EXHIBIT 10.1
L E A S E A G R E E M E N T
dated as of December 15, 1994
between
BA LEASING & CAPITAL CORPORATION
and
COCA-COLA BOTTLING CO. CONSOLIDATED
CONTENTS
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. LEASE . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Agreement to Lease . . . . . . . . . . . . . 1
1.02 Procurement . . . . . . . . . . . . . . . . . 1
1.03 Conditions Precedent . . . . . . . . . . . . 1
1.04 Lease Schedules . . . . . . . . . . . . . . . 1
2. TERM, RENT AND PAYMENTS . . . . . . . . . . . . . . 2
2.01 Term. . . . . . . . . . . . . . . . . . . . . 2
2.02 Rent . . . . . . . . . . . . . . . . . . . . 2
2.03 Payment . . . . . . . . . . . . . . . . . . . 2
2.04 Net Lease . . . . . . . . . . . . . . . . . . 2
2.05 Application of Payments . . . . . . . . . . . 3
2.06 Excessive Rent . . . . . . . . . . . . . . . 3
2.07 Advance Payments . . . . . . . . . . . . . . 3
3. WARRANTIES . . . . . . . . . . . . . . . . . . . . . 3
4. COVENANTS WITH RESPECT TO THE UNITS. . . . . . . . . 4
4.01 Use . . . . . . . . . . . . . . . . . . . . . 4
4.02 Possession . . . . . . . . . . . . . . . . . 4
4.03 Liens . . . . . . . . . . . . . . . . . . . . 4
4.04 Titling, Licensing and Registration . . . . . 4
(a) Characterization of Lease . . . . . . 4
(b) PreClosing Titling and
Registration . . . . . . . . . . . . . 5
(c) Titling and Registration of Units . . 5
(d) Delivery of Titles . . . . . . . . . . 5
(e) Ownership . . . . . . . . . . . . . 5
4.05 Maintenance . . . . . . . . . . . . . . . . . 6
4.06 Alterations . . . . . . . . . . . . . . . . . 6
4.07 Inspection . . . . . . . . . . . . . . . . . 6
5. INDEMNITIES . . . . . . . . . . . . . . . . . . . . 6
5.01 General Indemnity . . . . . . . . . . . . . . 6
5.02 General Tax Indemnity . . . . . . . . . . . . 7
5.03 Special Tax Indemnity . . . . . . . . . . . . 8
(a) Definition of Loss . . . . . . . . . . 8
(b) Payments . . . . . . . . . . . . . . . 9
(c) Timing of Payments . . . . . . . . . . 10
(d) Exceptions . . . . . . . . . . . . . . 10
(e) Computations . . . . . . . . . . . . . 11
(f) Contest . . . . . . . . . . . . . . . 11
(g) Survival . . . . . . . . . . . . . . . 12
(h) Lessor . . . . . . . . . . . . . . . . 12
6. RISK OF LOSS; CASUALTIES; INDEMNITY . . . . . . . . 12
6.01 Casualty Value Payments . . . . . . . . . . . 12
6.02 Effect of Casualty Value Payments . . . . . . 12
7. INSURANCE . . . . . . . . . . . . . . . . . . . . . 13
8. DEFAULTS; REMEDIES . . . . . . . . . . . . . . . . . 13
8.01 Events of Default . . . . . . . . . . . . . . 13
8.02 Remedies . . . . . . . . . . . . . . . . . . 14
8.03 Expenses . . . . . . . . . . . . . . . . . . 15
8.04 Nonexclusive . . . . . . . . . . . . . . . . 15
8.05 Right of Lessor to Perform . . . . . . . . . 15
9. RETURN OF UNITS . . . . . . . . . . . . . . . . . . 15
10. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . 17
11. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . 17
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 18
12.01 Effect of Waiver . . . . . . . . . . . . . . 18
12.02 Survival of Covenants . . . . . . . . . . . . 18
12.03 Applicable Law; Severability . . . . . . . . 18
12.04 Financial Information . . . . . . . . . . . . 18
12.05 Notices . . . . . . . . . . . . . . . . . . . 18
12.06 Counterparts . . . . . . . . . . . . . . . . 18
12.07 Transaction Costs . . . . . . . . . . . . . . 19
12.08 Effect and Modification of Lease . . . . . . 19
APPENDIX
EXHIBIT A Form of Purchase Agreement Assignment
EXHIBIT B Form of Lease Schedule
EXHIBIT C Form of Bill of Sale
EXHIBIT D Form of Opinion of Counsel
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Lease No. 1994-1 (940148)
LEASE AGREEMENT (this "Lease") dated December
15, 1994 between BA LEASING & CAPITAL CORPORATION, a
California corporation ("Lessor") and COCA-COLA
BOTTLING CO. CONSOLIDATED, a Delaware corporation
("Lessee").
SECTION 1. LEASE.
1.01 Agreement to Lease. Lessor agrees to acquire
and lease to Lessee, and Lessee agrees to lease from Lessor
certain personal property (the "Units" and, individually, a
"Unit") described in the Appendix hereto (the "Appendix"), on
the terms and conditions set forth herein and in the Appendix.
1.02 Procurement. Lessee has ordered or shall order
the Units pursuant to one or more purchase orders or other
contracts of sale ("Purchase Agreements" and individually a
"Purchase Agreement") from one or more vendors ("Vendors" and
individually a "Vendor"). Lessee shall assign to Lessor all
of Lessee's right, title and interest in and to the applicable
Purchase Agreement as it relates to the Units by executing and
delivering to Lessor a Purchase Agreement Assignment
substantially in the form of Exhibit A. Lessor agrees to (a)
accept the assignment and (b) subject to Section 1.03, unless
Lessee has paid the Vendor, assume the obligations of Lessee
under the Purchase Agreement to purchase and pay for the Unit,
but no other duties and obligations thereunder. Nevertheless,
Lessee shall remain liable to Vendor in respect of its duties
and obligations in accordance with the Purchase Agreement.
Lessee represents and warrants in connection with the
assignment of any Purchase Agreement that (a) Lessee has the
right to assign the Purchase Agreement, (b) the right, title
and interest of Lessee in the Purchase Agreement so assigned
is and shall be free from all claims, liens, security
interests and encumbrances, (c) Lessee will warrant and defend
the assignment against claims and demands of all persons and
(d) the Purchase Agreement contains no conditions under which
Vendor may reclaim title to any Unit after delivery,
acceptance and payment therefor.
1.03 Conditions Precedent. The obligation of Lessor
to pay for each Unit is subject to satisfaction of the
conditions precedent set forth in the Appendix. If any of
those conditions is not met with respect to any Unit, Lessor
shall assign to Lessee all the right, title and interest of
Lessor in and to the Unit and any Purchase Agreement
theretofore assigned to Lessor, as it relates to the Unit.
1.04 Lease Schedules. Lessee shall deliver to
Lessor, not later than four business days before the relevant
Scheduling Date (as defined in the Appendix), an original
invoice for each Unit. Lessor shall then prepare and deliver
to Lessee, within two business days before such Scheduling
Date, for Lessee's signature (a) two executed counterparts of
a Lease Schedule in the form of Exhibit B (a "Schedule") and
(b) if title to any
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Unit has been transferred by the applicable Vendor or Lessee
has received the Unit before executing and delivering the
relevant Purchase Agreement Assignment to Lessor, a Bill of
Sale therefor in the form of Exhibit C. Lessee shall execute
those documents and return them to Lessor not later than such
Scheduling Date. If Lessor receives those documents later than
such Scheduling Date Lessor may reject them and regenerate the
Schedule for a later Scheduling Date.
