EXHIBIT 10.16
M A T R I X
F U N D I N G C O R P O R A T I O N
0000 Xxxxx Xxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxx, Xxxx 00000
MASTER LEASE AGREEMENT NO. R0758
This Master Lease Agreement is made this 25th day of January, 1999 between
MATRIX FUNDING CORPORATION, with its principal office at 0000 Xxxxx Xxxx
Xxxxxx, Xxxxxx Xxxxx, Xxxxxxx, XX 00000 (the "Lessor"), and PETCO ANIMAL
SUPPLIES, INC., with its principal office at 0000 Xxxxx Xxxx, Xxx Xxxxx, XX
00000 (the "Lessee").
1. LEASE:
Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor,
the property (together with all attachments, replacements, parts,
substitutions, additions, repairs, accessions and accessories, incorporated
therein and/or affixed thereto) (collectively, the "Property") described in
any Lease Schedule ("Schedule") executed and delivered by Lessor and Lessee
in connection with this Master Lease Agreement. Each Schedule shall
incorporate by reference the terms and conditions of this Master Lease
Agreement, and together with the Acceptance Certificate (as defined herein)
and Master Progress Funding Agreement, if applicable, shall constitute a
separate "Lease". In the event of conflict between the provisions of this
Master Lease Agreement and any Schedule, the provisions of the Schedule
shall govern.
2. ADDITIONAL DEFINITIONS:
(a) Except as otherwise provided in Section 6(a) hereof, "Acceptance Date"
means, as to the Property designated on any Schedule, the date Lessee
accepts the Property as set forth in any acceptance certificate signed by
the Lessee which is acceptable to Lessor (the "Acceptance Certificate").
If Lessee fails to sign and deliver an Acceptance Certificate, then except
as otherwise provided in Section 6(a) hereof, the Acceptance Date shall be
a date determined by Lessor which shall be no sooner than the date Lessee
receives substantially all of the Property.
(b) "Commencement Date" means, as to the Property designated on any
Schedule, where the Acceptance Date for such Schedule falls on the first
day of a calendar quarter, that date, and, in any other case, the first day
of the calendar quarter following the calendar quarter in which such
Acceptance Date falls.
3. TERM OF LEASE:
The term of any Lease, as to all Property designated on the applicable
Schedule, shall commence on the Acceptance Date for such Property, and
shall continue for an "Initial Period" ending that number of months from
the Commencement Date as specified in the Schedule. Thereafter, Lessee
shall have options to purchase or return the Property or to extend the
Lease, all as provided in Section 18(m) of this Agreement.
4. RENT AND PAYMENT:
Lessee shall pay as rent for use of the Property, aggregate rentals equal
to the sum of all the Monthly Rentals (defined in the Schedule) and other
payments due under the Lease for the entire Initial Period. The Monthly
Rental shall begin on the Acceptance Date and shall be due and payable by
Lessee in advance on the first day of each month throughout the Initial
Period. If the Acceptance Date does not fall on the first day of a
calendar quarter, then the first rental payment shall be calculated by
multiplying the number of days from and including the Acceptance Date to
the Commencement Date by a daily rental equal to one thirtieth (1/30) of
the Monthly Rental, and shall be due and payable on the Acceptance Date.
Lessee shall pay all rentals to Lessor, or its assigns, at Lessor's address
set forth above (or as otherwise directed in writing by Lessor, or its
assigns), without notice or demand. LESSEE SHALL NOT XXXXX, SET OFF OR
DEDUCT ANY AMOUNT OR DAMAGES FROM OR REDUCE ANY MONTHLY RENTAL OR OTHER
PAYMENT DUE FOR ANY REASON. THIS LEASE IS NON-CANCELABLE FOR THE ENTIRE
TERM OF THE INITIAL PERIOD AND ANY EXTENSION PERIODS.
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If any rental or other payment due under any Lease shall be unpaid after
its due date, Lessee will pay on demand, as a late charge, but not as
interest, the greater of twenty-five dollars ($25) or five percent (5%) of
any such unpaid amount but in no event to exceed maximum lawful charges.
If late charges are assessed by a lending institution due to any late
payment by Lessee, Lessee agrees to pay such late charges or to reimburse
Lessor for their payment.
5. TAXES:
Lessee shall pay to Lessor when due all taxes, fees, assessments and
charges paid, payable or required to be collected by Lessor, however
designated, which are levied or based on the Monthly Rental or other
payment due under the Lease, or on the possession, use, operation, lease,
rental, sale, purchase, control or value of the Property, including without
limitation, registration and license fees and assessments, state and local
privilege or excise taxes, documentary stamp taxes or assessments, sales
and use taxes, personal and other property taxes, and taxes or charges
based on gross revenue, but excluding taxes based on Lessor's net income
(collectively, "taxes"). Lessor shall invoice Lessee for all taxes in
advance of their payment due date, and Lessee shall promptly remit to
Lessor all taxes upon receipt of an invoice from Lessor. Lessee shall pay
all penalties and interest resulting from its failure to timely remit all
taxes to Lessor when invoiced by Lessor. Lessor shall file all required
sales and use tax and personal property tax returns and reports concerning
the Property with all applicable governmental agencies.
