Master Equipment Lease Agreement - NationsBanc Leasing Corp. of North Carolina and Collins & Aikman Products Co.
MASTER EQUIPMENT LEASE AGREEMENT
BETWEEN
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
AND
COLLINS & AIKMAN PRODUCTS CO.
September 30, 1994
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TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Agreement for Lease of Equipment; Covenant of Quiet Enjoyment . . . 7
3. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Initial Lease Supplement . . . . . . . . . . . . . . . . . . 7
(b) Subsequent Lease Supplements . . . . . . . . . . . . . . . . 8
(c) Additional Requirements . . . . . . . . . . . . . . . . . . . 9
4. Delivery and Acceptance of Equipment . . . . . . . . . . . . . . . 9
5. Interim Term; Basic Term; Early Termination . . . . . . . . . . . . 10
6. End of Term Delivery of Equipment . . . . . . . . . . . . . . . . . 11
7. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Basic Payments . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Supplemental Payments . . . . . . . . . . . . . . . . . . . . 11
(c) Method of Payment . . . . . . . . . . . . . . . . . . . . . . 11
8. Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. Lessor's Title; True Lease . . . . . . . . . . . . . . . . . . . . 12
(a) Lessor's Title . . . . . . . . . . . . . . . . . . . . . . . 12
(b) True Lease . . . . . . . . . . . . . . . . . . . . . . . . . 12
10. Use of Equipment; Compliance with Laws . . . . . . . . . . . . . . 12
11. Operation and Maintenance of Equipment . . . . . . . . . . . . . . 13
12. Replacement of Parts; Alterations; Modifications; Additions; and
Vendor-Financed Heads on Dornier Looms . . . . . . . . . . . . . . 13
13. Identification; Inspection; Reports; Change of Chief Executive
Office and/or Name . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Identification . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Inspection . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Change of Chief Executive Office and/or Name . . . . . . . . 14
14. Assignment, Sublease or Transfer by Lessee; Assignment by Lessor;
Mergers, Consolidations, Sales of Assets and Acquisitions . . . . . 15
(a) Assignment, Sublease or Other Transfer by Lessee . . . . . . 15
(b) Assignment By Lessor . . . . . . . . . . . . . . . . . . . . 15
(c) Mergers, Consolidations, Sales of Assets and Acquisitions . . 16
15. Liens; Permitted Contests . . . . . . . . . . . . . . . . . . . . . 16
16. Loss, Damage or Destruction . . . . . . . . . . . . . . . . . . . . 17
(a) Risk of Loss, Damage or Destruction . . . . . . . . . . . . . 17
(b) Event of Loss with Respect to Equipment . . . . . . . . . . . 17
(c) Application of Other Payments Upon Event of Loss . . . . . . 18
(d) Application of Payments Not Relating to an Event of Loss . . 19
17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Evidence of Insurance . . . . . . . . . . . . . . . . . . . . 21
(d) Annual Insurance Certificate . . . . . . . . . . . . . . . . 21
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18A. General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Indemnity Obligation . . . . . . . . . . . . . . . . . . . . 21
(b) Contests . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Reports, Returns and Payments . . . . . . . . . . . . . . . . 22
(e) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 22
18B. Special Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Representations, Warranties and Covenants . . . . . . . . . . 23
(c) Indemnity Payment Conditions . . . . . . . . . . . . . . . . 24
(d) Right to Contest . . . . . . . . . . . . . . . . . . . . . . 24
(e) Survival of Indemnities . . . . . . . . . . . . . . . . . . . 25
19. General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 25
20. NO WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
21. Lessee's Representations, Warranties and Covenants . . . . . . . . 27
(a) Due Organization and Existence . . . . . . . . . . . . . . . 27
(b) Power and Authority . . . . . . . . . . . . . . . . . . . . . 27
(c) Due Authorization . . . . . . . . . . . . . . . . . . . . . . 27
(d) Enforceability . . . . . . . . . . . . . . . . . . . . . . . 27
(e) No Consents . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(g) (intentionally omitted) . . . . . . . . . . . . . . . . . . . 28
(h) Financial Statements . . . . . . . . . . . . . . . . . . . . 28
(i) No Litigation . . . . . . . . . . . . . . . . . . . . . . . . 28
(j) Income Tax Return . . . . . . . . . . . . . . . . . . . . . . 28
(k) (intentionally omitted) . . . . . . . . . . . . . . . . . . . 29
(l) Investment Company . . . . . . . . . . . . . . . . . . . . . 29
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(n) No Offer to Sell or Assign . . . . . . . . . . . . . . . . . 29
(o) Invoices . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(p) Adverse Contract . . . . . . . . . . . . . . . . . . . . . . 29
(q) Misrepresentation . . . . . . . . . . . . . . . . . . . . . . 29
(r) (intentionally omitted) . . . . . . . . . . . . . . . . . . . 29
(s) Chief Executive Office . . . . . . . . . . . . . . . . . . . 29
(t) Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . 29
22. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Certain Covenants . . . . . . . . . . . . . . . . . . . . . . 29
(c) Other Covenants . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Default under Other Documents - Lessee . . . . . . . . . . . 30
(e) Bankruptcy; Insolvency - Lessee . . . . . . . . . . . . . . . 30
(f) Misrepresentation - Lessee . . . . . . . . . . . . . . . . . 30
23. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Return of Equipment . . . . . . . . . . . . . . . . . . . . . 30
(b) Sell, Use, Lease or Otherwise Employ Equipment . . . . . . . 30
(c) Excess of Casualty Loss Value over Fair Market Sales Value . 31
(d) Excess of Casualty Loss Value over Sales Proceeds . . . . . . 31
(e) Rescission . . . . . . . . . . . . . . . . . . . . . . . . . 31
24. Lessor's Right to Perform for Lessee . . . . . . . . . . . . . . . 31
25. Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
26. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 32
27. Transaction Costs, Fees and Expenses . . . . . . . . . . . . . . . 32
28. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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29. End of Term Purchase Options . . . . . . . . . . . . . . . . . . . 32
(a) Election Procedure . . . . . . . . . . . . . . . . . . . . . 32
(b) Lessee's Purchase . . . . . . . . . . . . . . . . . . . . . . 33
(c) Settlement Terms . . . . . . . . . . . . . . . . . . . . . . 33
30. Federal and State Tax Consequences . . . . . . . . . . . . . . . . 34
31. Financial Information . . . . . . . . . . . . . . . . . . . . . . . 34
32. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
33. Interest Rate Calculations . . . . . . . . . . . . . . . . . . . . 35
34. Personal Property Taxes . . . . . . . . . . . . . . . . . . . . . . 35
Exhibits
A - Lease Supplement and Acceptance Certificate
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MASTER EQUIPMENT LEASE AGREEMENT
THIS MASTER EQUIPMENT LEASE AGREEMENT dated as of September 30, 1994 (as
supplemented, amended modified, restated or replaced from time to time the
"Agreement") is between NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation (the "Lessor"), having its principal place of
business at NationsBank Corporate Center, 100 North Tryon Street,
NC1007-12-01, Charlotte, North Carolina 28255-0001 and COLLINS & AIKMAN
PRODUCTS CO., a Delaware corporation (the "Lessee"), having its principal
place of business at 701 McCullough Drive, Charlotte, North Carolina 28262.
WITNESSETH:
WHEREAS, Lessee has requested Lessor to purchase the Equipment (as
defined hereinafter) and, simultaneously with such acquisition, to lease the
Equipment to Lessee for use in its operations; and
WHEREAS, Lessor is willing to purchase and lease the Equipment subject
to the terms and conditions hereinafter set forth, and Lessee has agreed to
lease the Equipment from Lessor on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
SECTION 1. Definitions. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms herein defined:
"Acceptance Date" means, with respect to any Equipment, the date on
which Lessor enters into the Overall Transaction and Lessee unconditionally
accepts such items of Equipment for lease hereunder, as evidenced by the
execution and delivery of such Lease Supplement related to such Equipment and
dated such date.
"Acquisition Cost" means, with respect to any Equipment, an amount equal
to the sum of (a) the total cost paid by Lessor for such Equipment, plus (b)
all excise, sales and use taxes and registration fees paid by Lessor on or
with respect to the acquisition of such Equipment, less (c) the total cost
paid by Lessor for or in connection with any such particular items of
Equipment which have been the subject of an Event of Loss and for which an
amount equal to the Casualty Loss Value for such particular items of Equipment
has been paid in full to Lessor.
"Acquisition Expiration Date" means the date set forth in the applicable
Lease Supplement with respect to such Equipment.
"Affiliate" means a Person which directly or indirectly through one or
more intermediaries controls or is controlled by, or is under common control
with, any Person or a Subsidiary of such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting stock, by contract or otherwise.
"Appraisal Procedure" means the following procedure for determining the
Fair Market Sales Value or the Fair Market Rental Value of any property as the
case may be or any other amount which may, pursuant to any provision of any
Transaction Document, be determined by such procedure: if either party to
this Agreement shall have given written notice to the other party requesting
determination of such value by the Appraisal Procedure, the parties shall
consult for the purpose of appointing a qualified independent appraiser by
mutual agreement. If no such appraiser is so appointed within fifteen (15)
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days after such notice is given, each party shall appoint a qualified
independent appraiser within twenty (20) days of the giving of such notice.
If one (1) party, but not the other, appoints an appraiser pursuant to the
preceding sentence, then the appropriately appointed appraiser shall conduct
the appraisal. Any appraiser or appraisers appointed pursuant to the
foregoing procedure shall be instructed to determine such value within thirty
(30) days after his or their appointment. If the parties shall have appointed
a single appraiser, his determination of values shall be final. If two (2)
appraisers shall be appointed, the values determined shall be averaged. The
parties shall share equally the costs and expenses of the appraiser or the
appraisers, as the case may be.
"Assignee" means any Person to whom Lessor or any assignee has made any
assignment, sale or transfer referred to in Section 14(b) hereof.
"Basic Payment" means the amounts payable for the Equipment during the
Basic Term pursuant to Section 7(a) hereof.
"Basic Payment Date" means, with respect to any Equipment, each of the
dates set forth on the appropriate Lease Supplement with respect to such
Equipment.
"Basic Payment Factor" means, with respect to any Equipment, the Basic
Payment Factor set forth on each Lease Supplement with respect to such
Equipment.
"Basic Payment Period" means, with respect to any Equipment, each
quarterly period from the date immediately succeeding a Basic Payment Date to
the next occurring Basic Payment Date, except that the initial Basic Payment
Period under each Lease Supplement shall also begin on the date of execution
of such Lease Supplement.
"Basic Payment Reduced Factor" means, with respect to any Equipment, the
reduced payment factor achieved pursuant to the terms of Section 7(a) hereof
and set forth on the appropriate Lease Supplement with respect to such
Equipment.
"Basic Term" means, with respect to any Equipment, the Basic Term set
forth in each Lease Supplement with respect to such Equipment.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in Charlotte, North Carolina are
authorized by law to be closed.
"C&A" means Collins & Aikman Corporation, a Delaware corporation, and
its successors.
"C&A Credit Agreement" means the Credit Agreement dated as of June 22,
1994, as such has been amended, modified or supplemented to the date hereof
and as the same may be further amended, modified, supplemented, restated
and/or replaced from time to time, currently among Lessee, WCA Canada Inc.,
C&A, the financial institutions listed in Schedule 2.01 thereto, Continental
Bank, N.A. (now known as Bank of America Illinois) and NationsBank of North
Carolina, N.A., as managing agent and Chemical Bank, as administrative agent.
"C&A Credit Agreement Event of Default" means an Event of Default, as
such term is defined in the C&A Credit Agreement.
"Casualty Loss Value" means as of any Casualty Loss Value Date during
the Term an amount determined by multiplying (a) the sum of the Acquisition
Cost for all Equipment subject to an Event of Loss for which a payment of
Casualty Loss Value has not been previously made under this Agreement by (b)
the percentage set forth opposite such Casualty Loss Value Date on Annex B to
the Lease Supplement executed on the Acceptance Date for such Equipment.
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"Casualty Loss Value Date" means the last day of each Basic Payment
Period.
"Code" means the Internal Revenue Code of 1986, as supplemented,
amended, modified, restated or replaced from time to time, and all rules and
regulations promulgated thereunder.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of any Person in
its consolidated financial statements if such statements were prepared as of
such date.
"Default" means any event which with the giving of notice or the passage
of time or both would result in an Event of Default.
"Early Buyout Option Date" means the date set forth in the applicable
Lease Supplement.
"Early Termination Date" means the date set forth in the applicable
Lease Supplement.
"Equipment" means all items of equipment described in Annex A to the
various Lease Supplements executed by Lessor and Lessee in connection with
this Agreement, together with any Parts (including without limitation
replacement Parts) which may from time to time be incorporated in such
equipment and title to which shall have vested in Lessor, excluding any
vendor-financed head on any Dornier loom.
"Event of Default" shall have the meaning given to such term in Section
22 hereof.
"Event of Loss" means, with respect to any Equipment, any of the
following events: (a) loss of any Equipment or of the use thereof (for a
period equal to the lesser of ninety (90) days or the then remaining portion
of the Term) due to theft or disappearance during the Term, or the non-
existence of any Equipment at the expiration or termination of the Term, (b)
destruction, damage beyond repair, or rendition of any Equipment permanently
or temporarily for longer than a commercially reasonable period of time, unfit
for normal use for any reason whatsoever, (c) any damage to any Equipment
which results in an insurance settlement with respect to such Equipment on the
basis of a total loss or (d) the condemnation, confiscation, seizure, or
requisition of use or title to any Equipment (for a period equal to the lesser
of twelve (12) months or the then remaining portion of the Term) by any
governmental authority under the power of eminent domain or otherwise.
"Expiration Date" means, with respect to any Equipment, the last day of
the Term.
"Fair Market Rental Value" means, the value which would obtain in an
arm's length transaction between an informed and willing lessee and an
informed and willing lessor, each under no compulsion to enter into such
lease. If the parties are unable to agree on the Fair Market Rental Value
within 120 days prior to the Expiration Date, such Fair Market Rental Value
shall be determined by the Appraisal Procedure.
"Fair Market Sales Value" means, with respect to any Equipment, the
value which would obtain in an arm's length transaction between an informed
and willing buyer (other than a lessee currently in possession or a used
equipment dealer) and an informed and willing seller under no compulsion,
respectively, to buy or sell. If the parties are unable to agree on the Fair
Market Sales Value within thirty (30) days of Lessor's giving of notice as
specified in Section 23(c) hereof, such Fair Market Sales Value shall be
determined by the Appraisal Procedure.
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"Improvement" shall have the meaning given to such term in Section 12
hereof.
"Indemnified Party" shall have the meaning given to such term in Section
18A hereof.
"Interim Term" means, with respect to each item of Equipment, the period
of time from and including the Acceptance Date to and including the Interim
Term Expiration Date.
"Interim Term Expiration Date" shall have the meaning given to such term
in the applicable Lease Supplement.
"Lease Supplement" means a Lease Supplement and Acceptance Certificate
substantially in the form of Exhibit A hereto, to be executed by Lessor and
Lessee covering each item of the Equipment accepted under the terms of this
Agreement on each Acceptance Date, in accordance with the provisions of
Section 4 hereof.
"Lien" means any interest in property securing any obligation owed to,
or claimed by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including,
without limitation, the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes.
"Lessor Lien" means any Lien upon the Equipment arising as a result of
(a) claims against Lessor not related to the ownership, leasing, use or
operation of the Equipment or to any transactions contemplated by any of the
Transaction Documents, (b) acts in breach of a covenant or agreement of Lessor
contained in any Transaction Document, (c) Taxes or Other Impositions imposed
against Lessor which are not indemnified against by Lessee pursuant to any
Transaction Document or (d) claims against Lessor arising out of the transfer,
whether voluntary or involuntary, by Lessor of all or any portion of its
interest in the Equipment or the Transaction Documents.
