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EXHIBIT 10.20
[LOGO]
DEUTSCHE BANK MEDIUM TERM LEASE
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LEASE AGREEMENT
between
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity,
but solely as Owner Trustee,
as Lessor,
and
FRESENIUS USA, INC.,
as Lessee
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Dated as of March 31, 1995
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FRESENIUS USA, INC. EQUIPMENT LEASE PROGRAM
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This Lease Agreement may in the future be subject to a security interest in
favor of a commercial bank or other financial institution, as agent (the
"Agent") under a credit agreement, among First Security Bank of Utah, N.A., not
in its individual capacity except as expressly stated therein, but solely as
the Owner Trustee, the Lenders referred to therein and the Agent, as amended or
supplemented. This Lease Agreement has been executed in several counterparts.
To the extent, if any, that this Lease Agreement constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Lease Agreement may be
created through the transfer or possession of any counterpart other than the
original counterpart containing the receipt therefor executed by the Owner
Trustee on the signature page hereof.
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. DESCRIPTION OF THE EQUIPMENT AND LEASE TERM . . . . . . . . . . . . . . 1
2.1. Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Lease Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Equipment Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. RENT AND RENT PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Supplemental Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3. Performance on a Non-Business Day . . . . . . . . . . . . . . . . . . . 3
3.4. Rent Payment Provisions . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. UTILITY CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 6. NET LEASE AND ABATEMENT . . . . . . . . . . . . . . . . . . . . . . . . 4
6.1. Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.2. No Termination or Abatement . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. RIGHTS IN AND TO THE EQUIPMENT . . . . . . . . . . . . . . . . . . . . . 5
7.1. Ownership of the Equipment . . . . . . . . . . . . . . . . . . . . . . . 5
7.2. Security Interest in the Equipment . . . . . . . . . . . . . . . . . . . 5
SECTION 8. CONDITION AND USE OF THE EQUIPMENT . . . . . . . . . . . . . . . . . . . 5
8.1. Condition of the Equipment . . . . . . . . . . . . . . . . . . . . . . . 5
8.2. Possession and Use of the Equipment . . . . . . . . . . . . . . . . . . 6
SECTION 9. COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS . . . . . 7
SECTION 10. MAINTENANCE AND ENVIRONMENTAL INSPECTION . . . . . . . . . . . . . . . 7
10.1. Maintenance and Repair; Return . . . . . . . . . . . . . . . . . . . . . 7
10.2. Environmental Inspection . . . . . . . . . . . . . . . . . . . . . . . . 8
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SECTION 11. MODIFICATIONS, SUBSTITUTIONS AND REPLACEMENTS AND FINANCING THEREOF . . 9
11.1. Modifications, Substitutions and Replacements . . . . . . . . . . . . . . 9
11.2. Financing of Severable Optional Modifications . . . . . . . . . . . . . . 9
SECTION 12. PROHIBITION AGAINST LIENS . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 13. PERMITTED CONTESTS OTHER THAN IN RESPECT OF INDEMNITIES . . . . . . . . 11
SECTION 14. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
14.1. Public Liability and Workers' Compensation Insurance . . . . . . . . . . 12
14.2. Hazard and Other Insurance . . . . . . . . . . . . . . . . . . . . . . . 12
14.3. Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 15. EVENTS OF LOSS AND ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . 14
15.1. Event of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15.2. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . 16
15.3. Notice of Environmental Matters . . . . . . . . . . . . . . . . . . . . 17
SECTION 16. TERMINATION FOR EVENTS OF LOSS . . . . . . . . . . . . . . . . . . . . . 17
16.1. Termination Upon Certain Events . . . . . . . . . . . . . . . . . . . . 17
16.2. Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 17. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
17.1. Lease Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 18
17.2. Surrender of Possession . . . . . . . . . . . . . . . . . . . . . . . . 20
17.3. Reletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
17.4. Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
17.5. Final Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . 22
17.6. Waiver of Certain Rights . . . . . . . . . . . . . . . . . . . . . . . . 22
17.7. Assignment of Rights Under Contracts . . . . . . . . . . . . . . . . . . 22
17.8. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 18. LESSOR'S RIGHT TO CURE LESSEE'S LEASE DEFAULTS . . . . . . . . . . . . . 23
SECTION 19. PROVISIONS RELATING TO LESSEE'S TERMINATION OF
THIS LEASE OR EXERCISE OF EXPIRATION DATE
PURCHASE OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 20. EXPIRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
20.1. Expiration Date Options . . . . . . . . . . . . . . . . . . . . . . . . 23
20.2. Expiration Date Purchase Option . . . . . . . . . . . . . . . . . . . . 23
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20.3. Operating Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
20.4. Remarketing Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 21. RENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
21.1. Renewal Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
21.2. Exercise of Renewal Option . . . . . . . . . . . . . . . . . . . . . . . 25
21.3. Renewal Term Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 22. SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
22.1. Sale Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
22.2. Application of Proceeds of Sale . . . . . . . . . . . . . . . . . . . . 27
22.3. Certain Obligations Continue . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 23. HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 24. RISK OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 25. SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
25.1. Subletting and Assignment . . . . . . . . . . . . . . . . . . . . . . . 28
25.2. Subleases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 26. NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 27. ACCEPTANCE OF SURRENDER . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 28. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 29. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
29.1. Survival and Severability . . . . . . . . . . . . . . . . . . . . . . . 30
29.2. Amendments and Modifications . . . . . . . . . . . . . . . . . . . . . . 30
29.3. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 31
29.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
29.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
29.6. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
29.7. Limitations on Recourse . . . . . . . . . . . . . . . . . . . . . . . . 31
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EXHIBITS
Exhibit A Form of Equipment Schedule
Exhibit B Other Names and Locations of Lessee
Exhibit C Purchase Agreement Assignment
Exhibit D Form of Bill of Sale
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LEASE AGREEMENT
This LEASE AGREEMENT (this "Lease"), dated as of March 31,
1995, between FIRST SECURITY BANK OF UTAH, N.A., a national banking
association, having its principal office at 79 South Main Street, Salt Lake
City, Utah 84111, not in its individual capacity, but solely as Owner Trustee,
as lessor (the "Lessor"), and FRESENIUS USA, INC., a Massachusetts corporation,
having its principal place of business at 2637 Shadelands Drive, Walnut Creek,
California 94598, as lessee (the "Lessee").
W I T N E S S E T H:
WHEREAS, subject to the terms and conditions of this Lease,
Lessor will purchase the Equipment from Lessee or one or more third parties
designated by Lessee; and
WHEREAS, Lessor desires to lease to Lessee, and Lessee desires
to lease from Lessor, the Equipment;
NOW, THEREFORE, 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.
Capitalized terms used but not otherwise defined in this Lease
have the respective meanings specified in Appendix A to the Participation
Agreement of even date herewith (the "Participation Agreement") among the
Lessee, First Security Bank of Utah, N.A., not in its individual capacity
except as expressly stated therein, as Owner Trustee, and the Investor, the
terms of which are incorporated herein by reference.
SECTION 2. DESCRIPTION OF THE EQUIPMENT AND LEASE TERM.
2.1. Equipment. Subject to the terms and conditions
hereinafter set forth and contained in the Equipment Schedules relating to the
Equipment, Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Equipment.
2.2. Lease Term. The term of this Lease with respect to
the Equipment (the "Basic Term") shall begin on the Lease Commencement Date and
shall end on the Basic Term
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Expiration Date, unless extended or earlier terminated in accordance with the
provisions of this Lease.
2.3. Title. Each item of Equipment is leased to Lessee
without any representation or warranty, express or implied, by Lessor and
subject to Permitted Liens and all applicable Legal Requirements. Lessee shall
in no event have any recourse against Lessor for any defect in title to any
Equipment, except for Lessor Liens attributable to Lessor.
2.4. Equipment Schedules. On the Lease Commencement Date
and each other Closing Date, Lessee and Lessor shall each execute and deliver
an Equipment Schedule or Equipment Schedules for the Equipment to be leased on
such date in substantially the form of Exhibit A hereto, and thereafter such
Equipment shall be subject to the terms of this Lease.
SECTION 3. RENT AND RENT PAYMENT.
3.1. Rent. (a) During the Basic Term, Lessee shall pay
Basic Rent in arrears on each Payment Date and on any date on which this Lease
shall terminate with respect to any or all of the Equipment. Basic Rent shall
be computed in accordance with the definition thereof and the other defined
terms used therein set forth in Appendix A to the Participation Agreement and
Sections 10.3, 10.4, 10.5 and 10.6 of the Participation Agreement which are
incorporated herein by reference.
(b) Basic Rent shall be due and payable in lawful money
of the United States and shall be paid by wire transfer of immediately
available funds on the due date therefor to such account or accounts at such
bank or banks or to such other Person or in such other manner as Lessor shall
from time to time direct.
(c) Neither Lessee's inability or failure to take
possession of all or any portion of any Equipment when delivered by Lessor, nor
Lessor's inability or failure to deliver all or any portion of any Equipment to
Lessee on or before the applicable Closing Date, whether or not attributable to
any act or omission of Lessee or any act or omission of Lessor, or for any
other reason whatsoever, shall delay or otherwise affect Lessee's obligation to
pay Rent for such Equipment in accordance with the terms of this Lease.
3.2. Supplemental Rent. Lessee shall pay to Lessor or the
Person entitled thereto any and all Supplemental Rent promptly as the same
shall become due and payable, and if Lessee fails to pay any Supplemental Rent,
Lessor shall have all rights, powers and remedies provided for herein or by law
or equity or otherwise in the case of nonpayment of Basic Rent. Lessee shall
pay to Lessor, as Supplemental Rent, among other things, on demand, to the
extent permitted by applicable Legal Requirements, interest at the applicable
Overdue Rate on any installment of Basic Rent not paid when due for the period
for which the same shall be overdue and on any payment of Supplemental Rent not
paid when due or demanded by Lessor for the period from the due date
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or the date of any such demand, as the case may be, until the same shall be
paid. The expiration or other termination of Lessee's obligations to pay Basic
Rent hereunder shall not limit or modify the obligations of Lessee with respect
to Supplemental Rent. Unless expressly provided otherwise in this Lease, in
the event of any failure on the part of Lessee to pay and discharge any
Supplemental Rent as and when due, Lessee shall also promptly pay and discharge
any fine, penalty, interest or cost which may be assessed or added for
nonpayment or late payment of such Supplemental Rent, all of which shall also
constitute Supplemental Rent.
3.3. Performance on a Non-Business Day. If any payment is
required hereunder on a day that is not a Business Day, then such payment shall
be due on the next succeeding Business Day, unless the definition of the term
"Rental Period" shall require payment on a different day.
3.4. Rent Payment Provisions. Lessee shall make payment
of all Basic Rent and Supplemental Rent when due regardless of whether any of
the Operative Agreements pursuant to which same is calculated and is owing
shall have been rejected, avoided or disavowed in any bankruptcy or insolvency
proceeding involving any of the parties to any of the Operative Agreements.
Such provisions of such Operative Agreements and their related definitions are
incorporated herein by reference and shall survive any termination, amendment
or rejection of any such Operative Agreements.
SECTION 4. UTILITY CHARGES.
