EXHIBIT 10.1
FUNDING AGREEMENT
THIS FUNDING AGREEMENT dated as of May 12, 1997 (this "Agreement") is made
by and between KEYCORP LEASING LTD., a Delaware corporation with its principal
place of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 ("Lessor"), and R-B
RUBBER PRODUCTS, INC., an Oregon corporation having its principal place of
business at 000 Xxxx 00xx Xxxxxx, XxXxxxxxxxx, XX 00000 ("Lessee").
I N T R O D U C T I O N :
On or prior to the execution and delivery of this Agreement, Lessor and
Lessee have entered into (1) a Master Equipment Lease Agreement dated as of May
12, 1997, a copy of which is attached hereto as EXHIBIT A, pursuant to which
Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, each
Item of Equipment described on Equipment Schedules from time to time executed in
connection therewith (such Master Equipment Lease Agreement and all Equipment
Schedules executed in connection therewith are hereinafter collectively referred
to as the "Lease"), and (2) a Loan Agreement (as hereinafter defined) and
related documents, including a promissory note (collectively, the "Interim
Funding Documents") providing for the financing of certain equipment (the
"Equipment") during the period of time in which such Equipment is being
purchased, assembled and/or tested. Capitalized terms used in this Agreement
and not otherwise defined herein shall have the respective meanings specified in
the Lease.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:
1. INTERIM FUNDING CLOSING DATE. The closing of the transactions
contemplated by the Interim Funding Documents (the "Interim Funding Closing")
shall take place on or about May 12, 1997 (the "Interim Funding Closing Date"),
at the offices of Lessor, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, or at such other
place or time as the parties hereto shall agree. On the Interim Funding Closing
Date, the following documents shall be duly executed and delivered by the
parties thereto and shall each be in full force and effect: an Interim Funding
Loan and Security Agreement dated as of May 12, 1997, in the form attached
hereto as EXHIBIT B (the "Loan Agreement"); a certificate relating to insurance
that is required pursuant to Section 17 of the Lease; all other documents
contemplated by the Loan Agreement, including, without limitation, a promissory
note in the form required by the Loan Agreement (the "Promissory Note"); and all
other documents as may be reasonably requested by Lessor. A Drawdown Request
(as defined in the Interim Funding Documents) may, but need not, be submitted on
the Interim Funding Closing Date.
2. LEASE CLOSING DATE. (a) The closing of the transactions contemplated
by the Lease (the "Lease Closing") shall take place on the date (the "Lease
Closing Date") specified in Lessee's Notice of Closing pursuant to Section 3 of
this Agreement, at the offices of Lessor, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, or
at such other place or time as the parties hereto shall agree. On or before the
Lease Closing Date, the following documents shall be duly executed and delivered
by the parties thereto and shall each be in full force and effect: an Equipment
Schedule, together with all addenda thereto, in the form(s) attached hereto as
EXHIBIT C; a Certificate of Acceptance, in the form of EXHIBIT D attached
hereto, with respect to the Equipment delivered by Lessee to Lessor on the Lease
Closing Date; all other documents contemplated by the Lease; and all other
documents as may be reasonably requested by Lessor.
(b) Subject to the terms and conditions hereof, on the Lease Closing
Date, Lessor will apply the proceeds of the Lease to the amounts due under the
Promissory Note, and the rental payments due and owing by Lessee under the Lease
shall commence and be payable as set forth therein.
3. NOTICE OF CLOSING DATE. Not later than the tenth Business Day
preceding the Lease Closing Date, Lessee shall give Lessor written notice (a
"Notice of Closing") by telex, telegraph, facsimile or U.S. mail of the Lease
Closing Date, which Notice of Closing shall specify the aggregate Equipment Cost
of the equipment to be financed under the applicable Equipment Schedule. Lessee
shall give such notice in order to timely prepay the Promissory Note, as
required by Section 4(b) thereof.
4. RENTAL AMOUNT. The Rent for the transaction contemplated by this
Agreement and the Lease shall be as set forth in the "Rental Amount" and
"Adjustment of Rental Amount Prior to Lease Closing" Sections of the Proposal
Letter.
5. REPRESENTATIONS AND WARRANTIES. All representations and warranties of
Lessor and Lessee set forth in the Loan Agreement and the Lease are hereby
incorporated by reference into this Agreement with the same force and effect as
if fully set forth herein.
6. CONDITIONS PRECEDENT TO INVESTMENT BY LESSOR ON INTERIM FUNDING
CLOSING DATE. The obligation of Lessor to make Advances (as defined in the Loan
Agreement) under the Loan Agreement shall be subject to the conditions set forth
in the Loan Agreement.
7. CONDITIONS PRECEDENT TO INVESTMENT BY LESSOR ON LEASE CLOSING DATE.
The obligation of Lessor to enter into the transaction contemplated by the Lease
shall be subject to the following conditions:
a) OPERATIVE AGREEMENTS. On or before the Lease Closing Date, Lessor
shall have received the documents set forth in Section 2 hereof.
b) OUTSIDE LEASE CLOSING DATE. The Lease Closing Date occurs on or
before September, 1997
c) TITLE. On the Lease Closing Date, after giving effect to the
transactions contemplated hereby, Lessor shall have good and marketable
title to the Equipment, free and clear of all Liens.
d) NO ILLEGALITY. No change shall have occurred after the date of
the execution and delivery of this Agreement in applicable law or
regulations thereunder or interpretations thereof by regulatory authorities
that, in the opinion of Lessor or its counsel, would make it illegal for
Lessor to enter into any transaction contemplated by this Agreement and the
Lease.
e) NO MATERIAL ADVERSE CHANGE IN LESSEE'S FINANCIAL CONDITION. In
the reasonable opinion of Lessor, no material adverse change in the
financial condition of Lessee has occurred since the date of this Agreement.
f) NO TAX LAW CHANGE. No change in applicable tax law shall have
occurred nor shall a judicial opinion on a tax issue have been rendered
prior to the acceptance and delivery of the Equipment on the Lease Closing
Date which change, if enacted, adopted or made effective, in the same or
substantially similar form of such judicial opinion, would, in the
reasonable opinion of Lessor, render it disadvantageous or inadvisable for
Lessor to enter into the transactions contemplated by this Agreement and
the Lease unless Lessee shall indemnify Lessor to Lessor's reasonable
satisfaction for such change in tax law or unless Lessee agrees to an
adjustment to Rent so as to preserve Lessor's net economic return.
g) CLOSING NOTICE. Lessor shall have received the notice of the
Lease Closing Date required pursuant to Section 3 of this Agreement.
h) CONSENTS; GOVERNMENTAL APPROVALS. All approvals and consents of
any trustees or holders of any indebtedness or obligations of Lessee which
are required in connection with the transactions contemplated by this
Agreement, the Lease and the Loan Documents shall have been duly obtained
and be in full force and effect. In addition, all actions required to have
been taken on or prior to the Lease Closing Date in connection with the
transactions contemplated hereby shall have been taken.
i) OTHER MATTERS. Lessor, its counsel and its internal financial
executives shall be satisfied, in their sole discretion, as to all aspects
of the transactions occurring on the Lease Closing Date.
8. NOTICES. All notices and other communications hereunder shall be in
writing and shall be transmitted by hand, overnight courier or certified mail
(return receipt requested), postage prepaid. Such notices and other
communications shall be addressed to the respective party at the address set
forth above or at such
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other address as any party may from time to time designate by notice duly given
in accordance with this Section. Such notices and other communications shall be
effective upon receipt.
9. SEVERABILITY; CAPTIONS. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability shall not invalidate or render unenforceable such provision in
any other jurisdiction. Captions are intended for convenience or reference
only, and shall not be construed to define, limit or describe the scope or
intent of any provisions hereof.
10. FEES. Lessee will pay promptly upon receipt of invoices submitted by
Lessor from time to time all reasonable fees and expenses of Lessor incurred in
connection with the transactions contemplated by this Agreement and the Lease,
including, without limitation, (a) Uniform Commercial Code search and filing
fees, (b) drawdown fees of $50 per drawdown, and (c) fees and expenses of
Lessor's outside counsel.
11. MISCELLANEOUS. Time is of the essence with respect to this Agreement.
ANY FAILURE OF LESSOR TO REQUIRE STRICT PERFORMANCE BY LESSEE OR ANY WAIVER BY
LESSOR OF ANY PROVISION HEREIN SHALL NOT BE CONSTRUED AS A CONSENT OR WAIVER OF
ANY PROVISION OF THIS AGREEMENT. This Agreement may not be amended except by a
writing signed by Lessor and Lessee. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, their permitted successors and
assigns. This Agreement will be binding upon Lessor only if executed by a duly
authorized officer or representative of Lessor at Lessor's principal place of
business as set forth above. This Agreement shall be executed on Lessee's
behalf by Authorized Signers of Lessee. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
or agreement between Lessor and Lessee with respect to the subject matter
hereof, and there is no understanding or agreement, oral or written, which is
not set forth herein or therein. This Agreement supersedes all commitment and
proposal letters, including the Proposal Letter, except those Proposal Letter
provisions expressly incorporated into Sections 2(a) and 4 above, executed by
Lessor and Lessee in connection with the transactions contemplated by this
Agreement.
13. EXECUTION IN COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Funding Agreement
to be executed and delivered, all as of the date first above written.
LESSOR:
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
LESSEE:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
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EXHIBIT A - FORM OF MASTER EQUIPMENT LEASE AGREEMENT
MASTER EQUIPMENT LEASE AGREEMENT
THIS MASTER EQUIPMENT LEASE AGREEMENT dated as of May 12, 1997 is made by
and between KEYCORP LEASING LTD., a Delaware corporation with its principal
place of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 ("Lessor"), and R-B
RUBBER PRODUCTS, INC., an Oregon corporation with its principal place of
business at 000 Xxxx 00xx Xxxxxx, XxXxxxxxxxx, XX 00000 ("Lessee").
TERMS AND CONDITIONS OF LEASE
1. LEASE. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Equipment, subject to and upon the terms and conditions set forth
herein. Each Equipment Schedule shall constitute a separate and enforceable
lease incorporating all the terms and conditions of this Master Equipment Lease
Agreement as if such terms and conditions were set forth in full in such
Equipment Schedule. In the event that any term or condition of any Equipment
Schedule conflicts with or is inconsistent with any term or condition of this
Master Equipment Lease Agreement, the terms and conditions of the Equipment
Schedule shall govern.
2. DISCLAIMER OF WARRANTIES. LESSOR MAKES NO (AND SHALL NOT BE DEEMED TO
HAVE MADE ANY) WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, THE DESIGN, OPERATION OR CONDITION OF, OR THE
QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN, THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE STATE OF TITLE
THERETO OR ANY COMPONENT THERETO, THE ABSENCE OF LATENT OR OTHER DEFECTS
(WHETHER OR NOT DISCOVERABLE), AND LESSOR HEREBY DISCLAIMS THE SAME; IT BEING
UNDERSTOOD THAT THE EQUIPMENT IS LEASED TO LESSEE "AS IS" AND ALL SUCH RISKS, IF
ANY, ARE TO BE BORNE BY LESSEE. NO DEFECT IN, OR UNFITNESS OF, THE EQUIPMENT,
OR ANY OF THE OTHER FOREGOING MATTERS, SHALL RELIEVE LESSEE OF THE OBLIGATION TO
PAY RENT OR OF ANY OTHER OBLIGATION HEREUNDER. LESSEE HAS MADE THE SELECTION OF
THE EQUIPMENT FROM THE SUPPLIER BASED ON ITS OWN JUDGMENT AND EXPRESSLY
DISCLAIMS ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY LESSOR.
LESSOR IS NOT RESPONSIBLE FOR ANY REPAIRS, SERVICE, MAINTENANCE OR DEFECT IN THE
EQUIPMENT OR THE OPERATION THEREOF. IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES (WHETHER UNDER THE UCC OR OTHERWISE),
INCLUDING, WITHOUT LIMITATION, ANY LOSS, COST OR DAMAGE TO LESSEE OR OTHERS
ARISING FROM ANY OF THE FOREGOING MATTERS, INCLUDING, WITHOUT LIMITATION,
DEFECTS, NEGLIGENCE, DELAYS, FAILURE OF DELIVERY OR NON-PERFORMANCE OF THE
EQUIPMENT. ANY WARRANTY BY THE SUPPLIER IS HEREBY ASSIGNED TO LESSEE BY LESSOR
WITHOUT RECOURSE. SUCH WARRANTY SHALL NOT RELEASE LESSEE FROM ITS OBLIGATION TO
LESSOR TO PAY RENT, TO PERFORM ALL OTHER OBLIGATIONS HEREUNDER AND TO KEEP,
MAINTAIN AND SURRENDER THE EQUIPMENT IN THE CONDITION REQUIRED BY SECTIONS 12
AND 13 HEREOF. Lessee's execution and delivery of a Certificate of Acceptance
shall be conclusive evidence as between Lessor and Lessee that the Items of
Equipment described therein are in all of the foregoing respects satisfactory to
Lessee, and Lessee shall not assert any claim of any nature whatsoever against
Lessor based on any of the foregoing matters; PROVIDED, HOWEVER, that nothing
contained herein shall in any way bar, reduce or defeat any claim that Lessee
may have against the Supplier or any other person (other than Lessor).
3. NON-CANCELABLE LEASE. THIS LEASE IS A NET LEASE AND LESSEE'S
OBLIGATION TO PAY RENT AND PERFORM ITS OBLIGATIONS HEREUNDER ARE ABSOLUTE,
IRREVOCABLE AND UNCONDITIONAL UNDER ANY AND ALL CIRCUMSTANCES WHATSOEVER AND
SHALL NOT BE SUBJECT TO ANY RIGHT OF SET OFF, COUNTERCLAIM, DEDUCTION, DEFENSE
OR OTHER RIGHT WHICH LESSEE MAY HAVE AGAINST THE SUPPLIER, LESSOR OR ANY OTHER
PARTY. LESSEE SHALL HAVE NO RIGHT TO TERMINATE (EXCEPT AS EXPRESSLY PROVIDED
HEREIN) OR CANCEL THIS LEASE OR TO BE RELEASED OR DISCHARGED FROM ITS OBLIGATION
HEREUNDER FOR ANY REASON WHATSOEVER,
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INCLUDING, WITHOUT LIMITATION, DEFECTS IN, DESTRUCTION OF, DAMAGE TO OR
INTERFERENCE WITH ANY USE OF THE EQUIPMENT (FOR ANY REASON WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, WAR, ACT OF GOD, STRIKE OR GOVERNMENTAL
REGULATION), THE INVALIDITY, ILLEGALITY OR UNENFORCEABILITY (OR ANY ALLEGATION
THEREOF) OF THIS LEASE OR ANY PROVISION HEREOF, OR ANY OTHER OCCURRENCE
WHATSOEVER, WHETHER SIMILAR OR DISSIMILAR TO THE FOREGOING, WHETHER FORESEEN OR
UNFORESEEN.
