MASTER LEASE AGREEMENT
LESSOR: MERIDIAN LEASING CORPORATION an Illinois corporation
ADDRESS: 000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
LESSEE: DIAMOND BRANDS, INC. a Minnesota Corporation
ADDRESS: 0000 Xxxxxxx Xxxxxx Xxxxxxx, XX 00000
AGREEMENT DATE: November 22,1996
This contract is a Master Lease Agreement. The terms of each Supplement hereto
are subject to any and all conditions and provisions set forth herein at the
time of execution of such Supplement as the same may have been amended prior to
the execution of such Supplement. Each Supplement shall provide a description
of Equipment, Lease Term, Rental Payment(s), Location of Equipment, Supplement
Commencement Date and such other information as may be required. Each
Supplement is enforceable according to the terms and conditions contained
therein and in the event of a conflict between the language of the Master Lease
Agreement and any Supplement hereto, the language of the Supplement shall
prevail in respect to that Supplement. Each Supplement together with the terms
and conditions of this Master Lease Agreement incorporated therein is referred
to herein as the "Lease" or "Lease Agreement" and constitutes a "finance lease"
as defined in Section 2-A-103(g) of the Uniform Commercial Code. Lessor, by its
acceptance hereof, hereby leases to Lessee, and the Lessee hereby leases from
Lessor, in accordance with the terms and conditions set forth herein and in the
applicable Supplement, the Equipment described on the Supplement and in any
attachments thereto (the "Equipment"). Lessor and Lessee acknowledge that in
the case of certain Supplements, Schedule A thereto constitutes only a summary
of the Equipment necessitated by space limitations. However, both parties
further acknowledge that the totality of the Equipment is contained in the
invoices and related documents pursuant to which the Equipment was originally
procured from its manufacturer (and the exhibits and attachments thereto), which
items, (including applicable serial numbers) are incorporated by Preference into
the applicable Supplement. At the expiration of the term of each Supplement,
Lessee shall return the exact items specified in such invoices and related
documents.
1. LEASE TERM
This Master Lease Agreement shall be effective from the date hereof. As to any
particular item of Equipment, the term shall continue as stated in the
applicable Supplement, from the respective Supplement Commencement Date, as,
from time to time, Equipment described in any Supplement is accepted by Lessee.
Said term shall be automatically extended at the monthly lease rate in effect at
the end of said term unless and until terminated by either party hereto giving
the other not less than ninety (90) days prior written notice. Acceptance
("Acceptance")
shall occur on or before the fifth day after the Equipment has been delivered
and, if applicable, approved for coverage under a prime shift maintenance
contract by the manufacturer thereof or other applicable maintenance
organization. Lessee agrees both to advise Lessor on Acceptance date and
thereupon to execute and deliver to Lessor a certificate of Acceptance.
2. PAYMENTS OF RENT
Unless otherwise set forth in the respective Supplement, the following shall
apply: The first rental payment shall be due upon the Acceptance of the
Equipment by Lessee, and such payment shall cover the lease month or other
period commencing on the Supplement Commencement Date. Each Subsequent rental
payment shall be due and payable in advance, for the lease period covered by
such payment, on the first day thereof. In the event Acceptance occurs prior to
the Supplement Commencement Date, interim rental shall be paid by Lessee in the
amount equal to a proration on a per them basis of the Monthly Rent, as
hereinafter defined, for the period commencing as of the date of Acceptance to
the Supplement Commencement Date. All rental and other payments by Lessee under
this Lease shall be made to Lessor at its address stated above or at such other
address as Lessor may designate in writing and if payment shall be made by
check, such check shall arrive at such address in sufficient time so that the
same shall arrive on or before the date the rental payment shall be due.
Monthly rent payable with respect to each item of Equipment ("Monthly Rent")
shall be as set forth for such item in the applicable Supplement. Any and all
amounts payable to Lessor hereunder other than Monthly Rent shall be considered
and referred to herein as "Supplemental Rent. Monthly Rent, together with
Supplemental Rent, shall be referred to herein as "Rent". This Lease provides
for a net lease, and the rent due hereunder from Lessee to Lessor shall be
absolute and unconditional and shall not be subject to any abatement,
recoupment, defense, claim, counterclaim, reduction, set-off, or any other
adjustment of any kind for any reason whatsoever.
3. ADDITIONAL SUMS PAYABLE BY LESSEE
(a) All transportation, transit insurance and other charges payable for
delivery of the Equipment to Lessee, and for installation of the Equipment,
shall be paid by Lessee.
(b) Lessee shall promptly pay all costs, expenses and obligations of every
kind and nature incurred in connection with the use, maintenance, servicing.
repair or operation of the Equipment which may arise or be payable during the
lease term of such Equipment hereunder, except as specifically provided herein,
and shall keep the Equipment in as good repair, condition and working order as
when delivered to Lessee hereunder, reasonable wear and tear from the proper use
thereof alone excepted, and shall furnish any and all parts, mechanisms and
devices required to keep the Equipment in such good repair, condition and
working order, at the expense of Lessee, and in addition will permit the
manufacturer to make all free-of-charge engineering changes, all so that the
Equipment will remain acceptable to the manufacturer for maintenance. Without
limiting the foregoing, Lessee shall, during the continuance of this Lease, at
its own expense, make appropriate arrangements for maintenance of each item of
Equipment, including without limitation with respect to each item of Equipment
entering into and maintaining in force
a contract with the manufacturer of the Equipment or other person or entity
approved in writing by Lessor covering at least prime shift maintenance.