6. USE; ALTERATIONS AND ATTACHMENTS:
(a) After Lessee receives and inspects any Property and is satisfied that
the Property is satisfactory, Lessee shall execute and deliver to Lessor an
Acceptance Certificate in form provided by Lessor; provided, however, that
Lessee's failure to execute and deliver an Acceptance Certificate for any
Property shall not affect the validity and enforceability of the Lease with
respect to the Property. If Lessee has signed and delivered a Master
Progress Funding Agreement, Lessor may, in its sole discretion, at any time
by written notice to Lessee, declare all prior Authorizations signed in
connection with the Master Progress Funding Agreement to be and constitute
the "Acceptance Certificate" for all purposes under the Lease, and the
Acceptance Date of the Lease shall be the date determined by Lessor in its
sole discretion which shall not be earlier than the date of the last
Authorization.
(b) Lessee shall at all times keep the Property in its sole possession and
control. The Property shall not be moved from the location stated in the
Schedule without the prior written consent of Lessor.
(c) Lessee shall cause the Property to be installed, used, operated and, at
the termination of the Lease, removed (i) in accordance with any applicable
manufacturer's manuals or instructions; (ii) by competent and duly
qualified personnel only; and (iii) in accordance with applicable
governmental regulations.
(d) Lessee may not make alterations or attachments to the Property without
first obtaining the written consent of Lessor. Any such alterations or
attachments shall be made at Lessee's expense and shall not interfere with
the normal and satisfactory operation or maintenance of the Property. The
manufacturer may incorporate engineering changes or make temporary
alterations to the Property upon request of Lessee. Unless Lessor shall
otherwise agree in writing, all such alterations and attachments shall be
and become the property of Lessor upon their attachment to the Property or,
at the option of Lessor, shall be removed by Lessee at the termination of
the Lease as to such Property and the Property restored at Lessee's expense
to its original condition, reasonable wear and tear only excepted.
(e) The Property is and shall remain personal property during the term of
the Lease notwithstanding that any portion thereof may in any manner become
affixed, attached to or located on real property or any building or
improvement thereon. Lessee shall not permit the Property to become an
accession to other goods or a fixture to or part of any real property.
Lessee will obtain and deliver to Lessor a waiver of liens, in form
satisfactory to Lessor, from all persons not a party hereto who might
secure an interest, lien or other claim in the Property.
(f) In the event the Property includes software (including all
documentation, later versions, updates, modifications) (herein "Software"),
the following shall apply: (i) Lessee shall possess and use the Software in
accordance with the terms and conditions of any license agreement
("License") entered into with the owner/vendor of such Software (at
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Lessor's request, Lessee shall provide a complete copy of the License to
Lessor); (ii) as due consideration for Lessor's payment of the Software
price and for providing the Software to Lessee at a lease rate (as opposed
to a debt rate), Lessee agrees that Lessor is leasing (and not financing)
the Software to Lessee; (iii) except as otherwise specifically provided
herein, the Software shall be deemed Property for all purposes under the
Lease.
(g) Lessee shall comply with all applicable laws, regulations,
requirements, rules and orders, all manufacturer's instructions and
warranty requirements, and with the conditions and requirements of all
policies of insurance with respect to the Property and the Lease.
(h) The Property is leased solely for commercial or business purposes.
7. MAINTENANCE AND REPAIRS; RETURN OF PROPERTY:
(a) During the continuance of each Lease, Lessee shall, at its expense, and
in accordance with all manufacturer maintenance specifications, (i) keep
the Property in good repair, condition and working order; (ii) make all
necessary adjustments, repairs and replacements; (iii) furnish all required
parts, mechanisms, devices and servicing; and (iv) not use or permit the
Property to be used for any purpose for which, in the opinion of the
manufacturer, the Property is not designed or reasonably suitable. Such
parts, mechanisms and devices shall immediately become a part of the
Property for all purposes hereunder and title thereto shall vest in Lessor.
If the manufacturer does not provide maintenance specifications, Lessee
shall perform all maintenance in accordance with industry standards for
like Property.
(b) During the continuance of each Lease, Lessee shall, at its own expense,
enter into and maintain in force a contract with the manufacturer or other
qualified maintenance organization satisfactory to Lessor for maintenance
of each item of Property. Such contract as to each item shall commence
upon the Acceptance Date. Lessee shall furnish Lessor with a copy of such
contract upon demand.
(c) Lessee shall pay all shipping and delivery charges and other expenses
incurred in connection with the Property. Upon default, or at the
expiration or earlier termination of any Lease, Lessee shall, at its own
expense, assemble, prepare for shipment and promptly return the Property
to Lessor at the location within the Continental United States designated
by Lessor. Upon such return, the Property shall be in the same operating
order, repair, condition and appearance as on the Acceptance Date, except
for reasonable wear and tear from proper use thereof, and shall include all
engineering changes theretofore prescribed by the manufacturer. Lessee
shall provide maintenance certificates or qualification letters and/or
arrange for and pay all costs which are necessary for the manufacturer to
accept the Property under contract maintenance at its then standard rates
("recertification"). The term of the Lease shall continue upon the same
terms and conditions until such recertification has been obtained. With
regard to Software, at the expiration or earlier termination of any Lease
Lessee shall (i) delete from its systems all Software then installed, (ii)
destroy all copies or duplicates of the Software which were not returned to
Lessor, and (iii) cease using the Software altogether. Upon its receipt
from Lessee, Lessor shall be responsible to return the Software to the
owner/vendor so that Lessee shall not be in breach of any software license.