"Net Proceeds of Sale" means the net amount received by Lessor from a
Third Party Purchaser of all (but not less than all) the Equipment described
on a particular Lease Supplement pursuant to a sale of all (but not less than
all) such Equipment under Section 23(b) or Section 29 hereof.
"Overall Transaction" means all of those transactions referred to in,
provided for in, or contemplated by, this Agreement, including, without
limitation, the financing, operation and management of the Equipment.
"Overdue Rate" means the lesser of the maximum rate permitted by
applicable law and a per annum interest rate equal to the Prime Rate plus two
percent (2%).
"Parts" means all appliances, parts, instruments, appurtenances,
accessories and miscellaneous property of whatever nature that may from time
to time be incorporated or installed in or attached to or otherwise part of
the Equipment.
"Payments" means, collectively, Basic Payments and Supplemental
Payments.
"Permitted Contest" means any contest pursued by Lessee, at its expense,
in good faith and by appropriate proceedings with respect to any Permitted
Lien or any Taxes or Other Impositions that Lessee and Lessor reasonably
believe may be contested in a manner that would not result in (a) the
collection of, or other realization upon, the Permitted Lien or any Taxes or
Other Impositions so contested, (b) the sale, forfeiture or loss of any item
of Equipment, any Part, the Payments or any portion thereof, or under any
document, instrument, agreement or contract entered into in relation hereto or
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otherwise in relation to the Equipment, (c) any interference with the use of
any item of Equipment or any Part thereof, or (d) any interference with the
payment of the Payments or any portion thereof.
"Permitted Lien" means a Lien permitted by the provisions of Section 15
hereof.
"Permitted Sublease" means a sublease (a) to which Lessor has given its
prior written consent (which consent shall not be unreasonably withheld), (b)
the sublessee with respect to which shall be organized under the laws of the
United States or any state thereof and shall have its principal place of
business in the United States, (c) the term of which shall in no event exceed
the then remaining portion of the Term and (d) which shall be subordinate in
all respects to this Agreement; provided, however, notwithstanding the
foregoing, the definition of "Permitted Sublease" shall also include a
sublease of any item of the Equipment between Lessee and an Affiliate of
Lessee which sublease may be entered into without obtaining the prior written
consent of Lessor to the extent (i) such Affiliate satisfies the requirements
of subsection (b) of this definition and (ii) the sublease to such Affiliate
satisfies the requirements of subsections (c) and (d) of this definition.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee(s) of a trust, unincorporated
organization, or government or governmental authority, agency or political
subdivision thereof.
"Prime Rate" means the rate of interest publicly announced by
NationsBank of North Carolina, N.A. in Charlotte, North Carolina as its "prime
rate". The Prime Rate is not necessarily the best or lowest rate of interest
offer by NationsBank of North Carolina, N.A.
"Replacement" shall have the meaning given to such term in Section 12
hereof.
"Replacement Item" means any item of equipment conveyed to Lessor
pursuant to Section 16(b) hereof in replacement of any item of Equipment.
"Required Alteration" shall have the meaning given to such term in
Section 12 hereof.
"Sales Expenses" means (a) all property, excise, sales and use taxes and
other taxes (as such may be applicable to the sale or transfer of the
Equipment), (b) all reasonable fees, costs and expenses of such sale or
transfer of the Equipment (including, without limitation, registration fees
and fees, reasonable costs and expenses of attorneys or those reasonably
associated with transportation, storage, security or insurance) incurred by
Lessor and (c) any and all other amounts reasonably incurred in connection
with such sale or transfer of the Equipment for which, if not paid, Lessor
would be liable or which, if not paid, would constitute a Lien on the
Equipment, or any Part.
"Seller" means each seller executing a Warranty Bill of Sale in favor of
Lessor with respect to any Equipment.
"Subsidiary" of any Person means any corporation of which more than
fifty percent (50%) of the voting rights of the outstanding capital stock at
the time of determination is owned directly or indirectly by such Person or
one of the Subsidiaries of such Person.
"Supplemental Payments" means all amounts, liabilities and obligations
which Lessee assumes or agrees to pay hereunder to Lessor or others,
including, without limitation, payments of Casualty Loss Value and
indemnities, but excluding Basic Payments.
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"Taxes or Other Impositions" shall have the meaning given to such term
in Section 18A hereof.
"Term" means Interim Term and the Basic Term, unless this agreement is
sooner terminated pursuant to the provisions hereof.
"Termination Value" means, with respect to any Equipment, an amount
determined by multiplying the Acquisition Cost of such Equipment by the
Termination Value Percentage for such Equipment as of the Expiration Date;
provided, however, to the extent this Agreement expires on a date which is not
a Basic Payment Date, the Termination Value Percentage shall be determined as
of the immediately preceding Basic Payment Date.
"Termination Value Percentage" means each termination value percentage
identified on Annex C to each Lease Supplement for the applicable Basic
Payment Date.
"Third Party Purchaser" means a third party purchaser of the Equipment
which is selected by Lessee, is financially capable of purchasing the
Equipment and is not an Affiliate of Lessee.
"Transaction Costs" means all the costs, fees and expenses referenced in
Section 27 hereof.
"Transaction Documents" means this Agreement, each Lease Supplement,
each Warranty Bill of Sale and the Uniform Commercial Code financing
statements (and with respect to each of the foregoing, all supplements,
amendments and modifications thereto) whether heretofore, now or hereafter
executed.
"Warranty Bill of Sale" means each warranty bill of sale, in form and
substance reasonably satisfactory to Lessor, referring to the various items of
the Equipment duly executed by a Seller thereof in favor of Lessor and dated
as of the Acceptance Date for such Equipment.
The words "this Agreement", "herein", "hereunder", "hereof", or other
like words mean and include this Agreement and the Lease Supplements and any
amendments and supplements hereto or thereto.
SECTION 2. Agreement for Lease of Equipment; Covenant of Quiet
Enjoyment. Subject to, and upon all of the terms and conditions of this
Agreement, Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to
lease from Lessor, each item of the Equipment from and including the
Acceptance Date therefor for the duration of the Term. Provided that no Event
of Default has occurred and is continuing, Lessor agrees that it shall not
interfere with Lessee's (or any sublessee pursuant to a Permitted Sublease)
quiet enjoyment, operation, use or possession of the Equipment during the
Term.
SECTION 3. Conditions Precedent.
(a) Initial Lease Supplement. The obligations of Lessor to
purchase the Equipment specified on the Lease Supplement dated as of the date
hereof and to lease the same to Lessee and enter into the Overall Transaction
are subject to the delivery to Lessor on or prior to the date hereof the
following documents each in form and substance reasonably satisfactory to
Lessor:
(i) an officer's certificate or certificates from Lessee:
(A) certifying Lessee's certificate of incorporation, by-laws and
resolutions, with such resolutions authorizing the Overall Transaction
and Lessee's execution, delivery and performance of this Agreement; (B)
containing an incumbency certification of Lessee with the name(s),
title(s) and specimen signature(s) of the person or persons authorized
on behalf of Lessee to execute this Agreement; (C) stating that no
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material adverse change has occurred in the condition of Lessee
(financial or otherwise) since July 30, 1994 which would materially
impair the ability of Lessee to pay and perform its obligations under
this Agreement; and (D) stating that no Default or Event of Default
shall have occurred and be continuing as of such date;
(ii) (intentionally omitted);
(iii) a written opinion of counsel for Lessee;
(iv) a certificate of insurance evidencing the coverages
required under Section 17 hereof with respect to the Equipment
referenced in the Lease Supplement dated as of the date hereof;
(v) the Lease Supplements, duly executed by Lessee, and
dated as of the date hereof with respect to the Equipment accepted by
Lessee and subjected to the terms of this Agreement as of the date
hereof;
(vi) Uniform Commercial Code filings listed on Schedule 1
hereto duly executed by Lessee;
(vii) a Warranty Bill of Sale specifically covering each
item of the Equipment referenced in the Lease Supplements dated as of
the date hereof;
(viii) good standing certificates from the Secretary of State
of Lessee's state of incorporation, the state of Lessee's principal
place of business and the state where the Equipment shall be initially
located as designated in the respective Lease Supplement;
(ix) UCC-11 lien search results and all releases of liens
as reasonably required by Lessor;
(x) tax lien searches against Lessee and all releases of
such liens as reasonably required by Lessor; and
(xi) judgment lien searches against Lessee and all releases
of such liens as reasonably required by Lessor.
(b) Subsequent Lease Supplements. The obligations of Lessor to
purchase Equipment on the respective Acceptance Date(s) therefor after the
date hereof and to enter into the Lease Supplement with respect thereto is
subject to the delivery to Lessor on such Acceptance Date of the following
documents each in form and substance reasonably satisfactory to Lessor:
(i) the Lease Supplement, duly executed by Lessee and
dated such Acceptance Date with respect to the Equipment accepted by
Lessee and subjected to the terms of this Agreement on such Acceptance
Date;
(ii) Uniform Commercial Code filings as deemed appropriate
by Lessor's counsel duly executed by Lessee;
(iii) a Warranty Bill of Sale specifically referring to each
item of the Equipment accepted by Lessee and subjected to the terms of
this Agreement on such date, duly executed by the Seller thereof in
favor of Lessor and dated such Acceptance Date;
(iv) a certificate dated as of such Acceptance Date from an
officer of Lessee stating that there has been no material adverse change
in the business, conditions or operations (financial or otherwise) of
Lessee and its Consolidated Subsidiaries since July 30, 1994, that no
Default or Event of Default has occurred and is continuing from the date
of the Agreement to the respective Acceptance Date and that the
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representations and warranties of Lessee in the Agreement are true and
correct as of such date, except to the extent that such representations
and warranties relate exclusively to an earlier point in time;
(vi) a certificate of insurance evidencing the coverages
required under Section 17 hereof with respect to the Equipment
referenced in the Lease Supplement dated as of such Acceptance Date;
(vii) UCC-11 lien search results and all releases of liens
as reasonably required by Lessor;
(viii) tax lien searches against Lessee and all releases of
such liens as reasonably required by Lessor; and
(ix) judgment lien searches against Lessee and all releases
of such liens as reasonably required by Lessor.
(c) Additional Requirements. The obligations of Lessor to
purchase the items of Equipment on the respective Acceptance Dates therefor
and to enter into the respective Lease Supplement are also subject to:
(i) the absence on the Acceptance Date of any Liens on the
Equipment, other than any Permitted Lien;
(ii) the aggregate Acquisition Cost of all Equipment
financed hereunder on any given date will not exceed the amount
specified in Lessor's credit approval for such Equipment;
(iii) the Acceptance Date shall be a date between and
inclusive of the date hereof and the Acquisition Expiration Date;
(iv) Lessee shall have paid all fees and expenses due and
owing to Lessor with respect to the Overall Transaction;
(v) in its sole discretion, Lessor shall have agreed in
writing to purchase items of Equipment in addition to those referenced
in the previously executed Lease Supplement(s) and Lessor shall have
obtained all internal approvals as Lessor shall have deemed necessary
and/or appropriate; and
(vi) Lessor shall have received such other documents,
appraisals, certificates, financing statements and other items, in form
and substance satisfactory to Lessor, as Lessor may reasonably require.
SECTION 4. Delivery and Acceptance of Equipment. Lessor shall not be
liable to Lessee for any failure or delay in obtaining the Equipment or making
delivery thereof. Lessor hereby appoints Lessee as Lessor's agent for the
sole and limited purpose of accepting delivery of each item of the Equipment.
On the Acceptance Date for such Equipment Lessee shall promptly inspect each
item of Equipment, and unless Lessee gives Lessor prompt written notice of any
defect in or other proper objection to any item of such Equipment, Lessee
shall promptly upon completion of such inspection execute and deliver to
Lessor the Lease Supplement, dated the Acceptance Date. Lessor shall pay to
the Seller the Acquisition Cost of the Seller's Equipment referenced in the
applicable Lease Supplement if all of the conditions precedent specified in
Section 3 hereof have been fulfilled to Lessor's reasonable satisfaction. The
execution of the Lease Supplement by Lessee and Lessor shall evidence that
each item of Equipment has been accepted under this Agreement, upon and
subject to all of the terms, conditions and provisions hereof and shall
constitute Lessee's unconditional and irrevocable acceptance of the Equipment
for all purposes under this Agreement. Lessee's execution of the Lease
Supplement shall constitute Lessee's acknowledgement and agreement that, as
between Lessor and Lessee, each item of Equipment has been inspected to
Lessee's satisfaction, is in good operating order, repair and condition, is of
a size, design, capacity and manufacture selected by Lessee, that each item of
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Equipment is duly certified or licensed by any governmental entity which is
charged with issuing such certificates or licenses and that Lessee has
unconditionally accepted each item of Equipment under this Agreement.
SECTION 5. Interim Term; Basic Term; Early Termination.
(a) Interim Term. There shall be an Interim Term for that
portion of the Equipment leased on the Acceptance Date with respect to
such Equipment and such term shall end on the Interim Term Expiration
Date with respect thereto, both dates inclusive. During the Interim
Term no Basic Payments pursuant to the provisions of Section 7 of this
Agreement shall be due.
(b) Basic Term. The Basic Term for lease of each item of the
Equipment hereunder shall commence and end on the dates set forth in the
applicable Lease Supplement therefor.
(c) Early Termination; Early Buy Out Option.
(i) Assuming there exists no Event of Default, the Lessee may
terminate this Agreement with respect to all but not less than all of
the Equipment (or with Lessor's consent which shall not be unreasonably
withheld, Lessee may exercise such right with respect to certain Lessee-
designated items of the Equipment having an aggregate Acquisition Cost
of no less than $250,000) by: (A) giving to Lessor forty-five (45) days
written notice prior to an Early Termination Date as set forth in the
applicable Lease Supplement, (B) providing to Lessor a certificate
executed by an officer of the Lessee certifying that the Equipment has
become obsolete or surplus to its needs, (C) paying to Lessor an amount
equal to all Basic Payments and Supplemental Payments then due and owing
or accrued and (D) selling the pertinent Equipment for cash to a Third
Party Purchaser and paying the sales proceeds to the Lessor. In the
event such sale proceeds are less than Termination Value for such
Equipment, then Lessee shall pay the Lessor the difference between the
sale proceeds and Termination Value for such Equipment. Lessor shall
retain any sale proceeds in excess of such Termination Value. Lessee
shall also pay all Sales Expenses incurred in connection with the
transfer of such Equipment. Upon payment by Lessee of the amounts
specified above, the Term shall end and Lessor shall transfer all of its
right, title and interest in and to the Equipment to Third Party
Purchaser on an "as-is", "where-is" basis without recourse,
representation or warranty by Lessor except as to the absence of Lessor
Liens.
(ii) Assuming there exists no Event of Default, the Lessee may
terminate this Agreement and purchase all but not less than all of the
Equipment (or with Lessor's consent which shall not be unreasonably
withheld, Lessee may exercise such right with respect to certain Lessee-
designated items of the Equipment having an aggregate Acquisition Cost
of no less than $250,000) by: (A) giving to Lessor forty-five (45) days
written notice prior to the Early Buyout Option Date set forth in the
applicable Lease Supplement and (B) paying to Lessor an amount equal to
the sum of (1) with respect to the Equipment, all Basic Payments and
Supplemental Payments then due and owing or accrued plus (2) an amount
equal to the Acquisition Cost multiplied by (x) 40.77% for Equipment
with a five-year recovery period pursuant to Section 168(c)(1) of the
Code and (y) 41.21% for Equipment with a seven-year recovery period
pursuant to Section 168(c)(1) of the Code. Lessee shall also pay all
Sales Expenses incurred in connection with the purchase of such
Equipment. Upon payment by Lessee of the amounts specified above, the
Term shall end and Lessor shall transfer all of its right, title and
interest in and to the Equipment to Lessee on an "as-is", "where-is"
basis without recourse, representation or warranty by Lessor except as
to the absence of Lessor Liens.
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SECTION 6. End of Term Delivery of Equipment.