(c) Lessee shall indemnify and hold harmless Lessor against and shall pay
all federal, state, county or local taxes, fees or other charges, however
designated (together with any related interest or penalties not arising from
negligence on the part of Lessor), imposed or assessed against or with respect
to this Lease, Rent hereunder, the Equipment, Lessor or Lessee or payable by
Lessor or Lessee with respect to the use, lease, sale, purchase, delivery,
possession, sublease or ownership of the Equipment, excepting only (i) taxes on
or to the extent measured by the net income of Lessor; and (ii) sales, use or
similar taxes paid by Lessor if, and only if, any such taxes are included as
part of the acquisition cost of any Equipment. Lessor shall give Lessee and
Lessee shall give Lessor written notice of any event or condition which requires
indemnification by Lessee hereunder or any allegation of such event or
condition, promptly upon obtaining knowledge thereof. Lessee shall not be
obligated to pay any amount under this Section 3 so long as Lessee shall in good
faith and by appropriate proceedings contest and diligently prosecute the
validity or the amount thereof unless such contest would adversely affect the
title of the Lessor to the Equipment or would subject it to forfeiture or sale,
provided that Lessee shall make any required deposits during such contest. Upon
resolution of such contest, Lessee shall promptly pay all amounts then owing. In
case any report or return is required to be made with respect to any obligation
of Lessee arising out of this Section 3, Lessee will either make such report or
return in such manner as shall be satisfactory to Lessor or, if requested by
Lessor, furnish information to Lessor necessary to complete such report or
return by Lessor.
4. WARRANTIES
(a) Lessor hereby warrants and covenants to Lessee that so long as no
Event of Default has occurred and is continuing under the applicable Supplement
hereto, Lessee shall and may quietly have, hold and enjoy the Equipment and
every part thereof Leased hereunder for the term of this Lease, as such term may
be extended hereunder, free from disturbance by Lessor or its agents, employees,
successors or assigns, or by anyone (whether the holder of a lien or otherwise)
claiming solely by. through or under Lessor. LESSOR HAS NOT MADE AND MAKES NO,
AND HEREBY EXPRESSLY DISCLAIMS ANY OTHER, EXPRESS OR IMPLIED WARRANTY WHATSOEVER
HEREUNDER, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PURPOSE,
OR OTHERWISE, REGARDING THE EQUIPMENT OR ANY PART OR THE DESIGN OR CONDITION
THEREOF. Subject to the provisions of Section 10 here Lessor hereby transfers
and assigns to Lessee during the term of this Lease all of its right, title and
interest in any express or implied warranties and covenants of any Equipment
manufacturer or vendor which are assignable by Lessor. Lessor and Lessee agree
to execute any manufacturer's transfer of "Patent and Copyright Indemnity" and
"Warranties" documents with respect to the Equipment leased hereunder.
(b) Lessee, at the time of execution of this Agreement and any Supplement
hereto, hereby warrants and represents to Lessor, Secured Party, as hereinafter
defined, and their respective successors and assigns: (i) that execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action on its part and are not in conflict with its
charter or bylaws or with or constitute a breach of or default under any
indenture, contract or agreement by which it is bound, or with any statute,
judgment, decree, rule or regulation binding upon it; (ii) that no consent or
approval of any trustee or holder of any indebtedness or obligation, and consent
or approval of, or taking of any other action with respect to, any governmental
authority, is necessary for execution, delivery or performance of this Agreement
(iii) that this Agreement is legal, valid, binding, and enforceable against the
Lessee in accordance with its terms, subject to enforcement limitations imposed
by rules of equity or by bankruptcy or similar laws; (iv) Lessee is a corporate
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and the jurisdiction(s) where the Equipment will be located and
has adequate corporate power to enter into and perform this Lease; and (v) there
are no actions, suits or proceedings pending or, to the knowledge of Lessee
threatened against or affecting Lessee in any court or before any governmental
commission, board or authority which, if adversely determined will have a
materially adverse effect on, the ability of Lessee to perform its obligations
under this Lease.
5. POSSESSION, USE AND MAINTENANCE OF THE EQUIPMENT
(a) The Equipment shall be kept by Lessee (1) subject to inspection by
Lessor at reasonable times and manner, (2) at Lessee's address, as stated on
each Supplement hereto, which Equipment shall not be relocated without prior
written consent of Lessor, which consent shall not be unreasonably withheld, (3)
free of all security interests of any kind whatsoever, liens, encumbrances and
other claims, except (i) those of persons claiming solely against Lessor but not
Lessee on account of obligations which Lessee is not required by this Lease to
discharge, (ii) liens of current taxes not delinquent (except liens for taxes
which are being contested by Lessee as provided in Section 3 hereof, (4) marked
with the manufacturer's identification marks or numbers and, if, requested by
Lessor or Secured Party conspicuously labeled with labels to disclose Lessor's
and any Secured Party's interest in the Equipment, and (5) in good and efficient
working order, condition and repair, reasonable wear and tear expected, and
acceptable for maintenance under the manufacturers maintenance agreement at the
expiration of the Lease Term, with the Equipment covered by a manufacturers band
(or similar indication, where available). Lessee will, within ten (10) working
days of receiving notice thereof, promptly notify Lessor in writing of any
mortgage, pledge, lien, attachment, charge, encumbrance or right of others which
has arisen with respect to the Equipment.
