Exhibit 10.6
GENERAL ELECTRIC CAPITAL CORPORATION
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MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT (the "Lease") is made as of the 27th day of
March, 2002, by and between GENERAL ELECTRIC CAPITAL CORPORATION, its successors
and assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC., its successors
and permitted assigns ("Lessee").
The parties agree that Lessee shall lease from Lessor the property (the
"Equipment") described in the Equipment Schedule(s) to be executed pursuant
hereto (collectively, the "Equipment Schedule"), subject to the terms set forth
herein, in the Riders annexed hereto and in the Equipment Schedule. Certain
definitions and construction of certain of the terms used herein are provided in
Section 19 hereof. Each Equipment Schedule shall incorporate by reference the
terms and conditions of this Lease. Each Equipment Schedule, incorporating by
reference the terms and conditions of this Lease, shall constitute a separate
instrument of lease.
1. TERM. The term of lease with respect to any item of the Equipment shall
be the term set forth in the Equipment Schedule relating thereto; provided,
however, that this Lease shall be effective from and after the date of execution
hereof.
2. RENT. Lessee shall pay Lessor the rental installments in the aggregate
amounts specified in the Equipment Schedule, without prior notice or demand, and
all other amounts payable pursuant to this Lease (such installments and other
amounts, the "rent"). Each Equipment Schedule constitutes a non-cancelable net
lease, and Lessee's obligation to pay rent, and to otherwise perform its
obligations under this Lease, each such Equipment Schedule and all of the other
documents and agreements entered in connection herewith (collectively, the
"Lease Documents"), are and shall be absolute and unconditional and shall not be
affected by any right of setoff, counterclaim, recoupment, deduction, defense or
other right which Lessee may have against Lessor, the manufacturer or vendor of
the Equipment (the "Suppliers"), or anyone else, for any reason whatsoever.
Rental installments are payable as and when specified in the Equipment Schedule
by mailing the same to Lessor at its address specified pursuant to this Lease or
by such other reasonable method of delivery of payment as may from time to time
be directed by Lessor or its assignee in writing; and payments of rent shall be
effective upon receipt. Timeliness of Lessee's payment and its other performance
under the Lease Documents is of the essence. If any rent is not paid on the due
date, Lessor may collect, and Lessee agrees to pay, a charge (the "Late Charge")
calculated as the product of the late charge rate specified in the Equipment
Schedule (the "Late Charge Rate") and the amount in arrears for the period such
amount remains unpaid after the original due date.
3. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and warrants
that: (a) Lessee is a corporation duly organized, validly existing and in good
standing under the laws of the state specified as its state of incorporation
below the signature of Lessee. (b) The execution, delivery and performance of
the Lease Documents: (1) have been duly authorized by all necessary corporate
action on the part of Lessee; (2) do not require the approval of any
stockholder, trustee or holder of any obligations of Lessee except such as have
been duly obtained; and (3) do not and will not contravene any law, governmental
rule, regulation or order now binding on Lessee, or the charter or by-laws of
Lessee, or contravene the provisions of, or constitute a default under, or
result in the creation of any lien or encumbrance upon the property of Lessee
under, any indenture, mortgage, contract or other agreement to which Lessee is a
party or by which it or its property is bound the contravention of which would
have a Material Adverse Effect. (c) Each of the Lease Documents, when entered
into, will constitute legal, valid and binding obligations of Lessee enforceable
against Lessee, in accordance with the terms thereof, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally, and by applicable law
(or equitable rights) which may affect creditors' rights generally. (d) There
are no pending actions or proceedings to which Lessee is a party (and as to
which Lessee has received written notice), and there are no other pending or
threatened actions or proceedings of which Lessee has knowledge, before any
court, arbitrator or administrative agency, which, either individually or in the
aggregate, would have a Material Adverse Effect. As used herein, "Material
Adverse Effect" shall mean (1) a materially adverse effect on the business,
condition (financial or otherwise), operations, performance or properties of
Lessee, or (2) a material impairment of the ability of Lessee to perform its
obligations under or to remain in compliance with the Lease Documents. Further,
Lessee is not in default (as of the date of execution hereof and as of the date
of execution of each Equipment Schedule hereunder, and Lessee has no knowledge
of the occurrence of any event which, with the giving of notice or the lapse of
time, or both, would become a Default) under any obligation for borrowed money,
for the deferred
purchase price of property or any lease agreement which, either individually or
in the aggregate, would have a Material Adverse Effect. (e) The financial
statements of Lessee (copies of which have been furnished to Lessor) have been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), and fairly present Lessee's financial condition
and the results of its operations as of the date of and for the period covered
by such statements, and since the date of such statements there has been no
material adverse change in such conditions or operations. (f) Lessee's name,
state of incorporation, Federal Employer Identification Number and
Organizational Number specified below the signature of Lessee are true and
correct, and the address stated below the signature of Lessee is the chief place
of business and chief executive office of Lessee; and Lessee does not conduct
business under a trade, assumed or fictitious name.
4. COVENANTS. Lessee covenants and agrees as follows: (a) Lessee will
furnish Lessor (1) within one hundred twenty (120) days after the end of each
fiscal year of Lessee, a balance sheet of Lessee as at the end of such year, and
the related statement of income and statement of cash flows of Lessee for such
fiscal year, prepared in accordance with GAAP, all in reasonable detail and
certified by independent certified public accountants of recognized standing
selected by Lessee (which shall be a "Big 5" accounting firm); (2) within sixty
(60) days after the end of each quarter, a balance sheet of Lessee as at the end
of such quarter, and the related statement of income and statement of cash flows
of Lessee for such quarter, prepared in accordance with GAAP; (3) within thirty
(30) days after the date on which they are filed, all regular periodic reports,
forms and other filings required to be made by Lessee to the Securities and
Exchange Commission, if any; and (4) as and when provided pursuant to that
certain Credit Agreement dated as of April 7, 1994, and amended and restated as
of January 29, 1998, between Lessee and The Chase Manhattan Bank, et al., as now
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or hereafter amended, and/or pursuant to that certain Indenture dated as of June
19, 2001, among Lessee, Applied Extrusion Technologies (Canada), Inc., as
Guarantor, and ▇▇▇▇▇ Fargo Minnesota, National Association, as Trustee, and any
successor to either thereof or replacement of either thereof, the covenant
compliance certificate required to be provided by Lessee pursuant to either
thereof. (b) Lessee will promptly execute and deliver to Lessor such further
reasonable documents, instruments and assurances and take such further action as
Lessor from time to time may reasonably request in order to carry out the intent
and purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor under the Lease Documents
(including, without limitation, such UCC Financing Statements as reasonably may
be required by Lessor in connection with any relocation of the Equipment in
accordance with the terms hereof). (c) Lessee shall provide written notice to
Lessor: (1) thirty (30) days prior to any contemplated change in the name, state
of incorporation or address of the chief executive office of Lessee; (2)
promptly upon the occurrence of any Default (as hereinafter defined) or event
which, with the lapse of time or the giving of notice, or both, would become a
Default (a "default"; except as used in Sections 15 and 16); and (3) promptly
upon Lessee becoming aware of any alleged material violation of applicable law
relating to the Equipment or this Lease. (d) Within forty-five (45) days after
the date of execution of the first Equipment Schedule hereunder, Lessee shall
cause to be provided to Lessor the insurance policy endorsements required
pursuant to Section 11 hereof with respect to the liability insurance.
5. CONDITIONS PRECEDENT. Lessor's obligations under each Equipment
Schedule, including its obligation to purchase and lease any Equipment to be
leased thereunder, are conditioned upon Lessor's reasonable determination that
all of the following have been satisfied (or waived, at Lessor's sole
discretion): (a) Lessor having received the following, in form and substance
satisfactory to Lessor: (1) evidence as to due compliance with the insurance
provisions hereof; (2) Uniform Commercial Code financing statements and all
other filings and recordings as required by Lessor; (3) certificate of Lessee's
Secretary certifying: (i) resolutions of Lessee's Board of Directors duly
authorizing the leasing of the Equipment hereunder and the execution, delivery
and performance of this Lease and the Equipment Schedule and all related
instruments and documents, and (ii) the incumbency and signature of the officers
of Lessee authorized to execute such documents; (4) an opinion of counsel for
Lessee as to each of the matters set forth in sub-parts (a) through (d) of
Section 3 hereof; (5) the only manually executed original of the Equipment
Schedule and all other Lease Documents; (6) evidence reasonably satisfactory to
Lessor of the termination of all existing leases with respect to the Equipment
and the conveyance by the existing lessors (the "Existing Lessors") to Lessee of
title to the Equipment; (7) a Real Property Waiver in substantially the form
attached hereto as Exhibit No. 1, duly executed by Lessee; (8) a Real Property
Waiver in substantially the form attached hereto as Exhibit No. 2, duly executed
by ▇▇ ▇▇▇▇▇▇ Chase Bank, as Administrative Agent; and (9) such other documents,
agreements, instruments, certificates, opinions and assurances, as Lessor
reasonably may require. (b) All representations and warranties provided in favor
of Lessor in any of the Lease Documents shall be true and correct on the
effective date of such Equipment Schedule with the same effect as though made as
of such date (Lessee's execution and delivery of the Equipment Schedule shall
constitute an acknowledgment of the same). (c) There shall be no default or
Default under the Equipment Schedule or any other Lease Documents. (d) On the
effective date of the Equipment Schedule, the Equipment shall have been
delivered to and accepted by Lessee, and shall be in the condition and repair
required hereby; and Lessor shall have received good title to the Equipment to
be leased
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thereunder, free and clear of any lien, claim or encumbrance of any kind. (e)
The purchase price payable by Lessor to Lessee to acquire the Equipment shall be
applied to pay down the obligations of Lessee pursuant to the Chase Credit
Agreement in accordance with the terms thereof. Lessee's obligations under each
Equipment Schedule, this Lease and the ▇▇▇▇ of Sale, including Lessee's
obligation to sell the Equipment to Lessor pursuant to the ▇▇▇▇ of Sale, are
conditioned upon payment by Lessor to Lessee by federal wire transfer or other
immediately available funds of Eighteen Million Two Hundred Twenty-five Thousand
Dollars ($18,225,000).
6. DELIVERY; INSPECTION AND ACCEPTANCE BY LESSEE. Upon execution hereof,
Lessee shall execute and deliver to Lessor Equipment Schedules containing a
complete description of the Equipment; whereupon, as between Lessor and Lessee,
the same shall be deemed to have been finally accepted by Lessee pursuant to
this Lease.
7. USE AND MAINTENANCE. (a) Lessee shall: (1) use the Equipment solely in
the Continental United States and in the conduct of its business, consistent
with Lessee's past practice, and shall not permanently discontinue use of the
Equipment; (2) operate, maintain, service and repair the Equipment, and maintain
all records and other materials relating thereto, (i) in accordance and
consistent with (A) the Supplier's recommendations and all maintenance and
operating manuals or service agreements, whenever furnished or entered into,
including any subsequent amendments or replacements thereof, consistent with
Lessee's past practice, (B) the requirements of all applicable insurance
policies, (C) all applicable laws, and (D) the prudent practice of other similar
companies in the same business as Lessee, but in any event, to no lesser
standard than that employed by Lessee for comparable equipment owned or leased
by it; (ii) without limiting the foregoing, so as to cause the Equipment to be
in good repair and operating condition and in at least the same condition as
when delivered to Lessee hereunder, except for ordinary wear and tear; and (iii)
shall not discriminate against the Equipment with respect to scheduling of
maintenance, parts or service; (3) not change the location of any Equipment as
specified in the Equipment Schedule without prior written notice to Lessor; (4)
not attach or incorporate the Equipment to or in any other item of equipment in
such a manner that the Equipment may be deemed to have become an accession to or
a part of such other item of equipment; and (5) cause each principal item of the
Equipment to be continually marked, in a plain and distinct manner, with the
name of Lessor followed by the words "Owner and Lessor," or other appropriate
words designated by Lessor on small labels furnished by Lessor. (b) Within a
reasonable time, Lessee will replace any parts of the Equipment which become
worn out, lost, destroyed, damaged beyond repair or otherwise permanently
rendered unfit for use, by new or reconditioned replacement parts which are free
and clear of all liens, encumbrances or rights of others and have a value,
utility and remaining useful life at least equal to the parts replaced. Any
modification or addition to the Equipment which is required by law shall be made
by Lessee, at its expense, and title thereto immediately shall vest in Lessor,
without cost or expense to Lessor or any further action by any other person.
Title to all replacement parts and permanent improvements, or attachments to the
Equipment which cannot be removed without damaging the Equipment, immediately
shall vest in Lessor, without cost or expense to Lessor or any further action by
any other person, and such parts, improvements and additions shall be deemed
incorporated in the Equipment and subject to the terms of this Lease as if
originally leased hereunder, if such parts are required by law or are otherwise
essential to the operation of the Equipment or cannot be detached from the
Equipment without materially interfering with the operation of the Equipment or
adversely affecting the value, utility and remaining useful life which the
Equipment would have had without the addition thereof. Lessee shall not make any
material alterations to the Equipment without prior written notice to Lessor,
provided that such material alterations do not adversely affect the value,
utility and remaining useful life which the Equipment would have had without the
addition thereof. (c) Upon forty-eight (48) hours' notice, Lessee shall afford
Lessor access to the premises where the Equipment is located for the purpose of
inspecting such Equipment and all applicable maintenance or other records at any
reasonable time during normal business hours; provided, however, if a default or
Default shall have occurred and then be continuing, no notice of any inspection
by Lessor shall be required.