If this Agreement shall be in full force and effect and Lessee shall not
have purchased the Equipment prior to the Expiration Date or elected to
purchase the Equipment in accordance with Section 29 hereof, then on the
Expiration Date Lessee shall deliver, at Lessee's expense, all requested
Equipment to Lessor to a location or locations within the southeastern United
States within 500 miles of the original location of the Equipment as specified
in writing by Lessor. At the time of such return to Lessor or delivery to the
third party, each item of Equipment (and each part or component thereof) shall
(i) be in good operating order, and in the repair and condition as when
originally delivered to Lessee, ordinary wear and tear from proper use thereof
excepted, (ii) be capable of being operated without further inspection,
repair, replacement, alteration or improvement, (iii) be in accordance and
compliance with any and all material statutes, laws, ordinances, rules and
regulations of any federal, (with respect to the state and local jurisdictions
where the Equipment is last operated by Lessee prior to the Expiration Date)
state or local governmental body, agency or authority applicable to the use
and operation of such item of Equipment, and (iv) be free and clear of all
Liens, other than Lessor Liens.
SECTION 7. Payments.
(a) Basic Payments. Lessee hereby agrees to pay Lessor Basic
Payments for the Equipment from and including the commencement date of the
Basic Term as set forth in the applicable Lease Supplement for each item of
Equipment and throughout the Basic Term, in consecutive quarterly installments
on each Basic Payment Date, with each installment in an amount equal to the
Basic Payment Factor set forth on the Lease Supplement applicable to such
items of Equipment hereto multiplied by the Acquisition Cost thereof. In the
event the Lessee achieves a senior debt rating of Baa3 or better from Moody's
Investors Services, Inc. or a debt rating of BBB- or better from Standard &
Poor's Corporation and notifies Lessor in writing of the achievement of either
such rating for Lessee's senior debt, the Basic Payment Factor for each item
of Equipment set forth in the applicable Lease Supplement shall decrease to
the Basic Payment Reduced Factor set forth in the applicable Lease Supplement.
The Basic Payment Reduced Factor shall become effective for the next occurring
full Basic Payment Period following Lessee's notice to Lessor of the
achievement of either such rating for Lessee's senior debt, and the Basic
Payment Reduced Factor shall be multiplied by the Acquisition Cost for such
Equipment to compute the Basic Payments for the then remaining portion of the
Term. Basic Payments shall remain payable in consecutive quarterly
installments on each Basic Payment Date.
(b) Supplemental Payments. Lessee agrees to pay Lessor, or to
whomsoever shall be entitled thereto as expressly provided herein, all
Supplemental Payments promptly as the same shall become due and owing, and in
the event of any failure on the part of Lessee to pay any such Supplemental
Payment hereunder Lessor shall have all rights, powers and remedies provided
for herein or by law or equity or otherwise in the case of nonpayment of Basic
Payments.
(c) Method of Payment. If the date that any Payment is due is
other than on a Business Day, the Payment otherwise payable on such date shall
be payable on the next succeeding Business Day. All Basic Payments and
Supplemental Payments required to be made by Lessee to Lessor hereunder shall
be made in immediately available funds and in United States dollars. In the
event of any assignment to an Assignee pursuant to Section 14(b) hereof, all
payments which are assigned to such Assignee, whether Basic Payments,
Supplemental Payments or otherwise, shall be paid in the same manner specified
herein for payments to Lessor at such address as shall be designated in
writing by such Assignee. Time is of the essence in connection with the
payment of Basic Payments and Supplemental Payments.
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SECTION 8. Net Lease. This Agreement is a net lease and Lessee
acknowledges and agrees that Lessee's obligations hereunder, including,
without limitation, its obligations to pay all Payments payable hereunder,
shall be absolute and unconditional under any and all circumstances and shall
be paid without notice or demand and without any abatement, reduction,
diminution, setoff, defense, counterclaim or recoupment whatsoever, including,
without limitation, any abatement, reduction, diminution, setoff, defense,
counterclaim or recoupment due or alleged to be due to, or by reason of, any
past, present or future claims which Lessee may have against Lessor, any
Assignee, or the manufacturer of any item of the Equipment, any Part or unit
or component of the Equipment, or any other Person for any reason whatsoever.
Except to the extent expressly provided herein, and without in any manner
limiting the generality of the foregoing sentence, the obligations and
liabilities of Lessee hereunder shall in no way be released, discharged or
otherwise affected for any reason, including, without limitation: (a) any
defect in any item of the Equipment, any Part or unit or component of the
Equipment, or the condition, design, operation or fitness for use thereof; (b)
any damage to, or any loss, abandonment, salvage, scrapping or destruction of,
any item of the Equipment, any Part or unit or component of the Equipment; (c)
any Liens or rights of others with respect to any item of the Equipment, any
Part or unit or component of the Equipment; (d) any prohibition or
interruption of or other restriction against Lessee's use, operation or
possession of any item of the Equipment, any Part or unit or component of the
Equipment, for any reason whatsoever, or any interference with such use,
operation or possession by any Person or entity; (e) any failure by Lessor to
perform any of its obligations herein contained; (f) any other indebtedness or
liability, howsoever and whenever arising, of Lessor or of any Assignee or of
Lessee to any other Person; (g) any insolvency, bankruptcy or similar
proceedings by or against Lessor, any Assignee, any guarantor of Lessee's
obligations or Lessee; or (h) any other reason whatsoever, whether similar or
dissimilar to any of the foregoing, any present or future law to the contrary
notwithstanding; it being the intention of the parties hereto that the Basic
Payments and Supplemental Payments payable by Lessee hereunder shall continue
to be payable in all events and in the manner and at the times herein
provided, without notice or demand, unless the obligation to pay the same
shall be terminated pursuant to the express provisions of this Agreement.
SECTION 9. Lessor's Title; True Lease. (a) Lessor's Title. Title to
the Equipment shall at all times remain in Lessor and at no time during the
Term shall title become vested in Lessee.
(b) True Lease. This Agreement is a lease intended as a true
lease and not as a lease intended as security. Lessee will make no claim nor
assert any right to the Equipment or any component thereof inconsistent with
Lessor's ownership thereof and will make appropriate entries upon its books
and records reflecting Lessor's ownership of the Equipment and each component
thereof.
SECTION 10. Use of Equipment; Compliance with Laws. Lessee agrees that
each item of Equipment will be used and operated only (a) for purposes or
operations in the ordinary course of its business and at the location(s) set
forth on the applicable Lease Supplement (or at such other locations as Lessee
may notify Lessor of in writing but in any event within the United States) and
(b) in the manner set forth in, and in accordance with, the terms, conditions
and provisions of the insurance policy or policies providing the coverages
specified in Section 17 hereof. In no event shall Lessee use or operate any
item of Equipment, or knowingly permit any item of Equipment to be used or
operated, for any purpose for which such item of Equipment is not designed or
reasonably suitable, or in any fashion that may reasonably subject such item
of Equipment to any Liens, other than Permitted Liens, or in any area excluded
from coverage by any such insurance policy or policies. Lessee further agrees
that each item of Equipment will be used and operated in the conduct of
Lessee's business and in compliance with all material statutes, law,
ordinances, rules and regulations of any federal, state or local governmental
authority having jurisdiction with respect to the use, operation, maintenance,
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condition and occupancy of any item of Equipment (including, without
limitation, all zoning, environmental protection, pollution, sanitary and
safety laws). Lessee will not load, use, operate, or store any item of
Equipment, or knowingly permit the loading, using, operating or storing of any
item of Equipment, in a negligent manner or otherwise in violation of this
Agreement or so as to void any of the insurance coverages specified in Section
17 hereof respecting any item of Equipment. Lessee shall procure and maintain
in effect all material licenses, certificates, permits, approvals and consents
required by federal, state, local or foreign laws or by any governmental body,
agency or authority, in connection with the delivery, use, operation,
maintenance, condition and occupancy of each item of Equipment. The Equipment
will at all times be and remain in the control of Lessee except as Lessee's
relinquishment of control of an item of Equipment is specifically permitted by
this Agreement and except while an item of Equipment is undergoing
maintenance. To the extent that any applicable law requires the licensing or
certification of an operator of any item of the Equipment, each such operator
shall be duly licensed and currently certificated and qualified to operate
such item of Equipment and authorized by the terms of (in accordance with the
provisions and requirements of) the insurance policy or policies providing the
coverages specified in Section 17 hereof.
SECTION 11. Operation and Maintenance of Equipment. Lessee agrees, at
its own cost and expense, to keep, repair, maintain and preserve the Equipment
in good order and operating condition, ordinary wear and tear excepted, and in
compliance with (x) the greater of (i) reasonable manufacturer's
recommendations, (ii) the maintenance and repair standards of Lessee for
similar equipment and (iii) prudent industry standards and (y) all material
requirements of law applicable to the maintenance and condition of the
Equipment except (a) to the extent valid variances, exemptions or similar
exceptions have been obtained in writing from the necessary authority, (b)
where non-compliance would have no material adverse effect on Lessor's
ownership rights or the use, operation or maintenance of the Equipment by the
Lessee or on the business, operations or other condition of Lessee or (c) for
violations of any such laws the validity of which is being contested by Lessee
in good faith by appropriate proceedings and violation of such laws which
Lessee is diligently proceeding to correct. Lessee shall, at its own cost and
expense, supply the necessary power and other items required in the operation
of the Equipment. Lessee hereby waives, to the extent permitted by applicable
law, any right now or hereafter conferred by law to make repairs on the
Equipment at the expense of Lessor.
SECTION 12. Replacement of Parts; Alterations; Modifications;
Additions; and Vendor-Financed Heads on Dornier Looms. In case any Part,
component or unit of the Equipment is required to be altered, added, replaced
or modified on any item of Equipment in order to comply with the requirements
of Sections 10 and 11 hereof ("Required Alteration"), Lessee agrees to make
such Required Alteration at its own expense; provided, however, Lessee shall
not be obligated to replace any such Part, component, unit or appliance
respecting the Equipment if the failure to replace such Part, component, unit
or appliance respecting the Equipment will not materially decrease the value,
utility or expected useful life of such Equipment. Such Required Alteration
shall immediately be and become the property of Lessor hereunder and subject
to the terms of this Agreement. Lessee agrees that, within thirty (30) days
after the close of any calendar month in which Lessee has made any material
Required Alteration, Lessee will give written notice thereof to Lessor
describing, in reasonable detail, the Required Alteration and specifying the
cost thereof and the date or dates when made. All Parts, Equipment and
appliances incorporated or installed in or attached to any item of Equipment
in connection with servicing, repairing, maintaining and overhauling any item
of Equipment pursuant to the requirements of Sections 10 or 11 hereof
("Replacement") shall be considered accessions to such item of Equipment and
shall immediately, without further act, be and become the property of Lessor
and part of the Equipment. Lessee may, without the prior written consent of
Lessor, affix or install any accessory, equipment or device on the Equipment
or make any improvement or addition thereto other than a Required Alteration
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or Replacement ("Improvement"); provided that, (a) a nonremovable Improvement
may only be made to the Equipment if such Improvement does not reduce the
value, utility or remaining economic useful life of the Equipment and (b) any
other Improvement may only be made to the Equipment if such Improvement is
readily removable without causing damage to the Equipment or impairing the
value, utility, remaining economic useful life or condition the Equipment
would have had if such Improvement had not been so affixed or installed.
Nonremovable Improvements shall be considered accessions to the Equipment and
shall immediately without further act, be and become the property of Lessor
and part of the Equipment. Title to removable Improvements shall remain with
Lessee, provided that, to the extent Lessor is retaining the Equipment, Lessor
shall have the option to purchase such removable Improvements for cash at Fair
Market Sales Value at the end of the Term and such purchase shall be on an
"as-is," "where-is" basis without representation, recourse or warranty,
express or implied, by Lessee (except as to the absence of Liens, except
Lessor Liens) and provided, further, that if any removable Improvement is not
removed by Lessee on or prior to the date of expiration or earlier termination
of this Agreement, title to such removable Improvement shall, without further
action, vest with Lessor. At the time title to any replacement Part,
equipment or appliance has become vested in Lessor pursuant to the provisions
of this Section 12, title to the part, equipment or appliance replaced thereby
shall thereupon vest in Lessee.
Notwithstanding the foregoing provisions of this Section 12, each
vendor-financed head on a Dornier loom, which heads are specifically excluded
from the definition of "Equipment", shall at all times remain the property of
Lessee and shall not be considered an accession to the Equipment or a Part or
an Improvement. Lessee shall repair, at its own cost and expense, any damage
to the Equipment caused by Lessee's detachment of any such head from any
Dornier loom.
SECTION 13. Identification; Inspection; Reports; Change of Chief
Executive Office and/or Name.
(a) Identification. Lessee shall, to the extent feasible,
promptly after each Acceptance Date, mark each item of the Equipment accepted
under this Agreement on such date so as to identify that such item is owned by
Lessor.
(b) Inspection. Lessor shall have the right on any Business Day
during normal business hours and upon reasonable notice to Lessee to inspect
(i) the Equipment (wherever located) and (ii) Lessee's records with respect
thereto; provided, however, Lessor will conduct no such inspection which is
reasonably likely to disrupt Lessee's business operations. Upon receipt of
Lessor's notice requesting to inspect certain Equipment, Lessee shall promptly
notify Lessor of the location of the Equipment and shall make all necessary
arrangements to facilitate the inspection.
(c) Reports. Upon Lessor's written request, Lessee shall
furnish Lessor within a reasonable period of time after such request with an
accurate statement showing the then current location of each item of the
Equipment.
(d) Change of Chief Executive Office and/or Name. Lessee shall
give Lessor prior written notice of any change in (i) Lessee's chief executive
office from the address referenced therefor in this Agreement and/or (ii)
Lessee's name.
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SECTION 14. Assignment, Sublease or Transfer by Lessee; Assignment by
Lessor; Mergers, Consolidations, Sales of Assets and Acquisitions.
(a) Assignment, Sublease or Other Transfer by Lessee. LESSEE
WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (WHICH SHALL NOT BE
UNREASONABLY WITHHELD), ASSIGN, SUBLEASE OR OTHERWISE TRANSFER ITS RIGHTS OR
OBLIGATIONS WITH RESPECT TO ANY OF THE EQUIPMENT, HEREUNDER OR UNDER ANY OF
THE OTHER TRANSACTION DOCUMENTS AND ANY ATTEMPTED ASSIGNMENT, SUBLEASE OR
OTHER TRANSFER BY LESSEE WITHOUT SUCH LESSOR CONSENT SHALL BE NULL AND VOID.
Lessee shall not enter into any sublease of the Equipment unless such
sublease is a Permitted Sublease. No such sublease by Lessee will reduce any
of the obligations of Lessee hereunder or the rights of Lessor hereunder, and
all of the obligations of Lessee hereunder shall be and remain primary and
shall continue in full force and effect as the obligations of a principal and
not of a guarantor or surety.
