EXHIBIT 10.28
[LOGO]
LEASE AGREEMENT
No. CPG-101
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This Lease Agreement is made the 15th day of November, 1995, between IFA
Incorporated with its office at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000 ("Lessor") and Custom Papers Group, Inc. with an office at 000
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 ("Lessee"). In consideration of the
mutual covenants herein contained, the parties agree as follows:
1. LEASE
Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor, the
equipment and/or features ("Equipment") described in the Equipment
Supplement(s) ("Supplement") attached hereto. Each Supplement constitutes a
separate lease. In the event of a conflict between the terms and conditions
of this Lease Agreement and the terms and conditions of any Supplement or any
amendment, addendum or rider thereto, the terms and conditions of any
Supplement, amendment, addendum or rider shall prevail. Any reference to
"Lease" shall mean this Lease Agreement, the Supplement(s), and any
amendment(s), addenda or rider(s) thereto.
This Lease and each Supplement thereto is non-cancellable and Lessee's
obligation to pay all amounts due shall be absolute and unconditional and
shall not be subject to any delay, set-off, defense, counterclaim or
recoupment for any reason, whatsoever, including any failure of the Equipment
or any representations of the manufacturer.
Lessor has the authority to insert the serial numbers and other description
of the Equipment governed by this Lease into a Supplement thereto.
2. TERM
The term of this Lease with respect to the Equipment described in a
particular Supplement shall commence on the date set forth on the applicable
Supplement ("Commencement Date") for such Equipment and shall continue for
such number of months thereafter as is specified on such Supplement ("Initial
Term"). Where no date is specified, the Commencement Date shall be: (a) in
the case of Equipment which is the subject of a sale and leaseback between
Lessor and Lessee, the first day of the month following the date upon which
Lessor purchases such Equipment; or (b) in the case of Equipment requiring
installation, the first day of the month following the date upon which the
Equipment is certified as ready for use by the manufacturer ("Installation
Date").
This Lease may be terminated as to a Supplement at the expiration of its
Initial Term by written notice of termination given by either party to the
other not less than three (3) months prior to the date of termination
designated in such notice which date shall be the last day of a calendar
month. Notice of termination given in accordance with this Section shall not
be effective unless it is applicable to all items of Equipment described in a
Supplement.
3. RENTAL
The monthly rental ("Monthly Rental") and other charges due hereunder for
each item of
Equipment shall begin to accrue on the Installation Date and shall be due and
payable by Lessee in advance on the first day of each month (except for the
first payment which shall be a pro rata portion of the Monthly Rental charge,
calculated on a 30-day basis, due and payable on the Commencement Date). In
addition to the Monthly Rental set forth in the Supplement, Lessee shall pay
to Lessor an amount equal to all taxes paid, payable or required to be
collected by Lessor, however designated, which are levied or based on the
rental, on the Lease or on the Equipment or its purchase, sale, ownership,
delivery, possession, use, lease, operation, control or value (including,
without limitation, state and local privilege or excise taxes based on gross
revenue, all license and registration fees, any other governmental charges),
any penalties or interest in connection therewith not arising from negligence
on the part of Lessor or taxes or amounts in lieu thereof paid or payable by
Lessor in respect of the foregoing, but excluding taxes on Lessor's net
income. Such sums due under the Lease, in addition to the monthly rental
amounts, will be deemed Additional Rent due.
Lessee shall file timely all necessary personal property returns or
declarations and pay all personal property taxes levied on or assessed
against the Equipment during the Initial Term of the applicable Supplement,
and all renewals or extensions thereof, before such taxes become delinquent,
without any proration whatsoever. Lessee shall promptly (a) provide evidence
satisfactory to Lessor of the timely filing of the returns or declarations
and the payment of such taxes, or (b) notify Lessor, in sufficient time for
Lessor to file same timely, when by law or local custom Lessee cannot file
same, and promptly pay the amount of such taxes to Lessor.
Interest on any past due payments shall accrue at the rate of 1-1/2% per
month, or if such rate shall exceed the maximum rate allowed by law, than at
such maximum rate, and shall be payable on demand. Charges for taxes,
penalties and interest shall be promptly paid by Lessee when invoiced by
Lessor.