Subject to satisfaction of all applicable conditions
precedent, Lessor shall, upon receipt of such documents signed
by Lessee, execute the Schedule and pay the Vendor or Lessee,
as the case may be, the Purchase Prices of the Units described
in the Schedule, and deliver a fully signed counterpart of the
Schedule to Lessee.
SECTION 2. TERM, RENT AND PAYMENTS.
2.01 Term. The term of this Lease as to each Unit
shall begin upon its receipt by Lessee and continue as
specified in the Schedule.
2.02 Rent. Lessee shall pay to Lessor rent for each
Unit as described in the Appendix and in the amounts and at
the times set forth in the Schedule therefor.
2.03 Payment. Rent and all other sums due Lessor
hereunder shall be paid at the office of Lessor set forth
below unless otherwise specified by Lessor.
2.04 Net Lease. THIS LEASE IS A NET LEASE AND LESSEE
SHALL NOT BE ENTITLED TO ANY ABATEMENT OR REDUCTION OF RENT OR
ANY SET OFF AGAINST RENT, WHETHER ARISING BY REASON OF ANY
PAST, PRESENT OR FUTURE CLAIM OF ANY NATURE BY LESSEE AGAINST
LESSOR OR OTHERWISE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN, THIS LEASE SHALL NOT TERMINATE, NOR SHALL THE
OBLIGATIONS OF LESSOR OR LESSEE BE OTHERWISE AFFECTED BY ANY
CIRCUMSTANCE, including, without limitation (a) any defect in,
damage to, loss of possession or use or destruction of any
Unit, however caused, (b) the attachment of any lien,
encumbrance, security interest or other right or claim of any
third party to any Unit, (c) any prohibition or restriction of
or interference with Lessee's use of any Unit by any person or
entity, (d) the insolvency of or the commencement by or
against Lessee of any bankruptcy, reorganization or similar
proceeding, or (e) any other cause, whether similar or
dissimilar to the foregoing, any present or future law to the
contrary notwithstanding. IT IS THE INTENTION OF THE PARTIES
THAT ALL RENT AND OTHER AMOUNTS PAYABLE BY LESSEE HEREUNDER
SHALL BE PAYABLE IN ALL EVENTS IN THE MANNER AND AT THE TIMES
HEREIN PROVIDED UNLESS LESSEE'S OBLIGATIONS IN RESPECT THEREOF
HAVE BEEN TERMINATED PURSUANT TO THE EXPRESS PROVISIONS OF
THIS LEASE.
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2.05 Application of Payments. If an Event of Default
exists, payments shall be applied in the following order: (a)
any unreimbursed or unpaid expenses, including allocated time
charges of internal counsel for Lessor and any other
attorney's fees; (b) any unreimbursed or unpaid interest on
late payments; and (c) rent and all other sums due thereunder.
Payments shall be evidenced by entries in records maintained
by Lessor which shall be conclusive, absent manifest error.
2.06 Excessive Rent. If a court finally determines
Lessor has received any payments which are determined to be
interest and which result in interest charges to Lessee in
excess of the highest rate permitted by applicable law, such
payments, to the extent they result in such excess, shall be
deemed to have been payments on account of Base Rent and shall
be so credited. If such credit results in Lessee having paid
to Lessor any sum in excess of Base Rent plus interest charges
at the highest rate allowed by law, then such sum shall be
refunded to Lessee and Lessee hereby waives any further remedy
or claim against Lessor on account of Lessor having received
such sum.
2.07 Advance Payments. If any amount is received by
Lessor on or before the Scheduling Date, either as advance
rental or otherwise, such amount shall be held as security for
the performance of the terms of this Lease, and Lessor may,
but shall not be required to, apply such amount to any overdue
financial obligation of Lessee to Lessor. If such amount is
so applied, Lessee will pay the same amount to Lessor on
demand as a replacement for such amount. If Lessee is not in
default under this Lease, such amount shall be refunded upon
the request of Lessee. Lessee shall not receive any interest
on such deposits.
SECTION 3. WARRANTIES.
LESSEE ACKNOWLEDGES AND AGREES THAT (a) EACH UNIT IS OF
A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY LESSEE,
(b) LESSEE IS SATISFIED THAT THE SAME IS SUITABLE FOR ITS
PURPOSES, (c) LESSOR IS NOT A MANUFACTURER THEREOF NOR A
DEALER IN PROPERTY OF SUCH KIND AND (d) LESSOR HAS NOT MADE,
AND DOES NOT HEREBY MAKE, ANY REPRESENTATION, WARRANTY OR
COVENANT WITH RESPECT TO THE TITLE, MERCHANTABILITY,
CONDITION, QUALITY, DESCRIPTION, DURABILITY, FITNESS FOR
PURPOSE OR SUITABILITY OF ANY UNIT IN ANY RESPECT OR IN
CONNECTION WITH OR FOR THE PURPOSES AND USES OF LESSEE.
Lessor hereby assigns to Lessee, to the extent assignable, any
warranties, covenants and representations of Vendor with
respect to any Unit, but any action taken by Lessee by reason
thereof shall be at Lessee's expense and shall be consistent
with Lessee's obligations under Section 2. Any amounts
received by Lessee as payment under any such warranty shall be
applied to restore the relevant Units to the condition
required by this Lease, with the balance of such
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amount, if any, to be paid over to Lessor. Lessee shall not take
any action or fail to take any action the effect of which would
be to invalidate any such warranty.
SECTION 4. COVENANTS WITH RESPECT TO THE UNITS.
4.01 Use. Lessee shall not use, operate, maintain or
store any Unit improperly, carelessly or in violation of any
applicable law or regulation of any government authority.
4.02 Possession. Lessee shall not (a) abandon any
Unit, or (b) sublease any Unit or permit its use by anyone
other than Lessee or Piedmont Coca-Cola Bottling Partnership
without the prior written consent of Lessor, not to be
unreasonably withheld. No such sublease shall relieve Lessee
of its obligations hereunder.
4.03 Liens. Lessee shall not sell, assign or
transfer, or directly or indirectly create, incur or suffer to
exist any lien, claim, security interest or encumbrance of any
kind on any of its rights hereunder or in any Unit.
4.04 Titling, Licensing and Registration.
(a) Characterization of Lease. Lessee and
Lessor agree that:
(i) For Federal income tax purposes,
this Lease is intended to be a lease of the Units,
notwithstanding (in the case of Units that are Motor
Vehicles) the Terminal Rental Adjustment and related
provisions, as a result of the provisions of Section
7701(h) of the Code;
(ii) For purposes of the Uniform
Commercial Code of each state, in the case of Units
that are Motor Vehicles, notwithstanding the Terminal
Rental Adjustment, the TRAC Amount and the Estimated
Fair Market Value, and notwithstanding the Payment
Limitation, this Lease is properly characterized, as to
such Units, as a "true lease" and, in the case of Units
that are not Motor Vehicles, this Lease is properly
characterized, as to such Units, as a "true lease"; and
(iii) For vehicle titling and
registration purposes, the characterization of this
Lease for purposes of the Uniform Commercial Code is
relevant (and characterization of this Lease for
Federal income tax purposes is irrelevant) for
determining whether any Unit that is a Motor Vehicle
should be titled or registered in the name of Lessor or
Lessee.
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(b) Pre-Closing Titling and Registration.