(b) Assignment By Lessor. Lessor may at any time (i) assign,
sell or transfer to any Affiliate or successor of Lessor, in whole or in part,
Lessor's right, title and interest in, to and under this Agreement and any
Lease Supplement, including, without limitation, the right to receive any or
all Payments payable under this Agreement and under any Lease Supplement with
respect to the Equipment and (ii) sell or transfer to any Affiliate or
successor of Lessor all of Lessor's right, title and interest in and to the
Equipment; provided, however, with (but only with) the prior written consent
of Lessee, which consent shall not be unreasonably withheld, Lessor may at any
time (x) assign, sell or transfer to any Person (excepting any Affiliate or
successor of Lessor), in whole or in part, Lessor's right, title and interest
in, to and under this Agreement (as it relates to Lease Supplement Nos. 1-7)
and Lease Supplement Nos. 1-7, including, without limitation, the right to
receive any or all Payments payable thereunder with respect to the Equipment
described in Lease Supplement Nos. 1-7 and (y) sell or transfer to any other
Person (excepting any Affiliate or successor of Lessor) all of Lessor's right,
title and interest in and to the Equipment described in Lease Supplement
Nos. 1-7. Any such assignee, purchaser or transferee of Lessor's rights (an
"Assignee") shall have all of Lessor's right, title and interest hereunder to
the extent that the same relate to the interest of the Assignee covered by the
assignment, including, without limitation, the right to receive such
Assignee's portion of the Basic Payments payable for the Equipment sold or
transferred for all Basic Payment Periods commencing on or after the date of
such assignment, the right to receive such Assignee's portion of the
Supplemental Payments which are payable as a result of acts or events which
occur on or after the date of such assignment and the right to enforce, either
in such Assignee's name or in Lessor's name, but without cost or expense to
Lessor, all of Lessor's rights hereunder assigned to such Assignee. An
Assignee may re-assign all or a portion of its right, title and interest
received in accordance with the terms hereof. Any such assignment shall be
subject to Lessee's rights hereunder so long as no Event of Default has
occurred and is continuing hereunder, provided, that, upon the effective date
of such assignment, sale or transfer, Lessee shall be deemed to have released
Lessor from and any and all liabilities under the Agreement arising on or
after such effective date. Lessee shall be under no obligation to any
Assignee except upon written notice of such assignment, sale or transfer from
Lessor. Upon written notice from Lessor to Lessee of such assignment, sale or
transfer, Lessee agrees to pay the Basic Payments and Supplemental Payments to
the Assignee in accordance with the terms of this Agreement supplemented by
the instructions specified in such notice, to give all notices which are
required or permitted to be given by Lessee to Lessor hereunder to the
Person(s) specified to receive the same in such notice of assignment, sale or
transfer and to otherwise comply with all reasonable notices, directions and
demands which may be given by such Assignee in accordance with the provisions
of this Agreement. Lessee agrees to deliver to any Assignee an
acknowledgement of the assignment, sale or transfer; provided, however, all
reasonable out-of-pocket fees and expenses incurred by Lessee in connection
with the production or delivery of such acknowledgement shall be for the
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account of Lessor or such Assignee, as agreed to by such parties; provided,
further, Lessor or such Assignee, as agreed to by such parties, shall pay any
sales or transfer tax which becomes due and payable as a result of an
assignment, sale or transfer under this Section 14(b). The obligations of
Lessee shall not be materially increased due to any assignment, sale or
transfer by Lessor or any subsequent Assignee under this Section 14(b).
Lessor may also transfer all, but not less than all, of Lessor's right,
title and interest in, to and under the other Transaction Documents to the
Assignee and after the effective date of such transfer, the Assignee shall
have all of Lessor's right, title and interest under such other Transaction
Documents.
(c) Mergers, Consolidations, Sales of Assets and Acquisitions.
Section 6.08 of the C&A Credit Agreement is hereby incorporated into this
Agreement by reference with the same effect as if set forth herein in its
entirety. If such Section 6.08 is hereafter amended, modified or supplemented
in accordance with the provisions of the C&A Credit Agreement, then such
Section 6.08 shall be deemed to be amended, modified or supplemented in the
same manner. If the C&A Credit Agreement shall be restated and/or replaced by
another credit agreement, then so long as NationsBank of North Carolina, N.A.
shall be a party thereto, such Section 6.08 incorporated herein shall be
amended, and deemed to be replaced by, such replacement section appearing in
the restated and/or replaced credit agreement. If, for any reason,
NationsBank of North Carolina, N.A. ceases to be a party to the C&A Credit
Agreement or the C&A Credit Agreement is terminated and not restated and/or
replaced, then such Section 6.08 incorporated herein shall be identical to the
applicable section of the C&A Credit Agreement as of the date (i) NationsBank
of North Carolina, N.A. ceases to be a party to the C&A Credit Agreement or
(ii) the C&A Credit Agreement is terminated and not restated and/or replaced.
Upon any consolidation or merger in which Lessee is not the surviving
corporation, or any conveyance, transfer or lease of substantially all the
stock or assets of Lessee as an entirety, in each case in accordance with this
Section 14(c), the successor corporation formed by such consolidation or into
which Lessee is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for (but without release of Lessee from
any of its obligations hereunder with respect to any conveyance, transfer or
lease of substantially all the stock or assets of Lessee as an entirety), and
may exercise every right and power of, Lessee under this Agreement with the
same effect as if such successor corporation had been named as a Lessee
herein.
SECTION 15. Liens; Permitted Contests. Lessee will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with
respect to any item of Equipment, or Lessor's title thereof, except the
following (collectively, the "Permitted Liens"): (a) any Lien granted to
Lessor hereunder or granted or placed thereon by Lessor as a result of an
assignment pursuant to Section 14(b) hereof, (b) the Lien in favor of Lessee
arising as a result of its rights under this Agreement, (c) any Lien in favor
of a sublessee arising as a result of its rights under any Permitted Sublease,
(d) any Lessor Lien, (e) any Lien for Taxes or Other Impositions either not
yet delinquent or which are the subject of a Permitted Contest, (f) any Lien
respecting a judgment, to the extent such judgment is appealable and is the
subject of a Permitted Contest and (g) any materialmen's, mechanics',
workmen's, repairmen's or employees' lien or any other like Lien arising in
the ordinary course of business, which is not delinquent or is the subject of
a Permitted Contest. Lessee, at its own expense, will promptly pay, satisfy
and otherwise take such actions as may be necessary to keep each item of
Equipment free and clear of, and to duly discharge or eliminate or bond in a
manner satisfactory to Lessor, any such Lien not excepted above if the same
shall arise at any time. To the extent this Agreement is hereafter deemed to
be a lease intended as security and not as a true lease, Lessee will maintain
each Lien on the Equipment granted hereunder in favor of Lessor as a first
priority, perfected security interest. Lessee will notify Lessor and any
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Assignee in writing promptly upon becoming aware of any Taxes or Other
Impositions or other Lien (other than any Lien excepted above) that shall
attach to any item of Equipment and of the full particulars thereof.
SECTION 16. Loss, Damage or Destruction.
(a) Risk of Loss, Damage or Destruction. Lessee hereby assumes
all risk of loss, damage, theft, taking, destruction, confiscation,
requisition or commandeering, partial or complete, of or to the Equipment,
however caused or occasioned (except for the gross negligence or wilful
misconduct of Lessor or any of its agents or employees), such risk to be borne
by Lessee with respect to the Equipment from the Acceptance Date therefor, and
continuing until the Equipment has been delivered in accordance with the
provisions of Section 6 hereof or has been purchased by Lessee or a third
party in accordance with the provisions of Section 5(c) or Section 29 hereof.
(b) Event of Loss with Respect to Equipment. (i) Upon the
occurrence of an Event of Loss with respect to any item of Equipment during
the Term, Lessee shall forthwith (and in any event within sixty (60) days
after such occurrence) give Lessor written notice of such Event of Loss and of
its election to perform one of the following options (it being agreed that if
Lessee shall not have given Lessor notice of such election within such sixty
(60) days after such occurrence, Lessee shall be deemed to have elected to
perform the option set forth in the following clause (B)), provided that
Lessee shall not have the right to select the option set forth in the
following clause (A) and if Event of Default shall have occurred and be
continuing and in such circumstance shall be deemed to have selected the
option set forth in the following clause (B):
(A) As promptly as practicable, and in any event within ninety
(90) days of the occurrence of such Event of Loss, Lessee shall convey
or cause to be conveyed to Lessor pursuant to Section 16(b)(ii), and to
be leased by Lessee hereunder in replacement for such item of Equipment,
a replacement item (the "Replacement Item"), such Replacement Item to be
free and clear of all Liens (other than Permitted Liens) and to have a
value and utility at least equal to, and be in as good operating
condition as, the item of Equipment with respect to which such Event of
Loss occurred, assuming such item of Equipment was of the value and
utility and in the condition and repair required by the terms hereof
immediately prior to the occurrence of such Event of Loss; provided
that, if Lessee shall not perform its obligation to effect such
replacement under this clause (A) during the period of time provided
herein, then Lessee shall promptly give notice to Lessor, and shall be
deemed (whether or not Lessee shall have so given such notice) to have
elected to perform the option set forth in clause (B) below by the date
and pursuant to the terms specified in said clause. (Notwithstanding
such Event of Loss, Lessee's obligation to pay Basic Payments shall
continue.)
(B) On the Casualty Loss Value Date next following the earlier
of ninety (90) days after the occurrence of such Event of Loss and the
date of receipt of insurance proceeds in respect of such occurrence,
Lessee shall pay Lessor the sum of (i) the Casualty Loss Value (computed
as of the Casualty Loss Value Date next following the date of such Event
of Loss) for all the Equipment then subject to the Event of Loss, plus
(ii) all accrued and unpaid Basic Payments (and/or any pro rata portion
thereof) owing for all Basic Payment Periods (and/or any pro rata
portion thereof) prior to such Casualty Loss Value Date, plus (iii) all
Supplemental Payments then accrued and unpaid or due and owing. Upon
payment in full of amounts specified in clauses (i) through (iii) of the
preceding sentence, (A) the obligation of Lessee to pay Basic Payments
hereunder, with respect to such item of Equipment for all Basic Payment
Periods commencing after the occurrence of such Event of Loss shall
terminate, (B) the Term shall end with respect to such item of
Equipment, and (C) Lessor shall transfer to Lessee, or Lessee's
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designee, its title to such item of Equipment consistent with the
settlement terms of Section 29(c) hereof.
(ii) Conveyance of Replacement Equipment. Prior to or at
the time of any conveyance of a Replacement Item, Lessee, at its own
expense, will furnish, or cause to be furnished, to the Lessor the
following documents (in form and substance reasonably satisfactory to
Lessor) which shall have been duly authorized, executed and delivered by
the respective parties thereto and shall be in full force and effect on
the date of such conveyance:
(A) with respect to any such Replacement Item, a full
warranty bill of sale and Uniform Commercial Code financing
statements;
(B) a supplement to this Agreement, and if a Permitted
Sublease is in force and effect to such Permitted Sublease, in
each case covering such Replacement Item, duly executed by Lessee
and the sublessee under the Permitted Sublease, if any;
(C) certificates of insurance, with respect to such
Replacement Item evidencing compliance with Sections 17(a) and
17(b)(i-vii) hereof, executed by the insurer or its duly
authorized agent;
(D) (intentionally omitted); and
(E) such other documents and evidence with respect to
Lessee as Lessor or its counsel, may reasonably request in order
to establish the consummation of the transactions contemplated by
this Section 16(b), the taking of all corporate proceedings in
connection with and compliance with the conditions set forth in
this Section 16(b), in each case in form and substance
satisfactory to Lessor.
Upon full compliance by Lessee with the terms of this Section 16(b),
Lessor shall convey to Lessee, at Lessee's cost and expense, all of Lessor's
right, title and interest, as-is, where-is, without recourse or warranty,
express or implied (except as to the absence of Lessor Liens), in and to such
replaced item of Equipment, with respect to which Event of Loss occurred. No
Event of Loss with respect to an item of Equipment under the circumstances
contemplated by the terms of this Section 16(b) shall result in any reduction
in Basic Payments or Lessee's obligation to pay Basic Payments hereunder.
Lessee further agrees to take such further action as Lessor may
reasonably request with respect to such Replacement Item to perfect the
interest of Lessor in such Replacement Item.
(c) Application of Other Payments Upon Event of Loss. Any
payments for damages to the Equipment (including, without limitation,
insurance proceeds) received at any time by Lessor or by Lessee from any
insurer, governmental authority or other party as a result of the occurrence
of an Event of Loss will be applied as follows: (i) any such payments received
at any time by Lessee shall be promptly paid to Lessor for application
pursuant to the following provisions of this Section 16(c); (ii) so much of
such payments as shall not exceed the amounts required to be paid by Lessee
pursuant to Section 16(b) hereof shall be applied in reduction of Lessee's
obligation to pay such amount, if not already paid by Lessee, or, if already
paid by Lessee, shall be applied to reimburse Lessee for its payment of such
amount, unless an Event of Default shall have occurred and be continuing; and
(iii) the balance, if any, of such payments remaining thereafter shall be paid
to or retained by Lessee, unless an Event of Default shall have occurred and
be continuing.
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(d) Application of Payments Not Relating to an Event of Loss.
Any payments (including, without limitation, insurance proceeds) received at
any time by Lessor or Lessee from any insurer, governmental authority or other
party with respect to any condemnation, confiscation, theft or seizure of, or
requisition of title to or use of, or loss or damage to, any item of the
Equipment not constituting an Event of Loss, will be applied (if no Event of
Default shall have occurred and be continuing) directly in payment of repairs
or for replacement of property in accordance with the provisions of Sections
11 and 12 hereof, if not already paid by Lessee, or if already paid by Lessee
and if no Event of Default shall have occurred and be continuing, shall be
applied to reimburse Lessee for such payment, and any balance remaining after
compliance with said Sections 11 and 12 with respect to such loss or damage
shall be paid to or retained by Lessor.
SECTION 17. Insurance.
(a) Coverage. Lessee shall:
(i) maintain or cause to be maintained property damage
insurance for the Equipment in an amount not less than the greater of
the then applicable replacement value or Casualty Loss Value of the
Equipment for all property damage and loss including, without
limitation, loss, vandalism, malicious mischief, damage from fire, and
normal extended coverage perils customarily included in policies
available with respect to property comparable to the Equipment;
(ii) maintain or cause to be maintained comprehensive
general public liability, including blanket contractual, personal
injury, property damage and loss of use of property of others, insurance
applicable to the Equipment in such amounts usually carried by Lessee
but in any event with a combined single limit of not less than
$10,000,000 or such other amount as is mutually agreed to by Lessee and
Lessor, as such agreement shall be reflected in the Lease Supplement
applicable to certain Equipment; and
(iii) maintain or cause to be maintained such other
insurance with respect to the Equipment in such amounts and against such
insurable hazards as is usually carried by Lessee, but any loss of the
type customarily covered by the policies described in Sections 17(a)(i)
and (ii) whether actually covered in whole or in part by such policies,
shall be the responsibility of Lessee and the absence of such coverage
shall not relieve Lessee from any of its obligations under any of the
documents or agreements related to the Overall Transaction.
All insurance policies carried in accordance with this Section 17(a)
(excepting any self-insurance permitted under this Agreement) shall be
maintained with insurers of recognized responsibility and standing in the
industry.
Any insurance policies carried in accordance with this Section 17 shall
be subject only to (A) exclusions of the sort existing in the insurance
policies in effect on the Acceptance Date and (B) deductible amounts and/or
retentions not in excess of $1,000,000 per occurrence with respect to
comprehensive general public liability insurance.
Notwithstanding anything to the contrary in this Section 17, (i) Lessee
shall at all times maintain insurance with respect to the Equipment in
accordance with its standard corporate minimum practice with respect to other
similar equipment and (ii) any loss of the type customarily covered by the
policies described in Sections 17(a), whether actually covered in whole or in
part by such policies, shall be the responsibility of Lessee and the absence
of such coverage shall not relieve Lessee from any of its obligations under
any of the documents or agreements related to the Overall Transaction.