8. DISCLAIMER OF WARRANTIES. LESSOR IS NOT A SELLER, SUPPLIER OR
MANUFACTURER (AS SUCH TERMS ARE DEFINED OR USED, AS THE CASE MAY BE, IN THE
UNIFORM COMMERCIAL CODE), OR DEALER, NOR A SELLER'S OR A DEALER'S AGENT. THE
EQUIPMENT IS LEASED HEREUNDER "AS IS", AND LESSOR HAS NOT MADE, AND HEREBY
DISCLAIMS LIABILITY FOR, AND LESSEE HEREBY WAIVES ALL RIGHTS AGAINST LESSOR
RELATING TO, ANY AND ALL WARRANTIES, REPRESENTATIONS OR OBLIGATIONS OF ANY KIND
WITH RESPECT TO THE EQUIPMENT, EITHER EXPRESS OR IMPLIED, ARISING BY APPLICABLE
LAW OR OTHERWISE, INCLUDING ANY OF THE SAME RELATING TO OR ARISING IN OR UNDER
(a) MERCHANTABILITY OR FITNESS FOR PARTICULAR USE OR PURPOSE, (b) COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE OR (c) TORT (WHETHER OR NOT
ARISING FROM THE ACTUAL, IMPLIED OR IMPUTED NEGLIGENCE OF LESSOR OR STRICT
LIABILITY) OR THE UNIFORM COMMERCIAL CODE (INCLUDING ARTICLE 2A, AS HEREINAFTER
DEFINED; AND, WITHOUT LIMITING THE FOREGOING, INCLUDING, (i) ANY WARRANTIES
CONTAINED IN SECTIONS ▇▇-▇▇▇, ▇▇-▇▇▇, ▇▇-▇▇▇ ▇▇▇ ▇▇-▇▇▇, (▇▇) ANY RIGHT TO DEEM
LESSOR IN DEFAULT PURSUANT THERETO, AND (iii) ALL OF LESSEE'S RIGHTS AND
REMEDIES UNDER SECTIONS 2A-508 THROUGH 2A-521) OR OTHER
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APPLICABLE LAW WITH RESPECT TO THE EQUIPMENT, INCLUDING ITS TITLE OR FREEDOM
FROM LIENS, FREEDOM FROM TRADEMARK, PATENT OR COPYRIGHT INFRINGEMENT, FREEDOM
FROM LATENT DEFECTS (WHETHER OR NOT DISCOVERABLE), CONDITION, MANUFACTURE,
DESIGN, SERVICING OR COMPLIANCE WITH APPLICABLE LAW; it being agreed that all
such risks, as between Lessor and Lessee, are to be borne by Lessee; and
Lessor's agreement to enter into this Lease and any Equipment Schedule is in
reliance upon the freedom from and complete negation of liability or
responsibility for the specific matters waived and disclaimed herein. Lessor is
not responsible for any direct, indirect, incidental or consequential damage to
or losses resulting from the installation, operation or use of the Equipment or
any products manufactured thereby. All assignable warranties made by the
Supplier to Lessor are hereby assigned to Lessee for and during the term of this
Lease and Lessee agrees to resolve all such claims directly with the Supplier.
Provided that no default or Default has occurred and is then continuing, Lessor
fully shall cooperate with Lessee with respect to the resolution of such claims,
in good faith and by appropriate proceedings at Lessee's expense. Any such claim
shall not affect in any manner the unconditional obligation of Lessee to make
rent payments hereunder.
9. FEES AND TAXES. (a) To the extent permitted by law, Lessee shall file
any necessary report and return for, shall pay promptly when due, shall
otherwise be liable to reimburse Lessor (on an after-tax basis) for, and agrees
to indemnify and hold Lessor harmless from: (i) all titling, recordation,
documentary stamp and other fees; and (ii) taxes (other than taxes calculated
solely on the basis of net income or capital gains), assessments and all other
charges or withholdings of any nature (together with any penalties, fines or
interest thereon); in each case arising at any time upon or relating to the
Equipment or this Lease or the delivery, acquisition, ownership, use, operation
or leasing or other disposition of the Equipment, or upon the rent, whether the
same be assessed to Lessor or Lessee (any of the foregoing, an "Imposition").
(b) If any report, return or property listing, or any Imposition is, by law,
required to be filed by, assessed or billed to, or paid by, Lessor, Lessee at
its own expense will do all things required to be done by Lessor (to the extent
permitted by law) in connection therewith and is hereby authorized by Lessor to
contest or protest, in good faith and by appropriate proceedings, the validity
of any Imposition, or the amount thereof. Lessor agrees fully to cooperate with
Lessee in any such contest, and Lessee agrees promptly to indemnify Lessor for
all reasonable expenses incurred by Lessor in the course of such cooperation. An
Imposition or Claim (as hereinafter defined) therefor shall be paid, subject to
refund proceedings, if failure to pay would adversely affect the title or rights
of Lessor. Provided that no default or Default has occurred and is continuing,
if (at any time during or after the term of this Lease) Lessor obtains a refund
of any Imposition which has been paid (by Lessee, or by Lessor and for which
Lessor has been reimbursed by Lessee), Lessor shall promptly pay to Lessee the
net amount of such refund to the extent actually received. Lessee will cause all
▇▇▇▇▇▇▇▇ of such charges to Lessor to be made to Lessor in care of Lessee and
will, in preparing any report or return required by law, show the ownership of
the Equipment in Lessor, and shall send a copy of any such report or return to
Lessor. If Lessee fails to pay any such charges when due, except any Imposition
being contested in good faith and by appropriate proceedings as above provided
for a reasonable period of time, Lessor at its option may do so, in which event
the amount so paid (including any penalty or interest incurred as a result of
Lessee's failure), plus interest thereon at the Late Charge Rate, shall be paid
by Lessee to Lessor with the next periodic payment of rent. (c) As used herein,
the term "Lessor" shall mean and include Lessor and the consolidated Federal
taxpayer group of which Lessor is a member.
10. INTENT, TITLE AND LIENS. (a) The parties intend and agree that the
Equipment shall remain personal property, and that Lessor's title thereto not be
impaired, notwithstanding the manner in which it may be affixed to any real
property. Lessee shall obtain and deliver to Lessor, from any person having an
interest in the property where the Equipment is to be located, waivers of any
lien, encumbrance or interest which such person might have or hereafter obtain
or claim with respect to the Equipment. (b) It is the express intention of the
parties hereto that (1) each Equipment Schedule, incorporating by reference the
terms of this Lease, constitutes a true "lease" and a "finance lease" as such
terms are defined in the Uniform Commercial Code Article 2A - Leases ("Article
2A") and not a sale or retention of security interest; and (2) title to the
Equipment shall at all times remain in Lessor, and Lessee shall acquire no
ownership, property, rights, equity, or interest other than a leasehold interest
with the exclusive right to use the Equipment, solely as Lessee subject to the
terms and conditions hereof. If, notwithstanding the express intent of the
parties, a court of competent jurisdiction determines that any Equipment
Schedule is not a true lease, but is rather a sale and extension of credit, a
lease intended for security, a loan secured by the Equipment specified in such
Equipment Schedule, or other similar arrangement, the parties agree that in such
event: (i) (A) in order to secure the prompt payment and performance as and when
due of all of Lessee's obligations (both now existing and hereafter arising)
under each such Equipment Schedule, Lessee shall be deemed to have granted, and
it hereby grants, to Lessor a first priority security interest in the following
(whether now existing or hereafter created): the Equipment leased pursuant to
such Equipment Schedule and all replacements, substitutions, accessions, and
proceeds (cash and non-cash; but without power of sale), including the proceeds
of all insurance policies, thereof, and (B) Lessee agrees that with respect to
the Equipment, in addition to all of the other rights and remedies available to
Lessor hereunder upon the occurrence of a Default, Lessor shall have all of the
rights and
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remedies of a first priority secured party under the UCC; and (ii) (A) the
principal amount of any such obligation shall be an amount equal to the
aggregate Total Invoice Cost of all Equipment (to be amortized as provided in
Clause (D) below, (B) the term of any such obligation shall be the same as the
term specified for such Equipment in the related Equipment Schedule, (C) the
payments under any such obligation shall be the regular installments of rent
specified in the Equipment Schedule for such Equipment, and (D) any such
obligation shall be at an interest rate that is equal to the lesser of the
maximum lawful rate permitted by applicable law or the effective interest rate
calculated on the basis of the foregoing principal amount, term and payments as
if the principal amount were amortized over the term of the obligation to a
balloon payment of fifteen percent (15%). For purposes of this sub-part (b),
this Lease, the Equipment Schedule, or a photocopy of either thereof may be
filed as a financing statement under the UCC. (c) Lessee may not dispose of any
of the Equipment except to the extent expressly provided herein, notwithstanding
the fact that proceeds constitute a part of the Equipment. (d) Lessee further
agrees to maintain the Equipment free from all claims, liens, attachments,
rights of others and legal processes ("Liens") of creditors of Lessee or any
other persons, other than Liens for fees, taxes, levies, duties or other
governmental charges of any kind, Liens of mechanics, materialmen, laborers,
employees or suppliers and similar Liens arising by operation of law incurred by
Lessee in the ordinary course of business for sums that are not yet delinquent
or are being contested in good faith by negotiations or by appropriate
proceedings which suspend the collection thereof (provided, however, that such
proceedings do not involve any substantial danger (as determined in Lessor's
sole reasonable discretion) of the sale, forfeiture or loss of the Equipment or
any interest therein). Lessee will defend, at its own expense, Lessor's title to
the Equipment from such claims, Liens or legal processes. Lessee shall also
notify Lessor immediately upon receipt of notice of any Lien affecting the
Equipment in whole or in part.
11. INSURANCE. Lessee shall obtain and maintain all-risk insurance coverage
with respect to the Equipment insuring against, among other things: casualty
coverage, including loss or damage due to fire and the risks normally included
in extended coverage, malicious mischief and vandalism, for not less than the
greater of the full replacement value or the Stipulated Loss Value (as defined
in Section 12 hereof); and commercial liability coverage, including both bodily
injury and property damage with a combined single limit per occurrence of not
less than the amount specified in the Equipment Schedule, subject to such
deductible as is reasonably acceptable to Lessor. All said insurance shall be in
commercially reasonable form and with companies reasonably satisfactory to
Lessor. All insurance for loss or damage to the Equipment shall provide that
losses, if any, shall be payable to Lessor as loss payee and Lessee shall
utilize its reasonable efforts to have all checks relating to any such losses
delivered promptly to Lessor. Lessor shall be named as an additional insured
with respect to all such liability insurance. Lessee shall pay the premiums
therefor and deliver to Lessor evidence satisfactory to Lessor of such insurance
coverage. Lessee shall cause to be provided to Lessor, not less than fifteen
(15) days prior to the scheduled expiration or lapse of such insurance coverage,
evidence satisfactory to Lessor of renewal or replacement coverage. Each insurer
shall agree, by endorsement upon the policy or policies issued by it or by
independent instrument furnished to Lessor, that (a) it will give Lessor thirty
(30) days' prior written notice of the effective date of any material alteration
or cancellation of such policy; and (b) insurance as to the interest of any
named additional insured or loss payee other than Lessee shall not be
invalidated by any actions, inactions, breach of warranty or conditions or
negligence of Lessee or any person other than Lessor with respect to such policy
or policies. The proceeds of such insurance payable as a result of loss of or
damage to the Equipment shall be applied as required by the provisions of
Section 12 hereof.
12. LOSS AND DAMAGE. Lessee assumes the risk of direct and consequential
loss and damage to the Equipment from all causes (other than such as may be
caused by the gross negligence or willful misconduct of Lessor). Except as
provided in this Section for discharge upon payment of Stipulated Loss Value, no
loss or damage to the Equipment or any part thereof shall release or impair any
obligations of Lessee under this Lease. Lessee agrees that Lessor shall not
incur any liability to Lessee for any loss of business, loss of profits,
expenses, or any other Claims resulting to Lessee by reason of any failure of or
delay in delivery or any delay caused by any non-performance, defective
performance, or breakdown of the Equipment, nor shall Lessor at any time be
responsible for personal injury or the loss or destruction of any other property
resulting from the Equipment (other than such as may be caused by the gross
negligence or willful misconduct of Lessor). In the event of loss or damage to
any item of Equipment which does not constitute a Total Loss (as hereinafter
defined), Lessee shall, at its sole cost and expense, promptly repair and
restore such item of the Equipment to the condition required by this Lease.
Provided that no default or Default has occurred and is continuing, upon receipt
of evidence reasonably satisfactory to Lessor of completion of such repairs,
Lessor will apply any net insurance proceeds received by Lessor on account of
such loss to the cost of repairs. Upon the occurrence of the actual or
constructive total loss of any item of the Equipment, or the loss,
disappearance, theft or destruction of any item of the Equipment or damage to
any item of the Equipment to such extent as shall make repair thereof
uneconomical or shall render any item of the Equipment permanently unfit for
normal use for any reason whatsoever, or the condemnation, confiscation,
requisition, seizure, forfeiture or other taking of title to or use of any item
of the Equipment or the imposition of any Lien thereon by any governmental
authority (as established to the reasonable satisfaction of Lessor and Lessee;
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any such occurrence being herein referred to as a "Total Loss"), during the term
of this Lease, Lessee shall give prompt notice thereof to Lessor. On the next
date for the payment of rent, Lessee shall pay to Lessor the rent due on that
date plus the Stipulated Loss Value of the item or items of the Equipment with
respect to which the Total Loss has occurred and any other sums due hereunder
with respect to that Equipment (less any insurance proceeds or condemnation
award actually paid). Upon making such payment, this Lease and the obligation to
make future rental payments shall terminate solely with respect to the Equipment
or items thereof so paid for and (to the extent applicable) Lessee shall become
entitled thereto AS IS WHERE IS without warranty, express or implied, with
respect to any matter whatsoever. Lessor shall deliver to Lessee a ▇▇▇▇ of sale
transferring and assigning to Lessee without recourse or warranty, all of
Lessor's right, title and interest in and to such Equipment. Lessor shall not be
required to make and may specifically disclaim any representation or warranty as
to the condition of the Equipment or any other matters. As used in this Lease,
"Stipulated Loss Value" shall mean the product of the Total Invoice Cost
(designated on the appropriate Equipment Schedule) of the Equipment and the
applicable percentage factor set forth on the Schedule of Stipulated Loss Values
attached to the Equipment Schedule. Stipulated Loss Value shall be determined as
of the next date on which a payment of rent is or would be due after a Total
Loss or other termination of an Equipment Schedule, after payment of any rent
due on such date, and the applicable percentage factor shall be that which is
set forth with respect to such rent payment. After payment of the final payment
of rent due under the original term of this Lease and during any renewal term
thereof, Stipulated Loss Value shall be determined as of the date of termination
of such Equipment Schedule (absent any renewal thereof) or, if during a renewal
term, on the next date on which a payment of rent is or would be due after a
Total Loss or other termination of such renewal term, after payment of any rent
due on such date, and the applicable percentage factor shall be the last
percentage factor set forth on the Schedule of Stipulated Loss Values attached
to such Equipment Schedule.
