Lessee and its Subsidiaries, if
positive, for each fiscal quarter after March 31, 1994. "Consolidated Tangible
Net Worth" shall be equal to total stockholders' equity minus intangibles
(including, without limitation, patents, copyrights, trademarks, and goodwill),
all determined in accordance with GAAP consistently applied.
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(g) Debt to Consolidated Tangible Net Worth Ratio. The Lessee
shall maintain at all times a ratio of (i) total Debt less the sum of (A) up to
$10,000,000 in Debt of the Lessee to Fresenius AG maturing within twelve (12)
months of the date of determination; and (B) the aggregate principal amount of
any other loans made by Fresenius AG to the Lessee and not included in the
preceding clause (A), to the extent such other loans shall have been
subordinated to the Lessee's obligations under the Loan Documents and the
Operative Agreements in a manner satisfactory to the Investor to (ii)
Consolidated Tangible Net Worth of (x) from the date hereof through but not
including December 31, 1995, not more than 3.5 to 1 and (y) on and after
December 31, 1995, 3.0 to 1.
(h) Financial Statements. The Lessee shall provide the
Investor with financial statements for the first three fiscal quarters of each
fiscal year (within sixty (60) days from the closing of the respective quarterly
period) and on an annual basis. Annual statements shall be supplied within one
hundred twenty (120) days from the closing of the respective annual fiscal
period and shall be audited by a nationally recognized, independent accountant.
(i) Officer's Certificate. The Lessee shall provide the
Investor concurrently with delivery of the financial statements referred to in
Section 8.1(h) hereof with a certificate of the chief financial officer of the
Lessee in the form of Exhibit C attached hereto and duly signed confirming (i)
that such officer has reviewed the terms of the Operative Agreements and has
concluded that no Lease Default or Lease Event of Default has occurred during
such period or, if any such default has occurred, specifying the nature and
extent thereof and, if continuing, the action the Lessee proposes to take in
respect thereof and (ii) the Lessee's compliance with the financial covenants
set forth in this Agreement as of the end of such calendar quarter.
(j) Further Information. The Lessee shall, and shall cause
each Restricted Subsidiary to, provide the Investor with any other information
the Investor may reasonably request from time to time.
8.2. Negative Covenants. The Lessee covenants and agrees that,
so long as this Agreement remains in effect:
(a) Debt. The Lessee shall not, and shall not permit any
Subsidiary to, incur, or permit to exist, any Debt other than (i) Debt incurred
from the Bank under the Loan Documents and any other Debt of the Lessee or any
Subsidiary to the Bank whether now existing or hereafter incurred, (ii) Debt
existing on the date hereof and described in Schedule 6 attached hereto, and
(iii) any extension, renewal, or refinancing of the Debt referred to in clause
(ii), provided that (x) if such Debt is unsecured, such Debt as extended,
renewed or refinanced remains unsecured and (y) the terms of such Debt as
extended, renewed or refinanced are no more restrictive than the terms of such
Debt as of the date hereof; (iv) Debt of the Lessee to Fresenius AG to the
extent such Debt (x) matures within twelve (12) months of the date of incurrance
or issuance thereof and does not exceed $10,000,000 in the aggregate principal
amount or (y) shall have been subordinated to the Lessee's obligations
hereunder, under the Loan Documents and the
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Operative Agreements in a manner satisfactory to the Investor and (v) Debt in
addition to the Debt permitted under the preceding clauses (i) through (iv) of
this paragraph (a) incurred after the date hereof, provided that the aggregate
principal amount of such additional Debt outstanding at any one time shall not
exceed $35,000,000. "Debt" shall mean, with respect to any Person, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables incurred in the
ordinary course of business of such Person and not overdue and other than trade
payables payable by the Lessee to Fresenius AG), (ii) all indebtedness of such
Person evidenced by a note, bond, debenture or similar instrument, (iii) the
principal component of all capitalized leases (as defined in accordance with
GAAP) of such Person, (iv) the face amount of all letters of credit (other than
documentary letters of credit) issued for the account of such Person and all
unreimbursed amounts drawn thereunder, (v) all indebtedness of any other Person
secured by any lien on any property owned by such Person, whether or not such
indebtedness has been assumed, and (vi) all Contingent Obligations of such
Person.
(b) Contingent Obligations. The Lessee shall not, and shall
not permit any Subsidiary to, incur, or permit to exist, any Contingent
Obligation other than (i) any Contingent Obligation under the Loan Documents or
the Operative Agreements and any other Contingent Obligation of the Lessee or
any Subsidiary to the Investor or the Bank whether now existing or hereafter
incurred, and (ii) Contingent Obligations existing on the date hereof and
described in Schedule 6 attached hereto. "Contingent Obligation" shall mean, as
to any Person, any obligation of such Person guaranteeing or intended to
guarantee or having the effect of guaranteeing any Debt, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly; provided, however, that
the term "Contingent Obligation" shall not include (i) endorsements of
instruments for deposit or collection in the ordinary course of business or (ii)
any guarantee by the Lessee of the primary obligations of any wholly owned
Subsidiary of the Lessee.
(c) Merger, Consolidation, Sale or Lease. The Lessee shall
not, and shall not permit any Subsidiary to, enter into any merger or
consolidation or sell or lease or otherwise dispose of all or any substantial
part of its assets, other than sales in the ordinary course of business or as
contemplated by the Operative Agreements; except that any Subsidiary may merge
into or consolidate with any other Subsidiary which is wholly owned by the
Lessee, and any Subsidiary which is wholly owned by the Lessee may merge with or
consolidate into the Lessee provided that the Lessee is the surviving
corporation.
(d) Investments. The Lessee shall not, and shall not permit
any Subsidiary to, lend or advance money, credit or property to or invest in (by
capital contribution, loan, purchase or otherwise) any Person except investments
in the ordinary course of the Lessee's business in Persons engaged in
substantially the same business as the Lessee and except investments in
Permitted Investments having maturities not in excess of one year. "Permitted
Investments" shall mean shall mean (i) obligations of or directly and fully
guaranteed by the United States of America or any agency or instrumentality
thereof when such obligations are backed by the full faith and
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credit of the United States, (ii) certificates of deposit, time deposits or
bankers acceptances issued by any domestic or foreign commercial bank whose
long-term credit rating is at least A- or the equivalent by Standard & Poor's
Rating Group and A3 or the equivalent by Moody's Investors Service, Inc., (iii)
direct obligations of, the principal of and interest on which are
unconditionally guaranteed by, and any other obligations the interest on which
is excluded from gross income for federal income tax purposes issued by, any
state of the United States, the District of Columbia or the Commonwealth of
Puerto Rico, or any political subdivision, agency, authority or other
instrumentality of any of the foregoing, which are rated at least AA or the
equivalent by Standard & Poor's Rating Group and Aa or the equivalent by Moody's
Investors Service, Inc., (iv) commercial paper issued by any corporation rated
at least A-1 or the equivalent by Standard & Poors Rating Group and at least P-1
or equivalent by Moody's Investors Service, Inc., (v) instruments issued by
investment companies having a portfolio ninety-five percent (95%) or more
consisting of the type described above, (vi) repurchase agreements with banking
institutions and securities dealers recognized as primary dealers by the Federal
Reserve Bank of New York having a combined capital and surplus of not less than
$250 million with respect to any of the obligations described in clauses (i)
through (iii) above in which a fiduciary shall have a perfected security
interest and for which a fiduciary shall hold as collateral the securities
purchased or a third party shall hold as collateral the securities purchased for
the benefit of the fiduciary, and (vii) other investment grade instruments to be
mutually agreed upon by the Investor and the Lessee.
(e) Liens. The Lessee shall not, and shall not permit any
Subsidiary to, create, assume, or permit to exist, any Lien on any of its
property or assets now owned or hereafter acquired except (i) Liens in favor of
the Bank under the Loan Documents and any other Liens of the Lessee or any
Subsidiary in favor of the Bank whether now existing or hereafter created, (ii)
Liens for Taxes or other governmental charges which are not delinquent or which
are being contested in good faith and for which a reserve shall have been
established in accordance with GAAP, (iii) statutory Liens of landlords and
Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed
by any Requirement of Law (other than any Lien imposed under ERISA or pursuant
to any Environmental Law) created in the ordinary course of business for amounts
not yet due or which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate bonds have
been posted, (iv) easements, rights-of-way, zoning and similar restrictions and
other similar charges or encumbrances not interfering with the ordinary conduct
of business and which do not detract materially from the value of the property
to which they attach or impair materially the use thereof, (v) Liens created to
secure purchase money indebtedness or capital lease indebtedness, in each case
to the extent such Debt is permitted under Section 8.2(a) hereof, provided that
(x) such Liens are only in respect of the property or assets subject to, and
secure only, such Debt and (y) the aggregate amount of such Debt secured by such
Liens shall not exceed $12,500,000 in the aggregate at any time outstanding, and
(vi) customary Liens arising from or created in connection with the issuance of
letters of credit for the account of the Lessee, provided that in each case such
Liens apply only to the raw materials, inventory, machinery or equipment in
connection with the purchase of which such letter of credit was issued or to the
balance of any account of the account party in respect of such letter of credit
with the bank issuing such letter of credit. Notwithstanding the foregoing (i)
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there shall be no Liens on any of the Collateral (as defined in the Loan
Documents) other than Liens in favor of the Bank and (ii) the restriction on
Liens contained in this paragraph (e) shall not be deemed to extend to any Lien
arising out of or deemed to arise out of any lease (including, without
limitation, the Lease) in respect of which the Investor, any affiliate thereof
or any trustee acting on behalf of the Investor or such affiliate is the lessor
and the Lessee is the lessee.
(f) Dividends. The Lessee shall not, and shall not permit any
Subsidiary to, declare or pay any dividends on its capital stock (other than
dividends payable solely in shares of its own common stock), or purchase,
redeem, retire or otherwise acquire any of its capital stock at any time
outstanding, except that (i) any Subsidiary of the Lessee may declare and pay
dividends pro rata to the holders of shares of its capital stock entitled to
receive such dividends, and (ii) the Lessee may declare or pay dividends on its
capital stock, in each case so long as (x) no Default or Event of Default has
occurred and is continuing at the time of such declaration or payment and (y)
the aggregate amount of such dividends paid or declared by any such Subsidiary
to entities other than Subsidiaries of the Lessee plus the aggregate amount of
such dividends paid or declared by the Lessee plus the aggregate amounts paid by
any joint venture in which the Lessee or any Subsidiary of the Lessee is a joint
venturer to any entity other than the Lessee or a Subsidiary of the Lessee, in
each case in any fiscal year, does not exceed fifty percent (50%) of the
consolidated net income (excluding any extraordinary gains) of the Lessee and
its Subsidiaries on a consolidated basis for the fiscal year immediately
preceding such fiscal year.
(g) Operating Leases. The Lessee shall not, and shall not
permit any Subsidiary to, create, assume, enter into, or permit to exist any
operating lease (as defined in accordance with GAAP consistently applied) if
after giving effect to such operating lease the aggregate amount of payments
required to be made by the Lessee and its Restricted Subsidiaries under all
operating leases (other than any operating lease in respect of which the
Investor, any affiliate thereof or any trustee acting on behalf of the Investor
or such affiliate is the lessor and the Lessee is the lessee) in any fiscal year
will exceed the Maximum Lease Amount. The "Maximum Lease Amount" shall mean, for
any fiscal year, an amount equal to (i) for the fiscal years beginning January
1, 1994 and January 1, 1995, $6,000,000, and (ii) for each fiscal year
thereafter, an amount equal to the Maximum Lease Amount for the immediately
preceding fiscal year plus an amount equal to five percent (5%) of such amount.
(h) Change of Location or Name. The Lessee shall not move its
chief executive office, or change its name from, nor carry on business under any
name other than, "Fresenius USA, Inc.", until (i) it has given to the Investor
and the Lessor not less than sixty (60) days' prior written notice of its
intention to do so, clearly describing such new location or specifying such new
name, as the case may be, and providing such other information in connection
therewith as the Investor may reasonably request, and (ii) with respect to such
new location or such new location or such new name, as the case may be, it shall
have taken all action, satisfactory to the Investor and the Lessor to protect
their interest in the Equipment.
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SECTION 9. PAYMENT OF CERTAIN EXPENSES.
9.1. Transaction Expenses. (a) If the Initial Closing Date
occurs, on the Initial Closing Date, the Investor shall pay, or cause to be
paid, the Commitment Fee, all reasonable fees, expenses and disbursements of
each of the Lessor's, Owner Trustee's and the Investor's counsel in connection
with the transactions contemplated by the Operative Agreements and incurred in
connection with such Initial Closing Date, including all Transaction Expenses of
the Lessor, the Owner Trustee and the Investor (arising from the Initial Closing
Date), and all other reasonable expenses in connection with such Initial Closing
Date, including, without limitation, all expenses relating to the Preliminary
Appraisal, due diligence, environmental audit and all fees, taxes and expenses
for the recording, registration and filing of documents and the initial fees and
expenses of the Owner Trustee.