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(b) Policy. Any insurance policy maintained by Lessee pursuant
to Section 17(a) hereof (excepting any self-insurance permitted under this
Agreement) shall:
(i) specify Lessor, as its interest may appear, as a loss
payee with respect to property damage insurance and as an additional
insured with respect to liability insurance;
(ii) include effective waivers by the insurer of all claims
for insurance premiums or commissions or (if such policies provide for
the payment thereof) additional premiums or assessments against Lessor;
(iii) provide that in respect of the interests of Lessor
such policies shall not be invalidated by any action or inaction of
Lessee, any sublessee, or their respective agents, employees, officers,
directors, stockholders, successors, assigns and servants shall insure
the rights and interests of Lessor regardless of, and any claims for
losses shall be payable notwithstanding:
(A) any act of negligence by Lessee, any sublessee, or
their respective agents, employees, officers, directors,
stockholders, successors, assigns and servants including, without
limitation, any breach of any condition or warranty in any policy
of insurance by Lessee or any other Person;
(B) the use of the Equipment by Lessee, any sublessee, or
their respective agents, employees, officers, directors,
stockholders, successors, assigns and servants for purposes more
hazardous than permitted by the terms of the policy;
(C) any foreclosure or other proceeding or notice of sale
relating to the Equipment; or
(D) any change in the title to or ownership of the
Equipment;
(iv) provide that such insurance shall be primary insurance
and that the insurers under such insurance policies shall be liable
under such policies without right of contribution from any other
insurance coverage effected by or on behalf of Lessor under any other
insurance policies covering a loss that is also covered under the
insurance policies maintained by Lessee pursuant to this Section 17 and
shall expressly provide that all provisions thereof, except the limits
of liability (which shall be applicable to all insureds as a group) and
liability for premiums (which shall be solely a liability of the
Lessee), shall operate in the same manner as if there were a separate
policy covering each insured;
(v) provide that any material adverse change therein shall
not be effective as to Lessor until at least thirty (30) days after
receipt by Lessor of written notice thereof and provide that any
cancellation thereof shall not be effective as to Lessor until receipt
by Lessor of written notice of cancellation at thirty (30) days before
the effective date of cancellation;
(vi) waive any right of subrogation of the insurers against
Lessor and waive any right of the insurers to any setoff or counterclaim
or any other deduction, whether by attachment or otherwise, in respect
of any liability of Lessor;
(vii) provide that the whole or any part of the right, title
and interest of Lessor or Lessee therein may be assigned; and
(viii) subject to Section 17(a) hereof, be reasonably
satisfactory to Lessor in all other material respects.
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(c) Evidence of Insurance. Lessee shall deliver to Lessor by
the Acceptance Date for each item of the Equipment certificates of insurance
evidencing the provisions described in Sections 17(a) and 17(b)(i-vii) hereof
executed by the insurer or its duly authorized agent.
(d) Annual Insurance Certificate. By the annual anniversary of
the Acceptance Date for each item of the Equipment of each year commencing
with September 30, 1995, and within thirty (30) days after any material
adverse change (including, without limitation, any material increase in
deductible and/or retention amounts) in the information set forth in the
certificates provided pursuant to Section 17(c) hereof, Lessee shall deliver
to Lessor a certificate of insurance with respect to the same items as
described in Section 17(c).
SECTION 18A. General Tax Indemnity.
(a) Indemnity Obligation. Lessee hereby assumes liability for,
and does hereby agree, to indemnify, protect, save, defend, exonerate, pay and
hold harmless Lessor, each Assignee and each of their respective officers,
directors, stockholders, successors, assigns, agents and servants (each such
party may be referred to herein as an "Indemnified Party") on an after-tax
basis (at the then highest marginal federal and applicable state, local and
foreign income tax rates) from, any and all federal, state, local and foreign
taxes, fees, withholdings, levies, imposts, duties, assessments and charges of
any kind and nature whatsoever, together with any penalties, fines or interest
therein (herein called "Taxes or Other Impositions") howsoever imposed,
whether levied or imposed upon or asserted against an Indemnified Party,
Lessee or the Equipment by any federal, state or local government or taxing
authority in the United States, or by any taxing authority or governmental
subdivision of a foreign country, upon or with respect to (a) the Equipment,
(b) the manufacture, construction, ordering, purchase, acceptance or
rejection, ownership, delivery, leasing, re-leasing, wet leasing, subleasing,
possession, use, operation, maintenance, storage, registration or re-
registration, titling or re-titling, licensing or re-licensing, documentation,
removal, return, sale (including, without limitation, sale to Lessee by an
Indemnified Party pursuant to the terms hereof) or other applications or
dispositions thereof, (c) the payments, receipts or earnings arising from the
Equipment, (d) any Permitted Contest or (e) this Agreement, any document,
instrument, agreement or contract entered into in relation hereto or otherwise
in relation to the Equipment or any payments payable by Lessee or to an
Indemnified Party hereunder or pursuant to any document, instrument, agreement
or contract entered into in relation hereto or otherwise in relation to the
Equipment; provided, however, that the foregoing indemnity shall not apply to
any taxes imposed solely as the result of the gross negligence or willful
misconduct of an Indemnified Party, or to the extent based upon or measured by
an Indemnified Party's net income and which are imposed or levied by any
federal, state or local taxing authority in the United States (other than net
income taxes attributable to Lessor's receipt or accrual of an indemnity
payable hereunder).
(b) Contests. Each Indemnified Party shall furnish Lessee with
copies of any requests for information received by such Indemnified Party from
any taxing authority relating to any Taxes or Other Impositions with respect
to which Lessee is required to indemnify hereunder, and if a claim is made
against such Indemnified Party for any such Taxes or Other Impositions with
respect to which Lessee is liable for a payment or indemnity hereunder, such
Indemnified Party shall give Lessee notice in writing within 30 days of
receipt of such claim (but failure of an Indemnified Party to so notify Lessee
shall not relieve Lessee of its obligations hereunder except to the extent
that such failure shall have materially prejudiced the ability to contest such
claim). Lessee may, at its sole cost and expense, either in its own name or,
if permitted by law, in the name of such Indemnified Party, contest the
validity, applicability or amount of any such Taxes or Other Impositions by
means of a Permitted Contest; provided, however, such Indemnified Party shall
in all cases control all such contests, but (except as provided further below
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in this Section 18A(b)) termination of any Permitted Contest shall require the
consent of Lessee, which shall not be unreasonably withheld or delayed. If
Lessee shall have duly complied with all the terms of this Section 18A(b), and
Lessee shall reasonably withhold in writing its consent to all or part of such
assessment or settlement based upon its evaluation of the merits, Lessor still
may terminate or settle the contest, but Lessee shall not be obligated to
indemnify Lessor for the portion of such assessment or settlement to which
Lessee has reasonably withheld its consent. Lessee shall pay, and save such
Indemnified Party harmless on an after tax basis against, any and all losses,
judgments, decrees and costs (including, without limitation, all reasonable
attorneys' fees and expenses) in connection with any Permitted Contest and
shall promptly after the final settlement, compromise or determination
(including, without limitation, any appeals) of such Permitted Contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interests, costs and expenses thereof or
in connection therewith, and perform all acts, the performance of which shall
be ordered or decreed as a result thereof.
(c) Refunds. If an Indemnified Party shall obtain a refund of
any amount paid by Lessee pursuant to this Section 18A, such Indemnified Party
shall pay to Lessee within 30 days the amount of such refund, together with
the amount of any interest actually received by such Indemnified Party on
account of such refund; provided, however, that the aggregate amount of all
payments pursuant to this sentence by such Indemnified Party with respect to
any Tax or Other Imposition shall not exceed the aggregate amount of all
payments made by Lessee pursuant to this Section 18A with respect to such Tax
or Other Imposition, and, provided further, that such Indemnified Party shall
have no obligation to pay such refund to Lessee as long as a Default or an
Event of Default has occurred and is continuing.
(d) Reports, Returns and Payments. Lessee will promptly notify
the appropriate Indemnified Party of all reports or returns required to be
made with respect to any Taxes or Other Impositions with respect to which
Lessee is required to indemnify hereunder, and will promptly provide such
Indemnified Party with all information necessary for the making and timely
filing of such reports or returns by such Indemnified Party. If an
Indemnified Party requests that any such reports or returns be prepared and
filed by Lessee, Lessee will prepare and file the same if permitted by
applicable law to file the same, and if not so permitted, Lessee shall prepare
such reports or returns for signature by such Indemnified Party, and shall
forward the same, together with immediately available funds for payment of any
Taxes or Other Impositions due, to such Indemnified Party, at least 10 days in
advance of the date such payment is to be made. Upon written request, Lessee
shall furnish an Indemnified Party with copies of all paid receipts or other
appropriate evidence of payment for all Taxes or Other Impositions paid by
Lessee pursuant to this Section 18A.
(e) Survival. The provisions of this Section 18A and all of the
indemnities and obligations of Lessee contained in this Section 18A shall
apply to the Equipment and each component thereof and shall apply from the
date of execution of this Agreement and shall continue in full force and
effect notwithstanding the expiration or earlier termination of this Agreement
or any other documents, instruments, agreements or contracts entered into in
relation hereto or otherwise in relation to the Equipment or any component of
the Equipment and are expressly made for the benefit of, and shall be
enforceable by, each Indemnified Party.
SECTION 18B. Special Tax Indemnity.
(a) Assumptions. Lessor and Lessee have made the following
assumptions regarding the characterization of this Agreement for federal
income tax purposes (the "Tax Assumptions"): (i) Lessor will be treated as
the purchaser, owner, and lessor of the Equipment; (ii) the Equipment will be
treated as placed in service on the date or dates as indicated in the
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applicable Lease Supplements, and Lessor's basis in the Equipment under
Section 1012 of the Code will be equal to the total actual cost to Lessor of
the Equipment; (iii) for federal tax purposes, Lessor will be entitled to
claim depreciation deductions with respect to one hundred percent (100%) of
the total actual cost of the Equipment computed (A) by using the applicable
recovery period for the Equipment within the meaning of Section 168(c)(1) of
the Code (the "Applicable Recovery Period") as set forth in the applicable
Lease Supplements; (B) by using the two hundred percent (200%) declining
balance method, switching to a straight line method for the first taxable year
of Lessor for which such method yields a larger allowance, (C) assuming
salvage value is zero, and (D) using the half-year convention under Section
168(d)(4)(A) of the Code (the "Depreciation Deductions"); (iv) the only
amounts that Lessor will be required to include in gross income with respect
to this Agreement will be (A) rents of all types as paid under this Agreement,
(B) payments as a consequence of a sale or other disposition of the Equipment,
and (C) any indemnity pursuant to this Section 18B ("Anticipated Lease
Income"); (v) Lessor will be able to amortize over the Term all of its
Transaction Costs which are not currently deductible (the "Transaction Expense
Deductions"); (vi) all items of income and expense will be treated as derived
from or allocable to sources within the United States; (vii) Lessor's taxable
year is the calendar year, and all items of income and expense will be treated
on an accrual basis; (viii) Lessor will have at all relevant times sufficient
federal and applicable state and local taxable income against which to apply
the Depreciation Deductions, Transaction Expense Deductions, and any other
deductible tax benefits relating to the ownership of the Equipment or to the
transactions contemplated by this Agreement; (ix) Lessor's federal corporate
income tax rate will be thirty-five percent (35%), and its combined federal
and state income tax rate will be 40.04% during each year of this Agreement
(the "Combined Tax Rate"); and (x) no portion of the Depreciation Deductions
will be recaptured under Section 1245 of the Code or otherwise disallowed
during the Term.
(b) Representations, Warranties and Covenants. Lessee hereby
represents, warrants and covenants to Lessor as follows: (i) at no time
during the Term will the Equipment be used "predominantly outside the United
States" within the meaning of Sections 168(g)(1)(A) and 168(g)(4) of the Code;
(ii) assuming Lessor is treated as the owner of the Equipment for federal
income tax purposes, the Tax Assumptions set forth in Section 18B(a)(ii)-(vi)
are correct; (iii) under current law, neither the Equipment nor any component
thereof constitutes "limited use property" within the meaning of Revenue
Procedure 76-30, 1976-2 C.B. 647; (iv) Lessee (including any Affiliate of
Lessee) will not claim any depreciation or cost recovery deductions with
respect to the Equipment, will not use the Equipment in any manner that will
cause the Equipment to cease to qualify for use of the Applicable Recovery
Period as set forth in the applicable Lease Supplements, and has not taken and
will not take any other action in connection with filing its or their federal
income tax returns that would cause any of the Tax Assumptions to be
incorrect; (v) as of each delivery date with respect to the Equipment, such
Equipment will not require any improvement, modification or addition in order
to be rendered complete for its intended use by Lessee; (vi) all written
information supplied, caused to be supplied, or to be supplied to any
appraiser by or on behalf of Lessee or any Affiliate of Lessee with respect to
the Equipment was or will be, as the case may be, true and accurate when
supplied; (vii) at no time during the Term will the Equipment constitute "tax-
exempt use property" within the meaning of Section 168(h) of the Code; (viii)
at the end of the Basic Term, the Equipment will have a remaining economic
useful life of at least 20% of the total economic useful life as measured from
the Closing Date; (ix) at the end of the Basic Term, the Equipment will have a
residual value of at least 20% of the total actual cost of the Equipment
without including in such residual value any increase or decrease for
inflation or deflation during the Basic Term and after subtracting from such
residual value the cost, if any, to Lessor for removal and delivery of
possession of the property to Lessor at the end of the Basic Term; and (x)
based on all facts known by Lessee as of the Acceptance Date with respect to
each applicable Lease Supplement, it is reasonable to expect that, as of the
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Early Buyout Option Date as set forth in such Lease Supplement, the fair
market value of the Equipment will be less than or equal to the Early Buyout
Option Price as set forth in such Lease Supplement.
(c) Indemnity Payment Conditions. If, by reason of any act or
omission of Lessee or by any other Person in possession of the Equipment or by
reason of the inaccuracy or breach by Lessee of any of the representations,
warranties and covenants contained in this Section 18B, the Depreciation
Deductions or Transaction Expense Deductions are lost, disallowed, eliminated,
reduced, recaptured, compromised, delayed or otherwise made unavailable to
Lessor (a "Loss") or Lessor incurs a tax detriment because it is required to
include amounts in income other than Anticipated Lease Income (an
"Inclusion"), Lessee shall, upon notice by Lessor, promptly pay to Lessor on
demand in immediately available funds, as an indemnity an amount which, after
deduction of the amount of all taxes required to be paid by Lessor in respect
of the receipt or accrual of such amount under the laws of any federal, state,
local or foreign government or other taxing authority and any applicable
foreign withholding taxes, shall be equal to the sum of (x) the increase in
federal, state, local and foreign income tax liability for the respective
taxable year attributable to such Loss or Inclusion plus (y) the amounts of
interest, penalties or additions to tax (including, without limitation, any
additions to tax because of underpayment of estimated tax), which are assessed
against Lessor for such taxable year by the Internal Revenue Service ("IRS")
or any relevant state, local or foreign taxing authority and which are
attributable to such Loss or Inclusion. In calculating any amount payable to
Lessor pursuant to this Section 18B(c), such amount shall be determined by
applying the Tax Assumptions, and it shall be assumed that all income of
Lessor is subject to tax at the Combined Tax Rate and that all deductions may
be utilized at the Combined Tax Rate; provided, however, that (i) the amount
of any taxes payable as the result of income giving rise to an Inclusion and
(ii) the amount of taxes payable as the result of payments to Lessor pursuant
to this Section 18B(c) (i.e. the amount of any applicable "gross-up"), shall
be determined based upon the then highest marginal federal, state, local and
foreign income tax rates applicable to Lessor for the relevant taxable year
with respect to such payments.