4. DEFINITIONS. Unless the context otherwise requires, as used in this
Lease, the following terms shall have the respective meanings indicated below
and shall be equally applicable to both the singular and the plural forms
thereof:
(a) "APPLICABLE LAW" shall mean all applicable Federal, state, local
and foreign laws (including, without limitation, any Environmental Law,
industrial hygiene and occupational safety or similar laws), ordinances,
judgments, decrees, injunctions, writs and orders of any Governmental Authority
and rules, regulations, orders, licenses and permits of any Governmental
Authority.
(b) "APPRAISAL PROCEDURE" shall mean the following procedure for
obtaining an appraisal of the Fair Market Sales Value or the Fair Market Rental
Value. Lessor shall provide Lessee with the names of three independent
Appraisers. Within ten (10) business days thereafter, Lessee shall select one
of such Appraisers to perform the appraisal. The selected Appraiser shall be
instructed to perform its appraisal based upon the assumptions specified in the
definition of Fair Market Sales Value or Fair Market Rental Value, as
applicable, and shall complete its appraisal within twenty (20) business days
after such selection. Any such appraisal shall be final, binding and conclusive
on Lessee and Lessor and shall have the legal effect of an arbitration award.
Lessee shall pay the fees and expenses of the selected Appraiser.
(c) "APPRAISER" shall mean a person engaged in the business of
appraising property who has at least ten years' experience in appraising
property similar to the Equipment.
(d) "AUTHORIZED SIGNER" shall mean those officers of Lessee, set
forth on an incumbency certificate (in form and substance satisfactory to
Lessor) delivered by Lessee to Lessor, who are authorized and empowered to
execute this Lease, the Equipment Schedules and all other documents the
execution of which is contemplated hereby.
(e) "CERTIFICATE OF ACCEPTANCE" shall mean a certificate of
acceptance, in form and substance satisfactory to Lessor, executed and delivered
by Lessee in accordance with Section 7 hereof indicating, among other things,
that the Equipment described therein has been accepted by Lessee for all
purposes of this Lease.
(f) "DEFAULT" shall mean any event or condition which, with the
passage of time or the giving of notice, or both, would constitute an Event of
Default.
(g) "ENVIRONMENTAL LAW" shall mean any federal, state, or local
statute, law, ordinance, code, rule, regulation, or order or decree regulating,
relating to or imposing liability upon a person in connection with the use,
release or disposal of any hazardous, toxic or dangerous substance, waste, or
material as same may relate to the Equipment or its operation.
(h) "EQUIPMENT" shall mean an item or items of personal property
designated from time to time by Lessee which are described on an Equipment
Schedule and which are being or will be leased by Lessee pursuant to this Lease,
together with all replacement parts, additions and accessories incorporated
therein or affixed thereto.
(i) "EQUIPMENT GROUP" shall consist of all Items of Equipment listed
on a particular Equipment Schedule.
(j) "EQUIPMENT LOCATION" shall mean the location of the Equipment, as
set forth on an Equipment Schedule, or such other location (approved by Lessor)
as Lessee shall from time to time specify in writing.
(k) "EQUIPMENT SCHEDULE" shall mean each equipment lease schedule
from time to time executed by Lessor and Lessee with respect to an Equipment
Group, pursuant to and incorporating by reference all of the terms and
conditions of this Master Equipment Lease Agreement.
(l) "EVENT OF DEFAULT" shall have the meaning specified in Section 22
hereof.
(m) "FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALE VALUE" shall mean
the value of each Item of Equipment for lease or sale, unless otherwise
specified herein as determined between Lessor and Lessee, or, if Lessor and
Lessee are unable to agree, pursuant to the Appraisal Procedure, which would be
obtained in an arms-length transaction between an informed and willing lessor or
seller (under no compulsion to lease or sell) and an informed and willing lessee
or buyer (under no compulsion to lease or purchase). In determining the Fair
Market Rental Value or Fair Market Sale Value of the Equipment, (a) such Fair
Market Rental Value or Fair Market Sale
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Value shall be calculated on the assumption that the Equipment is in the
condition and repair required by Sections 12 and 13 hereof, and (b) there shall
be excluded from the calculation thereof the value of any upgrades and
attachments made pursuant to Section 14 hereof in which the Lessor does not own
an interest; PROVIDED, HOWEVER, that, unless otherwise provided in such Section
22, for purposes of Section 22 of the Lease, Fair Market Sale Value of the
Equipment shall be determined based upon the actual facts and circumstances
then prevailing without regard to the assumptions in clause (a) above.
(n) "GOVERNMENTAL ACTION" shall mean all authorizations, consents,
approvals, waivers, filings and declarations of any Governmental Authority,
including, without limitation, those environmental and operating permits
required for the ownership, lease, use and operation of the Equipment.
(o) "GOVERNMENTAL AUTHORITY" shall mean any foreign, Federal, state,
county, municipal or other governmental authority, agency, board or court.
(p) "GUARANTOR" shall mean any guarantor of Lessee's obligations
hereunder.
(q) "ITEM OF EQUIPMENT" shall mean each item of the Equipment.
(r) "LATE PAYMENT RATE" shall mean an annual interest rate equal to
the lesser of 18% or the maximum interest rate permitted by Applicable Law.
(s) "LEASE", "HEREOF", "HEREIN" and "HEREUNDER" shall mean, with
respect to an Equipment Group, this Master Equipment Lease Agreement and the
Equipment Schedule on which such Equipment Group is described, including all
addenda attached thereto and made a part thereof.
(t) "LIEN" shall mean all mortgages, pledges, security interests,
liens, encumbrances, claims or other charges of any kind whatsoever.
(u) "PURCHASE AGREEMENT" shall mean any purchase agreement or other
contract entered into between the Supplier and Lessee for the acquisition of the
Equipment to be leased hereunder.
(v) "RELATED EQUIPMENT SCHEDULE" shall have the meaning set forth in
Section 27 hereof.
(w) "RENEWAL NOTICE" shall have the meaning set forth in Section 32
hereof.
(x) "RETURN NOTICE" shall have the meaning set forth in Section 13
hereof.
(y) "RENT" shall mean the periodic rental payments due hereunder for
the leasing of the Equipment, as set forth on the Equipment Schedules, and,
where the context hereof requires, all such additional amounts as may from time
to time be payable under any provision of this Lease.
(z) "RENT COMMENCEMENT DATE" shall mean, with respect to an Equipment
Group, the date on which Lessor disburses funds for the purchase of such
Equipment Group, as determined by Lessor in its sole discretion.
(aa) "RENT PAYMENT DATE" with respect to an Equipment Group, shall
have the meaning set forth in the Equipment Schedule associated therewith.
(ab) "STIPULATED LOSS VALUE" shall mean, as of any Rent Payment Date
and with respect to an Item of Equipment, the amount determined by multiplying
the Total Cost for such Item of Equipment by the percentage specified in the
applicable Stipulated Loss Value Supplement opposite such Rent Payment Date.
(ac) "STIPULATED LOSS VALUE SUPPLEMENT" with respect to an Equipment
Group, shall have the meaning set forth in the Equipment Schedule associated
therewith.
(ad) "SUPPLIER" shall mean the manufacturer or the vendor of the
Equipment, as set forth on each Equipment Schedule.
(ae) "TERM" shall mean the Initial Term, as defined in Section 8
hereof, and any Renewal Term, as defined in Section 8 hereof.
(af) "TOTAL COST" shall mean, with respect to an Item of Equipment,
(1) the acquisition cost of such Item of Equipment (including Lessor's
capitalized costs), as set forth on the Equipment Schedule on which such Item of
Equipment is described, or (2) if no such acquisition cost is specified, the
Supplier's invoice price for such Item of Equipment plus Lessor's capitalized
costs, or (3) if no such acquisition cost is specified and no such invoice price
is obtainable, an allocated price for such Item of Equipment based on the Total
Cost of all Items of Equipment set forth on the Equipment Schedule on which such
Item of Equipment is described, as determined by Lessor in its sole discretion.
5. SUPPLIER NOT AN AGENT. LESSEE UNDERSTANDS AND AGREES THAT (i) NEITHER
THE SUPPLIER, NOR ANY SALES REPRESENTATIVE OR OTHER AGENT OF THE SUPPLIER, IS
(1) AN AGENT OF LESSOR OR (2) AUTHORIZED TO MAKE OR ALTER ANY TERM OR CONDITION
OF THIS LEASE, AND (ii) NO SUCH WAIVER OR ALTERATION SHALL VARY THE TERMS OF
THIS LEASE UNLESS EXPRESSLY SET FORTH HEREIN.
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6. ORDERING EQUIPMENT. Lessee has selected and ordered the Equipment
from the Supplier and, if appropriate, has entered into a Purchase Agreement
with respect thereto. Lessor shall accept an assignment from Lessee of Lessee's
rights, but none of Lessee's obligations, under any such Purchase Agreement.
Lessee shall arrange for delivery of the Equipment so that it can be accepted in
accordance with Section 7 hereof. If an Item of Equipment is subject to an
existing Purchase Agreement between Lessee and the Supplier, Lessee warrants
that such Item of Equipment has not been delivered to Lessee as of the date of
the Equipment Schedule applicable thereto. If Lessee causes the Equipment to be
modified or altered, or requests any additions thereto prior to the Rent
Commencement Date, Lessee (i) acknowledges that any such modification,
alteration or addition to an Item of Equipment may affect the Total Cost, taxes,
purchase and renewal options, if any, Stipulated Loss Value and Rent with
respect to such Item of Equipment, and (ii) hereby authorizes Lessor to adjust
such Total Cost, taxes, purchase and renewal options, if any, Stipulated Loss
Value and Rent as appropriate. Lessee hereby authorizes Lessor to complete each
Equipment Schedule with the serial numbers and other identification data of the
Equipment Group associated therewith, as such data is received by Lessor.
7. DELIVERY AND ACCEPTANCE. Upon acceptance for lease by Lessee of any
Equipment delivered to Lessee and described in any Equipment Schedule, Lessee
shall execute and deliver to Lessor a Certificate of Acceptance. LESSOR SHALL
HAVE NO OBLIGATION TO ADVANCE FUNDS FOR THE PURCHASE OF THE EQUIPMENT UNLESS AND
UNTIL LESSOR SHALL HAVE RECEIVED A CERTIFICATE OF ACCEPTANCE RELATING THERETO
EXECUTED BY LESSEE. Such Certificate of Acceptance shall constitute Lessee's
acknowledgment that such Equipment (a) was received by Lessee, (b) is
satisfactory to Lessee in all respects and is acceptable to Lessee for lease
hereunder, (c) is suitable for Lessee's purposes, (d) is in good order, repair
and condition, (e) has been installed and operates properly, and (f) is subject
to all of the terms and conditions of this Lease (including, without limitation,
Section 2 hereof).
8. TERM; SURVIVAL. With respect to any Item of Equipment, unless
otherwise specified thereon, the initial term of this Lease (the "Initial Term")
shall commence on the date on which such Item of Equipment is delivered to
Lessee, and, unless earlier terminated as provided herein, shall expire on the
final Rent Payment Date for such Item of Equipment. With respect to an Item of
Equipment, any renewal term of this Lease (individually, a "Renewal Term"), as
contemplated hereby, shall commence immediately upon the expiration of the
Initial Term or any prior Renewal Term, as the case may be, and, unless earlier
terminated as provided herein, shall expire on the date on which the final
payment of Rent is due and paid hereunder. All obligations of Lessee hereunder
shall survive the expiration, cancellation or other termination of the Term
hereof.
9. RENT. With respect to Each Item of Equipment, Lessee shall pay the
Rent set forth on the Equipment Schedule applicable to such Item of Equipment,
commencing on the Rent Commencement Date, and, unless otherwise set forth on
such Equipment Schedule, on the same day of each payment period thereafter for
the balance of the Term. Rent shall be due whether or not Lessee has received
any notice that such payments are due. All Rent shall be paid to Lessor at its
address set forth on the Equipment Schedule, or as otherwise directed by Lessor
in writing.
10. LOCATION; INSPECTION; LABELS. The Equipment shall be delivered to the
Equipment Location and shall not be removed therefrom without Lessor's prior
written consent. Lessor shall have the right to enter upon the Equipment
Location and inspect the Equipment at any reasonable time. Lessor may, without
notice to Lessee, remove the Equipment if the Equipment is, in the opinion of
Lessor, being used beyond its capacity or is in any manner improperly cared for,
abused or misused. At Lessor's request, Lessee shall affix labels stating that
the Equipment is owned by Lessor permanently in a prominent place on the
Equipment and shall keep such labels in good repair and condition.
11. USE; ALTERATIONS. Lessee shall use the Equipment lawfully and only in
the manner for which it was designed and intended and so as to subject it only
to ordinary wear and tear. Lessee shall comply with all Applicable Law. Lessee
shall immediately notify Lessor in writing of any existing, pending or
threatened investigation, inquiry, claim or action by any Governmental Authority
in connection with any Applicable Law or Governmental Action which could
adversely affect the Equipment or this Lease. Lessee, at its own expense, shall
make such alterations, additions or modifications or improvements to the
Equipment as may be required from time to time to meet the requirements of
Applicable Law or Governmental Action. Except as otherwise permitted
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herein, Lessee shall not make any alterations, additions, modifications or
improvements to the Equipment without Lessor's prior written consent.