Lessee shall pay or cause to be paid all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service and all
other rents and utilities used in or in connection with the Equipment and
related real property during the Basic Term. Lessee shall be entitled to
receive any credit or refund with respect to any utility charge paid by Lessee
and the amount of any credit or refund received by Lessor on account of any
utility charges paid by Lessee, net of the costs and expenses incurred by
Lessor in obtaining such credit or refund, shall be promptly paid over to
Lessee. All charges for utilities imposed with respect to an item of Equipment
for a billing period during which this Lease expires or terminates shall be
adjusted and prorated on a daily basis between Lessor and Lessee, and each
party shall pay or reimburse the other for such party's pro rata share thereof.
SECTION 5. QUIET ENJOYMENT.
Subject to the rights of Lessor contained in Sections 17.2 and
17.3 hereof and the other terms of this Lease and so long as no Lease Event of
Default shall have occurred and be continuing, Lessee shall peaceably and
quietly have, hold and enjoy the Equipment for the Basic Term, free of any
claim or other action by Lessor or anyone rightfully claiming by, through or
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under Lessor (other than Lessee) with respect to any matters arising from and
after the applicable Closing Date.
SECTION 6. NET LEASE AND ABATEMENT.
6.1. Net Lease. This Lease shall constitute a net lease,
and Basic Rent and Supplemental Rent shall be paid absolutely net to Lessor, so
that this Lease shall yield to Lessor the full amount thereof, without setoff,
deduction or reduction (other than as already taken into account in the
computation of Supplemental Rent). Any present or future law to the contrary
notwithstanding, this Lease shall not terminate, nor shall Lessee be entitled
to any abatement, suspension, deferment, reduction, setoff, counterclaim, or
defense with respect to the Rent (other than as already taken into account in
the computation of Supplemental Rent), nor shall the obligations of Lessee
hereunder be affected (except as expressly herein permitted and by performance
of the obligations in connection therewith) by reason of: (i) any damage to or
destruction of any Equipment or any part thereof; (ii) any taking of any
Equipment or any part thereof or interest therein by condemnation or otherwise;
(iii) any prohibition, limitation, restriction or prevention of Lessee's use,
occupancy or enjoyment of any Equipment or any part thereof, or any
interference with such use, occupancy or enjoyment by any Person or for any
other reason (other than as a result of an intentional breach by Lessor of its
covenant of quiet enjoyment); (iv) any title defect, Lien or any matter
affecting title to any Equipment (other than as a result of an intentional
breach by Lessor of its covenant of quiet enjoyment); (v) any default by Lessor
hereunder (other than an intentional breach by Lessor of its covenant of quiet
enjoyment); (vi) any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding relating to or affecting Lessor;
(vii) the impossibility of performance by Lessor, Lessee or both; (viii) any
action of any Governmental Authority; (ix) Lessee's acquisition of ownership of
all or part of any item of Equipment (except to the extent this Lease is
terminated with respect to such item of Equipment pursuant to the terms
hereof); (x) breach of any warranty or representation with respect to any
Equipment or any Operative Agreement; (xi) any defect in the condition,
quality or fitness for use of any Equipment or any part thereof; or (xii) any
other cause or circumstances whether similar or dissimilar to the foregoing and
whether or not Lessee shall have notice or knowledge of any of the foregoing
(other than as a result of an intentional breach by Lessor of its covenant of
quiet enjoyment). The parties intend that the obligations of Lessee hereunder
shall be covenants and agreements that are separate and independent from any
obligations of Lessor hereunder and shall continue unaffected unless such
obligations shall have been modified or terminated in accordance with an
express provision of this Lease.
6.2. No Termination or Abatement. Lessee shall remain
obligated under this Lease in accordance with its terms and shall not take any
action to terminate, rescind or avoid this Lease, notwithstanding any action
for bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Lessor, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator
of Lessor or by any court with respect to Lessor. Lessee hereby waives all
right (i) to terminate or surrender this
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Lease or (ii) to avail itself of any abatement, suspension, deferment,
reduction, setoff, counterclaim or defense with respect to any Rent. Lessee
shall remain obligated under this Lease in accordance with its terms and Lessee
hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be
bound by all of the terms and conditions contained in this Lease.
SECTION 7. RIGHTS IN AND TO THE EQUIPMENT.
7.1. Ownership of the Equipment. Lessor and Lessee intend
that (i) Lessor will be treated as the owner and lessor of the Equipment and
(ii) Lessee will be treated as the lessee of the Equipment. Lessee agrees that
neither it, any affiliate of Lessee, nor any permitted sublessee or user of the
Equipment will, directly or indirectly, at any time during the term of the
Lease take any action or fail to take any action or file or fail to file any
returns, certificates, or other documents if such action, failure to act,
filing or failure to file would be inconsistent with the foregoing
characterization of the transaction. Lessee agrees further that it will file
such returns, take such action, execute such documents, and keep and make
available to Lessor such records as may be reasonable and necessary to
facilitate accomplishing the foregoing.
7.2. Security Interest in the Equipment. In the event
that this Lease shall be recharacterized under applicable law as a lease
intended for security or a secured financing, Lessor and Lessee further intend
and agree that, for the purpose of securing Lessee's obligations for the
repayment of its obligations hereunder, (i) this Lease shall also be deemed to
be a security agreement and financing statement within the meaning of Article 9
of the Uniform Commercial Code; (ii) the conveyance provided for in Section 2.1
hereof shall be deemed to be a grant by Lessee to Lessor of a lien on and
security interest in all of Lessee's right, title and interest in and to the
Equipment and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property, whether in the
form of cash, investments, securities or other property; (iii) the possession
by Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgements,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under applicable law. Lessor and Lessee
shall, to the extent consistent with this Lease, take such actions as may be
necessary (including the filing of Uniform Commercial Code Financing
Statements) to ensure that, if this Lease were deemed to create a security
interest in the Equipment in accordance with this Section, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the Basic Term.
SECTION 8. CONDITION AND USE OF THE EQUIPMENT.
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8.1. Condition of the Equipment. LESSEE ACKNOWLEDGES AND
AGREES THAT IT IS LEASING THE EQUIPMENT "AS IS" WITHOUT REPRESENTATION,
WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY LESSOR. NEITHER LESSOR NOR THE
INVESTOR HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY
OR COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE, VALUE, USE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OF ANY EQUIPMENT (OR ANY PART THEREOF), OR
ANY OTHER REPRESENTATION, WARRANTY OR COVENANT (SUBJECT TO LESSEE'S RIGHT OF
QUIET ENJOYMENT) WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY EQUIPMENT
(OR ANY PART THEREOF), AND NEITHER LESSOR NOR THE INVESTOR SHALL BE LIABLE FOR
ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF ANY EQUIPMENT,
OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT. LESSEE HAS OR WILL
HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT THE EQUIPMENT, IS OR WILL BE
(INSOFAR AS THE LESSOR IS CONCERNED) SATISFIED WITH THE RESULTS OF ITS
INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS OF THE RESULTS
OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE
PRECEDING SENTENCE, AS BETWEEN THE INVESTOR AND LESSOR, ON THE ONE HAND, AND
LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
8.2. Possession and Use of the Equipment. (a) At all
times during the Basic Term, the Equipment shall be continuously used by Lessee
or a permitted sublessee in the ordinary course of its business, subject to
usual and customary downtime for repairs, maintenance and the making of
modifications. Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Equipment as contemplated by this
Lease.
(b) The address of Lessee stated below or on the
applicable Equipment Schedule is the chief place of business and chief
executive office of Lessee (as such terms are used in Section 9-103(3) of the
Uniform Commercial Code); and except for such names and the names specified on
Exhibit B hereto or on the applicable Equipment Schedule, Lessee does not
conduct business in a corporate or divisional name at any location where the
Equipment is or will be located under any other name. Each Equipment Schedule
correctly identifies the location of each item of Equipment and whether any of
such locations are leased by Lessee or are subject to any real property
mortgage. Lessee has no other places of business where the Equipment will be
located other than those identified on the applicable Equipment Schedule.
(c) With respect to the Equipment being purchased by
Lessor on the Lease Commencement Date or any other Closing Date, subject to the
terms and conditions of this Lease and the Participation Agreement, Lessor and
Lessee shall execute and deliver one or more Equipment Schedules that have a
complete description of each item of Equipment to be leased hereunder as of
such date and a Purchase Agreement Assignment in the form attached hereto as
Exhibit C. Simultaneously therewith, Lessor shall purchase such Equipment from
Lessee or the
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applicable third party vendor subject to satisfaction of such terms and
conditions by paying to Lessee or such vendor an amount equal to the total
Equipment Cost specified on the Equipment Schedules for such Equipment, such
purchase to be evidenced by a Bill of Sale from Lessee or such vendor to Lessor
in the form attached hereto as Exhibit D covering such Equipment; whereupon, as
between Lessor and Lessee, such Equipment shall be deemed to have been accepted
by Lessee for all purposes of this Lease and to be subject to this Lease.
SECTION 9. COMPLIANCE WITH LEGAL REQUIREMENTS AND
INSURANCE REQUIREMENTS.
Subject to the terms of Section 13 hereof relating to
permitted contests, Lessee, at its sole cost and expense, shall (i) comply with
all Legal Requirements (including all Environmental Laws), except to the extent
noncompliance therewith could not, individually or in the aggregate, have a
Material Adverse Effect, and all Insurance Requirements relating to the
Equipment, including the use, operation, maintenance, repair and restoration
thereof, whether or not compliance therewith shall require structural or
extraordinary changes in the Equipment or interfere with the use and enjoyment
of the Equipment, and (ii) procure, maintain and comply with all licenses,
permits, orders, approvals, consents and other authorizations required for the
use, operation, maintenance, repair and restoration of the Equipment, except to
the extent noncompliance therewith could not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 10. MAINTENANCE AND ENVIRONMENTAL INSPECTION.
10.1. Maintenance and Repair; Return. (a) Lessee, at its
sole cost and expense, shall cause each item of Equipment to be operated,
serviced, maintained and repaired (i) so as to keep it in good operable
condition, ordinary wear and tear excepted; (ii) in accordance with the terms
of any vendor's or manufacturer's warranties and specifications; (iii) in a
manner consistent with standard industry practice for similar equipment and
Lessee's maintenance practices applicable to its other equipment and applicable
Insurance Requirements; (iv) in accordance with all Legal Requirements, except
to the extent noncompliance therewith could not, individually or in the
aggregate, have a Material Adverse Effect; and (v) so as to permit the
continued operation as an integrated production system capable of producing a
saleable end product. Lessee shall make all necessary repairs thereto, of
every kind and nature whatsoever, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by all Legal
Requirements, Insurance Requirements, and manufacturer's specifications and
standards and on a basis consistent with the operation and maintenance of
properties or equipment comparable in type and function to the applicable
Equipment, subject, however, to the provisions of Section 15.1 hereof with
respect to Events of Loss.
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(b) Lessee shall not use or locate the Equipment outside
of the United States. Lessee shall not move or relocate the Equipment to any
location other than a location listed on the applicable Equipment Schedule
hereto unless Lessee shall provide Lessor with written notice of such
relocation not less than thirty (30) days after such relocation or such lesser
period as allowed by law and Lessee shall file any Uniform Commercial Code
financing statements with respect to such Equipment in such filing offices, to
the extent required by law, and obtain such landlord waivers and/or mortgagee
waivers with respect to such Equipment, as Lessor shall require.