(b) Lessee shall use the Equipment with due care to prevent injury
thereto, and to any person or property, and in conformity with all applicable
laws, ordinances, rules, regulations and other requirements of any insurer or
governmental body and with all requirements of the manufacturer with respect to
the use, maintenance and operation of the Equipment. Lessee shall not modify any
Equipment without the prior written consent of Lessor, which may be granted or
withheld in its sole discretion. It is the intention and understanding of both
Lessor and Lessee that the Equipment shall be and at all times remain separately
identifiable personal property. Lessee shall not permit any Equipment to be
installed in, or used, stored or maintained with, any personal property (except
other Equipment leased hereunder) in such manner or under such circumstances
that such Equipment might be or become an accession to or confused with such
other personal property. Lessee shall not permit any Equipment to be
installed in or used, stored or maintained with, any real property such a manner
or under such circumstances that any person might acquire any rights in such
Equipment paramount to the rights of Lessor or Security Party by reason of such
Equipment being deemed to be real property or a fixture thereon.
6. RISK OF LOSS
(a) Lessee assumes and shall bear the entire risk of partial or complete
loss theft, damage, destruction, condemnation, requisition, taking by eminent
domain or other interruption or termination of use of the Equipment from any
cause whatsoever, whether or not insured against, from the date of delivery of
the Equipment until the Equipment is returned to and received by Lessor. Except
as otherwise expressly provided herein, no such loss, theft, damage,
destruction, condemnation, requisition, taking by eminent domain or other
interruption or termination of use of the Equipment, and no delay, deficiency or
absence of insurance proceeds, and no unavailability, delay or failure of
supplies, parts, mechanisms, devices or service for the Equipment or any failure
of the Equipment to function for any cause, shall relieve Lessee of the
obligation to pay Rent hereunder. Lessee's obligation to pay all Rent, and the
rights of Lessor and the Secured Party in and to such payments, shall be
absolute and unconditional and except as otherwise expressly provided herein
this lease shall not terminate nor shall the respective obligations of the
Lessor or the Lessee be affected, by reason of any defect or in Total Casualty
(as defined in this Section 6) to or obsolescence of the Equipment or an item
thereof from whatever cause, or the interference with the use thereof by any
private person, corporation governmental authority, or any other disability of
the Lessee to use the Equipment, or war, act of God, or governmental
regulations, any present or future law or regulation to the contrary
notwithstanding. Lessee shall promptly notify Lessor in writing of the
occurrence of any of the above events and all pertinent details connected
therewith. Except during any period when an Event of Default shall have occurred
and shall be continuing, Lessee shall be entitled to the proceeds of any claim
or right of Lessor or Lessee against any third party on account of any Of the
foregoing events and Lessee shall be subrogated to the Lessor's right of
recovery therefor against any third party. Lessor shall execute and deliver from
time to time such instruments and take such other action as may be necessary or
appropriate to more fully vest in Lessee such proceeds or effect such
subrogation, provided, however, that all costs and expenses, including court
costs and attorneys' fees, incurred in connection with enforcing or realizing
upon any such claim or right to proceeds or obtaining enforcement of or
realizing upon such right of subrogation, shall be paid by Lessee.
(b) In the event any item of Equipment is physically damaged to a material
extent by any occurrence whatsoever, Lessee shall immediately notify Lessor of
such damage and, unless Lessor shall determine that Section 6(c) hereof is
applicable to such damage, Lessee, at Lessee's expense, shall promptly cause
such item of Equipment to be returned to the condition described in Sections 3
and 5 hereof.
(c) In the event any item of Equipment shall be lost, stolen, destroyed,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever, or shall be subjected to a requisition, taking by eminent domain or
other interruption or termination of use for a stated
period which exceeds the term of this Lease (any such occurrence being referred
to as "Total Casualty"), Lessee shall promptly notify Lessor and either: (i)
obtain replacement equipment of like mode, and features, having utility and
remaining useful life at least equal to that of each such replaced item of
Equipment and, in which case, Lessee shall immediately convey to Lessor good
title for all such replacement equipment free of all liens, claims or
encumbrances and such replacement equipment shall be substituted for each such
item of Equipment replaced hereunder; or (ii) pay to Lessor, on the next Monthly
Rent payment date for such item of Equipment following such Total Casually an
amount equal to the Casualty Value (specified in the applicable Supplement) of
such item of Equipment on such Monthly payment date. If Lessee elects to pay the
Casualty Value rather than replace the Equipment, after the payment of such
Casualty Value and all Monthly Rent due and owing for the period prior to the
date of the Total Casualty with respect to such item of Equipment, Lessee's
obligation to pay further Monthly Rent for such item of Equipment shall cease,
but Lessee's obligation to pay Rent for all other items of Equipment, shall
remain unchanged. So long as no Event of Default shall have occurred and be
continuing under this Lease, and provided Lessee shall have made the Casualty
Value payment identified above, Lessor shall pay Lessee any insurance proceeds
received by Lessor by reason of such Total Casualty up to the amount of the
Casualty Value paid by the Lessee.
7. INSURANCE
Lessee shall at all times during the term of this Lease and until the Equipment
has been returned to Lessor as provided below, at its own expense, maintain
physical damage insurance in an amount not less than the replacement value of
the Equipment but in no event less than the Casualty Value thereof, and
liability and property damage insurance covering the Equipment (including
Lessee's contractual liability under Section 9 hereof), in such amount, and with
such companies (which shall be licensed by the state in which the Equipment is
located) and such endorsements and covering such hazards, as are in general
usage by companies owning or operating similar property and engaged in a
business similar to Lessee's, in order to adequately protect the parties hereto.
