Exhibit 10.19.1
PARTICIPATION AGREEMENT
Dated as of April 29, 1994
Entered Into Among
Xxxxxx-Xxxxxx, Inc., as Lessee
Tone Brothers, Inc., as Sublessee
BA Leasing & Capital Corporation,
not individually, except as expressly
set forth herein, but as Agent
and
The Lessors Listed on
the Signature Pages Hereto
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS
ARTICLE II PURCHASES OF EQUIPMENT
Section 2.1 Payment of Purchase Price ................................ 2
Section 2.2 Time and Place of Fundings and Delivery Dates ............ 3
Section 2.3 Delivery Date Notices .................................... 4
Section 2.4 Application of Funds; Sale and Lease of Equipment ........ 4
Section 2.5 Conditions for Participants to Initial Funding
and Delivery Date ........................................ 4
Section 2.6 Conditions for Participants .............................. 7
ARTICLE III ADDITIONAL DELIVERY DATE REQUIREMENTS
Section 3.1 Lease Supplements ........................................ 10
Section 3.2 Delivery of Search Reports ............................... 12
Section 3.3 Postponement of a Subsequent Delivery Date ............... 12
Section 3.4 Interest Payments to Lessors ............................. 12
ARTICLE IV GENERAL PROVISIONS
Section 4.1 Nature of Transaction .................................... 14
[Section 4.2 Reserved ................................................ 14
Section 4.3 Replacement of Equipment ................................. 14
Section 4.4 Additional Fees .......................................... 15
Section 4.5 Increased Capital Costs .................................. 15
Section 4.6 Assignment of Purchase Agreements ........................ 16
ARTICLE V REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of Lessee and
Sublessee ................................................ 16
Section 5.2 Representations and Warranties of Lessors ................ 22
Section 5.3 Representations and Warranties of Agent .................. 24
ARTICLE VI COVENANTS
Section 6.1 Covenants of Lessee ...................................... 25
Section 6.2 Covenants of Sublessee ................................... 32
Section 6.3 Covenants of Agent and Lessors ........................... 34
ARTICLE VII GENERAL INDEMNITY
Section 7.1 Indemnity ................................................ 35
Page
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Section 7.2 Excessive Use Indemnity .................................. 36
ARTICLE VIII GENERAL TAX INDEMNITY
Section 8.1 General Tax Indemnity .................................... 37
Section 8.2 Contest .................................................. 40
Section 8.3 Gross Up ................................................. 41
Section 8.4 Tax Returns .............................................. 41
Section 8.5 Tax Character of Transaction ............................. 42
Section 8.6 Withholding Tax Exemption ................................ 42
ARTICLE IX LIMITATIONS
Section 9.1 Limitation of Liability of Agent ......................... 44
ARTICLE X AMENDMENTS TO OPERATIVE AGREEMENTS
Section 10.1 Amendments to Operative Agreements With
Consent of Lessors ...................................... 44
Section 10.2 Amendments to Operative Agreements Affecting
Agent ................................................... 45
ARTICLE XI MISCELLANEOUS
Section 11.1 Survival of Covenants ................................... 46
Section 11.2 APPLICABLE LAW .......................................... 46
Section 11.3 Effect and Modification of Participation Agreement ...... 46
Section 11.4 Notices ................................................. 46
Section 11.5 Transaction Costs ....................................... 47
Section 11.6 Counterparts ............................................ 47
Section 11.7 Severability ............................................ 47
Section 11.8 Successors and Assigns .................................. 48
Section 11.9 Brokers ................................................. 48
Section 11.10 JURY TRIAL ............................................. 48
Section 11.11 Captions; Table of Contents ............................ 48
Section 11.12 FINAL AGREEMENT ........................................ 48
Section 11.13 No Third-Party Beneficiaries ........................... 48
Section 11.14 Further Assurances ..................................... 49
Section 11.15 Reproduction of Documents .............................. 49
Section 11.16 Consideration for Consents to Waivers and Amendments ... 49
Section 11.17 Submission to Jurisdiction ............................. 50
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LIST OF SCHEDULES AND EXHIBITS
Schedule I -- Commitments of Lessors; Payment Instructions
Schedule II -- Description of Eligible Equipment to be Delivered by
Lessee and Sublessee on the Initial Delivery Date
Schedule III -- Description of Eligible Equipment to be Delivered on the
Subsequent Delivery Dates
Schedule IV -- Disclosure Schedule
Schedule X -- Definitions
Schedule Y -- Functional Units
Exhibit A -- Form of Lease
Schedule I -- Equipment
Schedule II -- Functional Units
Schedule III -- Rental Payment Percentage
Exhibit A -- Form of Investors Letter
Exhibit B -- Form of Lease Supplement
Schedule I -- Equipment and Purchase Prices
Schedule II -- Interest Rate; Rent Payments
Schedule III -- Allocation of Rent Payments among
Lessors
Schedule IV -- Functional Unit Balances
Exhibit B -- Form of Sublease
Schedule I -- Sublease Items
Schedule II -- Notice Addresses
Exhibit C -- Form of Delivery Date Notice
Schedule I -- Equipment List, Purchase Price and Site(s)
Schedule II -- Purchase Agreements
Exhibit D -- Form of Lessee's and Sublessee's Opinion of Counsel
Exhibit E -- Form of Xxxx of Sale
Schedule I -- Equipment List
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PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT, dated as of April 29, 1994, is entered into
among: (a) Xxxxxx-Xxxxxx, Inc., a Delaware corporation, as Lessee, (b) Tone
Brothers, Inc., an Iowa corporation, as Sublessee, (c) BA Leasing & Capital
Corporation, a California corporation, not in its individual capacity, except as
otherwise expressly provided herein, but solely as Agent for the Lessors, and
(d) the various Lessors listed on the signature pages hereto.
WHEREAS, on the Initial Delivery Date, the Lessee or the Sublessee will
transfer to the Agent, for the benefit of the Lessors, and the Agent, on behalf
of the Lessors will purchase, the items of Eligible Equipment identified in
Schedule II hereto;
AND WHEREAS, on each Subsequent Delivery Date, Lessee or Sublessee, as the
case may be, will cause to be transferred to the Agent, for the benefit of the
Lessors, certain of the items of Eligible Equipment generally described on
Schedule III hereto and the Agent, on behalf of the Lessors, will purchase such
Equipment directly from the Manufacturers or Lessee, as the case may be;
AND WHEREAS, the Eligible Equipment is grouped into Functional Units as
identified on Schedule Y hereto;
AND WHEREAS, upon the transfer of the Functional Units on each Delivery
Date, Lessors will lease such Functional Units to Lessee and Lessee will lease
such Functional Units from the Lessors pursuant to the terms of the Lease
substantially in the form of Exhibit A hereto and a Lease Supplement
substantially in the form of Exhibit B to the Lease;
AND WHEREAS, the Lessee will enter into the Sublease substantially in the
form of Exhibit B hereto subleasing to the Sublessee the Functional Units
described therein;
NOW THEREFORE, in consideration of the mutual terms and conditions herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein (including those used in the
foregoing recitals) shall have the meanings
specified in Schedule X hereto unless the context otherwise requires, which
Schedule X shall for all purposes constitute a part of this Participation
Agreement.
ARTICLE II
PURCHASES OF EQUIPMENT
Section 2.1 Payment of Purchase Price.
(a) Subject to the terms and conditions hereinafter set forth, and
in reliance on the representations and warranties contained herein or made
pursuant hereto, following receipt of the Initial Delivery Date Notice and
each Subsequent Delivery Date Notice, each Lessor shall transfer to Agent
an amount equal to the product of the aggregate Purchase Price of the
Eligible Equipment specified in the Delivery Date Notice to be delivered
by Lessee prior to such Delivery Date, multiplied by such Lessor's
Commitment Percentage (each such transfer being referred to herein as a
"Funding"). In no event shall any Lessor be required to provide funds
under this Participation Agreement in an aggregate amount exceeding such
Lessor's Commitment.
(b) Remittances pursuant to this Section 2.1 shall be made in
immediately available federal funds by wire transfer to the account of the
Agent set forth below (or as otherwise specified by Agent to each Lessor
from time to time not less than three Business Days prior to the date of
the requested Funding) and must be received by Agent by 9:00 a.m., San
Francisco time on the applicable Delivery Date:
Bank: Bank of America NT&SA
San Francisco Main Branch
San Francisco, California
ABA Routing #: 121 000 358
Account #: 06568-57503
Payee: BA Leasing & Capital Corporation
Notify: Xxxxxxx Xxxxxx (000) 000-0000.
(c) If on any date specified for a Funding, any Lessor wrongfully
fails to make any payment then required of it, then any party hereto
(other than the party so failing to make the payment or otherwise in
breach) may cancel its obligations under this Participation Agreement and
the transactions contemplated hereby by notice to the other parties;
provided, however, that if such failure to pay is on the part of only one
Lessor, then the other Lessors shall be obligated to make the payments
that they would otherwise have been obligated to make pursuant to the
relevant
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Funding, so long as the Equipment to be delivered on the corresponding
Delivery Date consists solely of Functional Units; and provided, further,
that if the total Purchase Price of the Equipment subject to the Lease
must be reduced because of a Lessor's wrongful failure to fund, the
Required Lessors shall have the right to reject any tendered delivery of a
Functional Unit so long as there are one or more other Functional Units
described on Schedule III which have not previously been delivered and
which have a total Purchase Price approximately equal to the rejected
Functional Unit. The party wrongfully failing to make its payment shall
not be responsible for any consequential damages suffered by the Sublessee
or the Lessee or any of their Affiliates as a result of its failure to so
fund.
Section 2.2 Time and Place of Fundings and Delivery Dates.
(a) The following shall be applicable to the Fundings and the
Delivery Dates:
(i) no more than four Fundings and four Delivery Dates may
occur;
(ii) each Funding and each Delivery Date shall occur on a
Business Day on or after April 29, 1994 and before March 31, 1995,
it being understood that there may be a Funding without a Delivery
Date Closing if Lessee has postponed the Delivery Date pursuant to
Section 3.3, so long as such Delivery Date occurs prior to March 31,
1995;
(iii) each Funding shall provide for financing of Eligible
Equipment having an aggregate Purchase Price which equals or
exceeds, except in the case of the final Funding, $1,000,000;
(iv) all items of Eligible Equipment to be purchased with the
proceeds of such Funding shall comprise one or more complete
Functional Units; and
(v) in no event shall the aggregate amount advanced by the
Lessors exceed the aggregate amount of the Commitment.
(b) The closing for each Funding shall take place on the Delivery
Date set forth in the Delivery Date Notice applicable to such Funding,
commencing at 9:00 a.m. Los Angeles time, at Xxxxx, Xxxxx & Xxxxx, 000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
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Section 2.3 Delivery Date Notices. With respect to each Funding (unless
waived by the parties hereto), the Lessee shall, not later than 1:00 p.m. San
Francisco time on the tenth (10th) Business Day prior thereto, provide an
irrevocable (subject to Section 3.3) notice to Agent and each of the Lessors (a
"Delivery Date Notice") substantially in the form of Exhibit C, specifying (i)
the Delivery Date, (ii) a description of each item of Eligible Equipment to be
purchased on such Delivery Date, categorized on a Functional Unit basis, (iii)
the aggregate Purchase Price of all Eligible Equipment to be purchased on such
Delivery Date, (iv) wire transfer instructions for the disbursement of funds,
and (v) in the event such Delivery Date is to be the final Delivery Date, that
such Delivery Date is to be the final Delivery Date.
Section 2.4 Application of Funds; Sale and Lease of Equipment. On each
Delivery Date, upon (a) receipt by Agent of all amounts to be paid by the
Lessors pursuant to Section 2.1, and (b) satisfaction or waiver of the
conditions set forth in Sections 2.5 and 2.6, (i) Agent shall purchase, for the
benefit of the Lessors, the Equipment to be acquired on such Delivery Date, as
specified in the Delivery Date Notice delivered pursuant to Section 2.3, and the
Xxxx of Sale and Lease Supplement to be executed on such Delivery Date, (ii) in
consideration therefor, the Agent, on behalf of the Lessors, shall pay, from the
funds made available by the Lessors pursuant to Section 2.1, an amount equal to
the aggregate Purchase Price of Equipment then being sold and purchased pursuant
thereto in immediately available federal funds remitted by wire transfer to the
account of the Lessee at: Bank of America, ABA #121 000 358, Beneficiary:
Xxxxxx-Xxxxxx, Inc., Benef. A/C #14 596 01430 (or as otherwise specified by the
Lessee to the Agent at least three (3) Business Days before such Delivery Date)
in the case of Eligible Equipment described at Schedule II or directly to the
Manufacturer for all Eligible Equipment described in Schedule III hereto and
(iii) Lessors shall lease to the Lessee the Equipment purchased by the Agent on
behalf of Lessors on such Delivery Date and Lessee shall accept delivery of and
lease from Lessors such Equipment pursuant to the Lease and the Lease Supplement
entered into by Lessors, Agent and Lessee on such Delivery Date. Delivery of the
Eligible Equipment to be purchased by the Agent on behalf of Lessors on such
Delivery Date shall be effected by the delivery by Lessee or the Manufacturer,
as applicable, of one or more Bills of Sale specifically identifying the
Equipment delivered on such Delivery Date. Each Lessor shall hold an undivided
interest in the Equipment equal to such Lessor's Lease Percentage.
Section 2.5 Conditions for Participants to Initial Funding and Delivery
Date. The obligation of each Participant to perform its obligations on the
Initial Delivery Date, and of each Lessor
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to make its initial Funding, shall be subject to the fulfillment to the
satisfaction of (including, with respect to writings, such writings being in
form and substance reasonably satisfactory to the addressee or beneficiary
thereof), or the waiver in writing by, such Participant of the following
conditions precedent on or prior to the Initial Delivery Date (except that the
obligation of any party hereto shall not be subject to such party's own
performance or compliance):
(a) each of the Participants shall have received a fully executed
counterpart of this Participation Agreement;
(b) each Participant shall have received a fully executed
counterpart of the Lease; provided, however, only Agent shall receive the
Lease marked "Counterpart No. 1 - Agent's Original Copy";
(c) each Participant shall have received a fully executed
counterpart of the Sublease; provided, however, only Agent shall have
received the Sublease marked "Counterpart No. 1 - Sublessor's Original
Copy";
(d) at least two (2) Business Days prior to the Initial Delivery
Date, the Agent and Lessors shall have received a report from the
Appraiser to their satisfaction opining:
(i) that the Appraised Value of the Functional Units Numbered
1 through 32 on Schedule Y hereto is reasonably expected to be as
follows:
Date Value
---- -----
Sum of Fair Market Value
of Eligible Equipment
described at Schedule II
on the Initial Delivery Date $18,646,310
End of Initial Term $16,395,359
End of First Renewal Term $13,978,188
End of Second Renewal Term $11,770,338
End of Third Renewal Term $ 9,981,357
End of Fourth Renewal Term $ 8,497,320
End of Fifth Renewal Term $ 7,363,875
(ii) that the remaining composite economic useful life of the
Eligible Equipment is not less than eight (8) years,
(iii) that it would be reasonable to assume an increase for
inflation of at least two percent (2%) per
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annum in the values set forth in the foregoing clause (i), and
(iv) that it is commercially feasible for a Person other than
the Lessee or Sublessee to use the Eligible Equipment at the end of
the Lease Term and each Renewal Term;
(e) Lessee shall have paid to Agent, for the benefit of Agent and
the Lessors, the Transaction Costs. Such payment shall be made by wire
transfer of immediately available funds to the account specified for Agent
at Schedule I;
(f) each Lessor and the Agent shall have received the opinions of
Maslon, Edelman, Xxxxxx & Brand, as counsel to Lessee and Sublessee, and
of local counsel in each jurisdiction in which any Equipment to be
delivered on the Initial Delivery Date is located, substantially to the
effect of the matters set forth in Exhibit D;
(g) each Lessor and the Agent shall have received: (i) copies of
each of the Lessee's and the Sublessee's certificate of incorporation,
certified by the Secretary of State of the States of their incorporation
no earlier than the 15th day prior to the Initial Delivery Date, and
by-laws of such corporation, accompanied by an Officer's Certificate,
dated the Initial Delivery Date, stating that such documents are in full
force and effect and have not been amended since the respective dates
thereof; (ii) certificates of existence and good standing from the
Secretary of State of the States of their incorporation and the Secretary
of State of the State of California, dated no earlier than the 15th day
prior to the Initial Delivery Date, with respect to each of the Lessee and
Sublessee; (iii) a copy of resolutions of each of the Lessee's and
Sublessee's board of directors authorizing the execution, delivery and
performance by each such corporation of each of the Operative Agreements
to which it is or will be a party, accompanied by an Officer's
Certificate, dated the Initial Delivery Date, of each such corporation,
stating that such resolution is in full force and effect and has not been
amended since the date of its adoption; and (iv) an incumbency
certificate, dated the Initial Delivery Date, of each of the Lessee and
Sublessee; and
(h) each Lessor and the Agent shall have received: (i) a report or
reports, in form and substance reasonably satisfactory to them, from a
satisfactory environmental consultant, as to the compliance of the Sites
on which the Eligible Equipment being delivered on the Initial Delivery
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Date is to be located with all applicable Environmental Laws and as to
such other matters as shall be reasonably requested by such Participant;
and (ii) a written agreement from such environmental consultant that each
Lessor and the Agent may rely upon such report or reports to the same
extent as the Person that engaged such firm to provide such report or
reports.
Section 2.6 Conditions for Participants on each Delivery Date. The
obligation of each Participant to perform its obligations on each Delivery Date
shall be subject to the fulfillment to the satisfaction of (including, with
respect to writings, such writings being in form and substance reasonably
satisfactory to the addressee or beneficiary thereof), or the waiver in writing
by, such Participant of the following conditions precedent on or prior to the
Delivery Date (except that the obligation of any party hereto shall not be
subject to such party's own performance or compliance):
(a) Each of the Participants shall have received a fully executed
counterpart of a Lease Supplement as required by Section 3.1; provided,
however, only Agent shall receive the Lease Supplement marked "Counterpart
No. 1 - Lessors' Original Copy."
(b) (i) Lessee and Sublessee shall have executed and delivered to
the Agent financing statements with respect to the Equipment
identified in such Delivery Date Notice. Such financing statements
shall have been filed for record in all appropriate offices of all
relevant jurisdictions;
(ii) the Agent shall have received such releases of liens,
termination statements, landlord consents (from Site landlords) and
mortgagee consents (from Site mortgagees) as maybe necessary to
insure (x) a first priority security interest in the Equipment which
may be deemed "fixtures" and thereby subject to prior liens and (y)
the ability of the Agent and Lessors to obtain access to such Sites
and remove the Equipment therefrom in connection with exercising
their rights and remedies under the Operative Agreements; and
(iii) the Agent, on behalf of the Lessors, shall have received
a fully executed Xxxx of Sale substantially in the form of Exhibit E
hereof with respect to the items of Eligible Equipment identified in
such Delivery Date Notice;
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(c) at least ten (10) Business Days prior to each Subsequent
Delivery Date, each Lessor and Agent shall have received a report from the
Appraiser to their satisfaction opining, with respect to any Equipment
proposed to be delivered on such Delivery Date that was not covered in any
Appraisal previously delivered to the Agent and the Lessors, that:
(i) the Fair Market Value of the Equipment identified in the
Delivery Date Notice preceding and relating to such Subsequent
Delivery Date is equal to the Purchase Price for such Equipment,
(ii) the estimated Fair Market Value of such Equipment at the
end of the Initial Term and each Renewal Term, which shall be set
forth in such report, is a reasonable estimate, and that it would be
reasonable to assume an increase for inflation of at least two
percent (2%) per annum in such Fair Market Values, and
(iii) the remaining composite economic useful life of such
Eligible Equipment is not less than eight (8) years, and
(iv) it is commercially feasible for a Person other than the
Lessee or Sublessee, as appropriate, to use such Eligible Equipment
at the end of the Lease Term and each Renewal Term;
(d) the representations and warranties of each of the parties hereto
contained in this Participation Agreement and in any of the other
Operative Agreements shall be true and correct in all material respects on
the Delivery Date with the same effect as though made on and as of the
Delivery Date (provided that the representation set forth in Section
5.1(b) shall be true with respect to each State, County and Parish in
which any Equipment to be delivered on the applicable Delivery Date is
located), and an Officer's Certificate, dated the Delivery Date, of each
of such parties (other than the Lessors and the Agent) to that effect
shall have been delivered to each Participant, and in the case of any
Lessor, the funding of its Commitment (or portion thereof) pursuant to
Section 2.1, shall be deemed to constitute a confirmation by it that its
representations and warranties contained herein are true and correct in
all material respects on such Delivery Date;
(e) all Impositions other than Charges payable on or prior to such
Delivery Date in connection with the execution, delivery, recording or
filing of any of the
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Operative Agreements, in connection with the filing of any of the
financing statements, any applications regarding certificates of title and
any other documents, in connection with the consummation of any other
transactions contemplated hereby or by any of the other Operative
Agreements, shall have been paid in full by Lessee;
(f) the Agent and each of the Lessors shall have received reports
acceptable to the Agent and each of the Lessors (i) as to each of the
Lessee and Sublessee by the office of the Secretaries of State of the
States in which the Equipment to be delivered on such Delivery Date is to
be located, each dated as close to the relevant Delivery Date as
practicable, in respect of a search of the applicable Uniform Commercial
Code files maintained by such offices and (ii) as to each of the Lessee
and Sublessee by the appropriate county filing or recording office of each
County or Parish in which the Equipment to be delivered on such Delivery
Date is to be located, each dated as close to the relevant Delivery Date
as practicable, in respect of a search of the applicable Uniform
Commercial Code files and any indices of Liens maintained by such offices
(including, if applicable, indices of judgment, revenue and tax liens);
(g) the Agent shall have received (and each Lessor shall have
received a copy of) a current certificate to the effect that insurance
complying with Section 7.2 of the Lease is in full force and effect;
(h) the Lessors and the Agent shall have received satisfactory
evidence that the Purchase Price of the Equipment accepted on the Delivery
Date does not exceed (i) with respect to Eligible Equipment described in
Schedule II, the Fair Market Value of such Equipment, and (ii) to the
extent such Equipment constitutes Eligible Equipment described in Schedule
III, the invoice cost for such Equipment plus the Charges properly
attributable thereto;
(i) all proceedings taken in connection with the Delivery Date
Closing and all documents relating thereto shall be reasonably
satisfactory to each Participant and its counsel, and each Participant and
its counsel shall have received copies of such documents as such
Participant or its counsel may reasonably request in connection therewith,
all in form and substance reasonably satisfactory to such Participant and
its counsel;
(j) each Lessor and the Agent shall have received one or more
opinions of local counsel to the Lessee to the effect that the Agent, for
the benefit of the Lessors, has a perfected security interest in the
Collateral delivered on
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such Delivery Date in each State where such Collateral is located to the
extent a security interest can be so perfected by filing in each such
State;
(k) no material adverse change (financial or otherwise) in the
condition, operation, property or business on either a consolidated or
separate basis of the Lessee has occurred since the previous Delivery Date
(or, with respect to the Initial Delivery Date, since May 1, 1993);
(l) no Lease Default or an event which with the giving of notice
and/or lapse of time could become a Lease Default shall have occurred and
be continuing;
(m) the Agent and the Lessors shall have received evidence to their
reasonable satisfaction that no materially adverse environmental
conditions or instances of noncompliance with applicable Environmental
Laws exist with respect to any Site(s) on which the Eligible Equipment
being delivered on such Delivery Date is to be located; and
(n) the Agent and Lessors shall have received such other documents
as they may reasonably request and which are consistent with the terms
hereof including any third party approvals.
ARTICLE III
ADDITIONAL DELIVERY DATE REQUIREMENTS
Section 3.1 Lease Supplements. On each Delivery Date, Lessee shall execute
and deliver to each of the Lessors and the Agent a Lease Supplement in form and
substance reasonably satisfactory to Lessors and substantially in the form set
forth in Exhibit B to the Lease (a "Lease Supplement"). Each Lease Supplement to
be executed and delivered by Lessee on each Delivery Date shall set forth:
(a) in Schedule I thereto, a description of and the Purchase Price
for each Functional Unit to be purchased by Lessor on such Delivery Date;
(b) in Schedule II thereto, the Interest Rate, the Interim Rent, the
Applicable Percentage Amount, a schedule of the installments of Basic Rent
and Renewal Rent and the Payment Dates therefor and the Supplement Balance
of such Lease Supplement as of the end of the Initial Term and each
Renewal Term;
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(c) in Schedule III thereto, a schedule of each Lessor's
proportionate share of each installment of Rent and of the Supplement
Balance as of the end of the Initial Term and each Renewal Term, based on
each such Lessor's Lease Percentage; and
(d) in Schedule IV thereto, the Functional Unit Balance of each
Functional Unit subject to that Lease Supplement as of the Delivery Date
therefor and as of each Payment Date in the Initial Term and each Renewal
Term.
Schedules I, II, III and IV to each Lease Supplement shall be prepared by Agent
and delivered on or prior to the relevant Delivery Date. With respect to the
Lease Supplement delivered on the Initial Delivery Date, all parties hereto
hereby approve such Schedules, and with respect to all Lease Supplements
delivered on subsequent Delivery Dates, the items set forth by Agent in such
Schedules shall be conclusive and binding upon Lessee for all purposes
hereunder. The schedule of Rent set forth in Schedule II to each Lease
Supplement shall be calculated based upon the following assumptions:
(i) that Lessors have loaned the total Purchase Price of the
Eligible Equipment to be covered by the Lease Supplement to the Lessee on
the applicable Delivery Date Closing;
(ii) that such principal amount of such deemed loan will bear
interest at the Interest Rate;
(iii) that the maturity date of such deemed loan will be April 30,
2000;
(iv) that the average life of such deemed loan will be four years
plus or minus six months;
(v) that the "Specified Portion" of the principal amount of such
deemed loan on each anniversary of the Base Commencement Date of such
Lease Supplement shall be 21-1/2% of the outstanding principal balance of
the deemed loan on the immediately preceding anniversary of such Base
Commencement Date;
(vi) that a payment consisting solely of interest accrued on the
outstanding principal of the deemed loan at the Interest Rate will be due
and payable on the last day of the 90-day period ending on April 30, July
30, October 30 or January 30 (as the case may be) in which the deemed loan
was made, and that thereafter principal and interest will be paid on each
Payment Date; and
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(vii) that the Supplement Balance of the relevant Lease Supplement
at the end of the second Renewal Term and each Renewal Term thereafter
will be equal to the Adjusted Appraised Value of the Functional Units
subject to such Lease Supplement.
Upon execution and delivery of each Lease Supplement, Lessee conclusively agrees
to lease from Lessors on the terms and conditions set forth in the Lease and
such Lease Supplement the Functional Units described in Schedule I to such Lease
Supplement.
Section 3.2 Delivery of Search Reports. No later than April 30, 1995,
Lessee shall cause to be delivered to the Agent and each Lessor (i) reports as
to each of the Lessee and Sublessee by the office of the Secretary of State of
each State in which any of the Equipment is located, each dated as close to
April 30, 1995 as practicable, in respect of a search of the Uniform Commercial
Code files maintained by such offices; and (ii) acceptable reports as to each of
the Lessee and Sublessee by the offices of the appropriate filing or recording
office of each County or Parish in which any of the Equipment is located, each
dated as close to April 30, 1995 as practicable in respect of a search of the
Uniform Commercial Code files and any indices of Liens maintained by such
offices (including, if applicable, indices of judgment, revenue and tax liens),
to determine in each case whether there are any Liens (other than Permitted
Liens) filed against the Equipment.
Section 3.3 Postponement of a Subsequent Delivery Date. A Subsequent
Delivery Date with respect to all or any Functional Units identified in a
Delivery Date Notice may be postponed by the Lessee from time to time (but
subject in any event to Section 2.2(a)) if the Lessee gives the Agent and each
Lessor written notice of such postponement no later than two days prior to such
date. The notice shall indicate that the delivery of all of the Functional Units
identified in the applicable Delivery Date Notice, or if only a portion is being
delayed, the notice shall identify the Functional Unit(s) that will not be
delivered on such date. The notice shall also indicate the Subsequent Delivery
Date on which such items will be purchased. A postponement of a Delivery Date
shall not postpone the corresponding Funding, which shall be made in any event,
and to the extent proceeds are not used to purchase Eligible Equipment, such
proceeds shall be held by Agent in trust for the Lessors, subject to the terms
of Section 3.4.
Section 3.4 Interest Payments to Lessors. (a) In the event of any
postponement of a Subsequent Delivery Date with respect to all or any Functional
Unit(s) pursuant to Section 3.3 hereof, or if on a Subsequent Delivery Date all
or any Functional
12
Unit(s) is not delivered or accepted by the Lessee under the Lease for any
reason, the Lessee will reimburse each Lessor for the loss of the use of its
funds occasioned by such deposit, postponement or failure to deliver or accept
(unless such failure to accept is caused by a default by such Lessor) by paying
to each such Lessor on demand (A) interest at the Assumed Interest Rate on the
amount funded by such Lessor but which is not applied to the purchase of
Functional Units (the "Unfunded Amount") for the period from and including the
Subsequent Delivery Date specified in such notice to but excluding the earlier
of (x) the Business Day on which such Unfunded Amount is returned to it and (y)
the next Delivery Date when such Unfunded Amount is applied by the Agent to
purchase Functional Units pursuant to Article II minus (B) such interest as
shall have been realized from the investments by the Agent of the amount of the
Unfunded Amount (if investment thereof was effected pursuant to Section 3.4(b)
hereof). If the requisite amount of Equipment is not accepted on a Subsequent
Delivery Date, the Agent shall retain the Unfunded Amount in trust for such
Lessor until March 31, 1995, on which day (or at such earlier time as may have
been directed in the same manner by the Lessee), such funds (together with
accrued interest thereon) shall be returned to such Lessor not later than 11:00
a.m., California time in the same form as such funds were made available by such
Lessor, unless the requisite amount of Equipment shall have been accepted by the
Lessee, and the conditions set forth in Section 2.6 hereof shall have been
satisfied or waived, prior to such return of funds, in which case such funds
shall be applied in the manner and at the times provided in Section 2.4 hereof.
Upon return of such funds pursuant to the preceding sentence, such Lessor's
Commitment shall be canceled and Lessee shall pay to each Lessor on demand a
Make-Whole Premium with respect to the Unfunded Amount.
(b) Upon any failure to deliver or accept the requisite amount of
Equipment on a Subsequent Delivery Date, the Agent shall, to the extent
practicable, invest all funds held by it, if any, under Section 3.4(a) hereof,
in Permitted Investments pursuant to written instructions by the Required
Lessors. Agent shall bear no liability for any losses on such investments. Agent
shall distribute, quarterly in arrears (or promptly upon the return or
application of such Lessor's Commitment, if earlier), to each Lessor which had
previously delivered its Commitment to it any interest or other income realized
from the investment thereof, ratably, in the proportion that such Lessor's
Commitment bears to the total of such Commitments.
(c) Notwithstanding the foregoing provisions of this Section 3.4, no
Lessor shall be under any obligation to make its Commitment available after
March 31, 1995, and such time shall be of the essence in this Participation
Agreement.
13
ARTICLE IV
GENERAL PROVISIONS
Section 4.1 Nature of Transaction. It is the intent of the Participants
that: (a) the transaction contemplated hereby constitutes an operating lease
from the Agent and Lessors to Lessee for purposes of Lessee's financial
reporting, (b) the transaction contemplated hereby grants (and with respect to
existing Equipment, preserves) ownership in the Equipment to the Lessee for
purposes of Federal and state income tax, bankruptcy and Uniform Commercial Code
purposes, and (c) the Lease grants a security interest in the Equipment and the
other Collateral to the Agent for the benefit of the Agent and the Lessors.
Nevertheless, the Lessee and Sublessee acknowledge and agree that no Participant
or any other Person has made any representations or warranties concerning the
tax, accounting or legal characteristics of the Operative Agreements and that
the Lessee and Sublessee have obtained and relied upon such tax, accounting and
legal advice concerning the Operative Agreements as they deem appropriate.
[Section 4.2 Reserved]
Section 4.3 Replacement of Equipment. Required Lessors shall instruct the
Agent to release a Substituted Item or a Replaced Unit from the Lease and
evidence such release by the execution and delivery of a termination statement
release, a Xxxx of Sale and such other documents as may be required to release
the Substituted Item or Replaced Unit from the Lease and which are in form and
substance satisfactory to the Required Lessors subject to the following
conditions:
(a) each of the Lessors and Agent has received a written notice from
the Lessee (the "Replacement Notice") at least 10 days prior to the
requested release which identifies (i) the Replacement Part and
Substituted Item or (ii) the Replacement Unit and the Replaced Unit, as
the case may be;
(b) in the case of a substitution pursuant to Section 5.4(a) of the
Lease, the Replacement Part is new and of the same or greater value,
utility and useful life than the Substituted Item on the date it became
subject to the Lease to the satisfaction of the Lessors;
(c) Lessee shall execute and deliver to the Agent, for the benefit
of the Lessors, a Xxxx of Sale and a certificate of acceptance conforming
to Sections 1, 2, 3 and 4 of the Lease Supplement in respect of the
Replacement Part or the Replacement Unit, as the case may be; and
14
(d) the conditions set forth in Sections 2.6(b), 2.6(e), 2.6(g),
2.6(h), 2.6(l) and 2.6(m) (and Section 2.6 (c), if requested by the
Required Lessors in connection with a substitution pursuant to Section
5.4(a) of the Lease) have been satisfied with respect to the Replacement
Part or the Replacement Unit, as the case may be, as though it had been
identified in a Delivery Date Notice. Lessee shall purchase the
Replacement Part or the Replacement Unit, as the case may be, with its own
funds. There shall be no obligation on the part of the Agent or the
Lessors to pay for or otherwise finance any Replacement Part or
Replacement Unit except by way of releasing the corresponding Substituted
Item or Replaced Unit as provided by this Section 4.3.