(c) Upon reasonable advance notice, Lessor and its agents
shall have the right to inspect the Equipment and all maintenance records with
respect thereto at any reasonable time during normal business hours but shall
not, in the absence of a Lease Event of Default, materially disrupt the
business of Lessee. Lessee shall cause an appraisal with respect to the
Equipment in form and substance satisfactory to Lessor to be provided to Lessor
at Lessee's sole expense unless otherwise specified (i) following Lessor's
reasonable request, in the absence of a Lease Default or Lease Event of
Default, no more than twice a year following the Final Closing Date, provided
that any such appraisals shall be at Lessor's sole expense, (ii) at such other
times as Lessor may request if a Lease Default or Lease Event of Default shall
have occurred and be continuing, (iii) in connection with an Operating Lease as
provided in Section 11 of the Participation Agreement, and (iv) in connection
with any proposed Renewal Term as provided in Section 21.1.
(d) Lessor shall under no circumstances be required to
make any repairs, replacements, alterations or modifications of any nature or
description to any Equipment, make any expenditure whatsoever in connection
with this Lease or maintain any Equipment in any way. Lessor shall not be
required to maintain, repair or rebuild all or any part of any Equipment, and
Lessee waives the right to (i) require Lessor to maintain, repair, or rebuild
all or any part of any Equipment, or (ii) make repairs at the expense of Lessor
pursuant to any Legal Requirement, Insurance Requirement, contract, agreement,
covenant, condition or restriction at any time in effect.
(e) Lessee shall, upon the expiration or earlier
termination of this Lease with respect to the Equipment, if Lessee shall not
have exercised its Expiration Date Purchase Option or option to secure an
Operating Lessee with respect to such Equipment, surrender such Equipment to
Lessor in its then-current, "AS IS" condition, subject to Lessee's obligations
under Sections 9, 10.l(a), 10.2, 11, 12 and 22.1 hereof.
10.2. Environmental Inspection. If Lessee has not given
notice of exercise of its Expiration Date Purchase Option or of its election to
secure an Operating Lease pursuant to Section 20.2 or 20.3 hereof, then not
more than 120 days nor less than 30 days prior to the Expiration Date, Lessee
shall, at its sole cost and expense, provide to Lessor at its request a report
by an environmental consultant selected by Lessee, and satisfactory to Lessor,
certifying that, since the Lease Commencement Date, Hazardous Substances have
not at any time been generated, used, treated or stored in, transported to or
from, Released at, on or from or deposited at or on such Equipment in violation
of this Lease, and no portion of such Equipment has been used for
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such purposes other than (i) as necessary to use, operate, maintain, repair and
restore such Equipment in accordance with this Lease and (ii) in full
compliance with all Environmental Laws. If such is not the case, the report
shall set forth a remedial response plan (the cost of which shall be borne by
the Lessee) relating to such Equipment (which remedial response plan, if
required by any Environmental Law or Governmental Authority, shall be approved
by the appropriate Governmental Authority). Such remedial response plan shall
include, but shall not be limited to, plans for full response, remediation,
removal, or other corrective action, and the protection, or mitigative action
associated with the protection, of natural resources, as required by all
applicable Environmental Laws.
SECTION 11. MODIFICATIONS, SUBSTITUTIONS AND REPLACEMENTS
AND FINANCING THEREOF.
11.1. Modifications, Substitutions and Replacements. If any
parts of the Equipment become worn out, lost, destroyed, damaged beyond repair
or otherwise permanently rendered unfit for use, Lessee, at its own expense,
will within a reasonable time replace such parts with replacement parts which
are free and clear of all Liens (other than Permitted Liens) and have a value,
utility and useful life at least equal to the parts replaced. Lessee, at its
sole cost and expense, may at any time and from time to time make alterations,
renovations, improvements and additions to the Equipment or any part thereof
and substitutions and replacements therefor (collectively with such replacement
parts referred to in the preceding sentence, "Modifications"); provided, that:
(i) no Modification shall impair the value, utility or useful life of the
Equipment from that which existed immediately prior to such Modification; (ii)
Lessee shall make all Modifications required to be made pursuant to a Legal
Requirement or an Insurance Requirement (each, a "Required Modification");
(iii) the Modification shall be done expeditiously and in a good and
workmanlike manner; (iv) Lessee shall comply with all Legal Requirements
(including all Environmental Laws), except to the extent noncompliance
therewith could not, individually or in the aggregate, have a Material Adverse
Effect, and Insurance Requirements applicable to the Modification; (v) subject
to the terms of Section 13 hereof relating to permitted contests, Lessee shall
pay all costs and expenses and discharge any Liens arising with respect to the
Modification; (vi) such Modification shall comply with Sections 8.2 and 10.1
hereof; and (vii) no Modification shall cause the Equipment or any part thereof
to become "limited use property", as defined in Revenue Procedure 75-21 and
Revenue Procedure 76-30. All Required Modifications and all other
Modifications (other than those that may be readily removed without impairing
the value, utility or remaining useful life of the applicable Equipment
("Severable Optional Modifications")) shall become property of Lessor and shall
be subject to this Lease, and title to any such Modifications shall immediately
vest in Lessor. All Modifications to which Lessor shall not have title may be
removed at any time by Lessee. Any such Modifications shall be removed by
Lessee at its expense if Lessor shall so request prior to the return of the
Equipment to Lessor, sale thereof to a third party or lease thereof by Lessor
to an Operating Lessee in accordance with the provisions of this Lease, and
Lessee shall at its expense repair any damage to the Equipment caused by the
removal of such Modifications. Lessor shall have the option to purchase all
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Severable Optional Modifications on the Expiration Date for Fair Market Value,
determined as if such Modifications were detached from the Equipment, and in "AS
IS" "WHERE IS" condition.
11.2. Financing of Severable Optional Modifications. (a)
Lessor agrees to consider in its sole discretion making an equity investment in
respect of any Severable Optional Modifications proposed by Lessee and not in
violation of this Lease. If Lessor does not agree to make an equity investment
in a Severable Optional Modification, then Lessee shall have the right to
arrange separate financing thereof and shall retain all depreciation, interest
deductions and other tax benefits associated with the Severable Optional
Modification; provided, however, that in the event that such separate financing
shall be secured by such Severable Optional Modification, then Lessee shall:
(i) provide Lessor with not less than ten (10) days' prior
written notice of Lessee's intent to secure any separate financing arranged by
it of any Severable Optional Modification with a Lien on such Severable
Optional Modification;
(ii) affix in a prominent place to any Equipment to which
such Severable Optional Modification is attached such labels, name plates or
other markings as Lessor may designate, clearly indicating Lessor as the owner
of such Equipment; and
(iii) upon the Expiration Date, at its expense, remove such
Severable Optional Modification from the Equipment to which it is attached
unless (A) Lessor purchases such Severable Optional Modification pursuant to
Section 11.1 hereof, or (B) Lessee exercises one of its options on the
Expiration Date pursuant to Section 20.1 (i) or (ii) hereof.
(b) Any such financing by Lessor shall be subject to the
receipt of the documents referred to below (in form and substance reasonably
satisfactory to Lessor):
(i) a lease supplement, duly authorized, executed and
delivered by Lessee and Lessor, providing for adjustments in Rent, Unamortized
Equipment Cost, Residual Value, Termination Value, Lease Funding Balance and
Purchase Option Price under the Lease, together with such instruments of
conveyance, assignment and transfer, if any, necessary to subject such lease
supplement to the Lien of the Credit Agreement and the other Security
Documents, and evidence as to the due recording or filing of each thereof and
of financing or similar statements with respect thereto;
(ii) Such instruments of conveyance, assignment and transfer
(including, without limitation, contractors' waivers) duly executed and
delivered by the respective parties thereto, and such evidence of the due
filing thereof or of financing statements with respect thereto, as may be
reasonably requested to convey to Lessor all property included in such
Severable Optional Modifications, if any, and to subject such property to the
Lien of the Credit Agreement and the other Security Documents, subject to no
Liens except for Permitted Liens;
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(iii) originals or certified copies of all corporate actions
and governmental approvals and permits necessary for the due and valid
authorization, execution, delivery and performance by Lessee and Lessor of the
lease supplement and the creation of the Lien thereon referred to above, all of
which corporate actions and governmental approvals and permits shall have been
duly obtained and shall be in full force and effect; together with evidence as
to the due occurrence of such authorization, execution, delivery and
performance;
(iv) such other instruments, certificates, opinions of
counsel, as may be reasonably requested by Lessor; and
(v) such modifications, amendments, waivers or supplements to
the Operative Agreements as may be reasonably requested by Lessor or Lessee in
order to effectuate the financing contemplated by this Section 11.2.
SECTION 12. PROHIBITION AGAINST LIENS.
Lessee agrees that, except as otherwise provided herein and
subject to the terms of Section 13 hereof relating to permitted contests,
Lessee shall not directly or indirectly create or allow to remain, and shall
promptly discharge at its sole cost and expense, any Lien, defect, attachment,
levy, title retention agreement or claim upon any Equipment or any
Modifications or any Lien, attachment, levy or claim with respect to the Rent
or with respect to any amounts held by the Agent pursuant to the Credit
Agreement, other than Permitted Liens and Lessor Liens. Lessee shall promptly
notify Lessor in the event of the existence of a Lien other than a Permitted
Lien or Lessor Lien with respect to an item of Equipment. Lessee represents
and warrants to, and covenants with, Lessor that the Liens in favor of the
Lessor created by the Operative Agreements are first priority perfected liens
subject only to Permitted Liens.
SECTION 13. PERMITTED CONTESTS OTHER THAN IN RESPECT OF
INDEMNITIES.
Except to the extent otherwise provided for in Section 13 of
the Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the
amount, validity or application, in whole or in part, of any Legal Requirement,
or utility charges payable pursuant to Section 4 or any Lien, attachment, levy,
encumbrance or encroachment, and Lessor agrees not to pay, settle or otherwise
compromise any such item, provided that (a) the commencement and continuation
of such proceedings shall suspend the collection thereof from, and suspend the
enforcement thereof against, the applicable Equipment, Lessor, the Investor,
the Agent and the Lenders; (b) there shall be no risk of the imposition of a
Lien (other than Permitted Liens) on any Equipment and no part of any Equipment
nor any Rent would be in any danger of being sold, foreclosed, forfeited, lost
or deferred; (c) at no time during
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the permitted contest shall there be a risk of the imposition of any criminal
liability, or any civil liability which would not be fully indemnified against,
on Lessor, the Investor, the Agent or any Lender for failure to comply
therewith; and (d) there shall be no risk of the extension of the application of
such item beyond the end of the Basic Term or any Renewal Term; provided, that
Lessee shall deliver to Lessor an Officer's Certificate certifying as to the
matters set forth in clauses (a), (b), (c) and (d) of this Section 13. Lessor,
at Lessee's sole cost and expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in connection
with any contest and, if reasonably requested by Lessee, shall join as a party
therein at Lessee's sole cost and expense.
SECTION 14. INSURANCE.