12. REPAIRS AND MAINTENANCE. Lessee, at Lessee's own cost and expense,
shall (a) keep the Equipment in good repair, good operating condition and
working order and in compliance with the manufacturer's specifications, and (b)
enter into and keep in full force and effect during the Term hereof a
maintenance agreement with the manufacturer of the Equipment, or a
manufacturer-approved maintenance organization, to maintain, service and repair
the Equipment so as to keep the Equipment in as good operating condition and
working order as it was when it first became subject to this Lease and in
compliance with the manufacturer's specifications. Upon Lessor's request,
Lessee shall furnish Lessor with an executed copy of any such maintenance
agreement. An alternate source of maintenance may be used by Lessee with
Lessor's prior written consent. Lessee, at its own cost and expense and within
a reasonable period of time, shall replace any part of any Item of Equipment
that becomes worn out, lost, stolen, destroyed, or otherwise rendered
permanently unfit or unavailable for use (whether or not such replacement is
covered by the aforesaid maintenance agreement), with a replacement part of the
same manufacture, value, remaining useful life and utility as the replaced part
immediately preceding the replacement (assuming that such replaced part is in
the condition required by this Lease). Such replacement part shall be free and
clear of all Liens. Notwithstanding the foregoing, this paragraph shall not
apply to any Loss or Damage (as defined in Section 16 hereof) of any Item of
Equipment.
13. RETURN OF EQUIPMENT. Upon the expiration (subject to Section 32
hereof and except as otherwise provided in an Equipment Schedule) or earlier
termination of this Lease, Lessee, at its sole expense, shall return the
Equipment to Lessor by delivering such Equipment F.A.S. or F.O.B. to such
location or such carrier (packed for shipping) as Lessor shall specify. Lessee
agrees that the Equipment, when returned, shall be in the condition required by
Section 12 hereof. All components of the Equipment shall have been properly
serviced, following the manufacturer's written operating and servicing
procedures, such that the Equipment is eligible for a manufacturer's standard,
full service maintenance contract without Lessor's incurring any expense to
repair or rehabilitate the Equipment. If, in the opinion of Lessor, any Item of
Equipment fails to meet the standards set forth above, Lessee agrees to pay on
demand all costs and expenses incurred in connection with repairing such Item of
Equipment and restoring it so as to meet such standards, assembling and
delivering such Item of Equipment. Lessee shall give Lessor ninety (90) days
written notice (the "Return Notice") that Lessee is returning the Equipment as
provided for above. If Lessee fails to return any Item of Equipment as required
hereunder, then, all of Lessee's obligations under this Lease (including,
without limitation, Lessee's obligation to pay Rent for such Item of Equipment
at the rental then applicable under this Lease) shall continue in full force and
effect until such Item of Equipment shall have been returned in the condition
required hereunder.
14. EQUIPMENT UPGRADES/ATTACHMENTS. In addition to the requirements of
Section 11 hereof, Lessee, at its own expense, may from time to time add or
install upgrades or attachments to the Equipment during the Term; PROVIDED, that
such upgrades or attachments (a) are readily removable without causing material
damage to the Equipment, (b) do not materially adversely affect the Fair Market
Sale Value, the Fair Market Rental Value, residual value, productive capacity,
utility or remaining useful life of the Equipment, and (c) do not cause such
Equipment to become "limited use property" within the meaning of Revenue
Procedure 76-30, 1976-2 C.B. 647 (or such other successor tax provision), as of
the applicable delivery date or the time of such upgrade or attachment. Any
such upgrades or attachments which are not required by Section 11 hereof and
which can be removed without causing damage to or adversely affecting the
condition of the Equipment, or reducing the Fair Market Sale Value, the Fair
Market Rental Value, residual value, productive capacity, utility or remaining
useful life of the Equipment shall remain the property of Lessee; and upon the
expiration or earlier termination of this Lease and provided that no Event of
Default exists, Lessee may, at its option, remove any such upgrades or
attachments and, upon such removal, shall restore the Equipment to the condition
required hereunder.
15. SUBLEASE AND ASSIGNMENT. (a) WITHOUT LESSOR'S PRIOR WRITTEN CONSENT,
LESSEE SHALL NOT (I) ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE
OF THIS LEASE, THE EQUIPMENT OR ANY INTEREST THEREIN, OR (II) SUBLET OR LEND THE
EQUIPMENT TO, OR PERMIT THE EQUIPMENT TO BE USED BY, ANYONE OTHER THAN LESSEE OR
LESSEE'S QUALIFIED EMPLOYEES.
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(b) Lessor, at any time with or without notice to Lessee, may sell,
transfer, assign and/or grant a security interest in this Lease, any Equipment
Schedule or any Item of Equipment. In any such event, any such purchaser,
transferee, assignee or secured party shall have and may exercise all of
Lessor's rights hereunder with respect to the items to which any such sale,
transfer, assignment and/or security interest relates, and LESSEE SHALL NOT
ASSERT AGAINST ANY SUCH PURCHASER, TRANSFEREE, ASSIGNEE OR SECURED PARTY ANY
DEFENSE, COUNTERCLAIM OR OFFSET THAT LESSEE MAY HAVE AGAINST LESSOR. Lessee
acknowledges that no such sale, transfer, assignment and/or security interest
will materially change Lessee's duties hereunder or materially increase its
burdens or risks hereunder. Lessee agrees that upon written notice to Lessee of
any such sale, transfer, assignment and/or security interest, Lessee shall
acknowledge receipt thereof in writing and shall comply with the directions and
demands of Lessor's successor or assign.
16. LOSS OF OR DAMAGE TO EQUIPMENT. (a) Lessee shall bear the entire risk
of loss, theft, destruction, disappearance of or damage to any and all Items of
Equipment ("Loss or Damage") from any cause whatsoever during the Term hereof
until the Equipment is returned to Lessor in accordance with Section 13 hereof.
No Loss or Damage shall relieve Lessee of the obligation to pay Rent or of any
other obligation under this Lease.
(b) In the event of Loss or Damage to any Item of Equipment, Lessee,
at the option of Lessor, shall within thirty (30) days following such Loss or
Damage: (1) place such Item of Equipment in good condition and repair, in
accordance with the terms hereof; (2) replace such Item of Equipment with
replacement equipment (acceptable to Lessor) in as good condition and repair,
and with the same value, remaining useful economic life and utility, as such
replaced Item of Equipment immediately preceding the Loss or Damage (assuming
that such replaced Item of Equipment is the condition required by this Lease),
which replacement equipment shall be free and clear of all Liens; or (3) pay to
Lessor the sum of (i) all Rent due and owing hereunder with respect to such Item
of Equipment (at the time of such payment) plus (ii) the Stipulated Loss Value
as of the Rent Payment Date next following the date of such Loss or Damage with
respect to such Item of Equipment, as set forth on the Schedule applicable
thereto. Upon Lessor's receipt of the payment required under subsection (3)
above, Lessee shall be entitled to Lessor's interest in such Item of Equipment,
in its then condition and location, "as is" and "where is", without any
warranties, express or implied. If Lessee replaces the Item of Equipment
pursuant to subsection (b) above, title to such replacement equipment shall
immediately (and without further act) vest in Lessor and thereupon shall be
deemed to constitute Items of Equipment and be fully subject to this Lease as if
originally leased hereunder. If Lessee fails to either restore or replace the
Item of Equipment pursuant to subsection (1) or (2) above, respectively, Lessee
shall make the payment under subsection (3) above.
17. INSURANCE. (a) Lessee, at all times during the Term hereof (until the
Equipment shall have been returned to Lessor) and at Lessee's own cost and
expense, shall maintain (1) insurance against all risks of physical loss or
damage to the Equipment (including theft and collision for Equipment consisting
of motor vehicles) in an amount not less than the full replacement value thereof
or the Stipulated Loss Value thereof, whichever is greater, and (2) commercial
general liability insurance (including blanket contractual liability coverage
and products liability coverage) for personal and bodily injury and property
damage in an amount satisfactory to Lessor.
(b) All insurance policies required hereunder shall (1) require 30
days' prior written notice of cancellation or material change in coverage to
Lessor (any such cancellation or change, as applicable, not being effective
until the thirtieth (30th) day after the giving of such notice); (2) name
"KeyCorp and its subsidiaries and affiliated companies, including KeyCorp
Leasing Ltd." as an additional insured under the public liability policies and
name Lessor as sole loss payee under the property insurance policies; (3) not
require contributions from other policies held by Lessor; (4) waive any right of
subrogation against Lessor; (5) in respect of any liability of any of Lessor,
except for the insurers' salvage rights in the event of a Loss or Damage, waive
the right of such insurers to set-off, to counterclaim or to any other
deduction, whether by attachment or otherwise, to the extent of any monies due
Lessor under such policies; (6) not require that Lessor pay or be liable for any
premiums with respect to such insurance covered thereby; (7) be in full force
and effect throughout any geographical areas at any time traversed by any Item
of Equipment; and (8) contain breach of warranty provisions providing that, in
respect of the interests of Lessor in such policies, the insurance shall not be
invalidated by any action or inaction of Lessee or any other person (other than
Lessor) and shall insure Lessor regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Lessee or by
any other person (other than Lessor). Prior to the first date of delivery of
any Item of Equipment hereunder, and thereafter not less than 15 days prior to
the expiration dates of the expiring policies theretofore delivered pursuant to
this Section, Lessee shall deliver to Lessor a duplicate original of all
policies (or in the case of blanket policies, certificates thereof issued by the
insurers thereunder) for the insurance maintained pursuant to this Section.
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18. GENERAL TAX INDEMNIFICATION. Lessee shall pay when due and shall
indemnify and hold Lessor harmless from and against (on an after-tax basis) any
and all taxes, fees, withholdings, levies, imposts, duties, assessments and
charges of any kind and nature (together with interest and penalties
thereon)(including, without limitation, sales, use, gross receipts, personal
property, ad valorem, business and occupational, franchise, value added,
leasing, leasing use, documentary, stamp or other taxes) imposed upon or against
Lessor, Lessor's assigns, Lessee or any Item of Equipment by any Governmental
Authority with respect to any Item of Equipment or the manufacturing, ordering,
sale, purchase, shipment, delivery, acceptance or rejection, ownership, titling,
registration, leasing, subleasing, possession, use, operation, removal, return
or other dispossession thereof or upon the rents, receipts or earnings arising
therefrom or upon or with respect to this Lease, excepting only all Federal,
state and local taxes on or measured by Lessor's net income (other than income
tax resulting from making any alterations, improvements, modifications,
additions, upgrades, attachments, replacements or substitutions by Lessee).
Whenever this Lease terminates as to any Item of Equipment, Lessee shall, upon
written request by Lessor, advance to Lessor the amount determined by Lessor to
be the personal property or other taxes on said item which are not yet payable,
but for which Lessee is responsible, provided Lessor provides Lessee with copies
of tax bills supporting Lessor's request.
19. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to perform or
comply with any of its obligations contained herein, Lessor may (but shall not
be obligated to do so) itself perform or comply with such obligations, and the
amount of the reasonable costs and expenses of Lessor incurred in connection
with such performance or compliance, together with interest on such amount at
the Late Payment Rate, shall be payable by Lessee to Lessor upon demand. No
such performance or compliance by Lessor shall be deemed a waiver of the rights
and remedies of Lessor or any assignee of Lessor against Lessee hereunder or be
deemed to cure the default of Lessee hereunder.
20. DELINQUENT PAYMENTS; INTEREST. If Lessee fails to pay any Rent or
other sums under this Lease when the same becomes due, Lessee shall pay to
Lessor a late charge equal to five percent (5%) of such delinquent amount. Such
late charge shall be payable by Lessee upon demand by Lessor and shall be deemed
Rent hereunder. In no event shall such late charge exceed the maximum amounts
permitted under Applicable Law.
21. PERSONAL PROPERTY; LIENS. Lessor and Lessee hereby agree that the
Equipment is, and shall at all times remain, personal property notwithstanding
the fact that any Item of Equipment may now be, or hereafter become, in any
manner affixed or attached to real property or any improvements thereon. Lessee
shall at all times keep the Equipment free and clear from all Liens. Lessee
shall (i) give Lessor immediate written notice of any such Lien, (ii) promptly,
at Lessee's sole cost and expense, take such action as may be necessary to
discharge any such Lien, and (iii) indemnify and hold Lessor, on an after-tax
basis, harmless from and against any loss or damage caused by any such Lien.
22. EVENTS OF DEFAULT; REMEDIES. (a) As used herein, the term "Event of
Default" shall mean any of the following events: (1) Lessee fails to pay any
Rent within ten (10) days after the same shall have become due; (2) Lessee or
any Guarantor becomes insolvent or makes an assignment for the benefit of its
creditors; (3) a receiver, trustee, conservator or liquidator of Lessee or any
Guarantor or of all or a substantial part of Lessee's or such Guarantor's assets
is appointed with or without the application or consent of Lessee or such
Guarantor, respectively; (4) a petition is filed by or against Lessee or any
Guarantor under any bankruptcy, insolvency or similar legislation; (5) Lessee or
any Guarantor violates or fails to perform any provision of either this Lease or
any other loan, lease or credit agreement or any acquisition or purchase
agreement with Lessor or any other party; (6) Lessee violates or fails to
perform any covenant or representation made by Lessee herein; (7) any
representation or warranty made herein or in any Lease, certificate, financial
statement or other statement furnished to Lessor shall prove to be false or
misleading in any material respect as of the date on which the same was made;
(8) Lessee makes a bulk transfer of furniture, furnishings, fixtures or other
equipment or inventory; or (9) there is a material adverse change in Lessee's or
any Guarantor's financial condition since the first Rent Commencement Date of
any Equipment Schedule executed in connection herewith. An Event of Default
with respect to any Equipment Schedule hereunder shall, at Lessor's option,
constitute an Event of Default for all Equipment Schedules hereunder and any
other agreements between Lessor and Lessee.