(b) On each other Closing Date, the Investor shall pay, or
cause to be paid, all reasonable fees, expenses and disbursements of each of the
Lessor's, the Owner Trustee's, and the Investor's counsel in connection with
such transactions contemplated by the Operative Agreements and incurred in
connection with such Closing Date, including all Transaction Expenses of the
Lessor, the Owner Trustee and the Investor (arising from such Closing Date), and
all other reasonable expenses of the Lessor, the Owner Trustee and the Investor
in connection with such Closing Date, including, without limitation, all
expenses relating to the Final Appraisal (in the case of the Final Closing
Date), due diligence, environmental audit and all fees, taxes and expenses for
the recording, registration and filing of documents.
(c) If the Initial Closing Date does not occur, the Lessee
shall pay all of the Transaction Expenses referred to in Section 9.1(a) hereof
(other than the Commitment Fee). Following the occurrence of the Initial Closing
Date, the Lessee agrees to pay when due: (i) the reasonable expenses (including
legal fees and expenses) of the Owner Trustee and the Investor incurred
subsequent to the Initial Closing Date in connection with any supplements,
amendments, modifications or alterations of any of the Operative Agreements;
(ii) the ongoing reasonable fees and expenses (including legal fees and
expenses) of the Owner Trustee under the Trust Agreement; (iii) all reasonable
costs and expenses incurred by the Lessor, the Lessee and the Investor in
connection with any purchase of any Equipment by the Lessee pursuant to Section
16 or 20 of the Lease. In either event, the Lessee shall pay (A) the fees and
expenses of its legal counsel; and (B) any costs and expenses relating to this
transaction as provided in the Operative Agreements which the Lessor or the
Investor is not expressly obligated to pay hereunder.
(d) The Lessee also agrees, to the extent permitted by
applicable law, to pay and indemnify the Owner Trustee and the Investor against
any reasonable costs and expenses incurred on or after the occurrence of a Lease
Default or a Lease Event of Default, including reasonable attorneys' fees
incurred by the Owner Trustee or the Investor, in evaluating (in connection with
any investigation, litigation or other proceeding involving the Lessee
(including,
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without limitation, any threatened investigation or proceeding) relating to this
Agreement or the other Operative Agreements to which the Lessee is a party) and
enforcing any rights or remedies under this Agreement or the other Operative
Agreements to which the Lessee is a party or in responding to any subpoena or
other legal process issued in connection with this Agreement or the other
Operative Agreements to which the Lessee is a party, including without
limitation, costs and expenses incurred in any bankruptcy case.
9.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or
cause to be paid any brokers' fees and any and all stamp, transfer and other
similar taxes, fees and excises, if any, including any interest and penalties,
which are payable in connection with the transactions contemplated by this
Agreement and the other Operative Agreements, provided that the Lessee shall not
be responsible for any such taxes, fees or excises in connection with a transfer
by the Lessor or the Investor of its rights or interests under Section 12.1
hereof.
SECTION 10. OTHER COVENANTS AND AGREEMENTS.
10.1. Cooperation with the Lessee. The Investor and the Owner
Trustee (at the direction of the Investor) shall, to the extent reasonably
requested by the Lessee (but without assuming additional liabilities on account
thereof), at the Lessee's expense, cooperate with the Lessee in connection with
its covenants contained in Section 14.11 hereof including, without limitation,
at any time and from time to time, upon the request of the Lessee, to promptly
and duly execute and deliver any and all such further instruments, documents and
financing statements (and continuation statements related thereto) as the Lessee
may reasonably request in order to perform such covenants. Each of the Investor
and the Owner Trustee agrees that, to the extent it (or, in the case of the
Owner Trustee, a Responsible Officer thereof) shall obtain actual knowledge of
the occurrence of a Lease Default or Lease Event of Default, it shall promptly
notify the Lessee describing the same in reasonable detail or provide the Lessee
with a copy of any default notice received by it; provided, that the failure to
provide such notices shall not result in any liability to the Investor or the
Owner Trustee.
10.2. Covenants of the Owner Trustee and the Investor. Each of
the Owner Trustee and the Investor hereby agrees, severally and not jointly,
that so long as this Agreement is in effect:
(a) Discharge of Liens. Each of the Investor and the Owner
Trustee (both in its trust capacity and in its individual capacity) will not
create or permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to cause to
be discharged, all Lessor Liens on the Equipment attributable to it; provided,
however, that the Investor and the Owner Trustee shall not be required to so
discharge any such Lessor Lien while the same is being contested in good faith
by appropriate proceedings diligently prosecuted so long as such proceedings
shall not involve any material danger of impairment of the Liens of the Security
Documents or of the sale, forfeiture or loss of, and shall
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not interfere with the use or disposition of, any Equipment or title thereto or
any interest therein or the payment of Rent.
(b) Trust Agreement. Without prejudice to any right under the
Trust Agreement of the Owner Trustee to resign, or the Investor's rights under
the Trust Agreement to remove the institution acting as Owner Trustee, each of
the Investor and the Owner Trustee hereby agrees with the Lessee (i) not to
terminate or revoke the trust created by the Trust Agreement except as permitted
by Section 8 of the Trust Agreement, (ii) not to amend, supplement, terminate or
revoke or otherwise modify any provision of the Trust Agreement in such a manner
as to adversely affect the rights or interests of the Lessee without the prior
written consent of the Lessee and (iii) to comply with all of the terms of the
Trust Agreement, the nonperformance of which would adversely affect the Lessee.
(c) Successor Owner Trustee. The Owner Trustee or any
successor may resign or be removed by the Investor as Owner Trustee, a successor
Owner Trustee may be appointed, and a corporation may become the Owner Trustee
under the Trust Agreement, only in accordance with the provisions of Section 9
of the Trust Agreement and, with respect to such appointment, with the consent
of the Lessee, which consent shall not be unreasonably withheld or delayed.
(d) Indebtedness; Other Business. The Owner Trustee, in its
capacity as Owner Trustee under the Trust Agreement, and not in its individual
capacity, shall not contract for, create, incur or assume any indebtedness, or
enter into any business or other activity, other than pursuant to or under the
Operative Agreements.
(e) No Violation. The Investor will not instruct the Owner
Trustee to take any action in violation of the terms of any Operative Agreement.
(f) No Voluntary Bankruptcy. Neither the Investor nor the
Owner Trustee shall (i) commence any case, proceeding or other action with
respect to the Owner Trustee under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (ii) seek appointment of a
receiver, trustee, custodian or other similar official with respect to the Owner
Trustee or for all or any substantial part of its property, or a general
assignment for the benefit of the creditors of the Owner Trustee; and neither
the Investor nor the Owner Trustee shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in this paragraph.
(g) Change of Chief Place of Business. The Owner Trustee shall
give prompt notice to the Lessee and the Investor if the Owner Trustee's chief
place of business or chief executive office, or the office where the records
concerning the Equipment or the Trust Estate are kept, shall cease to be located
at 79 South Main Street, Salt Lake City, Utah 84111 or if it shall change its
name.
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10.3. Computation of Rent.
(a) Basis of Rental Rates. The rental rates applicable to the
Rent under the Lease shall be determined based upon the Eurodollar Rate, except
as otherwise required by any circumstances described in Sections 10.3(d) or 10.4
hereof. If any of such Sections are applicable, the rental rates applicable to
the Lease shall, until the condition or event described therein has been cured
or otherwise no longer exists, be determined based upon the ABR. If the ABR is
applicable, the term "ABR" shall be substituted for the term "Eurodollar Reserve
Rate" in the definitions of "Eurodollar Component" and "Overdue Rate".
(b) Overdue Rate. If all or a portion of any other amount
payable by the Lessee hereunder, under the Lease or under any other Operative
Agreement shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is equal to the Overdue Rate from the date of such non-payment
until such amount is paid in full (as well after as before judgment) and such
interest shall constitute Supplemental Rent.
(c) Calculation. Basic Rent shall be calculated on the basis
of a 360-day year for the actual days elapsed. The Investor shall as soon as
practicable notify the Lessor and the Lessee of each determination of a
Eurodollar Reserve Rate. Any change in the Eurodollar Component of Basic Rent
resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such
change becomes effective. The Investor shall as soon as practicable notify the
Lessor and the Lessee of the effective date and the amount of each such change
in rental rate. Each determination of a rental rate by the Investor pursuant to
any provision of this Agreement shall be conclusive and binding on the Lessor
and the Lessee in the absence of manifest error. The Investor shall, at the
request of the Lessee, deliver to the Lessee a statement showing the quotations
used by the Investor in determining any rental rate pursuant to Section 10.3(a)
hereof.
(d) Inability to Determine Eurodollar Rate. If the Eurodollar
Rate cannot be determined by the Reference Lender in the manner specified in the
definition of the term "Eurodollar Rate", the Investor shall give telecopy or
telephonic notice thereof to the Lessor and the Lessee as soon as practicable
thereafter. Until such time as the Eurodollar Rate can be determined by the
Reference Lender in the manner specified in the definition of such term, the
Eurodollar Component shall be determined based upon the ABR as provided in
Section 10.3(a) hereof until a Eurodollar Rate is again able to be determined.
10.4. Increased Costs, Illegality, etc.
(a) Costs. If (i) there shall be any increase in the cost to
the Investor of agreeing to make or making, funding or maintaining its
investment in the Lease or (ii) any reduction in any amount receivable in
respect thereof, and such increased cost or reduced amount receivable is due to
either:
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(x) the introduction of or any change in, or in the
interpretation of, any law or regulation after the date
hereof; or
(y) the compliance with any guideline or request made
after the date hereof from any central bank or other
Governmental Authority (whether or not having the force of
law);
then (subject to the provisions of Section 10.6 hereof) the Lessee shall from
time to time, upon written demand by the Investor pay the Investor additional
amounts sufficient to compensate the Investor for such increased cost or reduced
amount receivable (other than costs and amounts addressed and either covered by
or specifically excluded from coverage of Section 13 hereof).
(b) Capital Standards. If the Investor shall have reasonably
determined that (i) the applicability of any law, rule, regulation or guideline
adopted after the date hereof pursuant to or arising out of the July 1988 paper
of the Basle Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or
(ii) the adoption after the date hereof of any other law, rule, regulation or
guideline regarding capital adequacy affecting the Investor, or (iii) any change
arising after the date hereof in any such law, rule, regulation or guideline or
in the interpretation or administration of any of the foregoing by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or (iv) compliance by the Investor (or
any lending office of the Investor), or any holding company for the Investor
which is subject to any of the capital requirements described above, with any
request or directive of general application issued after the date hereof
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Investor's capital or on the capital of any
such holding company as a direct consequence of the Investor's obligations
hereunder or under the Lease to a level below that which the Investor or any
such holding company could have achieved but for such adoption, change or
compliance (taking into consideration the Investor's policies and the policies
of such holding company with respect to capital adequacy) by an amount deemed by
the Investor to be material, then (subject to the provisions of Section 10.6
hereof) from time to time the Investor may request the Lessee to pay to the
Investor such additional amounts as will compensate the Investor or any such
holding company for any such reduction suffered. Any certificate as to such
amounts which is delivered pursuant to Section 10.6(a) hereof shall, in addition
to any items required by Section 10.6(a) hereof, include the calculation of the
savings (if any) which may be reasonably projected to be associated with such
increased capital requirement; provided, however, that in no event shall the
Investor be obligated to pay or refund any amounts to the Lessee on account of
such savings.
(c) Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for the Investor to make or
maintain its investment in the Lease based upon the Eurodollar Rate as
contemplated by this Agreement, the Investor shall give notice thereof to the
Lessor and the Lessee describing the relevant provisions of such Requirement of
Law, following
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which the commitment of the Investor hereunder to maintain its investment based
upon the Eurodollar Rate shall forthwith be cancelled and the rental rates
applicable to the Rent under the Lease shall be converted from rates based upon
the Eurodollar Rate to rates based upon the ABR (i) on the last day of the then
current Rental Period, or (ii) within such earlier period as required by law. If
any such conversion occurs on a day which is not the last day of the then
current Rental Period with respect thereto, the Lessee shall pay to the Investor
such amounts, if any, as may be required pursuant to Section 10.5 hereof.
10.5 Funding Indemnity. Subject to the provisions of
Section 10.6(a) hereof, the Lessee agrees to indemnify the Investor and to hold
the Investor harmless from any loss or reasonable expense which the Investor may
sustain or incur as a consequence of (a) there being no Closing Date on the date
scheduled therefor for any reason other than default by the Investor or the
Owner Trustee after furnishing a Notice of Closing Date, (b) any conversion from
or continuation of the basis for the determination of Rent based upon the
Eurodollar Rate as provided herein, or (c) the making of a voluntary or
involuntary prepayment of Basic Rent or Supplemental Rent on a day which is not
the last day of a Rental Period with respect thereto. Such indemnification shall
be in an amount equal to the excess, if any, of (i) the amount of interest which
would have accrued on the amount so prepaid, or not so invested, converted or
continued, for the period from the date of such prepayment or of such failure to
invest, convert or continue to the last day of such Rental Period (or, in the
case of a failure to invest, the Rental Period that would have commenced on the
date of such failure) in each case at the applicable rate of interest provided
for herein, provided that, in the case of a conversion described in (b) above,
the amount described in this clause (i) shall be based solely upon the
Eurodollar Component and not any other component of Basic Rent, over (ii) the
amount of interest (as determined by the Investor) which would have accrued to
the Investor on such amount by placing such amount on deposit for a comparable
period with leading banks in the relevant interest rate market. This covenant
shall survive the termination of this Agreement and the payment of all other
amounts payable hereunder.