14.1. Public Liability and Workers' Compensation Insurance.
During the Basic Term and any Renewal Term, Lessee shall procure and carry, at
Lessee's sole cost and expense, commercial general liability insurance for
claims for injuries or death sustained by persons or damage to property while
on the premises where the Equipment is located and such other public liability
coverages as are ordinarily procured by Persons who own or operate similar
equipment in similar businesses. Such insurance shall be on terms, in amounts
and with deductibles that are no less favorable than insurance maintained by
Lessee with respect to similar equipment that it owns and that are in
accordance with normal industry practice. The policy shall also specifically
provide that the policy shall be considered primary insurance which shall apply
to any loss or claim before any contribution by any insurance which Lessor, the
Investor, the Agent or the Lenders may have in force. Lessee shall, in the
operation of the Equipment, comply with the applicable workers' compensation
laws, maintain statutory workers' compensation insurance meeting all
requirements of applicable laws with limits of no less than $1,000,000 per
occurrence, and protect Lessor against any liability under such laws.
14.2. Hazard and Other Insurance. During the Basic Term
and any Renewal Term, Lessee shall keep, or cause to be kept, the Equipment
insured against loss or damage by fire and other risks in an amount not less
than the then applicable Termination Value of the Equipment, on terms and with
deductibles that are no less favorable than insurance covering other similar
properties owned by Lessee and that are in accordance with normal industry
practice. The policy shall also specifically provide that the policy shall be
considered primary insurance which shall apply to any loss or claim before any
contribution by any insurance which Lessor, the Investor, the Agent or the
Lenders shall have in force. Any loss payable under the insurance policy
required by this Section will be paid to and adjusted solely by Lessor in
accordance with Section 14.3(g) hereof.
14.3. Coverage. (a) Lessee shall furnish Lessor with
certificates showing the insurance required under Sections 14.1 and 14.2 hereof
to be in effect and (i) with respect to liability insurance maintained pursuant
to Section 14.1 hereof, naming Lessor, the Investor, the Agent and the Lenders
as an additional insured, and (ii) with respect to insurance maintained
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pursuant to Section 14.2, naming Lessor and the Investor as an additional
insured and the Agent, if any, as loss payee for so long as any indebtedness is
outstanding under the Credit Agreement, and thereafter naming Lessor as loss
payee. All insurers shall be of recognized responsibility and standing and
approved by the Investor, such approval not to be unreasonably withheld or
delayed, and shall not be disqualified from insuring risks in the jurisdiction
where the Equipment is located. All such insurance shall be at the cost and
expense of Lessee. Such certificates shall include a provision for thirty (30)
days' advance written notice by the insurer to Lessor and the Agent in the
event of cancellation of such insurance. Lessee shall deliver to Lessor copies
of all insurance policies required by Sections 14.1 and 14.2 hereof.
(b) Lessee agrees that the insurance policy or policies
required by Section 14.2 hereof shall include an appropriate clause pursuant to
which such policy shall provide that it will not be invalidated should Lessee
waive, in writing, prior to a loss, any or all rights of recovery against
Lessor, the Investor, the Agent or the Lenders for losses covered by such
policy. Lessee hereby waives any and all such rights against Lessor, the
Investor, the Agent and the Lenders to the extent of payments made to any such
Person under such policies.
(c) Neither Lessor nor Lessee shall carry separate
insurance concurrent in kind or form or contributing in the event of loss with
any insurance required under this Section 14, except that Lessor may carry
separate insurance at Lessor's sole cost so long as (i) Lessee's insurance is
designated as primary and in no event excess or contributory to any insurance
Lessor may have in force which would apply to a loss covered under Lessee's
policy and (ii) each such insurance policy will not cause Lessee's insurance
required under this Section 14 to be subject to a coinsurance exception of any
kind.
(d) Lessee shall pay as they become due all premiums for
the insurance required by Section 14.1 and Section 14.2 hereof, shall renew or
replace each policy prior to the expiration date thereof or otherwise maintain
the coverage required by such Sections without any lapse in coverage and shall
promptly deliver to Lessor and the Agent certificates for such policies.
(e) Any of the foregoing insurance coverages may be
carried as a part of excess insurance or blanket policies. Any policies with
respect to property insurance shall provide (i) that if such insurance is
cancelled for any reason whatsoever, or any substantial change is made in the
coverage which affects the interest of Lessor, the Agent or the Investor, or if
such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective against any insured party
for 30 days after receipt by Lessor, the Agent or the Investor, respectively,
of written notice from any applicable insurers of such cancellation, change or
lapse, and (ii) that each of Lessor, the Agent or the Investor shall be
permitted to make payments to effect the continuation of such insurance
coverage upon notice of cancellation due to nonpayment of premiums.
(f) In the event that Lessee shall fail to maintain
insurance as herein provided, Lessor, the Agent or the Investor may at its
option maintain insurance which is required to be
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maintained by Lessee hereunder, and, in such event, Lessee shall reimburse such
party upon demand for the cost thereof, together with interest thereon at the
Overdue Rate, as Supplemental Rent.
(g) Subject to Section 15.1(f) hereof, all insurance
proceeds (except under insurance separately maintained by Lessor, the Investor
or the Agent) on account of any physical loss or damage to the Equipment or any
part thereof (less the actual costs, fees and expenses incurred in the
collection thereof) shall be paid to Lessor, and all such proceeds shall be
applied and dealt with as follows:
(i) except as provided in clause (ii) below, all such
proceeds shall be paid over to Lessee or as it may direct from time to time as
restoration progresses, to pay (or reimburse Lessee for) the cost of
restoration, if the amount of such proceeds received by the Agent or Lessor,
together with such additional amount, if any, theretofore expended by Lessee
out of its own funds for such restoration, are sufficient to pay the estimated
cost of completing such restoration upon a written application and an Officer's
Certificate of Lessee showing in reasonable detail the nature of such
restoration and the estimated cost to complete such restoration and stating
that no Lease Default or Lease Event of Default has occurred and is continuing.
The balance, if any, of such proceeds shall be paid over or assigned to Lessee
and Lessor as their respective interests may appear; and
(ii) all such proceeds in respect of an Event of Loss for
which no election has been made pursuant to the proviso of the first sentence
of Section 15.1(b) hereof shall be applied in satisfaction of Lessee's
obligation to pay Termination Value as provided in Sections 15.1(b) and 15.1(d)
hereof.
(h) Any insurance policy maintained by Lessee pursuant to
Section 14.1 or 14.2 hereof shall:
(i) include effective waivers by the insurer of all
claims for insurance premiums or commissions or (if such policies provide for
the payment thereof) additional premiums or assessments against Lessor, the
Agent, the Investor and the Lenders;
(ii) provide that in respect of the interests of Lessor,
the Agent, the Investor and the Lenders, to the extent commercially available,
such policies shall not be invalidated by any action or inaction of Lessee or
any other Person and shall insure Lessor, the Agent, the Investor and the
Lenders regardless of, and any claims for losses shall be payable
notwithstanding, any act of negligence, including any breach of any condition
or warranty in any policy of insurance, of Lessee, Lessor, the Agent, the
Investor, the Lenders or any other Person; and
(iii) provide that all provisions thereof, except the
limits of liability (which shall be applicable to all insureds as a group) and
liability for premiums (which shall be solely a
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liability of Lessee), shall operate in the same manner as if there were a
separate policy covering each insured.
SECTION 15. EVENTS OF LOSS AND ENVIRONMENTAL MATTERS.
15.1. Event of Loss. (a) In the event that the Equipment
shall suffer either (i) an Event of Loss or (ii) an event which, in the
reasonable opinion of the Lessee, might constitute an Event of Loss, such fact
and the date of the occurrence thereof shall promptly be reported by Lessee to
Lessor. In the case of any event described in clause (ii) of the preceding
sentence, Lessee shall determine, not later than sixty (60) days after the
occurrence of such event, whether such event constitutes an Event of Loss.
(b) Upon the occurrence of an Event of Loss, Lessee shall
purchase the Equipment by paying Termination Value therefor in accordance with
Section 16 hereof; provided that not later than sixty (60) days prior to the
next Payment Date, Lessee may, at its expense, irrevocably elect to, and shall
thereafter, replace the Equipment with equipment with a value, utility and
remaining useful life at least equal to the Equipment replaced, assuming such
replaced Equipment was in the condition in which it was required to be
maintained at the time of such Event of Loss, in which case this Lease shall
continue in full force and effect. In connection with any replacement of
Equipment pursuant to this Section 15.1(b) and within the sixty (60) day period
referred to in the previous sentence, Lessee will at its sole cost and expense:
(i) furnish Lessor with a bill of sale with respect to
such replacement Equipment;
(ii) cause an Equipment Schedule amendment covering such
replacement Equipment to be duly executed and delivered;
(iii) furnish Lessor with certificates showing the
insurance coverage required pursuant to Section 14 hereof with respect to such
replacement Equipment;
(iv) furnish Lessor with an Officer's Certificate
certifying that such replacement Equipment has a value, utility and remaining
useful life at least equal to that of the Equipment replaced, assuming no Event
of Loss had occurred and that such replaced Equipment was in the condition
required by this Lease; and
(v) furnish the Investor and Lessor with an appraisal of
such Equipment satisfactory to the Investor and prepared in a manner consistent
with that of the Preliminary Appraisal and Final Appraisal.
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(c) In the event of damage to the Equipment which does not
constitute an Event of Loss, Lessee shall promptly restore the Equipment to the
condition to which it is required to be maintained hereunder.
(d) Unless Lessee elects to replace Equipment pursuant to the
proviso to Section 15.1(b) hereof, insurance and other payments received by
Lessor, the Agent or Lessee in respect of an Event of Loss shall be applied
against Lessee's obligation to pay Termination Value in accordance with Section
15.1(b) hereof and amounts in excess of Termination Value shall be paid to
Lessee and Lessor, as their interests may appear. If Lessee elects to replace
the Equipment which suffered an Event of Loss pursuant to the proviso to Section
15.1(b) hereof or if an event of the type described in Section 15.1(e) hereof
which does not constitute an Event of Loss has occurred, insurance and other
payments in excess of the amounts required to repair, restore or replace the
Equipment that has been destroyed, damaged, lost, condemned, confiscated,
stolen, seized or requisitioned, as the case may be, shall be paid to Lessee and
Lessor, as their interests may appear.
(e) Unless a Lease Default or Lease Event of Default shall
have occurred and be continuing, payments (except under insurance separately
maintained by Lessor, the Agent or the Investor) received at any time by Lessor,
the Agent or Lessee from any Governmental Authority, insurer or other Person
with respect to any destruction, damage, loss, condemnation, confiscation, theft
or seizure of or requisition of title to or use of the Equipment or any item
thereof not constituting an Event of Loss shall be paid to Lessor and first
shall be applied in accordance with the provisions of Section 14.3(g) hereof to
restore or replace what has been destroyed, damaged, lost, condemned,
confiscated, stolen, seized or requisitioned, and second in accordance with the
provisions of Section 15.1(d) hereof.