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(b) Upon the occurrence of an Event of Default, Lessor may do one or
more of the following as Lessor in its sole discretion shall elect: (1) 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; (2) sell any Item of Equipment at public or
private sale; (3) hold, keep idle or lease to others any Item of Equipment as
Lessor in its sole discretion may determine; (4) by notice in writing to Lessee,
terminate this Lease, without prejudice to any other remedies hereunder; (5)
demand that Lessee, and Lessee shall, upon written demand of Lessor and at
Lessee's expense forthwith return all Items of Equipment to Lessor or its order
in the manner and condition required by, and otherwise in accordance with all of
the provisions of this Lease, except those provisions relating to periods of
notice; (6) enter upon the premises of Lessee or other premises where any Item
of Equipment may be located and, without notice to Lessee and with or without
legal process, take possession of and remove all or any such Items of Equipment
without liability to Lessor by reason of such entry or taking possession, and
without such action constituting a termination of this Lease unless Lessor
notifies Lessee in writing to such effect; (7) by written notice to Lessee
specifying a payment date, demand that Lessee pay to Lessor, and Lessee shall
pay to Lessor, on the payment date specified in such notice, as liquidated
damages for loss of a bargain and not as a penalty, any unpaid Rent due prior to
the payment date specified in such notice plus whichever of the following
amounts Lessor, in its sole discretion, shall specify in such notice (together
with interest on such amount at the Late Payment Rate from the payment date
specified in such notice to the date of actual payment): (i) an amount, with
respect to an Item of Equipment, equal to the Rent payable for such Item of
Equipment for the remainder of the then current Term thereof, after discounting
such Rent to present worth as of the payment date specified in such notice on
the basis of a per annum rate of discount equal to five percent (5%) from the
respective dates upon which such Rent would have been paid had this Lease not
been terminated; or (ii) the Stipulated Loss Value, computed as of the payment
date specified in such notice or, if such payment date is not a Rent Payment
Date, the Rent Payment Date next following the payment date specified in such
notice (provided, however, that, with respect to any Item of Equipment returned
to or repossessed by Lessor, the amount recoverable under this clause (ii) shall
be reduced (but not below zero) by an amount equal to the Fair Market Sales
Value (taking into account its actual condition) of such Item of Equipment; (8)
cause Lessee, at its expense, to promptly assemble any and all Items of
Equipment and return the same to Lessor at such place as Lessor may designate in
writing; and (9) exercise any other right or remedy available to Lessor under
applicable law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof or to rescind this Lease. In
addition, Lessee shall be liable, except as otherwise provided above, for any
and all unpaid Rent due hereunder before or during the exercise of any of the
foregoing remedies, and for legal fees and other costs and expenses incurred by
reason of the occurrence of any Event of Default or the exercise of Lessor's
remedies with respect thereto, including without limitation the repayment in
full of any costs and expenses necessary to be expended in repairing any Item of
Equipment in order to cause it to be in compliance with all maintenance and
regulatory standards imposed by this Lease. If an Event of Default occurs, to
the fullest extent permitted by law, Lessee hereby waives any right to notice of
sale and further waives any defenses, rights, offsets or claims against Lessor
because of the manner or method of sale or disposition of any Items of
Equipment. None of Lessor's rights or remedies hereunder are intended to be
exclusive of, but each shall be cumulative and in addition to any other right or
remedy referred to hereunder or otherwise available to Lessor or its assigns at
law or in equity. No express or implied waiver by Lessor of any Event of
Default shall constitute a waiver of any other Event of Default or a waiver of
any of Lessor's rights.
23. NOTICES. All notices and other communications hereunder shall be in
writing and shall be transmitted by hand, overnight courier or certified mail
(return receipt requested), postage prepaid. Such notices and other
communications shall be addressed to the respective party at the address set
forth above or at such other address as any party may from time to time
designate by notice duly given in accordance with this Section. Such notices
and other communications shall be effective upon receipt.
24. GENERAL INDEMNIFICATION. Lessee shall pay, and shall indemnify and
hold Lessor harmless on an after-tax basis from and against, any and all
liabilities, causes of action, claims, suits, penalties, damages, losses, costs
or expenses (including attorneys' fees), obligations, liabilities, demands and
judgments, and Liens, of any nature whatsoever (collectively, a "Liability")
arising out of or in any way related to: (a) this Lease or any other written
agreement entered into in connection with the transactions contemplated hereby
and thereby (including, without limitation, a Purchase Agreement, if any) or any
amendment, waiver or modification of any of the foregoing or the enforcement of
any of the terms hereof or any of the foregoing, (b) the manufacture, purchase,
ownership, selection, acceptance, rejection, possession, lease, sublease,
operation, use, maintenance,
12
documenting, inspection, control, loss, damage, destruction, removal, storage,
surrender, sale, use, condition, delivery, nondelivery, return or other
disposition of or any other matter relating to any Item of Equipment or any part
or portion thereof (including, in each case and without limitation, latent or
other defects, whether or not discoverable, any claim for patent, trademark or
copyright infringement and any and all Liabilities in any way relating to or
arising out of injury to persons, properties or the environment or any and all
Liabilities based on strict liability in tort, negligence, breach of warranties
or violations of any regulatory law or requirement, (c) a failure to comply
fully with any Environmental Law with respect to the Equipment or its operation
or use, and (d) Lessee's failure to perform any covenant, or breach of any
representation or warranty, hereunder; PROVIDED, that the foregoing indemnity
shall not extend to the Liabilities to the extent resulting solely from the
gross negligence or willful misconduct of Lessor. Lessee shall deliver promptly
to Lessor (i) copies of any documents received from the United States
Environmental Protection Agency or any state, county or municipal environmental
or health agency and (ii) copies of any documents submitted by Lessee or any of
its subsidiaries to the United States Environmental Protection Agency or any
state, county or municipal environmental or health agency concerning the
Equipment or its operation.
25. SEVERABILITY; CAPTIONS. Any provision of this Lease or any Equipment
Schedule which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability shall not invalidate or render
unenforceable such provision in any other jurisdiction. Captions are intended
for convenience or reference only, and shall not be construed to define, limit
or describe the scope or intent of any provisions hereof.
26. LESSOR'S EXPENSE. Lessee shall pay all costs and expenses of Lessor,
including attorneys' fees and the fees of any collection agencies, incurred by
Lessor in enforcing any of the terms, conditions or provisions hereof or in
protecting Lessor's rights hereunder.
27. RELATED EQUIPMENT SCHEDULES. In the event that any Item of Equipment
covered under any Equipment Schedule hereunder may become attached or affixed
to, or used in connection with, Equipment covered under another Equipment
Schedule hereunder (a "Related Equipment Schedule"), Lessee agrees that, if
Lessee elects to exercise a purchase or renewal option under any such Equipment
Schedule, or if Lessee elects to return the Equipment under any such Equipment
Schedule pursuant to Section 13 hereof, then Lessor, in its sole discretion, may
require that all Equipment leased under all Related Equipment Schedules be
similarly disposed of.
28. FINANCIAL AND OTHER DATA. During the Term hereof, Lessee shall
furnish Lessor, as soon as available and in any event within 60 days after the
end of each quarterly period (except the last) of each fiscal year, and, as soon
as available and in any event within 120 days after the last day of each fiscal
year, financial statements of Lessee and each Guarantor, in each case certified
by an independent public accountant if customarily available or requested.
Lessee shall also furnish such other financial reports, information or data as
Lessor may reasonably request from time to time.
29. COMMITMENT FEE REQUIREMENT. An amount equal to the first periodic
payment of Rent must accompany each Lessee proposal for an Equipment Schedule
hereunder. THIS COMMITMENT FEE IS NON-REFUNDABLE; provided, however, that, upon
Lessor's acceptance of Lessee's proposal to enter into such Equipment Schedule,
such commitment fee shall be applied to the first periodic payment of Rent
thereunder.
30. NO AFFILIATION WITH THE SUPPLIER. Lessee hereby represents and
warrants to Lessor that, except as previously disclosed in writing to Lessor,
neither Lessee nor any of its officers or directors (if a corporation) or
partners (if a partnership) has, directly or indirectly, any financial interest
in the Supplier.
31. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and
warrants that: (a) Lessee is a corporation duly organized and validly existing
in good standing under the laws of the state of its incorporation; (b) the
execution, delivery and performance of this Lease and all related instruments
and documents: (1) have been duly authorized by all necessary corporate action
on the part of Lessee, (2) do not require the approval of any stockholder,
partner, trustee, or holder of any obligations of Lessee except such as have
been duly obtained, and (3) do not and will not contravene any law, governmental
rule, regulation or order now binding on Lessee, or
13
the charter or by-laws of Lessee, or contravene the provisions of, or constitute
a default under, or result in the creation of any lien or encumbrance upon the
property of Lessee under, any indenture, mortgage, contract or other agreement
to which Lessee is a party or by which it or its property is bound; (c) this
Lease and all related instruments and documents, when entered into, will
constitute legal, valid and binding obligations of Lessee enforceable against
Lessee in accordance with the terms thereof; (d) there are no pending actions or
proceedings to which Lessee is a party, and there are no other pending or
threatened actions or proceedings of which Lessee has knowledge, before any
court, arbitrator or administrative agency, which, either individually or in the
aggregate, would adversely affect the financial condition of Lessee, or the
ability of Lessee to perform its obligations hereunder; (e) Lessee is not in
default under any obligation for the payment of borrowed money, for the deferred
purchase price of property or for the payment of any rent under any lease
agreement which, either individually or in the aggregate, would have the same
such effect; (f) under the laws of the state(s) in which the Equipment is to be
located, the Equipment consists solely of personal property and not fixtures;
(g) the financial statements of Lessee (copies of which have been furnished to
Lessor) have been prepared in accordance with generally acceptable accounting
principles consistently applied ("GAAP"), and fairly present Lessee's financial
condition and the results of its operations as of the date of and for the period
covered by such statements, and since the date of such statements there has been
no material adverse change in such conditions or operations; (h) the address
stated above is the chief place of business and chief executive office, or in
the case of individuals, the primary residence, of Lessee; (i) Lessee does not
conduct business under a trade, assumed or fictitious name; and (j) the
Equipment is being leased hereunder solely for business purposes and that no
item of Equipment will be used for personal, family or household purposes.
32. RENEWAL AND PURCHASE OPTIONS. With respect to an Equipment Schedule
and the Equipment Group set forth thereon, so long as no Default or Event of
Default shall have occurred and is continuing, then, upon not less than ninety
(90) days prior written notice to Lessor, (the "Renewal Notice") Lessee may (a)
at the expiration of the Initial Term, or any Renewal Term, purchase all, but
not less than all, of the Equipment Group for the Fair Market Sale Value of such
Equipment Group, payable in cash to Lessor upon the expiration of the Initial
Term or any Renewal Term, as the case may be, (b) at the expiration of the
Initial Term, renew this Lease on a month to month basis at the same Rent
payable at the expiration of the Initial Term, or (c) at the expiration of the
Initial Term, renew this Lease for a minimum period of not less than twelve (12)
consecutive months at the then current Fair Market Rental Value. If Lessee
fails to give Lessor the Return Notice or the Renewal Notice at least ninety
(90) days before the expiration of the Initial Term, Lessee shall be deemed to
have chosen option (b) above. If Lessee exercises option (a) above, Lessee
shall purchase the Equipment "as is" and "where is" and without any warranties,
express or implied, by Lessor.
33. LESSEE'S WAIVERS. To the extent permitted by Applicable Law, Lessee
hereby waives (a) any and all rights and remedies which it may now have or which
at any time hereafter may be conferred upon it by statute (including, without
limitation, Article 2A of the Uniform Commercial Code, as applicable) or
otherwise, (1) which may limit or modify Lessor's rights or remedies hereunder,
(2) to terminate, cancel, quit, repudiate or surrender this Lease, except as
expressly provided herein; (3) to reject, revoke acceptance or accept partial
delivery of the Equipment; (4) to recover damages from Lessor for any breach of
warranty or for any other reason PROVIDED, HOWEVER, that no such waiver shall
preclude Lessee from asserting any such claim against Lessor in a separate cause
of action; or (5) to setoff or deduct all or any part of any claimed damages
resulting from Lessor's default, if any, under this Lease.
34. UCC FILINGS. LESSEE HEREBY APPOINTS LESSOR OR ITS ASSIGNEE AS ITS
TRUE AND LAWFUL ATTORNEY IN FACT, IRREVOCABLY AND COUPLED WITH AN INTEREST, TO
EXECUTE AND FILE ON BEHALF OF LESSEE ALL UCC FINANCING STATEMENTS WHICH IN
LESSOR'S SOLE DISCRETION ARE NECESSARY OR PROPER TO SECURE LESSOR'S INTEREST IN
THE EQUIPMENT IN ALL APPLICABLE JURISDICTIONS.
35. MISCELLANEOUS. Time is of the essence with respect to this Lease.
ANY FAILURE OF LESSOR TO REQUIRE STRICT PERFORMANCE BY LESSEE OR ANY WAIVER BY
LESSOR OF ANY PROVISION HEREIN SHALL NOT BE CONSTRUED AS A CONSENT OR WAIVER OF
ANY PROVISION OF THIS LEASE. Neither this Lease nor any Equipment Schedule may
be amended except by a writing signed by Lessor and Lessee. This Lease and each
Equipment Schedule shall be binding upon, and inure to the benefit of, the
parties hereto, their permitted successors and assigns. This Lease will be
binding upon Lessor only if executed by a duly authorized officer or
representative of
14
Lessor at Lessor's principal place of business as set forth above. This Lease,
and all other documents (the execution and delivery of which by Lessee is
contemplated hereunder), shall be executed on Lessee's behalf by Authorized
Signers of Lessee. THIS LEASE IS BEING DELIVERED IN THE STATE OF NEW YORK AND
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
36. JURY TRIAL WAIVER. LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO WHICH LESSOR OR LESSEE MAY BE PARTIES ARISING OUT OF
OR IN ANY WAY PERTAINING TO THIS LEASE. THIS WAIVER IS MADE KNOWINGLY,
WILLINGLY AND VOLUNTARILY BY THE LESSOR AND THE LESSEE WHO EACH ACKNOWLEDGE THAT
NO REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.
37. MORE THAN ONE LESSEE. If more than one person or entity executes this
Lease, each Equipment Schedule, and all addenda or other documents executed in
connection herewith or therewith, as "Lessee," the obligations of "Lessee"
contained herein and therein shall be deemed joint and several and all
references to "Lessee" shall apply both individually and jointly.
38. QUIET ENJOYMENT. So long as no Event of Default has occurred and is
continuing, Lessee shall peaceably hold and quietly enjoy the Equipment without
interruption by Lessor or any person or entity claiming through Lessor.
39. ENTIRE AGREEMENT. This Lease, together with all Equipment Schedules,
riders and addenda executed by Lessor and Lessee collectively constitute the
entire understanding or agreement between Lessor and Lessee with respect to the
leasing of the Equipment, and there is no understanding or agreement, oral or
written, which is not set forth herein or therein. By initialing below, Lessee
hereby further acknowledges the conditions of this Section 39.