All insurance so maintained shall provide for a thirty-day prior written notice
to Lessor and its assigns of any cancellation or reduction of coverages and an
option in Lessor or its assignees to prevent cancellation by payment of
premiums, shall cover both the interest of the Lessor and any assigns of which
the Lessee has notice and of the Lessee in the Equipment, and shall provide that
all insurance proceeds shall be payable to the Lessee, Lessor and any such
assignee as their respective interests may appear at the time of any such
payment. Lessor and any such assignee shall be named as additional insureds on
any public liability insurance policies so maintained. Lessee shall furnish to
Lessor satisfactory evidence of any insurance so maintained no later than the
date of delivery of each item of Equipment and once annually, upon Lessor's
request, during the term hereof. Lessee's above the initial date of delivery of
the Equipment and obligation shall commence one shall continue until the Lease
term hereof expires and the Equipment is returned to Lessor. Lessee shall
cooperate and, to the extent possible, cause others to cooperate with Lessor and
all companies providing any insurance to Lessee or Lessor or both with respect
to the Equipment in collection on or enforcement of any such insurance. By this
Section 7, Lessor does not modify or limit any provision of this Lease relating
to disclaimer of warranties and liability or indemnity.
8. RETURN OF EQUIPMENT
Upon the expiration or earlier termination of the Lease term, Lessee shall
return the Equipment to Lessor in the same condition and configuration including
original serial number, as received, reasonable wear and tear excepted and in
the condition required by Sections 3 and 5 hereof, and shall cause the Equipment
to be inspected by agent(s) of the respective manufacturer(s), if Lessor so
requests, repaired, if necessary, so as to place the Equipment in the foregoing
condition, crated, and shipped by truck or other normal ground transportation to
such address as Lessor may designate. Lessee shall pay all expenses arising
from the above requirements, provided that shipping charges payable by Lessee
shall be limited to an amount equal to the cost of shipping the Equipment to any
location within the Continental United States. Notwithstanding the provision of
any notice contemplated by Section 1 above, in the event that, in contravention
of said notice, any item of Equipment is not returned at the expiration of any
Supplement, Lessor shall be entitled without notice or demand to receive
Supplemental Rent for each day that such return is delayed at the rate of 150%
of the daily proration of Monthly Rent. Lessee's failure to return the
Equipment in accordance with the original notice shall also cause the applicable
Supplement to continue in effect until terminated by either party upon not less
than 90 days additional prior written notice.
9. DISCLAIMER OF LIABILITY AND INDEMNITY
Lessor shall not be liable for, and Lessee agrees to indemnify and hold Lessor,
Secured Party, and their respective successors and assigns harmless against any
loss, claim, action, suit, demand, proceeding, liability, penalty, cost, damage,
obligation, lien or expense of any kind on account of personal injury, property
damage or otherwise, including but not limited to any matter arising under
strict liability in tort, imposed on or incurred by or asserted against Lessor
or Secured Party, or its or their successors or assigns, including without
limitation attorneys' fees incurred on account of any of the foregoing, in any
way relating to this Lease or any document contemplated hereby, or in any way
relating to the selection, manufacture, purchase, acceptance, ownership,
delivery, installation, lease, sublease, possession, use, operation,
maintenance, condition, return or storage of any item of Equipment, or any
accident in connection therewith, or arising by operation of law as a
consequence of any of the foregoing. The provisions of this Section 9 shall
survive any termination of this Lease, provided, however, that the Lessee shall
not be required to indemnify the Lessor for (a) any claim in respect of any item
of Equipment arising from acts or events which occur after possession of such
item has been redelivered to the Lessor, (b) any claim resulting from the
willful misconduct or negligence of the Lessor. Lessee shall give Lessor prompt
written notice of any matter hereby indemnified against and agrees that unless
directed to the contrary by written notice by the indemnified party, Lessee
shall assume full responsibility for the defense thereof on behalf of such
party.
10. EVENTS OF DEFAULT
(a) Each of the following shall constitute an Event of Default hereunder:
(i) default in the payment of any Rent hereunder and continuance thereof for ten
days after notice by Lessor to Lessee of said default; (ii) failure by Lessee to
make any other payment required by this Lease,
or to perform any other of Lessee's agreements set forth in this Lease, within
30 days after notice thereof is given by Lessor to Lessee; (iii) Lessee becomes
insolvent or admits in writing its inability to pay its debts as they mature, or
applies for, consents to, or acquiesces in the appointment of a trustee or a
receiver or similar officer for it or any of its property, or, in the absence of
such application, consent or acquiescence, a trustee or receiver or similar
officer is appointed for Lessee or for a substantial part of its property and is
not discharged within 60 days, or any bankruptcy, reorganization, debt,
dissolution or other proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is instituted by or against Lessee, and
if instituted against Lessee is consented to or acquiesced in by Lessee or
remains for 60 days undismissed; (iv) Lessee shall make an assignment for the
benefit of creditors; (v) any warranty, representation, statement or report made
in writing by Lessee in this Lease or in any document or certificate furnished
in connection with this Lease or any financing obtained in connection therewith
proves to have been untrue or incorrect in any material respect; or (vi) Lessee
shall be a party to a transaction governed by Section 11 (a) below without
complying with such Section.