10.6. Notice of Amounts Payable; Relocation.
(a) Notice. In the event that the Investor becomes aware that
any amounts are or will be owed to it pursuant to Sections 10.4 or 10.5 hereof
or that it is unable to maintain its investment in the Lease on the basis of the
Eurodollar Rate, then it shall promptly notify the Lessor and the Lessee thereof
and, as soon as possible thereafter, the Investor shall submit to the Lessee
(with a copy to the Lessor) a certificate indicating the amount owing to it and
the calculation thereof. The amounts set forth in such certificate shall be
prima facie evidence of the obligations of the Lessee hereunder.
(b) Relocation. If the Investor claims any additional amounts
payable pursuant to Section 10.4 hereof or that it is unable to maintain its
investment in the Lease on the basis of the Eurodollar Rate, it shall use its
reasonable efforts (consistent with legal and regulatory restrictions) to avoid
the need for paying such additional amounts or such inability, including
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changing the jurisdiction of the applicable office through which the investment
in this Lease is maintained; provided, however, that the taking of any such
action would not, in the sole judgment of the Investor, be disadvantageous to
the Investor.
SECTION 11. OPERATING LEASE.
11.1. Election to Provide Operating Lease. If the Lease has
not been otherwise earlier terminated and the Lessee shall have made an election
under Section 20.3 of the Lease, then the Lessee shall cause an Operating Lessee
to enter into a replacement lease (an "Operating Lease"). Any such Operating
Lease shall:
(a) have a term that begins immediately upon the expiration of
the Basic Term or the then current Renewal Term and continues for a term of
seven (7) years (the "Operating Lease Term");
(b) except as provided below, contain substantive terms and
conditions identical in all material respects (but with appropriate changes to
reflect the different identity of the Operating Lessee) to those contained in
the Lease, except for Sections 13.3(a)(i) hereof and Sections 19, 20, 21 and 22
(except as set forth in Section 11.1(d) hereof) of the Lease (the subject matter
of which need not be addressed in the Operating Lease), and no terms or
conditions inconsistent therewith as well as representations, warranties,
covenants and indemnities identical in all material respects (but with
appropriate changes to reflect the identity and credit standing of the Operating
Lessee) to those contained in Sections 7.3 and 8 hereof;
(c) provide for basic rent ("Operating Lease Basic Rent") in
amounts at least equal to the amounts calculated according to the formula set
forth in Exhibit D attached hereto; and
(d) provide for the return of the Equipment at the expiration
of the Operating Lease Term to the Lessor dismantled and delivered to a location
selected by the Lessor, free and clear of any and all Liens.
11.2. Rejection. The Lessor may, by irrevocable written notice
delivered to the Lessee no later than twelve (12) months prior to the Expiration
Date, elect to reject any proposed Operating Lease and relieve the Lessee of its
obligations under this Section 11 and Section 20.3 of the Lease, in which case
the Lessee shall deliver or surrender the Equipment to the Lessor at the end of
the Term of the Lease in accordance with the provisions of Sections 10.1 and
22.1 (other than Section 22.1(b)) thereof.
11.3. Conditions to the Investor's and the Lessor's
Obligations. At the commencement of the Operating Lease, the Lessee shall cause
the Equipment to be delivered or surrendered to the Operating Lessee in
accordance with Sections 10.1 and 22.1 of the Lease as
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directed by the Operating Lessee. In addition, the Lessor's obligation to enter
into the Operating Lease shall be subject to the satisfaction of the following
conditions at or prior to the commencement of the Operating Lease Term: (i) the
Operating Lease shall be duly executed by Operating Lessee, and such other
recordings, filings, financing statements, continuation statements or other
instruments and all other actions shall have been taken as are necessary to
maintain the Lessor's title to the Equipment, (ii) the Lessor and the Investor
shall be furnished with such evidence of compliance by the Operating Lessee with
the insurance provisions of the Operating Lease as the Lessor and the Investor
may reasonably request and such other documents, certificates and opinions of
counsel as the Lessor and the Investor may reasonably request, (iii) the Lessee
shall furnish the Lessor with a certificate of a Responsible Officer of the
Lessee certifying that immediately prior to the commencement of the Operating
Lease no Lease Default or Lease Event of Default exists unless such Lease
Default or Lease Event of Default is cured at the time or as a result of
entering into the Operating Lease, and no Lease Default or Lease Event of
Default shall occur as a result of the entering into of the Operating Lease, and
(iv) such other matters and proceedings taken in connection with such
transaction shall be reasonably satisfactory to the Lessor and the Investor and
their counsel.
11.4. Expenses. The Lessee shall be responsible for all
reasonable costs, fees and expenses incurred by the Lessee, the Lessor, the
Investor, the Agent and the Lenders (including, without limitation, reasonable
fees and disbursements of counsel) in connection with the Operating Lease.
11.5. Notices and Documentation. If the Lessee shall elect to
cause an Operating Lessee to enter into an Operating Lease pursuant to this
Section, then (i) on or before sixteen (16) months prior to the expiration of
the Basic Term or any Renewal Term, as the case may be, the Lessee shall give
the Lessor irrevocable notice of such election, which notice shall identify the
proposed Operating Lessee and shall furnish such financial and such other
information as the Lessor may reasonably request; and (ii) should the Lessor not
elect to reject the proposed Operating Lease pursuant to Section 11.2 hereof,
the Lessor and the Investor each shall negotiate in good faith to enter into the
Operating Lease documentation with the Operating Lessee on or before the
Expiration Date.
SECTION 12. TRANSFER OF INTEREST.
12.1. Restrictions on Transfer. (a) The Investor may, directly
or indirectly, assign, sell or grant participations in, convey or otherwise
transfer any of its right, title or interest in or to the Trust Estate, the
Trust Agreement or any other Operative Agreement without the consent of any
party hereto or thereto. The Owner Trustee may, subject to the Lien of the
applicable Security Documents and with the consent and at the direction of the
Investor, directly or indirectly, assign, sell or grant participations in,
convey, appoint an agent with respect to enforcement of, or otherwise transfer
any of its right, title or interest in or to any Equipment, the Lease, the Trust
Agreement, this Agreement (including, without limitation, any right to
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indemnification thereunder), any Operative Agreement or any other document
relating to the Equipment or any interest in the Equipment as provided in the
Trust Agreement and the Lease.
(b) In addition, the Investor and/or the Owner Trustee, with
the consent and at the direction of the Investor, may enter into one or more
Credit Agreements and related Security Documents in connection with any
financing by the Investor of its interest in the Equipment or the Trust Estate.
Upon the written request of the Investor, the parties hereto shall negotiate and
enter into a Credit Agreement, such Security Documents, and such amendments to
this Agreement and the other Operative Agreements and the parties shall execute
such other documents, agreements and instruments (including estoppel
certificates) as the Investor shall reasonably request and as are customary in
synthetic lease transactions, leveraged lease transactions or securitized
financings to effect such financing, provided, that no such agreements,
documents or amendments shall result in any change in any amounts payable by the
Lessee under any Operative Agreement other than pursuant to the indemnification
provisions thereof (except for the indemnification provisions contained in
Sections 13.2 and 13.3 hereof, to the extent referred to therein). In connection
with any such financing, the Lessee agrees that, from time to time upon not less
than ten (10) days' prior request by the Investor or the Owner Trustee, the
Lessee will deliver to the Investor, the Lessor and any other Person requested
by either of them (i) a statement in writing certifying (A) that the Lease is
unmodified and in full force and effect (or if there have been modifications, a
description of such modifications and that the Lease as modified is in full
force and effect); (B) the dates to which Rent and other charges have been paid;
(C) that the Lessor is not in default under any provision of the Lease, or, if
in default, the nature thereof in detail; and (D) such further matters as the
Investor or the Lessor may request; and (ii) such instruments of subordination
and attornment as the Investor or the Lessor may request in connection
therewith, it being intended that any such statements and instruments may be
relied upon by any prospective lenders or other providers of such financing, or
any prospective assignee of any such Persons, or any prospective and/or
subsequent purchaser or transferee of all or a part of the Lessor's or the
Investor's interest in the Trust Estate, subject to delivery by such prospective
lender, assignee or purchaser to the Lessee of a non-disturbance agreement with
respect to the Lessee's quiet enjoyment of the Equipment, in form and substance
reasonably satisfactory to the Lessee.
12.2. Effect of Transfer. From and after any transfer effected
in accordance with this Section 12, the transferor shall be released, to the
extent of such transfer, from its liability hereunder and under the other
documents to which it is a party in respect of obligations to be performed on or
after the date of such transfer; provided, however, that any transferor Investor
shall remain liable under Section 11 of the Trust Agreement to the extent that
the transferee Investor shall not have assumed the obligations of the transferor
Investor thereunder. Upon any transfer by the Owner Trustee or an Investor as
above provided, any such transferee shall assume the obligations of the Owner
Trustee, and the Lessor or Investor, as the case may be, and shall be deemed an
"Owner Trustee", "Lessor" or "Investor", as the case may be, for all purposes of
such documents and each reference herein to the transferor shall thereafter be
deemed a reference to such transferee for all purposes, except as provided in
the preceding sentence. Notwithstanding
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any transfer of all or a portion of the transferor's interest as provided in
this Section 12, the transferor shall be entitled to all benefits accrued and
all rights vested prior to such transfer including, without limitation, rights
to indemnification under any such document.
SECTION 13. INDEMNIFICATION.
13.1. General Indemnity. The Lessee, whether or not any of the
transactions contemplated hereby shall be consummated, hereby assumes liability
for and agrees to defend, indemnify and hold harmless each Indemnified Person on
an After Tax Basis from and against any Claims, which may be imposed on,
incurred by or asserted against an Indemnified Person (other than to the extent
such Claims arise from the misrepresentation, violation of covenants, gross
negligence or willful misconduct of such Indemnified Person or Claims addressed
in and either covered by or specifically excluded from the coverage of Sections
13.2 or 13.3 hereof) in any way relating to or arising or alleged to arise out
of the execution, delivery, performance or enforcement of this Agreement, the
Lease or any other Operative Agreement or on or with respect to any Equipment,
including, without limitation, Claims in any way relating to or arising or
alleged to arise out of (a) the financing, refinancing, purchase, acceptance,
rejection, ownership, design, construction, delivery, acceptance, nondelivery,
leasing, subleasing, possession, use, operation, repair, maintenance,
modification, transportation, condition, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of any Equipment or
any part thereof; (b) any latent or other defects in any property whether or not
discoverable by an Indemnified Person or the Lessee; (c) a violation of
Environmental Laws, Environmental Claims or other loss of or damage to any
property or the environment relating to any Equipment, the Lease or the Lessee;
(d) the Operative Agreements, or any transaction contemplated thereby; (e) any
breach by the Lessee of any of its representations or warranties under the
Operative Agreements or failure by the Lessee to perform or observe any covenant
or agreement to be performed by it under any of the Operative Agreements; (f)
the transactions contemplated hereby or by any other Operative Agreement, in
respect of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA;
and (g) personal injury, death or property damage, including Claims based on
strict liability in tort. The Lessee shall be entitled to control, and shall
assume full responsibility for the defense of any Claim for Indemnified Persons
other than the Owner Trustee and the Trust Company so long as the Lessee is
diligently pursuing such defense and no Default or Event of Default shall have
occurred and be continuing; provided, however, that (i) the Investor may retain
separate counsel at the expense of the Lessee in the event of a conflict, (ii)
such parties shall use reasonable efforts to share counsel to the extent
practicable and minimize the fees of counsel being reimbursed hereunder, and
(iii) the Lessee shall not be entitled to control, or to assume the defense of,
any Claim, if and to the extent that in the reasonable opinion of the
Indemnified Person the Claim shall involve the potential imposition of any
criminal liability, or any civil liability which would not be fully indemnified
against, on such Indemnified Person. Notwithstanding anything to the contrary
herein, the Owner Trustee and the Trust Company may retain independent counsel,
whether or not a conflict exists, at the expense of the Lessee; provided,
however, the Owner Trustee and the Trust Company shall not settle any Claim
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without the consent of the Lessee (which consent shall not be unreasonably
withheld or delayed). The Lessee and each Indemnified Person agree to give each
other prompt written notice of any Claim hereby indemnified against but the
giving of any such notice by an Indemnified Person shall not be a condition to
the Lessee's obligations under this Section 13.1, except to the extent failure
to give such notice precludes the Lessee from contesting all or part of such
Claim. After an Indemnified Person has been fully indemnified for a Claim
pursuant to this Section 13.1 and so long as no Lease Event of Default shall
have occurred and be continuing, the Lessee shall be subrogated to any right of
such Indemnified Person (except against another Indemnified Person) with respect
to such Claim. The general indemnity provisions of this Section 13.1 do not
constitute a guaranty by the Lessee of the residual value of the Equipment.