8. OWNERSHIP AND INSPECTION:
(a) The Property shall at all times be the property of Lessor or its
assigns, and Lessee shall have no right, title or interest therein except
as to the use thereof subject to the terms and conditions of the Lease.
For purposes of the foregoing, Lessee transfers to Lessor all right, title
and interest (including all ownership interest) which Lessee may have in
and to the Property. Lessor may affix (or require Lessee to affix) tags,
decals or plates to the Property indicating Lessor's ownership, and Lessee
shall not permit their removal or concealment. Lessee shall not permit the
name of any person or entity other than Lessor or its assigns to be placed
on the Property as a designation that might be interpreted as a claim of
ownership or security interest.
(b) LESSEE SHALL KEEP THE PROPERTY AND LESSEE'S INTEREST UNDER ANY LEASE
FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES, EXCEPT THOSE PERMITTED IN
WRITING BY LESSOR OR ITS ASSIGNS.
(c) Lessor, its assigns and their agents shall have free access to the
Property at all reasonable times during normal business hours for the
purpose of inspecting the Property and for any other purpose contemplated
in the Lease.
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(d) Lessee shall immediately notify Lessor in writing of all details
concerning any damage or loss to the Property, including without
limitation, any damage or loss arising from the alleged or apparent
improper manufacture, functioning or operation of the Property.
9. WARRANTIES:
(a) Lessee acknowledges that Lessor is not the manufacturer of the Property
nor the manufacturer's agent nor a dealer therein. The Property is of a
size, design, capacity, description and manufacture selected by the Lessee.
Lessee is satisfied that the Property is suitable and fit for its purposes.
LESSEE AGREES THAT LESSOR HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR
REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR REPRESENTATION AS TO: (i)
THE DESCRIPTION, CONDITION, DESIGN, QUALITY OR PERFORMANCE OF THE PROPERTY
OR QUALITY OR CAPACITY OF MATERIALS OR WORKMANSHIP IN THE PROPERTY; (ii)
ITS MERCHANTABILITY OR FITNESS OR SUITABILITY FOR A PARTICULAR PURPOSE
WHETHER OR NOT DISCLOSED TO LESSOR; AND (iii) DELIVERY OF THE PROPERTY FREE
OF THE RIGHTFUL CLAIM OF ANY PERSON BY WAY OF INFRINGEMENT OR THE LIKE.
LESSOR EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES. Lessor shall not be liable
to Lessee for any loss, damage or expense of any kind or nature caused,
directly or indirectly, by the Property or the use, possession or
maintenance thereof, or the repair, service or adjustment thereof, or by
any delay or failure to provide any such maintenance, repair, service or
adjustment, or by any interruption of service or loss of use thereof or for
any loss of business howsoever caused.
(b) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE LEASE, LESSOR
SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO LESSEE OR ANY THIRD PARTY,
FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF
OR RELATED TO THE TRANSACTION CONTEMPLATED HEREUNDER, WHETHER IN AN ACTION
BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR ANY
OTHER LEGAL THEORY, INCLUDING WITHOUT LIMITATION, LOSS OF ANTICIPATED
PROFITS, OR BENEFITS OF USE OR LOSS OF BUSINESS, EVEN IF LESSOR IS APPRISED
OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.
IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF ANY
LEASE WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF
WARRANTIES OR EXCLUSION OF DAMAGES, IS INTENDED BY THE PARTIES TO BE
SEVERABLE FROM ANY OTHER PROVISION AND IS A SEPARABLE AND INDEPENDENT
ELEMENT OF RISK ALLOCATION AND IS INTENDED TO BE ENFORCED AS SUCH.
(c) Lessor assigns to Lessee all assignable warranties on the Property,
including without limitation any warranties described in Lessor's purchase
contract, which assignment shall be effective only (i) during the Initial
Period and any extensions thereof, and (ii) so long as no Event of Default
exists.
10. NET LEASE; LESSEE'S OBLIGATIONS ABSOLUTE AND UNCONDITIONAL:
This Agreement is a "net lease" and, as between Lessor and Lessee, Lessee
shall be responsible for and shall indemnify Lessor against, all costs,
expenses and claims of every nature whatsoever arising out of or in
connection with or related to the Lease or the Property.
Lessee agrees that its obligation to pay Monthly Rental and other
obligations under the Lease shall be irrevocable, independent, absolute and
unconditional and shall not be subject to any abatement, reduction,
recoupment, defense, offset or counterclaim otherwise available to Lessee;
nor, except as otherwise expressly provided herein or as agreed to by
Lessor in writing, shall this Agreement terminate for any reason whatsoever
prior to the end of the Initial Period.
11. ASSIGNMENT BY LESSOR:
Lessor may assign or transfer its rights and interests in the Lease and
Property to another party ("Lessor's Assignee") either outright or as
security for loans. Upon notice of any such assignment and instructions
from Lessor, Lessee shall pay its Monthly Rental and other payments and
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perform its other obligations under the Lease to the Lessor's Assignee (or
to another party designated by Lessor's Assignee). Upon any such sale or
assignment, LESSEE'S OBLIGATIONS TO LESSOR'S ASSIGNEE UNDER THE ASSIGNED
SCHEDULE SHALL BE ABSOLUTE AND UNCONDITIONAL AND LESSEE WILL NOT ASSERT
AGAINST LESSOR'S ASSIGNEE ANY CLAIM, DEFENSE, OFFSET OR COUNTERCLAIM WHICH
LESSEE MIGHT HAVE AGAINST LESSOR. Lessor's Assignee shall have all of the
rights but none of the obligations of Lessor under the assigned Lease, and
after such assignment Lessor shall continue to be responsible for all of
Lessor's obligations under the Lease.