4. QUIET ENJOYMENT
Provided Lessee is not in default under this Lease, neither Lessor nor anyone
claiming through Lessor shall interfere with Lessee's right of exclusive
possession, quiet enjoyment and unlimited use of the Equipment.
5. INSTALLATION, MAINTENANCE AND DISCONTINUANCE OF EQUIPMENT
(a) Lessor shall have the sole right and option to make all the
arrangements for (i) the transportation of each Item of Equipment to, and the
installation of, each Item of Equipment at the Equipment Location stated in
the applicable Supplement, and (ii) the discontinuance, disassembly, packing
and transportation of each Item of Equipment from the Equipment Location to a
location of Lessor's choice within the continental United States upon the
termination of the applicable Supplement (by expiration or otherwise) as to
each Item of Equipment.
(b) Lessee shall (i) make all arrangements for rigging and drayage, if
applicable, with respect to the Equipment, and (ii) furnish suitable electric
current required to operate the Equipment and a specific area in the
Equipment Location which is suitable for the operation of the Equipment and
complies with the applicable directives issued by the manufacturer thereof
and by Lessor. All transportation (including insurance), rigging and drayage
costs with respect to the Equipment, both on delivery to the Equipment
Location and redelivery to a
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location of Lessor's choice within the continental United States, and all
installation, discontinuance, disassembly and packing costs shall be paid by
Lessee.
(c) Any equipment, cards, disks, tapes or other items not specified in
the Supplement(s) which are used on or in connection with the Equipment must
meet the specifications of the manufacturer and shall be acquired by Lessee
as its own expense.
(d) Lessee will at all times keep the Equipment in its sole possession
and control. The Equipment shall not be moved from the Equipment Location
without Lessor's prior written consent.
(e) After prior written notice to Lessor and with Lessor's prior
written consent, Lessee may, at its own expense, make alterations in or add
attachments to the Equipment, provided such alterations or attachments do not
interfere with the normal and satisfactory operation or maintenance of the
Equipment or with Lessee's ability to obtain and maintain the maintenance
contract required by Section 5(f) hereof and are removable at any time
without material damage to the Equipment. All such alterations and
attachments shall be removed by Lessee and the Equipment restored, at
Lessee's expense, to its original condition, reasonable wear and tear only
excepted, no later than the termination of this Lease as to the applicable
item of Equipment. All alterations and attachments not removed upon
termination of the Lease shall become the property of the owner of the
Equipment.
(f) Lessee shall, during the term of this Lease, at its own expense,
enter into and maintain in force a contract with the manufacturer or the
Maintenance Organization covering at least prime shift maintenance of each
item of Equipment. If at any time the Equipment is not being maintained to
Lessor's satisfaction, Lessor shall have the right to require Lessee to have
another company of Lessor's choice maintain the Equipment. Such maintenance
contract shall commence upon expiration of the manufacturer's warranty period,
if any, relating to such item of Equipment. At Lessor's request Lessee shall
furnish Lessor with an executed copy of such maintenance contract and all
renewals and extensions thereof and amendments thereto.
(g) At the termination of this Lease as to the applicable Supplement
(by expiration or otherwise), Lessee shall, at its expense, return the
Equipment to Lessor in the same operating order, repair, condition and
appearance as on the Commencement Date, subject only to reasonable wear and
tear. Lessee shall cause the Equipment to be audited by the manufacturer.
Lessee shall be responsible to have the Equipment certified as acceptable for
the manufacturer's standard maintenance contract prior to redelivery to
Lessor. Lessee shall present Lessor with a manufacturer's audit sheet or
maintenance qualification letter. Lessee shall enter into a contract with the
manufacturer of the Equipment to prepare it for redelivery to Lessor using
manufacturer's standard packing materials. All charges of complying with the
provisions of this section shall be at Lessee's sole expense.
6. OWNERSHIP AND INSPECTION
(a) This is a contract of lease only and Lessee shall have no equity or
property interest in the Equipment other than the rights acquired as a Lessee
hereunder and the Equipment shall remain personal property regardless of the
manner in which it may be installed or attached. Lessee shall not, without
Lessor's prior written consent, install or use the Equipment in such a
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manner or in such circumstances that any part of the Equipment is deemed to
be an accession to other personal property. The Lessee shall, at Lessor's
request, affix to the Equipment tags, decals or plates furnished by Lessor
indicating Lessor's ownership and Lessee shall not permit the removal or
concealment thereof.