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13.2. General Tax Indemnity.
(a) Indemnification. The Lessee shall pay and assume liability
for, and does hereby agree to indemnify, protect and defend all Indemnified
Persons, and hold them harmless against all Impositions (other than amounts
addressed in and either covered by or specifically excluded from the coverage of
Section 13.3 hereof) on an After Tax Basis.
(b) Payments. (i) Subject to the terms of Section 13.2(e)
hereof, the Lessee shall pay or cause to be paid all Impositions directly to the
taxing authorities where feasible and otherwise to the Indemnified Person, as
appropriate, and the Lessee shall at its own expense, upon such Indemnified
Person's reasonable request, furnish to such Indemnified Person copies of
official receipts or other satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 13.2(e) hereof and which the Lessee pays directly
to the taxing authorities, the Lessee shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for timely payment. In
the case of Impositions for which the Lessee reimburses an Indemnified Person,
the Lessee shall do so within twenty (20) days after receipt by the Lessee of
demand by such Indemnified Person describing in reasonable detail the nature of
the Imposition and the basis for the demand (including the computation of the
amount payable), but in no event shall the Lessee be required to pay such
reimbursement prior to thirty (30) days before the latest time permitted by the
relevant taxing authority for timely payment. In the case of Impositions for
which a contest is conducted pursuant to Section 13.2(e) hereof, the Lessee
shall pay such Impositions or reimburse such Indemnified Person for such
Impositions, to the extent not previously paid or reimbursed pursuant to
subsection (a), prior to the latest time permitted by the relevant taxing
authority for timely payment after conclusion of all contests under Section
13.2(e) hereof.
(iii) Impositions imposed with respect to Equipment for a
billing period during which the Lease expires or terminates (unless the Lessee
has exercised the Renewal Option or the Expiration Date Purchase Option with
respect to such Equipment) shall be adjusted and prorated on a daily basis
between the Lessee and the Lessor, whether or not such Imposition is imposed
before or after such expiration or termination, and each party shall pay or
reimburse the other for each party's pro rata share thereof.
(iv) At the Lessee's request, the amount of any
indemnification payment by the Lessee pursuant to subsection (a) shall be
verified and certified by an independent public accounting firm mutually
acceptable to the Lessee and the Indemnified Person. The fees and expenses of
such independent public accounting firm shall be paid by the Lessee.
(c) Reports and Returns. (i) The Lessee shall be responsible
for preparing and filing any real and personal property or ad valorem tax
returns in respect of each item of Equipment. In case any other report or tax
return shall be required to be made with respect to
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any obligations of the Lessee under or arising out of subsection (a) and of
which the Lessee has knowledge or should have knowledge, the Lessee, at its cost
and expense, shall notify the relevant Indemnified Person of such requirement
and (except if such Indemnified Person notifies the Lessee that such Indemnified
Person intends to file such report or return) (A) to the extent required or
permitted by and consistent with Legal Requirements, make and file in its own
name such return, statement or report; and (B) in the case of any other such
return, statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such return,
statement or report for filing by such Indemnified Person or, where such return,
statement or report shall be required to reflect items in addition to any
obligations of the Lessee under or arising out of subsection (a), provide such
Indemnified Person at the Lessee's expense with information sufficient to permit
such return, statement or report to be properly made with respect to any
obligations of the Lessee under or arising out of subsection (a). Such
Indemnified Person shall, upon the Lessee's request and at the Lessee's expense,
provide any data maintained by such Indemnified Person (and not otherwise
available to or within the control of the Lessee) with respect to each item of
Equipment which the Lessee may reasonably require to prepare any required tax
returns or reports;
(d) Withholding Taxes. As between the Lessee on one hand, and
the Lessor or the Agent, any Lender or the Investor on the other hand, the
Lessee shall be responsible for, and the Lessee shall indemnify and hold
harmless the Lessor, the Agent, the Lender and the Investor (without duplication
of any indemnification required by subsection (a)) on an After Tax Basis against
any obligation for United States or foreign withholding taxes imposed in respect
of the Rent payments under the Lease (and, if the Lessor, the Agent, any Lender
or the Investor receives a demand for such payment from any taxing authority,
the Lessee shall discharge such demand on behalf of the Lessor, the Agent, the
Lender or the Investor). The Lessee shall be obligated to request from the
Investor (i) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224, or applicable successor form, as the case may be, certifying
that the Investor is entitled to receive payments payable to it under the
Operative Agreements without deduction or withholding of any United States
federal income taxes, (ii) if applicable, an Internal Revenue Service Form W-8
or W-9, or applicable successor form, as the case may be, to establish an
exemption from United States backup withholding tax, and (iii) any other
governmental forms that are necessary or required under an applicable tax treaty
or otherwise by law to reduce or eliminate any withholding tax. The Lessee shall
send the Investor written request for such forms at least thirty (30) days prior
to the first date on which a payment is made to the Investor under any of the
Operative Agreements and at least thirty (30) days prior to the date that any
such form expires or becomes obsolete. The Investor agrees to provide such forms
to the Lessee upon timely written request, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such forms would otherwise be delivered hereunder that renders
such forms inapplicable or that would prevent the Investor from duly completing
and delivering any such forms with respect to it. The Investor's failure or
inability to deliver to the Lessee any forms so requested shall not relieve the
Lessee of its obligations under this subsection to gross up payments for any
taxes required to be withheld. Notwithstanding the foregoing, the Lessee shall
not indemnify the Lessor, the Agent, the Lenders
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or the Investor for withholding tax to the extent that such withholding tax
exceeds the amount of withholding tax that would have been imposed had the
Lessor not transferred, assigned, pledged or sold its interest in the Equipment
after the applicable Closing Date or had the Investor not transferred, assigned,
pledged or sold its interest in the Trust or Trust Estate after the applicable
Closing Date.
(e) Contests of Impositions. (i) If a written claim is made
against any Indemnified Person or if any proceeding shall be commenced against
such Indemnified Person (including a written notice of such proceeding), for any
Impositions, such Indemnified Person shall promptly notify the Lessee in writing
and shall not take action with respect to such claim or proceeding without the
consent of the Lessee for thirty (30) days after the receipt of such notice by
the Lessee; provided, however, that, in the case of any such claim or
proceeding, if action shall be required by law or regulation to be taken prior
to the end of such 30-day period, such Indemnified Person shall, in such notice
to the Lessee, inform the Lessee of such shorter period, and no action shall be
taken with respect to such claim or proceeding without the consent of the Lessee
before two (2) days before the end of such shorter period; provided, further,
that the failure of such Indemnified Person to give the notices referred to in
this sentence shall not diminish the Lessee's obligation hereunder except to the
extent failure to give such notice precludes the Lessee from contesting all or
part of such claim.
(ii) If, within thirty (30) days of receipt of such notice
from the Indemnified Person (or such shorter period as the Indemnified Person
has notified the Lessee is required by law or regulation for the Indemnified
Person to commence such contest), the Lessee shall request in writing that such
Indemnified Person contest such Imposition, the Indemnified Person shall, at the
expense of the Lessee, in good faith conduct and control such contest
(including, without limitation, by pursuit of appeals, provided that the Lessee
shall have the right to approve the Indemnified Person's selection of tax
counsel for such contest, which approval shall not be unreasonably withheld)
relating to the validity, applicability or amount of such Impositions (provided,
however, that (A) if such contest involves a tax other than a tax on net income
and can be pursued independently from any other proceeding involving a tax
liability of such Indemnified Person, the Indemnified Person, at the Lessee's
request, shall allow the Lessee to conduct and control such contest and (B) in
the case of any contest, the Indemnified Person may request the Lessee to
conduct and control such contest) by, in the sole discretion of the Person
conducting and controlling such contest, (1) resisting payment thereof, (2) not
paying the same except under protest, if protest is necessary and proper, (3) if
the payment be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings, or (4) taking such other
action as is reasonably requested by the Lessee from time to time.
(iii) The party controlling any contest shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of such contest; provided, that all
decisions ultimately shall be made in the sole discretion of the controlling
party. The parties agree that an Indemnified Person may at any time decline to
take further action with respect to the contest of any Imposition and may settle
such contest if
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such Indemnified Person shall waive its rights to any indemnity from the Lessee
that otherwise would be payable in respect of such claim (and any future claim
by any taxing authority, the contest of which is precluded by reason of such
resolution of such claim) and shall pay to the Lessee any amount previously paid
or advanced by the Lessee pursuant to this Section 13.2 by way of
indemnification or advance for the payment of an Imposition other than expenses
of such contest.
(iv) Notwithstanding the foregoing provisions of this Section
13.2, an Indemnified Person shall not be required to take any action and the
Lessee shall not be permitted to contest any Impositions in its own name or that
of the Indemnified Person unless (A) the Lessee shall have agreed in writing to
pay and shall pay to such Indemnified Person on demand and on an After Tax Basis
all reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with contesting such Impositions, including, without
limitation, all reasonable legal, accounting and investigatory fees and
disbursements, and the amount of such Imposition should the contest be
unsuccessful, (B) in the case of a claim that must be pursued in the name of an
Indemnified Person (or an Affiliate thereof), the amount of the potential
indemnity (taking into account all similar or logically related claims that have
been or could be raised in any audit involving such Indemnified Person for which
the Lessee may be liable to pay an indemnity under this Section 13.2) exceeds
$100,000, (C) the Indemnified Person shall have reasonably determined that the
action to be taken will not result in any material danger of sale, forfeiture or
loss of any Equipment, or any part thereof or interest therein, will not
interfere with the payment of Rent, and will not result in risk of criminal
liability, (D) if such contest shall involve the payment of the Imposition prior
to the contest, the Lessee shall provide to the Indemnified Person an
interest-free advance in an amount equal to the Imposition that the Indemnified
Person is required to pay (with no additional net after-tax cost to such
Indemnified Person), (E) in the case of a claim that must be pursued in the name
of an Indemnified Person (or an Affiliate thereof), the Lessee shall have
provided to such Indemnified Person an opinion of independent tax counsel
selected by the Lessee and reasonably satisfactory to the Indemnified Person
stating that a reasonable basis exists to contest such claim (or, in the case of
an appeal of an adverse determination, an opinion of such counsel to the effect
that the position asserted in such appeal will more likely than not prevail) and
(F) no Event of Default hereunder shall have occurred and be continuing. In no
event shall an Indemnified Person be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, an Indemnified
Person shall not be required to contest any claim in its name (or that of an
Affiliate) if the subject matter thereof shall be of a continuing nature and
shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 13.2, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Lessee's expense, an opinion of
independent tax counsel selected by the Lessee and reasonably acceptable to the
Indemnified Person stating that as a result of such change in law (or
interpretation thereof), it is more likely than not that the Indemnified Person
will prevail in such contest.
13.3. Special Income Tax Indemnity.
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(a) Indemnity. The Lessee will indemnify the Lessor and the
Investor on an After Tax Basis for (i) any loss, reduction, failure to claim
(based on an opinion of tax counsel that there is no reasonable basis to claim),
disallowance, recapture, or deferral, in whole or in part, of any tax benefits
that the Lessor or the Investor has claimed in connection with the Equipment and
the transactions contemplated by the Operative Agreements and any costs,
expenses, losses or breakage incurred by the Lessor or the Investor in
connection therewith, and (ii) any inclusion (an "Inclusion") in the Lessor's or
the Investor's foreign, federal, state or local gross income of any amounts
other than (A) Basic Rent, Termination Value, Purchase Option Price, Expiration
Date Termination Payment or Remarketing Option Payment, in the amounts and at
the times provided in the Lease; (B) payments made hereunder or under the Lease
on an After Tax Basis; (C) any other amount to the extent that such income
Inclusion is completely offset by a deduction of the same character and in the
same taxable year as the Inclusion; and (D) any amount designated as a pre-tax
fee or interest payment due and owing to the Lessor or the Investor under the
terms of the Operative Agreements, each loss and Inclusion under clause (a)(i)
and (ii) (net of the amount of any actual tax benefits that the Lessor or the
Investor receives by reason of such loss or Inclusion) constituting a "Tax
Loss." This tax indemnity shall constitute an "all events" indemnity, covering,
by way of example only, any Tax Loss resulting from a change of law, change in
tax rates, recharacterization of the transaction for tax purposes, and the
Lessor's inability to currently utilize any tax benefits. Notwithstanding the
foregoing, the Lessee shall not indemnify the Lessor or the Investor for (i) a
Tax Loss resulting solely from (x) the Investor's failure to take the actions
within the Investor's control that are reasonably necessary to secure the
benefits that are the subject of the Tax Loss or (y) the Investor's failure to
prevent the Trust from becoming an entity separately subject to United States
federal income tax liability; or (ii) a Tax Loss to the extent that such Tax
Loss exceeds the amount that the Tax Loss would have been had the Lessor not
transferred, assigned, pledged or sold its interest in the Equipment after the
applicable Closing Date or had the Investor not transferred, assigned, pledged
or sold its interest in the Trust or Trust Estate after the applicable Closing
Date.