Upon any such assignment, Lessee agrees to execute and deliver to Lessor:
(i) estoppel certificates, acknowledgments of assignment and other
documents requested by Lessor which acknowledge the assignment and affirm
provisions of the Lease, and (ii) UCC-1 financing statements or
precautionary filings as requested.
Only one executed counterpart of any Schedule shall be marked "Original";
any other executed counterparts shall be marked "Duplicate Original" or
"Counterpart". No security interest in any Schedule may be created through
the transfer and possession of any counterpart other than the "Original".
12. RISK OF LOSS ON LESSEE:
From the earlier of the date the supplier ships the Property to Lessee or
the date Lessor confirms Lessee's purchase order or contract to supplier
until the date the Property is returned to Lessor as provided in the Lease,
Lessee hereby assumes and shall bear all risk of loss for theft, damage or
destruction to the Property, howsoever caused. NO SUCH LOSS OR DAMAGE
SHALL IMPAIR ANY OBLIGATION OF LESSEE UNDER THIS LEASE WHICH SHALL CONTINUE
IN FULL FORCE AND EFFECT.
In the event of damage or loss to the Property (or any part thereof) and
irrespective of payment from any insurance coverage maintained by Lessee,
but applying full credit therefore, Lessee shall at the option of Lessor,
(a) place the Property in good repair, condition and working order; or (b)
replace the Property (or any part thereof) with like property of equal or
greater value, in good repair, condition and working order and transfer
clear title to such replacement property to Lessor whereupon such
replacement property shall be deemed the Property for all purposes under
the Lease; or (c) pay to Lessor the total rent due and owing at the time of
such payment plus an amount calculated by Lessor which is equal to the
Casualty Loss Value specified in the Casualty Loss Schedule attached to the
applicable Schedule.
13. INSURANCE:
Lessee shall obtain and maintain for the entire term of this Lease, at its
own expense (as primary insurance for Lessor and Lessee), property damage
and liability insurance and insurance against loss or damage to the
Property including without limitation loss by fire (including so-called
extended coverage), theft, collision and such other risks of loss as are
customarily insured against on the type of Property leased under any Lease
and by businesses in which Lessee is engaged, in such amounts, in such form
and with such insurers as shall be satisfactory to Lessor; provided,
however, that the amount of insurance against loss or damage to the
Property shall be equal to or greater than the Casualty Loss Value of such
items of Property as specified in the Casualty Loss Schedule attached to
the Schedule. Each insurance policy will name Lessee as insured and Lessor
and its assignees as additional insureds and loss payees thereof as their
interests may appear, shall contain cross-liability endorsements and shall
contain a clause requiring the insurer to give Lessor and its assignees at
least 30 days prior written notice of any material alteration in the terms
of such policy or of the cancellation thereof. Lessee shall furnish to
Lessor a certificate of insurance or other evidence satisfactory to Lessor
that such insurance coverage is in effect; provided, however, that Lessor
shall be under no duty either to ascertain the existence of or to examine
such insurance policy or to advise Lessee in the event such insurance
coverage shall not comply with the requirements hereof. All insurance
covering loss or damage to the Property shall contain a breach of warranty
clause satisfactory to Lessor.
14. INDEMNIFICATION:
Except for the gross negligence or willful misconduct of Lessor, Lessee
shall indemnify and hold Lessor harmless from and against any and all
claims, (including without limitation negligence, tort and strict
liability), damages, judgments, suits and legal proceedings, and any and
all costs and expenses in connection therewith (including attorney's fees
incurred by Lessor either in enforcing this indemnity or in defending
against such claims), arising out of or in any manner connected with or
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resulting from the Lease or the Property, including, without limitation the
manufacture, purchase, financing, ownership, rejection, non-delivery,
transportation, delivery, possession, use, operation, maintenance,
condition, lease, return, storage or disposition thereof; including without
limitation (a) claims for injury to or death of persons and for damage to
property; (b) claims relating to patent, copyright, or trademark
infringement, (c) claims relating to latent or other defects in the
Property whether or not discoverable by Lessor and (d) claims for wrongful,
negligent or improper act or misuse by Lessor. Lessee agrees to give
Lessor prompt notice of any such claim or liability. For purposes of this
paragraph and any Lease, the term "Lessor" shall include Lessor, its
successors and assigns, shareholders, directors, officers, representatives
and agents, and the provisions of this paragraph shall survive expiration
of any Lease with respect to events occurring prior thereto.
Upon request of Lessor, Lessee shall assume the defense of all demands,
claims, or actions, suits and all proceedings against Lessor for which
indemnity is provided and shall allow Lessor to participate in the defense
thereof. Lessor shall be subrogated to all rights of Lessee for any matter
which Lessor has assumed obligation hereunder, and may settle any such
demand, claim, or action without Lessee's prior consent, and without
prejudice to Lessor's right to indemnification hereunder.
15. EVENTS OF DEFAULT:
An "Event of Default" shall occur under any Lease if Lessee:
(a) fails to pay any Monthly Rental or other payment required under the
Lease when the same becomes due and payable and such failure continues for
ten (10) days after its due date.