(f) Notwithstanding the foregoing provisions of this Section
15.1, so long as a Lease Default or Lease Event of Default shall have occurred
and be continuing, any amount that would otherwise be payable to or for the
account of, Lessee pursuant to this Section 15.1 or Section 14 hereof shall be
paid to the Agent (or Lessor after the principal of, premium, if any, and
interest on any indebtedness under any Credit Agreement shall have been paid in
full and the Lien of the Security Documents shall have been discharged) as
security for the obligations of Lessee under this Lease and, at such time
thereafter as no Lease Default or Lease Event of Default shall exist, such
amount shall be applied in accordance with the provisions of Section 14.3(g)
hereof to restore or replace what has been destroyed, damaged, lost, condemned,
confiscated, stolen, seized or requisitioned, and second in accordance with the
provisions of Section 15.1(d) hereof unless this Lease shall theretofore have
been declared to be in default pursuant to Section 17.1 hereof, in which event
such amount shall be disposed of in accordance with the provisions hereof, of
the Credit Agreement, if any, and of the Trust Agreement.
(g) In no event shall an Event of Loss with respect to which
this Lease remains in full force and effect under this Section 15.1 affect
Lessee's obligations to pay Rent pursuant to Section 3.1 hereof.
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15.2. Environmental Matters. (a) In addition to and without
limitation of all other representations, warranties and covenants made by Lessee
under this Lease, Lessee further represents, warrants and covenants that Lessee
has not used and is not using Hazardous Substances on, in, or affecting the
Equipment in any manner which constitutes an Environmental Violation. With
regard to and in any way affecting the Equipment, Lessee shall comply with all
Environmental Laws, except to the extent noncompliance therewith could not,
individually or in the aggregate, have a Material Adverse Effect, and shall not
use, operate or maintain the Equipment except as contemplated by this Lease.
(b) Promptly upon Lessee's actual knowledge of the presence of
Hazardous Substances on, in, or affecting any item of Equipment in
concentrations and conditions that constitute an Environmental Violation, Lessee
shall notify Lessor in writing of such condition. In the event of any
Environmental Violation (regardless of whether notice thereof must be given),
Lessee shall, not later than thirty (30) days after Lessee has actual knowledge
of such Environmental Violation, at Lessee's sole cost and expense, promptly and
diligently undertake any response, clean up, remedial or other action necessary
to remove, clean up or remediate the Environmental Violation in accordance with
all Environmental Laws. Lessee shall, upon completion of remedial action by
Lessee, cause to be prepared by an environmental consultant reasonably
acceptable to Lessor a report describing the Environmental Violation and the
actions taken by Lessee (or its agents) in response to such Environmental
Violation, and a statement by the consultant that the Environmental Violation
has been remedied in full compliance with applicable Environmental Law.
15.3. Notice of Environmental Matters. Promptly, but in any
event within five (5) Business Days from the date Lessee has actual knowledge
thereof, Lessee shall provide to Lessor written notice of any material pending
or threatened claim, action or proceeding involving any Environmental Law or any
Release on, in, or affecting any Equipment. All such notices shall describe in
reasonable detail the nature of the claim, action or proceeding and Lessee's
proposed response thereto. In addition, Lessee shall provide to Lessor, within
five (5) Business Days of receipt, copies of all material written communications
with any Governmental Authority relating to any Environmental Law in connection
with or affecting any Equipment. Lessee shall also promptly provide such
detailed reports of any such material environmental claims as may reasonably be
requested by Lessor.
SECTION 16. TERMINATION FOR EVENTS OF LOSS.
16.1. Termination Upon Certain Events. Unless Lessee has
delivered notice pursuant to Section 15.1(b) hereof that, following the
occurrence of an Event of Loss, this Lease shall not terminate with respect to
the Equipment, then Lessee shall be obligated to deliver, not later than sixty
(60) days prior to the next Payment Date, a written notice to the Lessor in the
form described in Section 16.2(a) hereof (a "Termination Notice") of the
termination of this Lease.
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16.2. Procedures. (a) A Termination Notice shall contain: (i)
notice of termination of this Lease on the next Payment Date occurring at least
sixty (60) days following the occurrence of such Event of Loss (the "Termination
Date"); and (ii) a binding and irrevocable agreement of Lessee to pay the
Termination Value for the Equipment and purchase the Equipment on the
Termination Date.
(b) On the Termination Date, Lessee shall pay to Lessor the
Termination Value for the Equipment, plus all amounts owing in respect of Rent
for the Equipment (including Supplemental Rent) theretofore accruing, and Lessor
shall convey the Equipment to Lessee in accordance with Section 19 hereof.
(c) The Lease Funding Balance shall be adjusted to reflect the
payment of Termination Value hereunder.
SECTION 17. DEFAULT.
17.1. Lease Events of Default. If any one or more of the
following events (each a "Lease Event of Default") shall occur:
(a) Lessee shall fail to pay (i) any Basic Rent (except as set
forth in clause (ii)) within five (5) days after the same has become
due and payable or (ii) any Expiration Date Termination Payment,
Remarketing Option Payment, Termination Value or Purchase Option Price,
on the date any such payment is due, or any payment of Basic Rent or
Supplemental Rent due on the due date of any such payment of Expiration
Date Termination Payment, Termination Value or Purchase Option Price,
or any amount due on the Expiration Date after the same has become due
and payable;
(b) Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in Section 17.1(a)(ii)
hereof) due and payable within five (5) days after receipt of notice
thereof;
(c) Lessee shall fail to maintain insurance as required by
Section 14 of this Lease;
(d) Lessee shall fail to observe or perform any term, covenant
or condition of Lessee under this Lease, the Participation Agreement or
any other Operative Agreement to which Lessee is a party other than
those set forth in Section 17.1(a), (b), (c) or (h) hereof, or any
representation or warranty made by Lessee set forth in this Lease or in
any other Operative Agreement or in any document entered into in
connection herewith or therewith or in any document, certificate or
financial or other statement delivered in connection herewith or
therewith shall be false or inaccurate in any material way, and such
failure or misrepresentation or breach of warranty is capable of being
cured and shall
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remain uncured for a period of thirty (30) days after receipt of
written notice from Lessor thereof;
(e) Lessee shall (i) admit in writing its inability to pay its
debts generally as they become due, (ii) file a petition under the
United States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof, (iii) make a general assignment for the benefit of its
creditors, (iv) consent to the appointment of a receiver of itself or
the whole or any substantial part of its property, (v) fail to cause
the discharge of any custodian, trustee or receiver appointed for
Lessee or the whole or a substantial part of its property within thirty
(30) days after such appointment, or (vi) file a petition or answer
seeking or consenting to reorganization under the United States
bankruptcy laws or any other applicable insolvency law or statute of
the United States of America or any State or Commonwealth thereof;
(f) insolvency proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof shall be filed against Lessee and not dismissed within thirty
(30) days from the date of its filing, or a court of competent
jurisdiction shall enter an order or decree appointing, without the
consent of Lessee, a receiver of Lessee or the whole or a substantial
part of its property, and such order or decree shall not be vacated or
set aside within thirty (30) days from the date of the entry thereof;
(g) a Change of Control of Lessee shall occur;
(h) in the event Lessee shall not have exercised its
Expiration Date Purchase Option, Lessee shall have failed (A) to
arrange an Operating Lease commencing on the Expiration Date, or (B) to
remarket or return the Equipment in accordance with Sections 20.4 and
22 hereof and make the Remarketing Option Payment or the Expiration
Date Termination Payment, as the case may be, on the Expiration Date;
(i) (i) Lessee shall (A) default in any payment with respect
to any Debt under the Loan Agreement or any other Debt in excess of
$3,000,000 beyond the period of grace, if any, provided in the
instrument or agreement under which such Debt was created or (B)
default in the observance or performance of any agreement or condition
relating to any such Debt or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Debt
(or a trustee or agent on behalf of such holder or holders) to cause
(determined without regard to whether any notice or lapse of time is
required), any such Debt to become due prior to its stated maturity; or
(ii) any such Debt shall be declared to be due and payable, or required
to be prepaid other than by a regularly scheduled required prepayment
or as a mandatory prepayment, prior to the stated maturity thereof,
except in connection with a voluntary prepayment by Lessee;
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(j) one or more material judgments or decrees shall be entered
against Lessee or any of its Subsidiaries (to the extent not paid or
fully covered by insurance, provided by a carrier that has acknowledged
coverage) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within thirty
(30) days from the entry thereof; or
(k) (i) a Reportable Event or Reportable Events, or a
failure to make a required installment or other payment (within the
meaning of Section 412(n)(1) of the Code), shall have occurred with
respect to any Plan or Plans that would reasonably be expected to
result in liability of Lessee or any of its Subsidiaries to the PBGC or
to a Plan in an aggregate amount exceeding $3,000,000 and the Investor
shall have notified the Lessee in writing that, on the basis of such
Reportable Event or Reportable Events or such failure to make a
required payment, there are reasonable grounds (A) for the termination
of such Plan or Plans by the PBGC, (B) for the appointment by the
appropriate United States District Court of a trustee to administer
such Plan or Plans or (C) for the imposition of a Lien in favor of a
Plan; or a Termination Event shall have occurred; or
(ii) Lessee or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan and the amount of the
Withdrawal Liability specified in such notice, when aggregated with all
other Withdrawal Liabilities (determined as of the date or dates of
such notification), exceeds $3,000,000; or
(iii) Lessee or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of Lessee and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization
or have been or are being terminated have been or will be increased
over the amounts required to be contributed to such Multiemployer Plans
for their most recently completed plan years by an amount exceeding
$3,000,000; or
(l) Lessee or any of its Subsidiaries shall be the subject of
any proceeding or investigation pertaining to the release on or after
the Initial Closing Date by Lessee or any of its Subsidiaries, or any
other Person of any toxic or hazardous waste or substance into the
environment, or any violation of any Environmental Law, which, in
either case, would reasonably be expected to have a Material Adverse
Effect; or
(m) the Final Closing Date shall not have occurred on or
before June 30, 1995, or if all of the Equipment intended to be subject
to the Lease on such date shall not be so subject on such date and the
Equipment shall not constitute an integrated production system for
manufacturing blood dialysis filters capable of producing a saleable
end product as contemplated by the Preliminary Appraisal;
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then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Section 17 and in Section 18 hereof, terminate
this Lease by giving Lessee written notice of such termination, and this Lease
shall terminate, and all rights of Lessee under this Lease shall cease. Lessee
shall, to the fullest extent permitted by law, pay as Supplemental Rent all
costs and expenses incurred by or on behalf of Lessor, including fees and
expenses of counsel, as a result of any Lease Event of Default hereunder.
17.2. Surrender of Possession. If a Lease Event of Default
shall have occurred and be continuing, and whether or not this Lease shall have
been terminated pursuant to Section 17.1 hereof, Lessee shall upon written
demand of Lessor, surrender to Lessor possession of the Equipment. Lessor may
enter upon any premises where the Equipment is located and repossess the
Equipment and may remove any and all of Lessee's equipment and personalty and
severable Modifications from the Equipment. Lessor shall have no liability by
reason of any such entry, repossession or removal performed in accordance with
applicable law. Upon the written demand of Lessor, Lessee shall return the
Equipment promptly to Lessor at the location, in the manner and condition
required by, and otherwise in accordance with the provisions of, Section 22.1(c)
and (d) hereof.