Section 4.4 Additional Fees.
(a) On March 31, 1995, Lessee shall pay directly to the Lessors (pro
rata in accordance with each Lessor's Commitment Percentage) a
nonutilization fee equal to one percent (1.00%) of the amount by which
$20,000,000 exceeds the funded amount of the Commitment on such date.
(b) If Lessee elects the Sale Option during the second or fourth
Renewal Term pursuant to Section 11.1(c) of the Lease as to all or any
portion of the Equipment, Lessee shall, as a condition to exercising the
Lessee Sale Option, pay to each Lessor on the Termination Date an
additional fee equal to the product of (A) $250,000 if such option is
exercised during the second Renewal Term or $160,000 if such option is
exercised during the fourth Renewal Term, multiplied by (B) such Lessor's
Lease Percentage.
Section 4.5 Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank regulator or
other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lessor directly (or by its parent
company) and such Lessor determines (in its sole and absolute discretion) that
the rate of return on it or its parent's capital as a consequence of the
Fundings made by such Lessor hereunder is reduced to a level below that which
such Lessor or its parent could have achieved but for the occurrence of any such
circumstances, then, in any such case, upon written notification from time to
time by such Lessor to Lessee, Lessee shall immediately pay as Supplemental Rent
hereunder directly to such Lessor additional amounts sufficient to compensate
Lessor or its parent on an after-tax basis for such reduction in rate of return.
A statement of each Lessor as to
15
any such additional amount or amounts (including calculations thereof in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on Lessee. In determining such amount, each Lessor shall use any method
of averaging or attribution that it (in its reasonable discretion) shall deem
applicable.
Section 4.6 Assignment of Purchase Agreements. Lessee does hereby sell,
assign, transfer and set over unto Agent for the benefit of the Lessors all of
the Lessee's right, title and interest in and to each of the Purchase
Agreements, whether now or hereafter existing, as and to the extent that the
same relate to the Equipment and the purchase and operation thereof. Subject to
the terms and conditions hereof and of the Lease, the Agent hereby and from time
to time accepts the assignments contained in this Section 4.6. Notwithstanding
anything herein to the contrary, the Agent shall not have any obligation or
liability under any Purchase Agreement by reason of, or arising out of, the
assignment contained in this Section 4.6 or be obligated to perform any of the
obligations or duties of the Lessee under any Purchase Agreement or to make any
payment or to take any other related action thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of Lessee and Sublessee. Lessee
and Sublessee jointly and severally represent and warrant to the Agent and
Lessors that, as of the Effective Date and as of each Delivery Date:
(a) Lessee has good and marketable title to the items of Eligible
Equipment identified in Schedule II hereto delivered through such date and
all of the items of Eligible Equipment delivered through such date are
free from all Liens except for Permitted Liens;
(b) no filing, recordation or registration is necessary in order to
perfect the security interest in the Equipment referred to in the
foregoing subsection (a), except for the filing of a Uniform Commercial
Code financing statement with respect to Lessee and Sublessee in the
office of the Secretary of State of the States of California and Iowa, in
the county records of Los Angeles County, California, and Polk County,
Iowa, and a Uniform Commercial Code fixture filing in the real property
records of each of the foregoing Counties, and that upon such filings, the
security interest in such Equipment are enforceable and properly
perfected;
16
(c) the information provided by Lessee to the Appraiser and forming
the basis for the conclusions set forth in the Appraiser's reports, taken
as a whole, was true and correct in all material respects and did not omit
any information necessary to make the information provided not materially
misleading;
(d) Lessee and Sublessee are corporations duly incorporated, validly
existing and in good standing under the laws of the States of Delaware and
Iowa, respectively;
(e) Lessee is duly qualified or licensed and in good standing as a
foreign corporation authorized to do business in the States of California
and Oregon, and Lessee and Sublessee are duly qualified or licensed and in
good standing as foreign corporations authorized to do business in each
other jurisdiction where, because of the nature of their respective
activities or properties, such qualification or licensing is required,
except for such jurisdictions where the failure to be so qualified or
licensed will not materially adversely affect the consolidated condition
(financial or otherwise), business, prospects or operations of Lessee or
Sublessee and their respective consolidated subsidiaries;
(f) Lessee and Sublessee each have all requisite corporate power and
authority to execute, deliver, and perform its respective obligations
under each Operative Agreement to which it is a party;
(g) the execution and delivery by each of Lessee and Sublessee of
the Operative Agreements to which it is a party, and the performance by
Lessee and Sublessee of their respective obligations under such Operative
Agreements, have been duly authorized by all necessary corporate action
(including any necessary stockholder action) on its part, and do not and
will not: (i) violate any provision of any law, rule or regulation
presently in effect having applicability to Lessee or Sublessee or of any
order, writ, judgment, decree, determination or award presently in effect
having applicability to Lessee or Sublessee or of the charter or bylaws of
Lessee or Sublessee; (ii) result in a breach of or constitute a default
under any indenture or loan or credit agreement (which are, individually
or in the aggregate, material to the consolidated condition (financial or
otherwise), business, prospects or operations of Lessee or Sublessee and
their respective consolidated subsidiaries), or result in a breach of or
constitute a default under any other agreement or instrument to which
Lessee or Sublessee is a party or by which Lessee or Sublessee or their
respective properties may be bound or affected; or
17
(iii) result in, or require, the creation or imposition of any Lien of any
nature upon or with respect to any of the properties now owned or
hereafter acquired by Lessee or Sublessee (other than the security
interest contemplated by the Lease), and none of Lessee or Sublessee is in
default under or in violation of their respective charters or bylaws;
(h) each of the Operative Agreements to which Lessee or Sublessee is
a party constitutes the legal, valid and binding obligation of Lessee or
Sublessee, respectively, enforceable against Lessee or Sublessee,
respectively, in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity;
(i) there is no litigation (including, without limitation,
derivative actions), arbitration or governmental proceedings pending or,
to the knowledge of Lessee or Sublessee, threatened against Lessee or
Sublessee which may adversely affect the consolidated condition (financial
or otherwise), business, prospects or operations of Lessee, Sublessee or
their respective consolidated subsidiaries or impair Lessee's or
Sublessee's ability to perform their respective obligations under the
Operative Agreements to which they are party;
(j) no authorization, consent, approval, license or formal exemption
from, nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority (Federal, state, local or
foreign), including, without limitation, the Securities and Exchange
Commission, or with any securities exchange, is or will be required in
connection with the execution and delivery by Lessee or Sublessee of the
Operative Agreements to which they are party, the performance by Lessee or
Sublessee of their respective obligations under such Operative Agreements
or the ownership, operation and maintenance of the Equipment as
contemplated by the Operative Agreements;
(k) there is no agreement, understanding, contract or document to
which the Lessee or Sublessee is a party which is necessary in order to
test, maintain, repair, use or operate any item of Equipment (other than
as described on Schedule IV hereto, which Schedule may be supplemented
from time to time on each Delivery Date);
(l) the principal place of business and chief executive office (as
such term is used in Article 9 of the
18
Uniform Commercial Code) of the Lessee is located at 000 Xxxxxxxx Xxxxxx,
Xxx Xxxxxxx, XX 00000; and Sublessee is located at 0000 Xxxxxxxxx Xxxxx
Xxxxx, Xxxxxx, XX 00000-0000;
(m) relying upon the accuracy of the representations in Section
5.2(f) hereof, the execution and delivery of the Operative Agreements by
the Lessee and Sublessee will not involve any prohibited transaction
within the meaning of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended;
(n) the Lessee and Sublessee have filed or caused to be filed all
United States Federal and all other material tax returns that are required
to be filed by the Lessee or Sublessee, and have paid or caused to be paid
all taxes shown to be due and payable on such returns or on any assessment
received by the Lessee or Sublessee to the extent that such taxes have
become due and payable except to the extent that taxes due, but unpaid,
are being contested in good faith by Lessee or Sublessee by appropriate
action or proceeding and, to the extent (if any) that such taxes are not
due and payable, has established or caused to be established reserves that
are adequate for the payment thereof in accordance with GAAP;
(o) to the best of Lessee's and Sublessee's knowledge, the Equipment
and the property where it is located and the current operation thereof and
thereon do not violate any laws, rules, regulations, or orders of any
Authorities that are applicable thereto, including, without limitation,
any thereof relating to matters of occupational safety and health or
Environmental Laws the violation of which would have a material adverse
effect on Lessee, Sublessee or any of the Equipment;
(p) taken as a whole, neither this Participation Agreement, nor any
offering materials, nor the other Operative Agreements to which the Lessee
or Sublessee is or will be a party nor the other documents and
certificates furnished pursuant to this Participation Agreement to the
Agent, or the Lessors in connection with the transactions contemplated by
this Participation Agreement, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in the light of the circumstances
under which they were made, not misleading. There is no fact known to the
Lessee or Sublessee that materially and adversely affects the ability of
the Lessee or Sublessee to perform their respective obligations under this
Participation Agreement or the Operative Agreements.
19
Except for matters described in the Environmental Reports, there is no
fact of a materially adverse nature concerning the environmental
conditions at the Sites known to the Lessee or Sublessee;
(q) neither Lessee nor the Sublessee is subject to regulation as a
"holding company," an "affiliate" of a "holding company", or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended;
(r) neither the Lessee nor the Sublessee is an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended;
(s) there are no patents, patent rights, trademarks, service marks,
trade names, copyrights, licenses or other intellectual property rights
with respect to the Equipment that are necessary for the continued
economic operation of the Equipment (other than as described on Schedule
IV hereto, which Schedule may be supplemented from time to time on each
Delivery Date);
(t) neither the Agent nor any Lessor will, solely by reason of
entering into, the Operative Agreements or the consummation and
performance of the transactions contemplated thereby (other than upon the
exercise of remedies under the Lease) (i) be required to qualify to do
business in any jurisdiction, (ii) become subject to ongoing regulation by
any authority as a company engaged in the business of Lessee in any
jurisdiction or (iii) to the best of Lessee's knowledge, become subject to
any other ongoing regulation of its operations by any Authority;
(u) the use of the proceeds from the transaction contemplated by
this Participation Agreement will not violate or result in any violation
of Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System;
(v) no Lease Default or event which with the passage of time and/or
giving of notice could become a Lease Default has occurred and is
continuing;
(w) no Casualty has occurred with respect to the Equipment to be
delivered on such Delivery Date;
20
(x) the transfer of Equipment made by the Lessee pursuant to the
Delivery Date Closing did not render the Lessee insolvent, nor was it made
in contemplation of the Lessee's insolvency; the value of the assets and
properties of the Lessee at fair valuation and at their then present fair
salable value is and, after such transfers, will be greater than Lessee's
total liabilities, including contingent liabilities, as they become due;
the property remaining in the hands of the Lessee after such transfers was
not and will not be an unreasonably small amount of capital;
(y) all insurance coverages required by Section 7.1 of the Lease are
in full force and effect and there are no past due premiums in respect of
any such insurance;
(z) the Equipment is personal property within the meaning of the
laws of each jurisdiction in which it is located; and the Equipment is
"goods" (as defined in the Uniform Commercial Code);
(aa) the Lessee has delivered to the Agent and Lessors the audited
consolidated balance sheet of the Lessee and its consolidated subsidiaries
as of May 1, 1993 and the related audited consolidated statements of
income, cash flows and changes in shareholders' equity accounts for the
year then ended and the unaudited consolidated balance sheets of the
Lessee and its consolidated subsidiaries as of July 31 and October 31,
1993 and the related consolidated statements of income, cash flows and
changes in shareholders' equity accounts for the months then ended; such
consolidated financial statements have been prepared in accordance with
GAAP, applied on a consistent basis throughout the periods covered thereby
and on a basis consistent with prior periods; and such consolidated
financial statements fairly present the consolidated financial condition
of the Lessee and its consolidated subsidiaries at such dates and the
consolidated results of their operations for such periods. There has been
no material adverse change (financial or otherwise) in the condition,
operation, prospects or business of Lessee or Sublessee on either a
consolidated or separate basis since May 1, 1993;
(ab) the combined single limit insurance amount of $5,000,000 set
forth in Section 7.1(b) of the Lease is the limit of insurance customarily
insured against by similar corporations engaged in similar operations in
each State where the Equipment to be delivered on the Delivery Date is
located;
21
(ac) each of the Purchase Agreements is either freely assignable by
the Lessee to the Agent or a consent to the Lessee's assignment of its
rights under each of such Purchase Agreements to the Agent has been
received from each Manufacturer related thereto. The Purchase Agreements
are in full force and effect and are legal, valid and binding obligations
of the Lessee, enforceable against it in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, and the Lessee is
not in default thereunder; the Lessee has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this
Participation Agreement shall remain in effect, the whole or any part of
the rights in, to and under the Purchase Agreements assigned herein to
anyone other than the Agent;
(ad) the Charges relating to each of the Functional Units do not
exceed 20% of the Purchase Price thereof; and
(ae) neither it nor anyone acting on its behalf has taken or will
take any action which will subject the issue and sale of any interest
being acquired by the Lessors under the Operative Agreements to the
requirements of Section 5 of the Securities Act of 1933, as amended (the
"Securities Act"), and, assuming the truth and accuracy of the
representations set forth in Section 5.2(g), the issuance, sale and
delivery of such interests under the circumstances contemplated by this
Agreement do not require the registration of such interests under the
Securities Act or the qualification of any of the Operative Agreements
under the Trust Indenture Act of 1939, as amended.
Section 5.2 Representations and Warranties of Lessors. Each of the Lessors
hereby represents and warrants severally but not jointly to the other
Participants as follows:
(a) it is organized and validly existing in good standing under the
laws of its jurisdiction and has the corporate power and authority to
enter into and perform its obligations under each of the Operative
Agreements to which it is a party;
(b) each of the Operative Agreements to which it is a party has been
duly authorized, executed and delivered by it and is the valid, legal and
binding agreement of it, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and
22
by general principles of equity, including, without limitation, concepts
of good faith and fair dealing, materiality, reasonableness and the
possible unavailability of specific performance or injunctive relief
(regardless of whether such enforceability is considered in a proceeding
in equity or at law);
(c) neither the execution and delivery of any of the Operative
Agreements to which it is a party nor compliance with the terms and
provisions of any of the Operative Agreements to which it is a party
conflicts with, results in a breach of, constitutes a default under (with
or without the giving of notice or lapse of time or both), or violates any
of the terms, conditions or provisions of: (i) its articles of association
or by-laws, (ii) to the best of its knowledge, any bond, debenture, note,
mortgage, indenture, agreement, lease or other instrument to which it is
now a party or by which it or its property, is bound or affected, where
such conflict, breach, default or violation would materially and adversely
affect the ability of it to perform its obligations hereunder, or (iii) to
the best of its knowledge, any of the terms, conditions or provisions of
any law, rule, regulation, order, injunction or decree of any Authority
applicable to it, where such conflict, breach, default or violation would
materially and adversely affect the ability of it to perform its
obligations hereunder;
(d) there is no litigation (including, without limitation,
derivative actions), arbitration or governmental proceeding pending or, to
its knowledge, threatened against it which may adversely affect its
ability to perform its respective obligations under the Operative
Agreements to which it is party;
(e) to the best of its knowledge, no authorization, consent,
approval, license or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority
(Federal, state, local or foreign), including, without limitation, the
Securities and Exchange Commission, or with any securities exchange, is or
will be required in connection with the execution and delivery by it of
the Operative Agreements to which it is party, the acquisition of its
interest in the Equipment and the Operative Agreements, or the performance
by it of its obligations under such Operative Agreements;
(f) it is not and will not be funding any of its Commitment or
performing any of its obligations under the Operative Documents with the
assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA)
which is subject
23
to Title I of ERISA, or a "plan" (as defined in Section 4975(e)(1) of the
Code; and
(g) the interest being acquired by it under the Operative Agreements
is being acquired for its own account, without any view to the
distribution thereof or any interest therein, provided that such Lessor
shall be entitled to assign, transfer or convey its interest in accordance
with Section 22.2 of the Lease.
Section 5.3 Representations and Warranties of Agent. BA Leasing & Capital
Corporation, in its individual capacity, hereby represents and warrants to the
other parties as follows:
(a) it is a California corporation duly organized and validly
existing in good standing under the laws of the State of California and
has the corporate power and authority to enter into and perform its
obligations under the Operative Agreements;
(b) the Operative Agreements to which the Agent is or will be a
party have been or will be, on the date required to be delivered hereby,
duly authorized, executed and delivered by the Agent, and this
Participation Agreement is, and such other Operative Agreements are, or,
when so executed and delivered by the Agent will be, valid, legal and
binding agreements of the Agent, enforceable against the Agent in
accordance with their respective terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally
and by general principles of equity, including, without limitation,
concepts of good faith and fair dealing, materiality, reasonableness and
the possible unavailability of specific performance or injunctive relief
(regardless of whether such enforceability is considered in a proceeding
in equity or at law);
(c) neither the execution and delivery by the Agent of the Operative
Agreements to which it is or will be a party, either in its individual
capacity, as Agent, or both, nor compliance with the terms and provisions
thereof, conflicts with, results in a breach of, constitutes a default
under (with or without the giving of notice or lapse of time or both), or
violates any of the terms, conditions or provisions of: (i) the articles
of incorporation or by-laws of the Agent; (ii) to the best of Agent's
knowledge any bond, debenture, note, mortgage, indenture, agreement, lease
or other instrument to which the Agent, either in its individual capacity,
as Agent, or both, is now a party or by
24
which it or its property, either in its individual capacity, as Agent, or
both, is bound or affected, where such conflict, breach, default or
violation would materially and adversely affect the ability of the Agent,
either in its individual capacity, as Agent or both, to perform its
obligations under any Operative Agreement to which it is or will be a
party, either in its individual capacity, as Agent, or both; or (iii) to
the best of Agent's knowledge, any of the terms, conditions or provisions
of any law, rule, regulation, order, injunction or decree of any Authority
applicable to it in its individual capacity, as Agent, or both;
(d) there is no litigation (including, without limitation,
derivative actions), arbitration or governmental proceedings pending or,
to the knowledge of Agent, threatened against it which may adversely
affect Agent's ability to perform its obligations under the Operative
Agreements to which it is party;
(e) no authorization, consent, approval, license or formal exemption
from, nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority (Federal, state, local or
foreign), including, without limitation, the Securities and Exchange
Commission, or with any securities exchange, is or will be required in
connection with the execution and delivery by Agent of the Operative
Agreements to which it is party or the performance by Agent of its
obligations under such Operative Agreements.
ARTICLE VI
COVENANTS
Section 6.1 Covenants of Lessee. Lessee covenants and agrees with the
Lessors and the Agent that during the Lease Term, and, if the Lessee has not
purchased the Equipment pursuant to the Lease, for 90 days thereafter, except
with respect to clauses (a)(ii), (a)(iii) and (a)(iv) below, which Lessee may
comply with at any time after the execution hereof without being required to
wait for 90 days:
(a) (i) Lessee shall at all times maintain its corporate existence
except as otherwise permitted by clause (ii) hereof, and Lessee
shall do or cause to be done all things necessary to preserve and
keep in full force and effect its full corporate power and authority
25
to perform its obligations under each Operative Agreement to which
it is or will be a party;
(ii) Lessee shall not, without the consent of each of the
Lessors: (A) consolidate with or merge with or into any other
corporation (a "Merger"), unless (x) Lessee is the surviving
corporation of such Merger, (y) Lessee's Consolidated Net Worth
after giving effect to such Merger is no less than it was
immediately prior to such Merger, and (z) immediately before and
after giving effect to such Merger, no default under the Lease or
any of the Prior Debt Agreements shall have occurred and be
continuing, or (B) transfer, directly or indirectly, by sale,
exchange, lease or other disposition, in one transaction or a series
of related transactions to one or more Persons, all or substantially
all of its assets or all or substantially all of the assets of any
of its divisions (a "Transfer") unless immediately before and after
giving effect to such Transfer, no default under the Lease or any of
the Prior Debt Agreements shall have occurred and be continuing, and
any transaction described in this clause (ii) shall be subject in
any event to Section 22.1 of the Lease;
(iii) Lessee shall not, without the consent of each of the
Lessors, permit any sublessee (other than Sublessee in accordance
with the following clause (iv) or Section 6.2(a) (ii)) to effect a
Merger, unless such sublessee is the surviving corporation of such
Merger and continues to be a Subsidiary of Lessee, and immediately
before and after giving effect to such Merger, no default under the
Lease or any of the Prior Debt Agreements shall have occurred and be
continuing;
(iv) Lessee shall not dispose of any of the outstanding shares
of capital stock of Sublessee, consent to a Merger or a Transfer in
respect of the assets or outstanding shares of capital stock of
Sublessee, or permit Sublessee to assign the Sublease to any Person
that is not a Subsidiary of Lessee, and Sublessee shall not do any
of the foregoing and shall not issue any shares of its capital stock
to any Person other than Lessee, without the consent of each of the
Lessors, unless one of the following options is satisfied:
(A) Lessee shall, concurrently with or prior to such
transaction, purchase from the Lessors all of the Functional Units
then subject to the Sublease in accordance with the procedures set
forth in Article X
26
of the Lease, for a purchase price equal to the sum of (x) the
Functional Unit Balances for all such Functional Units plus (y) the
applicable Make-Whole Premiums for all such Functional Units, and
Lessee shall pay to the Lessors all unpaid Accrued Rent due and
payable on or prior to the date of such purchase with respect to
such Functional Units;
(B) in the case of an assignment by Sublessee of its
rights and obligations under the Sublease to, or a Merger of
Sublessee with, a Person that is not a Subsidiary of Lessee, each of
the following conditions must be satisfied: (1) the assignee or
surviving corporation must be a corporation organized under the laws
of the United States, (2) the assignee or surviving corporation must
expressly assume in writing the due and punctual performance and
observance of each obligation of Sublessee under this Agreement and
the other Operative Agreements and affirm and acknowledge the
security interest of the Agent, for the benefit of the Lessors,
thereunder, (3) the assignee or surviving corporation must deliver
to the Agent and each Lessor an opinion of counsel, in form and
scope reasonably acceptable to the Agent and the Lessors, to the
effect that each obligation of the Sublessee under the Sublease and
each other Operative Agreement to which Sublessee is a party is the
legal, valid and binding obligation of such assignee or surviving
corporation, and that the Sublease remains subject to the Agent's
security interest and subordinate to the Lease, and covering such
other matters as the Agent and the Lessors may reasonably request,
(4) both at the time of, and immediately after giving effect to,
such assignment or Merger, no default under the Lease or any of the
Prior Debt Agreements shall have occurred and be continuing, (5)
such assignment or Merger shall not release Lessee from any of its
obligations under the Lease or any of the other Operative Agreements
with respect to the Equipment subject to the Sublease, and (6)
Lessee shall have made an irrevocable election to exercise the
Lessee Purchase Option with respect to all of the Equipment subject
to the Sublease upon the expiration of the Lease Term, and
(C) in the case of a transfer of any of the Equipment
subject to the Sublease by Lessee to any Person that is not a
Subsidiary of Lessee, Lessors will instruct the Agent to release
such Equipment from the Lease upon the satisfaction of each of the
following conditions:
27
(1) such transferee ("Transferee") shall enter into a
new lease (the "Transferee Lease") for such Equipment upon
substantially similar terms and conditions as those contained
in the Lease (including without limitation, the granting and
perfection of a security interest in favor of the Agent, for
the benefit of the Lessors, in such Equipment), provided that
Transferee shall be required to purchase all of the Equipment
subject to the Transferee Lease at the termination thereof and
if Transferee fails to satisfy the following conditions (2)
and (3), then Transferee's parent company ("Parent") must
guarantee Transferee's obligations under the Transferee Lease
and satisfy conditions (2) and (3) below,
(2) Transferee, or Parent if a guarantee of Parent is
required, shall have a Consolidated Net Worth
(x) after giving effect to the transaction in question,
equal to or greater than that of Lessee immediately
prior to giving effect to such transaction, and
(y) at the end of such Person's most recently ended
fiscal year, equal to or greater than $147,348,000,
(3) Transferee, or Parent if a guarantee of Parent is
required, shall have had a Fixed Charge Coverage Ratio of not
less than 1.30:1.00 as of the end of its most recently ended
fiscal quarter for the period of four consecutive fiscal
quarters ended on such date,
(4) There shall be no constraints or restrictions
(whether imposed by law or regulation or by the internal
credit or underwriting policies, oral or written, of any
Lessor) preventing any Lessor in its sole and absolute
discretion from doing business with such Transferee or with
the business or industry in which such Transferee is engaged,
(5) Both at the time of and immediately after giving
effect to such transaction, no default shall have occurred and
be continuing under the Prior Debt Agreements with respect to
Lessee,
28
(6) Transferee and each Lessor shall have agreed, in
their sole and absolute discretion, upon new affirmative and
negative (including financial) covenants of a type similar to
those contained in the Prior Debt Agreements (as in effect on
the date hereof) for purposes of the Transferee Lease, and
(7) Transferee must (x) be a corporation organized under
the laws of the United States, (y) deliver to the Agent and
each Lessor an opinion of counsel in form and scope reasonably
acceptable to the Agent and the Lessors, to the effect that
each obligation of Transferee (and Parent, if Parent is
required to guarantee Transferee's obligations) under the
Transferee Lease and each other Operative Agreement to which
Transferee (and Parent, if applicable) is a party is the
legal, valid and binding obligation of Transferee (and Parent,
if applicable), and that the security interest in favor of the
Agent, for the benefit of the Lessors, created by the
Transferee Lease, is a valid and perfected security interest,
and covering such other matters as the Agent and the Lessors
may reasonably request, and (z) if Parent is required to
guarantee Transferee's obligations, Parent must be a
corporation organized under the laws of the United States
unless the Lessors are satisfied as to the enforceability of
Parent's guarantee;
(b) Lessee shall furnish to the Agent notice on or before the 30th
day prior to any relocation of its chief executive office, change of its
name or change in its corporate structure;
(c) Lessee, at its expense, shall cause, as soon as possible, but in
any event no later than the 10th day after any request, financing
statements (and continuation statements with respect thereto) and all
other documents necessary or reasonably requested by the Agent in
connection with the establishment and perfection of the interest of the
Agent in the Collateral, to be recorded or filed at such places and times,
and in such manner, and, at its expense, shall take, or shall cause to be
taken, all such other action as may be necessary or reasonably requested
by the Agent in order to establish, preserve, protect and perfect the
rights, titles and interests of the Agent to the Collateral;
29
(d) Lessee shall continually use all Equipment in its business
(subject to normal interruption in the ordinary course of business for
maintenance, inspection, service, repair and testing) unless such
Equipment has been sublet to the Sublessee pursuant to the Sublease,
exchanged for a Replacement Part pursuant to Section 4.3 hereto or a
Casualty has been declared with respect thereto;
(e) without limiting the terms of Section 7.1 hereof, Lessee shall
pay: (i) to the Agent and each Lessor all reasonable expenses, including,
without limitation, legal fees and expenses incurred by it in connection
with the entering into, or giving or (in the case of any amendments,
supplements, waivers or consents proposed by the Lessee or the Sublessee)
withholding, of any future amendments or supplements or waivers or
consents: (A) with respect to the Operative Agreements (including without
limitation any legal services rendered in connection with or arising under
Sections 6.1 and 6.2 hereof); or (B) which are further assurances
requested pursuant to Section 11.14 hereof or a similar provision in other
Operative Agreements; and (ii) the ongoing fees and expenses of the Agent
under the Lease.
(f) the Lessee shall deliver to the Agent:
(i) as soon as practicable but in any event no later than the
60th day after the end of each quarterly accounting period in each
fiscal year of the Lessee, copies of the unaudited consolidated
balance sheet of the Lessee and its consolidated subsidiaries as of
the end of such accounting period and a copy of the related
unaudited consolidated statements of income and cash flows of the
Lessee and its consolidated subsidiaries for such quarterly period
and for the portion of its fiscal year ended with the last day of
such quarterly period, all in accordance with GAAP (except for the
absence of footnotes and subject to year-end audit adjustments);
(ii) as soon as practicable after the end of each fiscal year
of the Lessee, but in any event no later than the 120th day
thereafter, a copy of the audited consolidated financial statements
of the Lessee and its consolidated subsidiaries in comparative form
certified as fairly presented and in accordance with GAAP
consistently applied by a nationally recognized firm of independent
certified public accountants (which certification shall state that
its audit was made without any limitation upon the scope thereof
being required by the Lessee);
30
(iii) as soon as practicable, but in any event not later than
the 60th day after the end of each quarterly accounting period in
each fiscal year of Lessee, an Officer's Certificate of Lessee
stating that such officer has reviewed the activities of the Lessee
and Sublessee during such period and that, to the best of such
officer's knowledge, the Lessee and Sublessee during such period
have observed, performed and fulfilled each and every covenant,
obligation and condition contained in the Operative Agreements, no
Lease Default, event which with the passage of time and/or giving of
notice could become a Lease Default, or Casualty exists under any of
the Operative Agreements, or if such condition shall exist,
specifying the nature and status thereof;
(iv) promptly following such delivery or filing (but in no
event more than ten (10) days thereafter), a copy of each report or
statement delivered to the Lessee's stockholders and each regular or
periodic report and any Current Report on Form 8-K filed by the
Lessee with any securities exchange or with the Securities and
Exchange Commission or any successor agency, and the delivery of any
Quarterly Report on Form l0-Q or any Annual Report on Form 10-K in
either case as filed with the Securities and Exchange Commission,
shall be deemed to satisfy the Lessee's obligations under Section
6.1(f)(i) and Section 6.1(f)(ii), respectively, for the period
covered by such report; and
(v) if: (A) the Lessee shall cease to be subject to Section 13
or 15(d) of the Securities Exchange Act of 1934; and (B) the Agent
or any Lessor at the time outstanding shall request that the Lessee
deliver to the Agent, or to such holder, information with respect to
the Lessee that meets the requirements of Rule 144A(d)(4)(i) of such
Act (or any successor provision), then: (x) promptly following the
receipt by the Lessee of that request, the Lessee shall deliver such
information to the Agent, or to Lessors, and (y) such information
shall, at the time of such delivery, be as of a date so as to be
entitled to the presumption that such information is "reasonably
current" within the meaning of Rule 144A(d)(4)(ii) of such Act (or
any successor provision);
(g) if there is any change in the ownership interest of the
Sublessee during the Lease Term or any Renewal Term, the Lessee shall
promptly notify the Agent and the Lessors;
31
(h) promptly upon becoming aware of the occurrence of any (i)
"Reportable Event" as such term is defined in Section 4043 of ERISA, (ii)
"Accumulated Funding Deficiency" as such term is defined in Section 302 of
ERISA or (iii) "Prohibited Transaction", as such term is defined in 4975
of the Code or described in Section 406 of ERISA, in connection with any
Pension Plan (or any trust created thereunder), Lessee shall notify Agent
and each of the Lessors in writing specifying the nature thereof, what
action Lessee or the Related Person is taking or proposes to take with
respect thereto, and, when known, any action taken by the Internal Revenue
Service with respect thereto;
(i) promptly upon, but in no event later than seven (7) days after
Lessee shall have obtained Actual Knowledge thereof, Lessee shall notify
the Agent and each Lessor in writing of the existence of a Lease Default
or any event which with the passage of time and/or giving of notice could
result in a Lease Default, or any other matter which has resulted or could
reasonably be expected to result in a material adverse change in the
financial condition or operations of Lessee and its Subsidiaries, taken as
a whole, which notice shall describe the nature of such Lease Default or
other matter and the action Lessee is taking with respect thereto;
(j) promptly upon Lessee's becoming aware of (i) any proposed or
pending investigation of it or any Affiliate by any Authority, (ii) any
court or administrative proceeding involving Lessee or a Subsidiary, or
(iii) any notice, claim or demand from any Authority which alleges that
Lessee or any Affiliate is in violation of any law or has failed to comply
with any order issued pursuant to any Federal, state or local statute
regulating its operation and business, which in any case involves (A) a
claim in the amount of $5,000,000 or more, or (B) the possibility of
materially and adversely affecting the properties, business, profits or
financial condition of Lessee and its subsidiaries taken as a whole,
Lessee shall notify Agent and each of the Lessors specifying its nature
and the action the Lessee is taking with respect thereto; and
(k) promptly upon receipt of a written request from the Agent or any
Lessor, Lessee shall deliver to such requesting party such other data and
information as from time to time may be reasonably requested.