13. REDELIVERY. Upon the expiration or earlier termination of the term of
any Equipment Schedule (or of any renewal thereof, if applicable), Lessee shall,
at its own expense, return all but not less than all of the Equipment leased
under such Equipment Schedule as provided herein to Lessor within five (5) days
of the last day of the term of the Lease with respect thereto (a) in the same
condition as when delivered to Lessee hereunder, ordinary wear and tear
resulting from proper use thereof excepted, (b) in such operating condition as
is capable of performing its originally intended use, (c) having been used,
operated, serviced and repaired in accordance with, and otherwise complying
with, Section 7 hereof, and (d) free and clear of all Liens whatsoever except
Liens resulting from claims against Lessor not relating to the ownership of such
Equipment. Lessee shall return the Equipment by delivering it, fully crated and
ready to be shipped, at the location to which the Equipment was originally
delivered or to which the Equipment was relocated with Lessor's consent. In
addition to Lessor's other rights and remedies hereunder, if the Equipment is
not returned in a timely fashion, or if repairs are reasonably necessary to
place any items of Equipment in the condition required in this Section, Lessee
shall continue to pay to Lessor per diem rent at the last prevailing lease rate
under the applicable Equipment Schedule with respect to such items of Equipment,
for the period of delay in redelivery, or for the period of time reasonably
necessary to accomplish such repairs together with the cost of such repairs, as
applicable. Lessor's acceptance of such rent on account of such delay or repair
does not constitute a renewal of the term of the related Equipment Schedule or a
waiver of Lessor's right to prompt return of the Equipment in proper condition.
14. INDEMNITY. Lessee assumes and agrees to indemnify, defend and keep
harmless Lessor, and any assignee of Lessor's rights and obligations under any
Equipment Schedule and this Lease, its agents and employees ("Indemnitees"),
from and against any and all Claims (other than such as may directly and
proximately result from the gross negligence or willful misconduct of, such
Indemnitees), by paying (on an after-tax basis) or otherwise discharging same,
when and as such Claims shall become due, including Claims arising on account of
(a) any Lease Document, or (b) the Equipment, or any part thereof, including the
ordering, acquisition, delivery, or installation of the Equipment, the
possession, maintenance, use, condition, ownership or operation of any item of
Equipment, and by whomsoever owned, used or operated, during the term of any
Equipment Schedule with respect to that item of Equipment, the existence of
latent and other defects (whether or not discoverable by Lessor or Lessee) in
the Equipment, any claim in tort for negligence or strict liability relating to
the Equipment, and any claim for patent, trademark or copyright infringement
relating to the Equipment, or the loss, damage, destruction, removal, return,
surrender, sale or other disposition of the Equipment, or any item thereof, or
for whatever other reason whatsoever relating to the Equipment or the
transaction contemplated by this Lease. Lessor shall give Lessee prompt notice
of any Claim hereby indemnified against and Lessee shall be entitled to control
the defense thereof, so long as no default or Default has occurred and is then
continuing; provided, however, that Lessor shall have the right to approve
defense counsel selected by Lessee. For the purposes of this Lease, the term
"Claims" shall mean (to the extent made by third parties) all claims,
allegations, ▇▇▇▇▇, judgments, good faith settlements entered into, suits,
actions, debts, obligations, damages (whether incidental, consequential or
direct), demands (for compensation, indemnification, reimbursement or
otherwise), losses, penalties, fines, liabilities (including strict liability),
charges that Lessor has incurred or for which it is responsible, in the nature
of interest, Liens, and costs (including attorneys' fees and
6
disbursements and any other legal or non-legal expenses of investigation or
defense of any Claim, whether or not such Claim is ultimately defeated or
enforcing the rights, remedies or indemnities provided for hereunder, or
otherwise available at law or equity to Lessor), of whatever kind or nature,
contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, by
or against any person.
15. DEFAULT. (a) A default shall be deemed to have occurred hereunder and
under an Equipment Schedule ("Default") if (1) Lessee shall fail to make any
payment of rent hereunder or under an Equipment Schedule as and when due and
such failure shall continue unremedied for a period of three (3) Business Days;
or (2) Lessee shall fail to satisfy the requirements of Section 4(d) hereof in a
timely manner, or shall fail to obtain and maintain the insurance required
herein; (3) Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any Lease
Document and such failure shall continue unremedied for a period of thirty (30)
days after written notice thereof to Lessee by Lessor; provided, however, that
if such failure can be cured but cannot be cured within such thirty (30) day
period, and Lessee commences efforts to effect such cure within such thirty (30)
day period and diligently pursues such efforts, then Lessee shall have an
additional period of sixty (60) days to remedy such failure; or (4) Lessee shall
(i) be generally not paying its debts as they become due; or (ii) make any
filing for the purpose of invoking the protection of any bankruptcy or
insolvency law, or any such law is invoked against or with respect to Lessee or
its property, and any such petition filed against Lessee is not dismissed within
sixty (60) days; or (5) Lessee shall make or permit any unauthorized Lien
against, or assignment or transfer of, this Lease, an Equipment Schedule, the
Equipment, or any interest therein; or (6) any certificate, statement,
representation, warranty or audit contained herein or furnished with respect
hereto by or on behalf of Lessee proving to have been false in any material
respect at the time as of which the facts therein set forth were stated or
certified, or having omitted any substantial contingent or unliquidated
liability or Claim against Lessee; or (7) Lessee shall be in default under any
material (i.e., for an amount in excess of Five Millions Dollars
($5,000,000.00)) obligation for borrowed money, for the deferred purchase price
of property or any lease agreement, and (i) the applicable grace period with
respect thereto shall have expired, and (ii) if such default is other than a
monetary default, then the obligee under such obligation shall have commenced
the exercise of any of its remedies available with respect to such obligation;
or (8) Lessee shall have terminated its corporate existence, consolidated with,
merged into, or conveyed (except in connection with any bona fide financing
arrangement) substantially all of its assets as an entirety to any person (such
actions being referred to as an "Event"), unless not less than sixty (60) days
prior to such Event: (i) such person executes and delivers to Lessor an
agreement satisfactory in form and substance to Lessor, in its sole discretion,
containing such person's effective assumption, and its agreement to pay,
perform, comply with and otherwise be liable for, in a due and punctual manner,
all of Lessee's obligations having previously arisen, or then or thereafter
arising, under any and all of the Lease Documents; and (ii) Lessor is satisfied
as to the creditworthiness of such person, based solely upon such person's
conformance to the standard criteria then used by Lessor for such purposes; or
(9) as a result of or in connection with a Change of Control, Lessee's Debt to
Tangible Net Worth equals or exceeds two and onehalf (2.5) times the ratio of
Lessee's Debt to Tangible Net Worth as of the date of this Lease, without the
prior written consent of Lessor. As used herein, "Change of Control" shall mean
either (i) a person becomes the owner or holder of 50% or more of the
outstanding voting securities of Lessee; and/or (ii) a person shall have the
contractual power presently to designate 50% or more of the directors of Lessee;
and "Debt" shall mean Lessee's total liabilities which, in accordance with GAAP,
would be included in the liability side of a balance sheet; and "Tangible Net
Worth" shall mean Lessee's tangible net worth including the sum of the par or
stated value of all outstanding capital stock, surplus and undivided profits,
less any amounts attributable to goodwill, patents, copyrights, mailing lists,
catalogs, trademarks, bond discount and underwriting expenses, organization
expense and other intangibles. Accounting terms used herein shall be as defined,
and all calculations hereunder shall be made, in accordance with GAAP. (b) The
occurrence of a Default with respect to any Equipment Schedule shall, at the
sole discretion of Lessor, constitute a Default with respect to any or all
Equipment Schedules to which it is then a party. Notwithstanding anything set
forth herein, Lessor may exercise all rights and remedies hereunder
independently with respect to each Equipment Schedule.
16. REMEDIES. Upon the occurrence of any Default under the provisions of
Section 15 hereof (including the failure to make any payment of rent as and when
due), Lessor may, at its option, declare this Lease and such Equipment Schedule
to be in default. At any time after cancellation of an Equipment Schedule or
after declaration by Lessor that such Equipment Schedule is in default, Lessor
may, in addition to any other remedies provided herein or by applicable law,
exercise one or more of the following remedies as Lessor in its sole discretion
shall elect:
(a) Require Lessee to assemble any or all of the Equipment at the
location to which the Equipment was delivered or the location to which such
Equipment may have been moved by Lessee or such other location in reasonable
proximity to either of the foregoing as Lessor shall designate; and/or to return
promptly, at Lessee's expense, any or all of the Equipment to Lessor at the
location, in the condition and otherwise in accordance with all of the terms of
Section 13 hereof; and/or take possession of and render unusable by Lessee any
or all of the Equipment, wherever it may be
7
located, without any court order or other process of law and without liability
for any damages occasioned by such taking of possession (other than to premises)
(any such taking of possession shall constitute an automatic cancellation of the
Equipment Schedule pertaining thereto, as it applies to those items taken
without further notice, and such taking of possession shall not prohibit Lessor
from exercising its other remedies hereunder).
(b) Sell, re-lease or otherwise dispose of any or all of the
Equipment, whether or not in Lessor's possession, in a commercially reasonable
manner at public or private sale with notice to Lessee (the parties agreeing
that ten (10) days' prior written notice shall constitute adequate notice of
such sale), with the right of Lessor to purchase and apply the net proceeds of
such disposition, after deducting all costs incurred by Lessor in connection
with such Default and all costs of such sale, re-lease or other of such
disposition (including but not limited to costs of transportation, possession,
storage, refurbishing, advertising and brokers' fees), to the obligations of
Lessee pursuant to this sub-part (b), with Lessee remaining liable for any
deficiency and with any excess being retained by Lessor; or retain any or all of
the Equipment in full or partial satisfaction, as the case may be, with Lessee
remaining liable for any deficiency; and recover from Lessee damages, not as a
penalty, but herein liquidated for all purposes as follows:
(1) if Lessor elects to dispose of the Equipment under an
Equipment Schedule pursuant to a lease which is substantially similar to this
Lease and such Equipment Schedule: an amount equal to the sum of (A) any accrued
and unpaid rent and other sums then due under this Lease and such Equipment
Schedule as of the date of commencement (the "Commencement Date") of the term of
the new lease, and (B) (i) the present value as of the Commencement Date of the
total rent for the then remaining term of such Equipment Schedule, minus (ii)
the present value as of the Commencement Date of the rent under the new lease
applicable to that period of the new lease term which is comparable to the then
remaining term of such Equipment Schedule, and (C) any incidental damages
allowed under Article 2A, less expenses saved by Lessor in consequence of the
Default ("Incidental Damages");
(2) if Lessor elects to retain the Equipment or to dispose of the
Equipment under an Equipment Schedule by sale, by re-lease (pursuant to a lease
which is not substantially similar to this Lease and such Equipment Schedule),
or otherwise: an amount equal to the sum of (A) any accrued and unpaid rent and
other sums then due under this Lease as of the date Lessor repossesses the
Equipment or such earlier date as Lessee tenders possession of the Equipment to
Lessor in accordance with the provisions of Section 13 hereof, (B) (i) the
present value as of the date determined under clause (A) of the total rent for
the then remaining term of such Equipment Schedule, minus (ii) the present
value, as of that certain date which may be determined by taking a reasonable
opportunity to repossess and remarket the Equipment, of the "market rent" (as
computed pursuant to Article 2A) at the place where the Equipment was located on
that date, computed for the same lease term, and (C) any Incidental Damages
(provided, however, that if the measure of damages provided is inadequate to put
Lessor in as good a position as performance would have, the damages shall be the
present value of the profit, including reasonable overhead, Lessor would have
made from full performance by Lessee, together with any incidental damages
allowed under Article 2A, due allowance for costs reasonably incurred and due
credit for payments or proceeds of disposition);
(3) if, with respect to an Equipment Schedule, Lessor has not
repossessed the Equipment, or if Lessor has repossessed the Equipment or Lessee
has tendered possession of the Equipment to Lessor and Lessor is unable after
reasonable effort to dispose of the Equipment at a reasonable price or the
circumstances reasonably indicate that such an effort will be unavailing: an
amount equal to the sum of (A) accrued and unpaid rent and other sums then due
under this Lease as of the date of entry of judgment in favor of Lessor, (B) the
present value as of the date determined under clause (A) of the rent for the
then remaining term of such Equipment Schedule, and (C) any Incidental Damages.
Lessor may dispose of the Equipment at any time before collection of a judgment
for damages. If the disposition is before the end of the remaining term of such
Equipment Schedule, Lessor's recovery against Lessee for damages will be
governed by sub-part (b)(1) or (2) (as applicable), and Lessor will cause an
appropriate credit to be provided against any judgment for damages to the extent
that the amount of the judgment exceeds the applicable recovery pursuant to
sub-part (b)(1) or (2).
Notwithstanding anything to the contrary set forth in this
Section 16(b), in addition to the liquidated damages specified in sub-parts (1)
and (2) hereof, Lessee shall also pay to Lessor all reasonable legal fees and
other expenses incurred by reason of any Default or the exercise of Lessor's
remedies, including all reasonable expenses incurred in connection with the
return of any Equipment in accordance with the terms of Section 13 hereof or in
placing such Equipment in the condition required by said Section, and all
pre-judgment and post-judgment enforcement-related activities.