(d) Right to Contest. Lessor shall notify Lessee in writing of
any actual or proposed claim, adjustment, or other action of any tax authority
received by Lessor in writing with respect to which Lessee may be required to
provide indemnification under this Section 18B ("Proposed Adjustment") (but
failure of Lessor to so notify Lessee shall not relieve Lessee of its
obligations hereunder except to the extent that such failure shall have
materially prejudiced the ability to contest the Proposed Adjustment). If
Lessee shall request in writing within thirty (30) days after Lessor's notice
described above that the Proposed Adjustment be contested, Lessor shall
contest the Proposed Adjustment; provided, however, that: (i) prior to taking
such action, Lessee shall have furnished Lessor with an opinion of independent
tax counsel or an internationally recognized accounting firm chosen by Lessee
and reasonably acceptable to Lessor, to the effect that Lessor has a
reasonable basis for contesting the claim; (ii) prior to taking such action,
Lessee shall have (A) acknowledged its obligation to indemnify Lessor
hereunder in the event Lessor does not prevail in such contest and (B) agreed
to reimburse Lessor, promptly on demand, all reasonable costs and expenses
that Lessor may incur in connection with contesting such claim, including
without limitation reasonable attorneys' and accountants' fees and expenses;
(iii) Lessor shall not be obligated to contest any proposed amount that is
less than $30,000.00; and (iv) Lessor shall in all events control the contest,
but (except as provided below in this Section 18B(d)) termination of any
contest shall require the consent of Lessee which shall not be unreasonably
withheld or delayed. Lessee shall not have any right to inspect the books and
records of Lessor, but shall have reasonable opportunity to review and comment
on portions of documentation, protests, memoranda or briefs relating
exclusively to a Proposed Adjustment. In the event Lessor shall pay the tax
claimed and then seek a refund, Lessor may require Lessee to advance funds
sufficient to pay the tax that would be indemnified by Lessee hereunder if the
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claim were resolved adversely to Lessor, in which case, to the extent the
refund claim is successful, such funds received from the taxing authority and
attributable thereto, to the extent not required to be applied to an indemnity
payable hereunder, shall be refunded to Lessee with any interest received by
Lessor with such refund. Notwithstanding anything to the contrary in this
Section 18B, Lessor may at any time decline to take any further action with
respect to a Proposed Adjustment or may settle any contest without the consent
of Lessee; provided, however, that if Lessee shall have duly complied with all
the terms of this Section 18B(d), and Lessee shall reasonably withhold in
writing its consent to all or part of such assessment or settlement based upon
its evaluation of the merits, Lessee shall not be obligated to indemnify
Lessor for the portion of such assessment or settlement to which Lessee has
reasonably withheld its consent.
(e) Survival of Indemnities. All of the indemnities contained
in this Section 18B shall apply to the Equipment and each component thereof
and shall continue in full force and effect, notwithstanding the expiration or
other termination of the Term and are expressly made for the benefit of, and
shall be enforceable by, Lessor and each Assignee.
SECTION 19. General Indemnity. Lessee hereby assumes liability for,
and does hereby agree, whether or not any of the transactions contemplated
hereby are consummated, to indemnify, protect, save, defend, exonerate, pay
and hold harmless each Indemnified Party on a net after-tax basis (at the then
highest marginal federal and applicable state, local and foreign income tax
rates) from and against any and all obligations, fees, liabilities, losses,
interest, damages, punitive damages, penalties, fines, claims, demands,
actions, suits, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses (including, without limitation, such legal
fees and expenses incurred in connection with the enforcement of this
Agreement or any other Transaction Document), of every kind and nature
whatsoever imposed on, incurred by, or asserted against any Indemnified Party,
in any way relating to or arising out of (a) the manufacture, construction,
ordering, purchase, acceptance or rejection, ownership, delivery, leasing, re-
leasing, wet leasing, subleasing, possession, use, operation, maintenance,
storage, registration or re-registration, titling or re-titling, licensing or
re-licensing, documentation, removal, return, sale (including, without
limitation, sale by an Indemnified Party to Lessee pursuant to the terms
hereof) or other applications or dispositions thereof, including, without
limitation, any of such as may arise from (i) loss or damage to any property
or death or injury to any Person, (ii) patent or latent defects in the
Equipment (whether or not discoverable by Lessee or any Indemnified Party),
(iii) any claims based on strict liability in tort or otherwise, (iv) any
claims based on patent, trademark or copyright infringement, and (v) any
claims based on liability arising under the applicable environmental or noise
or pollution control law or regulation of the United States, (b) any failure
on the part of Lessee to perform or comply with any of the terms of this
Agreement or any document, instrument, agreement or contract entered into in
relation hereto or otherwise in relation to the Equipment but excluding any
claim based upon any failure on the part of an Indemnified Party to comply
with its obligations under this Agreement or any document, instrument,
agreement or contract entered into by such Indemnified Party in relation
hereto or otherwise in relation to the Equipment or (c) any claims,
encumbrances, security interests, liens or legal processes regarding such
Indemnified Party's title to or interest in the Equipment, except for Lessor
Liens. Lessee shall not be required to indemnify any Indemnified Party for
any claims (t) resulting from acts which would constitute the willful
misconduct or gross negligence of such Indemnified Party, (u) arising out of
acts or events occurring after the termination of this Agreement and
redelivery of the Equipment (to the extent relating to such redelivered
Equipment), (v) arising out of any Lessor Lien, (w) arising out of the
transfer by Lessor of all or any portion of its rights in the Equipment or the
Transaction Documents (except with the consent of Lessee or in connection with
Lessor's exercise of remedies hereunder), (x) or expenses which an Indemnified
Party is required to bear or pay under the express provisions of any of the
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Transaction Documents, (y) constituting Taxes or Other Impositions or (z)
resulting from the breach by such Indemnified Party's covenants,
representations or warranties contained in any Transaction Documents. Lessee
shall give each Indemnified Party prompt notice of any occurrence, event or
condition known to Lessee as a consequence of which any Indemnified Party is
or is reasonably likely to be entitled to indemnification hereunder. If an
Indemnified Party shall receive notice of any claim or asserted liability
which, in such Indemnified Party's good faith judgment, may result in an
obligation by Lessee to indemnify hereunder, such Indemnified Party shall
promptly give notice thereof to Lessee but Lessee's indemnity obligations
hereunder shall not be modified in any manner unless such Indemnified Party's
failure to give such notice materially and adversely affects Lessee's ability
to raise a defense to such claim or asserted liability. The indemnification
provided in this Section 19 shall not be impaired in any manner by the
existence of any industrial or worker's compensation laws. Lessee shall
promptly upon request of any such Indemnified Party (but in any event within
45 days of such request) reimburse such Indemnified Party for amounts expended
by it in connection with any of the foregoing or pay such amounts directly.
Lessee shall be subrogated to an Indemnified Party's rights in any matter with
respect to which Lessee has actually reimbursed such Indemnified Party for
amounts expended by it or has actually paid such amounts directly pursuant to
this Section 19. In case any action, suit or proceeding is brought against
any Indemnified Party in connection with any claim indemnified against
hereunder, such Indemnified Party will, after receipt of notice of the
commencement of such action, suit or proceeding, promptly notify Lessee
thereof, enclosing a copy of all papers served upon such Indemnified Party
(but failure of an Indemnified Party to so notify Lessee shall not relieve
Lessee of its obligations hereunder except to the extent that such failure
shall have materially prejudiced the ability to contest such claim). Lessee
may, and upon such Indemnified Party's request will, at Lessee's expense,
resist and defend such action, suit or proceeding, or cause the same to be
resisted or defended by counsel selected by Lessee and reasonably satisfactory
to such Indemnified Party and in the event of any failure by Lessee to do so,
Lessee shall pay all costs and expenses (including, without limitation,
reasonable attorney's fees and expenses) reasonably incurred by such
Indemnified Party in connection with such action, suit or proceeding. The
Indemnified Party shall supply Lessee with such information requested by
Lessee as in the reasonable opinion of Lessee's counsel is necessary or
advisable for Lessee to control any such action, suit or proceeding; provided,
however, such Indemnified Party shall have no obligation to provide Lessee
with its confidential information unless Lessee shall execute a
confidentiality agreement, in form and substance reasonably satisfactory to
such Indemnified Party. The provisions of this Section 19, and all of the
indemnities and the obligations of Lessee under this Section 19, shall apply
to the Equipment and each component thereof and shall apply from the date of
the execution of this Agreement and shall survive the expiration or earlier
termination of this Agreement and all documents, instruments, agreements and
contracts entered into in relation hereto or otherwise in relation to the
Equipment or any component of the Equipment and are expressly made for the
benefit of, and shall be enforceable by, each Indemnified Party.
SECTION 20. NO WARRANTIES. LESSOR LEASES THE EQUIPMENT TO LESSEE ON AN
AS-IS, WHERE-IS BASIS AND EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS
AGREEMENT LESSOR EXPRESSLY DISCLAIMS AND MAKES NO REPRESENTATION OR WARRANTY,
EITHER EXPRESSED OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, THE EQUIPMENT, THE DESIGN OR CONDITION OF EQUIPMENT, ITS
MERCHANTABILITY, DURABILITY, SUITABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE EQUIPMENT, OR THE
CONFORMITY OF THE EQUIPMENT TO THE PROVISIONS AND SPECIFICATIONS OF ANY
PURCHASE ORDER OR ORDERS RELATING THERETO, OR ANY OTHER MATTER CONCERNING, ANY
ITEM OF THE EQUIPMENT OR THE FINANCING THEREOF (WHICH DISCLAIMER LESSEE HEREBY
ACKNOWLEDGES). LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING, WITHOUT LIMITATION,
INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY ANY ITEM OF THE
EQUIPMENT OR BY LESSEE'S LOSS OF USE THEREOF FOR ANY REASON WHATSOEVER.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, LESSOR SHALL NOT BE LIABLE
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OR RESPONSIBLE FOR ANY DEFECTS, EITHER PATENT OR LATENT (WHETHER OR NOT
DISCOVERABLE BY LESSEE), IN ANY ITEM OF THE EQUIPMENT, OR FOR ANY DIRECT OR
INDIRECT DAMAGE TO PERSONS OR PROPERTY RESULTING THEREFROM, OR FOR LESSEE'S
LOSS OF USE OF ANY ITEM OF THE EQUIPMENT OR FOR ANY INTERRUPTION IN LESSEE'S
BUSINESS CAUSED BY LESSEE'S INABILITY TO USE ANY ITEM OF THE EQUIPMENT FOR ANY
REASON WHATSOEVER. Lessor hereby assigns to Lessee whatever claims and rights
Lessor may have (to the extent Lessor may validly assign such claims and
rights) under all manufacturer's and supplier's warranties with respect to the
Equipment, provided, that all such assignments shall be of no further force or
effect, and all proceeds of such claims and rights shall be paid over to or
retained by Lessor if an Event of Default shall have occurred and be
continuing or upon the return of the Equipment to Lessor. So long and only so
long as all of the Equipment described in a particular Lease Supplement shall
be subject to this Agreement and Lessee shall be entitled to possession of the
Equipment hereunder, Lessor authorizes Lessee, at Lessee's sole expense, to
assert for Lessor's account, all rights and powers of Lessor under any
manufacturer's, vendor's or dealer's warranty on any item of Equipment;
provided, however, that Lessee shall indemnify, protect, save, defend and hold
harmless Lessor from and against any and all claims, and all costs, expenses,
damages, losses and liabilities incurred or suffered by Lessor in connection
therewith, as a result of, or incident to, any action by Lessee pursuant to
this sentence.
SECTION 21. Lessee's Representations, Warranties and Covenants.
Lessee hereby represents, warrants and covenants to Lessor that:
(a) Due Organization and Existence. Lessee is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, and is qualified to do business in each
jurisdiction in which such qualification is necessary except where the failure
to so qualify would not have a material adverse effect on the ability of
Lessee to perform its obligations under the Transactions Documents;
(b) Power and Authority. Lessee has the corporate power and
authority to execute and perform this Agreement and the other Transaction
Documents in effect as of the date hereof to which Lessee is a party and to
lease the Equipment hereunder, and has duly authorized the execution, delivery
and performance of this Agreement and the other Transaction Documents in
effect as of the date hereof to which Lessee is a party;
(c) Due Authorization. The leasing of the Equipment from Lessor
by Lessee, the execution and delivery by Lessee of this Agreement and each
Transaction Document in effect as of the date hereof to which it is a party,
and the compliance by Lessee with the terms hereof and thereof, and the
payment and performance by Lessee of all of its obligations hereunder and
thereunder (i) have been duly and legally authorized by appropriate corporate
action taken by Lessee, (ii) are not in contravention of, and will not result
in a violation or breach of, any of the terms of Lessee's certificate of
incorporation, by-laws or of any provisions of any agreements relating to
shares of the capital stock of Lessee, and (iii) will not violate or
constitute a breach of any provisions of law applicable to Lessee, any order,
writ, injunction, decree, determination or award of any court or other agency
of government applicable to Lessee, or any indenture, agreement or other
instrument to which Lessee is a party, or by or under which Lessee or any of
Lessee's property is bound, or be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time) a default under any such
indenture, agreement or any instrument, or result in the creation or
imposition of any Lien upon any of Lessee's property or assets, except where
there will be no material adverse effect on the ability of Lessee to perform
its obligations under the Transaction Documents;
(d) Enforceability. This Agreement, each Lease Supplement, and
every other Transaction Document in effect as of the date hereof have been (or
in the case of future Lease Supplements, will be) executed by the duly
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authorized officer or officers of Lessee and delivered to Lessor and
constitute (or in the case of future Lease Supplements, will constitute) the
legal, valid and binding obligation of Lessee, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally
and except as enforceability may be limited by general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law);
(e) No Consents. Except as set forth in subsection (g) below,
neither the execution and delivery by Lessee of this Agreement or any other
Transaction Document in effect as of the date hereof nor the payment and
performance by Lessee of all of its obligations hereunder and thereunder, nor
the sale of the Equipment by any Seller to Lessor for the purpose of leasing
the same to Lessee under this Agreement requires the consent or approval of,
the giving of notice to, the registration, filing or recording with or the
taking of any action that has not already been taken and completed in respect
of, any federal, state, local or foreign government or governmental authority
or agency;
(f) No Liens. No mortgage, deed of trust, or other Lien (other
than Permitted Liens) which now covers or affects, or which may hereafter
cover or affect, any property, or interest therein of Lessee, now attaches or
hereafter will attach to any item of Equipment, or in any manner materially
affects or will materially affect adversely Lessor's rights and interests
therein;
(g) (intentionally omitted);
(h) Financial Statements. All balance sheets, statements of
profit and loss and other financial data that have been delivered to Lessor
with respect to C&A (and its Consolidated Subsidiaries, including without
limitation Lessee) (i) are complete and correct in all material respects, (ii)
accurately present the financial condition of C&A (and its Consolidated
Subsidiaries, including without limitation Lessee) on the dates for which, and
the results of their respective operations for the periods for which, the same
have been furnished and (iii) have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
covered thereby; all balance sheets disclose all known material liabilities,
direct and contingent, as of their respective dates to the extent required by
generally accepted accounting principles, and there has been no change in the
condition of C&A (and its Consolidated Subsidiaries, including without
limitation Lessee), financial or otherwise, since the date of the most recent
financial statements delivered to Lessor with respect to C&A (and its
Consolidated Subsidiaries, including without limitation Lessee), other than
changes which, either separately or in the aggregate, have not been materially
adverse;
(i) No Litigation. There is no material litigation or any other
proceedings now pending or, to the knowledge of Lessee, threatened, against or
affecting Lessee in any court or before any regulatory commission, board or
other administrative governmental agency which would directly or indirectly
adversely affect or impair the title and interest of Lessor in and to the
Equipment, or which, in the reasonable opinion of Lessee's management, is
likely to affect materially and adversely, the business, properties,
operations or condition of Lessee (financial or otherwise), other than as
disclosed in C&A's Form 10-K as of December 31, 1993 filed with the Securities
and Exchange Commission or C&A's Form 10-Q as of July 30, 1994 filed with the
Securities and Exchange Commission.