Section 6.2 Covenants of Sublessee. Sublessee covenants and agrees (while
the Sublease is in effect) with the Agent and each of the Lessors that during
the Lease Term and Renewal Terms and, if the Lessee has not purchased the
Equipment pursuant to
32
the Lease, for 90 days thereafter, except with respect to clause (ii) below,
which Sublessee may comply with at any time without being required to wait for
90 days:
(a) (i) Sublessee shall at all times maintain its corporate
existence except as otherwise permitted by paragraph (ii) hereto,
and Sublessee shall do or cause to be done all things necessary to
preserve and keep in full force and effect its full corporate power
and authority to perform its obligations under each Operative
Agreement to which it is or will be a party;
(ii) Sublessee shall not effect a Merger or a Transfer or an
assignment of the Sublease except as provided in Section 6.1(a)(iv)
hereof;
(b) Sublessee shall furnish to the Agent notice on or before the
30th day prior to any relocation of its chief executive office, change of
its name or change in its corporate structure;
(c) Sublessee, at its expense, shall cause, as soon as possible, but
in any event no later than the 10th day after any request, financing
statements (and continuation statements with respect thereto) and all
other documents necessary or reasonably requested by the Agent in
connection with the establishment and perfection of the interest of the
Agent in the Collateral, to be recorded or filed at such places and times,
and in such manner, and, at its expense, shall take, or shall cause to be
taken, all such other action as may be necessary or reasonably requested
by the Agent in order to establish, preserve, protect and perfect the
rights, titles and interests of the Agent to the Collateral;
(d) Sublessee shall continually use all Equipment in its business
(subject to normal interruption in the ordinary course of business for
maintenance, inspection, service, repair and testing) that has been sublet
to the Sublessee pursuant to the Sublease, unless such Equipment has been
exchanged for a Replacement Part pursuant to Section 4.3 hereof or a
Casualty has been declared with respect thereto;
(e) promptly upon becoming aware of the occurrence of any (i)
"Reportable Event" as such term is defined in Section 4043 of ERISA, (ii)
"Accumulated Funding Deficiency" as such term is defined in Section 302 of
ERISA or (iii) "Prohibited Transaction", as such term is defined in 4975
of the Code or described in Section 406 of ERISA, in connection with any
Pension Plan (or any trust created thereunder), Sublessee shall notify
Agent specifying the
33
nature thereof, what action Sublessee or Related Person is taking or
proposes to take with respect thereto, and, when known, any action taken
by the Internal Revenue Service with respect thereto;
(f) promptly upon, but in no event later than seven (7) days after
Sublessee shall have obtained Actual Knowledge thereof, Sublessee shall
notify the Agent and each Lessor in writing of the existence of a default
under the Sublease, a Lease Default or any event which with the passage of
time and/or giving of notice could result in a Lease Default, or any other
matter which has resulted or could reasonably be expected to result in a
material adverse change in the financial condition or operations of
Sublessee and its Subsidiaries, taken as a whole, which notice shall
describe the nature of such Lease Default or other matter and the action
Sublessee is taking with respect thereto;
(g) promptly upon Sublessee's becoming aware of (i) any proposed or
pending investigation of it or any Affiliate by any Authority, (ii) any
court or administrative proceeding involving Sublessee or a Subsidiary of
Sublessee, or (iii) any notice, claim or demand from any Authority which
alleges that Sublessee or any Affiliate is in violation of any law or has
failed to comply with any order issued pursuant to any Federal, state or
local statute regulating its operation and business, which in any case
involves (A) a claim in the amount of $5,000,000 or more, or (B) the
possibility of materially and adversely affecting the properties,
business, profits or financial condition of Sublessee and its subsidiaries
taken as a whole, Sublessee shall notify Agent and each of the Lessors
specifying its nature and the action the Sublessee is taking with respect
thereto; and
(h) promptly upon receipt of a written request from the Agent or any
Lessor, Sublessee shall deliver to such requesting party such other data
and information as from time to time may be reasonably requested.
In addition to the foregoing, Lessee shall, concurrently with any notice,
delivery or other communication to Agent pursuant to any Operative Agreement,
deliver a copy of such notice, delivery or other communication to each Lessor at
such Lessor's current address.
Section 6.3 Covenants of Agent and Lessors. The Agent, in its individual
capacity, and each of the Lessors covenants and agrees with each of the other
parties that: (a) it will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Liens arising by, through or under it on the
34
Collateral, other than Permitted Lessor Liens; (b) it will, at its own cost and
expense, promptly take such action in its individual capacity as may be
necessary to discharge fully such Lessor Liens created by it on the Collateral,
other than Permitted Lessor Liens; and (c) it will not sell, transfer or
otherwise dispose of all or any part of the Equipment or the other Collateral
where such sale, transfer or disposition would violate the Operative Agreements.
ARTICLE VII
GENERAL INDEMNITY
Section 7.1 Indemnity. Whether or not the transactions contemplated hereby
are consummated, to the fullest extent permitted by applicable law, Lessee and
Sublessee waive and release any claims now or hereafter existing against
Indemnitees on account of, and shall indemnify, reimburse and hold the
Indemnitees harmless from, any and all claims by third parties (including, but
not limited to, claims relating to trademark or patent infringement and claims
based upon negligence, strict liability in tort, violation of laws, including,
without limitation, Environmental Laws, statutes, rules, codes or orders or
claims arising out of any loss or damage to any property or death or injury to
any Person), any losses, damages or obligations owing to third parties, any
penalties, liabilities, demands, suits, judgments or causes of action, and all
legal proceedings (either administrative or judicial), and any costs or expenses
in connection therewith (including costs incurred in connection with discovery)
or in connection with the enforcement of this indemnity (including reasonable
attorneys' fees and expenses, and fees and expenses of internal counsel,
incurred by the Indemnitees), including, in each case, matters based on the
negligence of Indemnitees (subject to the proviso below), which may be imposed
on, incurred by or asserted against the Indemnitees in any way relating to or
arising in any manner out of:
(a) the registration, purchase, taking or foreclosure of a security
interest in, ownership, delivery, condition, lease, sublease, assignment,
storage, transportation, possession, use, operation, return or other
disposition of any of the Equipment, or any defect in any such Equipment,
arising from the material or any article used therein or from the design,
testing or use thereof, or from any maintenance, service, repair, overhaul
or testing of any such Equipment regardless of when such defect shall be
discovered, whether or not such Equipment is in the possession of Lessee
or Sublessee and no matter where it is located; or
35
(b) this Participation Agreement, any other Operative Agreement or
any document or certificate delivered in connection therewith, the
enforcement hereof or thereof or the consummation of the transactions
contemplated hereby or thereby;
provided that Lessee and Sublessee shall not be obligated to indemnify an
Indemnitee for any such claim, loss, damage or liability which results directly
from
(c) the willful misconduct or gross negligence of such Indemnitee;
(d) acts or events that occur with respect to any of the Equipment
from and after (but not before) the delivery thereof by Lessee to Agent by
reason of the expiration of the Lease Term in accordance with the terms of
the Lease;
(e) the incorrectness in any material respect of any representation
or warranty made by such Indemnitee in the Operative Agreements;
(f) the willful failure by such Indemnitee to perform or observe in
any material respect any agreement or covenant made by it in any of the
Operative Agreements;
(g) the creation or existence of a Lessor Lien attributable to such
Indemnitee other than Permitted Lessor Liens; or
(h) a disposition by such Indemnitee of any Equipment following the
purchase of such Equipment by such Indemnitee from the Agent in a
foreclosure sale;
provided, however, that nothing in the preceding proviso shall be deemed to
exclude or limit any claim that any Indemnitee may have under any Operative
Agreement or applicable laws for damages from Lessee or Sublessee for breach of
their representations, warranties or covenants.
Section 7.2 Excessive Use Indemnity. In the event that at the end of the
Lease Term: (a) Lessee elects the Sale Option with respect to one or more
Functional Units; and (b) after paying to the Agent any amounts due under
Section 11.1(c) of the Lease, Proceeds and the Sale Recourse Amount, the Agent
does not have sufficient funds to reduce the Lease Balance to zero, then the
Lessee shall promptly pay over to the Agent the shortfall unless and to the
extent that the Lessee delivers a report from the Appraiser in form and
substance satisfactory to the Required Lessors which establishes that the
decline in value in the Equipment which was sold pursuant to the Sale Option
from that
36
amount anticipated for such date in the Appraiser's report delivered with
respect to such Equipment on the applicable Delivery Date was not due to
extraordinary use, failure to maintain or replace, failure to use, workmanship
or method of installation or removal or any other cause or condition within the
power of the Lessee to control or effect.
ARTICLE VIII
GENERAL TAX INDEMNITY
Section 8.1 General Tax Indemnity. Lessee agrees to pay or reimburse
Indemnitees for, and to indemnify and hold Indemnitees harmless from, all
Impositions arising at, or relating to, any time prior to or during the Lease
Term or Renewal Terms, or upon any termination of the Lease or prior to, or upon
the return of, the Equipment to Agent, and levied or imposed upon Indemnitees
directly or otherwise, by any Federal, state or local government or taxing
authority in the United States or by any foreign country or foreign or
international taxing authority upon or with respect to: (a) the Equipment; (b)
the exportation, importation, registration, purchase, ownership, delivery,
condition, lease, sublease, assignment, storage, transportation, possession,
use, operation, maintenance, repair, return, sale (including to Agent or Lessee
pursuant to the Operative Agreements), transfer of title or other disposition
thereof; (c) the rentals, receipts, or earnings arising from any of the
Equipment; or (d) the Lease or any payment made thereunder; provided that this
Section 8.1 shall not apply to:
(i) Impositions which are based upon or measured by the Indemnitee's
net income, or which are expressly in substitution for, or relieve
Indemnitee from, any actual Imposition based upon or measured by
Indemnitee's net income;
(ii) Impositions characterized under local law as franchise, net
worth, or shareholder's capital (excluding, however, any value-added,
license, property or similar Impositions);
(iii) Impositions based upon the voluntary transfer, assignment or
disposition by Agent or any Lessor of any interest in any of the Equipment
(other than a transfer pursuant to the exercise of remedies under the
Operative Agreements, transfers pursuant to the exercise of the Sale
Option or the Lessee Purchase Option or a transfer to Lessee or otherwise
pursuant to the Lease);
37
(iv) Impositions based upon the involuntary transfer by Agent or any
Lessor of any interest in the Equipment in connection with any bankruptcy
or other similar proceeding for the relief of debtors in which such
Indemnitee is the debtor or any foreclosure by a creditor of such
Indemnitee;
(v) any interest, penalties or additions to tax imposed on an
Indemnitee that would not have resulted but for the failure of such
Indemnitee to file any return properly and timely unless such failure
shall result from the failure of the Lessee to fulfill its obligations, if
any, under Section 8.4 with respect to such return;
(vi) with respect to an Indemnitee, Impositions that result from
such Indemnitee engaging, with respect to the Equipment or any part
thereof, in transactions other than those permitted by this Agreement or
any other Operative Agreement;
(vii) Impositions to the extent of the excess of such Impositions
over the amount of such Impositions that would have been imposed (or, if
less, that would not have been subject to indemnification hereunder) had
there not been a transfer by a predecessor in interest of the Indemnitee
(other than the Agent in its capacity as Agent) of any interest in the
Equipment or any interest arising under any Operative Agreement or any
Lessor other than a transfer in contemplation of the exercise of remedies
while an Event of Default shall have occurred and be continuing;
(viii) subject to the penultimate sentence of Section 8.2,
Impositions that are being contested in accordance with Section 8.2 during
the pendency of such contest;
(ix) subject to the last paragraph of this Section 8.1, Impositions
to the extent such Impositions would not have been imposed if such
Indemnitee had not engaged in activities in the jurisdiction imposing such
Imposition which activities are unrelated to the transactions contemplated
by the Operative Agreements;
(x) any Impositions imposed on an Indemnitee to the extent the
payment or accrual of such Impositions actually reduces permanently the
Impositions of such Indemnitee otherwise payable by such Indemnitee;
(xi) any Impositions that would not have been imposed but for the
existence of any Lessor Liens created by such Indemnitee or any act or
omission of the Indemnitee that are in violation of any of the terms of
the Operative Agreements or that constitute gross negligence or willful
misconduct or
38
the inaccuracy of any representation, warranty or covenant in any material
respect by the Indemnitee, but only if, in any such case, such act,
omission or inaccuracy is not a result of (a) any act or omission of the
Lessee or the Sublessee or (b) the breach or inaccuracy of any
representation, warranty or covenant of the Lessee or the Sublessee; and
(xii) except where there exists an Event of Default, Impositions in
respect of any of the Equipment arising after the expiration or earlier
termination of the Lease in respect of such Equipment and the return or
other disposition of such Equipment in full compliance with the terms of
the Lease, provided that such Impositions do not relate to acts or events
arising or occurring prior to or coincident with such time.
Notwithstanding anything to the contrary in this Section 8.1, Lessee agrees to
pay or reimburse Indemnitees for, and to indemnify and hold Indemnitees harmless
from, any Impositions imposed by any State or any political subdivision thereof
in which any Equipment is located (including income, severance, franchise and
personal property taxes, but net of any foreign, Federal, state or local income
tax benefits which are recognized by Indemnitees as a result of such Imposition)
arising solely by virtue of, and to the extent attributable to, Indemnitees
participation in the transactions contemplated by the Operative Agreements or
the exercise of remedies under the Operative Agreements.
Notwithstanding anything in the foregoing clauses (i) through (xii) of
this Section 8.1, Lessee agrees to pay or reimburse Indemnitees for, and to
indemnify and hold Indemnitees harmless from: (A) any Imposition based on, or
measured by the net income of Indemnitees imposed by any federal, state or local
taxing authority in the United States or any taxing authority in any other
jurisdiction in which Indemnitee maintains its principal place of business to
the extent they would not have been imposed if on each Delivery Date the Lessors
had advanced funds directly to Lessee in the form of a loan secured by the
Equipment in an amount equal to the amount advanced on such Delivery Date or
Dates with the debt service for such loan equal to scheduled rental payments
payable from time to time and a principal balance in the amount of the Lease
Balance remaining at the end of the Initial Term and each Renewal Term was due
at the end of such terms (the "Income Tax Indemnity") and (B) Impositions
imposed with respect to the payment, receipt or accrual of any indemnity payment
hereunder; and (C) with respect to any Lessor which is not incorporated under
the laws of the United States, or a state thereof, and which has complied with
39
Section 8.6, any deduction or withholding of any United States Federal income
tax.
Section 8.2 Contest. Lessee shall pay on or before the time or times
prescribed by law any Impositions (except any Impositions excluded by Section
8.1); provided, however, that Lessee shall be under no obligation to pay any
such Imposition so long as the payment of such Imposition is not delinquent or
is being contested by a Permitted Contest. If any claim or claims is or are made
against any Indemnitee solely for any Imposition which is subject to
indemnification as provided in Section 8.1, Indemnitee shall as soon as
practicable, but in no event more than 20 days after receipt of formal written
notice of the Imposition or proposed Imposition, notify Lessee and if, in the
opinion of Lessee and tax counsel acceptable to the Indemnitee, there exists a
reasonable basis to contest such Imposition (and if clause (ii) of the
definition of "Permitted Contest" continues to be satisfied and so long as no
Event of Default exists), Lessee at its expense may, to the extent permitted by
applicable law, contest such Imposition (other than an Imposition resulting in
an Income Tax Indemnity), and subsequently may appeal any adverse determination,
in the appropriate administrative and legal forums; provided that in all other
circumstances, upon notice from Lessee that there exists a reasonable basis to
contest any such Imposition, the Indemnitee, at Lessee's expense, shall contest
any such Imposition. Lessee shall pay all expenses incurred by the Indemnitee in
contesting any such Imposition (including, without limitation, all reasonable
attorneys' and accountants' fees, including the allocated costs of internal
counsel), upon demand by the Indemnitee. Lessee shall have the right to
participate in the conduct of any proceedings controlled by the Indemnitee to
the extent that such participation by such Person does not interfere with the
Indemnitee's control of such contest and Lessee shall in all events be kept
informed of material developments relative to such proceedings. The Indemnitee
shall have the right to participate in the conduct of any proceedings controlled
by Lessee and the Indemnitee shall in all events be kept informed of material
developments relative to such proceedings. The Indemnitees agree that a
contested claim for which Lessee would be required to make a reimbursement
payment hereunder will not be settled or compromised without Lessee's prior
written consent, unless clause (ii) of the definition of "Permitted Contest"
would not continue to be satisfied. Indemnitee shall endeavor to settle or
compromise any such contested claim in accordance with written instructions
received from Lessee, provided that: (x) Lessee on or before the date the
Indemnitee executes a settlement or compromise pays the contested Imposition to
the extent agreed upon or makes an indemnification payment to the Indemnitee in
an amount acceptable to the Indemnitee; and (y) the settlement or compromise
does not, in the reasonable opinion of the Indemnitee materially adversely
40
affect the right of the Lessor to receive payment of Rent or the Lease Balance,
or involve a material risk of sale, forfeiture or loss of any of the Equipment
or any interest therein or materially adversely affect the security interests
created by the Lease. The failure of an Indemnitee to timely contest a claim
against it for any Imposition which is subject to indemnification under Section
8.1 and for which it has an obligation to Lessee to contest under this Section
8.2 in the manner required by applicable law or regulations where Lessee has
timely requested that such Indemnitee contest such claim shall relieve Lessee of
its obligations to such Indemnitee under Section 8.1 with respect to such claim
to the extent such failure results in the loss of an effective contest. If
applicable law requires the payment of a contested Imposition as a condition to,
or regardless of, its being contested, and Lessee chooses to contest such
Imposition or to direct the Indemnitee to contest such Imposition in accordance
with this Section, then Lessee shall provide the Indemnitee with the funds to
pay such Imposition, such provision of funds to be deemed a non-interest bearing
loan by Lessee to the Indemnitee to be repaid by any recovery of such Imposition
from such contest and any remaining unpaid amount not recovered to offset
Lessee's obligation to indemnify the Indemnitee for such Imposition. In the
event that the Indemnitee receives a refund (or like adjustment) in respect of
any Imposition for which the Indemnitee has been reimbursed by Lessee, the
Indemnitee shall immediately remit the amount of such refund (or like
adjustment) to Lessee, net of all costs and expenses incurred by such
Indemnitee.
Section 8.3 Gross Up. If an Indemnitee shall not be entitled to a
corresponding and equal deduction with respect to any Imposition which Lessee is
required to pay or reimburse under Section 8.1 or 8.2 and which payment or
reimbursement constitutes income to such Indemnitee, then Lessee shall also pay
to such Indemnitee on demand the amount of such Imposition on a gross-up basis
such that, after subtracting all Impositions imposed on such Indemnitee with
respect to such payment by Lessee (including any Impositions otherwise excluded
by Section 8.1 and assuming for this purpose that such Indemnitee was subject to
taxation at the applicable Federal, state or local marginal rates used to
compute such Indemnitee's tax return for the year in which such income is
taxable) such Indemnitee shall be fully reimbursed for the Imposition with
respect to which such Indemnitee is entitled to be paid or reimbursed.
Section 8.4 Tax Returns. Except as otherwise provided in the third
sentence below, Lessee shall prepare and file (whether or not it is a legal
obligation of an Indemnitee) all tax returns or reports that may be required
with respect to any Impositions assessed, charged or imposed on the Equipment or
the Lease, including, but not limited to sales and use taxes (as to which Lessee
shall prepare all returns as hereinabove provided and file
41
all such returns to the extent permitted by applicable law), property taxes (ad
valorem and real property) and any other tax or charge based upon the ownership,
leasing, subleasing, rental, sale, purchase, possession, use, operation,
delivery, return or other disposition of any of the Equipment or upon the
rentals or the receipts therefrom (excluding, however, any tax based upon the
net income of an Indemnitee or any tax which is in substitution for or relief of
a tax imposed upon or measured by the net income of an Indemnitee). Lessee may
notify in writing all applicable governmental authorities having jurisdiction
with respect to personal property taxes that Lessee is the appropriate party for
receiving notices of (or copies of, if such governmental authority is required
by law to notify Agent) assessment, appeal and payment with respect to the
Equipment. If an Indemnitee is obligated by law to file any such reports or
returns, then Lessee shall at least 10 days before the same are due prepare the
same and forward them to the Indemnitee, as appropriate, with detailed
instructions as to how to comply with all applicable filing requirements,
together with funds in the amount of any payment required pursuant thereto.
Indemnitee shall forward to Lessee at its address listed on the signature page
hereto copies of all assessment and valuation notices it receives within 10 days
of receipt; provided that Indemnitee's failure to deliver on a timely basis such
notices shall not relieve Lessee of any obligations hereunder.
Section 8.5 Tax Character of Transaction. It is the intention of the
Participants that for Federal and state income tax purposes: (a) the Lessee or a
corporation that is a member of its affiliated group shall be treated as owner
of the Equipment with the ability to claim depreciation on the Equipment and to
deduct the interest component of the Rents; and (b) the Rents payable to Agent
under the Lease constitute payments of interest and principal. Participants
agree that neither they nor any corporation controlled by them, or under common
control with them, directly or indirectly will at any time take any action or
fail to take any action with respect to the filing of any income tax return,
including an amended income tax return, inconsistent with the intention of the
parties expressed in the preceding sentence.
Section 8.6 Withholding Tax Exemption. (a) At least five (5) Business Days
prior to the first date on which any Rent is payable hereunder or under any
other Operative Agreement for the account of any Lessor not incorporated under
the laws of the United States or a state thereof, such Lessor agrees that it
will have delivered to each of the Lessee and the Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, certifying
in either case that such Lessor is entitled to receive payments under this
Agreement and the other Operative Agreements without deduction or withholding of
any
42
United States Federal income taxes. Each Lessor which so delivers a Form 1001 or
4224 further undertakes to deliver to each of the Lessee and the Agent two
additional copies of such form (or a successor form) on or before the date that
such form expires (currently, three successive calendar years for Form 1001 and
one calendar year for Form 4224) or becomes obsolete or after the occurrence of
any event requiring a change in the most recent forms so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Lessee or the Agent, in each case certifying that such Lessor
is entitled to receive payments under this Agreement and the other Operative
Agreements without deduction or withholding of any United States Federal income
taxes, unless an event (including any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lessor from duly completing and delivering any such form with respect to it and
such Lessor advises the Lessee and the Agent that it is not capable of receiving
payments without any withholding of United States Federal income tax.
(b) At least five (5) Business Days prior to the first date on which any
Rent is payable hereunder or under any other Operative Agreement for the account
of any Lessor who does not have a street address in the State of California,
such Lessor agrees that it will have delivered to each of the Lessee and the
Agent two duly completed copies of California Form 587 or 590, certifying in
either case that such Lessor is entitled to receive payments under this
Agreement and the other Operative Agreements without deduction or withholding of
any California income taxes. Each Lessor which so delivers a Form 587 or 590
further undertakes to deliver to each of the Lessee and the Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent forms so delivered by it (including, without
limitation, any change in residency or address), and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by the Lessee or
the Agent, in each case certifying that such Lessor is entitled to receive
payments under this Agreement and the other Operative Agreements without
deduction or withholding of any California income taxes, unless an event
(including any change in law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lessor from duly completing and
delivering any such form with respect to it and such Lessor advises the Lessee
and the Agent that it is not capable of receiving payments without any
withholding of California income tax.
43
ARTICLE IX
LIMITATIONS
Section 9.1 Limitation of Liability of Agent. It is expressly understood
and agreed by and among the parties hereto that, except as otherwise provided
herein or in the other Operative Agreements: (a) this Participation Agreement
and the other Operative Agreements to which the Agent is a party are executed by
the Agent, not in its individual capacity, but solely as Agent under the Lease
in the exercise of the power and authority conferred and vested in it as such
Agent; (b) each and all of the undertakings and agreements herein made on the
part of the Agent are each and every one of them made and intended not as
personal undertakings and agreements by the Agent, or for the purpose or with
the intention of binding the Agent personally, but are made and intended for the
purpose of binding only the Collateral unless expressly provided otherwise; (c)
actions to be taken by the Agent pursuant to its obligations under the Operative
Agreements may, in certain circumstances, be taken by the Agent only upon
specific authority of the Lessors; (d) nothing contained in the Operative
Agreements shall be construed as creating any liability on the Agent,
individually or personally, or any incorporator or any past, present or future
subscriber to the capital stock of, or stockholder, officer or director of, the
Agent to perform any covenants either express or implied contained herein, all
such liability, if any, being expressly waived by the other parties hereto and
by any Person claiming by, through or under them; and (e) so far as the Agent,
individually or personally, is concerned, the other parties hereto and any
Person claiming by, through or under them shall look solely to the Collateral
and the Lessee (and the Sublessee, if appropriate) for the performance of any
obligation under any of the instruments referred to herein; provided, however,
that nothing in this Section 9.1 shall be construed to limit in scope or
substance the general corporate liability of the Agent in respect of its gross
negligence or willful misconduct or those representations, warranties and
covenants of the Agent in its individual capacity set forth herein or in any of
the other agreements contemplated hereby.
ARTICLE X
AMENDMENTS TO OPERATIVE AGREEMENTS
Section 10.1 Amendments to Operative Agreements With Consent of Lessors.
This Participation Agreement and each of the other Operative Agreements shall be
changed, waived, discharged or terminated with respect to each Lessor upon the
ratification in writing of such change, waiver, discharge or termination by
44
the Required Lessors, in which case such change, waiver, discharge or
termination shall be effective as to each Lessor; provided no such change,
waiver, discharge or termination shall, without the written ratification of each
Lessor:
(i) modify any of the provisions of this Section 10.1, change the
definition of "Required Lessors" or modify or waive any provision of an
Operative Agreement requiring action by the foregoing, or release any
Collateral (except as otherwise specifically provided in any Operative
Agreement);
(ii) modify, amend, waive or supplement any of the provisions of
Section 7.1, 7.2, 8.1, 8.2, 8.3, 11.1, 13, 22.1, 22.2 or 28 of the Lease,
or Section 6.1(a) of this Agreement;
(iii) reduce, modify, amend or waive any indemnities in favor of any
Participant (except that any Person may consent to any reduction,
modification, amendment or waiver of any indemnity payable to it);
(iv) modify, postpone, reduce or forgive, in whole or in part, any
payment of Rent (other than pursuant to the terms of any Operative
Agreement), Make-Whole Premium, Lease Balance, Supplement Balance,
Functional Unit Balance, Purchase Option Exercise Amount, Recourse
Deficiency Amount, Applicable Percentage Amount, interest or yield or,
subject to clause (iii) above, any other amount payable under the Lease or
Participation Agreement, or modify the definition or method of calculation
of any payment of Rent (other than pursuant to the terms of any Operative
Agreement), Make-Whole Premium, Lease Balance, Supplement Balance,
Functional Unit Balance, Purchase Option Exercise Amount, Recourse
Deficiency Amount, Applicable Percentage Amount or other amount payable
hereunder;
(v) consent to any assignment of the Lease releasing the Lessee from
its obligations in respect of the payments of Rent or changing the
absolute and unconditional character of such obligations, or any similar
assignment of the Sublease similarly releasing the Sublessee; or
(vi) permit the creation of any Lien on the Collateral or any part
thereof except as contemplated in the Operative Agreements, or deprive any
Lessor of the benefit of the security interest in the Collateral granted
by Lessee.
Section 10.2 Amendments to Operative Agreements Affecting Agent. Without
the prior written consent of the Agent, no amendment of, supplement to, or
waiver or modification of, any
45
Operative Agreement shall adversely affect Agent's rights or immunities or
modify or increase the duties or obligations of the Agent with respect to any
Operative Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Survival of Covenants. All claims pertaining to the
representations, warranties, covenants or indemnities of Lessee or Sublessee
shall survive the termination of the Lease to the extent such claims arose out
of events occurring or conditions existing prior to any such termination.
Without limiting the foregoing, the provisions of Article VII and Article VIII
hereof shall survive the termination of the Lease.
Section 11.2 APPLICABLE LAW. THIS PARTICIPATION AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE LAWS OF CALIFORNIA WITHOUT REGARD TO THE
CHOICE OF LAW PROVISIONS THEREOF.
Section 11.3 Effect and Modification of Participation Agreement. No
variation, modification, amendment or waiver of this Participation Agreement,
including any Schedules or Exhibits hereto, or any other Operative Agreement to
which Agent is a party shall be valid unless in writing and signed by the Lessee
and the Agent with the consent of the Lessors required to effect such variation,
modification, amendment or waiver pursuant to Article X hereof.
Section 11.4 Notices. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by the terms hereof shall be in writing and shall be deemed to have
been duly given when delivered personally, by facsimile (and confirmed, which
confirmation may be mechanical) or otherwise actually received or 5 Business
Days after being deposited in the United States mail certified, postage prepaid,
addressed as follows:
If to the Lessee:
Xxxxxx-Xxxxxx, Inc.
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
with a copy to:
Maslon, Edelman, Xxxxxx & Brand
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxx, Esq.
46
If to the Sublessee:
Tone Brothers, Inc.
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: President
If to the Agent:
BA Leasing & Capital Corporation
Four Embarcadero Center, Suite 1200
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Contract Administration
If to the Lessors, to their respective addresses set forth on Schedule I
hereto or at such other place in the United States as any such party may
designate by notice given in accordance with this Section 11.4.
Section 11.5 Transaction Costs. The Lessee shall pay all Transaction Costs
whether or not the transactions contemplated hereby close. In addition, the
Lessee agrees to pay or reimburse the Agent and the Lessors for all other
out-of-pocket costs and expenses reasonably incurred in connection with: (a)
negotiating and entering into the Operative Agreements or entering into, or the
giving or withholding of, any future amendments, supplements, waivers or
consents with respect to the Operative Agreements; (b) any Casualty or
termination of the Lease or any other Operative Agreement; (c) the negotiation
and documentation of any restructuring or "workout," whether or not
consummated, of any Operative Agreement; (d) the enforcement of the rights or
remedies under the Operative Agreements; (e) any transfer by Agent or a Lessor
of any interest in the Operative Agreements during the continuance of an Event
of Default; or (f) any Delivery Date.
Section 11.6 Counterparts. This Participation Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each executed counterpart constituting an original but all
together one agreement.
Section 11.7 Severability. Whenever possible, each provision of this
Participation Agreement shall be interpreted in such manner as to be effective
and valid under applicable law; but if any provision of this Participation
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Participation Agreement.
47
Section 11.8 Successors and Assigns. This Participation Agreement shall be
binding upon the parties hereto and their respective successors and assigns, and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Section 11.9 Brokers. None of the Participants has engaged or authorized
any broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker, finder, investment banker, agent or any
other like capacity in connection with this Participation Agreement or the
transactions contemplated hereby, except that Lessee and its Affiliates have
retained BA Leasing & Capital Corporation as arranger in connection with the
transactions contemplated hereby and the Lessee shall be responsible for, and
shall indemnify, defend, and hold the other Participants harmless from and
against any and all claims, liabilities, or demands by BA Leasing & Capital
Corporation for fees or other entitlements with respect to the Lease or the
transactions contemplated hereby.
Section 11.10 JURY TRIAL. THE LESSEE AND SUBLESSEE WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS PARTICIPATION AGREEMENT OR ANY
OPERATIVE AGREEMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
Section 11.11 Captions; Table of Contents. Section captions and the table
of contents used in this Participation Agreement (including the exhibits and
schedules) are for convenience of reference only and shall not affect the
construction of this Participation Agreement.
Section 11.12 FINAL AGREEMENT. THIS PARTICIPATION AGREEMENT, TOGETHER WITH
THE OTHER OPERATIVE AGREEMENTS, REPRESENT THE ENTIRE FINAL AGREEMENT BETWEEN THE
PARTIES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY AND IN THE OTHER
OPERATIVE AGREEMENTS. THIS PARTICIPATION AGREEMENT CANNOT BE MODIFIED,
SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES, EXCEPT BY AN
INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 11.13 No Third-Party Beneficiaries. Nothing in this Participation
Agreement or the other Operative Agreements shall be deemed to create any right
in any Person not a party
48
hereto or thereto (other than the permitted successors and assigns of the
Lessors, the Agent, the Lessee and the Sublessee) and such agreements shall not
be construed in any respect to be a contract in whole or in part for the benefit
of any third party except as aforesaid.
Section 11.14 Further Assurances. Each Participant, at the expense of the
Lessee, will promptly and duly execute and deliver all such documents and take
such further action as may be necessary or appropriate in order to effect the
intent or purpose of this Participation Agreement and the other Operative
Agreements and to establish and protect the rights and remedies created or
intended to be created in favor of the Lessors and the Agent for the benefit of
the Lessors, including, without limitation, if requested by Required Lessors at
the expense of the Lessee, the recording or filing of any Operative Agreement or
any other document in accordance with the laws of the appropriate jurisdictions.
Section 11.15 Reproduction of Documents. This Participation Agreement, all
documents constituting Schedules or Exhibits hereto, and all documents relating
hereto received by a party hereto, including, without limitation: (a) consents,
waivers and modifications that may hereafter be executed; (b) documents received
by the Lessors or the Agent in connection with the receipt and/or acquisition of
the Equipment; and (c) financial statements, certificates, and other information
previously or hereafter furnished to the Agent or any Lessor may be reproduced
by the party receiving the same by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. Each of the
Participants agrees and stipulates that, to the extent permitted by law, any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such party in the
regular course of business) and that, to the extent permitted by law, any
enlargement, facsimile, or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 11.16 Consideration for Consents to Waivers and Amendments. Each
of the Lessee and the Sublessee hereby jointly and severally agrees that it will
not, and that it will not permit any of its Affiliates to, offer or give any
consideration or benefit of any kind whatsoever to any Lessor in connection
with, in exchange for, or as an inducement to, such Lessor's consent to any
waiver in respect of, any modification or amendment of, any supplement to, or
any other consent or approval under, any Operative Agreement unless such
consideration or benefit is offered ratably to all Lessors.