(b) attempts to or does, remove, sell, assign, transfer, encumber, sublet
or part with possession of any one or more items of the Property or any
interest under any Lease, except as expressly permitted herein, or permits
a judgment or other claim to become a lien upon any or all of Lessee's
assets or upon the Property;
(c) permits any item of Property to become subject to any levy, seizure,
attachment, assignment or execution; or Lessee abandons any item of
Property;
(d) or any guarantor, fails to observe or perform any of its covenants and
obligations required to be observed or performed under the Lease and such
failure continues uncured for ten (10) days after occurrence thereof.
(e) or any guarantor, breaches any of its representations and warranties
made under any Lease, or if any such representations or warranties shall be
false or misleading in any material respect.
(f) or any guarantor, shall (i) be adjudicated insolvent or a bankrupt, or
cease, be unable, or admit in writing its inability, to pay its debts as
they mature, or make a general assignment for the benefit of creditors or
enter into any composition or arrangement with creditors; (ii) apply for or
consent to the appointment of a receiver, trustee or liquidator of it or of
a substantial part of its property, or authorize such application or
consent, or proceedings seeking such appointment shall be instituted
against it without such authorization, consent or application and shall
continue undismissed for a period of 60 days; (iii) authorize or file a
voluntary petition in bankruptcy or apply for or consent to the application
of any bankruptcy, reorganization in bankruptcy, arrangement, readjustment
of debt, insolvency, dissolution, moratorium or other similar law of any
jurisdiction, or authorize such application or consent; or proceedings to
such end shall be instituted against it without such authorization,
application or consent and such proceeding instituted against it shall
continue undismissed for a period of 60 days;
(g) or any guarantor, shall suffer an adverse change in its financial
condition after the date hereof as determined by Lessor in its sole
discretion, or there shall occur a substantial change in ownership of the
outstanding stock of Lessee or a substantial change in control of its board
of directors.
(h) shall be in default under any other Schedule or agreement executed with
Lessor; or shall fail to sign and deliver to Lessor any document requested
by Lessor in connection with any Lease or shall fail to do any thing
determined by Lessor to be necessary or desirable to effectuate the
transaction contemplated by the Lease or to protect Lessor's rights and
interests in the Lease and Property; or shall fail to provide financial
statements to Lessor as provided in Section 18(g) hereof.
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16. REMEDIES:
Upon the occurrence of any Event of Default and at any time thereafter,
Lessor may, with or without giving notice to Lessee or canceling the Lease,
do any one or more of the following:
(a) enforce this Agreement according to its terms;
(b) advance funds on Lessee's behalf to cure the Event of Default,
whereupon Lessee shall immediately reimburse Lessor therefor, together with
late charges accrued thereon;
(c) refuse to deliver the Property to Lessee;
(d) upon notice to Lessee, cancel this Master Lease Agreement and any or
all Schedules executed pursuant thereto;
(e) if Lessor determines, in its sole discretion, not to take possession of
the Property, Lessor shall continue to be the owner of the Property and
may, but is not obligated to, dispose of the Property by sale or otherwise,
all of which determinations may be made by Lessor in its sole discretion
and for its own account;
(f) declare immediately due and payable all amounts due or to become due
hereunder for the full term of the Lease (including any renewal or purchase
options which Lessee has contracted to pay);
(g) with or without terminating the Lease, recover the Casualty Loss Value
of the Property as of the rent payment date immediately preceding the date
of default together with all costs and expenses incurred by Lessor in the
repossession, recovery, storage, repair, sale, re-lease or other
disposition of the Property, including without limitation, reasonable
attorneys' fees and costs incurred in connection therewith or otherwise
resulting or arising from Lessee's default, and any indemnity if then
determinable, plus interest on all of the above until paid (before and
after judgment) at the lesser of the rate of eighteen percent (18%) per
annum or the highest rate permitted by law (collectively, "Lessor's
Damages");
(h) without notice to Lessee, repossess the Property wherever found, with
or without legal process, and for this purpose Lessor and/or its agents or
assigns may enter upon any premises of or under the control or jurisdiction
of Lessee or any agent of Lessee, without liability for suit, action or
other proceeding by Lessee (any damages occasioned by such repossession
being hereby expressly waived by Lessee) and remove the Property therefrom;
Lessee further agrees on demand, to assemble the Property and make it
available to Lessor at a place to be designated by Lessor;
(i) in its sole discretion, re-lease or sell any or all of the Property at
a public or private sale on such terms and notice as Lessor shall deem
reasonable (such sale may, at Lessor's sole option, be conducted at
Lessee's premises), and recover from Lessee liquidated damages for the loss
of a bargain and not as a penalty an amount equal to the Lessor's Damages.
(j) if Lessee breaches any of its obligations under Section 7(c) of this
Agreement, Lessee shall be liable to Lessor for additional damages in an
amount not less than two (2) times the original cost paid by Lessor for the
Software, and at Lessor's option, Lessor shall be entitled to injunctive
relief.
(k) exercise any other right or remedy which may be available to it under
the Uniform Commercial Code or any other applicable law;
(l) a cancellation hereunder shall occur only upon notice by Lessor and
only as to such items of Property as Lessor specifically elects to cancel
and this Lease shall continue in full force and effect as to the remaining
items, if any;
In the event Lessor in good faith believes the Property to be in danger of
misuse, abuse or confiscation or to be in any other way threatened; or
believes in good faith that the Property is no longer sufficient or has
declined or may decline in value; or believes in good faith for any other
reason that the prospect of payment or performance has become impaired,
Lessor shall have the right, in its sole discretion, to either require
additional collateral or declare the entire indebtedness under any Lease
immediately due and payable.