(c) In lieu of the damages specified in sub-part (b), with respect to
each applicable Equipment Schedule, Lessor may recover from Lessee, as
liquidated damages for loss of a bargain and not as a penalty, an amount
calculated as the
8
sum of: (1) the greater of either (A) the Stipulated Loss Value of the Equipment
(determined as of the next date on which a payment is or would have been due
after the occurrence of the subject Default), together with all other sums due
under such Equipment Schedule as of such determination date or (B) all sums due
and to become due under such Equipment Schedule for the full term thereof
(including any tax indemnities becoming due as a result of the Default, and any
mandatory purchase or renewal options which Lessee has contracted to pay)
(provided that all sums becoming due after the occurrence of such Default shall
be discounted to present value as of the date of payment by Lessee) plus
Lessor's estimated residual interest in the Equipment; plus (2) the amount of
all commercially reasonable costs and expenses incurred by Lessor in connection
with repossession, recovery, storage, repair, sale, re-lease or other
disposition of the Equipment, including reasonable attorneys' fees and costs
incurred in connection therewith or otherwise resulting from the Default; minus
(3) if Lessor has repossessed the Equipment, the amount calculated pursuant to
clause (B) (ii) of sub-part (b)(1) or (2) (as applicable). Notwithstanding the
foregoing, in the event such Equipment Schedule and Lessee's rights thereunder
automatically are cancelled pursuant to the first sentence of this Section 16,
the amounts payable under clause (1) of this paragraph (c) automatically shall
become due and payable on the date of such cancellation, without notice or
demand, except as otherwise may be provided in writing by Lessor.
(d) Cancel such Equipment Schedule as to any or all of the Equipment.
(e) Proceed by appropriate court action, either at law or in equity
(including an action for specific performance), to enforce performance by Lessee
or to recover damages associated with such Default; or exercise any other right
or remedy available to Lessor at law or in equity.
With respect to any exercise by Lessor of its right to recover and/or
dispose of any Equipment or other collateral securing Lessee's obligations under
any Equipment Schedule (if applicable), Lessee acknowledges and agrees as
follows: (i) Lessor shall have no obligation, subject to the requirements of
commercial reasonableness, to clean up or otherwise prepare the Equipment or any
other collateral for disposition, (ii) Lessor may comply with the requirements
of any applicable law in connection with any disposition of the Equipment or
other collateral, and any actions taken in connection therewith shall not be
deemed to have adversely affected the commercial reasonableness of any
disposition of such Equipment and/or other collateral. Lessee acknowledges that
if Lessor purchases any of the Equipment or other collateral upon sale pursuant
to the exercise of its remedies hereunder, Lessor may pay for the same by
crediting some or all of Lessee's obligations hereunder or under any Equipment
Schedule.
Within fifteen (15) Business Days after written notice by Lessor of a
Default under this Lease, Lessee may elect by written notice to Lessor to
purchase the Equipment on that date which is thirty (30) days after such notice
from Lessor (the "Purchase Date"). On the Purchase Date, Lessee shall pay to
Lessor, in cash, an amount equal to the sum of: (x) the greater of the
Stipulated Loss Value of the Equipment (determined as of the next date on which
a payment is or would have been due after the occurrence of the Default), or the
then Fair Market Value (as defined in Rider No. 1 attached to this Lease) of the
Equipment, plus (y) all other sums then due hereunder or under each Equipment
Schedule (including, without limitation, all reasonable legal fees and other
expenses incurred by reason of any default or Default or the commencement of the
exercise of Lessor's remedies, and all other pre-judgment and post-judgment
enforcement related activities; together with all taxes or charges upon sale
(excluding any taxes calculated on the basis of net income or capital gains to
Lessor). Upon receipt of such notice from Lessee, Lessor temporarily shall cease
the exercise of its remedies hereunder until the Purchase Date. Upon
satisfaction of Lessee's obligations hereunder on the Purchase Date, Lessor
shall deliver to Lessee a ▇▇▇▇ of sale transferring and assigning to Lessee
without recourse or warranty, except (with respect to the status of title
conveyed) in respect of Lessor's acts, all of Lessor's right, title and interest
in and to the Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the condition of the
Equipment or any other matters. If Lessee fails to satisfy its obligations under
this paragraph on the Purchase Date, Lessee's option hereunder shall terminate
and Lessor may exercise all rights and remedies available to it hereunder or at
law or in equity.
All amounts to be present valued shall be discounted at a rate equal
to the discount rate of the Federal Reserve Bank of Richmond in effect on the
applicable date. Unless otherwise provided above, a cancellation of any
Equipment Schedule shall occur only upon written notice by Lessor to Lessee and
only with respect to such items of the Equipment as Lessor specifically elects
to cancel in such notice. Except as to such items of the Equipment with respect
to which there is a cancellation, this Lease and the Equipment Schedules not so
cancelled shall remain in full force and effect and Lessee shall be and remain
liable for the full performance of all its obligations hereunder and thereunder.
Lessee shall be liable for all reasonable legal fees and other expenses incurred
by reason of any default or Default or the exercise of Lessor's rights or
remedies, including all reasonable expenses incurred in connection with the
return of any Equipment in accordance with the terms of Section 13 hereof and
this Section or in placing such Equipment in the condition required by
9
said Sections; and all other pre-judgment and post-judgment enforcement related
actions taken by Lessor, and/or any actions taken by Lessor in any bankruptcy
case involving Lessee, the Equipment or any other collateral. Lessee shall also
be liable for Late Charges which shall accrue and be payable with respect to all
amounts becoming due pursuant to this Section from and after the due date
therefor until payment of the full amount thereof is made. No right or remedy
referred to in this Section is intended to be exclusive, but each shall be
cumulative and shall be in addition to any other remedy referred to above or
otherwise available at law or in equity, and may be exercised concurrently or
separately from time to time. The failure of Lessor to exercise the rights
granted hereunder upon any Default by Lessee shall not constitute a waiver of
any such right upon the continuation or reoccurrence of any such Default. In no
event shall the execution of an Equipment Schedule constitute a waiver by Lessor
of any pre-existing Default in the performance of the terms and conditions
hereof.
17. ASSIGNMENT. (a) WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (WHICH
SHALL NOT UNREASONABLY BE WITHHELD), LESSEE WILL NOT ASSIGN, TRANSFER OR
ENCUMBER ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR UNDER ANY EQUIPMENT
SCHEDULE, OR ITS LEASEHOLD INTEREST, SUBLET THE EQUIPMENT OR OTHERWISE PERMIT
THE EQUIPMENT TO BE OPERATED OR USED BY, OR TO COME INTO OR REMAIN IN THE
POSSESSION OF, ANYONE BUT LESSEE. No assignment or sublease, whether authorized
in this Section or in violation of the terms hereof, shall relieve Lessee of its
obligations, and Lessee shall remain primarily liable hereunder and under each
Equipment Schedule. (b) Lessor may assign any or all of its rights, obligations,
title and interest hereunder, or the right to enter into any Equipment Schedule,
or may resell (through syndication, assignment, participation or placements) an
interest in any or all of the Equipment, this Lease or any Equipment Schedule.
Lessee agrees that it will pay all rent and other amounts payable under each
Equipment Schedule to the "Lessor" named therein; provided, however, if Lessee
receives written notice of an assignment from Lessor, Lessee will pay all rent
and other amounts payable under any assigned Equipment Schedule to such assignee
or as instructed by Lessor and such assignee. Each Equipment Schedule,
incorporating by reference the terms and conditions of this Lease, constitutes a
separate instrument of lease subject to the terms and conditions of such
Equipment Schedule and of this Lease, and the "Lessor" named therein or its
assignee shall have all rights as "Lessor" thereunder separately exercisable by
such named Lessor or assignee as the case may be, exclusively and independently
of Lessor or any assignee with respect to other Equipment Schedules executed
pursuant hereto. Lessee agrees to confirm in writing receipt of any notice of
assignment, syndication, participation or placement, as reasonably may be
requested by Lessor or any such assignee or participant (collectively, the
"Assignee"). Lessee hereby waives and agrees not to assert against any such
Assignee any defense, setoff, recoupment, claim or counterclaim which Lessee has
or may at any time hereafter have against Lessor or any person other than such
Assignee, for any reason whatsoever. Lessee will provide reasonable assistance
to Lessor in whatever manner necessary in order to permit Lessor to complete any
resale, syndication, assignment, participation or placement of the transaction
contemplated by this Lease. Lessee agrees that any such assignment shall not
materially change Lessee's duties or obligations under the Lease or any
Equipment Schedule nor materially increase Lessee's risks or burdens. Upon such
assignment and except as may otherwise be provided therein all references in
this Lease to Lessor shall include such Assignee. (c) Subject always to the
foregoing, this Lease and each Equipment Schedule inure to the benefit of, and
are binding upon, the successors and assigns of the parties hereto and thereto,
as the case may be (and, without limiting the foregoing, shall bind all persons
who become bound as a "new debtor" to this Lease and any Equipment Schedule, as
set forth in UCC Section 9-203(e)).
18. MISCELLANEOUS. (a) This Lease, the Riders annexed hereto, each
Equipment Schedule and any commitment letter between the parties, constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof and shall not be rescinded, amended or modified in any manner except
by a document in writing executed by both parties. (b) Any provision of this
Lease which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. (c) The
representations, warranties and covenants of Lessee herein shall be deemed to be
continuing and to survive the execution and delivery of this Lease, each
Equipment Schedule and any other Lease Documents through and during the term of
this Lease. Each execution by Lessee of an Equipment Schedule shall be deemed a
reaffirmation and warranty that there shall have been no material adverse change
in the business or financial condition of Lessee from the date of execution
hereof and that Lessee is not then in default (as of the date of execution of
such Equipment Schedule, and Lessee has no knowledge of the occurrence of any
event which, with the giving of notice or the lapse of time, or both, would
become a Default) under any obligation for borrowed money, for the deferred
purchase price of property or any lease agreement which, either individually or
in the aggregate, would have a Material Adverse Effect. With respect to each
Equipment Schedule, the obligations of Lessee under Sections 7, 8, 9, 10, 13 and
14 hereof, together with any of Lessee's obligations under the other provisions
of this Lease (as incorporated therein) which have accrued but not been fully
satisfied, performed or complied with prior to the cancellation or expiration of
such
10
Equipment Schedule, shall survive the cancellation or expiration thereof to the
extent necessary for the full and complete performance of such obligations. (d)
Lessor represents and covenants to Lessee that Lessor has full authority to
enter into this Lease and any other Lease Documents to which it may become a
party, and so long as no Default occurs with respect to this Lease or any
Equipment Schedule, neither Lessor nor any person authorized by Lessor shall
interfere with Lessee's right to peaceably and quietly possess and use the
Equipment during the term thereof, subject to the terms and provisions hereof;
and the interest of any assignee from, or holder of a security interest granted
by, Lessor with respect to this Lease and/or the Equipment shall be subject to
the provisions of this Section 18(d). (e) Lessee agrees to pay within ten (10)
days of demand all reasonable costs and expenses incurred by Lessor in
connection with the preparation, execution, delivery, filing, recording and
administration of any of the Lease Documents, including (without limitation) the
reasonable fees and out-of-pocket expenses of counsel for Lessor, and all costs
and expenses incurred by Lessor in connection with (1) the filing or recording
of real property waivers and Uniform Commercial Code statements, and (2) lien
search reports and copies of filings with respect to Lessee and/or the
Equipment. (f) If Lessee fails to perform any of its obligations hereunder,
Lessor shall have the right, but shall not be obligated, to effect such
performance, and the amount of any out of pocket and other reasonable expenses
of Lessor incurred in connection with such performance, together with interest
thereon at the Late Charge Rate, shall be payable by Lessee upon demand.
Lessor's effecting such compliance shall not be a waiver of Lessee's default.
(g) Lessee irrevocably authorizes Lessor to file any UCC statements, and Lessee
irrevocably appoints Lessor as Lessee's attorney-in-fact (which power shall be
deemed coupled with an interest) to execute, endorse and deliver any UCC
statements and any documents and checks or drafts relating to or received in
payment for any loss or damage under the policies of insurance required by the
provisions of Section 11 hereof, but only to the extent that the same relates to
the Equipment. (h) LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH LESSEE AND/OR LESSOR MAY BE PARTIES ARISING OUT OF OR IN ANY
WAY PERTAINING TO THIS LEASE. LESSEE AUTHORIZES LESSOR TO FILE THIS PROVISION
WITH THE CLERK OR JUDGE OF ANY COURT HEARING ANY SUCH CLAIM. IT IS HEREBY AGREED
AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL
CLAIMS AGAINST PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS LEASE. THIS WAIVER IS KNOWINGLY, WILLINGLY
AND VOLUNTARILY MADE BY THE PARTIES AND THE PARTIES HEREBY ACKNOWLEDGE THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.
LESSOR AND LESSEE FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE
SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL. (i) All notices (excluding ▇▇▇▇▇▇▇▇ and
communications in the ordinary course of business) hereunder shall be in
writing, personally delivered, delivered by overnight courier service, sent by
facsimile transmission (with confirmation of receipt), or sent by certified
mail, return receipt requested, addressed to the other party at its respective
address stated below the signature of such party or at such other address as
such party shall from time to time designate in writing to the other party; and
shall be effective from the date of receipt. (j) THIS LEASE AND ALL OF THE OTHER
LEASE DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER, SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (THE "STATE") (WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES OF THE STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in any state or Federal court in the
State, and agree that a summons and complaint commencing an action or proceeding
in any such court shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to it at its address
hereinbelow set forth, or as it may provide in writing from time to time, or as
otherwise provided under the laws of the State. (k) This Lease and all of the
other Lease Documents may be executed in any number of counterparts and by
different parties hereto or thereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together consist of but one and the same instrument; provided, however,
that to the extent that this Lease and/or the Equipment Schedule would
constitute chattel paper, as such term is defined in the Uniform Commercial Code
as in effect in any applicable jurisdiction, no security interest herein or
therein may be created through the transfer or possession of this Lease in and
of itself without the transfer or possession of the original of such Equipment
Schedule and incorporating the Lease by reference; and no security interest in
this Lease and an Equipment Schedule may be created by the transfer or
possession of any counterpart of such Equipment Schedule other than the original
thereof, which shall be identified as the document marked "Original" and all
other counterparts shall be marked "Duplicate".