Lessee's Initials:
40. EXECUTION IN COUNTERPARTS. This Master Equipment Lease Agreement may
be executed in several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the
day and year first above written.
LESSOR:
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
LESSEE:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
15
EXHIBIT B - FORM OF INTERIM FUNDING LOAN AND SECURITY AGREEMENT
INTERIM FUNDING LOAN AND SECURITY AGREEMENT
THIS INTERIM FUNDING LOAN AND SECURITY AGREEMENT dated as of May 12, 1997
is made by and between KEYCORP LEASING LTD., a Delaware corporation ("Lessor"),
and R-B RUBBER PRODUCTS, INC., an Oregon corporation having its principal place
of business at 000 Xxxx 00xx Xxxxxx, XxXxxxxxxxx, XX 00000 ("Lessee").
I N T R O D U C T I O N :
Lessee has entered into (i) Funding Agreement dated as of May 12, 1997 with
Lessor (the "Funding Agreement"), (ii) a Master Equipment Lease Agreement dated
as of May 12, 1997 with Lessor, as lessor (the "Master Lease"), a copy of which
is attached to the Funding Agreement (such Master Lease, together with all
Equipment Schedules executed in connection therewith, in substantially the form
attached to the Funding Agreement, and all addenda attached thereto, if any,
from time to time executed in connection therewith, are hereinafter collectively
referred to as, the "Lease"), (iii) purchase agreements with various vendors
(the "Other Suppliers"), pursuant to which Lessee has agreed to purchase certain
goods and other property from such Other Suppliers, together with goods and
other property purchased from the Main Supplier (as hereinafter defined) (the
"Equipment), and (iv) a purchase agreement (the "Purchase Agreement"), a copy of
which is attached hereto as EXHIBIT B, dated January 4, 1997 with Xxxx Xxxx
Xxxxxxxxx AG (the "Main Supplier") and the Other Suppliers, pursuant to which
Lessee has agreed to purchase Equipment. Lessee has requested Lessor to make
certain payments (the "Advance Payment(s)"), as required by the terms of the
Purchase Agreement and purchase orders with the Other Suppliers, in each case
subsequent to the effectiveness and enforceability of the Master Lease with
respect to such Equipment, but prior to the Rent Commencement Date with respect
to such Equipment, and Lessor is willing to make such Advance Payments, subject
to and upon the terms and conditions set forth herein. Unless the context
otherwise requires, all capitalized terms used herein without definition shall
have the respective meanings set forth in the Lease.
NOW, THEREFORE, in consideration of the foregoing premises, the Secured
Obligations between the parties hereunder, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lessor and Lessee hereby agree as follows:
1. THE ADVANCE PAYMENTS. Subject to the terms and conditions set forth
in (a) this Agreement, (b) the Purchase Agreement, (c) the Lease, (d) the
Promissory Note (as defined herein), and (e) any other agreement executed in
connection therewith (this Agreement, the Purchase Agreement, the Lease, the
Promissory Note and all other such agreements collectively referred to hereafter
as the "Loan Documents"), Lessor hereby agrees to make the Advance Payments upon
Lessee's request at the times and in the amounts set forth in the Purchase
Agreement or the purchase orders with the Other Suppliers. Advance Payments
shall be made to the address set forth in each Drawdown Request (as defined in
the Promissory Note).
2. MASTER LEASE IN FULL FORCE AND EFFECT AS TO ADVANCE PAYMENTS. Lessee
hereby acknowledges that, with respect to the Advance Payments hereunder (and
the Equipment to which such Advance Payments relate), the Master Lease shall be
deemed to be in full force and effect against Lessee with respect to such
Equipment with the same force and effect as if an Equipment Schedule was
executed with respect to each item of such Equipment, and Lessee acknowledged
its unqualified acceptance of each item of such Equipment, on the date of the
Advance Payment hereunder relating thereto.
3. THE PROMISSORY NOTE; INTEREST; REPAYMENT. The obligations of Lessee
to repay the Advance Payments shall be evidenced by a promissory note (the
"Promissory Note"), in the form attached hereto as EXHIBIT A. Interest shall be
calculated as set forth in, and repayment made in accordance with, the terms and
conditions of the Promissory Note.
16
4. SECURITY INTEREST. (a) As security for the payment and performance of
all obligations due to Lessor hereunder and under the Promissory Note,
including, without limitation, repayment of the Advance Payments and all
interest accrued thereon, and any and all other obligations of Lessee under the
Loan Documents (collectively, the "Secured Obligations"), Lessee hereby grants
to Lessor a security interest in and to all of Lessee's right, title and
interest, now existing or hereafter arising, in and to the following: Lessee's
assignment of the Purchase Agreement shall be evidenced by an Assignment of
Purchase Agreement in the form attached hereto as EXHIBIT C (the "Assignment of
Purchase Agreement").
(b) Lessee represents and warrants to Lessor that the Collateral is
free and clear of all claims, liens, encumbrances and charges whatsoever, except
for the security interest granted hereby. Lessee shall, at Lessee's own cost
and expense, promptly take any action as may be necessary or desirable in order
to discharge any liens (other than the security interest granted hereby) upon
the Collateral arising as a result of any act or omission of Lessee.
5. EXPRESS CONDITION TO ADVANCE PAYMENTS. Lessor shall have no
obligation to make any Advance Payment hereunder (a) if an Event of Default (as
defined in Section 6 hereof) shall have occurred and is continuing), (b) until
such time as Lessor, or its designee, shall have made a physical inspection of
the Equipment which is satisfactory to Lessor in its sole discretion, and (c)
unless Lessor shall have received the following documents duly executed and
delivered by an authorized representative of Lessee and/or the Main Supplier, as
applicable:
(1) the Master Lease;
(2) this Interim Funding Loan and Security Agreement;
(3) UCC Financing Statements, as requested by Lessor;
(4) a Drawdown Request (as defined in the Promissory Note) with
respect to such Advance Payment;
(5) any other instruments or documents as may be reasonably requested
by Lessor;
(6) an invoice issued by the Main Supplier and the Other Suppliers
and countersigned by Lessee (which countersignature by Lessee shall be
conclusively deemed to be Lessee's certification and agreement that the Advance
Payment invoiced is then due and owing and properly payable, and that all
conditions precedent to the payment of such invoice have been performed and
completed to the satisfaction of Lessee, and in accordance with the terms and
conditions of the Purchase Agreement (provided, however, that Lessor shall have
no obligation to make the final Advance Payment due under the Purchase Agreement
until such time as Lessor has received the duly executed Certificate of
Acceptance for the Equipment from the Lessee, as required by the terms of the
Master Lease;
(7) the Purchase Agreement;
(8) the Assignment of Contract; and
(9) the Consent to Assignment and Agreement, in the form attached
hereto as EXHIBIT D.
6. EVENTS OF DEFAULT; REMEDIES. (a) The occurrence of any of the
following events shall constitute and be an event of default (an "Event of
Default"): (1) Lessee fails to pay any installment of principal or interest, or
any other payment due and owing, under the Promissory Note or this Agreement
within ten (10) days after the same shall have become due; (2) Lessee becomes
insolvent or makes an assignment for the benefit of its creditors; (3) a
receiver, trustee, conservator or liquidator of Lessee or of all or a
substantial part of Lessee's assets is appointed with or without the application
or consent of Lessee; (4) a petition is filed by or against Lessee under any
bankruptcy, insolvency or similar legislation, and, if against, the proceeding
shall continue undismissed, or the order, judgment or decree ordering the
proceeding shall continue unstayed, for thirty (30) or more days; (5) Lessee
violates or fails to perform any provision of either this Agreement, the
Promissory Note, the Lease or any other loan, lease or credit agreement or any
acquisition or purchase agreement with Lessor or any other party (a default
under which third party agreement would materially and adversely effect Lessee),
and such failure shall continue unremedied for 30 days after notice from Lessor
to Lessee, specifying the failure and demanding the same to be remedied; (6)
Lessee violates or fails to perform any covenant or representation made by
Lessee in this Agreement or the Promissory Note, and such violation or failure
shall continue unremedied for 30 days after notice from Lessor to Lessee,
specifying the violation or failure and demanding the same to be remedied; (7)
any representation or warranty made in this Agreement, the Promissory Note, the
Lease, certificate, financial statement or other statement furnished to Lessor
shall prove to be false or misleading in any material respect as of the date on
which the same was made; (8) an event of default has occurred and is continuing
under the
17
Promissory Note; (9) an additional lien attaches to the Equipment; or (10)
Lessee makes a bulk transfer of furniture, furnishings, fixtures or other
equipment or inventory; or (11) there is a material adverse change in Lessee's
or any Guarantor's financial condition since the dated of this Agreement.
(b) Upon the occurrence of an Event of Default: (1) Lessor shall have
no obligation to make any additional Advance Payments hereunder, (2) Lessor
shall have the right to cause the entire outstanding balance of the Advance
Payments, together with all accrued and unpaid interest thereon, to become
immediately due and payable without notice or demand, (3) Lessee shall pay on
demand all costs and expenses of Lessor with respect to the enforcement of its
rights and remedies hereunder and under the Promissory Note, including, without
limitation, reasonable attorneys' fees, and (4) Lessor shall have the right to
exercise any and all remedies available to it hereunder and under the Promissory
Note.
(c) The remedies of Lessor provided herein and in the Promissory Note
shall be cumulative and concurrent and may be pursued singly, successively or
concurrently at the sole discretion of Lessor and may be exercised as often as
occasion therefor shall occur. The failure to exercise, or any delay in the
exercise of, any right or remedy shall in no event be construed as a waiver,
release or exhaustion of any such remedies.
7. WAIVER. LESSEE AND ANY GUARANTOR HEREBY JOINTLY AND SEVERALLY WAIVE
PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF DEMAND, NOTICE OF NON-PAYMENT, NOTICE
OF PROTEST, PROTEST, AND HEREBY CONSENT TO ANY AND ALL EXTENSIONS OF TIME,
RENEWALS, WAIVERS OR MODIFICATIONS OF AND ANY AND ALL SUBSTITUTIONS OR RELEASES
OF SECURITY OR OF ANY PARTY PRIMARILY OR SECONDARILY LIABLE HEREUNDER OR FOR ANY
OF THE SECURED OBLIGATIONS HEREUNDER. LESSEE AND ANY GUARANTOR HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT, THE
PROMISSORY NOTE OR ANY INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION HEREWITH
OR THEREWITH, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN
LESSEE, ANY GUARANTOR AND LESSOR. LESSEE AND ANY GUARANTOR HEREBY EXPRESSLY
WAIVE ANY DEFENSE OR COUNTERCLAIM (IN EACH CASE IN CONNECTION WITH THE EXERCISE
BY LESSOR OF ITS RIGHTS AND REMEDIES UNDER THIS AGREEMENT) OR SET OFF WHATSOEVER
WITH RESPECT TO THE OBLIGATION TO MAKE ANY PAYMENT OF PRINCIPAL OR INTEREST
HEREUNDER, IT BEING UNDERSTOOD AND AGREED THAT THE OBLIGATION TO MAKE SUCH
PAYMENT IS ABSOLUTE AND UNCONDITIONAL IRRESPECTIVE OF THE PERFORMANCE OF THE
PARTIES HEREUNDER.
8. PURCHASE AGREEMENT. Lessee hereby represents and warrants that the
copy of the Purchase Agreement annexed hereto as EXHIBIT B is true, accurate and
complete in all respects as of the date hereof.
9. REPRESENTATIONS AND WARRANTIES. The Equipment shall be located at,
and except as otherwise provided in this Lease, shall not be removed from, the
Equipment Location. In addition to the representations and warranties set forth
in the Lease, Lessee hereby represents and warrants to Lessor that, except as
set forth on SCHEDULE 1 attached hereto, Lessee owns the Equipment Location free
and clear of all liens.
10. MISCELLANEOUS. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW
YORK AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original and in each case such counterparts
shall constitute but one and the same instrument. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Agreement, together with the Promissory
Note, the Lease and all other documents executed in connection herewith and
therewith collectively constitute the entire understanding or agreement between
Lessee and Lessor with respect to the interim financing of the Equipment, and
there is no understanding or agreement, oral or written, which is not set forth
herein or therein.
18
IN WITNESS WHEREOF, Lessor and Lessee have executed this Interim Funding
Loan and Security Agreement as of the day and year first above written.
LESSOR:
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
LESSEE:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
19
EXHIBIT A - FORM OF PROMISSORY NOTE
PROMISSORY NOTE
U.S. $1,000,000.00 Date: May 12, 1997
FOR VALUE RECEIVED, R-B RUBBER PRODUCTS, INC., an Oregon corporation with its
principal place of business at 000 Xxxx 00xx Xxxxxx, XxXxxxxxxxx, XX 00000
("Maker"), promises to pay to the order of KEYCORP LEASING LTD., a Delaware
corporation ("Holder"), the sum of ONE MILLION DOLLARS ($1,000,000.00) in lawful
money of the United States of America or so much thereof as from time to time
shall have been advanced hereunder (the "Principal"), with interest thereon as
hereafter provided ("Interest"), to be paid in the manner set forth herein.
1. INTEREST RATE; PLACE OF PAYMENT. Interest on the balance of the
Principal outstanding on this Promissory Note shall accrue with respect to each
advance hereunder (each, an "Advance") from the date of such Advance and shall
be due and payable at a floating rate per annum (the "Interest Rate") equal to
the Prime Rate (as hereinafter defined) in effect from time to time plus one
percent (1%). The Interest Rate shall be immediately and correspondingly
adjusted with each change in the Prime Rate. Interest shall be calculated on
the basis of a 360-day year consisting of twelve 30-day months. Interest shall
accrue until the date of receipt of payment. As used herein, the term "Prime
Rate" shall mean the prime rate announced from time to time in THE WALL STREET
JOURNAL. If the Prime Rate is no longer available, Holder will choose a new
index which is based upon comparable information and will give Maker notice of
such new "Prime Rate." Payment of the Principal and Interest hereunder shall be
made to Holder at X.X. Xxx 0000, Xxxxxx, Xxx Xxxx 00000-0000, or at such other
place as Holder may designate from time to time in writing.