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Lessor may exercise any and all rights and remedies available at law or in
equity, including those available under the Uniform Commercial Code. The
rights and remedies afforded Lessor hereunder shall not be deemed to be
exclusive, but shall be in addition to any rights or remedies provided by
law. Lessor's failure promptly to enforce any right or remedy hereunder
shall not operate as a waiver of such right or remedy, and Lessor's waiver
of any default shall not constitute a waiver of any subsequent or other
default. Lessor may accept late payments or partial payments of amounts
due under the Lease and may delay enforcing any of Lessor's rights or
remedies hereunder without losing or waiving any of Lessor's rights or
remedies under the Lease.
17. LESSEE'S REPRESENTATIONS AND WARRANTIES:
Lessee represents and warrants as follows:
(a) If Lessee is a corporation, duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation, duly
qualified to do business in each jurisdiction where any Property is, or is
to be located, and has full corporate power and authority to hold property
under lease and to enter into and perform its obligations under any Lease;
the execution, delivery and performance by Lessee of any Lease has been
duly authorized by all necessary corporate action on the part of Lessee,
and is not inconsistent with its Articles of Incorporation or By-Laws or
other governing instruments.
(b) If Lessee is a partnership, duly organized by written partnership
agreement and validly existing in accordance with the laws of the
jurisdiction of its organization, duly qualified to do business in each
jurisdiction where the Property is, or is to be located, and has full power
and authority to hold property under lease and to enter into and perform
its obligations under any Lease; the execution, delivery and performance by
Lessee of any Lease has been duly authorized by all necessary action on the
part of the Lessee, and is not inconsistent with its partnership agreement
or other governing instruments. Upon request, Lessee will deliver to
Lessor certified copies of its partnership agreement and other governing
instruments and original certificate of partners and other instruments
deemed necessary or desirable by Lessor. To the extent required by
applicable law, Lessee has filed and published its fictitious business name
certificate.
(c) The execution, delivery and performance by Lessee of any Lease does not
violate any law or governmental rule, regulation, or order applicable to
Lessee, does not and will not contravene any provision, or constitute a
default under any indenture, mortgage, contract, or other instrument to
which it is bound and, upon execution and delivery of each Lease, will
constitute a legal, valid and binding agreement of Lessee, enforceable in
accordance with its terms.
(d) No action, including any permits or consents, in respect of or by any
state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by Lessee of any Lease.
(e) All computer hardware and software that is utilized by Lessee in the
operation of its businesses is and will be "Year 2000 Compliant" in that it
is and will be capable of accepting, processing and printing date data
between and within the twentieth and twenty-first centuries, and neither
the performance nor functionality of any computer hardware or software is
affected by dates prior to, during, or after the Year 2000. Upon request,
Lessee shall provide written assurances to Lessor that its hardware and
software are "Year 2000 Compliant".
18. GENERAL:
(a) Entire Agreement. Each Schedule shall incorporate the terms and
conditions of this Master Lease Agreement and, together with the
Acceptance Certificate (as defined herein) and Master Progress Funding
Agreement (and Authorizations thereunder), if applicable, and any
amendments to any of the foregoing documents, shall supersede all prior
agreements and constitute the entire understanding and agreement between
the Lessor and Lessee with regard to the subject matter hereof and thereof,
and there is no understanding or agreement, oral or written, which is not
set forth herein or therein.
(b) Time Is of the Essence; Provisions Severable. Time is of the essence
with respect to any Lease. The provisions contained in any agreement shall
be deemed to be independent and severable. The invalidity or partial
invalidity of any one provision or portion of the Lease under the laws of
any jurisdiction shall not affect the validity or enforceability of any
other provisions of the Lease. The captions and headings set forth herein
are for convenience of reference only and shall not define or limit any of
the terms hereof.
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(c) Notices. Notices or demands required to be given hereunder shall be in
writing and addressed to the other party at the address herein or such
other address provided by written notice hereunder and shall be effective
(i) upon the next business day if sent by guaranteed overnight express
service (such as Federal Express); (ii) on the same day if personally
delivered; or (iii) three days after mailing if sent by certified or
registered U.S. mail, postage prepaid.
(d) Governing Law; Waiver of Trial by Jury. THIS LEASE SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. LESSEE AGREES TO SUBMIT TO THE JURISDICTION OF THE STATE
AND/OR FEDERAL COURTS IN THE STATE OF UTAH IN ALL MATTERS RELATING TO THE
LEASE, THE PROPERTY AND THE CONDUCT OF THE RELATIONSHIP BETWEEN LESSOR AND
LESSEE. THIS LEASE WAS EXECUTED IN THE STATE OF UTAH (BY THE LESSOR HAVING
COUNTERSIGNED IT IN UTAH) AND IS TO BE PERFORMED IN THE STATE OF UTAH (BY
REASON OF ONE OR MORE PAYMENTS REQUIRED TO BE MADE TO LESSOR IN UTAH).
LESSOR AND LESSEE HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS
ARISING OUT OF THE LEASE OR PROPERTY OR THE CONDUCT OF THE RELATIONSHIP
BETWEEN LESSOR AND LESSEE.