Lessee may cause title and registration of a Motor Vehicle to
be in Lessor's name before the Scheduling Date therefor if the
expected fair market value of such Motor Vehicle at Lease
termination is substantially equal to the TRAC Amount
therefor. In such case Lessor shall be considered the nominee
for the benefit of Lessee until such Scheduling Date.
Thereafter such title shall be held as provided in Section
4.04(d). If Lessor is named as owner on any certificate of
title or registration for any Unit before its Scheduling Date,
all obligations of Lessee hereunder shall apply with respect
to such Unit, except that no rent shall accrue for such Unit
before its Scheduling Date.
(c) Titling and Registration of Units.
Unless titling and registration of a Unit in Lessor's name has
theretofore been accomplished pursuant to Section 4.04(b),
Lessee shall, at Lessee's sole cost and expense, not later
than 15 Business Days after the Scheduling Date of a Unit,
duly apply or cause application to be made to the appropriate
motor vehicle agency for a certificate of title for, and
registration of, the Unit in the name of Lessor if the
expected fair market value of such Motor Vehicle at Lease
termination is substantially equal to the TRAC Amount
therefor.
(d) Delivery of Titles. As each certificate
of title is issued, Lessee shall promptly deliver or cause to
be delivered such certificate to Lessor and in any event shall
deliver a certificate of title for each Unit to Lessor not
later than 30 days following the Unit's Scheduling Date. Upon
Lessee's purchase or sale of such Unit in accordance with Item
G of the Appendix or upon Lessor's receipt of all payments to
which it is entitled upon a Casualty Occurrence with respect
to such Unit pursuant to Section 6.01, Lessor shall, if no
Event of Default then exists, deliver such certificate of
title for such Unit to Lessee within 10 days of payment,
properly endorsed and released.
(e) Ownership. The parties intend that
this Lease is a true lease and in no event shall this
agreement be construed as a sale of the Units. Title to the
Units shall at all times remain in Lessor, and Lessee shall
acquire no ownership, title, property, right, equity, or
interest in the Units other than its leasehold interest solely
as Lessee subject to all the terms and conditions hereof.
Notwithstanding the express intent of the parties, if a court
of competent jurisdiction determines this agreement is not a
true lease, but rather one intended as security, then solely
in that event and for the expressly limited purposes thereof,
Lessee shall be deemed to have hereby granted Lessor a
security interest in the Units, and all accessions thereto,
substitutions and replacements therefore, and proceeds
(including insurance
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proceeds) thereof to secure the prompt payment and performance
as and when due of all obligations and indebtedness of Lessee
to Lessor arising under this Lease.
4.05 Maintenance. Lessee shall at its expense at all
times during the term of this Lease maintain the Units in good
operating order, repair, condition and appearance and in
accordance with the manufacturer's recommended procedures.
4.06 Alterations. Lessee shall not alter any Unit or
affix or place any accessory, equipment or device on any Unit
if such alteration or addition would impair any applicable
warranty or the originally intended function or use or reduce
the value of the Unit. All repairs, parts, accessories,
equipment and devices furnished, affixed or installed to or on
any Unit, excluding temporary replacements, shall thereupon
become the property of Lessor. If no Event of Default exists,
Lessee may remove at its expense any such parts, accessories,
equipment and devices at the expiration of the term of this
Lease with respect to the Unit, if such parts, accessories,
equipment or devices are readily removable and such removal
will not impair the originally intended function or use of the
Unit.
4.07 Inspection. Upon prior notice to Lessee, Lessor
and its designees shall have the right at all reasonable times
to inspect any Unit, observe its use and inspect records
related thereto.
SECTION 5. INDEMNITIES.
5.01 General Indemnity. Lessee waives and releases
any claim now or hereafter existing against Lessor, any
company controlled by, controlling, or under common control
with Lessor and all of their directors, officers, employees,
agents, attorneys, successors and assigns (each, an
"Indemnified Person") on account of, and shall indemnify,
reimburse and hold each Indemnified Person harmless from, any
and all claims (including, but not limited to, claims based on
or relating to copyright, trademark or patent infringement,
environmental liability, negligence, strict liability in tort,
statutory liability or violation of laws), losses, damages,
obligations, penalties, liabilities, demands, suits, judgments
or causes of action, and all legal proceedings, and any
reasonable costs or expenses in connection therewith,
including reasonable attorneys' fees, including reasonable
allocated time charges of internal counsel, in each case
imposed on, incurred by or asserted against the Indemnified
Person in any way relating to or arising in any manner out of
(a) the registration, purchase, taking or foreclosure of a
security interest in, or the ownership, delivery, condition,
lease, assignment, storage, transportation, possession, use,
operation, return, repossession, sale or other disposition of,
any Unit, before or
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during the term of this Lease as to the Unit, (b) any alleged
or actual defect in any Unit (whether arising from the material
or any article used therein, the design, testing, use,
maintenance, service, repair, or overhaul thereof or otherwise),
regardless of when such defect is discovered or alleged, whether
or not the Unit is in Lessee's possession and no matter where
it is located, or (c) this Lease or any other related document,
the enforcement hereof or thereof or the consummation of the
transactions contemplated hereby or thereby. Notwithstanding
the foregoing, this Section 5.01 will not apply to any claims
resulting solely and primarily from any breach by Lessor of
its obligations hereunder.
5.02 General Tax Indemnity.
(a) Lessee shall pay or reimburse Lessor for,
and indemnify and hold Lessor harmless from, all fees
(including, but not limited to, license, documentation,
recording or registration fees), and all sales, use, gross
receipts, property, occupational, value-added or other taxes,
levies, imposts, duties, assessments, charges or withholdings
of any nature whatsoever, together with any penalties, fines
or additions to tax, or interest thereon (all of the foregoing
being hereafter referred to as "Impositions"), arising at any
time before or during the term of this Lease, or upon any
termination of this Lease or return of the Units to Lessor,
and levied or imposed on Lessor, directly or otherwise, by any
federal, state or local government or taxing authority in the
United States or by any foreign country or foreign or
international taxing authority on or with respect to (i) any
Unit, (ii) the exportation, importation, registration,
purchase, ownership, delivery, leasing, possession, use,
operation, storage, maintenance, repair, transportation,
return, sale, transfer of title or other disposition thereof,
(iii) the rents, receipts, or earnings arising from any Unit,
or (iv) this Lease or any payment made hereunder, excluding,
however, taxes measured by Lessor's net income imposed or
levied by the United States or any state thereof but not
excluding any such net income taxes that by the terms of the
statute imposing such tax expressly relieve Lessee or Lessor
from the payment of any Impositions Lessee would otherwise
have been obligated to pay, reimburse or indemnify.
(b) Lessor shall pay directly all Impositions
for which Lessor is primarily responsible and as to which
Lessor gives Lessee notice Lessor will pay directly; and
Lessee shall promptly reimburse Lessor for such Impositions so
paid (except any Impositions excluded by Section 5.02(a)) upon
presentation of a bill therefor.
(c) Lessee shall pay on or before the time or
times prescribed by law any Impositions for which Lessee is
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primarily responsible under applicable law and any other
Impositions (except any Impositions excluded by Section
5.02(a)) not payable by Lessor pursuant to Section 5.02(b),
but Lessee shall have no obligation to pay any such Imposition
while Lessee is contesting such Imposition in good faith and
by appropriate legal proceedings and the nonpayment thereof
does not, in the opinion of Lessor, adversely affect the
title, property, use, disposition or other rights of Lessor
with respect to the Units. Lessee shall furnish on Lessor's
request proof of payment of any Imposition paid by Lessee.