2. REPAYMENT TERMS. Interest on the Principal at the rates aforesaid
shall be due and payable monthly in arrears on the last day of each month
beginning on the month in which Holder funds the first Advance hereunder in
SEPTEMBER, 1997 to and including the earlier of: (a) SEPTEMBER, 1997; or (b) the
date on which a prepayment is required under Section 4(b) hereof; or (c) the
final Rent Commencement Date for the final Schedule under, and as defined in,
the Master Equipment Lease Agreement dated as of May 12, 1997 between the Maker,
as lessee, and the Holder, as lessor (such Master Equipment Lease Agreement,
together with Equipment Schedules from time to time executed in connection
therewith, are hereinafter collectively referred to as, the "Lease").
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE ENTIRE UNPAID
BALANCE OF THE PRINCIPAL ADVANCED HEREUNDER, TOGETHER WITH ACCRUED AND UNPAID
INTEREST THEREON AT THE APPLICABLE RATE AFORESAID, SHALL BE DUE AND PAYABLE ON
THE EARLIER OF: (A) SEPTEMBER, 1997; OR (B) THE DATE ON WHICH A PREPAYMENT IS
REQUIRED UNDER SECTION 4(B) HEREOF; OR (C) THE FINAL RENT COMMENCEMENT DATE FOR
THE FINAL SCHEDULE UNDER, AND AS DEFINED IN, THE LEASE. In addition, Maker will
pay a late payment charge of five percent (5%) of any payment due hereunder that
is more than ten days late, for each month or part thereof that the same remains
unpaid, computed from the due date thereof through the date of receipt thereof.
Holder reserves the right to require any payment on this Promissory Note,
whether such payment represents a regular installment or a prepayment, to be
payable by wired federal funds or other immediately available funds.
3. LOAN AGREEMENT. This Promissory Note hereby incorporates by reference
all of the terms and conditions of an Interim Funding Loan And Security
Agreement (the "Loan Agreement") dated as of May 12, 1997 between Maker and
Holder to the same extent, and with the same force and effect, as if such terms
and conditions were fully set forth herein and Maker hereby covenants and agrees
to observe and perform such terms and conditions strictly in accordance with the
Loan Agreement. Requisitions and advances under this Promissory Note shall be
made only on the terms and conditions set forth in the Loan Agreement. Advances
hereunder shall be requested by a drawdown request in the form attached hereto
as EXHIBIT A (the "Drawdown Request") and shall be evidenced by a drawdown
certificate in the form attached hereto as EXHIBIT B (the "Drawdown
Certificate").
20
4. PREPAYMENT TERMS. (a) VOLUNTARY PREPAYMENT. Maker may prepay, in
connection with any Rent Commencement Date under an Equipment Schedule, the
Principal outstanding hereunder at any time without premium or penalty.
(b) REQUIRED PREPAYMENT. In the event that (1) more than $100,000 of
the Equipment to which Advance Payments relate is deemed first placed in service
during a calendar quarter, or (2) any Equipment to which Advance Payments relate
is deemed first placed in service during a calendar year, then, on the final day
of each such calendar quarter or calendar year, as the case may be, Maker shall
prepay an amount of Principal, together with accrued and unpaid interest thereon
at the applicable rate aforesaid, which equals the cost of such Equipment.
Holder shall apply, and Maker directs Holder to apply, the proceeds of the Lease
to such prepayment, in accordance with and subject to the terms and conditions
of the Funding Agreement dated as of May 12, 1997.
5. SECURITY. Payment of the Principal and Interest hereunder, and the
performance and observance by Maker of all agreements, covenants and provisions
contained herein, is secured by the grant by Maker to Holder of a first priority
security interest in the Collateral (as defined in the Loan Agreement).
6. TRANSFER OR ASSIGNMENT. Holder may at any time assign or otherwise
transfer or negotiate this Promissory Note in whole or in part, without any
notice to Maker.
7. APPLICATION OF PAYMENTS. Each payment received on this Promissory
Note shall be applied first to unpaid late payment charges (if any) hereunder,
then to Interest as of the payment due date and the balance, if any, to the
outstanding Principal as of the date received.
8. EVENTS OF DEFAULT. (a) The occurrence of any of the "Events of
Default" set forth in the Loan Agreement shall constitute and be an event of
default hereunder (an "Event of Default").
(b) Notwithstanding anything to the contrary contained herein, upon
the occurrence of an Event of Default: (i) Holder shall have the right to cause
the entire outstanding balance of the Principal, together with all accrued and
unpaid Interest thereon, to become immediately due and payable without notice or
demand, (ii) Maker shall pay on demand all costs and expenses of Holder with
respect to the enforcement of its rights and remedies hereunder and under the
Loan Agreement, including, without limitation, reasonable attorneys' fees, and
(iii) Holder shall have the right to exercise any and all remedies available to
it hereunder and under the Loan Agreement.
(c) The remedies of Holder provided herein and in the Loan Agreement
shall be cumulative and concurrent and may be pursued singly, successively or
concurrently at the sole discretion of Holder and may be exercised as often as
occasion therefor shall occur. The failure to exercise, or any delay in the
exercise of, any right or remedy shall in no event be construed as a waiver,
release or exhaustion of any such remedies.
9. COLLECTION COSTS. In addition to the Principal, Interest, and any
late payment charges (if any), Holder shall be entitled to collect all costs and
expenses of collection, including, without limitation, reasonable attorneys'
fees, incurred in connection with the protection or realization of the
Collateral or in connection with Holder's collection efforts, whether or not
suit on this Promissory Note or any foreclosure proceeding is filed. All such
costs and expenses shall be payable on demand and, until paid, shall be secured
by the security interest evidenced by the Loan Agreement and all other
collateral, if any, held by Holder as security for Maker's obligations under
this Promissory Note.
10. BINDING AGREEMENT; GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED
IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. The provisions of this Promissory Note shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
11. MORE THAN ONE SIGNER. If more than one person or entity signs this
Promissory Note as a Maker, the obligations contained herein shall be deemed
joint and several and all references to "Maker" shall apply both individually
and jointly.
21
12. GENERAL. Maker represents and warrants that this Promissory Note
evidences a loan for business or commercial purposes. By signing this
Promissory Note, Maker agrees to be legally bound to all terms and conditions
contained herein.
13. WAIVER. MAKER AND ALL ENDORSERS, SURETIES, AND GUARANTORS HEREOF
HEREBY JOINTLY AND SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF
NON-PAYMENT OR DISHONOR, NOTICE OF PROTEST AND PROTEST OF THIS PROMISSORY NOTE.
MAKER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH OR ARISING OUT OF, THIS PROMISSORY NOTE OR
ANY DOCUMENT DELIVERED IN CONNECTION WITH THIS PROMISSORY NOTE.
14. USURY; PARTIAL INVALIDITY. . (a) At no time shall the Interest Rate
(or any other late charges or other amounts paid or collected hereunder) exceed
the highest rate allowed by applicable law for this type of loan. Should Holder
ever collect interest at a rate that exceeds the such applicable legal limit,
such excess will be credited to the Principal. If the amount of the credit
exceeds the balance of the Principal then outstanding on this Promissory Note,
such excess will be returned to Maker; and the effective rate of interest
automatically shall be reduced to the maximum lawful contract rate allowed under
Applicable Law as now or hereafter construed by the courts having jurisdiction
thereof. Notwithstanding the foregoing, if any applicable state law is amended
or the law of the United States of America preempts any applicable state law, so
that it becomes lawful for Holder to receive a greater per annum interest rate
than is presently allowed by law, the Maker agrees that, on the effective date
of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest rate per annum allowed by
the amended state law or the law of the United States of America (but not in
excess of the Interest Rate provided for herein). All calculations of the rate
of interest contracted for, charged or received under this Note or the Loan
Agreement which are made for the purpose of determining whether such rate
exceeds the maximum lawful contract rate, shall be made, to the extent permitted
by applicable law, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the indebtedness evidenced
hereby, all interest at any time contracted for, charged or received from the
Maker or otherwise by Holder in connection with the Secured Obligations (as
defined in the Loan Agreement).
(b) Whenever possible, each provision of this Promissory Note shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Promissory Note shall be prohibited by or invalid
under the laws of any jurisdiction, such provision, as to such jurisdiction,
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Promissory Note in any other jurisdiction.
15. NOTICES. All notices and other communications under this Promissory
Note shall be in writing and shall be addressed: (i) if to Maker, R-B RUBBER
PRODUCTS, INC., 000 Xxxx 00xx Xxxxxx, XxXxxxxxxxx, XX 00000; and (ii) if to
Holder, KEYCORP LEASING LTD., 00 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000,
Attention: Business Coordinator, or such other address as either party hereto
shall communicate to the other party at its address specified above. All such
notices and other communications shall be deemed to have been duly given if
delivered by hand or if sent by certified mail, return receipt requested, to the
party to whom such notice is intended to be given, and shall be effective upon
receipt.
22
IN WITNESS WHEREOF, Maker, intending to be legally bound, has caused this
Promissory Note to be duly executed under seal on the day and year first above
written.
MAKER:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
STATE OF ____________________________ )
)ss.:
COUNTY OF __________________________ )
On this ______ day of ___________, 19____, before me the subscriber
personally appeared _________________________, who being by me duly sworn, did
depose and say; that (s)he resides at ____________________________, that (s)he
is the ____________________________ of R-B RUBBER PRODUCTS, INC., the
corporation described in and which executed the foregoing instrument; and that
(s)he signed his/her name thereto by order of the Board of Directors of said
corporation.
______________________________________
NOTARY PUBLIC
My Commission Expires:
23
EXHIBIT A
FORM OF DRAWDOWN REQUEST
[To be prepared on Borrower's letterhead]
[Date]
KeyCorp Leasing Ltd.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: Business Coordinator
Dear Business Coordinator:
In accordance with the terms and conditions of a Master Equipment Lease
Agreement dated as of May 12, 1997 (the "Lease"), an Interim Funding Loan and
Security Agreement dated as of May 12, 1997 and a Promissory Note dated as of
May 12, 1997, each either by and between KEYCORP LEASING LTD. ("KCL") and R-B
RUBBER PRODUCTS, INC. (collectively, the "Agreements") or in favor of KCL,
Lessee certifies as follows:
1. KCL is hereby authorized to advance $_________________ under the
Agreements and to forward payment of the proceeds of such advance directly to
___________________________________________________ for payment of the following
attached invoices in the amounts shown:
VENDOR EQUIPMENT DESCRIPTION AMOUNT (MINIMUM $50,000)
------ --------------------- ------------------------
2. This advance shall apply to Equipment Schedule 01 to the Lease. The
following documentation is enclosed for your review in support of this drawdown
request:
a. Check for $50.00 for drawdown request.
b. Invoices described above.
c. Other (specify):
Please make this advance effective as of ______________, 199___.
Sincerely,
Maker:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
24
EXHIBIT B
Drawdown Certificate under
Promissory Note Dated as of May 12, 1997
by R-B RUBBER PRODUCTS, INC. in favor of KEYCORP LEASING LTD.
The referenced Promissory Note and this Drawdown Certificate are in
connection with the Master Equipment Lease Agreement dated as of May 12, 1997
between the Maker, as lessee, and the Holder, as lessor, and the Equipment
Schedule Number 01 thereto. Pursuant to a Drawdown Request dated
________________________________ from R-B RUBBER PRODUCTS, INC., the following
Advance Payment was made by KEYCORP LEASING LTD.:
Date of Drawdown: _____________, 199___
Drawdown Amount: $_______________
Initial Interest Rate on Drawdown Amount
(the Interest Rate floats as set forth in the
above-referenced Promissory Note): 9.50%
Equipment Schedule to Which
Drawdown Applies: Equipment Schedule 01
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
25
EXHIBIT B - THE PURCHASE AGREEMENT
26
EXHIBIT C - FORM OF ASSIGNMENT OF CONTRACT
ASSIGNMENT OF PURCHASE AGREEMENT
R-B RUBBER PRODUCTS, INC. ("Assignor"), for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
hereby grants, conveys, transfers, pledges and assigns unto KEYCORP LEASING
LTD., a Delaware corporation ("Assignee"), all of Assignor's right, title and
interest in and to the Purchase Agreement (the "Purchase Agreement") dated as of
January 4, 1997 between Assignor and XXXX XXXX XXXXXXXXX AG (the "Mail
Supplier") and Other Suppliers, pursuant to which Assignor has agreed to
purchase goods and other property (the "Equipment") from the Supplier
(including, but not limited to, the right to become direct purchaser of the
Equipment thereunder), together with all Assignor's right, title and interest in
and to the Equipment, for the purpose of securing the payment and performance of
the Secured Obligations (as defined in the Interim Funding Loan and Security
Agreement dated as of May 12, 1997 between Assignee, as lessor, and Assignor, as
lessee).
Assignor covenants and agrees that it shall not modify, amend, terminate or
release the Purchase Agreement without the prior written consent of Assignee.
Assignor and Assignee mutually agree that the acceptance by Assignee of
this Assignment of Purchase Agreement, with all of the rights, powers,
privileges and authority so created, shall not be deemed or construed to
obligate Assignee to assume any obligation or responsibility of Assignor under
the Purchase Agreement, nor shall Assignee be liable for the nonperformance of
any such obligation or responsibility.
THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, Assignor has caused this Assignment of Purchase
Agreement to be executed as of May 12, 1997.
ASSIGNOR:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
27
EXHIBIT D - FORM OF CONSENT AND AGREEMENT
CONSENT TO ASSIGNMENT AND AGREEMENT
XXXX XXXX XXXXXXXXX AG (the "Supplier") hereby (i) consents to that certain
Assignment of Purchase Agreement dated as of May 12, 1997 by R-B RUBBER
PRODUCTS, INC. ("Assignor") to KEYCORP LEASING LTD. ("Assignee"), pursuant to
which, among other things, Assignor has assigned to Assignee, all of Assignor's
right, title and interest in and to the purchase agreement (the "Purchase
Agreement") dated January 4, 1997 between the Supplier and Assignor (pursuant to
which the Supplier has agreed to sell, and Assignor has agreed to buy, certain
equipment under the terms specified therein), and (ii) confirms to and agrees
with Assignor and Assignee that:
1. OBLIGATIONS OF ASSIGNEE. Assignee shall not be liable for any of the
obligations of Assignor or duties of Assignor under the Purchase Agreement, nor
shall the Purchase Agreement give rise to any duties or obligations whatsoever
on the part of Assignee owing to the Supplier.