(e) Binding Effect; Survivability. The provisions of each Lease shall
inure to the benefit of and shall bind Lessor and Lessee and their
respective permitted successors and assigns. All representations,
warranties, covenants and indemnities of Lessee made or agreed to in the
Lease or in any certificates delivered in connection therewith shall
survive the expiration, termination or cancellation of the Lease for any
reason.
(f) Further Assurances; Financing Statements. Lessee will cooperate with
Lessor in protecting Lessor's interests in the Property, the Lease and the
amounts due under the Lease, including, without limitation, the execution
and delivery of Uniform Commercial Code statements and filings and other
documents requested by Lessor. Lessee shall pay all costs of filing any
financing, continuation or termination statements with respect to the
Property and Lease, including without limitation, any intangibles tax,
documentary stamp tax or other similar tax or charge relating thereto and
of all UCC or other lien searches deemed necessary or advisable by Lessor.
Lessee will do whatever may be necessary or advisable to have a statement
of the interest of Lessor in the Property noted on any certificate of title
relating to the Property and will deposit said certificate with Lessor.
Lessee will execute and deliver to Lessor such other documents and written
assurances and take such further action as Lessor may request to more fully
carry out the implementation, effectuation, confirmation and perfection of
the Lease and any rights of Lessor thereunder. Lessee grants to Lessor a
security interest in all deposits and other property transferred or pledged
to Lessor to secure the payment and performance of all of Lessee's
obligations under the Lease.
(g) Financial Statements. Lessee shall provide to Lessor a copy of its
annual audited financial statements within 90 days after its fiscal year
end, and a copy of its quarterly unaudited financial statements within 45
days after the end of each fiscal quarter.
(h) Provisional Security Interest. In the event a court of competent
jurisdiction or other governing authority shall determine that the Lease
is not a "true lease" or is a lease intended as security or that Lessor (or
its assigns) does not hold legal title to or is not the owner of the
Property, then the Lease shall be deemed to be a security agreement with
Lessee, as debtor, having granted to Lessor, as secured party, a security
interest in the Property effective the date of the Lease, and the Property
shall secure, in addition to the indebtedness set forth herein, any other
indebtedness owing by Lessee to Lessor. In such case, Lessor shall have
all of the rights, privileges and remedies of a secured party under the
Utah Uniform Commercial Code.
(i) Change in Lessee's Name or Address. Lessee shall not change its name
or address from that set forth above, unless it shall have given Lessor or
its assigns no less than 30 days' prior written notice.
(j) Covenant of Quiet Possession. Lessor agrees that so long as no Event
of Default has occurred and is continuing, Lessee shall be entitled to
quietly possess the Property subject to and in accordance with the terms
and conditions of this Agreement.
(k) Lessor's Right to Perform for Lessee. If Lessee fails to perform or
comply with any of its agreements contained herein, Lessor may perform or
comply with such agreements and the amount of any payments and expenses of
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Lessor incurred in connection with such performance or compliance
(including attorneys' fees), together with interest thereon at the lesser
of the rate of eighteen percent (18%) per annum, or the highest rate
permitted by law shall be deemed additional rent payable by Lessee upon
demand.
(l) Attorneys' Fees. Lessee shall reimburse Lessor for all charges, costs,
expenses and attorneys' fees incurred by Lessor (a) in defending or
protecting its interest in the Property; (b) in the execution, delivery,
administration, amendment and enforcement of the Lease or the collection of
any rent or other payments due under the Lease; and (c) in any lawsuit or
other legal or arbitration/mediation proceeding to which the Lease gives
rise, including without limitation, actions in tort.
(m) Lessee's Options at End of Initial Period. At the end of the Initial
Period of any Lease, or upon any expiration of any renewal or extension
thereof as provided for in option (2) herein or otherwise, Lessee shall,
provided at least one hundred eighty (180) days prior written notice is
received by Lessor from Lessee via certified mail, do one of the following:
(1) purchase the Property for a price to be determined by Lessor and
Lessee, (2) extend the Lease for six (6) additional months at the rate
specified on the respective Schedule, or (3) return the Property to Lessor
at Lessee's expense to a destination within the continental United States
specified by Lessor and terminate the Schedule; provided, however, that for
option (3) to apply, all accrued but unpaid late charges, interest, taxes,
penalties, and any and all other sums due and owing under the Schedule must
first be paid in full, the provisions of Sections 6(c) and (d) and 7(c)
hereof must be specifically complied with, and Lessee must enter into a new
Schedule with Lessor to lease Property which replaces the Property listed
on the old Schedule. With respect to options (1) and (3), each party shall
have the right in its absolute and sole discretion to accept or reject any
terms of purchase or of any new Schedule, as applicable. In the event
Lessor and Lessee have not agreed to either option (1) or (3) by the end of
the Initial Period or any renewal or extension period then in effect, or if
Lessee fails to give written notice of its option via certified mail at
least one hundred eighty (180) days prior to the termination of the Initial
Period or any renewal or extension period then in effect, then option (2)
shall apply at the end of the Initial Period or any renewal or extension
period then in effect.