(d) If Lessor is not entitled to a
corresponding and equal deduction with respect to any
Imposition Lessee is required to pay or reimburse under
Section 5.02(a), (b) or (c) and the payment or reimbursement
constitutes income to Lessor, then Lessee shall also pay to
Lessor the amount of any Imposition Lessor is obligated to pay
in respect of (i) such payment or reimbursement by Lessee and
(ii) any payment by Lessee made pursuant to this Section
5.02(d).
(e) Lessor shall prepare and file all
required property tax reports or returns as "Owner" of the
Units but Lessee must timely provide Lessor with all
information that Lessor requires to prepare properly any such
report or return. Lessee shall report the Units as "Equipment
Leased from Others" on any property tax reports or returns
required to be filed by Lessee. Lessee shall furnish on
Lessor's request copies of reports or returns so filed.
5.03 Special Tax Indemnity.
(a) Definition of Loss. For all Federal,
state and local income tax purposes, if for any reason:
(i) Depreciation. Lessor is not
entitled to annual accelerated cost recovery deductions
("Depreciation Deductions") for each Unit as provided
by Section 168(a) of the Internal Revenue Code of 1986,
as amended (the "Code") based on (A) a basis for
depreciation equal to the Purchase Price of the Unit,
(B) use of the 200% declining balance method, switching
to the straight-line method as provided in Section
168(b)(1) of the Code, (C) a recovery period of three
years, in the case of Units that are over-the-road
tractors, and five years, in the case of all other
Units, as provided in Section 168(c) of the Code, (D) a
salvage value equal to zero and (E) the half-year
convention;
(ii) Inclusions. Lessor is required to
include in gross income (an "Inclusion") any amount
with respect to the Lease other than (A) Supplemental
Rent, Interim Rent, Base Rent and rent payable with
respect to
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any extension of the term of the Lease, (B) any commitment
fee and nonutilization fee payable under the Lease,
(C) any amounts payable with respect to a casualty with
respect to any Unit or any other event giving rise to a
payment of Casualty Value or an amount determined by
reference thereto, (D) any amounts payable with respect
to an election to purchase the Units, (E) any amounts
payable as interest on overdue payments, and (F) the
amount of any indemnity payment; in each case at the
time and in the amount each such payment accrues under
the terms of the Lease; or
(iii) Foreign Tax Credits. Lessor's
federal income tax liability is increased as a result
of a reduction in the foreign tax credits available for
utilization by Lessor;
(any of the foregoing being a "Loss"), then, except as
provided in Section 5.03(d), Lessee shall indemnify Lessor
with respect to such Loss by making payments in the amounts
and at the times specified herein. Any Loss suffered for
federal income tax purposes will be deemed to give rise to a
corresponding loss for state and local income tax purposes,
and no Loss will be considered suffered for state and local
income tax purposes unless there is a corresponding Loss for
federal income tax purposes.
(b) Payments.
(i) Lessee's Payments. If a Loss
occurs, Lessee shall pay Lessor an amount which, after
reduction by the net amount of all additional taxes
payable by Lessor in respect of the receipt or accrual
of such amount under the laws of the United States and
California (the amount of such taxes to be computed
assuming Lessor is subject to the highest marginal
Federal and California statutory rate for income or
franchise taxes then generally applicable to
corporations), is equal to the sum of (A) the net
additional Federal income taxes payable by Lessor as a
result of such Loss, plus (B) any interest, penalties
or additions to tax payable by Lessor as a result of
such Loss, such sum to be determined (1) in the case of
loss of a Depreciation Deduction, by assuming that
Lessor's combined marginal federal, state and local
income tax rate will be 40.2%, (2) in the case of an
Inclusion, by assuming Lessor is subject to the highest
marginal Federal and California statutory rate for
income or franchise taxes then generally applicable to
corporations and (3) in the case of a loss of foreign
tax credits, by assuming Lessor can fully and currently
utilize all
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available credits for foreign taxes to reduce its federal
income tax liability.
(ii) Lessor's Payments. Lessor shall
pay Lessee an amount equal to the sum of (i) the net
reduction in Federal income taxes, if any, realized by
Lessor attributable to any Loss or circumstances
resulting in a Loss, such sum to be determined
utilizing the rates set forth in Section 5.03(b)(i)(1)
or (2), as applicable, and (ii) the net amount of any
additional reduction in Federal and California income
and franchise taxes, if any, realized by Lessor as a
result of any payment pursuant to this sentence.
However, the aggregate amount paid by Lessor to Lessee
hereunder with respect to any Loss shall not exceed the
aggregate amount paid by Lessee to Lessor with respect
to such Loss.
(c) Timing of Payments.
(i) Time of Lessee's Payments. Any
amount payable to Lessor shall be paid within 30 days
after written notice to Lessee by Lessor that a Loss
has occurred (which notice shall describe the Loss in
reasonable detail and set forth the computation of the
amount payable). The time at which a Loss occurs shall
be deemed to be the date the additional Federal income
taxes resulting from the Loss would become due under
the assumptions set forth in paragraph (e).
(ii) Time of Lessor's Payments. Any
amount payable to Lessee shall be paid within 30 days
after the date on which Lessor would realize the
reduction in Federal income tax under the assumptions
set forth in paragraph (e), and shall be accompanied by
a written statement describing the computation of the
amount so payable as determined by Lessor.
(d) Exceptions. Lessee shall not be required
to make any payment hereunder in respect of any Loss that
results solely from one or more of the following causes:
(i) the failure of Lessor to have
sufficient taxable income to benefit from the
depreciation deductions described in paragraph 1;
(ii) the failure of Lessor to claim
timely or properly any tax benefit or treatment
referred to in paragraph 1 in a tax return of Lessor,
unless such failure is based on a good faith
determination of Lessor that it is not entitled to
claim such tax benefit or treatment;
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(iii) a voluntary disposition by Lessor
of all or any part of its interest in a Unit before any
default by Lessee;
(iv) any event giving rise to a payment
of Casualty Value or an amount determined by reference
thereto, but only if such payment has been made in
full;
(v) a foreclosure of a lien on any
Unit by any person holding such lien through Lessor
which foreclosure results solely from an act of Lessor;
or
(vi) the failure of Lessor to qualify
for the half-year convention provided by Code
(section indicator)168(d)(1).
(e) Computations. Whenever it may be
necessary to determine (i) whether there has been a Loss or
(ii) the amount of any payment required to be made hereunder
by either Lessee or Lessor, such determination shall be made
assuming (A) Lessor could fully benefit from any deductions
and would suffer the full detriment of any additional income,
(B) Lessor pays its annual federal income and state and local
franchise or income taxes on quarterly estimated payment dates
in accordance with the following schedule: 25% of the total
income taxes for each year is paid on each April 15, June 15,
September 15 and December 15 of the year with respect to which
such taxes are imposed ("Estimated Tax Payment Dates") and (C)
Lessor will compute its taxable income under the accrual
method of accounting.
(f) Contest.