2. REPRESENTATIONS AND WARRANTIES. The Supplier represents and warrants
to Assignor that: (a) attached hereto as EXHIBIT A is a true, complete and
accurate copy of the Purchase Agreement, and that such Purchase Agreement is in
full force and effect and has not been modified or amended; (b) the Supplier has
not sent or received any notice of default or any notice for the purpose of
terminating the Purchase Agreement, nor is there, to the best knowledge of the
Supplier, any existing circumstance or event which, but for the passage of time,
giving of notice or otherwise, would constitute a default by the Supplier or
Assignor under the Purchase Agreement; (c) the Supplier will not terminate, or
exercise any remedies under, the Purchase Agreement by reason of any default
thereunder by Assignor without sending to Assignee written notice of such
default (including in such notice the grounds upon which it proposes to
terminate the Purchase Agreement and the proposed termination date), and
availing Assignee of a reasonable time period to cure such default, provided,
however, that such reasonable time period shall not exceed fifteen (15) days (in
the case of payment default), or thirty (30) days (in the case of other
defaults); (d) the Supplier will not, without the prior written consent of
Assignee (1) acknowledge or consent to any sale or pledge of, or any other
assignment of a security interest by Assignor of, any of the right, title or
interest of Assignor in the Purchase Agreement, or (2) agree to any amendment,
modification, release or discharge (in whole or in part) of the Purchase
Agreement; (e) in the event that Assignee succeeds to the interest of Assignor
under the Purchase Agreement, the Supplier shall (1) accept performance by
Assignee, its successors or assigns, under the Purchase Agreement, (2) accept
Assignee, its successors or assigns, as the successor to the rights of Assignor
thereunder, (3) perform the Supplier's obligations and duties under the Purchase
Agreement to Assignee, its successors or assigns, on the same terms and
conditions as set forth in the Purchase Agreement; and (f) the Supplier shall
send copies of all notices of defaults sent by the Supplier to Assignor pursuant
to the Purchase Agreement to Assignee and no such notice shall be effective for
any purpose unless and until a copy thereof shall have been received by
Assignee.
3. NOTICES. All notices and other communications hereunder shall be in
writing and shall be transmitted by hand, overnight courier or certified mail
(return receipt requested), postage prepaid. Such notices and other
communications shall be addressed to the respective party at the following
address or at such other address as any party may from time to time designate by
notice duly given in accordance with this Section:
if to Assignee if to the Supplier
KEYCORP LEASING LTD. XXXX XXXX XXXXXXXXX AG
00 Xxxxx Xxxxxx X.X. Xxx Xxxxxxxxxxx 0
Albany, New York 12207 0000 Xxxxxxxxx, Xxxxxxxxxxx
Attention: Business Coordinator Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000 Facsimile: 0041-1-915-00-65
All notices and other communications under this Consent to Assignment shall be
effective upon receipt.
28
4. MISCELLANEOUS. Time is of the essence with respect to this
Agreement. This Agreement shall be binding upon, and inure to the benefit of,
the parties hereto, their permitted successors and assigns. THIS AGREEMENT IS
BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the Supplier has executed this Consent to Assignment
and Agreement as of May 12, 1997.
SUPPLIER:
XXXX XXXX XXXXXXXXX AG
By: ________________________________________
Name:
Title:
29
EXHIBIT A
THE PURCHASE AGREEMENT
Attached hereto.
30
LIST OF SCHEDULES
Schedule 1 - Title Exceptions to Site
31
EXHIBIT C - FORM OF EQUIPMENT SCHEDULE, TOGETHER WITH ALL ADDENDA THERETO
EQUIPMENT SCHEDULE XX. 00
XXXXXXXXX XXXXXXXX XX. 00 dated as of < < TO BE DETERMINED > > (this
"Schedule") between KEYCORP LEASING LTD. ("Lessor"), a Delaware corporation, and
R-B RUBBER PRODUCTS, INC., an Oregon corporation ("Lessee").
I N T R O D U C T I O N :
Lessor and Lessee have heretofore entered into that certain Master
Equipment Lease Agreement dated as of May 12, 1997 (the "Master Lease"; the
Master Lease and this Schedule hereinafter collectively referred to as, this
"Lease"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings specified in the Master Lease. The Master Lease provides for
the execution and delivery of a Schedule substantially in the form hereof for
the purpose of confirming the acceptance and lease of the Equipment under this
Lease as and when delivered by Lessor to Lessee in accordance with the terms
thereof and hereof.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. EQUIPMENT. Pursuant to the terms and conditions of this Lease, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the equipment
listed on EXHIBIT A attached hereto (the "Equipment"). The aggregate Total Cost
of such Equipment is $< < TO BE DETERMINED > >.
2. TERM. The Initial Term of this Lease with respect to the Equipment
described on this Schedule shall commence on the date on which such Equipment is
delivered to Lessee, and, unless earlier terminated as provided herein, shall
expire on a date which is eighty-four (84) months after the Rent Commencement
Date (the "Initial Term Expiration Date").
3. RENT PAYMENT DATES; RENT. Lessee hereby agrees to pay Rent for the
Equipment throughout the Initial Term in < < TERM WORD > > (< < TERM # > >)
consecutive monthly installments payable in advance on the Rent Commencement
Date and on the same day each month thereafter (each, a "Rent Payment Date").
Each such installment of Rent shall be in an amount equal to $< < PAYMENT AMOUNT
> >.
4. EQUIPMENT LOCATION; BILLING ADDRESS. The Equipment described on this
Schedule shall be located at, and except as otherwise provided in this Lease,
shall not be removed from, the following address: 000 Xxxx 00xx Xxxxxx,
XxXxxxxxxxx, XX 00000. The billing address of Lessee is as follows: R-B RUBBER
PRODUCTS, INC., 000 Xxxx 00xx Xxxxxx, XxXxxxxxxxx, XX 00000.
5. TAX INDEMNIFICATION. (a) Lessee acknowledges that Lessor has executed
this Lease, and that the Rent payable by Lessee under this Lease has been
computed, upon the assumptions that Lessor will (i) be entitled to depreciation
or cost recovery deductions ("MACRS Deductions") for Federal income tax purposes
under the Modified Accelerated Cost Recovery System provided for in Section 168
of the Internal Revenue Code of 1986, as amended (the "Code"), and depreciation
or cost recovery deductions ("State Depreciation Deductions") for state income
tax purposes for the State of New York ("New York"), in each case on the basis
that (1) each Item of Equipment constitutes "< < -year property" within the
meaning of Section 168(e) of the Code, (2) the initial tax basis for each Item
of Equipment will be equal to the Total Cost, (3) deductions for each Item of
Equipment will be computed by using the method specified in Section 168(b)(1) of
the Code over the < < -year recovery period described in Section 168(c) of the
Code, and (4) the applicable convention for each Item of Equipment under Section
168(d) of the Code is the half-year convention; (ii) be entitled to deductions
for Federal income tax purposes (available in the manner and as provided by
Section 163 of the Code) for interest payable with respect to any indebtedness
incurred by Lessor in connection with any financing by Lessor
32
of any portion of the Total Cost of each Item of Equipment ("Interest
Deductions"); and (iii) be subject to tax for each year at a composite Federal
and New York corporate income tax rate equal to the then highest marginal rate
for corporations provided for under the Code and the laws of New York (the
"Highest Marginal Tax Rate"). The MACRS Deductions, State Depreciation
Deductions and Interest Deductions are hereinafter collectively referred to as
the "Tax Benefits".
(b) Lessee represents and warrants to Lessor that (i) each Item of
Equipment constitutes "< < -year property" within the meaning of Section 168(e)
of the Code, (ii) Lessee shall not attempt to claim such Tax Benefits, (iii) at
and after the time of delivery of the Equipment to Lessee pursuant to this
Lease, the Equipment shall be owned by Lessor for Federal income tax purposes
and Lessee shall not claim any ownership or title in and to the Equipment, and
(iv) Lessee has not, and will not, at any time after such delivery throughout
the Term of this Lease, take any action or omit to take any action (whether or
not the same is permitted or required hereunder) which will result in the loss
by Lessor of all or any part of such Tax Benefits.
(c) If, as a result of any act, omission or misrepresentation of
Lessee, (x) the Tax Benefits are lost, disallowed, deferred, eliminated,
reduced, recaptured, compromised or otherwise unavailable to Lessor, (y) for
Federal, foreign, state or local income tax purposes, any item of income, loss
or deduction with respect to any Item of Equipment is treated as derived from,
or allocable to, sources outside the United States, or (z) there shall be
included in the gross income of Lessor for Federal, state or local income tax
purposes any amount on account of any addition, modification, substitution or
improvement to or in respect of any Item of Equipment made or paid for by Lessee
(any of the foregoing being hereinafter a "Tax Loss"), then, within thirty (30)
days of Lessee's receipt of written notice from Lessor that such a Tax Loss has
occurred, Lessee shall pay to Lessor an amount which, after deduction therefrom
of all taxes to be paid in respect of the receipt thereof, will enable Lessor to
receive the same Net Economic Return (as hereinafter defined) that Lessor would
have realized on this Lease had such Tax Loss (together with any interest,
penalties or additions to tax) not occurred. Any event which, by the terms of
this Lease, requires payment by Lessee to Lessor of the Stipulated Loss Value of
the Equipment shall not constitute the act of Lessee for purpose of the
foregoing sentence.
(d) As used in this Section, the term "Net Economic Return" shall mean
Lessor's net after-tax yield, aggregate after-tax cash flow and return on
assets, based on (i) the assumptions used by Lessor in originally calculating
Rent and Stipulated Loss Value percentages, including the assumptions set forth
above (as such assumptions may have been revised pursuant to the last sentence
of this subsection) and (ii) the Highest Marginal Tax Rate actually in effect
during each year from the date of such original calculations to the date of such
Tax Loss, both dates inclusive. In the event Lessor shall suffer a Tax Loss
with respect to which Lessee is required to pay an indemnity hereunder, and the
full amount of such indemnity has been paid or provided for hereunder, the
aforesaid assumptions, without further act of the parties hereto, shall
thereupon be and be deemed to be amended, if and to the extent appropriate, to
reflect such Tax Loss.
(e) For purposes of this Section, the term "Lessor" shall include the
entity or entities, if any, with which Lessor consolidates any tax return.
Lessee acknowledges that it has neither sought nor received tax advice from
Lessor as to the availability to Lessee of any tax benefits with respect to the
Equipment. All of Lessor's rights and privileges arising from the indemnities
contained in this Lease will survive the expiration or other termination or
cancellation of this Lease. Such indemnities are expressly made for the benefit
of, and are enforceable by, Lessor and its successors and assigns.
< < INDEMNITY RELATING TO OREGON ENERGY TAX CREDITS TO BE PLACED HERE > >
6. TRUE LEASE TRANSACTION. (a) It is the express intent of the parties
that this Lease constitute a true lease and not a sale of the Equipment. Title
to the Equipment shall at all times remain in Lessor, and Lessee shall acquire
no ownership, title, property, right, equity, or interest in the Equipment other
than its leasehold interest solely as Lessee subject to all the terms and
conditions hereof. To the extent that Article 2A ("Article 2A") of the Uniform
Commercial Code ("UCC") applies to the characterization of this Lease, the
parties hereby agree that this Lease is a "Finance Lease" as defined therein.
Lessee acknowledges: (i) that Lessee has selected the "Supplier" (as defined in
the
33
UCC) and has directed Lessor to purchase the Equipment from the Supplier in
connection with this Lease, and (ii) that Lessee has been informed in writing in
this Lease, before Lessee's execution of this Lease, that Lessee is entitled
under Article 2A to the promises and warranties, including those of any third
party, provided to Lessor by the Supplier in connection with or as part of the
Purchase Agreement, and that Lessee may communicate with the Supplier and
receive an accurate and complete statement of those promises and warranties,
including any disclaimers and limitations of them or of remedies. The filing of
UCC financing statements pursuant to Section 34 of the Master Lease is
precautionary and shall not be deemed to have any effect on the characterization
of this Lease.
(b) Notwithstanding the express intent of Lessor and Lessee that this
agreement constitute a true lease and not a sale of the Equipment, should a
court of competent jurisdiction determine that 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 Equipment and all accessions,
substitutions and replacements thereto and therefor, and proceeds (cash and
non-cash), including, without limitation, insurance proceeds thereof (but
without power of sale), to secure the prompt payment and performance as and when
due of all obligations and indebtedness of Lessee, now existing or hereafter
created, to Lessee pursuant to this Lease or otherwise. In furtherance of the
foregoing, Lessee shall execute and deliver to Lessor, to be recorded at
Lessee's expense, Uniform Commercial Code financing statements, statements of
amendment and statements of continuation as reasonably may be required by Lessor
to perfect and maintain perfected such security interest.
(c) In the event that the Supplier erroneously invoices Lessee for the
Equipment, Lessee agrees to forward said invoice to Lessor immediately. Lessee
acknowledges that the Equipment is, and shall at all times remain, the property
of Lessor, and that Lessee has no right, title or interest therein or thereto
except as expressly set forth in the Lease.
7. LESSEE'S PURCHASE AND RENEWAL OPTIONS. Lessee shall have the purchase
and renewal options set forth on the End of Lease Options Addendum attached
hereto and made a part hereof.
8. MODIFICATIONS TO MASTER LEASE. With respect to the Equipment
described on this Schedule, the Master Lease shall be modified as follows:
(a) The following shall be inserted as the penultimate sentence of
Section 11 of the Master Lease ("Use; Alterations"):
Title to all such alterations, additions, modifications or
improvements shall immediately, and without further act, vest in Lessor and
thereupon shall be deemed to constitute Items of Equipment and be fully subject
to this Lease as if originally leased hereunder.
(b) The following shall be inserted as the penultimate sentence of
Section 12 of the Master Lease ("Repairs and Maintenance"):
Title to such replacement part shall immediately (and without further
act) vest in Lessor upon installation, attachment or incorporation of the same
in, on or into such Item of Equipment and thereupon shall be deemed to
constitute an Item of Equipment and be fully subject to this Lease as if
originally leased hereunder.
(c) As used in Section 22(a) of the Master Lease ("Events of
Default"), the term "Event of Default" shall also mean any of the following
events: (1) a change in control occurs in Lessee; or (2) the death or
dissolution of Lessee.