17.3. Reletting. If a Lease Event of Default shall have
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1 hereof, Lessor may, but shall be under no
obligation to, relet any or all of the Equipment, for the account of Lessee or
otherwise, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the Term) and on such
conditions (which may include concessions or free rent) and for such purposes as
Lessor may determine, and Lessor may collect, receive and retain the rents
resulting from such reletting. Lessor shall not be liable to Lessee for any
failure to relet any Equipment or for any failure to collect any rent due upon
such reletting.
17.4. Damages. Neither (a) the termination of this Lease as to
all or any of the Equipment pursuant to Section 17.1 hereof; (b) the
repossession of all or any of the Equipment; nor (c) except to the extent
required by applicable law, the failure of Lessor to relet all or any of the
Equipment, the reletting of all or any portion thereof, nor the failure of
Lessor to collect or receive any rentals due upon any such reletting shall
relieve Lessee of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. If any Lease Event of
Default shall have occurred and be continuing and notwithstanding any
termination of this Lease pursuant to Section 17.1 hereof, Lessee shall
forthwith pay to Lessor all Rent and other sums due and payable hereunder to and
including the date of such termination. Thereafter, on the days on which Basic
Rent or Supplemental Rent, as applicable, are payable under this Lease or would
have been payable under this Lease if the same had not been terminated pursuant
to Section 17.1 hereof and until the end of the Basic Term or Renewal Term
hereof or what would have been the Basic Term or Renewal Term in the absence of
such termination, Lessee shall pay Lessor, as current liquidated damages (it
being agreed that it would be impossible accurately to determine actual
damages), an amount equal to the Basic Rent and Supplemental Rent that are
payable under
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this Lease or would have been payable by Lessee hereunder if this Lease had not
been terminated pursuant to Section 17.1 hereof, less the net proceeds, if any,
which are actually received by Lessor with respect to the period in question of
any reletting of any Equipment or any portion thereof; provided that Lessee's
obligation to make payments of Basic Rent and Supplemental Rent under this
Section 17.4 shall continue only so long as Lessor shall not have received the
amounts specified in Section 17.5 hereof. In calculating the amount of such net
proceeds from reletting, there shall be deducted all of Lessor's, the Agent's
and any Lenders' reasonable expenses in connection therewith, including
repossession costs, brokerage or sales commissions, fees and expenses for
counsel and any necessary repair or alteration costs and expenses incurred in
preparation for such reletting. To the extent Lessor receives any damages
pursuant to this Section 17.4, such amounts shall be regarded as amounts paid on
account of Rent. If any statute or rule of law shall limit the amount of such
final liquidated damages to less than the amount agreed upon, Lessor shall be
entitled to the maximum amount allowable under such statute or rule of law.
17.5. Final Liquidated Damages. If a Lease Event of Default
shall have occurred and be continuing, whether or not this Lease shall have been
terminated pursuant to Section 17.1 hereof and whether or not Lessor shall have
collected any current liquidated damages pursuant to Section 17.4 hereof, Lessor
shall have the right to recover, by demand to Lessee and at Lessor's election,
and Lessee shall pay to Lessor, as and for final liquidated damages, and in lieu
of all current liquidated damages beyond the date of such demand (it being
agreed that it would be impossible accurately to determine actual damages) the
sum of: (i) the Termination Value for all Equipment remaining under this Lease;
plus (ii) all other amounts owing in respect of Rent and Supplemental Rent
theretofore accruing under this Lease; provided, that in the event of the
occurrence of a Lease Event of Default under Sections 17.1(e) or (f) hereof such
amount shall become immediately due and payable. If any statute or rule of law
shall limit the amount of such final liquidated damages to less than the amount
agreed upon, Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law.
17.6. Waiver of Certain Rights. If this Lease shall be
terminated pursuant to Section 17.1 hereof, Lessee waives, to the fullest extent
permitted by law, (a) any notice of re-entry or the institution of legal
proceedings to obtain re-entry or possession; (b) any right of redemption,
re-entry or repossession; (c) the benefit of any laws now or hereafter in force
exempting property from liability for rent or for debt; and (d) any other rights
which might otherwise limit or modify any of Lessor's rights or remedies under
this Section 17.
17.7. Assignment of Rights Under Contracts. If a Lease Event
of Default shall have occurred and be continuing, and whether or not this Lease
shall have been terminated pursuant to Section 17.1 hereof, Lessee shall upon
Lessor's demand immediately assign, transfer and set over to Lessor all of
Lessee's right, title and interest in and to (a) the Intellectual Property and
each agreement executed by Lessee in connection therewith and (b) each agreement
(other than those involving the Intellectual Property or any intellectual
property of Fresenius AG) executed by Lessee in connection with the purchase,
construction, installation, use or operation of the Equipment (including,
without limitation, all right, title and interest of Lessee with respect
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to all warranty, performance, service and indemnity provisions), as and to the
extent that the same relate to the purchase, construction, installation, use or
operation of the Equipment.
17.8. Remedies Cumulative. The remedies herein provided shall
be cumulative and in addition to (and not in limitation of) any other remedies
available at law, equity or otherwise.
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SECTION 18. LESSOR'S RIGHT TO CURE LESSEE'S LEASE
DEFAULTS.
Lessor, without waiving or releasing any obligation or Lease
Event of Default, may (but shall be under no obligation to) remedy any Lease
Event of Default for the account and at the sole cost and expense of Lessee,
including the failure by Lessee to maintain the insurance required by Section 14
hereof, and may, to the fullest extent permitted by law, and notwithstanding any
right of quiet enjoyment in favor of Lessee, enter upon any real property owned
or leased by Lessee where any Equipment is located for such purpose and take all
such action thereon as may be necessary or appropriate therefor. No such entry
shall be deemed an eviction of Lessee. All out-of-pocket costs and expenses so
incurred (including fees and expenses of counsel), together with interest
thereon at the Overdue Rate from the date on which such sums or expenses are
paid by Lessor, shall be paid by Lessee to Lessor on demand.
SECTION 19. PROVISIONS RELATING TO LESSEE'S
TERMINATION OF THIS LEASE OR EXERCISE OF
EXPIRATION DATE PURCHASE OPTION.
In connection with any termination of this Lease with respect
to the Equipment pursuant to the terms of Section 16.2 hereof, or in connection
with Lessee's exercise of its Expiration Date Purchase Option, upon the date on
which this Lease is to terminate with respect to the Equipment or upon the
Expiration Date with respect to the Equipment, and upon tender by Lessee of the
amounts set forth in Sections 16.2(b) or 20.2 hereof, as applicable, Lessor
shall execute and deliver to Lessee (or to Lessee's designee) at Lessee's cost
and expense a bill of sale transferring Lessor's entire interest in the
Equipment, in each case free and clear of the Lien of the Lease and any Lessor
Liens attributable to Lessor but without any other warranties from Lessor. The
Equipment shall be conveyed to Lessee "AS IS" "WHERE IS" and in its then present
physical condition.
SECTION 20. EXPIRATION.
20.1. Expiration Date Options. Lessee shall have the following
options upon the Expiration Date, exercisable with respect to all, but not less
than all, of the Equipment in accordance with the following Sections hereof: (i)
the Renewal Option pursuant to Section 21 hereof; (ii) to purchase the Equipment
pursuant to Section 20.2 hereof; (iii) to secure an Operating Lessee in
accordance with Section 20.3 hereof; and (iv) to remarket the Equipment in
accordance with Sections 20.4 and 22.1 hereof. If Lessee does not exercise any
of such options, then Lessee shall be obligated to return the Equipment pursuant
to Section 22.1 hereof.
20.2. Expiration Date Purchase Option. Not more than
twenty-two (22) months nor less than sixteen (16) months prior to the expiration
of the Basic Term or the first Renewal
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Term Lessee may give Lessor irrevocable written notice (the "Expiration Date
Election Notice") that Lessee is electing to exercise the Expiration Date
Purchase Option. If Lessee shall elect to exercise the Expiration Date Purchase
Option, then on the Expiration Date Lessee shall pay to Lessor an amount equal
to the Purchase Option Price for all of the Equipment and, upon receipt of such
amount plus all Rent and other amounts then due and payable under this Lease and
any other Operative Agreement, Lessor shall transfer to Lessee all of Lessor's
right, title and interest in and to the Equipment in accordance with Section 19
hereof.
20.3. Operating Lease. Not more than twenty-two (22) months
nor less than sixteen (16) months prior to the expiration of the Basic Term or
any Renewal Term, Lessee may secure an Operating Lessee who will undertake an
Operating Lease with Lessor, commencing on the then current Expiration Date, in
accordance with the provisions of Section 11 of the Participation Agreement.
20.4. Remarketing Option. If Lessee desires to exercise its
option to remarket the Equipment (the "Remarketing Option"), Lessee shall give
Lessor irrevocable written notice thereof not more than twenty-two (22) months
nor less than sixteen (16) months prior to the expiration of the Basic Term or
any Renewal Term. If Lessee shall elect to exercise the Remarketing Option,
Lessee shall follow the procedure set forth in Section 22.1 hereof, and on the
Expiration Date Lessee shall pay to Lessor an amount equal to the sum of (i) the
Remarketing Option Payment, (ii) the Net Sales Proceeds if paid to Lessee, and
(iii) all Rent and other amounts then due and payable under this Lease and any
other Operative Agreement.
SECTION 21. RENEWAL.
21.1. Renewal Option. At the end of the Basic Term or the then
applicable Renewal Term, as the case may be, provided that no Lease Default or
Lease Event of Default shall have occurred and be continuing, Lessee shall have
the option (each a "Renewal Option") to request that Lessor renew the term of
this Lease for one or more periods (each, a "Renewal Term") of not less than one
year or more than four years, less one day, provided, that (i) each Renewal Term
shall be for at least one year; (ii) the aggregate length of the Basic Term and
all Renewal Terms shall not exceed eighty percent (80%) of the estimated useful
life of the Equipment as of the Final Closing Date as determined by both the
Final Appraisal and the Renewal Term Appraisal delivered pursuant to clause (iv)
of this sentence; (iii) at the end of any Renewal Term and at the end of a
seven-year Operating Lease Term immediately following such Renewal Term, the
uninflated residual value of the remaining Equipment shall not be less than
twenty percent (20%) of the Equipment Cost of such Equipment, as determined by
both the Final Appraisal and the Renewal Term Appraisal; (iv) Lessee shall
obtain, at Lessee's expense, a Renewal Term Appraisal confirming the expected
remaining useful life, Residual Value and the uninflated residual value of such
Equipment, as well as the conclusions set forth in clauses (H)-(K) of the
definition of "Preliminary Appraisal"; and (v) Lessor shall have the right, in
its sole discretion, to refuse to consent to any proposed Renewal Term.
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21.2. Exercise of Renewal Option. If Lessee desires to
exercise its Renewal Option, it shall notify Lessor thereof not more than twenty
four (24) months nor less than eighteen (18) months prior to the expiration of
the Basic Term or any Renewal Term. Lessor shall notify Lessee of its consent to
or denial of such request within thirty (30) days of receipt of such request. If
Lessor shall have consented to such request, Lessee and Lessor shall have thirty
(30) days from the date of such consent to agree upon the terms and conditions
of the Renewal Term. Any such exercise shall be irrevocable as to Lessee, but be
binding on Lessor only if Lessor shall have consented thereto, the parties shall
have agreed on such terms and conditions and on the effective date of the
Renewal Term no Lease Default or Lease Event of Default shall have occurred and
be continuing.