(i) Lessor shall have no obligation to
contest any disallowance or adjustment or other action
that may result in a Loss unless: (A) Lessor receives
a written notification by any taxing authority of a
proposed disallowance or adjustment (a "Disallowance"),
(B) Lessee requests Lessor to contest the Disallowance
within 45 days after Lessor has notified Lessee thereof
and within 60 days thereafter delivers to Lessor an
opinion of tax counsel satisfactory to Lessor that
Lessor should prevail in the contest, (C) Lessee
promptly pays the amount required under paragraph 2 if
Lessor elects to pay the tax and sue for a refund,
(D) the amount at issue in such contest exceeds
$100,000, and (E) Lessee fully indemnifies Lessor for
the tax and for all costs and expenses incurred by
Lessor in connection with such contest including
allocated time charges of internal counsel for Lessor
and any other reasonable attorney's fees and expenses,
and promptly reimburses Lessor for all such costs and
expenses as incurred.
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(ii) Lessor shall have the right to
control the conduct of the contest of any proposed
adjustment; provided, however, that Lessee shall be
kept informed of the status of such contest and shall
have the right to participate in the conduct of such
contest. If, in the course of contesting any claim
referred to in this Section 5.03, the Internal Revenue
Service advises Lessor that it is willing to agree to a
settlement of such claim, Lessor shall notify Lessee of
such settlement proposal. If, after receipt of such
notice, Lessee so requests, and such settlement
proposal relates exclusively to a Loss indemnifiable by
Lessee hereunder for which Lessee has acknowledged its
liability hereunder, Lessor shall agree to the
settlement as proposed by the Internal Revenue Service
and described to Lessee. At any time, Lessor may agree
to a settlement proposal, without Lessee's approval or
consent, by notifying Lessee in writing that Lessor has
waived its right to indemnity with respect to such
settlement.
(g) Survival. All of Lessor's rights and
privileges arising from the indemnities contained herein shall
survive the expiration or other termination of this Lease.
(h) Lessor. For purposes of this Income Tax
Indemnity, "Lessor" shall include any affiliated group (within
the meaning of Section 1504 of the Code) of which Lessor is or
becomes a member for any year in which a consolidated income
tax return is filed for such affiliated group.
SECTION 6. RISK OF LOSS; CASUALTIES; INDEMNITY.
6.01 Casualty Value Payments. If any Unit is worn
out, lost, stolen, destroyed, or irreparably damaged, from any
cause whatsoever, or taken or requisitioned by condemnation or
otherwise (any such occurrence being hereinafter called a
"Casualty Occurrence") before or during the term of this Lease
as to such Unit, Lessee shall give Lessor prompt notice
thereof, but in event not later than 10 days after Lessee is
reasonably able to determine that a Casualty Occurrence
occurred. On the first rent payment date after the Casualty
Occurrence or, if there is no such rent payment date, 30 days
after the Casualty Occurrence, Lessee shall pay to Lessor an
amount equal to the rent payment in respect of such Unit, if
any, due on such date plus a sum equal to the Casualty Value
for the Unit as of such date, determined according to the
Appendix.
6.02 Effect of Casualty Value Payments. Upon the
making of such payment by Lessee in respect of any Unit, the
rent for the Unit shall cease to accrue, the term of this
Lease as to the Unit shall terminate and Lessor shall be
entitled to recover possession of the Unit. If Lessor
receives the Casualty
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Value for a Unit, Lessee shall be entitled to the proceeds of
any recovery in respect of the Unit from insurance or otherwise.
Except as provided in this Section 6.02, Lessee shall not be
released from its obligations hereunder in the event of, and
shall bear the risk of, any Casualty Occurrence to any Unit
before or during the term of this Lease with respect to the Unit.
SECTION 7. INSURANCE.
Lessee, at its own cost and expense, shall keep the
Units insured against all risks for the value of the Units and
in no event for less than the Casualty Value of the Units.
Notwithstanding the foregoing, if no Event of Default exists,
Lessee may self-insure with respect to the insurance required
in the preceding sentence. Lessee shall maintain public
liability insurance against such risks in amounts not less
than $5 million combined single limit. All such insurance
shall be in such form as Lessor shall approve, with
financially sound and reputable independent insurers, shall
specify Lessor and Lessee as insurers and shall provide that
such insurance may not be canceled as to Lessor or altered in
any way that would affect the interest of Lessor without at
least 30 days prior written notice to Lessor. All insurance
shall be primary, without right of contribution from any other
insurance carried by Lessor, shall contain a "breach of
warranty" provision satisfactory to Lessor, and shall provide
that all amounts payable by reason of loss or damage to all
the Units shall be payable solely to Lessor. Lessee shall
provide Lessor with evidence satisfactory to Lessor of the
required insurance at the time specified in Item B, Paragraph
2 of the Appendix.
SECTION 8. DEFAULTS; REMEDIES.
8.01 Events of Default. The following shall
constitute events of default ("Events of Default") hereunder:
(a) Lessee fails to make any payments to
Lessor within 10 days of the date when due hereunder;
(b) Any representation or warranty of Lessee
contained herein or in any document furnished to Lessor in
connection herewith is incorrect or misleading in any material
respect when made and is not corrected (if capable of being
corrected) within 10 days after notice thereof from Lessor to
Lessee;
(c) Lessee fails to observe or perform any
other covenant, agreement or warranty made by Lessee hereunder
and such failure continues for 10 days after written notice
thereof to Lessee;
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(d) Any default occurs under any other
agreement for borrowing money or receiving credit under which
Lessee or any guarantor or general partner of Lessee may be
obligated as borrower, lessee or guarantor, if such default
consists of the failure to pay any indebtedness when due or
perform any other obligation thereunder if such default gives
the holder of the indebtedness the right to accelerate the
indebtedness; provided, that if the default under such other
agreement is cured or waived by the parties thereto, default
under this subsection (d) shall be deemed likewise to have
been thereupon cured or waived;
(e) Lessee, any guarantor of this Lease or
any general partner of Lessee makes an assignment for the
benefit of creditors or files any petition or action under any
bankruptcy, reorganization, insolvency or moratorium law, or
any other law or laws for the relief of, or relating to,
debtors;
(f) Any involuntary petition is filed under
any bankruptcy statute against Lessee, any guarantor of this
Lease or any general partner of Lessee, or any receiver,
trustee, custodian or similar official is appointed to take
possession of the properties of Lessee, any guarantor of this
Lease or any general partner of Lessee, unless such petition
or appointment is set aside or withdrawn or ceases to be in
effect within 60 days from the date of the filing or
appointment; or
(g) Lessee, any guarantor of this Lease or
any general partner of Lessee liquidates, dissolves, dies or
enters into any partnership, joint venture (other than in its
ordinary course of business), consolidation, merger or other
combination, or sells, leases or disposes of a substantial
portion of its business or assets; provided that the foregoing
shall not apply to the participation in a joint venture or
partnership for the expansion of Lessee's bottling business or
a consolidation, merger or other combination in which Lessee
is the survivor.
8.02 Remedies. If any Event of Default occurs,
Lessor, at its option, may:
(a) proceed by appropriate court action or
actions either at law or in equity, to enforce performance by
Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof; or
(b) by notice in writing to Lessee terminate
this Lease, whereupon all rights of Lessee to use the Units
shall terminate, but Lessee shall remain liable as hereinafter
provided; and thereupon Lessor may enter upon the premises of
Lessee or other premises where any of the Units may be and
take possession of all or any of such Units and thenceforth
hold the same free from any right of Lessee, its successors or
assigns,
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but Lessor shall, nevertheless, have a right to recover from
Lessee any and all amounts that under the terms of this Lease
may be then due or that may have accrued to the date of such
termination (computing the rent for any number of days less
than a full rent period by multiplying the rent for such full
rental period by a fraction of which the numerator is such
number of days and the denominator is the total number of days
in such full rent period) and also to recover forthwith from
Lessee: (i) as damages for loss of the bargain and not as a
penalty, a sum, with respect to each Unit, that equals (x) the
present value, at the time of such termination, of the entire
unpaid balance of all rent for the Unit that would otherwise
have accrued hereunder from the date of such termination to the
end of the term of this Lease as to such Unit minus (y) the
then present value of the rent Lessor reasonably estimates to be
obtainable for the Unit during such period, such present value
to be computed in each case by discounting at a rate equal to
the then judgment rate of interest fixed under California law,
compounded at the same frequency as rent is payable hereunder,
from the respective dates upon which rent would have been
payable hereunder had the Lease not been terminated and (ii)
any damages and expenses in addition thereto that Lessor sustains
because of the breach of any covenant, representation or warranty
contained in this Lease other than for the payment of rent.
Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise that may require Lessor to
sell, lease or otherwise use any Unit in mitigation of
Lessor's damages upon any default by Lessee, except as may be
set forth in this Section 8.02, or that may otherwise limit or
modify any of Lessor's rights or remedies under Section 8.02.
8.03 Expenses. Lessee agrees to pay all reasonable
allocated time charges, costs and expenses of internal counsel
for Lessor and any other reasonable attorneys' fees, expenses
or out-of-pocket costs incurred by Lessor in enforcing this
Lease.
8.04 Nonexclusive. The remedies herein provided in
favor of Lessor shall not be deemed exclusive, but shall be
cumulative, and shall be in addition to all other remedies in
its favor existing at law or in equity.
8.05 Right of Lessor to Perform. If Lessee fails to
perform any of its agreements contained herein, Lessor may
perform such agreement, and Lessee shall pay the reasonable
expenses incurred by Lessor in connection with such
performance, upon demand.
SECTION 9. RETURN OF UNITS.
Upon expiration of the term of this Lease in respect of
each Unit, or if Lessor rightfully demands possession of a
Unit
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pursuant to this Lease or otherwise, Lessee, at its expense,
shall forthwith deliver possession of the Unit to Lessor,
together with its manuals and maintenance records, in the
condition required by Section 4 and any additional requirements
specified in the Appendix. Upon such return the Unit shall be
free and clear of all liens, encumbrances or rights of others
whatsoever. Lessee shall, by whichever of the following means
Lessor may specify (after first storing the Unit, at Lessor's
request, at the place where the Unit is to be located hereunder,
free of charge for a period not to exceed 9O days, during which
time Lessor will be allowed reasonable access thereto) deliver
the Unit to Lessor in the continental United States as follows:
(i) at Lessee's premises; (ii) at Lessee's expense to such place
as Lessor shall specify; or (iii) the loading of the Unit on
board such carrier and to such destinations as Lessor may
designate with freight charges prepaid by Lessee. If the Unit
is shipped pursuant to clause (i) of the preceding sentence,
Lessee shall obtain and pay for a policy of transit insurance
in an amount equal to the replacement value of the Unit and
Lessor shall be named as the Loss payee on all such policies
of insurance. Lessor shall have the right to inspect the Unit
before or after its return, and Lessee shall pay the reasonable
costs of such inspection if the Unit is not in the condition
required by this Lease. In addition, if repairs are made
necessary, in the reasonable opinion of Lessor, to place the
Unit in the condition required by this Lease, Lessee agrees to
pay the cost of such repairs and further agrees to pay Lessor
rent for the period of time reasonably necessary to accomplish
such repairs, based on a daily pro-rated amount of the previous
rent. Rent shall accrue at a daily pro-rated amount of the
previous rent, for each day that Lessee does not return the
Unit as required, but such payment of rent does not extend the
term of this Lease.
Each Motor Vehicle Unit returned to Lessor pursuant to
this Section 9 shall have (a) at least 50% original tread on
all tires, which may not include recapped tires, except that
if technology regarding recapped tires has significantly
improved since the date hereof, Lessor may, in its reasonable
discretion, accept recapped tires; (b) all cargo boxes
substantially air and water tight; (c) no promotional decals
or cracked or broken glass, except for minor chips and cracks
that do not materially reduce the value or utility of the
particular Units involved; (d) the engine, transmission and
drive train in roadworthy condition and the remainder of the
Unit in good operating condition, capable of performing its
originally intended use; (e) all operating components of each
Unit able to perform their function as originally intended;
(f) all mechanical and electrical equipment, including radios,
heaters, and air conditioners in proper operating condition;
and (g) no damage to all other exterior and interior
materials, the cost of repairs of which, taken together,
exceed $500 per Unit, and otherwise,
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ordinary wear and tear resulting from ordinary use in the rental
market alone excepted, in the same condition as when delivered
to Lessee hereunder. But such ordinary wear and tear exception
shall not derogate from the specific requirements of this Section
9. Upon the return of any Unit to Lessor, Lessee will, at
Lessor's request, promptly deliver to Lessor all maintenance
records as kept by Lessee or Lessee's affiliates in the normal
course of business, repair orders, license plates, registration
certificates and all other similar documents for the Unit, in
their entirety.
If the proceeds of sale of any Motor Vehicle Unit
received by Lessor under paragraph 2 of Item E of the Appendix
at the scheduled expiration of the Lease term of the Unit (net
of sales costs and any applicable taxes) and any Terminal
Rental Adjustment payment by Lessee with respect to the Unit
equals or exceeds the TRAC Amount for the Unit, then Lessee
shall have no liability under this Section 9.
SECTION 10. ASSIGNMENT.
Lessor may at any time assign or transfer all of the
right, title or interest of Lessor in and to this Lease, and
the rights, benefits and advantages of Lessor hereunder,
including the rights to receive payment of rent or any other
payment hereunder and Lessor's title to the Units and any and
all obligations of Lessor in connection herewith, (a) in the
case of an assignment or transfer to a party who is at the
time a creditor of Lessee, without Lessee's consent and (b) in
all other cases, with the consent of Lessee, not to be
unreasonably withheld. Lessor may, subject to obtaining an
appropriate confidentiality agreement therefrom, disclose to
any potential or actual assignee or transferee any information
in Lessor's possession relating to Lessee or the Lease. Any
such assignment or transfer shall be subject and subordinate
to this Lease and the rights and interests of Lessee
hereunder. NO ASSIGNMENT OF THIS LEASE OR ANY RIGHT OR
OBLIGATION HEREUNDER MAY BE MADE BY LESSEE OR ANY ASSIGNEE OF
LESSEE WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR.
SECTION 11. FURTHER ASSURANCES.
Lessee confirms there is no pending litigation, tax
claim, proceeding or dispute that may materially adversely
affect its financial condition or impair its ability to
perform its obligations hereunder. Lessee will, at its
expense, maintain its legal existence in good standing and do
any further act and execute, acknowledge, deliver, file,
register and record any further documents Lessor may
reasonably request in order to protect Lessor's title to the
Units and Lessor's rights and benefits under this Lease.
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SECTION 12. MISCELLANEOUS.
12.01 Effect of Waiver.
No delay or omission to exercise any right, power or
remedy accruing to Lessor upon any breach or default of Lessee
hereunder shall impair any such right, power or remedy nor
shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein or of or in any similar
breach or default thereafter occurring, nor shall any waiver
of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring.
Any waiver, permit, consent or approval of any kind or
character on the part of Lessor of any breach or default under
this Lease must be in writing specifically set forth.
12.02 Survival of Covenants. All obligations of
Lessee under Sections 1, 2, 4, 5, 6, 7, 8, 9 and 11 and the
Appendix shall survive the expiration or termination of this
Lease to the extent required for their full observance and
performance.