19. DEFINITIONS AND RULES OF CONSTRUCTION. (a) The following terms when
used in this Lease or in any of the Equipment Schedules have the following
meanings: (1) "applicable law" or "law": any law, rule, regulation, ordinance,
order, code, common law, interpretation, judgment, directive, decree, treaty,
injunction, writ, determination, award, permit
11
or similar norm or decision of any governmental authority; (2) "business day":
any day, other than a Saturday, Sunday, or legal holiday for commercial banks
under the laws of the State; (3) "UCC" or "Uniform Commercial Code": the Uniform
Commercial Code as in effect in the State or in any other applicable
jurisdiction; and any reference to an article (including Article 2A) or section
thereof shall mean the corresponding article or section (however termed) of any
such other applicable version of the Uniform Commercial Code; (4) "governmental
authority": any federal, state, county, municipal, regional or other
governmental authority, agency, board, body, instrumentality or court, in each
case, whether domestic or foreign; and (5) "person": any individual,
corporation, partnership, joint venture, or other legal entity or a governmental
authority, whether employed, hired, affiliated, owned, contracted with, or
otherwise related or unrelated to Lessee or Lessor. (b) The following terms when
used herein or in any of the Equipment Schedules shall be construed as follows:
"herein," "hereof," "hereunder," etc.: in, of, under, etc. this Lease or such
other Lease Document in which such term appears (and not merely in, of, under,
etc. the section or provision where the reference occurs); "including":
containing, embracing or involving all of the enumerated items, but not limited
to such items unless such term is followed by the words "and limited to," or
similar words; and "or": at least one, but not necessarily only one, of the
alternatives enumerated. Any defined term used in the singular preceded by "any"
indicates any number of the members of the relevant class. Any Lease Document or
other agreement or instrument referred to herein means such agreement or
instrument as supplemented and amended from time to time. Any reference to
Lessor or Lessee shall include their permitted successors and assigns. Any
reference to a law shall also mean such law as amended, superseded or replaced
from time to time. Unless otherwise expressly provided herein to the contrary,
all actions that either party takes or is required to take under any Lease
Document shall be taken at such parties' sole cost and expense, and all such
costs and expenses shall constitute Claims and be covered by Section 14 hereof.
To the extent Lessor is required to give its consent or approval with respect to
any matter, the reasonableness of Lessor's withholding of such consent shall be
determined based on the then existing circumstances; provided, that Lessor's
withholding of its consent shall be deemed reasonable for all purposes if (i)
the taking of the action that is the subject of such request, would result in
(A) an impairment of Lessor's rights, title or interests hereunder or under any
Equipment Schedule or other Lease Document, or to the Equipment, or (B) expose
Lessor to any Claims, or (ii) to the extent Lessee fails to provide promptly to
Lessor any filings, certificates, opinions or indemnities specified by Lessor to
Lessee in writing.
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12
IN WITNESS WHEREOF, the parties hereto have caused this Master Lease
Agreement to be duly executed, as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
------------------------------------- ----------------------------------
Name: Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- Title: Chief Financial Officer and Senior Vice President
Title:
----------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ State of Incorporation: Delaware
Federal Employer Identification No.: ▇▇-▇▇▇▇▇▇▇
Organizational No.: 2094403
13
GENERAL ELECTRIC CAPITAL CORPORATION
--------------------------------------------------------------------------------
RIDER NO. 1
To and part of Master Lease Agreement dated as of the 27th day of March, 2002,
as amended (the "Lease"), between GENERAL ELECTRIC CAPITAL CORPORATION, its
successors and assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC.
("Lessee").
A. LESSEE RENEWAL. (1) Provided that Lessee is not then in Default, Lessee
shall have the option to renew this Lease, at the expiration of the original
term of this Lease, with respect to all but not less than all of the Equipment,
on the terms and conditions of this Lease, for a negotiated renewal term (as
provided in Section A.(2) hereof at a periodic rent equal to the Fair Market
Rental Value of such Equipment determined at the time of renewal pursuant to the
terms of Section A.(2) hereof. If Lessee desires to exercise this option it
shall give Lessor written non-binding notice of its intent to exercise its
option to renew at least three hundred (300) days before expiration of the
original term of this Lease with respect to the first Equipment Schedule to be
executed under this Lease. Thereafter, Lessee shall engage in negotiations with
Lessor to determine the additional renewal term and the periodic rent to be paid
during the renewal term. If Lessee desires to exercise this option, not less
than two hundred forty (240) days before expiration of the original term of this
Lease with respect to the first Equipment Schedule to be executed under this
Lease, Lessee shall give Lessor irrevocable written notice of its election to
renew. Such election shall be effective with respect to all Equipment leased
under all Equipment Schedules.
(2) For purposes of Section A.(1) hereof, "Fair Market Rental Value"
shall be deemed to be an amount equal to the rental, as installed and in use,
obtainable in an arms' length transaction between a willing and informed lessor
and a willing and informed lessee under no compulsion to lease (and assuming
that, as of the date of determination, the Equipment is in at least the
condition required by Section 13 and Rider No. 6 of this Lease), determined as
follows: After Lessee provides the non-binding notice pursuant to Section A.(1)
hereof, the parties shall attempt to agree on: (x) a renewal term based upon the
then remaining useful life of the Equipment and (y) the Fair Market Rental
Value. In the event Lessor and Lessee are unable to agree within fifteen (15)
days on either or both the renewal term or Fair Market Rental Value, either or
both the renewal term and/or the Fair Market Rental Value shall be determined
(as necessary), at Lessee's expense, by an independent appraiser selected by
Lessee and reasonably acceptable to Lessor (who must be associated with a
professional organization of equipment or personal property appraisers, such as
the American Society of Appraisers), and the determination of such appraiser
shall be binding on the parties hereto.
B. OPTIONS TO PURCHASE. (1) Provided that Lessee is not then in Default,
Lessee shall have the option to purchase, upon the expiration of the twelfth
(12th) quarter of the original term of this Lease (the "Early Termination
Date"), all but not less than all of the Equipment upon the following terms and
conditions: If Lessee desires to exercise this option it shall give Lessor
written notice of its election to purchase at least thirty (30) days and not
more than ninety (90) days before the Early Termination Date with respect to the
first Equipment Schedule to be executed under this Lease. Such election shall be
effective with respect to all Equipment leased under all Equipment Schedules. On
the Early Termination Date with respect to each Equipment Schedule, Lessee shall
pay to Lessor in cash the rent due on that date together with the purchase price
for the Equipment so purchased, determined as hereinafter provided. The purchase
price of the Equipment shall be an amount equal to 53.485 percent of the
original Total Invoice Cost of the Equipment (as specified on the Equipment
Schedule), together with all taxes and charges upon sale. Lessor and Lessee
agree that the purchase price represents a reasonable prediction of the Fair
Market Value of the Equipment at the time the option is exercisable.
(2) Provided that Lessee is not then in Default, Lessee shall have the
option to purchase, upon the expiration of the original term of this Lease, all
but not less than all of the Equipment upon the following terms and conditions:
If Lessee desires to exercise this option it shall give Lessor written notice of
its election to purchase at least two hundred forty (240) days before expiration
of the original term of this Lease with respect to the first Equipment Schedule
to be executed under this Lease. Such election shall be effective with respect
to all Equipment leased under all Equipment Schedules. Thereafter, Lessee shall
engage in negotiations with Lessor to determine the purchase price for the
Equipment. At the expiration of the original term of this Lease, Lessee shall
pay to Lessor in cash the rent due on that date together with the purchase price
for the Equipment so purchased, determined as hereinafter provided. The purchase
price of Equipment shall be an amount equal to the greater of: (x) fifteen (15)
percent of the original Total Invoice Cost of
14
the Equipment (as specified on the Equipment Schedule), or (y) the Fair Market
Value of the Equipment determined pursuant to Section B.(4); together with all
taxes and charges upon sale (excluding any taxes calculated on the basis of net
income or capital gains to Lessor).
(3) Provided that Lessee is not then in Default, Lessee shall have the
option to purchase, upon the expiration of any renewal term of this Lease, all
but not less than all of the Equipment upon the following terms and conditions:
If Lessee desires to exercise this option it shall give Lessor written notice of
its election to purchase at least two hundred forty (240) days before expiration
of the applicable renewal term of this Lease with respect to the first Equipment
Schedule to be executed under this Lease. Such election shall be effective with
respect to all Equipment leased under all Equipment Schedules. Thereafter,
Lessee shall engage in negotiations with Lessor to determine the purchase price
for the Equipment. At the expiration of the applicable renewal term of this
Lease, Lessee shall pay to Lessor in cash the rent due on that date together
with the purchase price for the Equipment so purchased, determined as
hereinafter provided. The purchase price of the Equipment shall be an amount
equal to its then Fair Market Value determined pursuant to Section B.(4),
together with all taxes and charges upon sale (excluding any taxes calculated on
the basis of net income or capital gains to Lessor).
(4) For purposes of Sections B.(2) and B.(3), "Fair Market Value"
shall be deemed to be an amount equal to the sale price of the Equipment, as
installed and in use, obtainable in an arms' length transaction between a
willing and informed buyer and a willing and informed seller under no compulsion
to sell (and assuming that, as of the date of determination, the Equipment is in
at least the condition required by Section 13 and Rider No. 6 of this Lease),
determined as follows:. After Lessee provides notice pursuant to Sections B.(2)
or B.(3) hereof, the parties shall attempt to agree on the Fair Market Value of
the Equipment. In the event Lessor and Lessee are unable to agree within one
hundred twenty (120) days on such Fair Market Value, then the Fair Market Rental
Value shall be determined, at Lessee's expense, by an independent appraiser (who
must be associated with a professional organization of equipment or personal
property appraisers, such as the American Society of Appraisers) chosen by
Lessee in its sole discretion, and the determination of such appraiser shall be
binding on the parties hereto.
(5) Notwithstanding any election of Lessee to purchase, the provisions
of this Lease shall continue in full force and effect until the passage of
ownership of the Equipment upon the date of purchase. On the date of purchase,
Lessor shall deliver to Lessee a ▇▇▇▇ of sale transferring and assigning to
Lessee without recourse or warranty, except (with respect to the status of title
conveyed) in respect of Lessor's acts, all of Lessor's right, title and interest
in and to the Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the condition of the
Equipment or any other matters.
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15
IN WITNESS WHEREOF, the parties have caused this Rider No. 1 to be duly
executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
--------------------------------- ---------------------------------
16
GENERAL ELECTRIC CAPITAL CORPORATION
--------------------------------------------------------------------------------
RIDER NO. 2
To and part of Master Lease Agreement dated as of the 27th day of March, 2002
(the "Lease"), between GENERAL ELECTRIC CAPITAL CORPORATION, its successors and
assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC., its successors and
permitted assigns ("Lessee").
A. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF LESSEE FOR SALE-LEASEBACK.
Lessee represents and warrants that: (1) The sale of those certain items of
equipment specified on the schedule attached to each Equipment ▇▇▇▇ of Sale
(collectively the "▇▇▇▇ of Sale") executed by Lessee, and the execution,
delivery and performance of the ▇▇▇▇ of Sale (a) have been duly authorized by
all necessary corporate action on the part of Lessee; (b) do not require the
consent of any stockholder, trustee or holders of any indebtedness of Lessee
except such as have been duly obtained; and (c) do not and will not contravene
any law, governmental rule, regulation or order now binding on Lessee, or the
charter or by-laws of Lessee, or contravene the provisions of, or constitute a
default under, or result in the creation of any lien or encumbrance upon the
property of Lessee under, any indenture, mortgage, contract or other agreement
to which Lessee is a party or by which it or its property is bound. (2) The ▇▇▇▇
of Sale transfers to Lessor valid title to the equipment described on the
schedule attached thereto free and clear of any and all encumbrances, liens,
charges or defects. No filing or recordation must be made, no notice must be
given, and no other action must be taken with respect to any state or local
jurisdiction, or any person, in order to preserve to Lessor all the rights
transferred by the ▇▇▇▇ of Sale.
B. ADDITIONAL AUTHORIZATION. Lessor's obligations under the Lease are
further conditioned upon Lessor having received the ▇▇▇▇ of Sale and an opinion
of counsel for Lessee as to the matters set forth in paragraph A above.
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17
IN WITNESS WHEREOF, the parties have caused this Rider No. 2 to be duly
executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
--------------------------------- ---------------------------------
18
GENERAL ELECTRIC CAPITAL CORPORATION
--------------------------------------------------------------------------------
RIDER NO. 3
To and part of Master Lease Agreement dated as of the 27th day of March, 2002
(the "Lease"), between GENERAL ELECTRIC CAPITAL CORPORATION, its successors and
assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC., its successors and
permitted assigns ("Lessee").
TAX INDEMNITY.
(1) Lessee represents and warrants that: (a) it believes that it is
reasonable to estimate that the useful life of the Equipment exceeds the lease
term (including any interim and fixed rental renewal periods) by the greater of
one (1) year or twenty (20) percent of such estimated useful life, and that said
Equipment will have a value at the end of the lease term, including any fixed
rate renewal period, of at least twenty (20) percent of the Total Invoice Cost
of the Equipment, without including in such value any increase or decrease for
inflation or deflation during the original lease term (all as evidenced by the
certificate of a qualified party to be provided at Lessee's expense to Lessor
prior to the commencement of the lease term); and (b) the Equipment is, and will
be used by Lessee so as to remain, property eligible for the MACRS Deductions
(as defined below).
(2) (a) If by reason of (i) any act or failure to act of Lessee (including
a breach of any covenant of Lessee set forth in Section 4 of the Lease), or (ii)
the misrepresentation of or breach by Lessee of any of the warranties and
representations set forth in Section 3 of the Lease or Section (1) of this
Rider, Lessor in computing its taxable income or liability for tax, shall lose,
or shall not have, or shall lose the right to claim or there shall be disallowed
or recaptured for Federal and/or state income tax purposes, in whole or in part,
the benefit of MACRS Deductions; or (b) Lessor shall become liable for
additional tax as a result of Lessee having added an attachment or made an
alteration to the Equipment, including (without limitation) any such attachment
or alteration which would increase the productivity or capability of the
Equipment so as to violate the provisions of Rev. Proc. 2001-28, 2001-19 I.R.B.