(n) Amendment and Modification. The Lease may not be amended or modified
except by a writing signed by a duly authorized representative of each
party, but no such amendment or modification needs further consideration to
be binding. Notwithstanding the foregoing, Lessee authorizes Lessor to
amend any Schedule to identify more accurately the Property (including,
without limitation, supplying serial numbers or other identifying data),
and such amendment shall be binding on Lessor and Lessee unless Lessee
objects thereto within 10 days after receiving notice of the amendment from
Lessor.
19. WAIVERS:
To the extent permitted by applicable law, Lessee hereby waives any and all
rights and remedies conferred upon a Lessee by Sections 2A-508 through 2A-
522 of the Uniform Commercial Code, including but not limited to Lessee's
rights to: (i) cancel the Lease; (ii) repudiate the Lease; (iii) reject the
Property; (iv) revoke acceptance of the Property; (v) recover damages from
Lessor for any breaches or warranty or for any other reason; (vi) claim,
grant or permit a security interest in the Property in Lessee's possession
or control for any reason; (vii) deduct all or any part of any claimed
damages resulting from Lessor's default, if any, under the Lease; (viii)
"cover" by making any purchase or lease of or contract to purchase or lease
Property in substitution for those due from Lessor; (ix) recover any
general, special, incidental or consequential damages, for any reason
whatsoever; and (x) commence legal action against Lessor for specific
performance, replevin, detinue, sequestration, claim and deliver or the
like for any Property identified to the Lease. To the extent permitted by
applicable law, Lessee also hereby waives any rights now or hereafter
conferred by statute or otherwise which may require Lessor to sell, lease
or otherwise use any Property in mitigation of Lessor's damages as set for
in Section 16 hereof or which may otherwise limit or modify any of Lessor's
rights or remedies in that section.
No waiver or modification by Lessor of any of the terms and conditions
hereof shall be effective unless in writing signed by an officer of Lessor.
20. ASSIGNMENT BY LESSEE:
LESSEE MAY NOT ASSIGN THIS AGREEMENT OR ANY OF ITS RIGHTS HEREUNDER OR
SUBLEASE THE PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. NO
PERMITTED ASSIGNMENT OR SUBLEASE SHALL RELIEVE LESSEE OF ANY OF ITS
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OBLIGATIONS HEREUNDER.
BY INITIALING THIS SECTION, LESSEE ACKNOWLEDGES THAT IT HAS READ THE ABOVE
PARAGRAPH UNDER SECTIONS 18, 19 AND 20, AND FULLY UNDERSTANDS THEIR CONTENT
AND AGREES TO THEIR PROVISIONS.
Initialed
--------
21. POWER OF ATTORNEY. LESSEE HEREBY AUTHORIZES AND APPOINTS LESSOR AND
LESSOR'S AGENTS AND ASSIGNS AS LESSEE'S ATTORNEY-IN-FACT TO COMPLETE,
EXECUTE, FILE AND AMEND ON LESSEE'S BEHALF UCC FINANCING STATEMENTS,
PRECAUTIONARY OR OTHERWISE, IN CONNECTION WITH THE PROPERTY AND LEASE AND
TO CONFORM THE DESCRIPTION OF THE PROPERTY (INCLUDING SERIAL NUMBERS) IN
ANY SUCH FINANCING STATEMENTS OR OTHER DOCUMENTATION.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Agreement on the
day and year first above written.
LESSOR: LESSEE:
MATRIX FUNDING CORPORATION PETCO ANIMAL SUPPLIES, INC.
BY: /s/ Xxxxxxx Copier BY: /s/ Xxxx X. Xxxxxxx
----------------------- ------------------------
TITLE: Assistant Vice President TITLE: Vice President and Controller
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CERTIFICATE OF INCUMBENCY
The undersigned, does hereby certify that he/she is the ASSISTANT SECRETARY
of Petco Animal Supplies, Inc., a corporation duly organized, existing in
good standing under the laws of the state of its incorporation, and qualified
to do business in all states where it is now conducting business (hereinafter
"Corporation"), and further certifies as follows:
1. That the individuals whose names appear below are duly elected officers
of the Corporation, elected, qualified and acting in the offices set forth
beside their names.
2. That pursuant to the Corporation's By-Laws and/or Resolutions, as
amended, the following persons have been properly designated and appointed
to the offices indicated and that said persons continue to hold such
offices at this time.
NAME OFFICE SPECIMEN SIGNATURE
Xxxx X. Xxxxxxx Vice President and Controller /s/ Xxxx X. Xxxxxxx
--------------------- ----------------------------- -------------------
Xxxxx X. Xxxxxx Chairman, President and CEO /s/ Xxxxx X. Xxxxxx
--------------------- ----------------------------- -------------------
3. That the persons designated to serve in the above entitled capacities
have been given sufficient authority to act on behalf of and to bind the
Corporation, and that each document executed before, after or on the date
of this Certificate, by any one or more of the above persons will
constitute a legally binding and enforceable obligation of the Corporation,
and the Corporation has authorized and approved the same.
4. That this Certificate shall be in full force and effect until revoked in
writing by the Secretary, Assistant Secretary or by any other duly
authorized officer of the Corporation.
5. That pursuant to the Corporation's By-Laws and/or Resolutions, as
amended, the undersigned has the power and authority to execute this
Certificate on behalf of the Corporation.
IN WITNESS WHEREOF, I have affixed my name and set the seal of the
Corporation this 26th day of January, 1999.
/s/ Xxxxx X. Xxxxxxx
--------------------
Signature
Assistant Secretary
--------------------
Title
(Corporate Seal)