12.03 Applicable Law; Severability. This Lease shall
be governed by and construed under the laws of California, to
the jurisdiction of which, and of federal courts in
California, the parties hereto submit. If any provision
hereof is held invalid, the remaining provisions shall remain
in full force and effect.
12.04 Financial Information. Lessee shall, and shall
cause any Guarantor to, keep its books and records in
accordance with generally accepted accounting principles and
practices consistently applied and shall, and shall cause any
Guarantor to, deliver to Lessor such financial statements and
information as may be set forth in the Appendix or as Lessor
may reasonably request. Credit information relating to
Lessee, any guarantor or general partner of Lessee may be
disseminated among Lessor and any of its affiliates and any of
their respective successors and assigns.
12.05 Notices. All demands, notices and other
communications hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, or
when deposited in the mail, first class postage prepaid, sent
by or delivered to a telegraph office, charges prepaid, or by
telecopier, followed by delivery of a copy thereof by mail or
telegram as aforesaid, addressed to each party at the address
set forth below the signature of such party on the signature
page, or at such other address as may hereafter be furnished
in writing by such party to the other.
12.06 Counterparts. Two counterparts of this Lease
have been executed by the parties hereto. One counterpart has
been prominently marked "Lessor's Copy". One counterpart has
been
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prominently marked "Lessee's Copy". Only the counterpart marked
"Lessor's Copy" shall evidence a monetary obligation of Lessee.
12.07 Transaction Costs. Lessee shall reimburse
Lessor for any reasonable legal expenses of Lessor (including
allocated time charges of internal counsel for Lessor) in
connection with negotiating, drafting or altering this Lease
and any related documents.
12.08 Effect and Modification of Lease. This Lease
exclusively and completely states the rights of Lessor and
Lessee with respect to the leasing of the Units and supersedes
all prior agreements, oral or written, with respect thereto.
No variation or modification of this Lease shall be valid
unless in writing.
(The initials BBJ appear here)
(LESSEE'S INITIALS)
LESSEE'S COPY
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The parties hereto have executed this Lease Agreement
as of the day and year first above written.
BA LEASING & CAPITAL COCA-COLA BOTTLING
CORPORATION CO. CONSOLIDATED
By: (Signature of Sonia Delen By:(Signature of Brenda B. Jackson
appears here) appears here)
Title: Assistant Vice President Title: Vice President & Treasurer
By: (Signature of Gail D. Smedal P.O. Box 31487
appears here) Charlotte, NC 28231-1487
Title: Vice President
Four Embarcadero Center
Suite 1200
San Francisco, CA 94111
Attn: Contract Administration
Fax #: 415/765-7373 Fax #: 704-551-4451
LESSEE CERTIFIES, UNDER PENALTY OF PERJURY, THAT (1)
IT INTENDS THAT MORE THAN 50% OF THE USE OF THE UNITS THAT ARE
MOTOR VEHICLES IS TO BE IN ITS TRADE OR BUSINESS, AND (2) IT
HAS BEEN ADVISED THAT IT WILL NOT BE TREATED AS OWNER OF SUCH
UNITS FOR FEDERAL INCOME TAX PURPOSES.
COCA-COLA BOTTLING CO. CONSOLIDATED
By Brenda B. Jackson
Title Vice President & Treasurer
LESSEE'S COPY
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Lease No. 1994-1 (940148)
APPENDIX TO LEASE AGREEMENT dated as
of December 15, 1994 between BA LEASING &
CAPITAL CORPORATION and COCA-COLA BOTTLING
CO. CONSOLIDATED.
A. Units.
The Units to be leased hereunder consist of new personal
property comprising OTR Tractors ("Type A Units"), OTR Trailers
("Type B Units"), Route Equipment ("Type C Units"), Vending Trucks
("Type D Units") and Forklifts ("Type E Units"), and all
modifications, replacements and substitutions thereof and
therefor; provided that Lessor reserves the right to disapprove
any equipment for leasing hereunder. The Type A, B, C and D Units
are sometimes referred to in this Lease as the "Motor Vehicles",
and individually, a "Motor Vehicle".
B. Purchase Price; Conditions Precedent.
1. "Purchase Price" with respect to each Unit means the
amount Lessor pays for such Unit. Without the prior written
consent of Lessor, the sum of the Purchase Price of all Units
leased hereunder shall not exceed $12,149,500 (the "Maximum
Purchase Price"), the Purchase Price of each Unit shall not
exceed, in the case of new equipment, the amount invoiced by
Vendor therefor and, in the case of used equipment, the fair
market value for similar used equipment, and the aggregate amount
of installation, transportation and any similar costs with respect
to any Unit shall not exceed 20% of the total Purchase Price for
the Unit.
In no event will any Schedule contain Units with an
aggregate Purchase Price of less than $5,000.
2. The obligation of Lessor to pay for each Unit is
subject to satisfaction of the following conditions precedent:
(a) Lessee shall have executed and delivered to
Lessor the Schedule therefor as required under Section 1.03 of the
Lease;
(b) Lessor shall have received a duly executed bill
of sale for the Unit, if required by Section 1.04 of the Lease;
(c) its Delivery Date shall be during the
Utilization Period set forth below;
(d) there shall exist no Event of Default nor any
event which, with notice or lapse of time or both, would become an
Event of Default (a "Default");
(e) Lessor shall have received satisfactory evidence
that Lessor has been named as owner or lien holder (as required by
Section 4.04 of the Lease) on all vehicle title or registration
documents;
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(f) delivery to Lessor, no later than the first
assignment by Lessee of a Purchase Agreement hereunder (or, in the
case of a sale and leaseback, the first Delivery Date), at
Lessee's sole expense, the following documents, in form and
substance satisfactory to Lessor:
(i) evidence of Lessee's authority to enter into
and perform its obligations under this Lease and of the
incumbency of the person or persons authorized to execute
and deliver this Lease and any other agreement or document
required hereunder, including specimen signatures of such
persons;
(ii) certificates of insurance, together with loss
payable and other endorsements complying with, or other
evidence acceptable to Lessor that Lessee has complied
with, Section 7 of the Lease;
(iii) UCC financing statements executed by Lessee,
together, at Lessor's option, with certificates of filing
officers as to the nonexistence of any prior UCC filings;
(iv) an opinion of counsel, substantially in the
form of Exhibit D; and
(v) any other documents as Lessor may reasonably
request.
C. Term.
The lease term for each Unit shall consist of an Interim
Term followed immediately by a Base Term. The Interim Term for
each Unit shall commence on, and include, the date of its receipt
by Lessee and shall continue until, but not include, its Base
Date. The Base Term of each Unit shall commence on, and include
its Base Date and shall continue for the number of months
specified in Attachment 1 to this Appendix. The Base Date for
each Unit shall be on the first or fifteenth day of the month, as
specified by Lessor, not more than three months following the
Scheduling Date. The Base Date shall not be earlier than the
later of the Delivery Date and the date the Unit is placed in
service by Lessor within the meaning of the Internal Revenue Code.
However, if Lessee does not deliver the Schedule to Lessor as
required by Section 1.03, Lessor may either terminate this Lease
as to such Unit or reschedule the Base Date to the next succeeding
month, in which event the provisions of this sentence shall
continue to apply.
D. Utilization Period.
All Delivery Dates for Units leased hereunder must occur
between the date of this Lease and December 31, 1995, inclusive
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which date may be extended by Lessor by notice to Lessee (the
"Utilization Period").