49
Section 11.17 Submission to Jurisdiction. Any suit by the Agent and the
Lessors to enforce any claim arising out of the Operative Agreements shall be
brought (subject to the penultimate sentence of this Section 11.17) in any state
or Federal court located in San Francisco, California having subject matter
jurisdiction, and with respect to any such claim, each Participant hereby
irrevocably: (a) submits to the jurisdiction of such courts; and (b) consents to
the service of process out of said courts by mailing a copy thereof, by
registered mail, postage prepaid, to the Lessee or Sublessee at their respective
addresses specified in this Participation Agreement, and agrees that such
service, to the fullest extent permitted by law: (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding; and (ii) shall be taken and held to be valid personal service upon
and personal delivery to it. Each of the Lessee and Sublessee irrevocably
waives, to the fullest extent permitted by law: (A) any claim, or any objection,
that it now or hereafter may have, that venue is not proper with respect to any
such suit, action or proceeding brought in such a court located in San
Francisco, California including, without limitation, any claim that any such
suit, action or proceeding brought in such court has been brought in an
inconvenient forum; and (B) any claim that any of the Lessee or Sublessee is not
subject to personal jurisdiction or service of process in such forum. The Lessee
and Sublessee agree that any suit to enforce any claim arising out of the
Operative Agreements or any course of conduct or dealing of the Agent or any
Lessor shall be brought and maintained exclusively in any state or Federal court
located in San Francisco, California. Nothing herein contained shall preclude
any Participant (other than the Lessee and Sublessee) from bringing an action or
proceeding in respect hereof in any other state or Federal court in any
jurisdiction where any Equipment is located. Lessee and Sublessee agree that a
final judgment in any action or proceeding in a state or Federal court within
the United States may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law.
[Remainder of page intentionally left blank.]
50
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered as of the date first above written.
XXXXXX-XXXXXX, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By /s/ Xxxxxx X. Xxxxxx By
------------------------------------ ------------------------------------
Name Printed: Xxxxxx X. Xxxxxx Name Printed:
------------------------- -------------------------
Title: Vice Pres. & Chief Title:
-------------------------------- --------------------------------
Acctg. Officer
TONE BROTHERS, INC., By
as Sublessee ------------------------------------
Name Printed:
By -------------------------
------------------------------------ Title:
Name Printed: --------------------------------
-------------------------
Title:
--------------------------------
LESSORS:
PITNEY XXXXX CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By By
------------------------------------ ------------------------------------
Name Printed: Name Printed:
------------------------- -------------------------
Title: Title:
-------------------------------- --------------------------------
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
MANUFACTURERS BANK
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
51
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered as of the date first above written.
XXXXXX-XXXXXX, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By By
------------------------------------ ------------------------------------
Name Printed: Name Printed:
------------------------- -------------------------
Title: Title:
-------------------------------- --------------------------------
TONE BROTHERS, INC., By
as Sublessee ------------------------------------
Name Printed:
By /s/ Xxxxx X. Xxxxxx -------------------------
------------------------------------ Title:
Name Printed: XXXXX X. XXXXXX --------------------------------
-------------------------
Title: V. P. FINANCE
--------------------------------
LESSORS:
PITNEY XXXXX CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By By
------------------------------------ ------------------------------------
Name Printed: Name Printed:
------------------------- -------------------------
Title: Title:
-------------------------------- --------------------------------
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
MANUFACTURERS BANK
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
52
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered as of the date first above written.
XXXXXX-XXXXXX, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By By /s/ Xxxxxx X. Xxxxxxx
------------------------------------ ------------------------------------
Name Printed: Name Printed: Xxxxxx X. Xxxxxxx
------------------------- -------------------------
Title: Title: Assistant Vice President
-------------------------------- --------------------------------
TONE BROTHERS, INC., By /s/ Xxxxxxxxx Xxxxxxx
as Sublessee ------------------------------------
Name Printed: Xxxxxxxxx Xxxxxxx
By -------------------------
------------------------------------ Title: Assistant Vice President
Name Printed: --------------------------------
-------------------------
Title:
--------------------------------
LESSORS:
PITNEY XXXXX CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By By /s/ Xxxxxxxxx Xxxxxxx
------------------------------------ ------------------------------------
Name Printed: Name Printed: Xxxxxxxxx Xxxxxxx
------------------------- -------------------------
Title: Title: Assistant Vice President
-------------------------------- --------------------------------
By /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
-------------------------
Title: Assistant Vice President
--------------------------------
MANUFACTURERS BANK
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
53
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered as of the date first above written.
XXXXXX-XXXXXX, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By By
------------------------------------ ------------------------------------
Name Printed: Name Printed:
------------------------- -------------------------
Title: Title:
-------------------------------- --------------------------------
TONE BROTHERS, INC., By
as Sublessee ------------------------------------
Name Printed:
By -------------------------
------------------------------------ Title:
Name Printed: --------------------------------
-------------------------
Title:
--------------------------------
LESSORS:
PITNEY XXXXX CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By /s/ Xxxxxxx X. Xxxxx By
------------------------------------ ------------------------------------
Name Printed: Xxxxxxx X. Xxxxx Name Printed:
------------------------- -------------------------
Title: Region Credit Manager Title:
-------------------------------- --------------------------------
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
MANUFACTURERS BANK
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
54
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered as of the date first above written.
XXXXXX-XXXXXX, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By By
------------------------------------ ------------------------------------
Name Printed: Name Printed:
------------------------- -------------------------
Title: Title:
-------------------------------- --------------------------------
TONE BROTHERS, INC., By
as Sublessee ------------------------------------
Name Printed:
By -------------------------
------------------------------------ Title:
Name Printed: --------------------------------
-------------------------
Title:
--------------------------------
LESSORS:
PITNEY XXXXX CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By By
------------------------------------ ------------------------------------
Name Printed: Name Printed:
------------------------- -------------------------
Title: Title:
-------------------------------- --------------------------------
By
------------------------------------
Name Printed:
-------------------------
Title:
--------------------------------
MANUFACTURERS BANK
By /s/ Xxxx Xxxxxx
------------------------------------
Name Printed: XXXX XXXXXX
-------------------------
Title: VICE PRESIDENT
--------------------------------
55
SCHEDULE I
TO
PARTICIPATION AGREEMENT
COMMITMENTS OF LESSOR
=====================================================================================================================
Initial Commitment Remaining After Funding
Lessors Delivery Date Initial Delivery Date Commitments
=====================================================================================================================
4/29/94
---------------------------------------------------------------------------------------------------------------------
1. BA Leasing & Capital Corporation $2,700,982.13 $10,000,000 44.44%
Four Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Bank of America NT & SA
San Francisco Main Branch
San Francisco, CA
ABA# 121 000 358
Accounts 06568-57503
Payee: BA Leasing & Capital
Corporation
Notify: Xxxxxxx Xxxxxx (000)000-0000
---------------------------------------------------------------------------------------------------------------------
2. Pitney Xxxxx Credit Corporation $2,025,736.72 $ 7,500,000 33.33%
Mellon Bank, N.A.
ABA# 043 000 261
Account# 092-0931
Notify: Xxxx Xxxxx (000)000-0000
---------------------------------------------------------------------------------------------------------------------
3. Manufacturers Bank $1,350,491.15 $ 5,000,000 22.22%
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
ABA# 000000000
Notify: Xxxxx Xxxxxx or
Xxxxx Xxxxxxxxx
=====================================================================================================================
TOTAL: $6,077,210.00 $22,500,000 100.00%
=====================================================================================================================
SI-1
SCHEDULE II
TO
PARTICIPATION AGREEMENT
DESCRIPTION OF EQUIPMENT ACQUIRED FROM LESSEE TO BE
DELIVERED ON THE INITIAL DELIVERY DATE
SII-1
SCHEDULE II
to
PARTICIPATION AGREEMENT
Functional Purchase
Unit # Equipment Description Price
---------- --------------------- --------
1 Packaging Line #1 (5 lb.) $ 132,533.00
2 Packaging Line #3 [Ankeny #11] (1 lb.) $ 253,500.00
3 Packaging Line #4 [Ankeny #8] (2 lb.) $ 239,731.00
4 Packaging Line #5 [Ankeny #10] (Hand Feed) $ 33,600.00
0 Xxxxxxxxx Xxxx #0 (4 & 8 oz.) $ 131,600.00
0 Xxxxxxxxx Xxxx #0 (1 lb.) $ 288,333.00
0 Xxxxxxxxx Xxxx #0 (1 oz. Tube) $ 177,000.00
0 Xxxxxxxxx Xxxx #0 (1 oz. Tube) $ 179,000.00
9 Pkgg Line #10 [A#12] (O.M. Bag Fill) $ 205,233.00
00 Xxxxxxxxx Xxxx #00 (Xx. Xxxxxx/Jollytime) $ 81,200.00
00 Xxxxxxxxx Xxxx #00 (1 lb. Kraft/Rykoff) $ 204,307.00
12 Extract Food Service Packaging Line $ 100,200.00
13 Extract Retail Packaging Line $ 96,367.00
00 Xxxxxxxxx Xxxx #0 [Future] (4 & 8 lb.) $ 102,667.00
15 Blending Equipment $ 3,741,314.00
16 Production & Distribution Support $ 1,612,982.00
17 Office & Building Support $ 3,678,333.00
18 Oil Production $ 190,680.00
19 Margarine Production $ 1,052,750.00
20 Receiving/Distribution $ 806,830.00
21 Injection Molding $ 359,850.00
22 Blow Molding $ 789,420.00
23 Straw $ 441,660.00
24 Mayonaisse Production $ 363,360.00
25 Xxxx Line/Dry Mix $ 269,050.00
26 Repro Line $ 609,820.00
27 Plastics $ 281,470.00
--------------
Total for All Functional Units $16,422,790.00
==============
SCHEDULE III
TO
PARTICIPATION AGREEMENT
DESCRIPTION OF ELIGIBLE EQUIPMENT TO BE
DELIVERED ON THE SUBSEQUENT DELIVERY DATES
SIII-1
SCHEDULE III
to
PARTICIPATION AGREEMENT
A.
Functional Purchase
Unit # Equipment Description Price
---------- --------------------- --------
28 Packaging Line Equipment $590,000.00
29 Production & Distribution Support $870,000.00
30 Office & Building Support $143,000.00
31 Portland Location $500,550.00
32 San Francisco Location $119,970.00
B. The Equipment described in this part B has not been appropriately
designated as Functional Units, and each Lessor shall have the right to
reject any item of Equipment which otherwise complies with the general
categories set forth below, in which case Lessee shall have the right to
propose in lieu thereof other Equipment (consisting solely of Functional
Units) by providing an amended Delivery Date Notice, and the originally
proposed Delivery Date shall not be delayed as a result of such amendment.
Material handling equipment, pallet racks and The aggregate price of
office furniture at Lessee's La Mirada, CA all equipment delivered
distribution center, and pursuant to this part B
Manufacturing and processing equipment located shall not exceed
at Sublessee's Ankeny, Iowa facility $ 3,853,690.00
SCHEDULE IV
TO
PARTICIPATION AGREEMENT
DISCLOSURE SCHEDULE
None.
SIV-1
SCHEDULE X
TO
PARTICIPATION AGREEMENT
DEFINITIONS
The following terms (or other terms used or defined in any Operative
Agreement which have meanings substantially similar or equivalent to the
meanings assigned to such terms) shall have the following meanings for all
purposes, and such meanings shall be equally applicable both to the singular and
plural forms of the terms defined. Any agreement, document or instrument defined
or referred to in this Schedule X shall include each amendment, modification or
supplement thereto including each waiver and consent that may (pursuant to the
Operative Agreements) be effective from time to time, except as otherwise
expressly indicated. The definition of any person herein shall include its
successors and permitted assigns. Reference to schedules and exhibits in this
Schedule X shall mean Schedules and Exhibits attached to the Participation
Agreement, except as otherwise indicated.
"Accrued Rent" shall mean, as of any date of determination, the aggregate
Accrued Supplement Rent under all of the Lease Supplements as of such date.
"Accrued Supplement Rent" shall mean, with respect to any Lease
Supplement, the interest that has accrued on the Functional Unit Balances
covered by such Lease Supplement at the applicable Interest Rate to the date of
determination.
"Actual Knowledge" with respect to any Person shall mean the actual
knowledge of a Responsible Officer of such Person and shall include receipt of a
notice of a fact by any such Person.
"Adjusted Appraised Value" shall mean, with respect to any Functional Unit
as of any date of determination, the Appraised Value of such Functional Unit,
adjusted on the basis of an assumed annual inflation rate of two percent (2%),
as set forth on Schedule III to the Lease Supplement governing such Functional
Unit.
"Affiliate(s)" of any Person shall mean any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such Person. No Person shall be considered an
Affiliate of the Agent unless such Person directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common
SX-1
control with, the Agent solely in its capacity as agent under the Lease.
"Agent" shall have the meaning assigned to such term in the preamble of
the Lease.
"Agent's Corporate Office" shall mean the principal corporate office of
the Agent, which office is, on the date the Participation Agreement is executed
by all parties thereto, located at the address for the Agent set forth in
Section 11.4 of the Participation Agreement.
"Aggregate Make-Whole Premium" shall mean, as of any date of
determination, the sum of the Make-Whole Premiums then payable with respect to
each Lease Supplement as determined pursuant to clause (B) of the definition of
"Make-Whole Premium" set forth in this Schedule X.
"Allocable Rent" shall mean, for any period with respect to any Functional
Unit as of any date of determination, the sum of the portions of the principal
component of each payment of Rent required to reduce the Functional Unit Balance
of such Functional Unit to the amount specified in Schedule IV of the applicable
Lease Supplement as of each Payment Date, plus interest that would accrue during
the relevant period on such principal amount at the Interest Rate.
"alter" shall have the meaning assigned to such term in Section 5.5(a) of
the Lease.
"Applicable Percentage" shall mean, with respect to each Lease Supplement
as of the end of the Initial Term and each Renewal Term, the percentage set
forth opposite each such date in Schedule II to such Lease Supplement.
"Applicable Percentage Amount" shall mean the sum of the products obtained
by multiplying the Purchase Price of each Functional Unit subject to the Sale
Option by the Applicable Percentage set forth in Schedule II to the Lease
Supplement governing such Functional Unit.
"Appraisal(s)" shall mean each of the appraisals of the Equipment from the
Appraiser received pursuant to a Delivery Date Closing.
"Appraised Value" shall mean, with respect to any Functional Unit as of
any date of determination, the Fair Market Value of such Functional Unit as set
forth on the Appraisal therefor.
SX-2
"Appraiser" shall mean the American Appraisal Company, The Manufacturers'
Appraisal Company or such other Person as is acceptable to the Required Lessors.
"Assumed Interest Rate" shall mean, as of the date of any Funding, the
Interest Rate that would have been applicable under a Lease Supplement in the
event that a Delivery Date had occurred on such date.
"Authority" shall mean any: (a) Federal, state, local or (if the Equipment
or any component thereof has been moved outside of the United States) foreign,
tribunal, legislative body, governmental subdivision, administrative agency or
other governmental authority; or (b) arbitrator or panel of arbitrators, in the
case of each of clause (a) and (b) having or exercising jurisdiction over the
Lessee, the Sublessee, the Agent, or the Equipment (or any component thereof).
"Base Commencement Date" shall mean, with respect to each Lease
Supplement, the date immediately succeeding the last day of the Interim Period
of such Lease Supplement.
"Basic Rent" shall mean, (a) with respect to each Lease Supplement, all
installments of Rent due and payable by Lessee on each Payment Date during the
period commencing on the Base Commencement Date and ending on April 29, 1995, as
set forth in Schedule II to such Lease Supplement, and (b) with respect to the
Lease, the aggregate of the payments described in the preceding clause (a) for
all Lease Supplements.
"Xxxx of Sale" shall mean a xxxx of sale substantially in the form of
Exhibit E to the Participation Agreement to be delivered to the Lessors pursuant
to Article II or Section 4.3 of the Participation Agreement, granting to each
Lessor an undivided interest in the Equipment described in such Xxxx of Sale
equal to each Lessor's Lease Percentage.
"Business Day" shall mean any day on which Federal and state chartered
banks in San Francisco, California are open for commercial banking business.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under GAAP, are or will be required to be capitalized on the
books of such Person or any Subsidiary, in each case taken at the amount thereof
accounted for as indebtedness (net of interest expense) in accordance with GAAP
but excluding industrial revenue bonds and pollution control financing.
"Casualty" shall mean any of the following events in respect of each
Functional Unit: (a) the total loss of a Functional
SX-3
Unit, the total loss of use thereof due to theft, disappearance, destruction,
damage beyond repair or rendition of a Functional Unit permanently unfit for
normal use for any reason whatsoever; (b) any damage to a Functional Unit which
results in an insurance settlement with respect to the Functional Unit on the
basis of a total loss; (c) the permanent condemnation, confiscation or seizure
of, or requisition of title to or use of, a Functional Unit; or (d) as a result
of any rule, regulation, order or other action by any Authority, the use of a
Functional Unit in the normal course of the business of Lessee shall have been
prohibited, directly or indirectly, for a period of 180 consecutive days, unless
Lessee, prior to the expiration of such 180-day period, shall have undertaken
and shall be diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such Functional Unit by Lessee or, in any
event, if use of such Functional Unit shall have been prohibited, directly or
indirectly, for a period of twelve consecutive months.
"Casualty Notice" shall have the meaning assigned to such term in Section
6.1 of the Lease.
"Casualty Proceeds" shall have the meaning assigned to such term in
Section 6.1(b) of the Lease.
"Casualty Settlement Date" shall have the meaning assigned to such term in
Section 6.1(a) of the Lease.
"Charges" shall mean freight, installation and applicable sales, use or
similar taxes imposed upon an item of Eligible Equipment described at Schedule
III to the Participation Agreement.
"Closing" shall mean the completion of those transactions described in
Section 2.1 of the Participation Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean
(a) the Equipment;
(b) the Intellectual Property Collateral;
(c) the Sublease and all subleases entered into in connection with
the Equipment as permitted pursuant to Section 5.2 of the Lease, together
with all security interests granted pursuant to the Sublease and all such
Subleases;
SX-4
(d) all contracts necessary to purchase, operate and maintain the
Equipment, including without limitation the Purchase Agreements;
(e) the Deposit Account;
(f) any rights to a rebate, offset or other assignment under a
purchase order, invoice or purchase agreement with any manufacturer of any
item of Equipment;
(g) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing; and
(h) all products, accessions, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a), (b), (d), (e), (f) and (g) above and, to the extent not
otherwise included, all payments under insurance (whether or not Lessor is
the loss payee thereof), or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
"Commitment(s)" for each Lessor shall mean the aggregate amount set forth
in Schedule I to the Participation Agreement across from the name of such
Lessor.
"Commitment Percentage" shall mean, with respect to each Lessor, the
quotient (expressed as a percentage) of such Lessor's Commitment divided by the
Total Commitment.
"Computer Software Collateral" shall mean:
(a) all software programs (including both source code, object code
and all related applications and data files), whether now owned, licensed
or leased or hereafter acquired by Lessee or Sublessee, designed for use
on any computers and electronic data processing hardware constituting part
of the Equipment and necessary for the operation and maintenance of the
Equipment; provided that with respect to any licensed or leased software
program the foregoing shall be included in "Computer Software Collateral"
only to the extent that a grant of a security interest is not prohibited
by the terms of the license or lease;
(b) all firmware associated therewith;
SX-5
(c) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) and (b); and
(d) all rights with respect to all of the foregoing, including,
without limitation, any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and indemnifications
and any substitutions, replacements, additions or model conversions of any
of the foregoing.
"Consolidated Net Earnings" of any Person shall mean the consolidated
gross revenues of such Person and its Subsidiaries less all operating and
non-operating expenses of such Person and its Subsidiaries including all charges
of a proper character (including current and deferred taxes on income, provision
for taxes on unremitted foreign earnings which are included in gross revenues,
and current additions to reserves), but not including in gross revenues any
gains (net of expenses and taxes applicable thereto) in excess of losses
resulting from the sale, conversion or other disposition of capital assets
(i.e., assets other than current assets) when such gains exceed Two Hundred
Fifty thousand Dollars ($250,000) in the aggregate, any gains resulting from the
write-up of assets, any equity of such Person or any Subsidiary in the
unremitted earnings of any corporation which is not a Subsidiary, any earnings
of any other Person acquired by such Person or any Subsidiary through purchase,
merger or consolidation or otherwise for the period prior to the date of
acquisition, or any deferred credit representing the excess of equity in any
Subsidiary at the date of acquisition over the cost of the investment in such
Subsidiary.
"Consolidated Net Worth" of any Person shall mean the amount by which the
total consolidated assets (excluding goodwill, trade names, trademarks, patents,
treasury stock, organization expense and other intangible assets) of such Person
and its Subsidiaries exceeds the total consolidated liabilities (including
deferred taxes and minority interests) of such Person and its Subsidiaries, in
each case determined in accordance with GAAP.
"Credit Agreement" shall mean the Credit Agreement dated as of October 25,
1993, between Xxxxxx-Xxxxxx, Inc. and Bank of America National Trust and Savings
Association ("Bank of America"), as such agreement is amended, modified,
restated or refinanced from time to time.
"Delivery Date" shall mean each of the actual dates on which the
transactions contemplated in Sections 2.1 and 3.1 of the Participation Agreement
are completed.
SX-6
"Delivery Date Closing" shall mean, with respect to a Delivery Date, the
completion of those transactions described in Article II of the Participation
Agreement.
"Delivery Date Notice" shall have the meaning assigned to such term at
Section 2.3.
"Deposit Account" shall have the meaning assigned to such term in Section
6.1(b) of the Lease.
"Effective Date" shall have the meaning assigned to such term in the
preamble to the Lease.
"Eligible Equipment" shall mean items of Equipment which qualify to be
purchased by Agent, on behalf of the Lessors under the Participation Agreement
on the Initial Delivery Date or any Subsequent Delivery Date, as described in
Schedule II or Schedule III to the Participation Agreement.
"Environmental Laws" shall mean all applicable Federal, state or local
statutes, laws, ordinances, codes, rules, regulations and orders (including
consent decrees) relating to public health and safety and protection of the
environment.
"Environmental Reports" shall mean the environmental reports or audits
styled as follows:
(a) Report for Phase I and II Environmental Audits of Xxxxxx Xxxxxx
Property, Ankeny (Polk County), Iowa. SENECA Project No. 8626.
(b) Phase I Environmental Assessment, Xxxxxxxx Warehouse Company
4121, 4141, and 0000 XxxXxxxxx Xxxxxx, Xxx Xxxxxx, Xxxx, prepared by
Environmental Science & Engineering, Inc. Project Number 593-3082.
(c) Remedial Action Plan for Soil and Groundwater and the Unleaded
Gasoline Tank Area, Previous UST Area, and PSC Car Wash Area, Former Ford
Predelivery Service Center, La Mirada, California, August 7, 1992,
prepared by Xxxxxxxx & Xxxxxx, Inc.
(d) Work Plan for Remediation System Modification, Former Ford
Pre-Delivery Service Center, La Mirada, California, November 12, 1993,
CA0209.001, prepared by Xxxxxxxx & Xxxxxx, Inc.
"Equipment" shall mean those items of equipment listed on Schedule I to
the Lease purchased by Lessors on a Delivery Date for which a Lease Supplement
has been delivered to each Lessor by
SX-7
Lessee, all Replacement Units, Replacement Parts and Mandatory Parts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning assigned to such term in Section
8.1. of the Lease.
"Expiration Date" shall mean the date upon which the Credit Agreement is
repaid in its entirety or otherwise expires, or when Bank of America (or any
successor to Bank of America by operation of law) ceases to be a party thereto.
"Fair Market Value" shall mean, with respect to any item of Equipment as
of any date, the price which a purchaser would pay to purchase such Equipment in
an arm's-length transaction between a buyer and seller, neither of them being
under any compulsion to buy or sell. In making any determination of Fair Market
Value the appraiser may assume such Equipment has been maintained in accordance
with the requirements of the Lease and that such Equipment is in the condition
in which it is required to be hereunder as of the date for which such
determination is made. Appraiser shall use such reasonable methods of appraisal
as are chosen by the Agent upon instructions from the Required Lessors.
"Fixed Charge Coverage Ratio" of any Person shall mean, for any period,
the ratio derived from dividing (a) the sum of (i) Consolidated Net Earnings
(ii) income taxes, (iii) Rental Expense and (iv) interest on Funded Debt to (b)
Rental Expense and interest on Funded Debt. For purposes of this definition,
amounts attributable to accreted or other interest or accreted or other value in
respect of so-called "zero coupon" subordinated Funded Debt of such Person that
is convertible into shares of capital stock of such Person shall be included as
interest on such subordinated Funded Debt only to the extent of the amount paid
in cash during such period.
"Functional Unit(s)" shall mean each group of items of Equipment
classified as a Functional Unit on Schedule Y to the Participation Agreement or
on Schedule I to a Lease Supplement. Each Functional Unit has an assigned number
on Schedule Y and on Schedule I to the Lease Supplement governing such
Functional Unit, and all references to the assigned number of any Functional
Unit shall be deemed to refer to such Functional Unit and to all items of
Equipment comprising such Functional Unit.
"Functional Unit Balance" shall mean, with respect to any Functional Unit
as of any date of determination, the amount set forth on Schedule IV to the
applicable Lease Supplement opposite
SX-8
the most recent Payment Date through which all installments of Rent have been
paid.
"Funded Debt" shall mean and includes, without duplication, in each case
as to any Person and its Subsidiaries, the following (all as determined in
accordance with GAAP):
(i) any obligation which under GAAP is shown on the balance sheet as
a liability (including Capitalized Lease Obligations, industrial revenue
bonds and pollution control bond financing, but excluding reserves for
deferred income taxes and other reserves to the extent that such reserves
do not constitute an obligation);
(ii) indebtedness which is secured by any Lien on property owned by
such Person or any subsidiary, whether or not the indebtedness secured
thereby shall have been assumed by such Person or such Subsidiary;
(iii) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of business)
and other contingent liabilities (whether direct or indirect) in
connection with the obligations, stock or dividends of any Person;
(iv) obligations under any contract providing for the making of
loans, advances or capital contributions to any Person, or for the
purchase of any property from any Person, in each case in order to enable
such Person primarily to maintain working capital, net worth or any other
balance sheet condition or to pay debts, dividends or expenses;
(v) obligations under any contract for the purchase of materials,
supplies or other property or services if such contract (or any related
document) requires that payment for such materials, supplies or other
property or services shall be made regardless of whether or not delivery
of such materials, supplies or other property or services is ever made or
tendered;
(vi) obligations under any contract to rent (as lessee) any real or
personal property if such contract (or any related document) provides that
the obligation to make payments thereunder is absolute and unconditional
under conditions not customarily found in commercial leases then in
general use or requires that the lessee purchase or otherwise acquire
securities or obligations of the lessor; and
(vii) obligations under any contract for the sale or use of
materials, supplies or other property or services if such
SX-9
contract (or any related document) requires that payment for such
materials, supplies or other property or services, or the use thereof,
shall be subordinated to any indebtedness (of the purchaser or user of
such materials, supplies or other property or the Person entitled to the
benefit of such services) owed or to be owed to any Person;
provided, however, that Funded Debt shall not include noncompete agreements of
the nature and type heretofore entered into by such Person in connection with
its purchase of a business through the purchase of its stock or assets.
"Funding" shall have the meaning assigned to that term in Section 2.1 of
the Participation Agreement.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time, applied on a consistent basis
both as to classification of items and amounts.
"Impositions" shall mean all fees (including, but not limited to, license,
documentation, recording or registration fees) and taxes (including but not
limited to all income, sales, use, lease, sublease, gross receipts, personal
property, occupational, value added or other taxes, levies, imposts, duties,
assessments, charges or withholdings of any nature whatsoever), together with
any penalties, fines or additions to tax or interest thereon.
"Income Tax Indemnity" shall have the meaning assigned to such term in
Section 8.1 of the Participation Agreement.
"Indemnitee(s)" shall mean the Agent in both its individual and agent
capacity, the Lessors, any Affiliate of any of them and any assign, officer,
director, employee, attorney or agent of any of them.
"Indenture" shall mean that certain Indenture dated as of November 1,
1993, between Lessee and Norwest Bank Minnesota, N.A., as trustee.
"Initial Delivery Date" shall mean the first Delivery Date completed
pursuant to A Article II of the Participation Agreement.
"Initial Delivery Date Notice" shall mean the Delivery Date Notice
relating to the Initial Delivery Date.
"Initial Term" shall have the meaning assigned to such term in Section 2.1
of the Lease.
SX-10
"Insolvency Default" shall have the meaning assigned to such term in
Section 8.2(d) of the Lease.
"Intellectual Property Collateral" shall mean all Computer Software
Collateral, all copyrights, whether statutory or common law, registered or
unregistered, and all applications therefore, all trademarks and trade names,
all common law and statutory trade secrets and all other confidential or
proprietary information, but only to the extent in each case necessary to
operate and maintain the Equipment, and all know-how (which know-how is used in
connection with the Equipment).
"Interest Rate" shall mean with respect to each Lease Supplement a fixed
rate of interest to be established by Agent two days prior to each Delivery Date
pursuant to Section 3.1 of the Participation Agreement in an amount equal to the
sum of (i) the rate of interest of United Stated Treasury securities having a
weighted average life equal to a period commencing on the Delivery Date
applicable to the Equipment described in such Lease Supplement and continuing to
and ending on April 29, 2000 plus (ii) 316 basis points.
"Interim Period" shall mean as to each Lease Supplement a period
commencing on the Delivery Date applicable to the Equipment described in such
Lease Supplement and continuing to and ending on the last day of the 90-day
period ending on April 30, July 30, October 30 or January 30 (as the case may
be) in which such Delivery Date occurs.
"Interim Rent" shall mean all payments due and payable by Lessee under
each Lease Supplement on the last day of the applicable Interim Period. The
Interim Rent payable under each Lease Supplement is set forth on Schedule II to
such Lease Supplement.
"IRS" shall mean the Internal Revenue Service.
"Lease" shall mean that certain Lease Intended as Security, dated as of
April 29, 1994, by and between the Agent, the Lessors and Lessee, substantially
in the form of Exhibit A.
"Lease Balance" shall mean, as of any determination date, the aggregate of
all Supplement Balances due under all Lease Supplements.
"Lease Default" shall mean an Event of Default.
"Lease Percentage" shall mean, with respect to each Lessor, the quotient
(expressed as a percentage) of (i) the aggregate amount funded by such Lessor on
all Delivery Dates, divided by
SX-11
(ii) the aggregate amount funded by all Lessors on all Delivery Dates as of the
date such determination is made.
"Lease Supplement" shall have the meaning attributed to such term at
Section 3.1 of the Participation Agreement.
"Lease Term" shall mean the Initial Term and all of the Renewal Terms.
"Lessee" shall mean Xxxxxx-Xxxxxx, Inc., a Delaware corporation.
"Lessee Purchase Option" shall have the meaning assigned to such term in
Section 11.1(b) of the Lease.
"Lessors" shall mean each of the Persons identified as a Lessor in the
preamble to the Lease and those persons to whom the interests in the Lease and
the Collateral shall have been transferred or assigned from time to time in
accordance with the provisions of the Lease and the Participation Agreement.
"Lessor Commitment" shall mean, with respect to each Lessor, the amount
set forth opposite such Lessor's name on Schedule I of the Participation
Agreement.
"Lessor Liens" shall mean Liens or other conveyances resulting from any
act of or claim against the Agent in its individual capacity (or any Person
claiming by, through or under the Agent in its individual capacity) or any
Lessor, in each case arising out of any event or condition not related to the
exercise of such Person's rights or the performance of its duties expressly
provided under any Operative Agreement.
"Lien" shall mean: (a) any interest in property securing an obligation
owed to, or claimed by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and including,
without limitation, any judgment lien, security interest, mortgage, encumbrance,
pledge, conditional sale, right of distraint or trust receipt or a lease,
consignment or bailment for security purposes; or (b) any reservation,
exception, encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or defect, cloud on title or
encumbrance affecting property.
"Make-Whole Premium" shall mean, as of any date of determination, in
connection with any purchase or sale of Functional Units requiring payment of a
Make-Whole Premium pursuant to the Operative Agreements (an "Early Payment"),
(A) with respect to each Functional Unit, the amount determined by the
Lessors to be equal to the greater of:
SX-12
(i) the excess, if any, of
(a) the present value (determined using a discount rate equal
to the Reference Treasury Constant Yield plus 110 basis points) of
the sum of (1) the amount of Allocable Rent (exclusive of Rent
accrued to the date of payment) that would have been payable on each
Payment Date with respect to the period commencing on the date on
which such Early Payment is required to be paid and ending on the
last day of fifth Renewal Term if such Early Payment had not been
made (and assuming the exercise of all Renewal Options), and (2) the
amount of the Functional Unit Balance at the end of the fifth
Renewal Term if such Early Payment had not been made,
over
(b) the Functional Unit Balance being so prepaid; or
(ii) one percent (1%) of the Functional Unit Balance at such payment date,
prior to giving effect to such prepayment; and
(B) with respect to each Lease Supplement, the sum of the amounts
determined by the Lessors pursuant to the foregoing clause (A) for each
Functional Unit governed by such Lease Supplement.