(b) Computation of Indemnity and Gross-Up; Payment. The amount
of the indemnity payable as a result of a Tax Loss, and the gross-up of the
indemnity payment for income taxes attributable to the indemnity payment
hereunder, shall be computed using the actual rate(s) of United States federal,
state and local tax then in effect and applicable to the Lessor or the Investor,
as the case may be. An event or occurrence giving rise to a Tax Loss for federal
income tax purposes shall be deemed to give rise to a Tax Loss at the same time
and in the same amount for state and local income tax purposes. At the Lessor's
option, the Lessee shall pay the indemnity in installments on each subsequent
Payment Date or by an amendment to the Lease Funding Balance Schedule.
(c) Certain Adjustments. If the Lessor shall suffer a Tax Loss
involving a tax benefit that was taken into account in calculating the Lease
Funding Balance, Eurodollar Component, Basic Rent, Renewal Rent or any other
amount under the Lease, then such value or values shall be adjusted to take into
account the unavailability, if any, of such tax benefit.
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(d) Verification. At the Lessee's request, the amount of any
indemnification payment to made by the Lessee pursuant to this Section 13.3
shall be verified and certified by an independent public accounting firm
mutually acceptable to the Lessee, the Lessor and the Investor. The fees and
expenses of such independent public accounting firm shall be paid by the Lessee.
(e) Contests. Any contests of claims arising in connection
with a Tax Loss shall be conducted under the provisions set forth in Section
13.2(e) hereof, except that (i) references to the Indemnified Person shall be to
the Lessor or the Investor, or both, as the case may be; (ii) references to a
Imposition shall be to a Tax Loss; (iii) the amount in Section 13.2(e)(iv)(B)
shall be $250,000.
SECTION 14. MISCELLANEOUS.
14.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Agreements, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Agreement, the transfer of any
Equipment to the Owner Trustee, any disposition of any interest of the Owner
Trustee in any Equipment or any interest of the Investor in the Trust, the
Equipment, the Operative Agreements or otherwise and shall be and continue in
effect notwithstanding any investigation made by any party and the fact that any
party may waive compliance with any of the other terms, provisions or conditions
of any of the Operative Agreements. Except as otherwise expressly set forth
herein or in any other Operative Agreement, the indemnities of the parties
provided for in the Operative Agreements shall survive the expiration or
termination of any thereof.
14.2. No Broker, etc. Each of the parties hereto represents to
the others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Agreement, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act. Any party who is in breach of this representation shall
indemnify and hold the other parties harmless from and against any liability
arising out of such breach of this representation.
14.3. Notices. Unless otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by United States mail, by nationally recognized
courier service or by hand and any such notice shall become effective upon
receipt and shall be directed to the address of such Person as indicated:
If to the Lessee, to it at the address set forth in the Lease, with a
copy as directed in the Lease.
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If to the Owner Trustee, to it at:
First Security Bank of Utah, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telephone No.: (801) 246-5630
Telecopy No.: (801) 246-5053
If to the Investor, to it at:
Deutsche Bank A.G., New York
and/or Cayman Islands Branches
550 South Hope Street
Suite 1850
Los Angeles, California 90071
Attn: Christine N. Lane, Assistant Vice President
Telephone No.: (213) 627-8200
Telecopy No.: (213) 627-9779
with a copy to:
Deutsche Bank A.G., New York
and/or Cayman Islands Branches
31 West 52nd Street
New York, New York 10019
Attn: Sarah K. Pennington,
Contracts Administrator,
International Leasing Group
Telephone No.: (212) 474-7393
Telecopy No.: (212) 474-7398
From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.
14.4. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
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14.5. Amendments and Termination. Neither this Agreement nor
any of the terms hereof may be terminated, amended, supplemented, waived or
modified except by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification shall be sought. This Agreement may be terminated by an agreement
signed in writing by the Owner Trustee, the Investor and the Lessee.
14.6. Headings, etc. The Table of Contents and headings of the
various Sections of this Agreement are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof.
14.7. Parties in Interest. Except as expressly provided
herein, none of the provisions of this Agreement are intended for the benefit of
any Person except the parties hereto.
14.8. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ANY OTHER CONFLICT-OF-LAW OR
CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
14.9. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14.10. Liability Limited. The Lessee and the Investor each
acknowledge and agree that the Owner Trustee is (except as otherwise expressly
provided herein or therein) entering into this Agreement and the other Operative
Agreements to which it is a party (other than the Trust Agreement), solely in
its capacity as trustee under the Trust Agreement and not in its individual
capacity. Anything to the contrary contained in this Agreement or in any other
Operative Agreement notwithstanding, neither the Lessor nor any officer,
director, shareholder, or partner thereof, nor any of the successors or assigns
of the foregoing, shall be personally liable in any respect for any liability or
obligation hereunder or in any other Operative Agreement, provided, however,
that the Owner Trustee shall be liable in its individual capacity in the case of
the inaccuracy of any of its representations and warranties expressly made in
its individual capacity or the breach of any of its covenants expressly made in
its individual capacity contained in this Agreement or any Operative Agreement
to which it is a party.
14.11. Further Assurances. The parties hereto shall promptly
cause to be taken, executed, acknowledged or delivered, at the sole expense of
the Lessee, all such further acts, conveyances, documents and assurances as the
other parties may from time to time reasonably
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request in order to carry out and effectuate the intent and purposes of this
Participation Agreement, the other Operative Agreements and the transactions
contemplated hereby and thereby (including, without limitation, the preparation,
execution and filing of any and all Uniform Commercial Code financing statements
and other filings or registrations which the parties hereto may from time to
time request to be filed or effected). The Lessee, at its own expense and
without need of any prior request from any other party, shall take such action
as may be necessary (including any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to maintain
and protect all security interests provided for hereunder or under any other
Operative Agreement.
14.12. Confidentiality. Each of the parties hereto, other than
the Investor and, as applicable, its Affiliates, agrees that it will maintain
the confidentiality of the general structure of this transaction, except to the
extent disclosure is required pursuant to regulatory requirements to which the
Lessee is subject.
14.13. Lessee Reliance on Own Experts. The Lessee acknowledges
that it is entering into this Agreement in reliance upon its own professional
advisors and experts for accounting, legal and tax advice, and is not relying
upon any accounting, legal or tax information or advice contained in any
communications received from the Lessor or the Investor. The Lessee further
acknowledges that all references in Exhibit E in connection with the payment of
taxes by the Investor or other items or estimates associated with taxes are
solely for the purposes of the calculations contained therein and do not
constitute a representation or agreement by the Investor to report its tax
liability as set forth in Exhibit E.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
FRESENIUS USA, INC., as Lessee
By:
-------------------------------
Heinz Schmidt, Vice President
Finance
FIRST SECURITY BANK OF
UTAH, N.A., not in its
individual capacity, except
as expressly stated herein,
but solely as Owner Trustee
By:
-----------------------------------
Name:
Title
DEUTSCHE BANK A.G., NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES,
as Investor
By:
-----------------------------------
John P. Ryan, Vice President
By:
-----------------------------------
Christine N. Lane, Assistant
Vice President
52
================================================================================
APPENDIX A
RULES OF USAGE AND DEFINITIONS
================================================================================
I. Rules of Usage
The following rules of usage shall apply to this Appendix A
and the Operative Agreements (and each appendix, schedule, exhibit and annex to
the foregoing) unless otherwise required by the context or unless otherwise
defined therein:
(a) Except as otherwise expressly provided, any
definitions set forth herein or in any other document shall be
equally applicable to the singular and plural forms of the
terms defined.
(b) Except as otherwise expressly provided,
references in any document to articles, sections, paragraphs,
clauses, annexes, appendices, schedules or exhibits are
references to articles, sections, paragraphs, clauses,
annexes, appendices, schedules or exhibits in or to such
document.
(c) The headings, subheadings and table of contents
used in any document are solely for convenience of reference
and shall not constitute a part of any such document nor shall
they affect the meaning, construction or effect of any
provision thereof.
(d) References to any Person shall include such
Person, its successors and permitted assigns and transferees.
(e) Except as otherwise expressly provided, reference
to any agreement means such agreement as amended, modified,
extended or supplemented from time to time in accordance with
the applicable provisions thereof.
(f) Except as otherwise expressly provided,
references to any law includes any amendment or modification
to such law and any rules or regulations issued thereunder or
any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words
of like import shall, unless the context
53
clearly indicates to the contrary, refer to the whole of the
applicable document and not to any particular article,
section, subsection, paragraph or clause thereof.
(h) References to "including" mean including without
limiting the generality of any description preceding such term
and for purposes hereof the rule of ejusdem generis shall not
be applicable to limit a general statement, followed by or
referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
(i) Each of the parties to the Operative Agreements
and their counsel have reviewed and revised, or requested
revisions to, the Operative Agreements, and the usual rule of
construction that any ambiguities are to be resolved against
the drafting party shall be inapplicable in the construing and
interpretation of the Operative Agreements and any amendments
or exhibits thereto.
II. Definitions
"ABR" shall mean for any day, a rate per annum equal to the greater of
(a) the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime
Lending Rate" shall mean the rate (rounded upwards to the nearest 1/100 of one
percent (1%)) which the Reference Lender announces from time to time as its
prime lending rate, base rate or equivalent, as in effect from time to time. The
Prime Lending Rate shall change automatically and without notice from time to
time as and when the prime lending rate, base rate or equivalent of the
Reference Lender changes. "Federal Funds Effective Rate" shall mean for any
period, a fluctuating interest rate per annum equal for each day during such
period to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Reference Lender from three Federal funds brokers of recognized standing
selected by it. Any change in the ABR due to a change in the Prime Lending Rate
or the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Lending Rate or the
Federal Funds Effective Rate, respectively.
"Affiliate" shall mean with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of a Person, whether through the
ownership of voting securities or by contract or otherwise.
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"After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after deduction of the
amount of all taxes required to be paid by the recipient calculated at the then
maximum marginal rates generally applicable to persons of the same type as the
recipients (less any tax savings realized as a result of the payment of the
indemnified amount) with respect to the receipt by the recipient of such
amounts, such increased payment (as so reduced) is equal to the payment
otherwise required to be made.
"Agent" shall mean the Agent for the Lenders pursuant to any Credit
Agreement, or any successor agent appointed in accordance with the terms of such
Credit Agreement.
"Agreement" shall mean the Participation Agreement.
"Amortization Component" shall mean, for any Rental Period, the
quotient of (i) the total Equipment Cost on the Final Closing Date minus the
amount determined under clause (i)(a) of the definition of the term "Purchase
Option Price", divided by (ii) fifteen. For Rental Periods ending on the first,
second and third monthly anniversaries of the Initial Closing Date, the
Amortization Component shall be equal to zero.
"Assignment of Lease" shall mean any assignment of lease and related
documents required in connection with any Credit Agreement.
"Bank" shall mean Deutsche Bank A.G., Los Angeles, New York and/or
Cayman Islands Branches, in its capacity as lender under the Loan Agreement.
"Basic Rent" shall mean, for any Rental Period, the sum of (i) the
Recourse Component, (ii) the Equity Component, (iii) the Eurodollar Component
and (iv) the Amortization Component.
"Basic Term" shall have the meaning specified in Section 2.2 of the
Lease.
"Basic Term Expiration Date" shall mean the day which is one day prior
to the fourth anniversary of the Initial Closing Date.
"Bill of Sale" shall mean a Bill of Sale in the form attached as
Exhibit D to the Lease.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national and/or state banks in New York, New
York, or Ogden, Utah are generally authorized or obligated, by law or executive
order, to close.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. sec. 9601 et seq., as
amended by the Superfund Amendments and Reauthorization Act of 1986.
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55
"Change of Control" shall mean Fresenius AG shall no longer own,
directly or indirectly, at least fifty-one percent (51%) of the Lessee's voting
capital stock.
"Claims" shall mean any and all obligations, liabilities, losses,
damages, actions, suits, penalties, claims, demands, costs and expenses
(including, without limitation, reasonable attorney's fees and expenses) of any
nature whatsoever.
"Closing Date" shall mean each date on which the Lessor purchases
Equipment pursuant to the Participation Agreement and leases such Equipment to
the Lessee pursuant to the Lease, and shall include the Initial Closing Date,
each Interim Closing Date and the Final Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto.
"Collateral" shall mean all assets of the Owner Trustee or the
Investor, now owned or hereafter acquired, upon which a Lien is purported to be
created by the Security Documents.