E. Rent.
1. Base Rent. Lessee shall pay rent for the use of
each Unit during the Base Term ("Base Rent") in arrears in
consecutive quarterly installments, with the first such
installment due three months following the Base Date. Each Base
Rent installment for each Unit will be an amount equal to the
relevant percentage of the Purchase Price of the Unit specified
below (the "Indicative Base Rent Rate"), which rate will be
adjusted corresponding to changes in the Index Rate four business
days before the Scheduling Date. Unless the Index Rate is more
than .125 percentage points different than the Indicative Index
Rate shown on Attachment 1 to this Appendix, there will be no
adjustment in the Base Rent. However, if the Index Rate four
business days before the Scheduling Date is more than .125
percentage points higher or lower, an adjustment will be made to
preserve Lessor's Economics.
"Scheduling Date" of each Unit means the date on
which the item of Unit is paid for by the Lessor.
"Index Rate" means the bond-equivalent yield per
annum for U.S. Treasury Notes specified on Attachment 1 to this
Appendix, as published in the Wall Street Journal four business
days before the Scheduling Date.
"Lessor's Economics" shall mean Lessor's anticipated
nominal after tax multiple-investment-sinking-fund yield
incorporating the same assumptions as were utilized by Lessor in
calculating the Indicative Base Rents.
2. Terminal Rental Adjustment. If the proceeds (net
of applicable taxes, sale costs and costs of warranty transfer)
received by Lessor from the sale of any Unit that is a Motor
Vehicle, (in the case of sale to a third party) or the fair market
sale value determined pursuant to Item (G) (in the case of a sale
to Lessee) are less than the TRAC amount for such Unit, Lessee
shall promptly pay to Lessor, upon demand, an amount equal to the
difference between (i) the TRAC Amount for such Unit set forth in
Attachment 1 to this Appendix and (ii) the net proceeds from such
sale actually received by or for the account of Lessor. If any
Unit that is a Motor Vehicle is sold after the scheduled
expiration of this Lease at a price exceeding the TRAC Amount for
such Unit, then Lessor shall promptly pay to Lessee an amount
equal to the amount by which the net proceeds from such sale
actually received by or for the account of Lessor exceeds the TRAC
Amount for such Unit. Any payment under this Item shall be
considered a terminal rental adjustment ("Terminal Rental
Adjustment"). However, for Type A Units the deficiency shall not
exceed 10.34% of the Purchase Price thereof. Lessee hereby
represents that this limitation on Lessor's
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recourse will not disqualify this transaction for treatment
under the TRAC lease provisions of the Code.
Lessor and Lessee intend this Lease to be a
"qualified motor vehicle operating agreement" as to the Units
containing a "Terminal Rental Adjustment", all within the meaning
of section 7701(h), or any successor section, of the Internal
Revenue Code.
F. Location; Return Condition; Casualty Values
1. Location. The Units shall be titled in the states
of Alabama, Florida, Georgia, Kentucky, Mississippi, North
Carolina, Ohio, South Carolina, Tennessee, Virginia and West
Virginia and the Schedule relating to each Unit shall set forth
the state in which such Unit is to be titled. Lessee shall give
Lessor notice of any change in the titling location required by
applicable law at least 10 days before such change is required.
2. Return Location and Condition. Any Unit returned
pursuant to Section 9 of the Lease shall be returned at the place
Lessor specifies within the state in which the Unit was originally
delivered or, if the Unit has been moved to another state in
accordance with this Lease, within such other state. Upon such
return such Unit shall be in good operating condition and,
ordinary wear and tear excepted, in the same condition as on its
Delivery Date.
3. Casualty Values. The Casualty Values of each Unit
shall be the percentages of the Purchase Price thereof as set
forth in Attachment 1 to this Appendix which will be adjusted
consistent with any adjustment of Base Rents as provided herein,
and such adjusted Casualty Values will be as set forth on the
Schedule relating to such Unit.
G. Sale Upon Expiration of Lease; Lessee Purchase Option.
Upon the scheduled expiration of this Lease with respect to
all, but not less than all, of the Units, Lessee may:
(a) purchase such Units for a price equal to the fair
market sale value (as determined herein) of such Units on such
date of expiration upon 45 days prior written notice to Lessor, or
(b) surrender such Units to Lessor on such date of
expiration pursuant to Item F.
If Lessee elects to surrender such Units, Lessee shall sell
such Units as agent for Lessor. Lessee's authority to act as such
agent shall expire 30 days after such date of expiration,
whereupon Lessor shall sell such Units as soon as practicable
thereafter, in a commercially reasonable manner (which may be by
auction in the wholesale market). While acting as Lessor's agent,
Lessee shall not
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consummate any proposed sale of a Unit that is a Motor Vehicle for
a price (net of applicable taxes and sales costs) less than
the TRAC Amount without notifying Lessor and obtaining Lessor's
prior written consent to such sale.
If Lessee exercises the purchase option, Lessee shall, if
no Event of Default exists on the date of such notice or on the
closing date of the purchase, purchase the Units at a purchase
price equal to the fair market sale value of such Units as of the
last day of the applicable Lease Term. The fair market sale value
shall mean the open market cash purchase price that an informed
and willing person (other than a lessee-user in possession) would
pay for the Units in an arms-length transaction to a willing and
informed owner under no compulsion to sell and assuming the Units
are in the condition as required in the Lease. The fair market
sale value for Type C Units shall not exceed 25% of the Purchase
Price for such Units. The fair market sale value of the Units
shall be determined no later than 30 days before such expiration
date by mutual consent of Lessor and Lessee. If they are unable
to agree, the fair market sale value shall be determined in an
appraisal mutually agreed to by two recognized independent
automotive appraisers, one of which shall be chosen by Lessor and
one by Lessee with each of Lessee and Lessor paying the expenses
of its appointed appraiser. If such appraiser cannot reach
agreement on the amount of such appraisal, the determination shall
be made by an appraisal arrived at by a third independent
appraiser chosen by mutual consent of such two appraisers. Lessee
and Lessor shall share equally the expenses of such third
appraisal. Upon receipt of the purchase price and all other
amounts due under the Lease, Lessor shall transfer to Lessee,
without recourse or warranty other than a warranty of retransfer
of all interest received by Lessor from Lessee subject to any
liens not created by Lessor, on an AS-IS, WHERE-IS basis, all of
Lessor's right, title and interest, if any, in such Units within
10 days of payment.
Whether or not Lessee purchases or surrenders the Motor
Vehicle Units, Lessee shall pay Lessor, as rent, any Terminal
Rental Adjustments.
H. Late Charges.
Lessee shall pay Lessor interest on late payments at the
rate of 2% in excess of the Reference Rate, computed daily on the
basis of a 360-day year and actual days elapsed, which results in
more interest than if a 365-day year is used.
"Reference Rate" is the rate of interest publicly announced
from time to time by Bank of America National Trust and Savings
Association in San Francisco, California ("Bank") as its Reference
Rate. The Reference Rate is set based on various factors,
including Bank's costs and desired return, general economic
conditions and
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other factors, and is used as a reference point for pricing some
loans. Loans may be priced at, above or below the Reference Rate.
I. Nonutilization Fee.
If upon the expiration of the Utilization Period the
Purchase Price of all Units leased hereunder is less than
$7,000,000, then Lessee shall pay to Lessor 1% of the difference
between the Purchase Price and $11,045,000. Such amount shall be
due and payable when billed by Lessor.
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