"Mandatory Parts" shall have the meaning assigned to such term in Section
5.5 of the Lease.
"Manufacturers" shall mean those manufacturers or vendors of Equipment
listed in Schedule III to the Participation Agreement or Schedule I to the
Delivery Date Notice.
"Merger" shall mean a transaction described in Section 6.1(a) (ii) (A) of
the Participation Agreement.
"Multiemployer Plan" shall have the meaning assigned to the term
"multiemployer plan" in Section 3(37) of ERISA.
"Notice of Partial Casualty" shall mean the notice given by Lessee to
Lessor in accordance with Section 6.2 of the Lease and shall include: (a) a
description of the item of Equipment suffering the Partial Casualty, (b) the
Purchase Price of such item of Equipment; and (c): (x) a description of the
remedial steps that Lessee will undertake (or cause to be undertaken) and the
time-frame in which such steps will be accomplished to repair and rebuild such
item of Equipment; or (y) if the item of
SX-13
Equipment is to be replaced, a description of the Replacement Part and its
Purchase Price.
"Officer's Certificate" shall mean a certificate executed on behalf of any
entity by its President, one of its Vice Presidents, its Chief Financial
Officer, its Treasurer, its Assistant Treasurer or its Controller.
"Operative Agreement(s)" shall mean the Participation Agreement, the
Lease, the Sublease, the Bills of Sale and the Lease Supplements executed on
each Delivery Date.
"Outstanding Investment" of any Lessor as of any date of determination
shall mean the aggregate amount funded by such Lessor pursuant to Article II of
the Participation Agreement, reduced by the principal amount of all Basic Rent
and all Renewal Rent paid to such Lessor and all Reduction Amounts paid to such
Lessor.
"Partial Casualty" shall mean any loss, damage, destruction, taking by
eminent domain, loss of use or theft of any portion of a Functional Unit which
does not constitute a Casualty.
"Partial Casualty Proceeds" shall mean all payments from any Authority or
other Person, and all proceeds of any insurance, which are received as a result
of a Partial Casualty.
"Participant(s)" shall mean any or all of the parties to the Participation
Agreement including, without limitation, the Agent in both its individual and
agent capacity, and the successors and assigns thereof.
"Participation Agreement" shall mean the Participation Agreement, dated as
of April 29, 1994, entered into among the Lessee, the Sublessee, the Lessors and
the Agent.
"Part(s)" shall mean all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature that may from
time to time be incorporated or installed in or attached to any item of
Equipment.
"Payment Date" shall mean each April 30, July 30, October 30 and January
30 (or if any such day is not a Business Day, then the first day thereafter
which is a Business Day).
"Payment Default" shall have the meaning assigned to such term in Section
8.2(d) of the Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
SX-14
"Pension Plan" shall mean, with respect to any Person, a "pension plan" as
such term is defined in section 3(2) of ERISA which is subject to Title IV of
ERISA and to which such Person may have any liability or contingent liability,
including, but not limited to, liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason or being deemed to be a contributing sponsor
under section 4069 of ERISA.
"Permitted Contest" shall mean actions taken by a Person to contest in
good faith, by appropriate proceedings initiated timely and diligently
prosecuted, the legality, validity or applicability to the Equipment or any
interest therein of any Person of: (a) any law, regulation, rule, judgment,
order, or other legal provision or judicial or administrative requirements; (b)
any term or condition of, or any revocation or amendment of, or other proceeding
relating to, any authorization or other consent, approval or other action by any
Authority; or (c) any Lien; provided that the initiation and prosecution of such
contest would not: (i) result in, or materially increase the risk of, the
imposition of any criminal liability on any Indemnitee; (ii) materially and
adversely affect the security interests created by the Lease or the right, title
or interest of the Agent or any Lessor in or to any of the Equipment or the
right of Agent to receive payment of Rent or the Lease Balance or any interest
therein; or (iii) materially and adversely affect the fair market value, utility
or remaining useful life of the Equipment or any interest therein or the
continued economic operation thereof; and provided further that in any event
adequate reserves in accordance with GAAP are maintained against any adverse
determination of such contest.
"Permitted Investments" shall mean (a) direct obligations of, or
obligations guaranteed by, the United States or any agency thereof (or any
mutual fund investing solely in any of the foregoing), (b) commercial paper
issued in the United States by any corporation (other than Lessee or its
subsidiaries or its Affiliates) and rated at least A-1 (by Standard & Poor's
Corporation) or P-1 (by Xxxxx'x Investors Service, Inc.), (c) certificates of
deposit issued by, or drafts accepted by, any bank or trust company the
short-term obligations of which (or of such Person's corporate parent) are rated
at least A-I (by Standard & Poor's Corporation) or P-1 (by Xxxxx'x Investors
Service, Inc.) and (d) any other negotiable instrument guaranteed or endorsed
with full recourse by any such bank or trust company; provided that all such
obligations, commercial paper, certificates of deposit, drafts and instruments
are denominated in Dollars and the obligor thereon is located in the United
States, each such obligation, certificate of deposit, draft and instrument
matures within thirty days after the date of
SX-15
investment and each item of such commercial paper matures within thirty days
after the date of investment.
"Permitted Lessor Liens" shall mean Lessor Liens: (a) for Taxes of the
Agent or a Lessor either not yet due or being challenged by a Permitted Contest;
(b) arising out of judgments or awards against the Agent or a Lessor with
respect to which at the time an appeal or proceeding for review is being
prosecuted by a Permitted Contest; and (c) arising out of Liens arising in the
ordinary course of business of the Agent or a Lessor for amounts the payment of
which is either not delinquent or is being contested by a Permitted Contest.
"Permitted Liens" shall mean: (i) any rights in favor of Lessors under the
Operative Agreements and any rights of any persons entitled to use of the
Collateral in accordance with Section 5.2 of the Lease; (ii) any Lien,
(including, without limitation, Liens of landlords, carriers, warehousemen,
mechanics or materialmen) in favor of any Person securing payment of the price
of goods or services provided in the ordinary course of business for amounts the
payment of which is not overdue or is being contested in good faith by
appropriate proceedings promptly initiated and diligently prosecuted, so long as
such proceedings do not involve any reasonable danger of sale, forfeiture or
loss of all or any material part of the Collateral and do not materially
adversely affect any Lien created in favor of Lessor under the Lease; (iii) any
Permitted Lessor Lien or any Lien arising out of any breach by Lessor of its
obligations under the Operative Agreements; (iv) any Lien for current taxes,
assessments or other governmental charges which are not delinquent or the
validity of which is being contested by a Permitted Contest; (v) attachments,
judgments and other similar Liens arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured hereby are being contested in good faith and by
appropriate proceedings; (vi) reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, zoning
and land use restrictions and other similar title exceptions or encumbrances
affecting real property that were not incurred in connection with the incurrence
of indebtedness, so long as such Liens do not involve a reasonable danger of
sale, forfeiture or loss of all or any material portion of the Collateral and do
not materially adversely affect any Lien created in favor of Lessor under the
Lease; and (vii) any Lien incurred in the ordinary course of business to secure
performance of statutory obligations.
"Person" shall mean any individual, partnership, corporation, trust,
unincorporated association or joint venture, a government or any department or
agency thereof or any other legal entity.
SX-16
"Plan" shall mean an "employee benefit plan" as defined in section 3(3) of
ERISA.
"Prior Debt Agreements" shall mean, collectively, the Credit Agreement and
the Indenture; provided, however, that for purposes of Sections 6.1(a) (ii),
6.1(a) (iii), 6.1(a) (iv) (B), and 6.1(a) (iv) (C) (5) of the Participation
Agreement, the Credit Agreement, as included in the term "Prior Debt Agreements"
shall mean the Credit Agreement as in effect from time to time and, following
the Expiration Date, the Credit Agreement as in effect on the Expiration Date.
"Proceeds" shall have the meaning assigned to such term in Section 11.1(c)
(2) of the Lease.
"Purchase Agreements" shall mean all now and hereafter existing contracts,
invoices or purchase orders to acquire Equipment.
"Purchase Option Exercise Amount" shall mean, on the last day of the
Initial Term and each Renewal Term, the aggregate of all Supplement Purchase
Option Exercise Amounts under all Lease Supplements.
"Purchase Price" shall mean (i) for any item of Equipment described in
Schedule II of the Participation Agreement, the Fair Market Value of such
Equipment as determined by the Appraisal and (ii) for any item of Equipment
described in Schedule III of the Participation Agreement, the invoice price for
such item of Equipment plus any Charges fairly attributable thereto and not
otherwise included in the invoice price.
"Recourse Deficiency Amount" shall mean, with respect to the exercise of
the Sale Option, the difference between (i) the Purchase Option Exercise Amount
at the end of any Renewal Term in which such Sale Option was elected and (ii)
the product of (A) 21.5% and (B) the Appraised Value of the Functional Units
subject to the Sale Option as of the first day of the Renewal Term in which the
Sale Option was elected.
"Reduction Amounts" shall mean any amounts paid by Lessee to Agent for the
benefit of Lessors for the purchase of any Equipment pursuant to Section 6.1 of
the Lease. "Reduction Amounts" shall not include any Rent or any costs, expenses
or taxes to be paid by Lessee in connection with any such purchase, sale or
transfer.
"Reference Treasury Constant Yield" shall mean, relative to any payment,
the yield calculated with reference to the Statistical Release No. H.15 (519)
then most recently published by the Board of Governors of the Federal Reserve
System or any
SX-17
successor thereto three Business Days prior to the date of such prepayment as
the yield of a hypothetical U.S. Treasury security with a remaining term equal
to the weighted average remaining term to maturity (rounded to the nearest
month) corresponding to the remaining scheduled terms, including the five
Renewal Terms, of the Lease. If no maturity exactly corresponds to the weighted
average remaining term to maturity of the remaining term, including the five
Renewal Terms, of the Lease, yields for two published maturities most closely
corresponding to such weighted average shall be selected in the Statistical
Release and the yield shall be interpolated or extrapolated from such yields on
a straight line basis, rounding in each period to the nearest month.
"Related Person" shall mean, with respect to any Person, any trade or
business (whether or not incorporated) which, together with such person, is
under common control as described in Section 414 of the Code.
"Removable Part" shall have the meaning assigned to such term in Section
5.5(a) of the Lease.
"Renewal Option" shall have the meaning assigned to such term in Section
11.1(a) of the Lease.
"Renewal Rent" shall mean, with respect to the Lease, all payments due and
payable by Lessee under all Lease Supplements on each Payment Date occurring
during the applicable Renewal Term, as set forth on Schedule II to such Lease
Supplement.
"Renewal Term" shall have the meaning assigned to such term in Section 2.2
of the Lease.
"Rent" shall mean, with respect to either the Lease or any Lease
Supplement, Interim Rent, Basic Rent, and/or Renewal Rent, as the context may
require.
"Rental Expense" shall mean rental expense under any lease (other than a
lease for data processing or other office equipment used in the ordinary course
of business) having a term (including all renewal terms which are not at the
option of the lessee, whether or not exercised) extending more than three (3)
years from the date of its inception.
"Replaced Unit" shall have the meaning assigned to such term in Section
5.4(b) of the Lease.
"Replacement Notice" shall mean a notice provided by the Lessee pursuant
to Section 4.3 of the Participation Agreement.
SX-18
"Replacement Part" shall have the meaning assigned to such term in Section
5.4(a) of the Lease.
"Replacement Unit" shall have the meaning assigned to such term in Section
5.4(b) of the Lease.
"Reportable Event" shall mean a "reportable event" described in Section
4043(b) of ERISA and the regulations thereunder.
"Required Lessors" shall mean, with respect to any approval, action,
waiver, direction, or consent, Lessors whose Outstanding Investments aggregate
at least a majority of the Lease Balance as of such date of determination;
provided, however, for purposes of instructing the Agent to provide Lessee with
a notice of an Event of Default other than for a Payment Default, then Required
Lessors shall mean Outstanding Investments aggregating twenty-five percent (25%)
or more of the Lease Balance as of such date of determination.
"Responsible Officer" of any Person shall mean: (i) in the case of any
business corporation, the chairman of the board of directors of such corporation
if such chairman is an officer of such corporation, the president, any vice
president or any assistant vice president of such corporation, the secretary or
any assistant secretary of such corporation or the treasurer or any assistant
treasurer of such corporation; (ii) in the case of any partnership, a general
partner (if such general partner is an individual), or a Responsible Officer of
a corporate general partner, of such partnership or the general manager of such
partnership or any assistant general manager of such partnership; and (iii) in
the case of any commercial bank or trust company, the chairman or vice chairman
of the board of directors or trustees of such bank or trust company, the
chairman or vice chairman of the executive committee of the board of directors
or trustees of such bank or trust company, the president, any vice president,
the secretary, any assistant secretary, the treasurer, any assistant treasurer,
the cashier, any assistant cashier, any trust officer or any assistant trust
officer of such bank or trust company, the controller or any assistant
controller of such bank or trust company, any executive or senior or assistant
or second vice president of such bank or trust company or any other individual
who is employed by such bank or trust company and customarily performs functions
similar to those performed by any of the other officers of such bank or trust
company referred to herein.
"Sale Option" shall have the meaning assigned to such term in Section
11.1(c) (1) of the Lease.
"Sale Recourse Amount" shall have the meaning assigned to such term in
Section 11.1(c) (2) of the Lease.
SX-19
"Schedule X" shall mean this Schedule to the Participation Agreement.
"Seller" shall have the meaning assigned to such term in the Xxxx of Sale.
"Site(s)" shall mean all of the land described in Schedule I to Exhibit C
to the Delivery Date Notice and any other land on which Eligible Equipment is
affixed.
"Specified Portion" shall mean, with respect to any Lease Supplement as of
any date of determination, the Supplement Balance of such Lease Supplement at
the immediately preceding Payment Date minus the Applicable Percentage Amount of
such Lease Supplement at such Payment Date.
"Sublessee" shall mean Tone Brothers, Inc., an Iowa corporation.
"Subsequent Delivery Date" shall mean each of the dates scheduled for a
Delivery Date Closing pursuant to a Delivery Date Notice occurring following the
Initial Delivery Date.
"Subsequent Delivery Date Closing" shall mean the Subsequent Delivery Date
on which a transaction contemplated in Section 3.1 of the Participation
Agreement is scheduled to be completed.
"Subsequent Delivery Date Notice" shall mean a Delivery Date Notice
relating to a Subsequent Delivery Date.
"Subsidiary" shall mean any corporation, association, partnership, joint
venture or other business entity more than 50% (by number of votes) of the stock
of any class or classes (or equivalent interests) of which is at the time owned
by the Lessee or Sublessee or by one or more Subsidiaries of the Lessee or
Sublessee, if the holders of the stock of such class or classes (or equivalent
interests) (a) are ordinarily, in the absence of contingencies, entitled to vote
for the election of a majority of the directors (or Persons performing similar
functions) of such business entity, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) at the time entitled,
as such holders, to vote for the election of a majority of the directors (or
Persons performing similar functions) of such business entity, whether or not
the right so to vote exists by reason of a happening of a contingency.
"Substituted Item" shall have the meaning assigned to such term in Section
5.4(a) of the Lease.
SX-20
"Supplemental Rent" shall mean all amounts due and payable by the Lessee
under the Lease other than Interim Rent, Basic Rent and Renewal Rent.
"Supplement Balance" shall mean, with respect to any Lease Supplement as
of any date of determination, the aggregate Functional Unit Balances of all of
the Functional Units subject to such Lease Supplement.
"Supplement Purchase Option Exercise Amount" shall mean as to each Lease
Supplement, on the last day of the Initial Term and each Renewal Term, the
Functional Unit Balances of all Functional Units subject to the Lessee Purchase
Option, after taking into account any scheduled installment of Basic or Renewal
Rent payable pursuant to such Lease Supplement on or prior to such date.
"Termination Date" shall mean the date the Lease Term including any
Renewal Term, ends pursuant to (a) Article VIII of the Lease relating to
termination as a result of an Event of Default, (b) Article X of the Lease
relating to early termination, (c) Section 11.1 of the Lease relating to the
exercise of the Lessee Purchase Option or Sale Option, or (d) with respect to
the Functional Units subject to the Sublease, Section 6.1(a) (iv) of the
Participation Agreement as provided in such Section.
"Total Commitment" shall mean $22,500,000, as reduced from time to time by
a Funding pursuant to the Participation Agreement.
"Transaction Costs" shall mean
(i) the reasonable fees and expenses of Xxxxx, Xxxxx & Xxxxx and any
local counsel incurred in connection with the negotiation, execution and
delivery of the term sheet, the commitment letters, the Operative
Agreements, and the transactions contemplated thereby (including, without
limitation, on each Funding and Delivery Date);
(ii) the reasonable allocated internal counsel fees of BA Leasing &
Capital Corporation incurred in connection with the negotiation and
drafting of the confidential memorandum dated January 1994 and the
Operative Agreements;
(iii) the reasonable fees and expenses of the Appraiser,
environmental consultant and insurance consultant;
(iv) the fees, costs and expenses of the Agent;
SX-21
(v) all costs of searching and perfecting a first priority security
interest in the Equipment; and
(vi) the arrangement fee of BA Leasing and Capital Corporation.
"Transfer" shall mean a transaction described in Section 6.1(a) (ii) (B)
of the Participation Agreement.
"Unfunded Amount" shall have the meaning assigned to such term in Section
3.4 of the Participation Agreement.
"Unused Commitment" shall mean for each Lessor the aggregate amount of
such Lessor's Commitment less such Lessor's Used Commitment.
"Used Commitment" shall mean for each Lessor that portion of such Lessor's
Commitment that has been transferred to Agent to be funded on a Delivery Date.
"Uniform Commercial Code" shall mean the Uniform Commercial Code, as in
effect from time to time in any jurisdiction where any Equipment is located.
"Welfare Plan" shall mean, with respect to any Person, a "welfare plan" as
such term is defined in section 3(1) of ERISA to which such Person or any
Related Person to such Person may have any liability or contingent liability.
SX-22
SCHEDULE Y
FUNCTIONAL UNITS
SCHEDULE V
to
PARTICIPATION AGREEMENT
A.
Functional
Unit # Equipment Description
---------- ---------------------
1 Packaging Line #1 (5 lb.)
2 Packaging Line #3 [Ankeny #11] (1 lb.)
3 Packaging Line #4 [Ankeny #8] (2 lb.)
4 Packaging Line #5 [Ankeny #10] (Hand Feed)
5 Packaging Line #6 (4 & 8 oz.)
0 Xxxxxxxxx Xxxx #0 (1 lb.)
0 Xxxxxxxxx Xxxx #0 (1 oz. Tube)
0 Xxxxxxxxx Xxxx #0 (1 oz. Tube)
9 Pkgg Line #10 [A#12] (O.M. Bag Fill)
00 Xxxxxxxxx Xxxx #00 (Xx. Xxxxxx/Jollytime)
00 Xxxxxxxxx Xxxx #00 (1 lb. Kraft/Rykoff)
12 Extract Food Service Packaging Line
13 Extract Retail Packaging Line
14 Packaging Line #2 [Future] (4 & 8 lb.)
15 Blending Equipment
16 Production & Distribution Support
17 Office & Building Support
18 Oil Production
19 Margarine Production
20 Receiving/Distribution
21 Injection Xxxxxxx
00 Xxxx Xxxxxxx
23 Straw
24 Mayonaisse Production
25 Xxxx Line/Dry Mix
26 Repro Line
27 Plastics
28 Packaging Line Equipment
29 Production & Distribution Support
30 Office & Building Support
31 Portland Location
32 San Francisco Location
B. The Equipment described in this part B has not been appropriately
designated as Functional Units, and each Lessor shall have the right to
reject any item of Equipment which otherwise complies with the general
categories set forth below, in which case Lessee shall have the right to
propose in lieu thereof other Equipment (consisting solely of Functional
Units) by providing an amended Delivery Date Notice, and the originally
proposed Delivery Date shall not be delayed as a result of such amendment.
Equipment Description
---------------------
Material handling equipment pallet racks and
office furniture at Lessee's La Mirada, CA
distribution center, and
Manufacturing and processing equipment located
at Sublessee's Ankeny, Iowa facility
EXHIBIT A
TO
PARTICIPATION AGREEMENT
FORM OF LEASE
A-1
EXHIBIT A
TO
PARTICIPATION AGREEMENT
FORM OF
LEASE INTENDED AS SECURITY
Dated as of April 29, 1994
among
XXXXXX-XXXXXX, INC.,
as Lessee,
BA LEASING & CAPITAL CORPORATION,
not individually, but solely as Agent for the Lessors,
and
The Lessors Listed on
the Signature Pages Hereto
TABLE OF CONTENTS
Page
Article I DELIVERY AND ACCEPTANCE ................................ 1
1.1. Acceptance and Lease of Equipment ........................... 1
1.2. Acceptance Procedure ........................................ 2
Article II LEASE TERM ............................................. 2
2.1. Initial Term ................................................ 2
2.2. Lease Renewal ............................................... 2
Article III RENT; OTHER ECONOMIC PROVISIONS ........................ 2
3.1. Rent Payments ............................................... 2
3.2. Place and Manner of Payment ................................. 2
3.3. Net Lease ................................................... 3
Article IV WARRANTIES ............................................. 4
4.1. Warranty Disclaimer ......................................... 4
4.2. Assignment of Warranties .................................... 5
Article V POSSESSION, ASSIGNMENT, USE AND
MAINTENANCE OF EQUIPMENT ............................... 5
5.1. Restriction on Lessee's Possession and Use .................. 5
5.2. Sublease .................................................... 5
5.3. Maintenance ................................................. 6
5.4. Replacement and Substitution ................................ 7
5.5. Alterations, Modifications and Additions;
Removable Parts ............................................. 9
5.6. Labeling of Equipment ....................................... 10
5.7. Inspection of Collateral .................................... 11
Article VI RISK OF LOSS; REPLACEMENT .............................. 11
6.1. Casualty .................................................... 11
6.2. Partial Casualty ............................................ 12
6.3. Partial Casualty Proceeds ................................... 12
Article VII INSURANCE .............................................. 14
7.1. Required Coverages .......................................... 14
7.2. Delivery of Insurance Certificates .......................... 15
Article VIII DEFAULT ................................................ 16
8.1. Events of Default ........................................... 16
8.2. Remedies .................................................... 19
8.3. Additional Remedies ......................................... 20
8.4. Proceeds of Sale; Deficiency ................................ 20
8.5. Right to Perform Lessee's Agreements ........................ 22
Article IX RETURN OF EQUIPMENT .................................... 23
Article X EARLY TERMINATION ...................................... 23
Article XI LEASE TERMINATION ...................................... 24
11.1. Lessee's Options ............................................ 24
11.2. Election of Options ......................................... 26
11.3. Sale Option Procedures ...................................... 26
11.4. Payment of Excess Amounts ................................... 27
11.5. Appraisals .................................................. 27
Article XII AGENT .................................................. 28
12.1. Appointment of Agent; Powers and
Authorization to Take Certain Actions ....................... 28
12.2. Reliance .................................................... 29
12.3. Action Upon Instructions Generally .......................... 29
12.4. Indemnification ............................................. 30
12.5. Independent Credit Investigation ............................ 31
12.6. Refusal to Act .............................................. 31
12.7. Resignation or Removal of Agent; Appointment
of Successor ................................................ 32
12.8. Separate Agent .............................................. 32
12.9. Termination of Agency ....................................... 33
12.10. Compensation of Agency ...................................... 33
Article XIII OWNERSHIP, GRANT OF SECURITY INTEREST AND
FURTHER ASSURANCES ..................................... 33
13.1. Grant of Security Interest .................................. 33
13.2. Retention of Title or Proceeds in the Case
of Default .................................................. 35
Article XIV EFFECT OF WAIVER ....................................... 35
Article XV SURVIVAL OF COVENANTS .................................. 35
Article XVI APPLICABLE LAW ......................................... 36
Article XVII EFFECT AND MODIFICATION OF LEASE ....................... 36
Article XVIII NOTICES ................................................ 36
Article XIX COUNTERPARTS ........................................... 36
Article XX SEVERABILITY ........................................... 36
Article XXI SUCCESSORS AND ASSIGNS; MERGER ......................... 37
21.1. Successors and Assigns ................................. 37
21.2. Merger ................................................. 37
Article XXII ASSIGNMENTS ............................................ 37
22.1. Assignment by Lessee ................................... 37
22.2. Lessor Transfers ....................................... 37
Article XXIII BROKERS ................................................ 40
Article XXIV JURY TRIAL ............................................. 40
Article XXV CAPTIONS; TABLE OF CONTENTS ............................ 41
Article XXVI FINAL AGREEMENT ........................................ 41
Article XXVII TIMELINESS OF PERFORMANCE .............................. 41
Article XXVIII DISTRIBUTION AND APPLICATION OF RENTS AND
OTHER PAYMENTS ......................................... 41
28.1. Pro Rata Payment ....................................... 41
Schedule I - Equipment
Exhibit A - Form of Investors Letter
Exhibit B - Form of Lease Supplement
LEASE INTENDED AS SECURITY
This LEASE INTENDED AS SECURITY (as amended, modified, restated or
supplemented from time to time, this "Lease") dated as of April 29, 1994 (the
"Effective Date") is between Xxxxxx-Xxxxxx, Inc., a Delaware corporation
("Lessee"), with its principal office at 000 Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, XX
00000, BA Leasing & Capital Corporation, Pitney Xxxxx Credit Corporation and
Manufacturers Bank (collectively, the "Lessors" and each a "Lessor"), and BA
Leasing & Capital Corporation, a California corporation, not in its individual
capacity, but solely in its capacity as agent under this Lease ("Agent") for the
benefit of the Lessors.
WHEREAS, pursuant to the terms and conditions set forth herein and in that
certain Participation Agreement dated as of April 29, 1994 (the "Participation
Agreement"), among Lessee, Sublessee, the Lessors and Agent, Lessors have agreed
to purchase and thereafter lease the Equipment to Lessee pursuant to this Lease.
AND WHEREAS, the Participation Agreement contemplates that, following
Lessee's execution and delivery of this Lease, Lessee will sublease a portion of
the Equipment to Sublessee pursuant to the terms of the Sublease;
AND WHEREAS, capitalized terms used but not otherwise defined herein
(including those used in the foregoing recitals) shall have the meanings
specified in Schedule X to the Participation Agreement, unless the context
otherwise requires.
AND WHEREAS, to secure Lessee's obligations under this Lease and the other
Operative Agreements, Lessee will grant to the Agent, for the benefit of the
Lessors, a security interest in the Collateral, including, without limitation,
the Equipment and the Sublease.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
Article I
DELIVERY AND ACCEPTANCE
Section 1.1. Acceptance and Lease of Equipment. Subject to each
Participant's satisfaction or waiver, as applicable, of the conditions set forth
in Articles II and III of the Participation Agreement, on each Delivery Date and
upon execution
and delivery of a Lease Supplement covering all of the Equipment to be purchased
on such date, Lessors shall lease to the Lessee, and Lessee will lease from the
Lessors, on the terms and subject to the conditions in this Lease and such Lease
Supplement, the Equipment purchased by the Agent on behalf of the Lessors on
such Delivery Date.
Section 1.2. Acceptance Procedure. Lessors hereby authorize one or more
employees of Lessee to be designated by Lessee as the authorized representative
or representatives of Lessors to accept delivery of the Equipment on each
Delivery Date. Lessee hereby agrees that such acceptance of delivery by such
authorized representative or representatives and the execution and delivery by
Lessee on each Delivery Date of a Lease Supplement shall, without further act,
constitute the irrevocable acceptance by Lessee of the Equipment which is the
subject thereof for all purposes of this Lease and the other Operative
Agreements on the terms set forth therein and herein.
Article II
LEASE TERM
Section 2.1. Initial Term. The commencement of the term of this Lease
shall be on the Effective Date and shall continue until, but not including,
April 29, 1995 (the "Initial Term"), unless earlier terminated in accordance
with the provisions herein or extended pursuant to Section 2.2 and Article XI.
Section 2.2. Lease Renewal. Lessee may elect to renew this Lease for up to
five successive one-year renewal terms (each, a "Renewal Term") as provided in
Article XI.
Article III
RENT; OTHER ECONOMIC PROVISIONS
Section 3.1. Rent Payments. On each Payment Date during the Initial Term
and each Renewal Term, Lessee shall pay to Agent for the benefit of the Lessors
the Interim Rent, Basic Rent or Renewal Rent, as applicable, that has become due
and payable pursuant to the terms of each Lease Supplement entered into prior to
such Payment Date. Scheduled installments of Basic Rent and Renewal Rent may be
adjusted pursuant to Section 6.1.
Section 3.2. Place and Manner of Payment. (a) Rent and all other sums due
Lessors hereunder shall be paid in immediately available funds to Agent, for the
benefit of the Lessors, at the Agent's Corporate Office, or at such other office
of Agent as it
2
may from time to time specify to Lessee in a notice pursuant to this Lease. All
such payments shall be received by Agent not later than 11:00 a.m. San Francisco
time, on the date due; funds received after such time shall for all purposes
under the Operative Agreements be deemed to have been received by Lessor on the
next succeeding Business Day. Lessee shall pay to Agent for the benefit of the
Lessors, on demand, interest (i) with respect to any overdue amount of Rent or
Make-Whole Premium, at the rate per annum which is 2% above the Interest Rate
under the Lease Supplement relating to the Functional Unit in respect of which
such amount is due and (ii) with respect to any other payment under this Lease
that is not paid when due (without taking into account any applicable grace
period), at the rate which is 2% per annum above the Interest Rate set forth in
Schedule II to the Lease Supplement delivered on the Initial Delivery Date, and
(to the extent permitted by applicable law) interest from the date due (not
taking into account any grace period) until payment is made.
(b) Agent shall make all payments to Lessors required under this Lease or
the Participation Agreement on the date the Agent receives the applicable
payment from Lessee, so long as Agent has received such payment from Lessee not
later than 9:00 a.m. San Francisco time, and if Agent receives the applicable
payment from Lessee later than 9:00 a.m. San Francisco time, then Agent shall
make payment to the Lessors on the next succeeding Business Day. Notwithstanding
the foregoing, any such amounts may be held by the Agent pending the Agent's
reasonable, good faith determination of the Lessor or Lessors entitled to such
payment (and the portion thereof payable to each Lessor), and shall be paid by
the Agent to each Lessor entitled thereto promptly upon making such
determination by transferring such amounts to such Lessors; provided, however,
that if such determination is not made by the end of the second Business Day
following receipt by the Agent of the applicable payment and the amount of such
payment shall exceed, in the aggregate, $100,000, the Agent shall, at the
request of the Required Lessors, invest such funds in Permitted Investments.
Section 3.3. Net Lease. This Lease is a net lease and Lessee's obligation
to pay all Rent, indemnity and other amounts payable hereunder shall be absolute
and unconditional under any and all circumstances and, without limiting the
generality of the foregoing, Lessee shall not be entitled to any abatement or
reduction of Rent or any setoff against Rent, indemnity or other amount, whether
arising by reason of any past, present or future claims of any nature by Lessee
against Agent or any Lessor, or otherwise. Except as otherwise expressly
provided herein, this Lease shall not terminate, nor shall the obligations of
Lessee be otherwise affected (a) by reason of any defect in, damage to, or loss
of possession or use, obsolescence or destruction, of any or
3
all of the Equipment, however caused; or (b) by the taking or requisitioning of
any or all of the Equipment by condemnation or otherwise; or (c) by the
invalidity or unenforceability or lack of due authorization by Agent, Lessors or
Lessee or other infirmity of this Lease; or (d) by lack of power or authority of
Lessor to enter into this Lease; or (e) by the attachment of any Lien of any
third party to any item of Equipment; or (f) by any prohibition or restriction
of or interference with Lessee's use of any or all of the Equipment by any
Person; or (g) by the insolvency of or the commencement by or against Lessee,
Agent or any Lessor of any bankruptcy, reorganization or similar proceeding; or
(h) by any other cause, whether similar or dissimilar to the foregoing, any
present or future law to the contrary notwithstanding. It is the intention of
the parties that all Rent, indemnities and other amounts payable by Lessee
hereunder shall be payable in all events in the manner and at the times herein
provided unless Lessee's obligations in respect thereof have been terminated or
modified pursuant to the express provisions of this Lease. To the extent
permitted by applicable law, Lessee waives any and all rights which it may now
have or which may at any time be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Lease, in whole or in part, except
strictly in accordance with the express terms hereof. Each rental, indemnity or
other payment made by Lessee hereunder shall be final, and Lessee shall not seek
to recover (except as expressly provided in this Lease) all or any part of such
payment from Lessors or the Agent for any reason whatsoever.