"Commitment Fee" shall mean $75,000.
"Commitment Letter" shall mean the letter dated March 6, 1995 from the
Investor to the Lessee regarding the transactions contemplated by the Operative
Agreements.
"Consolidated EBITDA" shall have the meaning specified in Section
8.1(e) of the Participation Agreement.
"Consolidated Interest Expense" shall have the meaning specified in
Section 8.1(e) of the Participation Agreement.
"Consolidated Tangible Net Worth" shall have the meaning specified in
Section 8.1(f) of the Participation Agreement.
"Contingent Obligation" shall have the meaning specified in Section
8.2(b) of the Participation Agreement.
"Credit Agreement" shall mean any credit agreement, entered into after
the Initial Closing Date, among the Lessor, the Agent, and the Lenders, as
specified therein, or any agreements and documents reasonably required to effect
a securitization of the interest of the Lessor and/or the Investor in any
amounts of Rent or other amounts receivable under the Lease, the Equipment or
the Trust Estate, including, without limitation, all replacements thereof, all
amendments or supplements thereto and all modifications thereof.
"Credit Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Credit Agreement Event of Default.
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"Credit Agreement Event of Default" shall mean any event or condition
defined as an "event of default" in the Credit Agreement.
"Debt" shall have the meaning specified in Section 8.2(a) of the
Participation Agreement.
"Default" shall mean any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Event of Default.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit plan
(within the meaning of Section 3(3) of ERISA, including any Multiemployer Plan),
or any "plan" as defined in Section 4975(e)(1) of the Code and as interpreted by
the Internal Revenue Service and the Department of Labor in rules, regulations,
releases or bulletins in effect on any Closing Date.
"Environmental Claims" shall mean any and all Claims arising out of or
related to Environmental Violations.
"Environmental Laws" shall mean any and all foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other requirements
of law regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or the environment, as now or may at any
time hereafter be in effect.
"Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (if the threat requires remediation under
any Environmental Law and is not remediated during any grace period allowed
under such Environmental Law) to violate or results in or threatens (if the
threat requires remediation under any Environmental Law and is not remediated
during any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever constituting a part of an
integrated production system for manufacturing blood dialysis filters which is
capable of producing a saleable end product purchased using the proceeds of the
Investor Contribution by the Lessor, whether or not now or subsequently attached
to, contained in or used or usable in any way in connection with any operation
of any improvements to real property, including but without limiting the
generality of the foregoing, all equipment described in the Final Appraisal,
including, without limitation, all direct production equipment, associated
equipment and spare parts, together with all operating manuals and required
Intellectual Property of every kind and description necessary for the operation
of the Equipment and the sale of its production.
"Equipment Cost" shall mean the cost of purchasing and installing the
Equipment and the associated Transaction Expenses funded by the Investor, in the
aggregate not to exceed $19,000,000.
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57
"Equity Component" shall mean, for any Rental Period, the product of
(i) (a) the Equity Margin multiplied by (b) a fraction equal to (1) the number
of days in such Rental Period, divided by (2) 360, multiplied by (ii) an amount
equal to twenty percent (20%) of the original Equipment Cost for all Equipment
then subject to the Lease.
"Equity Margin" shall mean (i) with respect to the Basic Term, one
hundred fifteen basis points (1.15%) per annum, and (ii) with respect to any
Renewal Term, as determined by the Lessor in its good faith business judgment
based upon the Renewal Term Pricing Factors applicable to such Renewal Term.
"Equipment Schedule" shall mean an Equipment Schedule in the form
attached as Exhibit A to the Lease.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean each entity required to be aggregated with
any Lessee pursuant to the requirements of Section 414(b) or (c) of the Code.
"Eurocurrency Reserve Requirements" shall mean for any day, the
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Business Day" shall mean a Business Day other than any day
on which banks are not open for dealings in dollar deposits in the London
interbank market.
"Eurodollar Component" shall mean, for any Rental Period, the product
of (i) (a) the Eurodollar Reserve Rate multiplied by (b) a fraction equal to (1)
the number of days in such Rental Period, divided by (2) 360, multiplied by (ii)
the Lease Funding Balance.
"Eurodollar Make Whole Amount" shall mean the sum of (i) an amount
equal to the excess, if any of (A) the amount of interest which will have
accrued under the Lease on the Unamortized Equipment Cost outstanding on the
date of determination from such date until the last day of the then applicable
Rental Period, over (B) the amount of interest (as determined by the Investor)
which would have accrued to the Investor by placing such amount on deposit for a
comparable period with lending banks in the relevant interest rate market, plus
(ii) the amount, if any, necessary to reimburse the Investor for breakage costs
associated with the termination of any Interest Rate Protection Agreement
entered into by the Investor and the Lessee with respect to any obligations of
the Lessee under the Lease.
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"Eurodollar Rate" shall mean the offered quotation (rounded upwards to
the nearest 1/16 of 1%), if any, to first class banks in the Eurodollar market
by the Reference Lender for deposits in the amounts in immediately available
funds comparable to the total Equipment Cost of all Equipment then subject to
the Lease with maturities comparable to the Rental Period for which such
Eurodollar Rate will apply, as of approximately 10:00 A.M. (New York City time)
two Business Days prior to the beginning of such Rental Period.
"Eurodollar Reserve Rate" shall mean, with respect to each day during
each Rental Period, a rate per annum determined for such day in accordance with
the following formula (rounded upward to the nearest 1/100 of one percent
(.01%)):
Eurodollar Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default" shall mean a Lease Event of Default or a Credit
Agreement Event of Default.
"Event of Loss" shall mean any of the following events: the Equipment
is (i) destroyed, damaged beyond repair or suffers damage which renders repair
uneconomic or renders the Equipment permanently unfit for normal use for any
reason whatsoever, or (ii) condemned, confiscated or seized in whole or any
significant part or title thereto or use thereof is requisitioned, for the
lesser of six months or the remainder of the Basic Term or any Renewal Term, or
(iii) is stolen or disappears, or (iv) is damaged or destroyed and such damage
or destruction results in an insurance settlement with respect to such item on
the basis of a total loss, or a constructive loss or a compromised total loss,
or (v) the Equipment is rendered inoperable as an integrated production system
capable of producing a saleable end product.
"Excepted Payment" shall mean:
(i) all indemnity payments (including indemnity payments made
pursuant to Section 13 of the Participation Agreement) and expenses to which the
Owner Trustee in its individual capacity, the Investor or any of their
respective Affiliates (or the respective successors, assigns, agents, officers,
directors or employees of the Owner Trustee in its individual capacity or the
Investor) is entitled;
(ii) any amounts (other than Basic Rent, Termination Value,
Purchase Option Price, Remarketing Option Payment and Expiration Date
Termination Payment) payable under any Operative Agreements to reimburse the
Owner Trustee, the Investor or any of their respective Affiliates (including the
reasonable expenses of the Owner Trustee and the Investor incurred in connection
with any such payment) for performing or complying with any of the obligations
of the Lessee under and as permitted by any Operative Agreement;
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(iii) any insurance proceeds (or payments with respect to
risks self-insured or policy deductibles) under liability policies payable to
the Investor or the Owner Trustee in its individual capacity;
(iv) any insurance proceeds under policies maintained by the
Owner Trustee or the Investor and not required to be maintained by the Lessee
under the Lease;
(v) any amount payable to the Owner Trustee or the Investor
pursuant to Section 9 of the Participation Agreement;
(vi) any amount payable to the Investor by any transferee of
such interest of the Investor as the purchase price of the Investor's interest
in the Trust Estate (or a portion thereof);
(vii) all right, title and interest of the Investor or the
Owner Trustee to any Equipment or any portion thereof or any other property to
the extent any of the foregoing has been released from the Liens of the Security
Documents and the Lease pursuant to the terms thereof;
(viii) upon termination of the Credit Agreement pursuant to
the terms thereof, all remaining property covered by the Lease or Security
Documents; and
(ix) any payments of interest on payments referred to in
clauses (i) through (viii) above.
"Expiration Date" shall mean the Basic Term Expiration Date or the
scheduled expiration of the then current Renewal Term, if any.
"Expiration Date Election Notice" shall have the meaning specified in
Section 20.2 of the Lease.
"Expiration Date Purchase Option" shall mean the Lessee's option to
purchase all (but not less than all) of the Equipment on the Expiration Date.
"Expiration Date Termination Payment" shall mean the difference between
(i) the Unamortized Equipment Cost on the Expiration Date and (ii) twenty
percent (20%) of the Equipment Cost of such Equipment.
"Facility" shall mean a facility used for the treatment, storage or
disposal of Hazardous Substances.
"Fair Market Value" of any property or service as of any date shall
mean the cash rent or cash price obtainable in an arm's-length lease, or sale or
supply, respectively, between an informed and willing lessee or buyer (under no
compulsion to lease or purchase) and an informed and willing lessor or seller or
supplier (under no compulsion to lease or sell or supply) of the
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property or service in question, and shall, in the case of the Equipment, be
determined on the basis that, except as otherwise expressly provided in the
Lease (i) the Equipment has been maintained in accordance with and in the
condition required by, and the Lessee has complied with, the requirements of the
Lease and the other Operative Agreements to which the Lessee is a party, (ii)
the Equipment is unencumbered by the Lease or any Security Documents, (iii)
included with the Equipment will be any Intellectual Property rights and
facility support and services agreements necessary to operate the Equipment and
(iv) the Equipment operates as part of an integrated production system capable
of producing a saleable end product.
"Final Appraisal" shall mean a letter addressed to the Investor from
the Independent Appraiser who conducted the Preliminary Appraisal, dated the
Final Closing Date and reaffirming the conclusions reached in the Preliminary
Appraisal, with such variations therefrom as are acceptable to the Investor.
"Final Closing Date" shall mean the final date on which the Lessor
purchases Equipment pursuant to the Participation Agreement and leases such
Equipment to the Lessee pursuant to the Lease.
"GAAP" shall mean generally accepted accounting principles in the U.S.
as in effect from time to time. If any changes in GAAP or the application
thereof from that used in the preparation of the financial statements referred
to in Section 8.1(h) of the Participation Agreement occur after the Initial
Closing Date and such changes result in, in the judgment of the Investor or the
Lessee, a material change in the calculation of any financial covenants or
restrictions set forth in the Participation Agreement, then the parties to the
Participation Agreement agree to enter into and diligently pursue negotiations
in order to amend such financial covenants and restrictions so as to equitably
reflect such changes, with the desired result that the criteria for evaluating
the financial condition and results of operations of the Lessee and its
Subsidiaries shall be the same after such changes as if such changes had not
been made.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement or Requirement of
Law, relating to the Equipment, its use and operation, or the real property on
which the Equipment is located and shall include, without limitation, all
environmental and operating permits and licenses that are required in connection
therewith.
"Governmental Authority" shall mean any foreign, Federal, state,
county, municipal or other United States Federal, state, local or foreign
governmental authority or judicial or regulatory agency, board, body,
commission, instrumentality, court or quasi-governmental authority.
"Hazardous Substance" shall mean any of the following: (i) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls,
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lead and radon gas; (ii) any substance, material, product, derivative, compound
or mixture, mineral, chemical, waste, gas, medical waste, or pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous to the environment or human health or safety
as determined in accordance with any Environmental Law; or (iii) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste or pollutant that would support the assertion of any claim
under any Environmental Law, whether or not defined as hazardous as such under
any Environmental Law.
"Impositions" shall mean, except to the extent described in the
following sentence, any and all liabilities, losses, expenses, costs, charges
and Liens of any kind whatsoever for fees, taxes, levies, imposts, duties,
charges, assessments or withholdings ("Taxes") including (i) real and personal
property taxes, including personal property taxes on any property covered by the
Lease that is classified by Governmental Authorities as personal property, and
real estate or ad valorem taxes in the nature of property taxes; (ii) sales
taxes, use taxes and other similar taxes (including rent taxes and intangibles
taxes); (iii) any excise taxes; (iv) real estate transfer taxes, conveyance
taxes, stamp taxes and documentary recording taxes and fees; (v) taxes that are
or are in the nature of franchise, income, value added, privilege and doing
business taxes, license and registration fees; (vi) assessments on any
Equipment, including all assessments for public improvements or benefits,
whether or not such improvements are commenced or completed within the Term; and
(vii) any tax, Lien, assessment or charge asserted, imposed or assessed by the
PBGC or any governmental authority succeeding to or performing functions similar
to, the PBGC; and in each case all interest, additions to tax and penalties
thereon, which at any time prior to, during or with respect to the Term or in
respect of any period for which the Lessee shall be obligated to pay
Supplemental Rent, may be levied, assessed or imposed by any Governmental
Authority upon or with respect to (a) any Equipment or any part thereof or
interest therein; (b) the leasing, financing, refinancing, demolition,
construction, substitution, subleasing, assignment, control, condition,
occupancy, servicing, maintenance, repair, ownership, possession, activity
conducted on, delivery, insuring, use, operation, improvement, transfer of
title, return or other disposition of such Equipment or any part thereof or
interest therein; (c) any indebtedness with respect to any Equipment or any part
thereof or interest therein; (d) the rentals, receipts or earnings arising from
any Equipment or any part thereof or interest therein; (e) the Operative
Agreements, the performance thereof, or any payment made or accrued pursuant
thereto; (f) the income or other proceeds received with respect to any Equipment
or any part thereof or interest therein upon the sale or disposition thereof;
(g) any contract relating to the construction, acquisition, installation or
delivery of the Equipment or any part thereof or interest therein; or (h)
otherwise in connection with the transactions contemplated by the Operative
Agreements.