(j) Income Tax Return. Lessee and has filed all United States
income tax returns which are required to be filed, and has paid, or made
provisions for the payment of, all taxes which have or may become due pursuant
to said returns or pursuant to any assessment received by Lessee, except such
taxes, if any, as are being contested by means of a Permitted Contest;
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(k) (intentionally omitted);
(l) Investment Company. Lessee is not an "investment company",
or a company "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended;
(m) Taxes. All sales, use, documentation or similar taxes, fees
or other charges due and payable prior to or as of the date of each Lease
Supplement shall be paid prior to or as of the date of each Lease Supplement
to the extent such are in connection with the sale to and purchase by Lessor
of the Equipment or the leasing of the Equipment by Lessor to Lessee;
(n) No Offer to Sell or Assign. Lessee has not offered any
interest in this Agreement, the Payments, or the Equipment or any similar
security for sale to, or solicited offers to buy any thereof from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than Lessor;
(o) Invoices. In connection with each Lease Supplement, Lessee
shall deliver or cause to be delivered to Lessor true, correct and complete
copies of all purchase agreements, offering documents and invoices for the
Equipment;
(p) Adverse Contract. Lessee is not a party to, or bound by,
any contract, agreement or instrument or subject to any corporate restriction
that would conflict with this Agreement or any other Transaction Document in
effect as of the date hereof;
(q) Misrepresentation. Neither this Agreement nor any other
Transaction Document in effect as of the date hereof contains any
misrepresentation or untrue statement of material fact or omits to state any
material fact necessary to make any of such Transaction Documents in effect as
of the date hereof not misleading;
(r) (intentionally omitted);
(s) Chief Executive Office. The chief executive office of
Lessee is located at 701 McCullough Drive, Charlotte, North Carolina 28262 and
has been located at such address for no less than the four (4) months prior to
the date hereof;
(t) Trade Names. Lessee has not, and does not, use any trade
name or any other name in the conduct of its business except for its name set
forth on the signature page hereof and those listed on Schedule 2 hereto; and
SECTION 22. Events of Default. Any of the following events shall
constitute an "Event of Default" (whether any such event shall be voluntary or
involuntary, or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(a) Payment. Lessee shall fail to make (i) any Basic Payments
within five (5) Business Days after the same is due and payable or (ii) any
Supplemental Payment within ten (10) days after receipt of written notice to
Lessee that the same is due and payable; or
(b) Certain Covenants. Lessee shall fail to observe or perform
any of the covenants or agreements of Lessee set forth in Sections 8 or 17
hereof; or
(c) Other Covenants. Lessee shall fail to perform or observe
any other covenant, condition, or agreement to be performed or observed by it
under this Agreement, or in any agreement or certificate furnished to Lessor
in connection herewith, and such failure shall continue unremedied for thirty
(30) days after written notice to Lessee specifying such failure and demanding
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the same to be remedied; provided, however, that if Lessee shall have
undertaken to cure any such failure and, notwithstanding the reasonable
diligence of Lessee in attempting to cure such failure, such failure is not
cured within said thirty (30) day period but is curable with future due
diligence, there shall exist no Event of Default under this Section 22 for
such further time, not to exceed sixty (60) days, as may reasonably be
required to effect such cure, so long as Lessee is proceeding with due
diligence to cure such failure; or
(d) Default under Other Documents - Lessee. A C&A Credit
Agreement Event of Default shall have occurred and no effective waiver shall
have been obtained with respect thereto; provided, however, the foregoing
shall not constitute an Event of Default hereunder until twelve (12) months
have passed during which Lessee has diligently pursued such a waiver by
appropriate means and no such waiver has been obtained in such period; or
(e) Bankruptcy; Insolvency - Lessee. Lessee shall become
insolvent or bankrupt or make an assignment for the benefit of creditors or
consent to the appointment of a trustee or receiver; or a trustee or a
receiver shall be appointed for Lessee or for a substantial part of its
property without its consent and shall not be dismissed for a period of sixty
(60) days; or any petition for the relief, reorganization or arrangement of
Lessee or any other petition in bankruptcy or for the liquidation, insolvency
or dissolution of Lessee shall be filed by or against Lessee and, if filed
against Lessee shall be consented to or be pending and not dismissed for a
period of sixty (60) days; or an order for relief under any bankruptcy or
insolvency law shall be entered by any court or governmental authority of
competent jurisdiction with respect to Lessee; or
(f) Misrepresentation - Lessee. Any representation, warranty,
statement or certification made by Lessee under this Agreement or in any other
Transaction Document in effect as of the date hereof to which Lessee is a
party (or in any document or certificate furnished to Lessor in connection
herewith or pursuant hereto) shall prove to be untrue or incorrect when made
in any material respect, or shall be breached in any material respect.
SECTION 23. Remedies Upon Default. Upon the occurrence of any Event of
Default, and at any time thereafter, Lessor may exercise one or more of the
following remedies with respect to the Equipment or any part thereof as Lessor
in its sole discretion shall elect:
(a) Return of Equipment. Lessor may cause Lessee, upon the
demand of Lessor and at Lessee's expense, to, and Lessee shall, promptly
return the Equipment (or any item thereof) as Lessor may demand to Lessor at
such location, in the manner and condition required by, and otherwise in
accordance with all the provisions of, Section 6 hereof as if the Equipment
were being returned at the end of the Term; or Lessor, at its option, may
enter upon the premises where the Equipment is located or believed to be
located and take immediate possession of and remove the Equipment (or any
items thereof) without the necessity for first instituting proceedings, or by
summary proceedings or otherwise, and Lessee shall comply therewith, all
without liability to Lessor for or by reason for such entry or taking
possession, whether for the restoration of damage to property caused by such
taking or otherwise;
(b) Sell, Use, Lease or Otherwise Employ Equipment. Lessor may
(i) sell or otherwise dispose of the Equipment, at public or private sale and
with or without notice to Lessee or advertisement, as Lessor may determine or
(ii) hold, use, operate, lease to others or keep idle all or any part of the
Equipment as Lessor, in its sole discretion, may determine, in the case of (i)
or (ii) of this Section 23(b) free and clear of any rights of Lessee except as
hereinafter set forth in this Section 23 and without any duty to account to
Lessee with respect to such action or inaction or for any proceeds with
respect thereto except to the extent required by Section 23(d) hereof in the
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event Lessor elects to exercise its rights under said Section 23(d) in lieu of
its rights under Section 23(b) hereof;
(c) Excess of Casualty Loss Value over Fair Market Sales Value.
Whether or not Lessor shall have exercised, or shall thereafter at any time
exercise, any of its rights under Sections 23(a) or (b) hereof with respect to
the Equipment, Lessor, by notice to Lessee specifying a payment date not
earlier than the next Basic Payment Date, may cause Lessee to pay to Lessor,
and Lessee shall pay to Lessor, on the payment date specified in such notice,
as liquidated damages for loss of a bargain and not as a penalty (in lieu of
the Basic Payments for the Equipment due after the specified payment date),
any Payments with respect to the Equipment due on or before or accrued as of
such payment date plus an amount equal to the excess, if any, of (i) the
Casualty Loss Value for all the Equipment, determined as of such payment date
over (ii) the Fair Market Sales Value for all the Equipment, computed as of
the payment date specified pursuant to this Section 23(c), together with
interest, to the extent permitted by applicable law, at the Overdue Rate on
such Payments and the amount of such excess, if any, from such payment date
specified pursuant to this Section 23(c), to the date of actual payment of all
such Payments and other amounts;
(d) Excess of Casualty Loss Value over Sales Proceeds. In the
event Lessor, pursuant to Section 23(b) hereof, shall have sold the Equipment,
Lessor in lieu of exercising its rights under Section 23(c) hereof with
respect to the Equipment, may, if it shall so elect, cause Lessee to pay
Lessor, and Lessee shall pay to Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Payments for the Equipment due after the date on which such sale
occurs), any Payments with respect to the Equipment due on or before or
accrued as of such date of sale, plus the amount of any deficiency of the net
proceeds of such sale below the Casualty Loss Value of all the Equipment,
determined as of the date of such sale, together with interest, to the extent
permitted by applicable law, at the Overdue Rate on all such Payments and the
amount of such deficiency from the date of such sale to the date of actual
payment of all such Payments and other amounts; or
(e) Rescission. Rescind this Agreement as to the Equipment or
exercise any other right or remedy which may be available under applicable law
or proceed by appropriate court action to enforce the terms hereof or to
recover damages for the breach hereof.
In addition, Lessee shall be liable for any and all Supplemental
Payments due hereunder before or after any termination hereof, including all
costs and expenses (including, without limitation, reasonable attorney's fees
and disbursements) 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 the Equipment
in accordance with the terms of Section 6 hereof or any appraisal of the
Equipment. At any sale of the Equipment, Lessor may bid for and purchase such
property. Except as otherwise expressly provided above, no remedy referred to
in this Section 23 is intended to be exclusive, but each shall be cumulative
and in addition to any other remedy referred to above or otherwise available
to Lessor at law or in equity; and the exercise or beginning of exercise by
Lessor of any one or more of such remedies shall not preclude the simultaneous
or later exercise by Lessor of any or all such other remedies. No express or
implied 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.
SECTION 24. Lessor's Right to Perform for Lessee. If Lessee fails to
make any Supplemental Payment required to be made by it hereunder or fails to
perform or comply with any of its agreements contained herein, Lessor may
itself, make such payment or perform or comply with such agreement, and the
amount of such payment and the amount of the expenses of Lessor reasonably
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
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rate specified in Section 25 hereof, shall, if not paid by Lessee to Lessor on
demand, be deemed a Supplemental Payment hereunder; provided, however, that no
such payment, performance or compliance by Lessor shall be deemed to cure any
Event of Default hereunder.
SECTION 25. Late Charges. Lessee shall pay to Lessor, upon demand, to
the extent permitted by applicable law, interest on any Basic Payment not paid
when due, and on any Supplemental Payment or other amount payable under this
Agreement which is not paid when due, for any period for which any of the same
is overdue (without regard to any grace period) at a rate equal to the Overdue
Rate.
SECTION 26. Further Assurances. Lessor and Lessee agree to cooperate
in good faith and to execute and deliver such documents and further assurances
consistent with and in clarification of the characterization and intent of the
parties with respect to the Overall Transactions.
SECTION 27. Transaction Costs, Fees and Expenses. Lessee shall pay all
out-of-pocket costs, fees and expenses of Lessor and Lessee in connection with
the negotiation, preparation, execution, delivery and enforcement of the
Transaction Documents (and all amendments, modifications and supplements
thereto in connection with each Acceptance Date after the date hereof) and all
other such reasonable costs, fees and expenses of Lessor and Lessee in
connection with the Overall Transaction including without limitation such
costs, fees and expenses (a) of Moore & Van Allen in connection with the
initial closing hereunder, in an amount as agreed pursuant to a side letter
from Lessor and acknowledged by Lessee and (b) associated with any and all
filings, searches and recordations necessary or appropriate in connection with
the Transaction Documents or the Overall Transaction.
SECTION 28. Notices. All notices provided for or required under the
terms and provisions hereof shall be in writing, and any such notice shall be
deemed given when personally delivered or when deposited with a nationally
recognized overnight delivery service, with the cost therefor prepaid, or in
the United States mails, with proper postage prepaid, for first class
certified mail, return receipt requested, addressed (a) if to Lessor or
Lessee, at their respective addresses as set forth herein or at such other
address as either of them shall, from time to time, designate in writing to
the other, and (b) if to any Assignee, to the address of such Assignee as such
Assignee shall designate, from time to time, in writing to Lessor and Lessee.
If to Lessor: NationsBanc Leasing Corporation
of North Carolina
NationsBank Corporate Center
100 North Tryon Street, NC1007-12-01
Charlotte, North Carolina 28255-0001
Attention: Manager of Corporate Lease
Administration
Telephone: (704) 386-7783
Telecopy: (704) 386-0892
If to Lessee: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Mark O. Remissong
Telephone: (704) 548-2145
Telecopy: (704) 548-2330
SECTION 29. End of Term Purchase Options.
(a) Election Procedure. If this Agreement shall not have been
earlier terminated, Lessee, upon written notice to Lessor delivered not later
than ninety (90) days prior to the end of the Term, shall elect either to
deliver the Equipment to Lessor pursuant to the terms of Section 6 hereof or
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<PAGE>
purchase the Equipment pursuant to the terms of Section 29(b) hereof. Lessee
shall be deemed to have elected the option described in Section 29(b) hereof
if Lessor has not received notice ninety (90) days prior to the end of the
Term. Upon the making of one of the above-referenced elections, Lessee may
not revoke such election.
(b) Lessee's Purchase. On the Expiration Date, Lessee shall
have the option to purchase all (but not less than all) of the Equipment for
an amount equal to the Fair Market Sales Value as of such date. Lessee shall
also pay to (i) Lessor all other Basic Payments then due and owing or accrued
and (ii) to the appropriate parties, all other Supplemental Payments then due
and owing or accrued. Lessee shall also pay all Sales Expenses in connection
with its purchase of the Equipment. Lessor's sale of the Equipment shall be
on an as-is, where-is basis, without recourse to or representation or warranty
by Lessor except as to the absence of Lessor Liens. If Lessee has exercised
its purchase option, but has not prior to the Expiration Date paid all amounts
for which it is obligated under this Section 29(b), then Lessor shall delay
the sale of the Equipment to Lessee until Lessee has paid all amounts for
which it is obligated under Section 29(b); provided, however, Lessor may in
its discretion elect not to sell the Equipment to Lessee in the event any
dispute regarding outstanding amounts from Lessee is not resolved to Lessor's
reasonable satisfaction within six months of the Expiration Date. During such
period of delay, (x) Lessor and Lessee shall in good faith attempt to resolve
any dispute between them as to outstanding amounts from Lessee and (y) Lessee
shall continue to pay Lessor an amount after the Expiration Date equal to the
pro rata portion of the Basic Payments until Lessee has paid or caused to be
paid all such amounts; provided, however, this provision shall not be
interpreted to grant Lessee a right to retain the Equipment after the
Expiration Date.
(c) Settlement Terms. In the event that Lessee purchases any
Equipment from Lessor pursuant to Section 16(b)(i)(B) or Section 29(b) hereof,
Lessor and Lessee hereby agree that the following provisions shall apply:
(i) Representations and Warranties of Lessee. Lessee
shall represent, warrant, covenant and agree with Lessor as of the date
of any sale of such Equipment by Lessor to Lessee, except where specific
reference is made to another date or dates, that:
(A) Lessee has the full right, power and authority to
purchase such Equipment from Lessor as provided in this Agreement
and to carry out Lessee's obligations under this Agreement (as
such pertain to the sale of such Equipment), and all requisite
action necessary to authorize Lessee to enter into the purchase of
such Equipment and to carry out Lessee's obligations with respect
thereto has been, or on or before the date of any sale of such
Equipment to Lessee, will have been, taken;
(B) Lessee acknowledges that:
(1) Lessee is purchasing such Equipment, and such
Equipment shall be conveyed and transferred to the Lessee,
"AS-IS, WHERE-IS, AND WITH ALL FAULTS AND SPECIFICALLY AND
EXPRESSLY WITHOUT ANY RECOURSE OR WARRANTIES,
REPRESENTATIONS, COVENANTS OR GUARANTEES, EXPRESSED OR
IMPLIED, OF ANY KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON
BEHALF OF LESSOR", provided, that Lessor shall represent
that there are no Lessor Liens. Lessee acknowledges that it
has not relied, and is not relying, on any information,
document, sales brochures, or other literature, sketches,
projection, pro forma, statement, representation, guarantee,
or warranty (whether express or implied, or oral or written,
or material or immaterial) that may have been given by, or
made by, or on behalf of, Lessor;
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<PAGE>
(2) Lessee shall not be entitled to, and should not
rely on, Lessor or Lessor's agents as to (a) the quality,
nature, adequacy, or physical condition of such Equipment;
(b) the quality of any labor or materials relating in any
way to such Equipment; or (c) the condition of title to such
Equipment;
(3) EXCEPT AS EXPRESSLY SET FORTH IN THE PROVISO IN
SUBPARAGRAPH (1) ABOVE, LESSOR HAS NOT, DOES NOT, AND WILL
NOT, WITH RESPECT TO SUCH EQUIPMENT, MAKE ANY WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, OR ARISING BY OPERATION
OF LAW, INCLUDING BUT NOT IN ANY WAY LIMITED TO, ANY
WARRANTY OF CONDITION, MERCHANTABILITY, HABITABILITY, OR
FITNESS FOR A PARTICULAR USE, OR WITH RESPECT TO THE VALUE,
PROFITABILITY, OR MARKETABILITY OF SUCH EQUIPMENT; and
(4) Without in any way limiting the generality of
the preceding subparagraphs (1) through (3), Lessee
specifically acknowledges and agrees that Lessee hereby
waives, releases, and discharges any claim Lessee has, might
have had, or may have against Lessor with respect to the
condition of such Equipment, patent or latent, the actual or
potential income or profits to be derived from such
Equipment, and any other state of facts which exists with
respect to such Equipment.