(b) Upon the occurrence of an Event of Default and so long as the same is
continuing, Lessor may, at its option, declare the applicable Supplement(s) to
be in default by notice to Lessee, and thereafter exercise one or more of the
following remedies, as Lessor in its sole discretion lawfully elects:
(1) Proceed by court action, either at law or in equity, to enforce
performance by Lessee of this Lease or to recover damages for the breach
thereof.
(2) By notice terminate the applicable Supplement, whereupon all rights
of Lessee in the Equipment subject to said Supplement will absolutely
cease but Lessee will remain liable as hereinafter provided; and
thereupon Lessee, if so requested, will at its expense promptly return
the Equipment to Lessor at the place designated by Lessor within the
Continental United States and in the condition, required pursuant to the
terms hereof, or Lessor, at its option, may enter the premises where the
Equipment is located and take immediate possession of and remove the
same in a lawful manner. Lessee will, without further demand, forthwith
pay Lessor an amount equal to any past due Rent which was due and
payable for all periods up to and including the Monthly Rent payment
date following the date on which Lessor has declared the Supplement to
be in default plus, as liquidated damages for loss of a bargain and not
as a penalty, an amount equal to the Casualty Value of the Equipment
then subject to the applicable Supplement, computed as of such Monthly
Rent payment date. Following the return of the Equipment to Lessor
pursuant to this clause (2), Lessor will proceed to sell or release the
Equipment in a commercially reasonable manner. The proceeds of such sale
or release will be applied by Lessor (A) first, to pay all costs and
expenses, including reasonable legal fees and disbursements, incurred by
Lessor as a result of the default and the exercise of its remedies with
respect thereto, (B) second, to pay Lessor an amount equal to any unpaid
past due Rent due and payable plus the Casualty Value, to the extent not
previously paid by Lessee, and (C) third, to reimburse Lessee for the
Casualty Value to the extent previously paid as liquidated damages. Any
surplus remaining thereafter will be retained by Lessor. To the extent
Lessee has not paid Lessor the amounts specified in this clause
(2), Lessee will forthwith pay such amounts to Lessor plus interest
provided in Section 12 on such amounts, computed from the date the
Casualty Value is payable hereunder until such amounts are paid.
(c) In addition, Lessee shall be liable for any damages and expenses which
Lessor shall have sustained by reason of the breach of any covenant,
representation or warranty of this Lease other than for the payment of the
Monthly Rent, and shall be liable for any and all unpaid amounts due hereunder
before, during or after the exercise of any of the foregoing remedies and for
all reasonable attorneys' fees and other costs and expenses incurred by reason
of the occurrence of any Event of Default or the exercise of Lessor's remedies
with respect thereto, including all costs and expenses incurred in connection
with the return of any item of Equipment. Upon the occurrence and during the
continuance of an Event of Default hereunder, Lessor shall be exclusively
entitled to enforce the warranties assigned to Lessee under Section 4 hereof,
notwithstanding such assignment.
(d) A cancellation or termination hereunder shall occur only upon written
notice by Lessor to Lessee, or repossession as provided above, and only with
respect to such items of equipment as Lessor specifically elects to cancel or
terminate by such notice or repossession. Except as to any such item of
Equipment with respect to which there is a cancellation or termination, this
Lease shall remain in full force and effect and Lessee shall be and remain
liable for the full performance of all its obligations.
11. SUBLEASE AND ASSIGNMENT
(a) LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR AND
SECURED PARTY WHICH MAY BE GRANTED OR WITHHELD IN THEIR SOLE DISCRETION, (i)
SUBLEASE, ASSIGN, PLEDGE, HYPOTHECATE OR IN ANY OTHER WAY TRANSFER THIS LEASE,
THE EQUIPMENT OR ANY PART THEREOF, OR ANY INTEREST THEREIN, OR (ii) PERMIT THE
EQUIPMENT OR ANY PART THEREOF TO BE USED BY ANYONE OTHER THAN LESSEE OR LESSEE'S
EMPLOYEES. Any assignment, sublease, pledge, hypothecation or transfer for which
consent is required hereby and which is made without such consent shall be void.
The consent of Lessor or Secured Party to any of the foregoing applies only to
the specific instance in which given, and shall not be deemed a consent to any
subsequent like act by Lessee or any other person. Subject to the foregoing,
this Lease inures to the benefit of, and is binding upon, the successors and
assigns of the parties hereto. Lessee's interest herein shall not be assigned by
operation of law. Notwithstanding the foregoing, Lessee shall be entitled to
assign or transfer this Lease, the Equipment and its interests in this Lease and
the Equipment in connection with a sale of all or substantially all of its
assets to, or a consolidation of Lessee with, or a merger of Lessee into, any
corporation, so long as Lessee provides Lessor with 45 days prior written notice
and such corporation assumes the obligations of Lessee under this Lease and
Lessee provides written evidence satisfactory to Lessor that immediately
following such sale, consolidation or merger such corporation is in the opinion
of Lessor no less credit-worthy than Lessee immediately prior to such sale,
consolidation or merger. Lessor and any direct or remote assignee of any right,
title and interest of Lessor
hereunder shall have the right at any time or from time to time to assign to any
third party all or any part of its right, title and interest in and to this
Lease or the Equipment.