Article IV
WARRANTIES
Section 4.1. Warranty Disclaimer. LESSEE ACKNOWLEDGES AND AGREES THAT: (a)
THE EQUIPMENT IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY LESSEE;
(b) LESSEE IS SATISFIED THAT THE SAME IS SUITABLE FOR ITS PURPOSES; (c) NEITHER
AGENT NOR ANY LESSOR IS A MANUFACTURER THEREOF OR A DEALER IN PROPERTY OF SUCH
KIND; AND (d) NEITHER AGENT NOR ANY LESSOR HAS MADE OR SHALL BE DEEMED TO HAVE
MADE: (i) ANY REPRESENTATION OR WARRANTY OR COVENANT WITH RESPECT TO THE TITLE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONDITION, QUALITY,
DESCRIPTION, DURABILITY OR SUITABILITY OF ANY ITEM OF EQUIPMENT IN ANY RESPECT
OR IN CONNECTION WITH OR FOR THE PURPOSES AND USES OF LESSEE; OR (ii) ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
ITEM OF EQUIPMENT, EXCEPT THAT EACH OF THE LESSORS REPRESENTS AND WARRANTS,
SEVERALLY AND NOT JOINTLY, THAT ON EACH DELIVERY DATE IT SHALL HAVE RECEIVED AN
UNDIVIDED INTEREST IN WHATEVER TITLE WAS CONVEYED BY THE MANUFACTURERS OF THE
EQUIPMENT DELIVERED ON SUCH DELIVERY DATE BY
4
SUCH MANUFACTURERS, FREE OF LESSOR LIENS CREATED BY SUCH LESSOR EXCEPT FOR
PERMITTED LESSOR LIENS AND LIENS CREATED PURSUANT TO THE OPERATIVE AGREEMENTS.
Section 4.2. Assignment of Warranties. Lessors assign to Lessee, to the
extent assignable, all of their interest, if any, in any warranties, covenants
and representations of any manufacturer, producer, vendor or maker of any item
of Equipment, provided that such assignment shall remain in effect only so long
as no Event of Default has occurred and is continuing, and provided, further,
that any action taken by Lessee by reason thereof shall be at the expense of
Lessee and shall be consistent with Lessee's obligations pursuant to this Lease.
Article V
POSSESSION, ASSIGNMENT, USE AND
MAINTENANCE OF EQUIPMENT
Section 5.1. Restriction on Lessee's Possession and Use. Lessee shall not
(a) use, operate, maintain or store any Functional Unit, item of Equipment or
any portion thereof (i) except in accordance with Section 5.3; or (ii) in
violation of any applicable insurance policy or law or regulation of any
Authority; (b) abandon any item of Equipment; (c) except as permitted by Section
5.2 and Section 6.1 of the Participation Agreement, sublease or assign, without
the prior written consent of Lessor, any item of Equipment or permit the use
thereof by anyone other than Lessee; (d) except as set forth in Section 5.2 and
Section 6.1 of the Participation Agreement, sell, assign or transfer any of its
rights hereunder or in any item of Equipment, or directly or indirectly create,
incur or suffer to exist any Lien on any of its rights hereunder or in any item
of Equipment, except for Permitted Liens; or (e) except in connection with any
maintenance or repair thereof, permit any item of Equipment or any Part relating
to such item of Equipment to be located at any location other than the location
of such Equipment or Part as of the Delivery Date applicable thereto and as set
forth opposite such item of Equipment on Schedule I of the applicable Lease
Supplement. Lessee will defend the sale of the Equipment by Lessee and
Manufacturers to Agent, for the benefit of the Lessors, against the claims or
demands of all Persons.
Section 5.2. Sublease. Subject to Sections 6.1(a) and 6.2(a) of the
Participation Agreement, so long as no Event of Default has occurred and is
continuing, Lessee may sublease one or more Functional Units to a Subsidiary of
Lessee without the prior written consent of Lessors or Agent; provided that (i)
any such sublease shall automatically expire upon the expiration of the Lease
Term or any earlier termination of this Lease and shall
5
be expressly subject and subordinate to this Lease and the Liens created hereby,
(ii) the sublease agreement shall be in writing and shall expressly prohibit any
further assignment, sublease or transfer and (iii) all of Lessee's rights, title
and interest in, to and under the sublease shall be pledged by Lessee to
Lessors, as collateral for Lessee's obligations under the Operative Agreements,
by delivery of an executed copy upon the execution and delivery thereof, marked
as the sole original execution copy for Uniform Commercial Code purposes, to the
Agent, and Lessee shall, at its own cost and expense, do any further act and
execute, acknowledge, deliver, file, register and record any further documents
which the Agent or Lessors may reasonably request in order to create, perfect,
preserve and protect Agent's and Lessors' security interest in the sublease.
Lessee shall remain primarily liable hereunder for the performance of all of the
terms of this Lease to the same extent as if such sublease had not been entered
into.
Section 5.3. Maintenance. Lessee shall at its own cost and expense and at
all times during the term of this Lease (a) maintain, manage and monitor the
Equipment in compliance with all applicable requirements of any law, Authority
and/or insurance policies; (b) maintain the Equipment (or cause the Equipment to
be maintained) in as good operating order, repair, condition and appearance as
it was on the date such Equipment became subject to this Lease (assuming that,
as of such date, the Equipment was in good operating order, repair, condition
and appearance), ordinary wear and tear excepted; (c) maintain, manage and
monitor the Equipment in accordance with the terms of all applicable contracts
(including, without limitation, service contracts and insurance contracts); (d)
conduct all scheduled maintenance of the Equipment in conformity with Lessee's
past practices, and manufacturer's maintenance and repair guidelines, for
similar equipment (including, without limitation, Lessee's maintenance program
for such equipment); and (e) cause the Equipment to continue to have at all
times the capacity and functional ability to perform, on a continuing basis
(subject to normal interruption in the ordinary course of business for
maintenance, inspection, service, repair and testing) and in commercial
operation, the functions for which it was specifically designed. Lessee shall in
any event maintain the Equipment (or cause the Equipment to be maintained) in at
least as good a condition as comparable equipment owned or leased by it or any
of its Subsidiaries. Lessee will maintain or cause to be maintained and shall
permit the Agent and Lessors to inspect any records, logs and other materials
required by any governmental authority having jurisdiction to be maintained or
filed in respect of any items of Equipment.
6
Section 5.4. Replacement and Substitution.
(a) In the event that any Part which may from time to time be incorporated
or installed in or attached to any item of Equipment, or any item of Equipment
itself, becomes at any time worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever (unless such event constitutes a Casualty or Partial Casualty,
in which event the provisions of Section 6.1. or 6.2 hereof shall apply),
Lessee, at its own cost and expense, will promptly replace, or cause to be
replaced, such Part or item of Equipment (the "Substituted Item") with a
replacement Part or item of Equipment (a "Replacement Part"). In addition,
Lessee may, at its own cost and expense, remove in the ordinary course of
maintenance, service, repair, overhaul or testing, any Part, whether or not worn
out, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee will, at its own cost and expense,
replace such Part as promptly as is commercially reasonable. All Replacement
Parts shall be free and clear of all Liens (other than Permitted Liens) and
shall be in as good an operating condition as, and shall have a value and
utility at least equal to, the Parts replaced, assuming such replaced Parts and
the Equipment were immediately prior to such replacement or the event or events
necessitating such replacement in the condition and repair required to be
maintained by the terms hereof. Any Part at any time removed from any item of
Equipment shall remain subject to the interests of the Agent and the Lessors
under the Operative Agreements, no matter where located, until such time as such
Part shall be replaced by a Part which has been incorporated or installed in or
attached to such item of Equipment and which meets the requirements for a
Replacement Part specified above. Immediately upon any Replacement Part becoming
incorporated or installed in or attached to any such item of Equipment as above
provided, without further act (i) title to the replaced Part shall thereupon
vest in Lessee, free and clear of all rights of the Lessors, and shall no longer
be deemed a Part hereunder, (ii) title to such Replacement Part shall thereupon
vest in the Lessors and (iii) such Replacement Part shall become subject to this
Lease and the security interest created hereunder and be deemed part of such
item of Equipment for all purposes hereof to the same extent as the Parts
incorporated or installed in or attached to such item of Equipment on the date
such item of Equipment became subject to this Lease. No later than 45 days after
the end of each fiscal quarter of Lessee, Lessee shall deliver to Lessors a Xxxx
of Sale evidencing the conveyance by Lessee to the Lessors of all Replacement
Parts not previously evidenced by
7
a Xxxx of Sale and such other documents in respect of such Part or Parts as the
Required Lessors may reasonably request in order to confirm that title to such
Part or Parts has passed to Lessors, as provided above. Each such Xxxx of Sale
shall provide that each Lessor is granted an undivided interest in such
Replacement Parts equal to its Lease Percentage as of the date of such transfer.
(b) In addition to the foregoing, Lessee shall have the option at any time
to replace any Functional Unit (a "Replaced Unit") with a substitute Functional
Unit (a "Replacement Unit"), subject to the following conditions:
(i) any such Replacement Unit shall satisfy one of the following
conditions: (x) the Replacement Unit shall consist of items of new
equipment of identical manufacture and model as the equipment comprising
the Replaced Unit, or (y) such Replacement Unit shall have a utility, an
Appraised Value, and an economic useful life at least equal to those of
the Replaced Unit immediately prior to such substitution, assuming that
the Replaced Unit was in the condition and repair required to be
maintained by the terms of this Lease, and Lessee shall have provided to
the Agent and each Lessor, at Lessee's expense, an Appraisal satisfactory
to Agent and each Lessor in their sole and absolute discretion with
respect to the determination of such utility, Fair Market Value and
economic useful life or (z) such Replacement Unit shall otherwise be
acceptable to each of the Lessors in its respective sole and absolute
discretion;
(ii) Lessee shall have satisfied each of the conditions set forth in
Section 4.3 of the Participation Agreement (other than subsection (b)
thereof) with respect to the proposed replacement; and
(iii) Lessee shall not remove the Replaced Unit from the location
set forth on Schedule I to the Delivery Date Notice pursuant to which the
Replaced Unit was delivered until such time as it has executed all
documents reasonably requested by Agent or any Lessor to perfect the
security interest of the Agent, for the benefit of the Lessors, in the
Replacement Unit.
Any Replacement Unit substituted in accordance with this Section 5.4(b) shall
thereafter be considered a Functional Unit for all purposes of this Lease.
8
(c) Lessee may request the replacement of an item of Equipment (pursuant
to the foregoing subsection (a)) or a Functional Unit (pursuant to the foregoing
subsection (b) by delivery of a Replacement Notice in the manner described in
Section 4.3 of the Participation Agreement. Upon the satisfaction of the
conditions specified in such Section 4.3, each in form and substance
satisfactory to the Required Lessors, and the Replacement Part or Replacement
Unit becoming subject to this Lease and the security interest created hereunder,
Lessor shall execute and deliver to Lessee a xxxx of sale (without
representations or warranties, except that the Substituted Item or Replaced
Unit, as the case may be, is free and clear of all Lessor Liens) and such other
documents as may be required to release the Substituted Item or Replaced Unit,
as the case may be, from the terms and scope of this Lease, in such form as may
be reasonably requested by Lessee and are in form and substance satisfactory to
the Lessors, all at Lessee's own cost and expense.
Section 5.5. Alterations, Modifications and Additions; Removable Parts.
(a) Except as provided in Section 5.4, Lessee shall not remove,
replace, modify, improve or alter (collectively, "alter") any item of
Equipment or affix or place any Part on any item of Equipment if such
alteration or addition would materially impair the originally intended
function or use or materially reduce the value of such item of Equipment
or the Functional Unit to which such item of Equipment belongs, provided
that Lessee, at its own cost and expense, will make, or cause to be made
any alteration or addition to or in respect of any item of Equipment that
may be necessary, from time to time, to comply in all material respects
with any applicable law, governmental rule or regulation (including any
Environmental Law) or any provision of any insurance policy required to be
maintained under Section 7.1 (any Parts being used to comply with this
provision shall be hereafter referred to as "Mandatory Parts"); provided,
however, that Lessee shall be under no obligation to take such action so
long as the application of the applicable law, rule, regulation or
provision is being contested by Lessee pursuant to a Permitted Contest.
Lessee shall notify Agent and the Lessors in advance of any proposed
alteration of or addition to any item of Equipment if the cost of such
alteration or addition, in the aggregate, can reasonably be expected to
exceed $250,000, or if such advance notice is not practicable, within 30
days after the completion of such alteration or addition. All Parts
affixed to or installed as a part on any item of Equipment, excluding
temporary
9
replacements, shall thereupon become subject to the security interest
under this Lease.
(b) If no Event of Default shall exist, Lessee may remove, at its
own cost and expense, any Part at any time during the term of this Lease
(such Part, a "Removable Part") which (i) is in addition to, and not in
replacement of or substitution for, any Part originally incorporated or
installed in or attached to an item of Equipment on the date such item
became subject to this Lease or any Part in replacement of or substitution
for any such Part originally incorporated or installed or attached to such
Equipment, (ii) is not a Mandatory Part and (iii) can be removed from any
item of Equipment without causing damage to such item of Equipment or
diminishing or impairing the value, utility or condition that such item of
Equipment would have had at such time had such addition not occurred,
provided that (x) such removal will not materially impair the value or use
which the item of Equipment would have had at such time had such Part not
been affixed to or placed on such Equipment, (y) such Part is not
necessary for the continued normal use of such item of Equipment and (z)
such removal would not cause the Functional Unit to which such items of
Equipment belong to no longer constitute a Functional Unit. Lessee shall
repair all damage to the item of Equipment resulting from any alteration
so as to restore any item of Equipment to the condition in which it
existed prior to such alteration (ordinary wear and tear excepted).
Lessors shall not have any obligation to pay for or to reimburse Lessee
for any alteration permitted by this Section 5.5.
Title to all Parts incorporated or installed in or attached or added to any item
of Equipment as the result of alterations, modifications or additions under this
Section 5.5, except Removable Parts, shall, without further act, vest in Agent,
for the benefit of the Lessors, in the manner provided in clause (ii) of Section
5.4(a) and the other applicable provisions of Section 5.4 shall apply with
respect to such Parts. Title to any Removable Part shall not vest in Agent, and
upon the removal by Lessee of any Removable Part as provided herein, such
Removable Part shall no longer be deemed part of the item of Equipment from
which it was removed. Any Removable Part not removed by Lessee as provided
herein prior to the end of the Lease Term or applicable Renewal Term shall
become the property of Agent, for the benefit of the Lessors, at such time.
Section 5.6. Labeling of Equipment. Lessee shall as soon as practicable
affix and keep throughout the Lease Term, including any Renewal Terms, labels,
plates or other markings, bearing the inscription "Security Interest held by BA
Leasing &
10
Capital Corporation, as agent for the Lessors" upon a prominent place on each
item of Equipment reasonably susceptible to being so labeled.
Section 5.7. Inspection of Collateral. Agent, the Lessors and each of
their agents and representatives shall have the right at all reasonable times,
upon reasonable notice, to inspect any Collateral.
Article VI
RISK OF LOSS; REPLACEMENT
Section 6.1. Casualty. Upon a Casualty, Lessee shall give prompt written
notice thereof (a "Casualty Notice") to Agent and Lessors, which notice shall
specify whether Lessee will:
(a) repay the Functional Unit Balance for each Functional Unit
subject to such Casualty together with unpaid Accrued Supplement Rent on
each such Functional Unit Balance so prepaid to the date of payment and
the applicable Make-Whole Premium on each such Functional Unit Balance so
repaid. All such amounts shall be paid to Agent for the benefit of the
Lessors no later than the next scheduled Payment Date occurring at least
30 days after such Casualty, but in no event later than the Termination
Date (such date being referred to as the "Casualty Settlement Date"); or
(b) replace pursuant to the provisions of Section 5.4(b) hereof and
Section 4.3 of the Participation Agreement each Functional Unit with
respect to which the Casualty has occurred; provided, however, that upon
the occurrence of an Event of Default or an event which with the giving of
notice and/or the passage of time could give rise to an Event of Default,
Lessee shall be obligated, at the option of the Required Lessors, to make
the payments referred to in clause (a) above and shall not be entitled to
exercise any right or election of replacement as set forth in this clause
(b).
All proceeds of any casualty insurance or condemnation proceeds ("Casualty
Proceeds") paid to the Lessee or any of its Affiliates by reason of a Casualty
to a Functional Unit shall be deposited into a deposit account established by
Agent for the benefit of the Lessors (the "Deposit Account"). Any Casualty
Proceeds paid to Agent with respect to a Functional Unit suffering a Casualty
shall also be deposited in the Deposit Account. Any monies in the Deposit
Account attributable to a Casualty shall be remitted promptly to Lessee after
either (i) Lessee's payment in full of the Functional Unit Balance
11
together with the applicable Make-Whole Premium or (ii) Lessee's full compliance
with the conditions governing a Replacement Part, as applicable pursuant to
clause (a) or (b) above.
If Lessee has elected to pay the Functional Unit Balance and an amount
equal to the applicable Make-Whole Premium pursuant to clause (a) above, Lessee
shall continue to make all payments of Rent due hereunder in respect of the
Functional Unit or Units suffering a Casualty through the date the Functional
Unit Balance and the applicable Make-Whole Premium are paid. Upon payment of
each of the amounts required by Section 6.1(a), then all scheduled installments
of Rent, including installments of Renewal Rent, thereafter payable for the
remainder of the Lease Term in respect of the Lease Supplement applicable to the
Functional Unit or Units suffering the Casualty, and the portion of the Purchase
Option Exercise Amounts allocable to such Lease Supplement, shall be
re-calculated by the Agent in the manner specified in Section 3.1 of the
Participation Agreement, without taking into account the Purchase Price or
Functional Unit Balance of the Functional Unit suffering the Casualty.
Section 6.2. Partial Casualty. Upon any Partial Casualty with respect to a
Functional Unit, Lessee shall give to Agent and Lessors a Notice of Partial
Casualty. As soon as practicable after a Partial Casualty, Lessee shall (a)
repair and rebuild the affected portions of such Functional Unit (or cause such
affected portions to be repaired and rebuilt) to the condition required to be
maintained by Section 5.3 hereof, provided that the value and functional
capability of such Functional Unit, as restored, is at least equivalent to the
value and functional capability of such Functional Unit as in effect immediately
prior to the occurrence of such Partial Casualty or (b) replace such affected
items of Equipment with Replacement Parts pursuant to the provisions of Section
5.4(a).
Section 6.3. Partial Casualty Proceeds. All Partial Casualty Proceeds
received by Lessee or any of its Affiliates as a result of a Partial Casualty
shall be promptly paid to Agent. Agent shall deposit such Partial Casualty
Proceeds into the Deposit Account and, so long as no Event of Default or event
which with the giving of notice and/or passage of time could give rise to an
Event of Default shall exist, Agent shall disburse such Partial Casualty
Proceeds with respect to a Functional Unit (or an item of Equipment constituting
part of such Functional Unit) suffering a Partial Casualty as follows:
(a) to Lessee in reimbursement of the costs of repairing and
rebuilding the affected portions of such Functional Unit (or item of
Equipment constituting part of such Functional Unit) suffering a Partial
Casualty which the
12
Lessee has chosen to repair and rebuild in accordance with Section 6.2; or
(b) upon a Replacement Part being duly substituted for each item of
Equipment having suffered a Partial Casualty, to Lessee to the extent
Partial Casualty Proceeds with respect to the corresponding Substituted
Item were deposited into the Deposit Account.
Partial Casualty Proceeds held by Agent and to be distributed in
accordance with paragraph (a) of this Section 6.3 shall be disbursed by Agent
from the Deposit Account to Lessee from time to time (but no more frequently
than once per calendar month) to reimburse Lessee for the costs of repairing and
rebuilding the affected Functional Units as required under Section 6.2(a),
subject to such reasonable disbursement conditions as Agent may impose,
including presentation of invoices and other supporting documentation reflecting
such costs and delivery of Lien waivers; provided, however, that Agent shall
have no obligation to disburse any Partial Casualty Proceeds out of the Deposit
Account at any time that Agent, at the direction of the Required Lessors, shall
reasonably determine (i) that such Partial Casualty Proceeds are not sufficient
to repair and rebuild the affected Functional Units as required by Section
6.2(a) (unless additional funds which are, in the sole discretion of the
Required Lessors, sufficient to so repair and rebuild the affected Functional
Units have been deposited in the Deposit Account) or (ii) that Lessee is not
diligently performing its obligations under Section 6.2. Notwithstanding the
foregoing provisions of this Section 6.3, and provided that no Event of Default
and no event which with the giving of notice and/or passage of time could become
an Event of Default shall exist, if the aggregate amount of Partial Casualty
Proceeds attributable to any Partial Casualty is $100,000 or less, Lessee may
receive such Partial Casualty Proceeds directly, without delivery to Agent,
provided that such Partial Casualty Proceeds are applied in accordance with the
requirements of Section 6.2. In the event that Agent receives Partial Casualty
Proceeds in an amount that is less than $100,000 and provided that no Event of
Default and no event which with the giving of notice and/or passage of time
could become an Event of Default shall exist, Agent shall promptly remit such
funds to Lessee. Notwithstanding any Partial Casualty, all of Lessee's
obligations under this Lease (including its obligation to make all payments of
Rent as they become due) shall continue unabated and in full force and effect as
provided in this Lease.
13
Article VII
INSURANCE
Section 7.1. Required Coverages. Lessee will keep the Equipment insured by
financially sound and reputable insurers against loss or damage, with insurance
of the kinds and in the amounts customarily maintained by similar corporations
engaged in similar operations in similar jurisdictions and carry such other
insurance as is usually carried by such corporations, provided that in any event
Lessee will maintain:
(a) Casualty Insurance -- insurance against risks of direct physical
loss or damage with respect to the Equipment (including, without
limitation, earthquake insurance) with deductibles and in such minimum
amounts as are consistent with industry standards; provided, however, that
at no time shall the amount of coverage, on a replacement cost basis, be
less than the sum of (x) the Lease Balance and (y) an amount equal to the
aggregate portion of the interest component of Basic Rent or Renewal Rent
to be accrued under all Lease Supplements for 90 days following the date
of determination;
(b) Public Liability Insurance -- combined single limit insurance
against claims for bodily injury, death or property damage in an amount at
least equal to $5,000,000 per occurrence with such deductibles as are
carried by similarly situated companies involved in operating similar
facilities and equipment; and
(c) Other Insurance -- such other insurance, including comprehensive
motor vehicle, worker's compensation and business interruption insurance,
in each case as generally carried by owners of equipment similar to the
Equipment and properties in the States of California, Iowa and Oregon, in
such amounts and against such risks as are then customary for equipment
and property similar in use.
Such insurance shall be written by reputable insurance companies that are
financially sound and solvent and otherwise reasonably appropriate considering
the amount and type of insurance being provided by such companies. Any insurance
company selected by Lessee which is rated in Best's Insurance Guide or any
successor thereto (or if there be none, an organization having a similar
national reputation) shall have a general policyholder rating of "A" and a
financial rating of at least "10" or be otherwise acceptable to the Required
Lessors. Property/Casualty insurance maintained by Lessee shall name Agent, for
the benefit of the Lessors, as sole loss payee to the extent such claims relate
to items of Equipment subject to this Lease, and liability insurance
14
maintained by Lessee shall name Agent, together with the Lessors, as additional
insureds. Each policy referred to in this Section 7.1 shall provide that (i) it
will not be cancelled or its limits reduced, or allowed to lapse without
renewal, except after not less than 30 days' written notice to Agent and the
Lessors, (ii) the interests of Agent and the Lessors shall not be invalidated by
any act or negligence of Lessee or any person having an interest in any item of
Equipment, (iii) such insurance is primary with respect to any other insurance
carried by or available to Agent and the Lessors, (iv) the insurer shall waive
any right of subrogation, setoff, counterclaim, or other deduction, whether by
attachment or otherwise, against Agent and the Lessors and (v) such policy shall
contain a cross-liability clause providing for coverage of Agent and each Lessor
as if separate policies had been issued to each of them. Lessee will notify
Agent and Lessors promptly of any policy cancellation, reduction in policy
limits, modification or amendment.
Section 7.2. Delivery of Insurance Certificates. On or before the Initial
Delivery Date and thereafter on each Subsequent Delivery Date, Lessee shall
deliver to Agent (with a copy to each Lessor) certificates of insurance
reasonably satisfactory to the Lessors evidencing the existence of all insurance
required to be maintained hereunder and setting forth the respective coverages,
limits of liability, carrier, policy number and period of coverage. Thereafter,
throughout the Lease Term, no sooner than 10 days before and no later than on
the last day of April (commencing in 0000), Xxxxxx shall deliver to Agent (with
a copy to each Lessor) certificates of insurance evidencing that all insurance
required by Section 7.1 hereof to be maintained by Lessee with respect to the
Equipment subject to this Lease is in effect. With each such certificate of
insurance (other than certificates delivered in connection with Delivery Date
Closings) Lessee shall cause to be delivered a written report of a firm of
independent insurance brokers of nationally recognized standing, stating that,
in their opinion, such policy is in compliance with the provisions of Section
7.1 hereof and is comparable in all material respects with insurance carried by
responsible owners and operators of equipment similar to the Equipment.
Article VIII
DEFAULT
Section 8.1. Events of Default. The following shall constitute events of
default (each an "Event of Default") hereunder (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order
15
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) any payment of Rent shall not be paid when due, or any other
payment payable by Lessee under any Operative Agreement shall not be paid
within ten (10) Business Days;
(b) any representation or warranty on the part of Lessee contained
in any Operative Agreement or in any certificate, letter or other writing
or instrument furnished or delivered to Agent or the Lessors pursuant
thereto shall at any time prove to have been incorrect in any material
respect when made, deemed made or reaffirmed, as the case may be;
(c) Lessee shall default in the performance or observance of any
term, covenant, condition or agreement on its part to be performed or
observed under Sections 5.1(c) or 5.1(d), Section 5.2, Article XI, or
Section 21.2 hereof;
(d) Lessee shall default in any material respect in the performance
or observance of any term, covenant, condition or agreement on its part to
be performed or observed under Section 7.1 hereof;
(e) Lessee shall default in any material respect in the performance
or observance of any other term, covenant, condition or agreement on its
part to be performed or observed hereunder or under any other Operative
Agreement (and not constituting an Event of Default under any other clause
of this Section 8.1), and such default shall continue unremedied for a
period of 30 days after the earlier to occur of (i) written notice thereof
by Agent or any Lessor to Lessee or (ii) Lessee has Actual Knowledge
thereof, provided that if such failure cannot be remedied within such
30-day period and Lessee is diligently proceeding, as determined in the
absolute discretion of the Required Lessors, to correct such failure of
performance and such failure of performance is capable of being remedied
within a single additional 30-day period, such period shall be extended
for an additional 30 days;
(f) (i) Lessee shall generally fail to pay, or admit in writing its
inability to pay, its debts as they become due, or shall voluntarily
commence any case or proceeding or file any petition under any bankruptcy,
insolvency or similar law seeking dissolution, liquidation or
reorganization or the appointment of a receiver, agent, custodian or
liquidator for itself or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors, or
shall file any
16
answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition filed against it in any
bankruptcy, insolvency or similar case or proceeding, or shall be
adjudicated bankrupt, or shall make a general assignment for the benefit
of creditors, or shall consent to, or acquiesce in the appointment of, a
receiver, agent, custodian or liquidator for itself or a substantial
portion of its property, assets or business or (ii) corporate action shall
be taken by Lessee for the purpose of effectuating any of the foregoing;
(g) involuntary proceedings or an involuntary petition shall be
commenced or filed against Lessee under any bankruptcy, insolvency or
similar law or seeking the dissolution, liquidation or reorganization of
Lessee or the appointment of a receiver, agent, custodian or liquidator
for Lessee or of a substantial part of the property, assets or business of
Lessee, or any writ, judgment, warrant of attachment, execution or similar
process shall be issued or levied against a substantial part of the
property, assets or business of Lessee, and such proceedings or petition
shall not be dismissed or stayed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released, vacated or
fully bonded within 60 days after commencement, filing or levy, as the
case may be;
(h) a contribution failure occurs with respect to any Pension Plan
(other than a Multiemployer Plan) sufficient to give rise to a lien under
Section 302(f) of ERISA or Section 412(n) of the Code with respect to any
Pension Plan (other than a Multiemployer Plan) as to which Lessee or any
Related Person to Lessee may have any liability, there shall exist an
unfunded current liability (as defined in 302(d) (8) of ERISA) with
respect to any Pension Plan which unfunded current liability is material
to the consolidated financial condition of Lessee and its consolidated
subsidiaries taken as a whole, steps are undertaken to terminate any
Pension Plan, any Reportable Event occurs with respect to a Pension Plan
for which notice to the PBGC has not been waived, any action is taken with
respect to a Pension Plan which could result in the requirement that
Lessee or any Related Person to Lessee furnish a bond or other security to
the PBGC or such Pension Plan, the occurrence of any event which could
cause Lessee or any Related Person to Lessee to incur any material
liability, fine or penalty with respect to any Pension Plan or any
material increase in liability with respect to any Pension Plan, or the
occurrence of any event that could result in any material increase in the
liability (or contingent liability) of Lessee or any Related Person to
Lessee with respect to post-retirement benefits under any Welfare Plan;
17
(i) any Operative Agreement or the security interest granted under
this Lease shall (except in accordance with its terms), in whole or in
part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of Lessee, or Lessee or any of its
Subsidiaries shall, directly or indirectly, contest in any manner in a
court of competent jurisdiction the effectiveness, validity, binding
nature or enforceability thereof or the security interest securing
Lessee's obligations under the Operative Agreements shall, in whole or in
part, cease to be a perfected first priority security interest;
(j) Lessee or any of its Subsidiaries shall fail to make any payment
when due in respect of any indebtedness (including, without limitation,
the indebtedness under the Prior Debt Agreements) or any guarantee,
installment purchase agreement or similar contingent obligation, or as a
result of an event of default, the maturity of an indebtedness (including,
without limitation, the indebtedness under the Prior Debt Agreements) or
contingent obligation has been accelerated prior to its express maturity,
provided that the aggregate of all such defaulted payments and/or
accelerations of principal exceeds $5,000,000 or more;
(k) a judgment or judgments for the payment of money are entered by
a court or courts of competent jurisdiction against Lessee or any of its
Subsidiaries, and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such judgments exceeds
$5,000,000; and
(1) Lessee or any of its "subsidiaries" (as defined in the Credit
Agreement) shall default after the Expiration Date in the performance or
observance of the covenants set forth in Sections 6.10, 6.11, 6.12, 6.13
or 6.14 of the Credit Agreement as these Sections are in effect on the
Expiration Date, it being understood that, for purposes of this Section
8.1(1), the aforementioned covenants and the related definitions and
ancillary provisions from the Credit Agreement shall be incorporated by
reference herein for the benefit of the Lessors and Agent and shall be
treated as having survived any termination of the Credit Agreement so long
as any obligation of Lessee may be due and owing under any Operative
Agreement.
Section 8.2. Remedies. If any Event of Default has occurred and is
continuing, Agent, on behalf of the Lessors as provided for in Article XII, may
exercise in any order one or
18
more or all of the remedies set forth in this Section 8.2 (it being understood
that no remedy herein conferred is intended to be exclusive of any other remedy
or remedies, but each and every remedy shall be cumulative and shall be in
addition to every other remedy given herein or now or hereafter existing at law
or in equity or by statute, including without limitation any applicable Uniform
Commercial Code).
(a) Agent may 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.
(b) Agent (with the consent of the Required Lessors) may by notice
in writing to Lessee terminate this Lease, but Lessee shall remain liable
as hereinafter provided; and Agent may do any one or more of the
following, as instructed by the Required Lessors: (i) declare the Lease
Balance, all unpaid Accrued Rent, all other amounts then due and payable
by Lessee under this Lease and the other Operative Agreements and an
amount equal to the Aggregate Make-Whole Premium to be immediately due and
payable, and recover any other damages and expenses (including the costs
and expenses described in Sections 7.1, 7.2 and 11.5 of the Participation
Agreement) in addition thereto which Lessor shall have sustained by reason
of such Event of Default, (ii) enforce the security interest given
hereunder pursuant to the Uniform Commercial Code or any other law, (iii)
enter upon the premises where any item of Equipment may be and either
remove such Equipment (or any portion thereof), with any damage to the
improvements upon which the Equipment may be attached to be borne by
Lessee, or take possession of the Equipment and (iv) require Lessee to
disassemble and return the Equipment as provided in Article IX hereof.
(c) Agent may require Lessee immediately to purchase the Equipment
for a purchase price equal to the sum of the Lease Balance, all unpaid
Accrued Rent, an amount equal to the Aggregate Make-Whole Premium and all
other amounts then due and payable under the Operative Agreements.
(d) If an Event of Default set forth in Section 8.1(a) (a "Payment
Default") shall have occurred, any Lessor may declare the Lease Balance
immediately due and payable by giving written notice to Agent, Lessee and
each other Lessor, whereupon the unpaid Lease Balance together with the
Aggregate Make-Whole Premium, if any, and all unpaid Accrued Rent shall
become immediately due and payable without further act or notice of any
kind. If an Event of Default set forth in Sections 8.1(f) or 8.1(g) (an
"Insolvency Default") shall have occurred, the unpaid Lease Balance
19
together with the Aggregate Make-Whole Premium, if any, and all unpaid
Accrued Rent shall become immediately due and payable without further act
or notice of any kind. If an Event of Default other than an Insolvency
Default or a Payment Default shall have occurred and be continuing, the
Agent, with the consent of the Required Lessors, may declare the Lease
(and each Lease Supplement) to be terminated and all payments thereunder
to be due and payable immediately by giving written notice to Agent,
Lessee and each Lessor, whereupon the unpaid Lease Balance together with
the Aggregate Make-Whole Premium, if any, and all unpaid Accrued Rent
shall become immediately due and payable without further act or notice of
any kind. Nothing contained in this Section 8.2 shall limit the
application of Article XXVIII in accordance with its terms.