1156 (as it may hereafter be modified or superseded); hereinafter referred to as
a "Loss"; then Lessee shall pay Lessor the Tax Indemnification Payment as
additional rent and Lessor shall revise the Schedule(s) of Stipulated Loss
Values to reflect the Loss. As used herein, "MACRS Deductions" shall mean the
deductions under Section 167 of the Internal Revenue Code of 1986, as now or
hereafter amended (the "Code") determined in accordance with the modified
Accelerated Cost Recovery System with respect to the Total Invoice Cost of any
item of the Equipment using the accelerated method set forth in Section
168(b)(1) or 168(b)(2) of the Code as in effect on the date of this Lease for
property assigned to the class of property specified in the Equipment Schedule
pertaining thereto; "Lessor" shall be deemed to include the consolidated Federal
taxpayer group of which Lessor is a member; and "Tax Indemnification Payment"
shall mean such amount as, after consideration of (i) all taxes required to be
paid by Lessor in respect of the receipt thereof under the laws of any
governmental or taxing authority in the United States, and (ii) the amount of
any interest or penalty which may be payable by Lessor in connection with the
Loss, shall be required to cause Lessor's after-tax net return (the "Net
Return") to be equal to, but no greater than, the Net Return computed
consistently with current tax laws (and with the assumption that Lessor is taxed
at the highest marginal Federal and state tax rates) as of the date of this
Lease that would have been available to Lessor had the Loss not occurred.
(3) Lessor promptly shall notify Lessee in writing of such Loss and Lessee
shall pay to Lessor the Tax Indemnification Payment within thirty (30) days of
such notice. For these purposes, a Loss shall occur upon the earliest of: (a)
the happening of any event (such as disposition or change in use of any item of
the Equipment) which will cause such Loss; (b) the payment by Lessor to the
Internal Revenue Service or state taxing authority of the tax increase
(including an increase in estimated taxes) resulting from such Loss; (c) the
date on which the Loss is realized by Lessor; or (d) the adjustment of the tax
return of Lessor to reflect such Loss.
(4) The obligations of Lessee under this Section, which accrue during the
term of the Lease, shall survive the expiration or termination of the Lease.
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19
IN WITNESS WHEREOF, the parties have caused this Rider No. 3 to be duly
executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
--------------------------------- ---------------------------------
20
GENERAL ELECTRIC CAPITAL CORPORATION
--------------------------------------------------------------------------------
RIDER NO. 4
To and part of Master Lease Agreement dated as of the 27th day of March, 2002
(the "Lease"), between GENERAL ELECTRIC CAPITAL CORPORATION, its successors and
assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC., its successors and
permitted assigns ("Lessee").
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
1. As used herein, the following terms shall have the following meaning:
(a) "Adverse Environmental Condition": shall mean (i) the existence or the
continuation of the existence, of an Environmental Contamination
(including, without limitation, a sudden or non-sudden accidental or
non-accidental Environmental Contamination), of, or exposure to, any
substance, chemical, material, pollutant, Hazardous Substance, odor or
audible noise or other release or emission in, into or onto the
environment (including without limitation, the air, ground, water or
any surface) at, in, by, from or related to any Equipment, (ii) the
environmental aspect of the transportation, storage, treatment or
disposal of materials in connection with the operation of any
Equipment, or (iii) the violation, or alleged violation, of any
Environmental Law, permits or licenses of, by or from any governmental
authority, agency or court relating to environmental matters connected
with any of the Equipment.
(b) "Affiliate" shall mean, with respect to any given Person, any Person
that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
Person.
(c) "Environmental Claim" shall mean any accusation, allegation, notice of
violation, claim, demand, abatement or other order on direction
(conditional or otherwise) made in writing by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to
the environment or other adverse affects on the environment, or for
fines, penalties or restrictions, resulting from or based upon any
Adverse Environmental Condition.
(d) "Environmental Contamination" shall mean any actual or threatened
release, spill, emission, leaking, pumping, injection, presence,
deposit, abandonment, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, or into or out of
any of the Equipment, including, without limitation, the movement of
any Hazardous Substance or other substance through or in the air,
soil, surface water, groundwater or property.
(e) "Environmental Law" shall mean any present or future federal, foreign,
state or local law, ordinance, order, rule or regulation and all
judicial, administrative and regulatory decrees, judgments and orders,
pertaining to health, industrial hygiene, the use, disposal or
transportation of Hazardous Substances, Environmental Contamination,
or pertaining to the protection of the environment, including, but not
limited to, the Comprehensive Environmental Response, Compensation,
and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the
-- ---
Hazardous Material Transportation Act (49 U.S.C. Section l80l et
--
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section l251
---
et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
-- ---
Section 690l et seq.), the Clean Air Act (42 U.S.C. Section 740l et
-- --- --
seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et
--- --
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
---
U.S.C. Section l36l et seq.), the Occupational Safety and Health Act
-- ---
(l9 U.S.C. Section 65l et seq.), the Noise Control Act of 1972 (42
-- ---
U.S.C. Section 4901 et seq.), and the Hazardous and Solid Waste
-- ---
Amendments (42 U.S.C. Section 2601 et seq.), as these laws have been
-- ---
or may be amended or supplemented, and any successor thereto, and any
analogous foreign, state or local statutes, and the rules, regulations
and orders promulgated pursuant thereto.
(f) "Environmental Loss" shall mean any loss, cost, damage, liability,
deficiency, fine, penalty or expense (including, without limitation,
reasonable attorneys' fees, engineering and other professional or
expert fees), investigation, removal, cleanup and remedial costs
(voluntarily or involuntarily incurred) and damages to, loss of the
use of or decrease in value of the Equipment arising out of or related
to any Adverse Environmental Condition.
21
(g) "Hazardous Substances" shall mean and include hazardous substances as
defined in CERCLA; oil of any kind, petroleum products and their
by-products, including, but not limited to, sludge or residue;
asbestos containing materials; polychlorinated biphenyls; any and all
other hazardous or toxic substances; hazardous waste, as defined in
CERCLA; medical waste; infectious waste; those substances listed in
the United States Department of Transportation Table (49 C.F.R.
Section 172.101); explosives; radioactive materials; and all other
pollutants, contaminants and other substances regulated or controlled
by the Environmental Laws and any other substance that requires
special handling in its collection, storage, treatment or disposal
under the Environmental Laws.
(h) "Person" shall mean any individual, partnership, corporation, trust,
unincorporated organization, government or department or agency
thereof and any other entity
2. Lessee hereby represents, warrants and covenants that: (a) it has
conducted, and will continue to conduct its business operations, and
throughout the term of the Lease will use the Equipment, so as to comply in
all material respects with all Environmental Laws; (b) as of the date
hereof, and as of the date of execution of each Equipment Schedule, except
as have been previously disclosed in writing by Lessee to Lessor, there are
no Hazardous Substances generated, treated, handled, stored, transported,
discharged, emitted, released or otherwise disposed of in connection with
Lessee's use of the Equipment except in Lessee's ordinary course of
business in compliance with Environmental Law; and (c) Lessee has, and
throughout the term of the Lease will continue to have in full force and
effect all federal, state and local licenses, permits, orders and approvals
required to operate the Equipment in compliance with all Environmental
Laws.
3. Lessee agrees that if required to return the Equipment or any item thereof
to Lessor or Lessor's agents, Lessee shall return such Equipment free from
all Hazardous Substances (other than those Hazardous Substances which are
customarily used by Lessee to lubricate and maintain the Equipment) and
otherwise fully in compliance with all Environmental Laws.
4. Lessee shall fully and promptly pay, perform, discharge, defend, indemnify
and hold harmless Lessor and its Affiliates, and their successors and
assigns, directors, officers, employees and agents, from and against any
Environmental Claim or Environmental Loss.
5. The provisions of this Rider shall survive any expiration or termination of
the Lease.
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22
IN WITNESS WHEREOF, the parties have caused this Rider No. 4 to be duly
executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
--------------------------------- ---------------------------------
23
GENERAL ELECTRIC CAPITAL CORPORATION
--------------------------------------------------------------------------------
RIDER NO. 5
To and part of Master Lease Agreement dated as of the 27th day of March, 2002
(the "Lease"), between GENERAL ELECTRIC CAPITAL CORPORATION, its successors and
assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC., its successors and
permitted assigns ("Lessee").
ADDITIONAL COLLATERAL.
In order to secure the prompt payment and performance as and when due of
all of Lessee's obligations (both now existing and hereafter arising) under all
Equipment Schedules, Lessee hereby grants to Lessor a first priority security
interest in the following (whether now existing or hereafter created): the
equipment described on Schedule A attached hereto and all replacements,
substitutions, accessions and proceeds (cash and non-cash), including the
proceeds of all insurance policies, thereof (the "Additional Collateral").
Provided that Lessee is not then in Default, upon the expiration of the
twelfth (12th) quarter of the original term of this Lease (the "Replacement
Date"), Lessee shall have the option to replace some or all of the equipment
described on Schedule A attached hereto with alternative collateral, on the
following terms and conditions: if Lessee desires to exercise this option it
shall give Lessor written notice at least thirty (30) days before the
Replacement Date with respect to the first Equipment Schedule to be executed
under this Lease, which notice shall include an itemization of the alternative
collateral proposed by Lessee and evidence reasonably satisfactory to Lessor
that such proposed alternative collateral is of equal value and utility as the
equipment described on Schedule A attached hereto which is to be replaced; and
such proposed alternative collateral shall otherwise be reasonably acceptable to
Lessor. From and after consummation of such replacement in accordance with the
terms hereof, such alternative collateral shall be deemed to be "Additional
Collateral" hereunder.
In furtherance of the foregoing, Lessee irrevocably authorizes Lessor to
record, at Lessee's expense, such Uniform Commercial Code financing statements
with respect to the Additional Collateral as Lessor may require. Lessee
represents and warrants to Lessor that, upon filing of such Uniform Commercial
Code financing statements describing the Additional Collateral in the State of
Delaware, Lessor shall have a first priority perfected security interest in the
Additional Collateral.
Lessee covenants and agrees that it shall perform all of its obligations
specified in Sections 7, 9, 10(a), 10(c), 10(d), 11, 14, 16, 17(a) and 18(g) of
the Lease with respect to the Additional Collateral as fully as if each
reference to "Equipment" in such Sections was a reference to the "Additional
Collateral". In addition, Lessee covenants and agrees that, in the event of the
loss of or damage to any item of the Additional Collateral, Lessee shall, at its
sole cost and expense, promptly repair and restore, or replace, such item of the
Additional Collateral to the condition of such item immediately prior to the
occurrence of such loss or damage.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the parties have caused this Rider No. 5 to be duly
executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
--------------------------------- ---------------------------------
25
SCHEDULE A
1 5.5 Meter Biaxially Oriented Polypropylene (▇▇▇▇) $6,900,000
Co-extrusion Flat Film Line 62 Consisting of:
-------
1 Mitsubishi Tandem Extruder System -
6"-32:1 Extruder with 250 HP DC Drive & Feed ▇▇▇▇▇▇
feeding into 4 1/2"-24:1 Extruder with 465 HP DC
Drive with Filter at barrel discharge - New 1980
2 3 1/2"-30:1 ▇▇▇▇▇▇ Extruders with 100 HP DC
Drives
2 Melt Gear Pumps, Filters & Connection Transfer
Piping from 3 1/2" Extruders to 36" Co-extrusion
Die
1 36" Multiple Manifold Co-extrusion Flat Sheet Die
1 30" Mitsubishi Casting Roll Unit w/ Drive System
and Temperature Control System
1 Measurex Model 2040 Thickness Measuring System
1 Mitsubishi 13 Roll Machine Direction Orienter Unit
with Drive Systems and Temperature Control System
2 3 1/2" - 30:1 Mitsubishi Extruders with 75 HP DC
Drives and 3 1/2" ▇▇▇▇▇▇▇▇ Screen Changers Mounted
on Platform and previously used for Laminating
(Not In Service)
1 Mitsubishi Steam Fired Tenter Oven - 12 Zones with
Fans, Air & Heat Ducts, Blowers & Filtering System
approx. 220 ft long, 1 meter entrance, 5.5 meter
exit
1 Mitsubishi Nip Roll Unit with Slitter Assembly and
Trim Removal Venturi System
1 Rapid Granulator, 25 HP mounted in pit with Blower
mounted in Sound Proof Enclosure for Trim Scrap
size reduction and conveying
1 Measurex Model 2002 Thickness Measuring System
1 Corona Dual Treater Stations w/ Power Pack mounted
above in environmental controlled room
1 5.5 meter wide Single Turret Winder for 30" O.D.