21.3. Renewal Term Rent. The terms and conditions of any
Renewal Term shall be mutually acceptable to Lessor and Lessee. The Renewal Term
rent (the "Renewal Rent") will be calculated using the same formula used to
calculate Basic Rent, except (i) "Renewal Term" will be substituted for "Basic
Term" each place it appears; (ii) Lessor will determine the Recourse Margin and
the Equity Margin in accordance with the Renewal Term Pricing Factors; (iii)
Lessor will determine the Amortization Component based upon the terms and
conditions of the Renewal Term, the Renewal Term Appraisal and the Renewal Term
Pricing Factors; and (iv) the Lease Funding Balance and components thereof shall
be negotiated by Lessor and Lessee.
SECTION 22. SALE.
22.1. Sale Procedure. (a) If Lessee exercises its Remarketing
Option pursuant to Section 20.4 hereof or if Lessee shall be required to return
the Equipment to Lessor pursuant to Section 20.1 hereof, Lessee shall remarket
the Equipment in accordance with this Section 22.1 and make the payments to
Lessor required by Section 20.4 hereof, in the case of the Remarketing Option,
or Section 22.1(b) hereof, in the case of a return of the Equipment. During the
Marketing Period, Lessee, as exclusive broker for Lessor, in the case of the
Remarketing Option, or as nonexclusive broker for Lessor, in the case of a
return of the Equipment, shall obtain bids for the cash purchase of the
Equipment being sold to be consummated for the highest price available, shall
notify Lessor promptly of the name and address of each prospective purchaser and
the cash price which each prospective purchaser shall have offered to pay for
such Equipment and shall provide Lessor with such additional information about
the bids and the bid solicitation procedure as Lessor may reasonably request
from time to time. In the case of a return, Lessor may reject any and all bids
and may assume sole responsibility for obtaining bids or may require Lessee to
return the Equipment to Lessor by giving Lessee written notice to that effect at
any time. Upon receipt of such notice, Lessee shall surrender the Equipment to
Lessor pursuant to Sections 10.1 and 22.1(c) and (d) hereof. Unless Lessor shall
have given such notice, in the case of a return, or if Lessee has exercised its
Remarketing Option, Lessee shall arrange for Lessor to sell the Equipment free
of any Lessor Liens attributable to it, without recourse or warranty, for cash
to the purchaser or purchasers identified by Lessee or Lessor, as the case may
be. Lessee shall surrender the Equipment so sold or subject to such documents to
such purchaser in the condition
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specified in Sections 10.1 and 22.1(c) hereof. Lessee shall not take or fail to
take any action which would have the effect of discouraging bona fide third
party bids for the Equipment. During the Marketing Period, Lessee shall be
obligated to maintain at its expense the insurance coverages required under
Section 14 hereof and to pay for the costs of storing the Equipment after the
Expiration Date in a storage facility reasonably acceptable to Lessor.
(b) On the Expiration Date, unless the Equipment (i) is
purchased by Lessee pursuant to exercise of its Expiration Date Purchase Option,
or (ii) is subject to an Operating Lease commencing on the Expiration Date, or
(iii) is sold to a third party purchaser pursuant to Lessee's exercise of its
Remarketing Option, Lessee shall pay to Lessor the Expiration Date Termination
Payment for the Equipment.
(c) If the Equipment is being sold on the Expiration Date
pursuant to Lessee's exercise of its Remarketing Option or is being returned to
Lessor, Lessee shall at its own risk and expense return the Equipment to Lessor
or deliver it to a third party purchaser in the same condition as when delivered
to Lessee hereunder, ordinary wear and tear resulting from proper use thereof
excepted, and in such operating condition as is capable of performing its
originally intended use (but excluding any use requiring any intellectual
property of Fresenius AG licensed to Lessee), free and clear of all Liens other
than Lessor Liens and otherwise in accordance with the terms of this Lease, by
the assembling, crating, insuring and delivering of such Equipment by
knowledgeable professionals in accordance with manufacturer's standards and
specifications, if available, and if not so available, in accordance with
industry standards for new equipment, with all sumps and tanks clean and dry and
no Hazardous Substances located in or on the Equipment, and together with all
maintenance and service records and all software and software documentation
necessary for the operation of the Equipment, to such locations as Lessor or
such purchaser shall specify within continental North America. Upon such
delivery, Lessee shall, at its expense, reassemble the Equipment and test it to
manufacturer's specifications, confirming that the Equipment is operational as
an integrated production system capable of producing saleable end product.
Return or delivery shall be completed within fifteen (15) days after the
Expiration Date or earlier termination of this Lease with respect to the
Equipment. In addition to Lessor's other rights and remedies hereunder, if any
item of the Equipment is not returned or delivered in a timely fashion, or if
repairs are necessary to place the Equipment in the condition required in this
Section 22.1(c), Lessee shall continue to pay to Lessor Rent in respect of the
Equipment at the higher of the then Fair Market Rental Value for such Equipment
and the last prevailing lease rate hereunder for the period of delay in
redelivery, or for the period of time reasonably necessary to accomplish such
repairs, together with the cost of such repairs, as applicable. Lessor's
acceptance of such Rent on account of such delay or repair does not constitute a
renewal of the term of this Lease or a waiver of Lessor's right to prompt return
of the Equipment in proper condition.
(d) If any Equipment is not purchased by Lessee on the
Expiration Date, at the option of Lessor, or, in the case of an Operating Lease,
the Operating Lessee, Lessee shall continue to provide Lessor (or a purchaser or
lessee of the Equipment from Lessor) or, in the case of an Operating Lease, the
Operating Lessee, with (i) (A) Intellectual Property and authorizations
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necessary to use and operate in place the Equipment for its intended purposes,
and (B) an assignment of all permits, certificates of occupancy, governmental
licenses and authorizations necessary to use and operate the Equipment for its
intended purposes, (ii) such easements, rights-of-way and other rights and
privileges in the nature of an easement as are reasonably necessary or desirable
in connection with the use, repair, access to or maintenance in place of the
Equipment as Lessor shall request (at arm's-length fair market rates), and (iii)
such facility support and services agreements covering such services (including
access and utilities) as Lessor may request in order to use and operate the
Equipment in place for its intended purposes at such rates (not in excess of
arm's-length fair market rates) as shall be acceptable to Lessor and Lessee. All
assignments, easements, agreements and other deliveries required by clauses (i),
(ii) and (iii) of this paragraph (d) shall be in form satisfactory to Lessor and
shall be fully assignable (including both primary assignments and assignments
given in the nature of security) without payment of any fee, cost or other
charge.
22.2. Application of Proceeds of Sale. Lessor shall apply the
proceeds of sale of items of Equipment in the following order of priority:
(i) FIRST, to pay or to reimburse Lessor for the payment of
all reasonable costs and expenses incurred by Lessor in connection with
the sale;
(ii) SECOND, so long as any Credit Agreement is in effect, to
the Agent to be applied pursuant to the provisions of the Credit
Agreement; and
(iii) THIRD, to the Owner Trustee to be applied pursuant to
the provisions of the Trust Agreement.
22.3. Certain Obligations Continue. During the Marketing
Period, the obligation of Lessee to pay Rent with respect to the Equipment
(including the installment of Basic Rent due on the expiration date of the Basic
Term or Renewal Term, as the case may be) shall continue undiminished until
payment in full to Lessor of the Expiration Date Termination Payment, and all
other amounts due to Lessor with respect to such Equipment.
SECTION 23. HOLDING OVER.
If Lessee shall for any reason remain in possession of the
Equipment after the expiration or earlier termination of this Lease as to the
Equipment (unless the Equipment is conveyed to Lessee), such possession shall be
as a tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to the Equipment and Lessee shall pay
Basic Rent at an annual rate equal to one hundred ten percent (110%) of the
higher of the then Fair Market Value rent for such Equipment and the annual
Basic Rent payable hereunder immediately preceding such expiration or earlier
termination. Such Basic Rent shall be payable from time to
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time upon demand by Lessor. During any period of tenancy at sufferance, Lessee
shall, subject to the second preceding sentence, be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder. Nothing contained in this Section 23 shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease as to the Equipment (unless the
Equipment is conveyed to Lessee) and nothing contained herein shall be read or
construed as preventing Lessor from maintaining a suit for possession of such
Equipment or exercising any other remedy available to Lessor at law or in
equity.
SECTION 24. RISK OF LOSS.
During the Basic Term and any Renewal Term, unless Lessee
shall not be in actual possession of the Equipment in question solely by reason
of Lessor's exercise of its remedies of dispossession under Section 17 hereof,
the risk of loss of or decrease in the enjoyment and beneficial use of the
Equipment as a result of the damage or destruction thereof by fire, the
elements, casualties, thefts, riots, wars or otherwise is assumed by Lessee, and
Lessor shall in no event be answerable or accountable therefor.
SECTION 25. SUBLETTING.
25.1. Subletting and Assignment. Lessee may not assign this
Lease or any of its rights or obligations hereunder in whole or in part;
provided, that Lessee may assign this Lease to an Affiliate of Lessee so long as
Lessee remains directly and primarily liable for all obligations of Lessee under
this Lease and the other Operative Agreements. Provided that no Lease Default or
Lease Event of Default has occurred and is continuing, Lessee may, without the
consent of Lessor, sublease any Equipment to any Person that is not a
"tax-exempt entity" within the meaning of section 168(h)(2) of the Code. No
sublease or other relinquishment of possession of any Equipment shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder and Lessee
shall remain directly and primarily liable under this Lease as to the Equipment
so sublet. Any sublease of any Equipment shall be made expressly subject to and
subordinated to this Lease and to the rights of Lessor hereunder, and shall
expressly provide for the surrender of the Equipment after a Lease Event of
Default hereunder. All such subleases shall expressly provide for termination at
or prior to the earlier of the Expiration Date or the termination of this Lease
pursuant to Section 17 hereof.
25.2. Subleases. Promptly following the execution and delivery
of any sublease permitted by this Section 25, Lessee shall deliver a copy of
such executed sublease to Lessor.
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SECTION 26. NO WAIVER.
No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy upon a
default hereunder, and no acceptance of full or partial payment of Rent during
the continuance of any such default, shall constitute a waiver of any such
default or of any such term. To the fullest extent permitted by law, no waiver
of any default shall affect or alter this Lease, and this Lease shall continue
in full force and effect with respect to any other then existing or subsequent
default.
SECTION 27. ACCEPTANCE OF SURRENDER.
No surrender to Lessor of this Lease or of all or any item of
any Equipment or of any interest therein (other than as specifically permitted
herein) shall be valid or effective unless agreed to and accepted in writing by
Lessor, and no act by Lessor or any representative or agent of Lessor, other
than a written acceptance, shall constitute an acceptance of any such surrender.
SECTION 28. NOTICES.
All notices, demands, requests, consents, approvals and other
communications hereunder shall be in writing and delivered personally or by a
nationally recognized overnight courier service or mailed (by registered or
certified mail, return receipt requested, postage prepaid), addressed to the
respective parties, as follows:
If to Lessee:
Fresenius USA, Inc.