Except for notices expressly otherwise provided for in the Operative Agreements,
Lessee hereby waives presentment, demand, protest and notice of any kind
including, without limitation, notices of default, notice of acceleration and
notice of intent to accelerate.
Section 8.3. Additional Remedies. In addition to the remedies set forth in
Section 8.2, if any Event of Default shall occur, Agent shall, if instructed by
the Required Lessors, sell the Collateral in one or more sales; provided,
Lessors shall have no liability to Lessee if they fail to instruct Agent to
conduct such a sale. Any Lessor or Agent may purchase all or any part of the
Collateral at such sale. Lessee acknowledges that sales for cash or on credit to
a wholesaler, retailer or user of such Collateral, at a public or private
auction, are all commercially reasonable. Any notice required by law of intended
disposition by Agent shall be deemed reasonable and properly given if given at
least 10 days before such disposition.
Section 8.4. Proceeds of Sale; Deficiency. All payments received and
amounts held or realized by Agent at any time when an Event of Default shall
have occurred and be continuing, as well as all payments or amounts then held or
thereafter received by Agent, shall be distributed forthwith upon receipt by
Agent in the following order of priority:
first: so much of such payments or amounts as shall be required to
pay the reasonable fees and compensation of Agent in connection with
acting as Agent not previously paid by Lessee shall be distributed to
Agent;
second: so much of such payments or amounts as shall be required to
reimburse first Agent and then any Lessor for any tax (except as excluded
pursuant to Section 8.1 of the Participation Agreement), expense or other
amount owed to
20
Agent (in its capacity as Agent) or any Lessor in connection with the
collection or distribution of such payments or amounts to the extent not
previously reimbursed by Lessee (including, without limitation, the
expenses of any sale, taking or other proceeding, expenses in connection
with realizing on any of the Collateral, reasonable attorneys' fees and
expenses (including the allocated costs of internal counsel), court costs
and any other reasonable expenditures incurred or reasonable expenditures
or advances made by Agent (in its capacity as Agent) or any Lessor in the
protection, exercise or enforcement of any right, power or remedy upon
such Event of Default whether pursuant to Section 8.2 or otherwise) shall
be so applied by Agent first to itself and then to Lessors; and in case
the aggregate amount so to be paid to the Lessors in accordance herewith
shall be insufficient to pay all such amounts as aforesaid, then ratably,
without priority of one such Person over the other, in the proportion that
the amount which would have been distributed to each such Person pursuant
to this provision but for such insufficiency bears to the aggregate amount
which would have been distributed to all Persons except for such
insufficiency;
third: (i) so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Lessors for payments or
deposits pursuant to Article XII (to the extent not previously reimbursed
and to the extent not constituting an indemnity paid or payable for an act
constituting gross negligence or willful misconduct) shall be distributed
to the then existing or prior Lessors, ratably, without priority of one
over the other, in accordance with the amount of the payments or deposits
made by each such then existing or prior Lessor pursuant to such Article
XII; and (ii) so much of such payments or amounts remaining as shall be
required to pay the then existing or prior Lessors the amounts payable to
them pursuant to the provisions of Section 8.5 hereof or Section 11.5 of
the Participation Agreement and the amounts of all other unpaid
obligations then due and payable to them hereunder and under the
Participation Agreement (other than obligations covered by clause fourth
of this Section 8.4) shall be distributed to each Lessor (including its
predecessor holders thereof) entitled thereto; and in case the aggregate
amount so to be paid in accordance with clauses (i) and (ii) above shall
be insufficient to pay all such amounts as aforesaid, then, ratably,
without priority of one such Person over the other, in the proportion that
the amount which would have been distributed to each such Person pursuant
to this clause third but for such insufficiency bears to the aggregate
amount which would have
21
been distributed to all such Persons pursuant to this clause third but for
such insufficiency;
fourth: so much of such payments or amounts remaining as shall be
required to pay in full each Lessor's Lease Percentage of the aggregate
unpaid Lease Balance, the Aggregate Make-Whole Premium, if any, and all
accrued but unpaid Accrued Rent (including, to the extent permitted by
applicable law, interest on interest) shall be distributed to the Lessors,
and in case the aggregate amount to be so distributed shall be
insufficient to pay the unpaid Lease Balance, the Aggregate Make-Whole
Premium, if any, and all accrued but unpaid Accrued Rent in full all as
aforesaid, then, ratably, without priority of one over the other, in the
proportions that each Lessor's Lease Percentage of aggregate unpaid Lease
Balance, the Aggregate Make-Whole Premium, if any, then due and payable
and all accrued but unpaid Accrued Rent to the date of distribution bears
to the aggregate unpaid Lease Balance, the Aggregate Make-Whole Premium,
if any, due and payable and all accrued but unpaid Accrued Rent to the
date of distribution under the Lease; and
fifth: so much of such payments or amounts as shall remain shall be
distributed to Lessee.
Section 8.5. Right to Perform Lessee's Agreements. If Lessee fails to
perform any of its agreements contained herein or in any other Operative
Agreement, whether or not an Event of Default has occurred and is continuing,
Agent, upon written instructions from the Required Lessors and receipt by Agent
of indemnification satisfactory to it, may perform such agreement and the fees
and expenses incurred by Agent (or one or more Lessors) in connection with such
performance together with interest thereon shall be payable by Lessee upon
demand. Interest on fees and expenses so incurred by Agent or one or more
Lessors shall accrue at the rate provided in Section 3.2 for overdue payments.
Article IX
RETURN OF EQUIPMENT
If Agent, upon the instruction of the Required Lessors, shall rightfully
demand possession of the Equipment pursuant to this Lease, Lessee, at its
expense, shall forthwith disassemble, package to facilitate reassembly and
deliver exclusive possession of such Equipment to Agent at a location designated
by Agent, together with a copy of an inventory list of the Equipment then
subject to the Lease, all then current plans, specifications and
22
operating, maintenance and repair manuals relating to the Equipment that have
been received or prepared by Lessee, appropriately protected and in the
condition required by Section 5.3 hereof, to Agent. In addition, if this Lease
has been terminated pursuant to Section 8.2, Lessee shall maintain the Equipment
in the condition required by Section 5.3, store the Equipment without cost to
the Agent or any Lessor and keep all of the Equipment insured in accordance with
Article VII for 90 days after redelivery thereof.
Article X
EARLY TERMINATION
If no Event of Default or event which with the giving of notice and/or
passage of time could become an Event of Default shall exist, on any Payment
Date after the first Renewal Term, Lessee may, at its option, by giving at least
30 days advance written notice to Agent and the Lessors, purchase all, but not
less than all, of the Equipment for the sum of (i) all unpaid Accrued Rent due
and payable on or prior to such Payment Date, (ii) the Lease Balance (after
taking into account all payments actually made pursuant to clause (i)), (iii) an
amount equal to the Aggregate Make-Whole Premium, and (iv) all other fees and
expenses then due and payable pursuant to this Lease and the other Operative
Agreements. Upon the payment of such sums by Lessee in accordance with the
provisions of the preceding sentence, the obligation of Lessee to pay Rent
hereunder shall cease, the term of this Lease shall end on the date of such
payment and Agent shall execute and deliver to Lessee a xxxx of sale (without
representations or warranties, except that the Equipment is free and clear of
Lessor Liens) and such other documents as may be required to release the
Equipment from the terms and scope of this Lease, in such form as may be
reasonably requested by Lessee, all at Lessee's own cost and expense.
Article XI
LEASE TERMINATION
Section 11.1. Lessee's Options. Not later than 270 days prior to the last
day of the Initial Term, or of any Renewal Term then in effect hereunder (other
than the fifth Renewal Term in the case of paragraph (a) below), Lessee shall by
delivery of written notice to the Agent and Lessors, exercise either the Renewal
Option, on the one hand, or the Lessee Purchase Option or the Sale Option, or a
combination of both, on the other hand, all in accordance with the terms set
forth below:
23
(a) Renew this Lease as to all of the Equipment for an additional
one year Renewal Term (the "Renewal Option") on the terms and conditions
set forth herein and in each Lease Supplement;
(b) Purchase for cash all or one or more Functional Units then
subject to this Lease on the last day of the Initial Term or Renewal Term
with respect to which such option is exercised (the "Lessee Purchase
Option"). If Lessee elects to exercise the Lessee Purchase Option with
respect to all of the Functional Units then subject to this Lease, Lessee
shall pay to Agent, for the benefit of the Lessors, the Purchase Option
Exercise Amount, the Aggregate Make-Whole Premium (provided such premium
shall not be due if such option is exercised at the end of the fifth
Renewal Term) and any other amounts then due and payable by Lessee under
the Lease or any other Operative Agreement. If Lessee elects to exercise
the Lessee Purchase Option with respect to Functional Units comprising
less than all of the Functional Units then subject to this Lease, (A)
Lessee shall pay to Agent, for the benefit of the Lessors, together with
all Rent then due and payable the sum of the following amounts:
(i) the applicable Make-Whole Premium with respect to each
Functional Unit subject to the Lessee Purchase Option (provided such
premium shall not be due if such option is exercised at the end of
the fifth Renewal Term), and
(ii) with respect to each Functional Unit subject to the
Lessee Purchase Option, the greater of (x) the Functional Unit
Balance of such Functional Unit to be purchased or (y) the Appraised
Value of such Functional Unit at the date of purchase, provided that
in no event shall Lessee be required to pay to Agent an amount
greater than the Lease Balance (after application of Proceeds
pursuant to subsection (c) below) plus the applicable Make-Whole
Premiums if due as provided for above and any other amounts then due
and payable by Lessee under the Lease and (B) Lessee shall be deemed
to have elected the Sale Option (defined below) with respect to all
of the remaining Functional Units, providing, however that if after
the Lessee's election of the Lessee Purchase Option the total
Purchase Price of the remaining Functional Units represents less
than 20% of the total Purchase Price of all Functional Units subject
to the Lease immediately prior to the purchases contemplated by
Sections 11.1(b) and 11.1(c), Lessee shall be treated as having made
the Lessee Purchase Option with respect to all of the Functional
Units;
24
(c) (1) Sell on behalf of Lessors on the Termination Date for cash,
to a purchaser or purchasers not in any way affiliated with Lessee, the
Functional Units not purchased by Lessee pursuant to the Lessee Purchase
Option (the "Sale Option"); provided, however, that Lessee may exercise
the Sale Option only with respect to Functional Units whose aggregate
Purchase Price represents at least 20% of the total Purchase Price of all
Functional Units then subject to the Lease. If Lessee elects the Sale
Option with respect to Functional Units comprising less than all of the
Functional Units then subject to this Lease, Lessee shall be deemed to
have elected the Lessee Purchase Option with respect to all of the
remaining Functional Units.
(2) Simultaneously with dispositions pursuant to the Sale Option,
Lessee shall pay to Agent, for the benefit of the Lessors, from the gross
proceeds of such sales, without deductions or expense reimbursements (the
"Proceeds"), the Lease Balance as of the Termination Date (as determined
after any payment of Rent due on such date) plus the applicable Make-Whole
Premiums (except that no Make-Whole Premiums shall be payable by Lessee on
Functional Units sold pursuant to an exercise of the Sale Option with
respect to the second, fourth or fifth Renewal Term) and any other amounts
then due and payable under any of the Operative Agreements. If the
Proceeds exceed the sum of the Lease Balance as of the Termination Date,
plus applicable Make-Whole Premiums as of such date and any other payments
then due and payable under any of the Operative Agreements, Lessee will
retain the portion of the Proceeds in excess thereof. If the Proceeds are
less than the sum of the Lease Balance as of the Termination Date plus
applicable Make-Whole Premiums as of such date and any other payments then
due and payable under any of the Operative Agreements, Lessee will pay or
will cause to be paid to Agent, for the benefit of the Lessors, on the
Termination Date (i) the Proceeds and (ii) from its own funds, the sum of
any payments then due and payable under any of the Operative Agreements,
including any installments of Rent then due and payable, applicable
Make-Whole Premiums (except that no Make-Whole Premiums shall be payable
by Lessee on Functional Units sold pursuant to an exercise of the Sale
Option with respect to the second, fourth or fifth Renewal Term) plus, at
the option of the Required Lessors, either (x) the Applicable Percentage
Amount or (y) the Recourse Deficiency Amount (the amount determined
pursuant to this clause (ii) shall be referred to as the "Sale Recourse
Amount"); provided that in no event shall the Sale Recourse Amount exceed
the Lease Balance and the applicable Make-Whole Premiums, if required
above, after taking into account all payments of Rent and Proceeds. Agent,
upon instruction of
25
the Required Lessors, shall exercise the option in the preceding sentence
by written notification to Lessee not later than ten Business Days prior
to the last day of the Lease Term. The obligation of Lessee to pay the
Sale Recourse Amount shall be a recourse obligation of Lessee (and shall
be in addition to any other recourse obligation of Lessee under any other
provision of the Operative Agreements) and shall be payable on the date
provided for in the preceding sentence. The Sale Recourse Amount and all
Proceeds paid to Agent for the direct benefit of the Lessors shall be
distributed in accordance with Article XXVIII.
Section 11.2. Election of Options. Lessee's election of any of the
foregoing options in Section 11.1 shall be irrevocable at the time made, but if
Lessee fails to make a timely election, Lessee will be deemed, in the case of
the Initial Term and each Renewal Term then in effect (other than the fifth
Renewal Term) to have irrevocably elected the Renewal Option and, in the case of
the fifth Renewal Term, Lessee will be deemed to have irrevocably elected the
Lessee Purchase Option with respect to all of the Functional Units then subject
to this Lease. In addition, if there exists an Event of Default at any time
after the Sale Option is properly elected, the Sale Option shall automatically
be revoked and Lessor shall be entitled to exercise all rights and remedies
provided in Article VIII. Lessee may not elect the Sale Option if there exists
on the date the election is made an Event of Default or an event which with the
giving of notice and/or passage of time could become an Event of Default.
Section 11.3. Sale Option Procedures. If Lessee elects the Sale Option,
Lessee shall use its best commercial efforts to obtain the highest all cash
purchase price for the Functional Units subject to the Sale Option. All costs
related to such sale and delivery, including, without limitation, the cost of
sales agents, removal of such Equipment, delivery of documents and Equipment,
certification and testing of such Equipment in any location chosen by the buyer
or prospective buyer, legal costs, costs of notices, any advertisement or other
similar costs, or other information and of any parts, configurations, repairs or
modifications desired by a buyer or prospective buyer shall be borne entirely by
Lessee, without regard to whether such costs were incurred by Agent, the
Lessors, Lessee or any potentially qualified buyer. Neither Agent nor Lessors
shall have any responsibility for procuring any purchaser. If, nevertheless, any
Lessor, or Agent, at the direction of the Required Lessors, undertakes any sales
efforts, Lessee shall promptly reimburse Agent or such Lessor for any charges,
costs or expenses incurred in such effort, including any allocated time charges,
costs or expenses of internal counsel or other attorneys' fees. Equipment
subject to the Sale Option shall be in the condition required by Section 5.3
hereof at the time of the sale. Agent, at the
26
direction of the Required Lessors, shall determine whether to accept the highest
all cash offer for the Equipment subject to the Sale Option. Any purchaser or
purchasers of the Equipment shall not in any way be affiliated with Lessee.
Pending the consummation of the Sale Option, Lessee shall at all times maintain
the Equipment in the condition required by Section 5.3, store the Equipment
without cost to the Lessors and keep all of the Equipment insured in accordance
with Article VII hereof.
Section 11.4. Payment of Excess Amounts. Following the application of all
amounts required pursuant to Section 11.2, if the Appraised Value of any
Functional Unit sold pursuant to the Sale Option (without taking into account
any removal costs) as of the Termination Date is in excess of the Proceeds
attributable to any such Functional Unit, Lessee shall promptly pay to Agent,
for the benefit of the Lessors, such excess.
Section 11.5. Appraisals. If Lessee gives notice of exercise of the Sale
Option with respect to one or more Functional Units, Agent (upon direction from
any Lessor) shall engage an appraiser of nationally recognized standing
reasonably acceptable to the Required Lessors, at Lessee's expense, to determine
(by appraisal methods satisfactory to Lessors holding at least 66.67% of the
Outstanding Investments in their sole and absolute discretion) the Fair Market
Value of the Equipment subject to the Sale Option as of (a) the first day of any
Renewal Term in which the Sale Option was elected, and (b) the Termination Date.
The Appraised Value determined pursuant to this Section 11.5 shall be applied in
accordance with the provisions of this Article XI.
Article XII
AGENT
Section 12.1. Appointment of Agent; Powers and Authorization to Take
Certain Actions.
(a) Each Lessor irrevocably appoints and authorizes BA Leasing &
Capital Corporation to act as agent hereunder, with such powers as are
specifically delegated to Agent by the terms of this Lease, together with
such other powers as are reasonably incidental thereto. Each Lessor
authorizes and directs Agent to, and Agent agrees for the benefit of the
Lessors, that, on each Delivery Date it will accept the documents
described in Articles II and III of the Participation Agreement. Agent
accepts the agency hereby created applicable to it and agrees to receive
all payments and proceeds pursuant to this Lease and disburse such
payments or proceeds in accordance with this Lease. Agent
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shall have no duties or responsibilities except those expressly set forth
in this Lease and the Participation Agreement. Agent shall not be
responsible to any Lessor (or to any other Person) (i) for any recitals,
statements, representations or warranties of any party contained in this
Lease, the Participation Agreement, or in any certificate or other
document referred to or provided for in, or received by any of them under,
this Lease or the other Operative Agreements, other than the
representations and warranties made by Agent in Section 5.3 of the
Participation Agreement, or (ii) for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Collateral or the title
thereto (subject to the Agent's obligations under Section 6.3 of the
Participation Agreement) or of this Lease or any other document referred
to or provided for herein or (iii) for any failure by Lessee, any Lessor
or any other third party (other than Agent) to perform any of its
obligations hereunder. Agent may employ agents, trustees or
attorneys-in-fact, may vest any of them with any property, title, right or
power deemed necessary for the purposes of such appointment and shall not
be responsible for the negligence or misconduct of any of them selected by
it with reasonable care. Neither Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith,
except for its or their own gross negligence or willful misconduct.
(b) Agent shall not have any duty or obligation to manage, control,
use, operate, store, lease, sell, dispose of or otherwise deal with any
item of Equipment or this Lease, or to otherwise take or refrain from
taking any action under, or in connection with, this Lease or any related
document to which Agent is a party, except as expressly provided by the
terms hereof, and no implied duties of any kind shall be read into this
Lease against Agent. The permissive right of Agent to take actions
enumerated in this Lease shall never be construed as a duty, unless Agent
is instructed or directed to exercise, perform or enforce one or more
rights by the Required Lessors (provided that Agent has received
indemnification reasonably satisfactory to it). Subject to Section 12.1(c)
below, no provision of this Lease shall require Agent to expend or risk
its own funds or otherwise incur any financial liability in the
performance of any of its obligations hereunder, or in the exercise of any
of its rights or powers hereunder. It is understood and agreed that the
duties of Agent are ministerial in nature.
(c) Except as specifically provided herein, Agent is acting
hereunder solely as agent and, except as specifically
28
provided herein, is not responsible to any party hereto in its individual
capacity, except with respect to any claim arising from Agent's gross
negligence or willful misconduct or any breach of a representation or
covenant made in its individual capacity.
(d) Agent may accept deposits from, lend money to and otherwise deal
with Lessee or any of its Affiliates with the same rights as it would have
if it were not the named Agent hereunder.
Section 12.2. Reliance. Agent may rely upon, and shall not be bound or
obligated to make any investigation into the facts or matters stated in, any
certificate, notice or other communication (including any communication by
telephone, telecopy, telex, telegram or cable) reasonably believed by it to be
genuine and correct and to have been made, signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Agent with due care
(including any expert selected by Agent to aid Agent in any calculations
required in connection with its duties under this Lease).
Section 12.3. Action Upon Instructions Generally. Subject to Sections
8.2(d), 12.4 and 12.6, upon written instructions of the Required Lessors, Agent
shall, on behalf of the Lessors, give such notice or direction, exercise such
right, remedy or power hereunder or in respect of any item of Equipment, and
give such consent or enter into such amendment to any document to which it is a
party as Agent as may be specified in such instructions. Agent shall deliver to
each Lessor a copy of each notice, report and certificate received by Agent
described in Article X and Sections 5.4, 5.5, 6.1, 6.2, 7.1, 7.2 and 11.1 hereof
and Sections 6.1 and 6.2 of the Participation Agreement. Agent shall have no
obligation to investigate or determine whether there has been an Event of
Default or an event which with the passage of time and/or the giving of notice
could result in an Event of Default. Agent shall not be deemed to have notice or
knowledge of an Event of Default or event which with the passage of time and/or
the giving of notice could result in an Event of Default unless a Responsible
Officer of Agent is notified in writing of such Event of Default or event which
with the passage of time and/or the giving of notice could result in an Event of
Default, provided that Agent shall be deemed to have been notified in writing of
any failure of Lessee to pay Rent in the amounts and at the times set forth in
Article III. If Agent receives notice of an Event of Default, Agent shall give
prompt notice thereof, at Lessee's expense, to each Lessor. Subject to Sections
8.2(d), 12.4 and 12.6 and Article XVII, Agent shall take action or refrain from
taking action with respect to such Event of Default as directed by the Required
Lessors; provided that, unless and
29
until Agent receives such directions, Agent shall refrain from taking any action
with respect to such Event of Default. Prior to the date the Lease Balance shall
have become due and payable by acceleration pursuant to Section 8.2, Required
Lessors may deliver written instructions to the Agent to waive, and Agent shall
waive pursuant thereto, any Event of Default and its consequences; provided that
in the absence of written instructions from all Lessors, Agent shall not waive
any (i) Payment Default or (ii) covenant or provision which, under Section 10.1
of the Participation Agreement, cannot be modified or amended without the
consent of all Lessors. As to any matters not expressly provided for by this
Lease, Agent shall in all cases be fully protected in acting, or in refraining
from acting, hereunder in accordance with instructions signed by the Required
Lessors and such instructions of the Required Lessors and any action taken or
failure to act pursuant thereto shall be binding on each Lessor.
Section 12.4. Indemnification. Each Lessor shall reimburse and hold Agent
harmless, ratably in accordance with its Lease Percentage at the time the
indemnification is required to be given, (but only to the extent that any such
indemnified amounts have not in fact been paid to Agent by, or on behalf of, the
Lessee in accordance with Section 7.1 of the Participation Agreement) from any
and all claims, losses, damages, obligations, penalties, liabilities, demands,
suits, judgments, or causes of action, and all legal proceedings, and any
reasonable costs or expenses in connection therewith, including allocated
charges, costs and expenses of internal counsel of Agent and all other
reasonable attorneys' fees and expenses incurred by Agent, in any way relating
to or arising in any manner out of (i) this Lease or any other Operative
Agreement, the enforcement hereof or thereof or the consummation of the
transactions contemplated hereby or thereby, or (ii) instructions from the
Required Lessors (including, without limitation, the costs and expenses that
Lessee is obligated to and does not pay hereunder, but excluding normal
administrative costs and expenses incident to the performance by Agent of its
agency duties hereunder other than materially increased administrative costs and
expenses incurred as a result of an Event of Default), provided that no Lessor
shall be liable for any of the foregoing to the extent they arise from (a) the
gross negligence or willful misconduct of Agent, (b) the inaccuracy of any
representation or warranty or breach of any covenant given by Agent in Section
5.3 or in Section 6.3 of the Participation Agreement or in this Lease, (c) in
the case of the Agent's handling of funds, the failure to act with the same care
as the Agent uses in handling its own funds or (d) any taxes, fees or other
charges payable by the Agent based on or measured by any fees, commissions or
compensation received by it for acting as Agent in connection with the
transactions contemplated by the Operative Agreements.
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Section 12.5. Independent Credit Investigation. Each Lessor by entering
into this Lease agrees that it has, independently and without reliance on Agent
or any other Lessor and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Lessee and its own decision to
enter into this Lease and all related documents to which it is a party and that
it will, independently and without reliance upon Agent or any other Lessor, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking action under
this Lease and any related documents to which it is a party. Agent shall not be
required to keep itself informed as to the performance or observance by Lessee
of any other document referred to (directly or indirectly) or provided for
herein or to inspect the properties or books of Lessee. Except for notices or
statements which Agent is expressly required to give under this Lease and for
notices, reports and other documents and information expressly required to be
furnished to Agent alone (and not also to each Lessor, it being understood that
Agent shall forward copies of same to each Lessor) hereunder or under any other
Operative Agreement, Agent shall not have any duty or responsibility to provide
any Lessor with copies of notices or with any credit or other information
concerning the affairs, financial condition or business of Lessee (or any of its
affiliates) that may come into the possession of Agent or any of its Affiliates.
Section 12.6. Refusal to Act. Except for notices and actions expressly
required of Agent hereunder and except for the performance of its covenants in
Section 6.3 of the Participation Agreement, Agent shall in all cases be fully
justified in failing or refusing to act unless (a) it is indemnified to its
reasonable satisfaction by the Lessors against any and all liability and
reasonable expense which may be incurred by it by reason of taking or continuing
to take any such action (provided that such indemnity shall not be required to
extend to liability or expense arising from Agent's gross negligence or willful
misconduct, it being understood that no action taken, or not taken, by Agent in
accordance with the instructions of the Required Lessors shall be deemed to
constitute gross negligence or willful misconduct on its part) and (b) it is
reasonably satisfied that such action is not contrary to this Lease or any other
Operative Agreement or to any applicable law.
Section 12.7. Resignation or Removal of Agent; Appointment of Successor.
Subject to the appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time by giving notice thereof to each Lessor or
may be removed at any time by written notice from the Required Lessors. Upon any
such resignation or removal, the Required Lessors at the time of the resignation
or removal shall have the right to appoint a
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successor Agent which shall be a financial institution having a combined capital
and surplus of not less than $100,000,000. If, within 30 calendar days after the
retiring Agent's giving of notice of resignation or receipt of a written notice
of removal, a successor Agent is not so appointed and does not accept such
appointment, then the retiring or removed Agent may appoint a successor Agent
and transfer to such successor Agent all rights and obligations of the retiring
Agent. Such successor Agent shall be a financial institution having combined
capital and surplus of not less than $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Agent and the retiring or removed Agent
shall be discharged from duties and obligations as Agent thereafter arising
hereunder and under any related document. If the retiring Agent does not appoint
a successor, any Lessor shall be entitled to apply to a court of competent
jurisdiction for such appointment, and such court may thereupon appoint a
successor to act until such time, if any, as a successor shall have been
appointed as above provided.
Section 12.8. Separate Agent. The Required Lessors may, and if they fail
to do so at any time when they are so required, Agent may, for the purpose of
meeting any legal requirements of any jurisdiction in which any item of
Equipment or Collateral may be located, appoint one or more individuals or
corporations either to act as co-agent jointly with Agent or to act as separate
agent of all or any part of the items of Equipment or Collateral or this Lease,
and vest in such individuals or corporations, in such capacity, such title to
the items of Equipment or Collateral or this Lease or any part thereof, and such
rights or duties as Agent may consider necessary or desirable. Agent shall not
be required to qualify to do business in any jurisdiction where it is not now so
qualified. Agent shall execute, acknowledge and deliver all such instruments as
may be required by any such co-agent or separate agent more fully confirming
such title, rights or duties to such co-agent or separate agent. Upon the
acceptance in writing of such appointment by any such co-agent or separate
agent, it or he shall be vested with such interest in the items of Equipment or
Collateral and this Lease or any part thereof, and with such rights and duties,
not inconsistent with the provisions of this Lease, as shall be specified in the
instrument of appointment, jointly with Agent (except insofar as local law makes
it necessary for any such co-agent or separate agent to act alone), subject to
all terms of this Lease. Any co-agent or separate agent, to the fullest extent
permitted by legal requirements of the relevant jurisdiction, at any time, by an
instrument in writing, shall constitute Agent its attorney-in-fact and agent,
with full power and authority to do all acts and things and to
32
exercise all discretion on its behalf and in its name. If any co-agent or
separate agent shall die, become incapable of acting, resign or be removed, the
interest in the items of Equipment or Collateral and this Lease and all rights
and duties of such co-agent or separate agent shall, so far as permitted by law,
vest in and be exercised by Agent, without the appointment of a successor to
such co-agent or separate agent.
Section 12.9. Termination of Agency. The agency created hereby shall
terminate upon the final disposition by Agent of all Collateral at any time
subject hereto and the final distribution by Agent of all monies or other
property or proceeds received pursuant to this Lease in accordance with Article
XXVIII, provided that at such time Lessee shall have complied fully with all the
terms hereof.
Section 12.10. Compensation of Agency. Lessee shall pay Agent its
reasonable and customary fees, costs and expenses for the performance of Agent's
obligations hereunder.
Article XIII
OWNERSHIP, GRANT OF SECURITY
INTEREST AND FURTHER ASSURANCES
Section 13.1. Grant of Security Interest. Title to the Equipment shall
remain in the Agent, for the benefit of the Lessors, as security for the
obligations of Lessee hereunder and under each of the other Operative Agreements
to which it is a party until such time as Lessee has fulfilled all of its
obligations hereunder and under such other Operative Agreements. Lessee hereby
assigns, grants and pledges to Agent, for the benefit of the Lessors, a security
interest in all of Lessee's right, title and interest, whether now or hereafter
existing or acquired, in the Collateral, to secure the payment and performance
of all obligations of Lessee now or hereafter existing under this Lease or any
other Operative Agreement. Lessee shall, at its own cost and expense, do any
further act and execute, acknowledge, deliver, file, register and/or record any
further documents which Agent or any Lessor may reasonably request in order to
protect its or their title to and perfected security interest in the Collateral,
subject to no Liens other than Permitted Liens, and Agent's or Lessor's rights
and benefits under this Lease. Lessee shall promptly and duly execute and
deliver to Agent, for the benefit of the Lessors, such documents and assurances
and take such further action as Agent or Lessors may from time to time
reasonably request in order to carry out more effectively the intent and purpose
of this Lease and the other Operative Agreements, to establish and protect the
rights and remedies created or intended to be created in favor of
33
Lessors and Agent hereunder and thereunder, and to establish, perfect and
maintain the right, title and interest of Agent or Lessors in and to the
Equipment, subject to no Lien other than Permitted Liens, or of such financing
statements, fixture filings, certificates of title or other documents with
respect hereto as Agent may from time to time reasonably request, and Lessee
agrees to execute and deliver promptly such of the foregoing financing
statements, fixture filings and certificates of title or other documents as may
require execution by Lessee. To the extent permitted by applicable laws, Lessee
hereby authorizes any such financing statements, fixture filings and
certificates of title to be filed without the necessity of the signature of
Lessee. Upon Lessee's request and at such time as all of the obligations of
Lessee under this Lease and any other Operative Agreement have been indefeasibly
paid or performed in full (other than Lessee's contingent obligations, if any,
under Articles VII and VIII of the Participation Agreement), Agent shall, and
Agent is hereby authorized by Lessors to act on their behalf to, execute and
deliver termination statements and other appropriate documentation reasonably
requested by Lessee, all at Lessee's own cost and expense, to evidence Agent's
release of Agent's security interest in the Collateral. At such time, Agent
shall execute and deliver to Lessee a xxxx of sale (without representations or
warranties except that the Equipment is free and clear of Lessor Liens) for the
Equipment. Notwithstanding the foregoing, such release shall not relieve Lessee
of its continuing obligations under Articles VII, VIII, and XI of the
Participation Agreement or any other provision of an Operative Agreement which
survives the termination hereof.
Section 13.2. Retention of Title or Proceeds in the Case of Default. If
Lessee would be entitled to any amount (including any Casualty Proceeds or
Partial Casualty Proceeds) or title to any item of Equipment hereunder but for
the existence of any Event of Default or event which with the giving of notice
and/or passage of time could become an Event of Default, Agent shall, on behalf
of the Lessors, hold such amount or item of Equipment as part of the Collateral
and shall be entitled to apply such amounts against any amounts due hereunder,
provided that Agent shall distribute such amount or transfer such Equipment in
accordance with the other terms of this Lease if and when no Event of Default or
event which with the giving of notice and/or passage of time could become an
Event of Default exists.
Article XIV
EFFECT OF WAIVER
No delay or omission to exercise any right, power or remedy accruing to
Lessors upon any breach or default of Lessee
34
hereunder shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein or of or in any similar breach or default thereafter occurring, nor
shall any single or partial exercise of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other right, power or
remedy, nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of Lessors of
any breach or default under this Lease must be specifically set forth in writing
and must satisfy the requirements set forth in Article XVII with respect to
approval by Lessors.
Article XV
SURVIVAL OF COVENANTS
All claims pertaining to the representations, warranties and covenants of
Lessee under Articles II, III, IV, V, VI, VII, X, XI, XXI and XXII shall survive
the termination of this Lease to the extent such claims arose out of events
occurring or conditions existing prior to any such termination.
Article XVI
APPLICABLE LAW
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF
CALIFORNIA, WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF.
Article XVII
EFFECT AND MODIFICATION OF LEASE
No variation, modification, amendment or waiver of this Lease, including
any schedules or exhibits hereto, shall be valid unless the same shall be
effected in accordance with Article X of the Participation Agreement.
Article XVIII
NOTICES
All notices, demands, requests, consents, approvals and other instruments
hereunder shall be in writing and shall be
35
deemed to have been properly given if given as provided for in Section 11.4 of
the Participation Agreement.