Rolls Rolls with Automatic Flying Splice Roll
Transfer
Mill Roll Handling, Storage and Curing Area $ 715,000
Consisting of:
48 5.5 Meter wide Fabricated Structural Steel Mill
Roll Storage Racks Custom Mfd by Hercules
30 5.5 Meter wide Temperature Controlled Curing Ovens
Fabricated Structural Steel Mill Roll- Custom Mfd
26
by Hercules
3 5.5 Meter wide Mill Roll Staging Stands Fabricated
Structural Steel for Roll delivery to Primary
Slitter- Rewinder Unwinds
1 Lot Mill Roll Scales, Electric Transfer Carts,
Portable Curing Ovens, Bridges Cranes, Electric
Hoists and Miscellaneous Related Items
Tobacco (Atlas) Slitter-Rewinder Fully $2,200,000
Computerized with Automatic Handling, Packaging
and Finishing
1 5.5 Meter (216") wide Atlas Slitter-Rewinder - New
2001 Computer Controlled for Fully Automatic
Operation to run Coated, Uncoated, Slip and
Non-slip Polypropylene Film from 44 ga (11.0
micron) to 150 ga (35 micron) at a Line Speed of
up to 600 MPM. Unwind for maximum 38" O.D. Rolls
at 6,000 lbs with an Eccentricity of up to 4" on
Nominal Mill Core Sizes of 12.375" (315mm) dia,
244" (6200 mm) Length with weights up to 1300 LBS,
Unwind oscillation plus/minus 7" (175 mm) with a
tension from .25 to 1.25 PLI of Web Width, Rewind
Slit Diameter from 8" (203 mm) to 16" (406 mm),
Slit Roll Width from 4.375" (111 mm) to 21" (533
mm) via Razor In Air, Slit Roll Weight from 5 to
16 lbs, Nominal Slit Roll Core Sizes 3" and 6"
I.D. Automatic Off-Loading of Slit Film Rolls for
Automatic Conveying and Robot Packaging of Rolls
for 9 Rolls Per Layer Packaging on 44" x 48"
Pallets or for 5 Rolls Per Layer Packaging on 42"
X 42" Pallets at a Maximum Stacked Height of 66"
Scrap Reclaim Size Reduction, Extrusion $2,300,000
Pelletizing, Material Handling and Conveying
Consisting of:
1 SSI Shredder, Model 2400H, 150 HP Motor
1 ▇▇▇▇▇▇▇ Shredder, Model MS 2000, 125 HP, New 2000
1 ▇▇▇▇▇▇▇ Box Dumper for Feeding Shredder
2 Cumberland Granulators, Model 50B, 200 HP Motor
With Blower Discharge
1 Rapid Granulator, Model 2442, 125 HP Motor with
Blower Discharge
2 Tanaka 48" Guillotine Roll Cutter with Cover
Guards
5 Scrap Film Roll Unwind Units for Feeding
Granulators or Shredders, (3) are 5.5 Meters wide
1 Lot Cranes, Hoists, Portable Scrap Roll Moving
Carts & Unwinds, Belt Conveyors and Misc. Related
Items
1 Economy Hydraulic Baler for Scrap Fill Size
Reduction
27
1 8"-30:1 NRM Extruder - 600 HP AC Motor to Water
Cooled Eddy Current Clutch Speed Control - New
1966
1 8" ▇▇▇▇▇▇▇▇ Hydraulic Slide Plate Screen Changer
with Power Pack
1 ▇▇▇▇▇▇▇▇ Water Ring Underwater Pelletizing
Downstream System w/ Water Slide, Water
Temperature System and Spin Dewatering Dryer
1 ▇▇▇▇▇ 3 Separation Classifier - 21" wide x 72"
long
2 6"-30:1 Mitsubishi Extruders - 250 HP DC - New
1970's
2 6" Kreyenborg Screen Changers w/ Hydraulic Power
Packs
2 ▇▇▇▇▇▇▇▇ Water Ring Underwater Pelletizing
Downstream System w/ Water Slide, Water
Temperature System and Spin Dewatering Dryer
2 ▇▇▇▇▇ 3 Separation Classifier - 21" wide x 72"
long
6 Storage Hold Hoppers - 10,000 lbs Capacity Each W/
Motorized Rotary Valve Discharges
4 Fluff Live Bottom Vibrating Feed Hoppers
7 Vacuum Pressure Blowers 25 HP to 60 HP
3 Sprout Waldren High Velocity Blowers - 60 HP
2 Cyclone Hoppers with Motorized Rotary Valve
Discharges Located Near Slitting Area for
Collection of Reject Pellets from Reclaim
Extruders
Reclaim Outside Material Storage, Blending, $1,400,000
Conveying and Dust Collecting Consisting of:
4 80,000 lb Capacity Material Blender Silos with 2
Motorized Rotary Valve Discharges Each
8 80,000 lb Capacity Material Storage Silos with
Motorized Rotary Valve Discharges
3 120,000 lb Capacity Material Storage Silos with
Motorized Rotary Valve Discharges
7 Cyclone Filter Collectors for Silos on Ground
2 Young Hoppers-Motorized Rotary Valve Discharges
1 ▇▇▇▇▇▇▇ Box Dumper into ▇▇▇▇▇▇ Bin with Rotary
Valve Discharge to Cyclone ▇▇▇▇▇▇ Collector
4 MAC 15 HP Vacuum Conveying Pressure Blowers With
Filters & Silencers
28
2 MAC Material Hoppers w/ Vacuum Receivers and
Motorized Rotary Valve Discharges
5 Sprout Waldren 60 HP Vacuum Conveying Pressure
Blowers With Filters & Silencers
3 Sprout Waldren 40 HP Vacuum Conveying Pressure
Blowers With Filters & Silencers
4 Vacuum Conveying Pressure Blowers With Filters &
Silencers, 1-30 HP, 3-40 HP and 1-50 HP
5 Outside Dust Collectors - Hosokawa / Mikro Model
SP 9-6, 5.9 Square Meters Filtering Area
3 Outside Dust Collectors - Hosokawa / Mikro Model
SP 25-8, 21 Square Meters Filtering Area
3 Outside Dust Collectors - Paraclone - New 1980
Coating Material Formulations, Mixing, Blending, $ 475,000
Drying and Conveying to Line 61, 62 & 63
Co-extruders Consisting of:
1 ▇▇▇▇▇▇▇ 5-Component Blender w/ ▇▇▇▇▇▇ Receivers
3 ▇▇▇▇▇▇▇ Box Tilters for Angled Feed of Materials
1 Nucon Dust Collection System with Piping
1 Super Sack Material Unloading Assembly
1 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Hot Air ▇▇▇▇▇▇ Dryer Model H800
S/N 9003019
3 ▇▇▇▇▇▇ Bins w/ Motorized Rotary Valve Discharges
5 3-Large & 2-Small Storage ▇▇▇▇▇▇ Bins
9 20 HP Vacuum Material Conveying Pressure Blowers
with Filters & Silencers
4 25 HP Vacuum Material Conveying Pressure Blowers
with Filters & Silencers
1 Lot Miscellaneous Related Items Including
Temperature Control Systems, Heat Exchangers,
Blowers, Cyclones, Screw Feeders, Tanks, Vessels,
Material Transfer Piping, Carts, Racks, Scales,
Pumps, etc.
Primary Polypropylene Receiving, Mixing, Blending, $ 875,000
Drying and Conveying to Line 61, 62 & 63 Main
Extruders Consisting of:
3 Conical Stainless Steel Hoppers - 4' Dia x 6' High
for Virgin Polypropylene Pellets
29
3 Conical Stainless Steel Hoppers - 10' Dia x 10'
High for Reclaimed Polypropylene Pellets
3 ▇▇▇▇▇▇ Dryers with Temp System & Condensation
Pumps
3 Conical Stainless Steel Hoppers for Fluff
Polypropylene
12 Screw Metering Feeders Mounted on Discharge of
Material Hoppers for Precise Metering of Material
to Blenders
3 Cyclone Separator Material Mixing Units w/
Motorized Rotary Valves for Feeding to ▇▇▇▇▇▇
Dryers
3 Cyclone Separator Material Mixing Units w/
Motorized Rotary Valves for Feeding to Main
Extruders
3 ▇▇▇▇ ▇▇▇▇▇▇▇ High Velocity Air Blowers - 60 HP
Motors
3 Vacuum Conveying Pressure Blowers, 1-15 HP &
2-71/2 HP
3 Structural Steel Mezzanines with Stairs, Railings
and Catwalks where above systems are installed
General Services Plant Support Equipment $1,900,000
1 York Millennium Centrifugal Water Chiller - 500
Tons R123 Refrigerant, Model YTH3CIE2-CRHS, S/N
00454H0599, New 1999
1 York Turbo Modulator Water Chiller - 500 Tons R11
Refrigerant, Model YTJIJ3E2-CSDTM, S/N MRP105764,
New 1976
1 York Open Turbopak Water Chiller - 500 Tons, R11
Refrigerant, Model K2E2-ORC, S/N KM000753, New
1975
1 York Open Turbopak Water Chiller - 500 Tons, R11
Refrigerant, Model K2E2-ORC, S/N KM000906, New
1990
1 York Open Turbopak Water Chiller - 500 Tons, R11
Refrigerant, Model K2E2-ORC, S/N KM000907, New
1990
1 Baltimore Air Coil - ▇▇▇▇▇▇▇▇▇ Water Cooling Tower
System, Located Outside, Model 4451-1, S/N
6526-79, 9000 GPM Cooling Tower, 4-2000 lb GPM
Pumps, 3-Cells @ 3000 GPM each
1 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Centrac Air Compressor - 450 HP,
Twin Screw Unitized Horizontal, Model IRB M79
1774, S/N M79, 1774, New 1979
30
1 Worthington Air Compressor - 20 HP, Two Stage Tank
Mounted, Size 6/6 x 4 1/2 x 2 3/4, S/N 2789
1 ▇▇▇▇▇▇▇▇▇ Engineering Air Dryer w/ Accessories
1 Air Receiver Tank - Located Outside
4 Water Centrifugal Pumps, 2-25 HP, 2-50 HP & 1-60
HP
1 Water Treatment Soft Water System
1 Lot Miscellaneous Tanks, Vessels, Filters, Valves,
Controls & Related Items
Mechanical and Electrical Maintenance Shops $ 50,000
1 9" x 36" South Bend Engine Lathe w/ Quick Change
Gears, 3 & 4 Jaw Chucks, Cabinet Base, S/N 2111R
1 Wilton Geared Head Floor Drill Press w/ Power Feed
to Spindle, S/N 191811
1 Rockwell 17" Floor Drill Press, S/N 1795924
1 Kalamazoo 20" Vertical Metal Cutting Band, S/N
65679
1 ▇▇▇▇▇/▇▇▇▇▇▇▇ Horizontal Band saw, S/N 188533
1 Enco 40" Vertical Band Saw w/ Butt Welding &
Grinding Attachment, S/n 1000142
1 75 Ton ▇▇▇▇ Hydraulic Arbor Press
1 ▇▇▇▇ Floor Arbor Press Model 2 1/2
1 Grieve Double Door Electric Oven, 650 Degree F S/N
390142
1 5 Ton ▇▇▇▇▇▇ Overhead Bridge Crane with Hoist
1 Extrusion Die Preheat Stand Fabricated Structural
Steel w/ Temperature Controls & Fixtures
1 Lot Bench Mounted Belt Grinder, Hand Beveling
Machine, Baldor Double End Pedestal Grinders, Chop
saw, Pipe Vise, etc.
1 Lot Portable Arc Welders, 3-Hobarts, 1-▇▇▇▇▇▇,
3-Portable Burning Sets,, Lay-out Table, Vise,
Welding masks, Screens, Welding Wire, etc.
1 Lot Mechanical Maintenance Shop Items Including
Work Benches, Vises, Hardware, Ladders, Air Hoses,
Reels, Sanding Belts, Straps, Carts, Tool Boxes,
Storage Cabinets, Tooling, Drills, Taps, Pipe
Wrenches, Hand Trucks, Hand Tools, C-Clamps,
Come-A longs, Jacks, Magnetic Base Drills, Skates,
Vacuum Cleaners, Portable
31
Pumps, Pressure Washers, etc.
1 Lot Electrical Maintenance Shop Items Including
Horizontal Metal Cutting Band saw, Double End
Bench Grinders, Floor Drill Press, Belt Sander,
Work Tables, Chain Hoists, Carts, Hand Tools,
Electrical Testing Devices, Electrical Supplies,
etc
Electrical Free Standing Plant Equipment In $ 850,000
Environmentally Controlled Rooms
1 Lot Electrical Equipment Installed in 2 -
Environmentally Temperature Controlled Rooms
Including GE Controllex Power Factor Correction
Capacitor Banks, Incoming Line Components
Disconnect Switches, Distribution Panels, 2- 2000
KVA Transformers, 12 - Various KVA Transformers,
Switch Gear Panels, etc.
32
GENERAL ELECTRIC CAPITAL CORPORATION
--------------------------------------------------------------------------------
RIDER NO. 6
To and part of Master Lease Agreement dated as of the 27th day of March, 2002
(the "Lease"), between GENERAL ELECTRIC CAPITAL CORPORATION, its successors and
assigns ("Lessor"), and APPLIED EXTRUSION TECHNOLOGIES, INC., its successors and
permitted assigns ("Lessee").
RETURN PROVISIONS: In addition to the provisions of Section 13 of the Lease
-----------------
(provided that any inconsistency between the provisions of Section 13 and this
Rider shall be resolved in favor of the provisions of this Rider), and provided
that Lessee has not elected to exercise its option to purchase the Equipment,
Lessee shall, at its expense:
(A) (i) Perform any testing and repairs required to place the Equipment in
the same condition and appearance as when received by Lessee (reasonable wear
and tear excepted) and in good working order for its originally intended
purpose; (ii) if de-installation, disassembly or crating is required, cause the
Equipment to be de-installed, disassembled and crated by an authorized
manufacturer's representative or such other service Person as is satisfactory to
Lessor; and (iii) return the Equipment, free and clear of all Liens and
encumbrances, to a location within the continental United States as Lessor shall
direct.
(B) Until Lessee fully has complied with the requirements of Paragraph (A)
above, Lessee's rent payment obligation and all other obligations under the
Lease shall continue from month to month notwithstanding any expiration or
termination of the term. Lessor may terminate such continued leasehold interest
upon ten (10) days' notice to Lessee. In addition to these rents, Lessor shall
have all of its other rights and remedies available as a result of its
nonperformance.
(C) At least one hundred eighty (180) days and not more than two hundred
forty (240) days prior to expiration or earlier termination of the Lease,
provide to Lessor a detailed inventory of all components of the Equipment. The
inventory should include, but not be limited to, a listing of model, serial
numbers and size description (length, width, height, diameter) for all
components comprising the Equipment.) Additionally, Lessee shall identify on the
inventory any item or component of the Equipment for which: (i) Lessee is
considered the only source for spare parts, software, or operating components;
and/or (ii) Lessee may hold intellectual property rights that could (1) restrict
the sale of the Equipment by Lessor; or (2) restrict the operation of the
Equipment by any third party.
(D) For any item or component of the Equipment for which Lessee is
considered the only source of information regarding design or operating
information, Lessee will provide reasonable technical assistance to any third
party purchaser or lessee for a period of three hundred sixty (360) days
following the successful re-installation of the Equipment by such third party.