2637 Shadelands Drive
Walnut Creek, California 94598
Attention: Heinz Schmidt, Vice President Finance
Telephone No.: (510) 295-0200
Telecopy No.: (510) 988-1950
If to Lessor:
First Security Bank of Utah, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Telephone No.: (801) 246-5630
Telecopy No.: (801) 246-5053
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36
In each case, with a copy to the Investor:
Deutsche Bank A.G., New York
and/or Cayman Islands Branches
550 South Hope Street
Suite 1850
Los Angeles, California 90071
Attn: Christine Lane, 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
or such additional parties and/or other address as such party may hereafter
designate , and shall be effective upon receipt or refusal thereof.
SECTION 29. MISCELLANEOUS.
29.1. Survival and Severability. Anything contained in this
Lease to the contrary notwithstanding, all claims against and liabilities of
Lessee or Lessor arising from events commencing prior to the expiration or
earlier termination of this Lease shall survive such expiration or earlier
termination. If any provision of this Lease shall be held to be unenforceable in
any jurisdiction, such unenforceability shall not affect the enforceability of
any other provision of this Lease in such jurisdiction or of such provision or
of any other provision hereof in any other jurisdiction.
29.2. Amendments and Modifications. Neither this Lease nor any
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by Lessor and Lessee.
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37
29.3. Successors and Assigns. All the terms and provisions of
this Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
29.4. Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
together constitute one and the same
instrument.
29.5. Headings. The Table of Contents and headings of the
various Sections of this Lease are for convenience of reference only and shall
not modify, define, expand or limit any of the terms or provisions hereof.
29.6. GOVERNING LAW. THIS LEASE 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.
29.7. Limitations on Recourse. Notwithstanding anything
contained in this Lease to the contrary, Lessee agrees to look solely to
Lessor's interest in the Trust Estate for the collection of any judgment
requiring the payment of money by Lessor in the event of liability by Lessor,
and no other property or assets of Lessor or any shareholder, owner or partner
(direct or indirect) in or of Lessor, or any director, officer, employee,
beneficiary, or Affiliate of any of the foregoing shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Lessee's
remedies under or with respect to this Lease, the relationship of Lessor and
Lessee hereunder or Lessee's use of the Equipment or any other liability of
Lessor to Lessee, provided that this Section 29.7 shall not be construed or
interpreted as a waiver of any rights of Lessee under the Participation
Agreement.
[SIGNATURE PAGE FOLLOWS]
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38
IN WITNESS WHEREOF, the parties have caused this Lease to be
duly executed and delivered as of the date first above written.
FIRST SECURITY BANK OF UTAH,
N.A., not in its individual capacity, but
solely as Owner Trustee
By:_________________________________
Name:_______________________________
Title:________________________________
FRESENIUS USA, INC.
By:_________________________________
Heinz Schmidt, Vice President Finance
[Receipt of this original counterpart of
the foregoing Lease is hereby acknowledged
as of the date hereof.]
FIRST SECURITY BANK OF UTAH,
N.A., not in its individual capacity, but
solely as Owner Trustee
By:_________________________________
Name:______________________________
Title:_______________________________
39
EXHIBIT A TO THE LEASE
[FORM OF EQUIPMENT SCHEDULE]
EQUIPMENT SCHEDULE NO.
Forming a part of Lease Agreement dated as of March 31, 1995 (the
"lease"), between First Security Bank Of Utah, N.A., not in its individual
capacity, but solely as Owner Trustee, as lessor (the "Lessor") and Fresenius
USA, Inc., as lessee (the "Lessee").
1. EQUIPMENT. The Equipment leased hereunder shall be as set forth in
the schedule attached hereto as Annex A.
TOTAL EQUIPMENT COST: $____________
2. TERM. Upon and after the date of execution hereof, the Equipment
shall be subject to the terms and conditions provided herein and in the Lease
(which is incorporated herein by reference).
3. RENT. From and after the date hereof, the Basic Rent for said
Equipment during the Basic Lease Term shall be payable on the dates and in the
amounts set forth in Section 3 of the Lease which is incorporated herein by
reference.
4. LESSEE CONFIRMATION. Lessee hereby confirms and warrants to Lessor
that the Equipment: (a) was duly delivered to lessee on or prior to the date
hereof at the locations specified in Section 5 hereof; (b) has been received,
inspected and determined to be in compliance with all applicable specifications
and that the Equipment is hereby accepted for all purposes of the Lease; and (c)
is a part of the "Equipment" referred to in the Lease and is taken subject to
all terms and conditions therein and herein provided.
5. LOCATION OF EQUIPMENT. The locations of the Equipment are specified
on the Schedule of Equipment attached hereto as Annex A.
6. FINANCING STATEMENTS. Annex B attached hereto specifies the location
of all UCC financing statements or other similar documents under applicable law
covering the Equipment.
Date of Execution: ____________, 1995
FIRST SECURITY BANK OF UTAH, FRESENIUS USA, INC.
N.A., not in its individual capacity, but
solely as Owner Trustee
By: ____________________________ By: ___________________________
Name: __________________________ Name: _________________________
Title: ___________________________ Title: ________________________
40
ANNEX A TO
EQUIPMENT SCHEDULE
EQUIPMENT
Approved by _____________________________ Page No. ___ of ___ total pages
(Lessee to initial each
page)
Attached Bill of Sale dated Equipment located at:
_______________,1995
__________________________________________
and Street No.
__________________________________________
Equipment Schedule No. ___. City County State Zip
This location is ___ owned, ____leased, ___
mortgaged.
Manufacturer and/or
Vendor Name & Description Equipment Cost
Invoice No.
41
ANNEX B TO
EQUIPMENT SCHEDULE
FINANCING STATEMENTS COVERING
EQUIPMENT
Secured Party Statement No. Filing Date Filing Location
- ------------- ------------- ----------- ---------------
42
EXHIBIT B TO THE LEASE
OTHER NAMES AND LOCATIONS OF LESSEE
None
43
EXHIBIT C TO THE LEASE
[FORM OF
PURCHASE AGREEMENT ASSIGNMENT]
This Purchase Agreement Assignment, dated __________, 1995, is
between FRESENIUS USA, INC., a Massachusetts corporation ("Assignor") and FIRST
SECURITY BANK OF UTAH, N.A., not in its individual capacity, but solely as Owner
Trustee ("Assignee").
WHEREAS, Assignor has entered into purchase agreements or purchase
orders (collectively the "Purchase Agreement") between Assignor and ___________
("Vendor"), providing for the sale to Assignor of various equipment, as more
fully described on Equipment Schedule No. (the "Equipment Schedule") attached as
Exhibit A hereto and made a part hereof (the "Equipment"); and
WHEREAS, Assignor [has purchased the Equipment and] desires that
Assignee acquire the Equipment from [Assignor/Vendor] and lease the Equipment to
Assignor pursuant to the terms of the Lease Agreement dated as of March 31,
1995, as supplemented by the Equipment Schedule (the "Lease").
NOW, THEREFORE, the parties hereto agree as follows:
1. Assignor does hereby sell, assign, transfer and set unto Assignee
all of Assignor's right, title and interest in, under and to the Purchase
Agreement and in and to the Equipment and all product support, warranty and
indemnification provisions and software and software licenses related thereto.
Assignee hereby accepts such assignment.
2. Assignor may not amend, modify, rescind or terminate the Purchase
Agreement in any manner which would have an adverse effect on Assignee without
the prior written consent of Assignee, which consent shall not be unreasonably
withheld.
3. It is agreed that, anything herein contained to the contrary
notwithstanding: (a) Assignor shall at all times remain liable to Vendor under
the Purchase Agreement to perform all the duties and obligations of the
purchaser thereunder to the same extent as if this Agreement had not been
executed, and Assignee does not assume and shall not be obligated to perform any
of these duties and obligations, and (b) the exercise by Assignee of any of the
rights assigned hereunder shall not release Assignor from its duties or
obligations to Vendor under the Purchase Agreement.
4. Assignor agrees at any time and from time to time and at its own
expense upon written request of Assignee to promptly and duly execute and
deliver any and all such further instruments and documents and take such further
actions as Assignee may reasonably request in order to obtain the full benefits
of this Agreement and of the rights and powers granted herein.
44
5. Assignor does hereby represent and warrant that: (a) the Purchase
Agreement is in full force and effect and enforceable in accordance with its
terms and Assignor is not in default thereunder, (b) Assignor has the legal
right to enter into this Agreement, and (c) the Purchase Agreement is free from
all claims, security interests, liens and encumbrances, except for the interest
being conveyed hereunder and the interest of Assignor therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on or as of the day and year first above written.
FRESENIUS USA, INC.,
Assignor
By:
-------------------------------
Title:
-------------------------------
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity, but
solely as Owner Trustee, Assignee
By:
-------------------------------
Title:
-------------------------------
45
CONSENT AND ACKNOWLEDGMENT OF
PURCHASE AGREEMENT ASSIGNMENT
The undersigned hereby consents to the attached Purchase
Agreement Assignment between Assignor and Assignee and consents to and accepts
said Assignment on and subject to the terms and conditions therein set forth.
[VENDOR]
By:
-------------------------------
Title:
-------------------------------
Date:
-------------------------------
46
EXHIBIT D TO THE LEASE
[FORM OF BILL OF SALE]
KNOW ALL MEN BY THESE PRESENTS THAT _______________________ ("Seller"), for
and in consideration of the sum of $10.00 and other good and valuable
consideration, in hand paid by First Security Bank of Utah, N.A., not in its
individual capacity, but solely as Owner Trustee under that certain Trust
Agreement dated as of March ___, 1995 ("Purchaser"), the receipt of which is
hereby acknowledged, grants, bargains, sells, conveys, transfers and delivers
all right, title and interest unto Purchaser, its successors and assigns forever
to the equipment described on Schedule A attached hereto and made a part hereof
(the "Equipment"), free and clear of any and all liens, claims, charges and
encumbrances.
Seller does hereby agree to and with Purchaser, its successors and assigns, to
warrant and defend title to the aforesaid Equipment hereby sold unto Purchaser,
its successors and assigns against all and every person and persons whomsoever.
Seller hereby represents and warrants to Purchaser that Seller is the record
and beneficial owner of such Equipment and that Seller has full right, power and
authority to sell the Equipment and to make this Bill of Sale.
Seller, for itself and its successors and assigns further covenants and agrees
to do, execute and deliver, or to cause to be done, executed or delivered, all
such further acts, transfers and assurances, for the better assuring, conveying
and confirming unto Purchaser and its successors and assigns the rights and
interests in the Equipment hereby bargained, sold, assigned, transferred, set
over and conveyed, as Purchaser and its successors and assigns shall reasonably
request.
This Bill of Sale and the representations, warranties and covenants herein
contained shall inure to the benefit of Purchaser and its successors and
assigns, shall be binding upon Seller and its successors, assigns and
transferees, and shall survive the execution and delivery hereof.
IN WITNESS WHEREOF, Seller has hereunto set its hand by an officer as of this
____ day of ______, 1995.
[LESSEE OR THIRD PARTY VENDOR]
By:
-------------------------------
Title:
-------------------------------