(d) Section 22(b) of the Master Lease ("Events of Default") is hereby
amended as follows: (1) with respect to Section 22(b)(4), the word "terminate"
is hereby deleted and the words "cancel or terminate" are hereby substituted in
its
34
place; (2) with respect to Section 22(b)(6), the word "termination" is hereby
deleted and the words "cancellation or termination" are hereby substituted in
its place; and (3) with respect to Section 22(b)(7), the word "terminated" is
hereby deleted and the words "canceled or terminated" are hereby substituted in
its place.
9. STIPULATED LOSS VALUE. The Stipulated Loss Values applicable to the
Equipment and this Lease are as set forth on a supplement (the "Stipulated Loss
Value Supplement") prepared by Lessor.
10. GOVERNING LAW. This Schedule is being delivered in the State of New
York and shall in all respects be governed by, and construed in accordance with,
the laws of the State of New York, including all matters of construction,
validity and performance.
11. COUNTERPARTS. This Schedule may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
12. PERSONAL PROPERTY TAX. To insure Lessee's compliance with the
provisions of the Lease with respect to the payment of personal property taxes
on the Equipment described on this Schedule, Lessee hereby covenants and agrees
that, unless otherwise directed in writing by Lessor or required by applicable
law, Lessee will not list itself as owner of any Item of Equipment for property
tax purposes. Upon receipt by Lessee of any property tax xxxx pertaining to
such Item of Equipment from the appropriate taxing authority, Lessee will
promptly forward such property tax xxxx to Lessor. Upon receipt by Lessor of
any such property tax xxxx, Lessor will pay such tax and will invoice Lessee for
the expense. Upon receipt of such invoice, Lessee will promptly reimburse
Lessor for such expense.
13. ADDITIONAL ADDENDA. In addition to the End of Lease Options Addendum,
please see the following addenda to this Schedule, attached hereto and made a
part hereof, for additional terms and conditions governing the leasing of the
Equipment described on this Schedule: Early Buyout Addendum, and Machine Tool
Return Maintnenance Addendum.
14. MORE THAN ONE LESSEE. If more than one person or entity executes this
Schedule, and all addenda or other documents executed in connection herewith, as
"Lessee," the obligations of "Lessee" contained herein and therein shall be
deemed joint and several and all references to "Lessee" shall apply both
individually and jointly.
15. RELATIONSHIP TO MASTER LEASE; FURTHER ASSURANCES. This Schedule shall
be construed in connection with and as part of the Lease, and all terms and
conditions contained in the Master Lease are hereby incorporated herein by
reference with the same force and effect as if such terms and conditions were
fully stated herein. By execution of this Schedule, Lessee and Lessor reaffirm
all terms and conditions of the Master Lease except as they may be modified
hereby. To the extent that any of the terms and conditions of this Schedule are
contrary to or inconsistent with any terms and conditions of the Master Lease,
the terms and conditions of this Schedule shall govern. LESSEE HEREBY CERTIFIES
TO LESSOR THAT THE REPRESENTATIONS AND WARRANTIES MADE BY LESSEE IN THE MASTER
LEASE (INCLUDING, WITHOUT LIMITATION, SECTION 31 THEREOF) ARE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF THE DATE OF THIS SCHEDULE WITH THE SAME EFFECT AS
THOUGH MADE ON AND AS OF SUCH DATE. Lessee shall take such additional actions
and execute and deliver such additional documents as Lessor shall deem necessary
from time to time to effectuate the terms of the Lease.
35
IN WITNESS WHEREOF, Lessor and Lessee have caused this Schedule to be duly
executed and delivered on the day and year first above written.
LESSOR:
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
LESSEE:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
36
EXHIBIT A
TO EQUIPMENT SCHEDULE NO. 01
DATED AS OF < < TO BE DETERMINED > >
TO MASTER EQUIPMENT LEASE AGREEMENT DATED AS OF MAY 12, 1997
VENDOR: < < NAME OF VENDOR > >
< < STREET ADDRESS > >
< < CITY, STATE AND ZIP CODE > >
Attention: < < NAME OF CONTACT > >
QTY EQUIPMENT DESCRIPTION
37
END OF LEASE OPTIONS ADDENDUM
TO EQUIPMENT SCHEDULE NUMBER 01
TO MASTER EQUIPMENT LEASE AGREEMENT DATED AS OF MAY 12, 1997
BETWEEN KEYCORP LEASING LTD., AS LESSOR,
AND R-B RUBBER PRODUCTS, INC., AS LESSEE.
(FMV Option)
THIS END OF LEASE OPTIONS ADDENDUM is annexed to, and made a part of, the
above-referenced Equipment Schedule and Master Equipment Lease Agreement, as it
relates to such Equipment Schedule (collectively, the "Lease"). Unless
otherwise specified herein, all capitalized terms shall have the meanings
ascribed to them in the Lease. Lessor and Lessee hereby agree as follows:
LESSEE'S PURCHASE AND RENEWAL OPTIONS. (a) With respect to the Equipment
described on this Schedule, Section 32 of the Master Lease ("Renewal and
Purchase Options") is hereby deleted in its entirety.
(b) So long as no Default or Event of Default shall have occurred and be
continuing and Lessee shall have given Lessor at least ninety (90) days prior
written notice (the "Option Notice"), Lessee shall have the option, at the
expiration of the Initial Term or any Renewal Term, to: (1) purchase all, but
not less than all, Items of Equipment for a purchase price (the "Purchase Option
Price") equal to the then Fair Market Sale Value thereof; (2) renew this Lease
on a month to month basis at the same Rent payable at the expiration of such
Initial Term or Renewal Term, as the case may be; (3) renew this Lease for a
minimum period of not less than twelve (12) consecutive months at the then
current Fair Market Rental Value; or (4) return such Equipment to Lessor
pursuant to, and in the condition required by, the Lease. If Lessee fails to
give Lessor the Option Notice, Lessee shall be deemed to have chosen option (2)
above. Payment of the Purchase Option Price, applicable sales taxes, together
with all other amounts due and owing by Lessee under the Lease (including,
without limitation, Rent) during such Initial Term and Renewal Term shall be
made on the last day of the Initial Term or Renewal Term, as the case may be, in
immediately available funds against delivery of a xxxx of sale transferring to
Lessee all right, title and interest of Lessor in and to the Equipment ON AN "AS
IS" "WHERE IS" BASIS, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY
MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT,
ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. LESSOR MAY
SPECIFICALLY DISCLAIM ANY SUCH REPRESENTATIONS AND WARRANTIES.
Except as modified hereby, all of the terms, covenants and conditions of
the Lease shall remain in full force and effect and are in all respects hereby
ratified and affirmed.
38
IN WITNESS WHEREOF, Lessor and Lessee have executed this End of Lease
Options Addendum as of < < TO BE DETERMINED > >.
LESSOR:
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
LESSEE:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
39
EARLY BUYOUT ADDENDUM
TO EQUIPMENT SCHEDULE NUMBER 01
TO MASTER EQUIPMENT LEASE AGREEMENT DATED AS OF MAY 12, 1997
BETWEEN KEYCORP LEASING LTD., AS LESSOR,
AND R-B RUBBER PRODUCTS, INC., AS LESSEE
THIS EARLY BUYOUT ADDENDUM is annexed to, and made a part of, the
above-referenced Equipment Schedule and Master Equipment Lease Agreement, as it
relates to such Equipment Schedule (collectively, the "Lease"). Unless
otherwise specified herein, all capitalized terms shall have the meanings
ascribed to them in the Lease. Lessor and Lessee hereby agree as follows:
So long as no Default or Event of Default shall have occurred and be
continuing and Lessee shall have given Lessor at least ninety (90) days prior
written notice, Lessee shall have the option to purchase all, but not less than
all, Items of Equipment on the date which is < < NUMBER > > (< < # > >) months
after the Rent Commencement Date (the "EBO Date") at a price (the "EBO Price")
equal to < < NUMBER > > percent (< < # > >%) of the Total Cost of the Equipment,
plus any applicable sales taxes. The EBO Price represents the parties present
best estimate of the fair market value of the Equipment on the EBO Date
determined by using commercially reasonable methods which are standard in the
industry. Payment of the EBO Price, applicable sales taxes, together with all
other amounts due and owing by Lessee under the Lease (including, without
limitation, Rent) on or before the EBO Date, shall be made on the EBO Date in
immediately available funds. Upon Lessee's written request, Lessor shall
deliver to Lessee a xxxx of sale transferring to Lessee all right, title and
interest of Lessor in and to the Equipment ON AN "AS IS" "WHERE IS" BASIS,
WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER. If
Lessee shall fail to pay all amounts required to be paid under the Lease on the
EBO Date, the Lease shall continue in full force and effect and Lessee agrees to
reimburse Lessor for all reasonable costs, expenses and liabilities incurred in
connection therewith.
Except as modified hereby, all of the terms, covenants and conditions of
the Lease shall remain in full force and effect and are in all respects hereby
ratified and affirmed.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Early Buyout
Addendum as of < < TO BE DETERMINED > >.
LESSOR:
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
LESSEE:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
40
RETURN/MAINTENANCE ADDENDUM
TO EQUIPMENT SCHEDULE NUMBER 01
TO MASTER EQUIPMENT LEASE AGREEMENT DATED AS OF MAY 12, 1997
BETWEEN KEYCORP LEASING LTD., AS LESSOR,
AND R-B RUBBER PRODUCTS, INC., AS LESSEE
(Machine Tool Equipment)
This Return/Maintenance Addendum is annexed to, and made a part of, the
above-referenced Equipment Lease Schedule and Master Equipment Lease Agreement,
as it relates to such Equipment Schedule (collectively, the "Lease"). Except as
specified herein, all capitalized terms used herein shall have the meanings
ascribed to them in the Lease. Lessor and Lessee hereby agree that the Lease
shall be modified as follows:
Section 13 of the Lease ("Return of Equipment") shall be deleted in its
entirety and the following shall be substituted in its place:
13. RETURN OF EQUIPMENT. Upon the expiration of the Term of any
Lease or upon demand by Lessor pursuant to Section 22 hereof, Lessee, at its
sole expense, shall return all of the Equipment leased under such Lease by
delivering it to such place or on board such carrier (packed for shipping) as
Lessor shall specify. Lessee agrees that the Equipment, when returned, shall be
free and clear of all liens, security interests, encumbrances and rights of
others, and in the same condition as when delivered to Lessee, reasonable wear
and tear excepted. Reasonable wear and tear shall mean that each item of the
Equipment has been maintained by Lessee in "Average Saleable Condition" (as
hereinafter defined) and that all components of the Equipment have been properly
serviced, following the manufacturer's written operating and servicing
procedures, such that the Equipment is eligible for a manufacturer's standard,
full service maintenance contract without Lessor's incurring any expense to
repair or rehabilitate the Equipment. If, in the opinion of Lessor, any item of
the Equipment fails to meet the standards set forth above, Lessee agrees to pay
on demand all costs and expenses incurred in connection with repairing the
Equipment and restoring it to such condition, its assembly and delivery. Lessee
shall give Lessor ninety (90) days written notice that Lessee is returning the
Equipment as provided for above. "Average Saleable Condition" shall be
satisfied when all of the following minimum standards are met:
(a) At the time of return hereunder, all major components and all
wear points, including, but not limited to electronic and mechanical controls
and pumps, motors, belts, hoses, pins, bushings, measuring devices, screws,
barrels, ways, cams, clamps and supports, shall be within manufacturer's design
performance characteristics and tolerances and capable of performing as
originally intended by the manufacturer and in a safe manner;
(b) The Equipment is complete, with no missing components or
attachments;
(c) The Equipment has been lubricated according to the
maintenance manual and/or lubrication schedule recommended by the manufacturer.
Written records of the lubrication service should be kept, dated, and signed by
the appropriate authority; and
(d) Prior to shipment of the Equipment, all process fluids have
been removed and disposed of in accordance with prevailing waste disposal laws
and regulations. All internal fluids, such as lube oil and hydraulic oil, have
been filled to operating levels. Filler caps shall be secured and disconnected
hoses shall be sealed to avoid accidental spillage.
Except as modified herein, all of the terms, covenants and conditions of
the Lease shall remain in full force and effect and are in all respects hereby
ratified and affirmed.
41
IN WITNESS WHEREOF, Lessor and Lessee have executed this Return/Maintenance
Addendum as of < < TO BE DETERMINED > >.
LESSOR:
KEYCORP LEASING LTD.
By: ________________________________________
Name:
Title:
LESSEE:
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
42
EXHIBIT D - FORM OF CERTIFICATE OF ACCEPTANCE
THIS IS A CERTIFICATE ACKNOWLEDGING
ACCEPTANCE OF THE EQUIPMENT FOR
PURPOSES OF THE BELOW-REFERENCED LEASE.
THIS IS NOT A DELIVERY RECEIPT.
LESSEE ACKNOWLEDGMENT
(Certificate of Acceptance)
Lessee Name: R-B RUBBER PRODUCTS, INC.
All the items of Equipment covered by Equipment Schedule No. 01 to Master
Equipment Lease Agreement dated as of May 12, 1997 (the "Lease") between KeyCorp
Leasing Ltd., as lessor ("KCL"), and the undersigned, as lessee, (a) were
received by the undersigned, (b) are satisfactory to the undersigned in all
respects and are acceptable to the undersigned for lease under the Lease, (c)
are suitable for the undersigned's purposes, (d) are in good order, repair and
condition, (e) have been installed and operate properly, and (f) are subject to
all of the terms and conditions of the Lease (including, without limitation,
Section 3 thereof).
To the extent that Article 2A ("Article 2A") of the Uniform Commercial Code
("UCC") applies to the characterization of the Lease, the undersigned hereby
agree(s) that the Lease is a "Finance Lease" as defined therein. The
undersigned acknowledge(s): (i) that the undersigned has selected the "Supplier"
(as defined in the UCC) and has directed KCL to purchase the Equipment from the
Supplier in connection with the Lease, and (ii) that the undersigned has been
informed in writing in the Lease, before the undersigned's execution of thereof,
that the undersigned is entitled under Article 2A to the promises and
warranties, including those of any third party, provided to KCL by the Supplier
in connection with or as part of the Purchase Agreement (as defined in the
Lease), and that the undersigned may communicate with the Supplier and receive
an accurate and complete statement of those promises and warranties, including
any disclaimers and limitations of them or of remedies.
Dated: ______________, 19____
R-B RUBBER PRODUCTS, INC.
By: ________________________________________
Name:
Title:
43