The term "Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or property
taxes) that are imposed on a Indemnified Person (other than the Lessor)
by the United States federal government that are based on or measured
by the net income (including taxes based on capital gains and
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minimum taxes) of such Person; provided, that this clause (i) shall not
be interpreted to prevent a payment from being made on an After Tax
Basis if such payment is otherwise required to be so made;
(ii) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or property
taxes) that are imposed by any state or local jurisdiction or taxing
authority within any state or local jurisdiction and that are based
upon or measured by the net income or net receipts of an Indemnified
Person except that this clause (ii) shall not apply to (and thus shall
not exclude) any such Taxes imposed on a Indemnified Person by a state
(or any local taxing authority thereof or therein) where any Equipment
is located, possessed or used under the Lease; provided, that this
clause (ii) shall not be interpreted to prevent a payment from being
made on an After Tax Basis if such payment is otherwise required to be
so made;
(iii) any Tax or imposition to the extent, but only to such
extent, it relates to any act, event or omission that occurs after the
termination of the Lease and redelivery or sale of the property in
accordance with the terms of the Lease (but not any Tax or imposition
that relates to any period or occurrence prior to such termination and
redelivery);
(iv) any Tax or imposition for so long as, but only for so
long as, it is being contested in accordance with the provisions of
Section 13.2 of the Participation Agreement; or
(v) any Taxes which are imposed on a Indemnified Person as a
result of the gross negligence or wilful misconduct of such Indemnified
Person itself (as opposed to gross negligence or wilful misconduct
imputed to such Indemnified Person), but not Taxes imposed as a result
of ordinary negligence of such Indemnified Person.
Any Tax or imposition excluded from the defined term "Imposition" in any one of
the foregoing clauses (i) through (v) shall not be construed as constituting an
Imposition by any provision of any other of the aforementioned clauses.
"Inclusion" shall have the meaning specified in Section 13.3(a) of the
Participation Agreement.
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in its
individual and its trust capacity, the Agent, the Investor, the Lenders and any
other parties (other than the Lessee or its Affiliates) to the Credit Agreement,
any other Security Document or any agreement, document or instrument executed in
connection therewith, and their respective successors, assigns, directors,
shareholders, partners, officers, employees, agents and Affiliates.
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"Independent Appraiser" shall mean Marshall & Stevens, Inc., or another
independent, nationally recognized appraisal firm selected by the Investor and
reasonably acceptable to the Lessee.
"Initial Closing Date" shall mean the date on which all of the
conditions set forth in Section 6 of the Participation Agreement shall have been
satisfied and the Lessor first purchases Equipment pursuant to the Participation
Agreement and leases such Equipment to the Lessee pursuant to the Lease.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy required by the Lease to be maintained by the Lessee and all
requirements of the issuer of any such policy.
"Intellectual Property" shall mean all operating manuals, technology,
patents, trademarks, copyrights, licenses, software and any other intellectual
property necessary for the operation of the Equipment, but excluding any such
intellectual property of Fresenius AG licensed to the Lessee.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect any Person against fluctuations in interest
rates.
"Interim Closing Date" shall mean any date subsequent to the Initial
Closing Date and prior to the Final Closing Date on which the Lessor purchases
Equipment pursuant to the Participation Agreement and leases such Equipment to
the Lessee pursuant to the Lease.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, together with the rules and regulations promulgated thereunder.
"Investor" shall mean Deutsche Bank A.G., New York and/or Cayman
Islands Branches.
"Investor Commitment" shall mean $19,000,000.
"Investor Contribution" shall have the meaning specified in Section 2
of the Participation Agreement.
"Lease" or "Lease Agreement" shall mean the Lease Agreement, dated as
of the Initial Closing Date, between the Lessor and the Lessee, together with
any Equipment Schedules thereto, as such Lease Agreement may from time to time
be supplemented, amended or modified in accordance with the terms thereof or of
any other Operative Agreement.
"Lease Commencement Date" shall mean the Initial Closing Date.
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"Lease Default" shall mean any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section
17.1 of the Lease.
"Lease Funding Balance" shall have the meaning specified in Exhibit E
to the Participation Agreement, as modified pursuant to Section 16.2(c) of the
Lease and Section 13.3(c) of the Participation Agreement.
"Legal Requirements" shall mean all foreign, Federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting any Equipment or the
taxation, demolition, construction, use or alteration thereof, whether now or
hereafter enacted and in force, including any that require repairs,
modifications or alterations in or to any Equipment or in any way limit the use
and enjoyment thereof (including all building, zoning and fire codes and the
Americans with Disabilities Act of 1990, 42 U.S.C. sec. 12101 et. seq., and any
other similar Federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental requirements
(including all Environmental Laws), and all permits, certificates of occupancy,
licenses, authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments affecting
any Equipment.
"Lenders" shall mean the several banks and other financial institutions
from time to time party to any Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessor" shall mean the Owner Trustee, not in its individual capacity,
as lessor under the Lease.
"Lessor Financing Statements" shall mean UCC financing statements
appropriately completed and executed for filing in the applicable jurisdictions
in order to protect the Lessor's interest under the Lease to the extent the
Lease is a security agreement.
"Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title which, in the absence of an Event of Default, interferes
with the Lessee's right of quiet enjoyment set forth in Section 5 of the Lease.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, option or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale of receivables with recourse (in whole or in part) against the
seller or any other Person except the account debtors, any filing or agreement
to file a financing statement as debtor under the UCC or any similar statute
other than to reflect ownership by a third party of property leased to the
Lessee or any of its Subsidiaries under a lease
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which is not in the nature of a conditional sale or title retention agreement,
or any subordination arrangement in favor of another Person).
"Loan Agreement" shall mean the Loan Agreement between the Lessee and
the Bank, as such Loan Agreement may be amended, supplemented or otherwise
modified from time to time and any loan agreement entered into to refinance the
indebtedness of the Lessee thereunder upon terms and conditions reasonably
satisfactory to the Investor.
"Loan Documents" shall have the meaning specified in the Loan
Agreement.
"Marketing Period" shall mean, if the Lessee has not given the
Expiration Date Election Notice in accordance with Section 20.2 of the Lease and
has not elected to arrange an Operating Lease in accordance with Section 20.3 of
the Lease, the period commencing on the date which is sixteen (16) months prior
to the applicable Expiration Date and ending on the date the Equipment remaining
subject to the Lease shall have been sold or otherwise disposed of.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, condition (financial or otherwise), assets, liabilities or
operations of the Lessee and its Subsidiaries taken as a whole, (b) the ability
of the Lessee or any Subsidiary to perform its respective obligations under any
Operative Agreement to which it is a party, (c) the validity or enforceability
of any Operative Agreement or the rights and remedies of the Agent, the Lenders,
the Investor or the Lessor thereunder, (d) the validity, priority or
enforceability of any Lien on any Equipment or other property created by any of
the Operative Agreements, (e) the value, utility or useful life of any Equipment
or the use, or ability of the Lessee to use, any Equipment for the purpose for
which it was intended or (f) on the Lessor's interest in the Equipment.
"Maximum Lease Amount" shall have the meaning specified in Section 8.2
(g) of the Participation Agreement.
"Modifications" shall have the meaning specified in Section 11.1(a) of
the Lease.
"Multiemployer Plan" shall mean any plan described in Section
4001(a)(3) of ERISA to which contributions are or have been made or required by
the Lessee or any of its Subsidiaries or ERISA Affiliates.
"Net Sales Proceeds" shall mean the proceeds of a sale of the Equipment
described in Section 22.1 of the Lease less any costs and expenses of Lessor
associated with such sale.
"Notice of Closing Date" shall have the meaning specified in Section
4.2 of the Participation Agreement.
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"Officer's Certificate" shall mean a certificate signed by any
individual holding the office of vice president or higher, which certificate
shall certify as true and correct the subject matter being certified to in such
certificate.
"Operating Lease" shall have the meaning specified in Section 11.1 of
the Participation Agreement.
"Operating Lease Basic Rent" shall have the meaning specified in
Section 11.1(c) of the Participation Agreement.
"Operating Lease Term" shall have the meaning specified in Section
11.1(a) of the Participation Agreement.
"Operating Lessee" shall mean a United States entity (other than the
Lessee or any of its Affiliates) that meets all of the following criteria on the
Expiration Date:
(i) The entity has a current, unqualified rating either by
Standard & Poor's Ratings Group of at least "A" or by Moody's Investor
Services of at least "A2" on either (a) the entity's long-term senior
unsecured rated debt or (b) if the entity has no rated debt, then on
the Operating Lease itself, as arranged by the Lessee;
(ii) The Investor would not be prohibited from directly
lending to the entity an amount equal to the Residual Value because of
legal lending limitations or restrictions, or any other Requirement of
Law or guideline; and
(iii) The entity is engaged in the medical products or
pharmaceutical industries and has a demonstrated ability to maintain
and operate equipment similar to, or performing similar functions as,
the Equipment in accordance with all required industry, governmental
and environmental standards.
"Operative Agreements" shall mean the following:
(a) the Participation Agreement;
(b) the Lease and each Equipment Schedule;
(c) the Credit Agreement, if any;
(d) the UCC Financing Statements;
(e) the Notices of Closing Date;
(f) the Trust Agreement; and
(g) the Security Documents, if any.
"Overdue Rate" shall mean the lesser of: (i) the sum of (a) the
Eurodollar Reserve Rate then applicable plus the Equity Margin plus (b) two
percent (2%) per annum and (ii) the highest rate permitted by the applicable
law.
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"Owner Trustee" shall mean First Security Bank of Utah, N.A., not in
its individual capacity except as expressly stated in the Participation
Agreement or the Trust Agreement, but solely as Owner Trustee under the Trust
Agreement, and any successor or replacement Owner Trustee expressly permitted
under the Operative Agreements.
"Participation Agreement" shall mean the Participation Agreement dated
as of March 31, 1995, among the Lessee, the Owner Trustee, not in its individual
capacity except as expressly stated therein, and the Investor, as such
Participation Agreement may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof or of any other Operative
Agreement.
"Payment Date" shall mean each of the first, second and third monthly
anniversaries of the Initial Closing Date and thereafter, the last day of each
Rental Period and the Expiration Date or earlier date on which the Lease shall
be terminated with respect to the Equipment.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under Title IV of ERISA.
"Permitted Investments" shall have the meaning specified in Section
8.2(d) of the Participation Agreement.
"Permitted Liens" shall mean:
(i) the respective rights and interests of the parties to the
Operative Agreements as provided in the Operative Agreements;
(ii) the rights of any sublessee or assignee under a sublease
or an assignment expressly permitted by the terms of the Lease;
(iii) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 13 of the Lease;
(iv) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', carriers',
warehousemen's and other like Liens relating to any Modifications or
arising in the ordinary course of business for amounts that either are
not more than 30 days past due or are being diligently contested in
good faith by appropriate proceedings, so long as such proceedings
satisfy the conditions for the continuation of proceedings to contest
Taxes set forth in Section 13 of the Lease;
(v) Liens of any of the types referred to in clause (iv) above
that have been bonded for not less than the full amount in dispute (or
as to which other security arrangements satisfactory to the Lessor have
been made), which bonding (or arrangements)
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shall comply with applicable Legal Requirements, and shall have
effectively stayed any execution or enforcement of such Liens; and
(vi) Liens arising out of judgments or awards with respect to
which appeals or other proceedings for review are being prosecuted in
good faith and for the payment of which adequate reserves have been
provided as required by GAAP or other appropriate provisions have been
made, so long as such proceedings have the effect of staying the
execution of such judgments or awards and satisfy the conditions for
the continuation of proceedings to contest Taxes set forth in Section
13 of the Lease.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or any other entity.
"Plan" shall have the meaning specified in the definition of the term
"Employee Benefit Plan."