(E) If applicable, upon request of Lessor, assign to Lessor or Lessor's
designee, any intellectual property rights associated with the Equipment and its
operation.
(F) At least one hundred eighty (180) days prior to expiration or earlier
termination of the Lease, upon receiving reasonable notice from Lessor, provide
or cause the vendor(s) or manufacturer(s) to provide to Lessor the following
documents: (1) one set of service manuals, blue prints, process flow diagrams
and operating manuals including replacements and/or additions thereto, such that
all documentation is completely up-to-date; and (2) one set of documents,
detailing equipment configuration, operating requirements, maintenance records,
and other technical data concerning the set-up and operation of the Equipment,
including replacements and/or additions thereto, such that all documentation is
completely up-to-date.
(G) At least one hundred eighty (180) days prior to expiration or earlier
termination of the Lease, upon receiving reasonable notice from Lessor, make the
Equipment available for on-site operational inspections by potential purchasers,
under power, and provide personnel, power and other requirements necessary to
demonstrate electrical, technical and functionality of each item of the
Equipment.
(H) At least ninety (90) days prior to expiration or earlier termination of
the Lease, cause the manufacturer's representative(s) or qualified equipment
maintenance provider(s), acceptable to Lessor, to perform a comprehensive
33
physical inspection, including testing all material and workmanship, of the
Equipment. The authorized inspector should ensure the Equipment is clean and
cosmetically acceptable, and in such condition so that it may be immediately
installed and placed into use in a similar environment. There shall be no
missing screws, bolts, fasteners, etc. The Equipment will be free from all
scratches, marks, gouges, dents, discoloration or stains that are unusual by
industry standards. There shall be no evidence of extreme use or overloading. If
during such inspection, examination and test, the authorized inspector finds any
of the material or workmanship to be defective or the Equipment not operating
within manufacturer's specifications, then Lessee shall repair or replace such
defective material and, after corrective measures are completed, Lessee will
provide for a follow-up inspection of the Equipment by the authorized inspector
as outlined in the preceding clause.
(I) Have each item of Equipment returned with an in-depth field service
report detailing said inspection as outlined in Section H. The report shall
certify that the Equipment has been properly inspected, examined and tested and
is operating within the manufacturer's specifications.
(J) Properly remove all Lessee installed markings that are not necessary
for the operation, maintenance or repair of the Equipment.
(K) Ensure all Equipment and equipment operations conform to all applicable
local, state, and federal laws, health and safety guidelines.
(L) Ensure all Equipment shall be redelivered with all component parts in
good operating condition. All components must meet or exceed the manufacturer's
minimum recommended specifications unless otherwise specified.
(M) Provide for the de-installation, packing, transporting, and certifying
of the Equipment to include, but not be limited to, the following: (1) the
manufacturer's representative shall de-install all Equipment (including all
wire, cable and mounting hardware) in accordance with the specifications of the
manufacturer; (2) each item of the Equipment will be returned with a certificate
supplied by the manufacturer's representative qualifying the Equipment to be in
good condition and (where applicable) to be eligible for the manufacturer's
maintenance plan; the certificate of eligibility shall be transferable to
another operator of the Equipment; (3) the Equipment shall be packed properly
and in accordance with the manufacturer's recommendations; and (4) Lessee shall
transport the Equipment in a manner consistent with the manufacturer's
recommendations and practices.
(N) During the period beginning two hundred forty (240) days prior to
expiration of the Lease and ending ninety (90) days following the successful
re-installation of the Equipment (including any necessary operational testing
periods) by a third party purchaser or lessee of the Equipment, upon written
request of that third party or Lessor, Lessee will make available to such
parties qualified technical, engineering, or other such personnel familiar with
the Equipment for consultations regarding the re-installation, operation and
maintenance of the Equipment.
(O) Upon sale of the Equipment to a third party, provide transportation for
the Equipment to any locations anywhere in North America selected by Lessor.
(P) Obtain and pay for a policy of transit insurance for the redelivery
period in an amount equal to the replacement value of the Equipment and Lessor
shall be named as the loss payee on all such policies of insurance.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
34
IN WITNESS WHEREOF, the parties have caused this Rider No. 6 to be duly
executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
--------------------------------- ---------------------------------
35
GENERAL ELECTRIC CAPITAL CORPORATION
--------------------------------------------------------------------------------
EQUIPMENT SCHEDULE NO. 1
executed pursuant to that certain Master Lease Agreement dated as of March 27,
2002 (the "Lease"; which is incorporated herein by reference). This Equipment
Schedule, incorporating by reference the terms and conditions of the Lease,
constitutes a separate instrument of lease.
1. EQUIPMENT. The Equipment leased hereunder shall be as set forth in the
schedule attached hereto as Annex A.
TOTAL INVOICE COST: $18,225,000.00
2. TERM. Upon and after the date of execution hereof, the Equipment shall
be subject to the terms and conditions provided herein and in the Lease.
A full term of lease with respect to said Equipment shall commence on the
date hereof and shall extend for sixty (60) months after the date of execution
hereof (the "Base Lease Commencement Date").
3. RENT. From and after the Base Lease Commencement Date, the quarterly
rent for said Equipment during the term of this Lease shall be $1,017,954.51,
computed as 5.585484% of the Total Invoice Cost specified above. Rent payments
shall be made, in arrears, on the 28th day of March, June, September and
December during the term of this Lease, commencing June 28, 2002.
4. LESSEE'S CONFIRMATION. Lessee hereby confirms and warrants to Lessor
that the Equipment: (a) was duly delivered to Lessee at the location specified
in Section 5 hereof; (b) has been received, inspected and determined to be in
compliance with all applicable specifications and that the Equipment is hereby
accepted for all purposes of the Lease; and (c) is a part of the "Equipment"
referred to in the Lease and is taken subject to all terms and conditions
therein and herein provided.
5. LOCATION OF EQUIPMENT. The location of the Equipment is U.S. Highway 41
North, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇.
6. LATE CHARGE RATE. The Late Charge Rate shall be two (2) percent per
month of the amount in arrears for the period such amount remains unpaid
(provided, however, that if such rate exceeds the highest rate permitted by
applicable law, then the Late Charge Rate shall be the highest rate permitted by
applicable law).
7. SCHEDULE OF STIPULATED LOSS VALUES. The Schedule of Stipulated Loss
Values attached hereto as Annex B is incorporated herein by reference, and shall
be applicable solely to the Equipment described in this Equipment Schedule.
8. RECOVERY PROPERTY CLASS. The class of property to which the Equipment is
assigned (as referenced in Section 2 of Rider No. 2 to the Lease) is 7-year
property.
9. COMMERCIAL LIABILITY INSURANCE. The amount of commercial liability
insurance referenced in Section 11 of the Lease is $10,000,000.00.
36
DATE OF EXECUTION: March , 2002
------
GENERAL ELECTRIC CAPITAL CORPORATION APPLIED EXTRUSION TECHNOLOGIES, INC.
Lessor Lessee
By: By:
--------------------------------- ---------------------------------
37
ANNEX A
TO
EQUIPMENT SCHEDULE NO. 1
DATED THIS 28th DAY OF MARCH, 2002
TO MASTER LEASE AGREEMENT DATED AS OF MARCH 27, 2002
DESCRIPTION OF EQUIPMENT
Quantity Manufacturer/Make/Model Total Invoice Cost
------------------------------------------------------------------------------------
1 5.5 Meter Biaxially Oriented Polypropylene (▇▇▇▇) $6,950,000
Co-extrusion Flat Film Line 61 Consisting of:
-------
1 Mitsubishi Tandem Extruder System -
6"-32:1Extruder with 250 HP DC Drive & Feed ▇▇▇▇▇▇
feeding into 4 1/2"-24:1 Extruder with 465 HP DC
Drive with Filter at barrel discharge - New 1980
2 3 1/2"- 30:1 HPM Extruders, S/N's 84292 & 84293,
with 100 HP DC Drives - New 1984 mounted on
Platform w/ Stairs above Tandem Extruders
2 Melt Gear Pumps, Filters & Connection Transfer
Piping from 3 1/2" Extruders to 36" Co-extrusion
Die
1 36" Multiple Manifold Co-extrusion Flat Sheet Die
1 30" Mitsubishi Casting Roll Unit w/ Drive System
and Temperature Control System
1 Measurex Model 2040 Thickness Measuring System
1 Mitsubishi 13 Roll Machine Direction Orienter Unit
with Drive Systems and Temperature Control System
2 3 1/2" - 30:1 Mitsubishi Extruders with 75 HP DC
Drives and 3 1/2" ▇▇▇▇▇▇▇▇ Screen Changers Mounted
on Platform and previously used for Laminating
(Not In Service)
1 Mitsubishi Steam Fired Tenter Oven - 12 Zones with
Fans, Air & Heat Ducts, Blowers & Filtering System
approx. 220 ft long, 1 meter entrance, 5.5 meter
exit
1 Mitsubishi Nip Roll Unit with Slitter Assembly and
Trim Removal Venturi System
1 Rapid Granulator, 25 HP mounted in pit with Blower
mounted in Sound Proof Enclosure for Trim Scrap
size reduction and conveying
1 Measurex Model 2002 Thickness Measuring System
38
1 Corona Dual Treater Stations w/ Power Pack mounted
above in environmental controlled room
1 5.5 meter wide Single Turret Winder for 30" O.D.
Rolls Rolls with Automatic Flying Splice Roll
Transfer
1 5.5 Meter Biaxially Oriented Polypropylene (▇▇▇▇) $6,975,000
Co-extrusion Flat Film Line 63 Consisting of:
-------
1 Mitsubishi Tandem Extruder System -
6"-32:1Extruder with 250 HP DC Drive & Feed ▇▇▇▇▇▇
feeding into 4 1/2"-24:1 Extruder with 465 HP DC
Drive with Filter at barrel discharge - New 1983
2 3 1/2"- 30:1 Mitsubishi Extruders with 100 HP DC
Drives
2 Melt Gear Pumps, Filters & Connection Transfer
Piping from 3 1/2" Extruders to 36" Co-extrusion
Die
1 36" Multiple Manifold Co-extrusion Flat Sheet Die
1 30" Mitsubishi Casting Roll Unit w/ Drive System
and Temperature Control System
1 Measurex Model 2040 Thickness Measuring System
1 Mitsubishi 13 Roll Machine Direction Orienter Unit
with Drive Systems and Temperature Control System
1 Mitsubishi Steam Fired Tenter Oven - 12 Zones with
Fans, Air & Heat Ducts, Blowers & Filtering System
approx. 220 ft long, 1 meter entrance, 5.5 meter
exit
1 Mitsubishi Nip Roll Unit with Slitter Assembly and
Trim Removal Venturi System
1 Rapid Granulator, 25 HP mounted in pit with Blower
mounted in Sound Proof Enclosure for Trim Scrap
size reduction and conveying
1 Measurex Model 2002 Thickness Measuring System
1 Corona Dual Treater Stations w/ Power Pack mounted
above in environmental controlled room
3 5.5 meter wide Single Turret Winder for 30" O.D.
Rolls Rolls with Automatic Flying Splice Roll
Transfer
Primary and Secondary Film Slitting Operation with $4,300,000
Packaging and Auxiliary Support Equipment Consisting
of:
3 5.5 Meter wide Kataoka Two Shaft Turret Unwinds
with Air Brake Tensioning - 32" O.D. Rolls
39
3 5.5 Meter wide Kataoka Primary Slitter-Rewinders
Duplex Center Surface Rewinding - 32" O.D. Rolls
3 5.5 Meter wide Overhead Crane Roll Unloading
Hoists
2 84" Cameron Model 314 Slitter-Winders Duplex
Center Surface Rewinding with Single Shaft Unwind
1 82" ▇▇▇▇▇▇▇▇▇ Model 815ATR Slitter-Rewinder Duplex
Center Surface Rewinding - S/N 58034 with Single
Shaft Unwind Model 824 DLS - S/N 58034
1 30" Stanford Model 142 LT Doctor Machine, 30" O.D.
Single Shaft Unwind and 24" O.D. Single Shaft
Rewind S/N 06975195
5 Overhead Crane Roll Unloading / Moving Hoists
1 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Guillotine Roll Cutter, 12" x 24",
Safety Cover Guards, S/N 89207
1 120" Appleton Menasha Semi-Automatic Core Cutter,
6" I.D. Cores, Model 8 200, S/N 032695
2 120" Core Tech Semi-Automatic Core Cutters, 3" I.D.
Cores, Model 11 120, S/N's 1621 & 1654
1 96" Appleton Semi-Automatic Core Cutter 3" I.D.
Cores, Model D21SH1073, S/N 101979
3 Lantec Automatic Pallet Shrink Wrap Systems with
Roller Conveyor Infeeds and Outfeeds
1 Lot Numerous Roll Transfer Carts and other Various
Miscellaneous Related Items
40
ANNEX B
TO
EQUIPMENT SCHEDULE NO. 1
DATED THIS 28th DAY OF MARCH, 2002
TO MASTER LEASE AGREEMENT DATED AS OF MARCH 27, 2002
STIPULATED LOSS VALUE TABLE*
Payment Payment Stipulated Loss
Date No. Value
6/28/02 1 102.777
9/28/02 2 99.420
12/28/02 3 95.986
3/28/03 4 92.474
6/28/03 5 88.888
9/28/03 6 85.210
12/28/03 7 81.446
3/28/04 8 77.600
6/28/04 9 73.667
9/28/04 10 69.644
12/28/04 11 65.529
3/28/05 12 61.320
6/28/05 13 57.016
9/28/05 14 52.613
12/28/05 15 48.110
3/28/06 16 43.505
6/28/06 17 38.794
9/28/06 18 33.977
12/28/06 19 29.050
3/28/07 20 24.000
----------
* The Stipulated Loss Value for any unit of Equipment shall be equal to the
Total Invoice Cost of such unit multiplied by the appropriate percentage
derived from the above table. In the event that the Lease is for any reason
extended, then the last percentage figure shown above shall control
throughout any such extended term.
41