(ii) Survival Beyond Closing. The representations and
warranties of Lessee contained in this Agreement as set forth in Section
29(e)(i) shall survive the closing of the sale of any Equipment to the
Lessee.
(iii) Seller. At the sale of any Equipment to Lessee, Lessor
shall deliver or cause to be delivered to Lessee, at Lessee's sole cost
and expense (except as provided to the contrary), a bill of sale of such
Equipment, duly executed by Lessor.
SECTION 30. Federal and State Tax Consequences. It is expressly agreed
that for federal and state income tax purposes the parties entered into the
transaction contemplated by this Agreement intending such transaction to be
characterized as a true lease and for Lessor to be considered the owner of the
Equipment for such tax purposes; provided, however, Lessee makes no
representation or warranty as to the availability of such tax treatment.
Consistent with this, Lessor intends to claim the cost recovery deductions
associated with the Equipment, and Lessee agrees not to take an inconsistent
position on its federal or state income tax returns.
SECTION 31. Financial Information. Lessee agrees to furnish Lessor (a)
as soon as available, and in any event within ninety (90) days after the last
day of each fiscal year of C&A, (i) a copy of the consolidated balance sheet
of C&A (and its Consolidated Subsidiaries, including without limitation
Lessee) and consolidating balance sheet of Lessee as of the end of such fiscal
year, and related consolidated statements of income and retained earnings of
C&A (and its Consolidated Subsidiaries, including without limitation Lessee)
and consolidating statements of income and retained earnings of Lessee for
such fiscal year with such consolidated financial information certified by an
independent certified public accounting firm of recognized standing, each on a
comparative basis with corresponding statements for the prior fiscal year, or
(ii) a copy of C&A's Form 10-K filed with the Securities and Exchange
Commission for such fiscal year (if C&A is subject to the reporting
requirements under the rules and regulations promulgated by the Securities and
Exchange Commission), and (b) within forty-five (45) days after the last day
of each fiscal quarter of C&A (except the last such fiscal quarter), (i) a
copy of the consolidated balance sheet as of the end of such quarter, and
related consolidated statements of income and retained earnings covering the
fiscal year to date of C&A (and its Consolidated Subsidiaries, including
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<PAGE>
without limitation Lessee) and a copy of the consolidating balance sheet as of
the end of such quarter, and related consolidating statements of income and
retained earnings covering the fiscal year to date of Lessee, each on a
comparative basis with the corresponding period of the prior year, all in
reasonable detail and certified by the treasurer or principal financial
officer of C&A, or (ii) if C&A is subject to the reporting requirements under
the rules and regulations promulgated by the Securities and Exchange
Commission, a copy of C&A's Form 10-Q filed with the Securities and Exchange
Commission and all such other financial statements and reports as C&A shall
send to the Securities and Exchange Commission.
SECTION 32. Miscellaneous. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating or diminishing Lessor's rights under the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. No term or provision of this Agreement may be
amended, altered, waived, discharged or terminated orally, but only by an
instrument in writing signed by a duly authorized officer or the party against
which the enforcement of the amendment, alteration, waiver, discharge or
termination is sought. A waiver on any one occasion shall not be construed as
a waiver on a future occasion. All of the covenants, conditions and
obligations contained in this Agreement shall be binding upon and shall inure
to the benefit of the respective successors and assigns of Lessor and (subject
to the restrictions of Section 14 hereof) Lessee. This Agreement may be
executed in as many counterparts as shall be determined by the parties hereto
when so executed, each such counterpart shall be binding on both parties
hereto, notwithstanding that both parties are not signatories to the same
counterpart. This Agreement, each Lease Supplement and each related
instrument, document, agreement and certificate collectively constitute the
entire agreement of Lessor and Lessee with respect to the financing of the
Equipment, and cancel and supersede any and all prior oral or written
understandings with respect thereto. THIS AGREEMENT AND EACH OTHER
TRANSACTION DOCUMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NORTH CAROLINA, INCLUDING,
WITHOUT LIMITATION, ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
LESSEE AND LESSOR HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION,
AND THE VENUE, OF A NORTH CAROLINA STATE OR FEDERAL COURT LOCATED IN
MECKLENBURG COUNTY, NORTH CAROLINA FOR ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. LESSEE AND
LESSOR HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NORTH CAROLINA COURT, OR TO THE
EXTENT PERMITTED BY LAW, SUCH FEDERAL COURT. LESSEE AND LESSOR HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR
PROCEEDING.
SECTION 33. Interest Rate Calculations. All rate calculations made
pursuant to this Agreement (including, without limitation, any calculation of
a late charge, the Overdue Rate) shall be computed on the basis of the actual
number of days elapsed over a year of 360 days.
SECTION 34. Personal Property Taxes. Lessor and Lessee hereby agree
that to the extent permitted by law (a) Lessee will file all returns and other
appropriate documentation in regard to personal property taxes on the
Equipment, (b) pay all such personal property taxes and (c) reimburse Lessor
for any and all such personal property taxes previously paid by Lessor.
[The remainder of this page has been intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
COUNTERPART NO. 5 OF 6 SERIALLY NUMBERED MANUALLY EXECUTED
COUNTERPARTS. TO THE EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL
PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT
MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER
THAN COUNTERPART NO. 1.
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<PAGE>
EXHIBIT A
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: _______________________.
2. As of the date hereof, the aggregate Acquisition Cost is $__________.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is __________________.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is ___________________.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be ____ years.
6. The Basic Term for the Equipment commences on ___________________, and
ends on ___________________, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after
___________________.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is ____________________.
9. The Basic Payment Factor is _____%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D hereto.
11. The Basic Payment Dates are _________, __________, _____________ and
____________ of each year during the Term, commencing on ________________.
Each Basic Payment shall be payable in arrears on the last day of each Basic
Payment Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
16. The liability insurance coverage referenced in Section 17(a)(ii) of the
Agreement and applicable exclusively to the Equipment identified in this Lease
Supplement shall be maintained in any event with a combined single limit of
not less than $___________.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By:_______________________________
Name: ________________________
Title: ________________________
COLLINS & AIKMAN PRODUCTS CO.
By:_______________________________
Name: ________________________
Title: ________________________
<PAGE>
Annex A to
Lease Supplement
(Equipment Description)
<PAGE>
Annex B to
Lease Supplement
(Casualty Loss Value)
Casualty Loss Casualty Loss
Value Date Value Percentage*
*Expressed as a percentage of Acquisition Cost (on a per unit basis) for the
Equipment described in Annex A.
<PAGE>
Annex C to
Lease Supplement
(Termination Value)
Termination Value
Expiration Date Percentage *
*Expressed as a percentage of aggregate Acquisition Cost (on a per unit basis)
for the Equipment described in Annex A.
<PAGE>
Annex D to
Lease Supplement
(Basic Payment Reduced Factor)
Basic Payment
Basic Payment Date Reduced Factor Percentage*
*Expressed as a percentage of Acquisition Cost (on a per unit basis) for the
Equipment described in Annex A.
<PAGE>
Schedule 1
(List of UCC Filings)
1. Office of the Secretary of State of North Carolina
2. Office of Register of Deeds for Mecklenburg County, North Carolina
3. Office of Register of Deeds for Person County, North Carolina
4. Office of Register of Deeds for Stanly County, North Carolina
5. Office of Register of Deeds for McDowell County, North Carolina
6. Office of Register of Deeds for Montgomery County, North Carolina
7. Office of Register of Deeds for Pitt County, North Carolina
8. Office of Register of Deeds for Chatham County, North Carolina
<PAGE>
Schedule 2
(List of Trade Names)
Collins & Aikman Floor Coverings Corporation*
Collins & Aikman Corporation*
Mastercraft Fabrics Corporation
* Discontinued
<PAGE>
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO.1
Person County - 7 Year Equipment
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: 1803 N. Main Street, Roxboro, Person
County, North Carolina.
2. As of the date hereof, the aggregate Acquisition Cost is $7,649,453.94.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is September 30, 1994.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is December 28, 1994.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be 7 years.
6. The Basic Term for the Equipment commences on December 29, 1994, and
ends on March 29, 2005, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after December 29,
1997.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is September 29, 2003.
9. The Basic Payment Factor is 3.266893%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D.
11. The Basic Payment Dates are March 29, June 29, September 29 and December
29 of each year during the Term, commencing on March 29, 1995. Each Basic
Payment shall be payable in arrears on the last day of each Basic Payment
Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
-3-
<PAGE>
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO.2
Person County - 5 Year Equipment
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: 1803 N. Main Street, Roxboro, Person
County, North Carolina.
2. As of the date hereof, the aggregate Acquisition Cost is $137,759.28.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is September 30, 1994.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is December 28, 1994.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be 5 years.
6. The Basic Term for the Equipment commences on December 29, 1994, and
ends on March 29, 2005, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after December 29,
1997.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is September 29, 2003.
9. The Basic Payment Factor is 3.191613%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D.
11. The Basic Payment Dates are March 29, June 29, September 29 and December
29 of each year during the Term, commencing on March 29, 1995. Each Basic
Payment shall be payable in arrears on the last day of each Basic Payment
Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
-3-
<PAGE>
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO.3
Stanly County - 5 Year Equipment
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: 313 Bethany Road, Albemarle, Stanly
County, North Carolina.
2. As of the date hereof, the aggregate Acquisition Cost is $373,161.71.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is September 30, 1994.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is December 28, 1994.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be 5 years.
6. The Basic Term for the Equipment commences on December 29, 1994, and
ends on March 29, 2005, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after December 29,
1997.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is September 29, 2003.
9. The Basic Payment Factor is 3.191613%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D.
11. The Basic Payment Dates are March 29, June 29, September 29 and December
29 of each year during the Term, commencing on March 29, 1995. Each Basic
Payment shall be payable in arrears on the last day of each Basic Payment
Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
-3-
<PAGE>
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO.4
McDowell County - 5 Year Equipment
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: Highway 70 East, Old Fort, McDowell
County, North Carolina.
2. As of the date hereof, the aggregate Acquisition Cost is $809,439.65.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is September 30, 1994.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is December 28, 1994.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be 5 years.
6. The Basic Term for the Equipment commences on December 29, 1994, and
ends on March 29, 2005, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after December 29,
1997.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is September 29, 2003.
9. The Basic Payment Factor is 3.191613%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D.
11. The Basic Payment Dates are March 29, June 29, September 29 and December
29 of each year during the Term, commencing on March 29, 1995. Each Basic
Payment shall be payable in arrears on the last day of each Basic Payment
Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
-3-
<PAGE>
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO.5
Montgomery County - 7 Year Equipment
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: Glenn Road, Troy, Montgomery County,
North Carolina.
2. As of the date hereof, the aggregate Acquisition Cost is $713,324.45.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is September 30, 1994.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is December 28, 1994.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be 7 years.
6. The Basic Term for the Equipment commences on December 29, 1994, and
ends on March 29, 2005, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after December 29,
1997.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is September 29, 2003.
9. The Basic Payment Factor is 3.266893%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D.
11. The Basic Payment Dates are March 29, June 29, September 29 and December
29 of each year during the Term, commencing on March 29, 1995. Each Basic
Payment shall be payable in arrears on the last day of each Basic Payment
Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
-3-
<PAGE>
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO.6
Pitt County - 5 Year Equipment
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: Highway 264 Bypass, Farmville, Pitt
County, North Carolina.
2. As of the date hereof, the aggregate Acquisition Cost is $6,504,190.00.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is September 30, 1994.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is December 28, 1994.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be 5 years.
6. The Basic Term for the Equipment commences on December 29, 1994, and
ends on March 29, 2005, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after December 29,
1997.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is September 29, 2003.
9. The Basic Payment Factor is 3.191613%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D.
11. The Basic Payment Dates are March 29, June 29, September 29 and December
29 of each year during the Term, commencing on March 29, 1995. Each Basic
Payment shall be payable in arrears on the last day of each Basic Payment
Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
-3-
<PAGE>
LEASE SUPPLEMENT AND ACCEPTANCE CERTIFICATE NO.7
Chatham County - 7 Year Equipment
This Lease Supplement and Acceptance Certificate is dated September 30,
1994 and is executed by NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("Lessor") and COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation ("Lessee") pursuant to Section 4 of the Master Equipment
Lease Agreement, dated as of September 30, 1994 between Lessee and Lessor (the
"Agreement"). All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.
Lessee hereby acknowledges and agrees that the equipment specified on
Annex A hereto (the "Equipment") has been delivered to Lessee on the date
hereof at the delivery place described below, and that, as between Lessor and
Lessee, the Equipment (a) has been inspected to the complete satisfaction of
Lessee, (b) is in good operating order, repair and condition, (c) is of a
size, design, capacity and manufacture selected by Lessee, (d) is suitable for
Lessee's purposes, (e) has been unconditionally accepted by Lessee on the date
hereof, for all purposes of the Agreement, and (f) is subject to all of the
terms, conditions and provisions of the Agreement. Lessee further
acknowledges, agrees and certifies that Lessor has made no representation,
warranty, covenant or guarantee of any type or kind, expressed or implied,
with respect to the Equipment and that the insurance policies, certificates or
other documents evidencing the coverages required under the Agreement have
been delivered to Lessor.
Lessee hereby leases from Lessor the Equipment, and Lessor and Lessee
further agree and state as follows:
1. Delivery Place for the Equipment: Highway 64 Bypass, Siler City,
Chatham County, North Carolina.
2. As of the date hereof, the aggregate Acquisition Cost is $6,369,267.07.
3. The Acquisition Expiration Date for the Equipment described in Annex A
hereto is September 30, 1994.
4. The Interim Term Expiration Date for the Equipment described in Annex A
hereto is December 28, 1994.
5. Pursuant to Section 168(c)(1) of the Code, the applicable recovery
period for the Equipment shall be 7 years.
6. The Basic Term for the Equipment commences on December 29, 1994, and
ends on March 29, 2005, both dates inclusive, unless sooner terminated in
accordance with the provisions of the Agreement.
7. With respect to the Equipment described in Annex A hereto, the Early
Termination Date is any Basic Payment Date occurring on or after December 29,
1997.
8. With respect to the Equipment described in Annex A hereto, the Early
Buyout Option Date is September 29, 2003.
9. The Basic Payment Factor is 3.266893%.
10. If such ever becomes applicable under the provisions of Section 7(a) of
the Agreement, the Basic Payment Reduced Factors shall be as set forth on
Annex D.
11. The Basic Payment Dates are March 29, June 29, September 29 and December
29 of each year during the Term, commencing on March 29, 1995. Each Basic
Payment shall be payable in arrears on the last day of each Basic Payment
Period to which such Basic Payment corresponds.
<PAGE>
12. The Basic Payment for the Equipment for each quarterly period is in an
amount equal to the Basic Payment Factor multiplied by the aggregate
Acquisition Cost for the Equipment described in Annex A hereto.
13. The Casualty Loss Value percentages for the Equipment during the Basic
Term are set forth on Annex B hereto.
14. The Termination Value Percentages for the Equipment during the Basic
Term are set forth on Annex C hereto.
15. This Lease Supplement and Acceptance Certificate may be executed in as
many counterparts as shall be determined by the parties hereto when so
executed, and each such counterpart shall be binding on both parties hereto,
notwithstanding that both parties are not signatories to the same counterpart.
[The remainder of this page has been intentionally left blank.]
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease Supplement
and Acceptance Certificate to be executed by their duly authorized
representatives as of the date first above written.
NATIONSBANC LEASING CORPORATION
OF NORTH CAROLINA
By: (Signature of Herbert T. Thurau)
Name: Herbert T. Thurau
Title: Vice President
COLLINS & AIKMAN PRODUCTS CO.
By: (Signature of Mark O. Remissong)
Name: Mark O. Remissong
Title: Senior Vice President
-3-