(b) Lessor may obtain financing through financial institutions and secure
such financial institutions ("Secured Party") by granting a security interest in
or lien on all or any part of Lessor's interest in the Equipment, the applicable
Supplement, any collateral therefor, and amounts payable by Lessee under the
applicable Supplement. Such financing may include the purchase of the Equipment
by the Secured Party. In the event of such financing (1) the lien instrument or
security agreement will specifically provide that it is subject to Lessee's
rights as herein provided; (2) such assignment of the applicable Supplement or
any interest herein will not relieve Lessor from its obligations hereunder or be
construed to be an assumption by Secured Party of such obligations (but Secured
Party may perform, at its option, some or all of Lessor's obligations); (3) upon
appropriate notice and upon request by Secured Party. Lessee will execute such
acknowledgements and other documentation as may be requested by Lessor or
Secured Party and Lessee will thereafter pay directly to Secured Party all Rent
and other amounts payable hereunder; and (4) Lessee's obligations hereunder,
including, without limitation, its obligation to pay Rent and other amounts
hereunder, shall be absolute and unconditional and shall not be subject to any
reduction, abatement, defense, set-off, counterclaim or recoupment for any
reason whatsoever. Lessee acknowledges that any assignment or transfer by Lessor
permitted under this Lease shall not materially change Lessee's duties or
obligations under this Lease or materially increase the burdens or risks imposed
upon Lessee.
12. GENERAL
(a) Any provision herein that Lessee shall take any action shall require
Lessee to do so at its sole cost and expense. Lessee shall pay Lessor interest
at the maximum rate permitted by applicable law, but in no event in excess of a
rate of 1-1/2% per month, on any amount past due from the date it is required to
make any payment of Rent or other amount hereunder. Such interest shall be
payable with respect to the period commencing on the date such payment is due
through the date such payment is actually made.
(b) Any notice hereunder shall be in writing and shall be deemed to be
given when delivered, including but not limited to overnight courier or
electronic transmission or, if mailed, on the third day after mailing by
registered or certified mail, postage prepaid and addressed to Lessee or Lessor
at its respective address shown on the first page hereof, or to either party at
such other address it has designated as its address for purposes of notice
hereunder.
(c) Promptly upon Lessor's written request, Lessee agrees to execute,
acknowledge and deliver such instruments, and to take such other action, as may
reasonably be necessary in the opinion of Lessor, or Lessor's counsel, to
protect Lessor's or any Secured Party's interests in the Equipment, this Lease
and any Rent, including, but without limitation, the obtaining and execution of
landlord and mortgage waivers and Uniform Commercial Code financing statements
in recordable form, incumbency certificates and, at Lessee's expense, opinion of
Lessee's legal counsel regarding the matters contained in Section 4(b) hereof.
Upon Lessor's written request, Lessee also agrees to provide quarterly financial
statements and annual audited
financial statements in the form previously furnished to Lessor within 120 days
of the end of each quarter and Lessee's fiscal year end. Lessor may file or
record a copy of this Lease, as a financing statement or for any other purpose.
(d) Lessor hereby informs Lessee of the following: i) Lessor did not select,
Manufacture or supply the Equipment; ii) Lessor acquired the Equipment or the
right to possession and use of the Equipment in conjunction with the lease; iii)
in the case of new equipment, the party supplying the Equipment to Lessor
("Supplier") is as stated on the applicable Supplement hereto or schedules
thereto; iv) Lessee is entitled under Article 2A of the Uniform Commercial Code
to the promises and warranties, including those of any third party, provided to
Lessor by Supplier in connection with, or as part of contract by which Lessor
acquired the Equipment or the right to possession and use of the Equipment; and
v) Lessee may communicate with Supplier and receive an accurate and complete
statement of those promises and warranties, including any disclaimers and
limitations of them or of remedies. Lessee hereby acknowledges that it received
this notification from Lessor prior to Lessee signing the Lease. Lessee hereby
certifies that the Lessor is not known to be in default under the terms of said
Lease and Lessee has no known claim against Lessor under the Lease as of the
date hereof. Lessee hereby waives any right it may have under Section 2A-517 of
the Uniform Commercial Code or otherwise to revoke its acceptance for any reason
whatsoever including but not limited to: i) any assumption by Lessee that a
nonconformity would be cured; ii) any inducement of acceptance by the Lessors
assurances or any difficulty to discover a nonconformity before acceptance; or
iii) any Lessor default under the Lease. Lessee further hereby waives its rights
under Section 2A-401 and 2A-402 of the Uniform Commercial Code to suspend
performance of any of its obligations under the Lease with respect to the
Equipment hereby accepted.
(e) This Agreement is, and is intended to be, a lease, and Lessee does not
acquire hereby any right, title or interest in or to the Equipment except the
right to use the same as Lessee under the terms hereof. Both Lessor and Lessee
agree to characterize this Agreement as a lease for Federal income tax purposes,
such that Lessor shall receive the benefits of any depreciation and investment
tax credit, allowance or similar benefit associated with any item of Equipment.