Article XIX
COUNTERPARTS
This Lease has been executed in several counterparts. One counterpart has
been prominently marked "Counterpart No. 1 -- Agent's Original Copy." Only the
counterpart marked "Counterpart No. 1--Agent's Original Copy" shall evidence a
monetary obligation of Lessee or shall be deemed to be an original or to be
chattel paper for purposes of the Uniform Commercial Code, and such copy shall
be held by Agent, for the benefit of the Lessors.
Article XX
SEVERABILITY
Whenever possible, each provision of this Lease shall be interpreted in
such manner as to be effective and valid under applicable law; but if any
provision of this Lease shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Lease.
Article XXI
SUCCESSORS AND ASSIGNS; MERGER
Section 21.1. Successors and Assigns. This Lease shall be binding upon the
parties hereto and, subject to Article XXII hereof, their respective successors
and assigns, and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 21.2. Except as otherwise provided in Section 6.1(a) (ii) of the
Participation Agreement, Lessee shall not consolidate with or merge with or into
any other corporation or entity, or permit any other corporation or entity to
consolidate with or merge with or into Lessee or any subsidiary of Lessee.
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Article XXII
ASSIGNMENTS
Section 22.1. Assignment by Lessee. Lessee shall not sell, assign,
transfer or otherwise dispose of its rights or delegate its obligations under
this Lease to any other person, except as permitted or required by Section 5.2
or Section 6.1 of the Participation Agreement.
Section 22.2. Lessor Transfers. No Lessor shall assign, convey or
otherwise transfer (including pursuant to a participation) all or any portion of
its right, title or interest in, to or under any of the Operative Agreements,
any Collateral and its interest in the Equipment except that without the prior
written consent of the Agent or the Lessee (x) any bank or similar financial or
commercial lending institution may pledge its interest in the ordinary course of
its business without the consent of the Lessee or the Agent; provided, that no
transfer upon a foreclosure pursuant to such a pledge may occur unless this
Section (other than clause (x)) is complied with, (y) any Lessor may transfer
all or any portion of its interest to any other existing Lessor and (z) any
Lessor may transfer any or all of such right, title and interest as provided in
paragraph (a) or (b) below:
(a) Transfers to Affiliates. Subject to the satisfaction of the
conditions set forth in this Section 22.2, any Lessor may make any such
assignment, conveyance or transfer to any Affiliate if such transferee's
obligations under the Operative Agreements shall have been unconditionally
guaranteed by such Lessor by an instrument in form and substance
reasonably satisfactory to the Agent; provided that the term of such
Lessor's guarantee shall not be required to extend past March 31, 1995.
(b) Transfers to Non-Affiliates. Subject to the satisfaction of the
conditions set forth in this Section 22.2, any Lessor may make any such
assignment, conveyance or transfer to any entity which does not qualify as
a transferee under the preceding paragraph (a) if (x) (i) such entity has
a consolidated net worth of at least $100,000,000 as at the end of its
most recent fiscal year, or (ii) such transferee entity's obligations
under the Operative Agreements shall have been unconditionally guaranteed
by the transferor by an instrument in form and substance reasonably
satisfactory to the Lessee and the Agent or (iii) such transferee entity's
obligations under the Operative Agreements are unconditionally guaranteed
by an instrument in form and substance reasonably satisfactory to the
Required Lessors) by an entity controlling such
37
transferee entity, if such entity would qualify as a transferee entity under
clause (i) hereof and (y) the provisions of Section 22.2(d) through (i) below
are satisfied with respect to such transfer.
(c) Transfer with Consent. Any transfer to an entity other than one
satisfying the requirements set forth in paragraph (a) or (b) of this Section
22.2 may only be made with the prior written consent of the Lessee and the
Required Lessors, which consent shall not be unreasonably withheld or delayed.
(d) Required Notice and Effective Date. Any Lessor desiring to effect a
transfer of its interest hereunder shall give written notice of each such
proposed transfer to the Lessee, the Agent and each other Lessor at least ten
(10) days prior to such proposed transfer, setting forth the name of such
proposed transferee, the percentage or interest to be retained by such Lessor,
if any, and the date on which such transfer is proposed to become effective. All
reasonable out-of-pocket costs incurred by the Agent in connection with any such
disposition by a Lessor under this Section 22.2 shall be borne by such Lessor.
In the event of a transfer under this Section 22.2, any expenses incurred by the
transferee in connection with its review of the Operative Agreements and its
investigation of the transactions contemplated thereby shall be borne by such
transferee or the relevant Lessor, as they may determine, but shall not be
considered costs and expenses which the Lessee is obligated to pay or reimburse
under Section 11.5 of the Participation Agreement.
(e) Assumption of Obligations. Any transferee pursuant to this Section
22.2 shall have executed and delivered to the Agent a letter in substantially
the form of the Investors Letter attached hereto as Exhibit A, and thereupon the
obligations of the transferring Lessor under the Operative Agreements shall be
proportionately released and reduced to the extent of such transfer. Upon any
such transfer as above provided, the transferee shall be deemed to be bound by
all obligations (whether or not yet accrued) under, and to have become a party
to, all Operative Agreements to which its transferor was a party, shall be
deemed the pertinent "Lessor" for all purposes of the Operative Agreements and
shall be deemed to have made that portion of the payments pursuant to the
Participation Agreement previously made or deemed to have been made by the
transferor represented by the interest being conveyed; and each reference herein
and in the other Operative Agreements to the pertinent "Lessor" shall thereafter
be deemed a reference to the transferee, to the extent of such transfer,
38
for all purposes. Upon any such transfer, the Agent shall deliver to each Lessor
and the Lessee a new Schedule I to the Participation Agreement, revised to
reflect the relevant information for such new Lessor and the Commitment of such
new Lessor (and the revised Commitment of the transferor Lessor if it shall not
have transferred its entire interest).
(f) Employee Benefit Plans. No Lessor may make any such assignment,
conveyance or transfer to or in connection with any arrangement or understanding
in any way involving any employee benefit plan (or its related trust), as
defined in Section 3(3) of ERISA, or with the assets of any such plan (or its
related trust), as defined in Section 4975(e) (1) of the Code (other than a
governmental plan, as defined in Section 3(32) of ERISA), with respect to which
the Lessee or such Lessor or any of their Affiliates is a party in interest
within the meaning of ERISA or a "disqualified person" within the meaning of the
Code.
(g) Limitation on Transfers. Notwithstanding paragraphs (a), (b) and (c)
of this Section 22.2, any Lessor proposing to transfer its interest may not make
any such assignment, conveyance or transfer at any time when there shall have
occurred and be continuing any material default of such Lessor to the Lessee
under the Participation Agreement.
(h) Amount of Commitment. No Lessor may make any such assignment,
conveyance or transfer if, as a consequence thereof, the transferor (if such
Lessor retains any part of its Commitment) or transferee Lessor would have a
Commitment (assuming for this purpose no funding by such Lessor) of less than
U.S. $2,000,000.
(i) Representations and Warranties. Notwithstanding anything to the
contrary set forth above, no Lessor may assign, convey or transfer its interest
to any Person, unless such Person shall have delivered to the Agent and the
Lessee a certificate confirming the accuracy of the representations and
warranties set forth in Section 5.2 of the Participation Agreement with respect
to such Person (other than as such representation or warranty relates to the
execution and delivery of Operative Agreements).
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Article XXIII
BROKERS
Neither the Lessee nor any Lessor has engaged or authorized any broker,
finder, investment banker or other third party to act on its behalf, directly or
indirectly, as a broker, finder, investment banker, agent or any other like
capacity in connection with this Lease or the transactions contemplated hereby,
except that Lessee has retained BA Leasing & Capital Corporation as arranger in
connection with the transactions contemplated hereby and Lessee shall be
responsible for, and shall indemnify, defend, and hold Agent and each Lessor
harmless from and against any and all claims, liabilities, or demands by BA
Leasing & Capital Corporation, in its capacity as arranger in connection with
the transactions contemplated hereby, for fees or other entitlements with
respect to this Lease or the transactions contemplated hereby or by the
Participation Agreement.
Article XXIV
JURY TRIAL
LESSEE WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS LEASE OR ANY RELATED DOCUMENT OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS LEASE OR ANY RELATED DOCUMENT AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
Article XXV
CAPTIONS; TABLE OF CONTENTS
Section captions and the table of contents used in this Lease (including
the schedules) are for convenience of reference only and shall not affect the
construction of this Lease.
Article XXVI
FINAL AGREEMENT
THIS LEASE, TOGETHER WITH THE OTHER OPERATIVE AGREEMENTS, REPRESENTS THE
ENTIRE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED BY THE LEASE AND THE OTHER OPERATIVE AGREEMENTS. THIS LEASE CANNOT
BE MODIFIED,
40
SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES, EXCEPT BY AN
INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Article XXVII
TIMELINESS OF PERFORMANCE
The provisions of Articles VIII and XI pertaining to the delivery of
notice and the performance of certain events on dates required by Articles VIII
and XI are to be strictly adhered to by the parties hereto.
Article XXVIII
DISTRIBUTION AND APPLICATION OF
RENTS AND OTHER PAYMENTS
Section 28.1. Pro Rata Payment. Except as specifically provided for at
Section 8.4 of this Lease or Section 4.5 of the Participation Agreement, all
amounts of money received or realized by Agent pursuant to any Operative
Agreement which are to be distributed to the Lessors (other than indemnification
payments payable to any Lessor by Lessee under any Operative Agreement and after
payment of accrued fees, expenses and indemnification payments payable to Agent
in its capacity as Agent that have been due and unpaid for 30 days or more)
shall be distributed to each Lessor pro rata, without preference or priority of
any Lessor over another, in accordance with the amounts due each Lessor at the
time of such payment in respect of the types of obligations described in the
Section pursuant to which the distribution is being made; provided, however,
that in the case where the aggregate amount to be so paid to the Lessors in
accordance herewith shall be insufficient to pay such amounts due to Lessors on
such distribution, then such amount shall be distributed ratably, without
priority of one such Person over the other, in the proportion that the amount
which would have been distributed to each such Person pursuant to this
provision, but for such insufficiency, bears to the aggregate amount which would
have been distributed to all Persons except for such insufficiency; and
provided, further, with respect to Rent, that all amounts shall be applied first
to the interest component thereof and then to the principal component.
[remainder of page intentionally left blank]
41
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.
XXXXXX-XXXXXX, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely as Agent
By_________________________________ By______________________________________
Name Printed:______________________ Name Printed:___________________________
Title:_____________________________ Title:__________________________________
By______________________________________
Name Printed:___________________________
Title:__________________________________
LESSORS:
PITNEY XXXXX CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By_________________________________ By______________________________________
Name Printed:______________________ Name Printed:___________________________
Title:_____________________________ Title:__________________________________
By_________________________________ By______________________________________
Name Printed:______________________ Name Printed:___________________________
Title:_____________________________ Title:__________________________________
MANUFACTURERS BANK
By_________________________________
Name Printed:______________________
Title:_____________________________
42
SCHEDULE I TO LEASE
Functional Unit
Equipment Location
Functional Unit
Equipment Location
Functional Unit
Equipment Location
Functional Unit
Equipment Location
EXHIBIT A TO LEASE
FORM OF INVESTORS LETTER
Xxxxxx-Xxxxxx, Inc.
[Address For Notice]
BA Leasing & Capital Corporation,
not individually, but solely as Agent
[Address For Notice]
Ladies and Gentlemen:
Capitalized terms used in this letter and not otherwise defined herein
shall have the meanings assigned thereto in that certain Participation Agreement
(the "Participation Agreement"), dated as of April __, 1994, among
Xxxxxx-Xxxxxx, Inc., a Delaware corporation, as Lessee, Tone Brothers, Inc., an
Iowa corporation, as Sublessee, certain institutions listed on Schedule I
thereto, and BA Leasing & Capital Corporation, a California corporation, as
Agent, unless the context otherwise requires. The undersigned has agreed to
purchase the interest of ______________ as a Lessor under the Participation
Agreement and the other Operative Agreements (as defined therein), representing
a Commitment of (amount) Dollars $(_______) (the "Interest"), and desires that
the Lessee execute and deliver to Agent and that Agent authenticate and deliver
to the undersigned and to each Lessor a new Schedule I to the Participation
Agreement evidencing the Commitment of the undersigned pursuant to Section 22.2
of the Lease. The undersigned hereby represents and warrants as of the date
hereof to the addressees hereof as follows:
(a) The undersigned will be acquiring the Interest with funds which
constitute general account assets and not assets of any separate account
in which any employee benefit plan has any interest or with assets
allocated to an insurance company pooled separate account as defined in
ERISA Section 3(17) maintained by a Lessor which satisfies the
requirements of U.S. Department of Labor Prohibited Transaction Class
Exemption 90-1 with respect to the transactions contemplated by the Lease
in order for such transactions to be exempt from the prohibitions of
Section 406 of ERISA and Section 4975 of the Code;
(b) The Interest is being acquired by the undersigned for investment
and not with a view to the resale or
distribution of such Interest or any part thereof, but without prejudice,
however, to the right of the undersigned at all times to sell or otherwise
dispose of all or any part of such Interest under a registration available
under the Securities Act of 1933, as amended, or under an exemption from
such registration available under such Act, it being understood that the
disposition by the undersigned of the Interest to be purchased by the
undersigned shall, at all times, remain entirely within its control;
(c) neither the undersigned nor any Person authorized to act on its
behalf has directly or indirectly offered to sell any interests in the
Collateral, the Interest or any security similar thereto, to, or otherwise
approved or negotiated with respect thereto with, anyone other than the
Lessors, and neither it nor any Person authorized to act on its behalf
will so offer or sell in violation of Section 5 of the Securities Act of
1933, as amended, or securities or blue sky law of any applicable
jurisdiction; and
(d) the undersigned agrees to treat its Interest for federal, state
and local income and franchise tax purposes as indebtedness of the Lessee.
The undersigned understands that the Interest has not been and will not be
registered or qualified under the Securities Act of 1933, as amended, or any
securities or "blue sky" laws of any jurisdiction and that no participant has an
obligation to effect such registration or otherwise assist in the disposition of
the Interest.
Very truly yours,
________________________________________
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
2
EXHIBIT B TO LEASE
FORM OF LEASE SUPPLEMENT (Xxxxxx-Xxxxxx, Inc. Lease)
LEASE SUPPLEMENT (Xxxxxx-Xxxxxx, Inc. Lease) dated ____________, 1994
(this "Lease Supplement") between XXXXXX-XXXXXX, INC., a Delaware corporation
(the "Lessee"), BA Leasing & Capital Corporation, Manufacturers Bank and Pitney
Xxxxx Credit Corporation (the "Lessors") and BA LEASING & CAPITAL CORPORATION,
not in its individual capacity, but solely in its capacity as Agent for the
Lessors;
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessors and the Agent have heretofore entered
into that certain Lease Intended as Security dated as of April 29, 1994 (the
"Lease"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings specified in the Lease; and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on each Delivery Date substantially in the form hereof for the
purpose of confirming the acceptance and lease of certain Equipment, specifying
the Rent applicable to such Equipment and setting forth certain other matters,
all as required pursuant to the Lease;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Agent, the Lessors and the Lessee hereby agree as
follows:
1. Inspection and Approval. The Lessee hereby acknowledges and confirms
that it has inspected and approved the Equipment set forth on Schedule I hereto
for all purposes of the Lease and the other Operative Documents and, as between
the Lessors and the Lessee, such Equipment complies in all material respects
with the specifications for such Equipment, is in good working order, repair,
condition and appearance, and without defect therein with respect to design,
manufacture, conditions, operation and fitness for use or in any other respect,
whether or not discoverable by Lessee as of the date hereof. Lessee reaffirms,
as to the Equipment set forth in Schedule I, each of the waivers,
acknowledgments and agreements of Lessee set forth in Section 4.1 of the Lease.
2. Delivery and Acceptance. The Lessors hereby confirm delivery and lease
to the Lessee, and the Lessee hereby confirms acceptance of delivery and lease
from the Lessors, under the
1
Lease as hereby supplemented, of the Equipment listed on Schedule I hereto.
3. Functional Units. The Equipment set forth on Schedule I consists of one
or more of the Functional Units set forth or referred to on Schedule Y to the
Participation Agreement, provided that the Required Lessors may from time to
time, in their reasonable discretion, direct the Agent to allocate such
Equipment into different Functional Units so long as each Item of Equipment
subject to the Lease is at all times part of a Functional Unit.
4. Warranty. The Lessee hereby represents and warrants that no event which
would constitute a Casualty under the Lease has occurred with respect to the
Equipment set forth on Schedule I hereto as of the date hereof. Lessee hereby
reaffirms each of the representations and warranties set forth at Section 5.1 of
the Participation Agreement as if made on the date hereof, including that the
Equipment set forth on Schedule I hereto is free and clear of all Liens other
than Permitted Liens.
5. Term, Interim Period, Interest Rate and Supplement Balance. The term of
this Lease Supplement shall commence on the date hereof and end on the
Termination Date. The Interim Period, the Interest Rate, the Applicable
Percentage and the amount of Rent due on each Payment Date are set forth,
respectively, in the appropriate portions of Schedule II hereto. Schedule III
hereto sets forth the respective portion of each installment of Rent payable on
each Payment Date to be paid to each Lessor. Schedule IV hereto sets forth the
Functional Unit Balance of each Functional Unit as of each Payment Date.
6. Rent.
(a) On the last day of the Interim Period, Lessee shall pay to Agent, for
the benefit of the Lessors, the amount of the Interim Rent set forth at Schedule
II.
(b) On each Payment Date following the expiration of the Interim Period
during the Initial Term and during each Renewal Term, Lessee shall pay to Agent,
for the benefit of the Lessors, the amount of the Basic Rent and Renewal Rent as
set forth at Schedule II hereto.
7. Confirmation. The Lessee hereby confirms its agreement, in accordance
with the Lease as supplemented by this Lease Supplement, to pay Rent to the
Agent, for the benefit of the Lessors, for each Functional Unit leased
hereunder. Nothing herein shall reduce Lessee's obligation to make all other
payments required under the Lease, including those payments to be
-2-
made on the last day of the Lease Term pursuant to Article XI of the Lease.
8. Incorporation into Lease. This Lease Supplement shall be construed in
connection with and as part of the Lease, and all terms, conditions and
covenants contained in the Lease, as supplemented by this Lease Supplement,
shall be and remain in full force and effect and shall govern the Equipment
described in Schedule I hereto.
9. References. Any and all notices, requests, certificates and other
instruments executed and delivered concurrently with or after the execution and
delivery of this Lease Supplement may refer to the "Lease Intended as Security,
dated as of April 29, 1994", or may identify the Lease in any other respect
without making specific reference to this Lease Supplement, but nevertheless all
such references shall be deemed to include this Lease Supplement, unless the
context shall otherwise require.
10. Counterparts. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
11. Governing Law. This Lease Supplement shall be governed by and
construed in accordance with the laws and decisions of the State of California
without regard to principles of conflicts of laws.
-3-
IN WITNESS WHEREOF, the Agent, Lessors and the Lessee have caused this
Lease Supplement to be duly executed and delivered on the day and year first
above written.
XXXXXX-XXXXXX, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By_________________________________ By______________________________________
Name Printed:______________________ Name Printed:___________________________
Title:_____________________________ Title:__________________________________
By______________________________________
Name Printed:___________________________
Title:__________________________________
LESSORS:
PITNEY XXXXX CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By_________________________________ By______________________________________
Name Printed:______________________ Name Printed:___________________________
Title:_____________________________ Title:__________________________________
By_________________________________ By______________________________________
Name Printed:______________________ Name Printed:___________________________
Title:_____________________________ Title:__________________________________
MANUFACTURERS BANK
By_________________________________
Name Printed:______________________
Title: ____________________________
SCHEDULE I
Items of Equipment Purchased by Lessors and Subject to this Lease
Supplement Purchase Price
Functional Unit
Functional Unit
Functional Unit
Functional Unit
SCHEDULE II
Delivery Date: ____________
Sum of Purchase Prices*: $____________
Interest Rate: ____________
"Applicable Percentage" shall mean, with respect to the end of the Initial
Term and each Renewal Term, the percentage set forth below opposite each such
date:
Supplement
End of Applicable Percentage Balance
------ --------------------- ----------
Initial Term _____% $_____________
First Renewal Term _____% $_____________
Second Renewal Term _____% $_____________
Third Renewal Term _____% $_____________
Fourth Renewal Term _____% $_____________
Fifth Renewal Term _____% $_____________
A. Interim Rent: $_____________
Interim Rent Payment Date: ____________**
B. Basic and Renewal Rent:
Payment Principal Interest Total Rent
Date Component Component Installment
---- --------- --------- -----------
Totals:
====== ========= ========= ===========
* Total of Purchase Prices set forth on Schedule I to Lease Supplement.
** This will be the last day of the Interim Period, i.e. the last day of the
calendar quarter in which the Delivery Date occurs.
SCHEDULE III
Rent Total
Payment Rent
Date Payment BA Leasing Manufacturers Pitney
---- ------- ---------- ------------- ------
________, 19__ $ $ $ $
________, 19__ $ $ $ $
________, 19__ $ $ $ $
SCHEDULE IV
Functional Payment Functional
Unit No. Date Unit Balance
-------- ---- ------------
EXHIBIT B
TO
PARTICIPATION AGREEMENT
FORM OF SUBLEASE
B-1
FORM OF SUBLEASE
SUBLEASE, dated as of April 29, 1994 between Xxxxxx-Xxxxxx, Inc., a
Delaware corporation ("Sublessor"), and Tone Brothers, Inc., an Iowa corporation
("Sublessee").
RECITALS
(A) Sublessor is Lessee under that certain Lease Intended as Security,
dated as of April 29, 1994 (as from time to time thereafter amended or
supplemented, the "Lease") with the Lessors listed on the signature pages
thereto and BA Leasing & Capital Corporation, not individually, but solely as
agent for the benefit of the Lessors ("Agent"). Unless otherwise defined herein
or the context hereof otherwise requires, terms which are defined or defined by
reference in the Lease shall have the same meanings when used herein as such
terms have therein, whether or not the Lease is then in effect.
(B) Sublessor desires to lease to Sublessee, and Sublessee desires to
lease from Sublessor, the items of equipment described on Schedule I hereto, as
from time to time hereafter amended ("Sublease Items").
Accordingly, the parties hereto agree as follows:
SECTION 1. LEASE. Sublessor leases to Sublessee and Sublessee leases from
Sublessor the Sublease Items described on Schedule I hereto, as such description
may from time to time be hereafter amended with the consent of Assignee (as
hereinafter defined).
SECTION 2. TERM. The term of this Sublease shall be concurrent with the
term of the Lease and termination of the Lease (including, without limitation,
termination pursuant to Article X thereof) shall constitute automatic
termination of this Sublease. Termination of the Lease with respect to any but
not all of the Sublease Items shall constitute automatic termination of this
Sublease only with respect to the Sublease Items no longer subject to the Lease.
If Sublessor elects to exercise the Lessee Purchase Option as provided in
Section 11.1(b) of the Lease, Sublessor shall sell to Sublessee, and Sublessee
shall purchase from Sublessor, the Sublease Items subject thereto for (i) the
portion of the Purchase Option Exercise Amount, any applicable Make-Whole
Premiums and any other amounts then due and payable attributable to such
Sublease Items or, (ii) if less than all of the Equipment is subject to such
Lessee Purchase Option, the aggregate of the amounts that are required to be
paid by Sublessor to Agent under Section 11.1(b) (A) of the Lease attributable
to such Sublease.
Items. Such payment for such Sublease Items shall be made by Sublessee
concurrently upon Sublessor's payment to the Agent pursuant to Section 11.1(b)
(A) of the Lease. Upon payment by the Sublessee for Sublease Items, Sublessor
shall execute and deliver to Sublessee a quitclaim xxxx of sale (without
representations or warranties) for such Sublease Items.
If Sublessor elects to exercise the Sale Option as provided in Section
11.1(c) of the Lease, Sublessee shall on the last day of the Lease Term permit a
purchaser of any Sublease Item to take possession thereof. Sublessee shall pay
to Sublessor an amount equal to the amount payable by Sublessor pursuant to
Section 11.1(c) (2) (ii) of the Lease attributable to the Sublease Items. Such
payment for the Sublease Items shall be made by Sublessee on the date that the
Section 11.1(c) (2) (ii) amount is payable by Sublessor to Lessor under the
Lease. If such purchaser cannot take possession of a Sublease Item on the last
day of the Lease Term, the Sublessee shall store such Sublease Item for a
reasonable period of time, but shall at all times comply with the last sentence
of Section 11.3 of the Lease.
SECTION 3. RENT. The rent and rental payment dates shall be as agreed from
time to time by Sublessor and Sublessee; provided, however, that if Assignee is
exercising its rights with respect to this Sublease or any Sublease Items, rent
shall be payable quarterly on the Sublease Items on each April 30, July 30,
October 30 and January 30 and shall be in an amount, with respect to each
Sublease Item, equal to that portion of the rental under the Lease and
applicable Lease Supplement attributable to such Sublease Item.
SECTION 4. WARRANTIES. NEITHER SUBLESSOR NOR ANY ASSIGNEE MAKES ANY
EXPRESS OR IMPLIED WARRANTY WHATSOEVER OF TITLE, MERCHANTABILITY, FITNESS FOR
ANY PURPOSE OR OTHERWISE REGARDING ANY SUBLEASE ITEM OR ANY PART THEREOF.
SECTION 5. LEASE. This Sublease is in all respects subject and subordinate
to the Lease (and each Lease Supplement governing any Sublease Item) and the
Liens created thereby. Without limiting the foregoing, if for any reason
Assignee shall exercise rights or remedies thereunder, such exercise may include
the termination hereof, notwithstanding, to the maximum extent permitted by law,
any right of Sublessee hereunder. Sublessee shall in all respects comply with
all of the terms and provisions of Article V of the Lease.
SECTION 6. ASSIGNMENT; SUBLEASE. Sublessor shall have the right to assign,
and has assigned to Agent concurrently with entering into this Sublease, all or
any part of its right, title and interest in and to this Sublease and shall have
the right to grant and has granted to Agent for the benefit of the Lessors a
B-2
security interest in the Sublease Items to the Agent (in this capacity,
"Assignee", which term shall also be deemed to refer to any successor or assign
of Agent in such capacity) pursuant to the Lease. Such assignment and grant
shall (i) be superior to Sublessee's rights hereunder; (ii) not relieve
Sublessor of any of its obligations hereunder; and (iii) not be construed to be
an assumption by Assignee of any obligations of Sublessor hereunder. Upon
written request of Assignee, Sublessee shall make all payments of rent directly
to Assignee, at such address as Assignee shall specify. Sublessee shall, upon
request, execute and deliver such instruments and take such other action as may
reasonably be requested to protect Sublessor's or Assignee's interests. This
Sublease shall not be amended, modified or waived without the consent of
Assignee. Sublessee acknowledges that this Sublease has been assigned, and a
security interest in the Sublease Items has been granted, to Agent under the
Lease. Sublessee shall not assign any right or interest in this Sublease.
Except as expressly provided in this Section 6, any further assignment,
sublease or transfer of the Sublease or of all or any portion of the Sublease
Items is prohibited.
SECTION 7. NOTICES. Notices shall be in writing and shall be deemed to be
given when delivered personally, by facsimile (and confirmed, which confirmation
may be mechanical) or otherwise actually received or five Business Days after
being sent, first class mail postage prepaid, and addressed to Sublessor,
Sublessee and Assignee at their respective addresses set forth on Schedule II
hereto, or at such other address as any such party from time to time provides to
the other parties in accordance with this Section 7.
SECTION 8. MISCELLANEOUS. This Sublease shall be governed by the laws of
the State of California, without regard to conflict of law principles. Only one
counterpart of this Sublease shall be marked as the sole original execution copy
hereof, and such counterpart shall be held by Assignee. Each of Sublessor and
Sublessee waives any right to trial by jury in any action or proceeding with
respect to this Sublease or any instrument, document or agreement now or
hereafter relating to this Sublease. If any provision hereof shall be prohibited
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Sublease. This Sublease shall
be binding upon Sublessor and Sublessee and shall inure to the benefit of
Sublessor, Sublessee, Assignee and the successors and assigns of Assignee.
B-3
SECTION 9. SECURITY INTEREST. Sublessee hereby grants a security interest
in the Sublease Items and proceeds thereof (the "Collateral") to Sublessor to
secure Sublessee's obligations under this Sublease. Sublessee shall, at its own
cost and expense, do any further act and execute, acknowledge, deliver, file,
register and/or record any further documents which Sublessor (or Assignee) may
reasonably request in order to protect its perfected security interest in the
Collateral.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of
the date and year first above written.
TONE BROTHERS, INC. XXXXXX-XXXXXX, INC.
By:________________________________ By:_____________________________________
Name: _____________________________ Name:___________________________________
Title:_____________________________ Title:__________________________________
B-4
SCHEDULE I
SUBLEASE ITEMS
B-5
SCHEDULE II
ADDRESSES FOR NOTICE
Sublessor:
Xxxxxx-Xxxxxx, Inc.
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
with a copy to:
Maslon, Edelman, Xxxxxx & Brand
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
Sublessee:
Tone Brothers, Inc.
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: President
with a copy to:
Maslon, Edelman, Xxxxxx & Brand
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
Agent/Assignee:
BA Leasing & Capital Corporation
Xxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Contract Administration
B-6
EXHIBIT C
TO
PARTICIPATION AGREEMENT
FORM OF DELIVERY DATE NOTICE
DELIVERY DATE NOTICE
(Date)
TO: BA Leasing & Capital Corporation, a California corporation,
not individually, but solely as Agent (the "Agent"), under
that certain Lease Intended as Security, dated as of April 29,
1994, among Xxxxxx-Xxxxxx, Inc., a Delaware corporation (the
"Lessee"), the Lessors named therein, and Agent as agent for
the Lessors (all capitalized terms used herein and not
otherwise defined shall have the meaning assigned to such term
in the Lease, unless the context otherwise requires).
FROM: Lessee
REGARDING: Delivery Date Closing
1. A Delivery Date Closing is scheduled for [specify a date no earlier
than 10 Business Days after receipt of notice] at the offices of Xxxxx, Xxxxx &
Xxxxx, 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, XX 00000, commencing at
9:00 a.m. [This Funding shall be the final Funding.]
2. The Functional Units to be acquired and accepted on such date are
identified on Schedule I hereto, all of which Functional Units were previously
identified on Schedule to the Participation Agreement.
3. The Purchase Agreements covering the Functional Units identified on
Schedule I hereto are attached as Schedule II hereto.
4. The aggregate Purchase Price for the items of Equipment to be acquired
is $__________, to be funded by each Lessor ratably in accordance with its
Commitment. The Purchase Price for each Functional Unit is listed on Schedule I
hereto.
5. The Purchase Price to be funded on the Delivery Date Closing plus the
Purchase Price of items previously funded in connection with prior Delivery Date
Closings is equal to or less than $22,500,000.
C-1
6. The Functional Units identified on Schedule I hereto are [to be]
located at the Site(s) described on Schedule III hereto.
7. Payment for the items of Equipment to be acquired shall be made by wire
transfer to the following vendors:
Name & Address
of Wire
Vendor Instructions Amount
-------------- ------------ ------
1. _______
2. _______
3. _______
Total
=======
Such amounts being hereby certified as due and owing to such vendors in payment
for such Equipment.
[The $___________ balance of the Purchase Price shall be sent by wire
transfer to the Lessee at the following account [Wire Instructions].]
XXXXXX-XXXXXX, INC.
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
C-2
Schedule I
to
Exhibit C
Equipment List
C-3
Schedule II
to
Exhibit C
Copies of Purchase Agreements
(ATTACHED)
C-4
Schedule III
to
Exhibit C
Site(s)
C-5
EXHIBIT D
TO
PARTICIPATION AGREEMENT
FORM OF LESSEE'S AND SUBLESSEE'S OPINION OF COUNSEL
See opinion dated April __, 1994 addressed to Agent and the Lessors.
D-1
EXHIBIT E
TO
PARTICIPATION AGREEMENT
FORM OF XXXX OF SALE
XXXX OF SALE
[Name of Manufacturer or Lessee, as the case may be] ("Seller"), is the
owner of the items (together with all repairs, parts, supplies, accessories,
equipment and devices affixed thereto or installed thereon, and all warranties,
covenants and representations of any manufacturer or vendor thereof, the "Items
of Equipment") of personal property described on Schedule I hereto;
Seller sells, grants, conveys, transfers and assigns title to the Items of
Equipment to BA Leasing & Capital Corporation (the "Agent"), as agent for each
of the persons listed below (the "Lessors"); and
Seller warrants to the Agent, the Lessors and their respective successors
and assigns that there is conveyed to the Agent, for the benefit of the Lessors,
good title to the Items of Equipment, free and clear of all liens, security
interests, claims, rights or encumbrances of others.
THIS XXXX OF SALE shall be governed by the laws of California without
regard to conflict of law principles.
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be executed and
delivered by one of its duly authorized officers this ____ day of __________,
199_.
[NAME OF SELLER]
By:________________________________
Name Printed:______________________
Title:_____________________________
LESSORS:
___________________________
___________________________
___________________________
___________________________
E-1
Schedule I
to
Xxxx of Sale
Equipment List
E-2