"Preliminary Appraisal" shall mean a letter addressed to the Investor,
dated the Initial Closing Date, from the Independent Appraiser, containing a
preliminary appraisal of the Equipment, in form and substance reasonably
satisfactory to the Investor and the Lessee, which appraisal shall (i) include
the following conclusions:
(A) the Equipment Cost (not including Transaction Expenses payable
by the Investor pursuant to Section 9.1 of the Participation
Agreement) is equal to the fair market value of the Equipment
as of the Lease Commencement Date and the Final Closing Date
and the Basic Rent approximates a fair market rent for the
Equipment;
(B) the Equipment is expected to be useful to or usable by the
Investor or a third-party unrelated to the Lessee at the end
of the Basic Term and any Renewal Term and by a third party
unrelated to the Lessee and the Operating Lessee at the end of
any Operating Lease Term, as delivered to Lessor pursuant to
Section 22.1(c) of the Lease or pursuant to the return
provisions of the Operating Lease, as the case may be;
(C) based on our investigation, the Equipment falls within Asset
Classes 30.21, 28.0 and 30.2; therefore, approximately 8.7% of
the Equipment qualifies as "3-year property," approximately
50.4% of the Equipment qualifies as "5-year property" and
approximately 40.9% of the Equipment qualifies as "7-year
property", each within the meaning of sections 168(e)(1) and
168(e)(3)(C) of the Code;
(D) the estimated economic useful life of the Equipment dismantled
is not less than 125% of the Basic Term (plus any Renewal Term
and any Operating Lease Term);
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(E) the Residual Value of the Equipment in place as permitted by
Section 22.1(d) of the Lease at the end of the Basic Term,
taking into account inflation at a reasonable annual rate;
(F) the residual value of the Equipment dismantled at the end of
the Basic Term and the end of any Operating Lease Term,
without taking into account inflation or deflation, is
expected to equal or exceed 20% of total Equipment Cost (not
including Transaction Expenses payable by the Investor
pursuant to Section 9.1 of the Participation Agreement);
(G) as of the Final Closing Date, the Equipment will be placed in
service and will not require any improvements, modifications
or additions to render such Equipment complete and fit for its
intended use by the Lessee;
(H) the formula for computing Operating Lease Basic Rent set forth
on Exhibit C to the Participation Agreement is expected to
generate rents that are not above the range of fair market
rents for the Equipment; as of the Final Closing Date there
reasonably are expected to be multiple potential Operating
Lessees for the Equipment; and the Equipment is expected to be
able to be placed for a re-lease period of seven years at the
end of the Basic Term with an Operating Lessee pursuant to an
Operating Lease;
(I) it is reasonable to expect that the terms of the Operating
Lease are not likely to be so burdensome, onerous or
economically unattractive to a potential Operating Lessee
so as to make finding a potential Operating Lessee
sufficiently difficult as to compel the Lessee to exercise its
option to purchase the Equipment at the end of the Basic Term
or any Renewal Term;
(J) based upon the comparative costs of the reasonably anticipated
alternatives expected to be available to the Lessee at the
expiration of the Basic Term and any Renewal Term, because of
the existence of the Operating Lease Option, the Lessee will
not be under any economic compulsion to exercise its option to
purchase the Equipment; and
(K) as of the Final Closing Date, the Equipment constitutes a
single self-contained, fully integrated facility, of which
each of the major components is interrelated in terms of the
useful life, structure and design; and
(L) the rights and interests required to be delivered or granted
by the Lessee to the Lessor, or in the case of an Operating
Lease to the Operating Lessee, under Section 22.1(d) of the
Lease are all the rights and interests necessary for the
productive operation of the Equipment in place by the Lessor,
the Operating Lessee or another user; and
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(ii) address such other matters as the Investor shall
reasonably request.
"Purchase Agreement Assignment" shall mean a Purchase Agreement
Assignment in the form attached as Exhibit C to the Lease, together with a
Consent and Agreement in the form attached thereto.
"Purchase Option Discount" shall mean the estimated value of the
deferral of the Investor's federal and state income taxes during 1999, if any,
by reason of the Lessee's exercise of the Expiration Date Purchase Option under
Section 20.2 of the Lease, as determined at that time and as mutually agreed by
the Investor and the Lessee.
"Purchase Option Price" shall mean (i) with respect to the Basic Term,
(a) the greater of (1) ninety-five percent (95%) of the Equipment Cost or (2)
the Residual Value on the Basic Term Expiration Date, minus (b) the Purchase
Option Discount, if any, provided that in no event shall the Purchase Option
Price be less than the Residual Value of the Equipment on the Basic Term
Expiration Date, and (ii) with respect to the first Renewal Term, the greater of
(a) the Unamortized Equipment Cost on the Expiration Date or (b) the Residual
Value on the Expiration Date.
"Quarterly Tax Payments" shall have the meaning specified in Exhibit E
to the Participation Agreement.
"Recourse Component" shall mean, for any Rental Period, the product of
(i)(a) the Recourse Margin, multiplied by (b) a fraction equal to (1) the number
of days in such Rental Period, divided by (2) 360, multiplied by (ii) the
difference between (a) the Unamortized Equipment Cost and (b) twenty percent
(20%) of the original Equipment Cost for all Equipment then subject to the
Lease.
"Recourse Margin" shall mean (i) with respect to the Basic Term,
sixty-five basis points (0.65%) per annum, and (ii) with respect to any Renewal
Term, as determined by the Lessor in its good faith business judgment based upon
the Renewal Term Pricing Factors applicable to such Renewal Term.
"Reference Lender" shall mean Deutsche Bank A.G., New York Branch.
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Remarketing Option" shall have the meaning specified in Section 21.4
of the Lease.
"Remarketing Option Payment" shall mean an amount equal to the
difference between (i) the Unamortized Equipment Cost on the Expiration Date and
(ii) the Net Sales Proceeds, but not
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to exceed the difference between (x) the Unamortized Equipment Cost on the
Expiration Date and (y) twenty percent (20%) of the original Equipment Cost.
"Renewal Rent" shall have the meaning specified in Section 21 of the
Lease.
"Renewal Option" shall have the meaning specified in Section 21 of the
Lease.
"Renewal Term" shall have the meaning specified in Section 21 of the
Lease.
"Renewal Term Appraisal" shall mean an appraisal of the Equipment
prepared by an Independent Appraiser in a manner consistent with the preparation
of the Preliminary Appraisal and the Final Appraisal and addressing such matters
as the Investor shall reasonably request, including, but not limited to, the
conclusions set forth in clauses (H)-(J) of the definition of "Preliminary
Appraisal".
"Renewal Term Pricing Factors" shall mean, with respect to any Renewal
Term, (i) prevailing market conditions, (ii) the terms and conditions of such
Renewal Term, (iii) the credit standing of the Lessee, and (iv) any other
factors that the Investor reasonably deems relevant at the time of
determination.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental
Rent, in each case payable under the Lease.
"Rental Period" shall mean:
(i) initially, the period commencing on the Initial Closing
Date and ending one month thereafter;
(ii) thereafter, until the Final Closing Date, each period
commencing on the last day of the next preceding Rental Period and
ending one month thereafter, with the last of such periods ending on
the Final Closing Date; and
(iii) thereafter, each period commencing on the last day of
the next preceding Rental Period and ending three months thereafter;
provided, however, that all of the foregoing provisions relating to
Rental Periods are subject to the following:
(a) if any Rental Period would otherwise end on a day
that is not a Business Day, such Rental Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Rental Period into
another calendar month, in which event such Rental Period
shall end on the immediately preceding Business Day;
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(b) any Rental Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Rental Period) shall end on the last Business
Day of a calendar month;
(c) the final Rental Period of the Basic Term shall
end on the Basic Term Expiration Date; and
(d) no Rental Period shall end on a date after the
Expiration Date.
"Reportable Event" shall have the meaning specified in ERISA.
"Required Modification" shall have the meaning specified in Section 11
of the Lease.
"Requirement of Law" as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation (including ERISA) or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Residual Value" shall mean, at any date, the estimated fair market
value of the item or items of Equipment with respect to which such determination
is being made taking into account a reasonable rate of inflation, as shown on
the Final Appraisal or, with respect to a Renewal Term, if available, a Renewal
Term Appraisal.
"Responsible Officer" shall mean the Chairman or Vice Chairman of the
Board of Directors, the Chairman or Vice Chairman of the Executive Committee of
the Board of Directors, the President, any Senior Vice President or Executive
Vice President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer.
"Restricted Subsidiary" shall mean each Subsidiary of the Lessee having
total assets (determined in accordance with the GAAP consistently applied) in
excess of five percent (5%) of the total consolidated assets (determined in
accordance with GAAP consistently applied) of the Lessee and its consolidated
Subsidiaries.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, together with the rules and regulations promulgated
thereunder.
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"Security Agreement" shall mean any security agreement between the
Owner Trustee or the Investor and the Agent, for the benefit of the Lenders, in
order to create a first priority Lien on the Trust Estate, as amended,
supplemented or otherwise modified from time to time.
"Security Documents" shall mean the collective reference to the
Security Agreement, the Assignment of Lease and all other security documents
hereafter delivered to the Agent or any other Person granting a Lien on any
asset or assets of any Person to secure the obligations and liabilities of the
Owner Trustee or the Investor under any Credit Agreement or to secure any
guarantee of any such obligations and liabilities, and all replacements thereof
and all amendments or supplements thereto or modifications thereof.
"Severable Optional Modification" shall mean the meaning specified in
Section 11 of the Lease.
"Subsidiary" shall mean as to any Person, any corporation of which at
least a majority of the outstanding stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other 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 such Person, or by one or
more Subsidiaries, or by such Person and one or more Subsidiaries.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which Lessee assumes or agrees to pay to Lessor, the
Investor, the Agent or any other Person under the Lease or under any of the
other Operative Agreements including, without limitation, payments of
Termination Value, Expiration Date Termination Payment, Remarketing Option
Payment and all indemnification amounts, liabilities and obligations.
"Taxes" shall have the meaning specified in the definition of the term
"Impositions."
"Tax Loss" shall have the meaning specified in Section 13.3(a) of the
Participation Agreement.
"Term" shall mean the Basic Term and each Renewal Term.
"Termination Date" shall have the meaning specified in Section 16.2(a)
of the Lease.
"Termination Event" shall mean (i) a Reportable Event (other than a
Reportable Event not subject to the provisions for 30-day notice to the PBGC
under such regulations), or (ii) the withdrawal of the Lessee or any of its
ERISA Affiliates from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing of a
notice of intent to terminate a Plan in a distress termination under Section
4041 of ERISA, or (iv) the institution of proceedings to terminate a Plan by the
PBGC, or (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the involuntary
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termination of, or the appointment of a trustee to administer, any Plan, or (vi)
the imposition of liability of Lessee or any of its ERISA Affiliates pursuant to
Sections 4064 or 4069 of ERISA, which, in the case of any event described in
clauses (i) through (v) above, would cause the sum of the Lessee's and its ERISA
Affiliates' liabilities (after giving effect to the tax consequences thereof)
resulting from or otherwise associated with such event to exceed $3,000,000.
"Termination Notice" shall have the meaning specified in Section
16.1(a) of the Lease.
"Termination Value" shall mean, at any date and with respect to the
Equipment, the sum of: (i) any costs or expenses of Lessor associated with a
sale or other disposition of the Equipment; (ii) the Unamortized Equipment Cost
of such Equipment at such date; and (iii) the Eurodollar Make Whole Amount for
the Equipment.
"Transaction Expenses" shall mean all costs and expenses incurred in
connection with the preparation, execution and delivery of the Operative
Agreements and the transactions contemplated by the Operative Agreements
including without limitation:
(i) the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the Operative
Agreements and the other transaction documents, preparing for the
closings under, and rendering opinions in connection with, such
transactions and in rendering other services customary for counsel
representing parties to transactions of the types involved in the
transactions contemplated by the Operative Agreements;
(ii) any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or any of
the other transaction documents;
(iii) the reasonable out-of-pocket expenses of the Investor in
connection with the transactions contemplated by the Operative
Agreements;
(iv) any and all Taxes and fees incurred in recording or
filing any Operative Agreement or any other transaction document,
security agreement, notice or financing statement with any public
office, registry or governmental agency in connection with the
transactions contemplated by the Operative Agreements; and
(v) the Commitment Fee.
"Trust" shall have the meaning specified in the Trust Agreement.
"Trust Agreement" shall mean the Trust Agreement dated as of the
Initial Closing Date between the Investor and the Owner Trustee.
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"Trust Company" shall mean First Security Bank of Utah, N.A. and any
successor financial institution acting as Owner Trustee under the Operative
Agreements, in each case in its individual capacity.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"UCC Financing Statements" shall mean collectively the financing
statements required by the Credit Agreement or related Security Documents and
the Lessor Financing Statements.
"Unamortized Equipment Cost" shall mean, for any period or at any date,
the difference between (i) the original total Equipment Cost of the Equipment,
and (ii) the sum of all Amortization Components for all periods ending prior to
the period with respect to which the Unamortized Equipment Cost is being
determined.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial
Code as in effect in any applicable jurisdiction.
"U.S." shall mean the United States of America, its territories, its
possessions and all other areas subject to its jurisdiction.
"Voting Power" shall mean, with respect to securities issued by any
Person, the combined voting power of all securities of such person which are
issued and outstanding at the time of determination and which are entitled to
vote in the election of directors of such Person, other than securities having
such power only by reason of the happening of a contingency.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
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