(f) This Master Lease Agreement and all Supplements duly executed and attached
hereto from time to time constitute the entire agreement between the parties
hereto with respect to the Equipment, and any change or modification hereto and
any related agreement must be in writing and sighed by the parties hereto. There
shall be a single executed original of this Master Lease Agreement which shall
be marked and for the purposes hereof shall be referred to as the "Original";
all other counterparts shall be marked "Duplicate". With respect to any
Supplement to this Master Lease Agreement executed by the parties hereto, the
following shall apply: (i) each such Supplement shall constitute a new lease
between the parties; (ii) there shall be a single executed original of each such
Supplement marked "Original"; (iii) all other counterparts of such Supplement
shall be marked "Duplicate"; and (iv) to the extent, if any, that any such
Supplement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction) no security
interest therein may be created through the transfer or possession of the
Original of this Master Lease Agreement or any Duplicate of such a
Supplement, but such security interest may be created by the transfer or
possession of the Original of such Supplement together with a certified copy of
this Master Lease Agreement.
(g) Lessor is not, and shall not be deemed to be, an agent, employee or
representative of Lessee or any manufacturer of any Equipment, for any purpose
whatsoever.
(h) If this Lease or any provision hereof shall be deemed invalid, illegal or
unenforceable in any respect or in any jurisdiction, the validity, legality and
enforceability of this Lease in other respects and in other jurisdictions shall
not be in any way impaired or affected thereby. No covenant or condition of this
Lease can be waived except by the written consent of the party to be bound by
such waiver. No waiver by Lessor of any Event of Default hereunder shall in any
way be, or be construed to be, a waiver of any future or subsequent Event of
Default. Forbearance or indulgence by Lessor or Lessee in any regard whatsoever
shall not constitute a waiver of the covenant or condition to be performed by
the other party to which such forbearance or indulgence may apply, and, until
complete performance by such party of such covenant or condition, Lessor or
Lessee, as the case may be, shall be entitled to invoke any remedy available to
such party under this Lease or by law or in equity or otherwise despite said
forbearance or indulgence. This Lease shall be governed by the laws of the State
of Illinois. Lessee hereby submits to the Jurisdiction of the state and federal
courts located in Illinois.
(i) Should Lessee fail to make any payment or to do any act as herein provided,
after notice to Lessee which is reasonable under the circumstances, Lessor shall
have the right, but not the obligation and without releasing Lessee from any
obligation hereunder or waiving Lessor's right to declare a default hereunder,
to make or do the same, and to pay, purchase, contest or compromise any
encumbrance, charge or lien which in the reasonable judgment of Lessor appears
to materially and adversely affect Lessor's interest in the Equipment, and in
exercising any such rights Lessor may incur and liability and expend whatever
amount in its reasonable discretion it may deem necessary therefor. All sums so
incurred or expended by Lessor shall be without demand immediately due and
payable by Lessee.
(j) Whenever the context of this Lease requests, the singular number includes
the plural. Section headings contained herein are solely for the convenience of
the parties, and are not an aid in the interpretation of the instrument.
Although this Lease is dated as of the date first above written for convenience,
the Supplement Commencement Date shall be as specified in the applicable
Supplement.
(k) This Master Lease Agreement may be canceled by Lessee in writing, provided
all outstanding Supplements hereunder have either expired or have been
terminated with respect to their individual termination provisions and that no
Events of Default are continuing under any Supplements, and Lessee has fulfilled
all obligations under all such Supplements.
LESSOR: LESSEE:
MERIDIAN LEASING CORPORATION DIAMOND BRANDS INCORPORATED
By: By:
Title: Title:
12/23/96 fe
SUPPLEMENT NUMBER 1
LESSEE: DIAMOND BRANDS, INC.
MASTER LEASE AGREEMENT DATE: November 22, 1996
This Supplement is issued pursuant to the Master Lease Agreement identified
above. All of the terms and conditions of the Master Lease Agreement are hereby
incorporated herein and made a part hereof as if such terms and conditions were
set forth in this Supplement. This Supplement, together with the terms and
conditions as incorporated herein, constitutes a separately enforceable lease
agreement with respect to the Equipment.
SUPPLEMENT COMMENCEMENT DATE: January 1, 1997
The Lease Term shall begin on the Supplement Commencement Date. To the extent
that the Equipment is accepted prior to that date, the Lessee shall pay to the
Lessor an interim rental representing a proration on a per diem basis of the
initial monthly rental.
EQUIPMENT: Manufactured by BAY NETWORKS, TRANSITION ENGINEERING, SHIVA, U.S.
ROBOTICS, ADC, 3COM, APC, COMPAQ, KINGSTON, MICROSOFT
See Equipment/Location Schedule A to Supplement Number 1.
LEASE TERM AND RENTAL PAYMENTS: Term 48 months, payable monthly on the first day
of each month. The amount of payment for months 1 through 48 is $2,321.00 per
month.
LOCATION OF EQUIPMENT:
See Equipment/Location Schedule A to Supplement Number 1.
ADDITIONAL PROVISIONS TO SUPPLEMENT:
Casualty Values........................................... Schedule B
Purchase Option........................................... Schedule C
MERIDIAN LEASING CO DIAMOND BRANDS, INC.
(Lessor), (Lessee)
By: By:
Title: Title:
EQUIPMENT/LOCATION SCHEDULE A
TO SUPPLEMENT 1
To
Master Lease Agreement Dated November 22, 1996
Between
MERIDIAN LEASING CORPORATION (Lessor)
And
DIAMOND BRANDS, INC. (Lessee)
EQUIPMENT: Manufactured by BAY NETWORKS, TRANSITION ENGINEERING, SHIVA, U.S.
ROBOTICS, ADC, 3COM, APC, COMPAQ, KINGSTON, MICROSOFT
LOCATION: DIAMOND BRANDS, INC.
0000 XXXXXXX XXXXXX
XXXXXXX, XX 00000
Qty Model/Type Description
3 CG1001X02 24 PORT 10BASE T HUB
2 CG1007002 ADVANCED AGNT NNM (BAYSTACK)
1 CG0018001 CASCADE CABLE
1 810M-A 8 PRT XXXXXXX XXX
0 00000 XXX 10 B 2 TRANSCEIVER
2 27890 10 B T TRANSCEIVERS
1 280131 SHIVA NETMODEM
1 940707 USR SPORTSTER MODEM
1 AE1001010 XXX: 1 ETH X 2 SYNC 8
1 AE1001007 AN: 1ETH X 2 SYNC 8MB
2 XX0000000 XXX: 1 ETH X 2 SYNC 12
1 XX0000000 AN: 1 ETH X 2 SYNC 4M D
5 AE0008024 REMOTE OFFICE SUITE
5 7220 V.35 CABLE FOR WAN
1 78741 ADC KENTROX ADD/DROP
4 78285 ADC CSU/DSU 64KB
1 636-03 OPTIVITY 6.0 FOR HP
4 3C562-TP XXXXXXXXX XXXXXX
0 0X000X-XXX XXXXXXXXX III RJ45
2 3C509B-TPO-20PK ETHERLINK III RJ45 (20)
4 3C509B-TPC ETHERLINK III RJ45 BNC
1 SU1000RM APC SMART UPS (1000VA)
1 SU3000 SMART UPS (3000VA)
1 SU1400 APC SMART UPS (1400VA)
5 BF2300-001 AN NXT DAY HARDWARE
1 S6-02 WINDOWS SOFTWARE LICENSE
3 BF2300-037 BAYSTACK NXT DAY HARD.
1 219720-007 PROLIANT 1500 5/166
2 KTC1691/64 64MB MEMORY U/G
1 146742-006 4.3GB PLUGGABLE F/W SCSI
1 1141564-601 1024 COLOR MONITOR
1 455787 M/S BACK OFFICE
80 543888 75 USER LICENSE
70 454902 U/G WIN 95
39 454124 MS OFFICE PRO (COMP U.G)
This Schedule is hereby attached to and made a part of the Supplement to the
Master Lease Agreement bearing date as set forth above, between MERIDIAN LEASING
CORPORATION and Lessee named above.
Lessee Address:
DIAMOND BRANDS, INC.
0000 XXXXXXX XXXXXX
XXXXXXX, XX 00000
SCHEDULE B TO SUPPLEMENT NUMBER 1
TO
Master Lease Agreement Dated November 22, 1996
Between
MERIDIAN LEASING CORPORATION (Lessor)
And
DIAMOND BRANDS, INC. (Lessee)
CASUALTY VALUES
The Casualty Value of the Equipment covered by the Supplement identified above,
as of any date, shall be the amount indicated below opposite the period of time
in which such date occurs. Values for those periods between the ones indicated
below can be calculated through interpolation of nearest values.
Months Expired After Casualty
Supplement Commencement Date Value
0 $113,236
12 $ 88,598
24 $ 69,872
36 $ 55,638
48 $ 44,820
After the term of lease for such Equipment, and until such item of Equipment has
been surrendered to Lessor, as provided in the Master Lease Agreement, the
Casualty Value of such Equipment shall be $44,820.00.
Following payment of the Casualty Value, the Lessor and the Lessee shall each
make reasonable efforts to obtain bids for the purchase of any existing
Equipment suffering such Total Casualty. Such Equipment shall be sold for the
highest cash offer then available, or if higher, other offer acceptable to
Lessor and Lessee. Upon such sale, the Lessee shall be refunded the amount of
the proceeds of the sale less the actual expenses incurred by Lessor in making
the sale, including, without limitation, storage, insurance, advertising and
sales taxes, but such refund shall not be in excess of the Casualty Value
previously paid.
Following payment of the Casualty Value, the Lessee shall be entitled to the
proceeds of any insurance covering the Equipment suffering such Total Casualty
up to an amount not in excess of the Casualty Value previously paid, but in no
event shall the aggregate of amounts refunded to or received by Lessee pursuant
to this Schedule B exceed the Casualty Value.
This Schedule is hereby attached to and made a part of the Supplement of the
Master Lease Agreement bearing date as set forth above, between MERIDIAN LEASING
CORPORATION and Lessee named above.
SCHEDULE C TO SUPPLEMENT NUMBER I
To
Master Lease Agreement Dated November 22, 1996
Between
MERIDIAN LEASING CORPORATION (Lessor)
And
DIAMOND BRANDS, INC. (Lessee)
PURCHASE OPTION:
Lessee has the option, with 3 months prior written notice, provided it has not
previously received written notice of default under the terms of the Lease, or
if it received such notice of default, has cured such default, to purchase the
Equipment at the end of the Lease Term for Fair Market Value, such Fair Market
Value to be determined objectively by Lessor. Upon payment of the purchase
price, Lessor hereby releases any interest it may have in the software subject
to this Supplement. In the event Lessee does not exercise said purchase option,
the Lease Term shall be automatically extended at the monthly lease rate in
effect at the end of said term, unless and until terminated by either party
giving the other not less than 3 months prior written notice, and any software
shall be returned with the Equipment.
This Schedule is hereby attached to and made a part of the Supplement of the
Master Lease Agreement bearing date as set forth above, between MERIDIAN LEASING
CORPORATION and Lessee named above.