(b) Lessee shall keep the Equipment free and clear of all liens and
encumbrances except liens or encumbrances arising through the actions or
omissions of Lessor. Lessee shall discharge, at its own expense, any liens or
encumbrances filed against the Equipment, except liens and encumbrances
created by Lessor. LESSEE SHALL NOT ASSIGN OR OTHERWISE ENCUMBER THIS LEASE
OR ANY OF ITS RIGHTS HEREUNDER OR THE EQUIPMENT, EXCEPT THAT LESSEE, AT ITS
EXPENSE AND UPON PRIOR WRITTEN NOTICE TO LESSOR, MAY ASSIGN THIS LEASE OR
SUBLEASE THE EQUIPMENT TO ITS PARENT OR ANY SUBSIDIARY CORPORATION OR TO A
CORPORATION WHICH SHALL HAVE ACQUIRED ALL OR SUBSTANTIALLY ALL OF THE
PROPERTY OF LESSEE BY MERGER, CONSOLIDATION OR PURCHASE. Upon any permitted
assignment or sublease, Lessee shall execute and deliver to Lessor, or any
assignee of Lessor, at Lessee's expense, such documentation as Lessor or such
assignee may require, including but not limited to documentation to evidence
and put third parties on notice of Lessor's or is assignees' interest in the
Equipment. No permitted assignment or sublease shall relieve Lessee of any of
its obligations hereunder.
(c) Lessor or its agents shall have free access to the Equipment and any
maintenance records kept by the Lessee which pertain to the Equipment at all
reasonable times for the purpose of inspection and for any other purpose
contemplated in this Lease.
(d) Lessee shall immediately notify Lessor of all details concerning
any damage to, or loss of, the Equipment arising out of any event or
occurrence whatsoever, including, but not limited to, the alleged or apparent
improper manufacture, functioning or operation of the Equipment.
7. WARRANTIES AND DISCLAIMER OF WARRANTIES
(a) Lessee represents that, as of the date the Equipment is installed,
it shall have (i) thoroughly inspected the Equipment, (ii) determined for
itself that all Items of Equipment are of a size, design, capacity and
manufacture selected by it, and (iii) satisfied itself that the Equipment is
suitable for Lessee purposes. Lessee authorizes Lessor to insert in each
Supplement the serial numbers and other identifying data of the Equipment
from the manufacturer's invoice.
(b) Lessee hereby covenants, represents and warrants with respect to
this Lease and each Supplement executed hereunder that:
(i) the execution, delivery and performance thereof by Lessee
have been duly approved and authorized by all necessary corporate action;
(ii) the individual executing such was duly authorized to do so;
(iii) the Lease and each Equipment supplemental constitute legal,
valid and binding agreements of Lessee enforceable in accordance with
their respective terms; and,
(iv) the Equipment is personal property and when subjected to
use by Lessee will
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not be or become a fixture under applicable law.
(v) Lessee is a valid corporation and is properly authorized to
do business in the jurisdictions relevant to the Lease.
(vi) Lessee maintains a chief office in the city and state listed
on page 1 of this Lease.
(vii) The transaction does not require shareholder approval, or
approval by any other holders of indebtedness.
(viii) The transaction does not violate any laws and does not
constitute a default under any of it other obligations.
(ix) The consummation of the Lease agreement does not require the
consent or approval of any branch of government, or authority.
(x) There are no suits pending against the Lessee with a
potential material adverse effect, and no further action, aside from the
filing of financing statements is required to perfect the Lessor's title
and interest in the Equipment.
(xi) No event of default has occurred under the Lease and the
financial statements furnished by the Lessee to the Lessor prior to the
date of the Lease fairly represent the financial condition of the Lessee.
(xii) As of the date of this Lease, the Lessee does not
contemplate any merger, consolidation, or sale of its assets with any
other entity.
(xiii) In the event of a "sale and leaseback":
(aa) Lessor will receive good and marketable title to the
Equipment free and clear of all liens, except as to the rights of
Lessee and liens and encumbrances created by Lessor;
(bb) All taxes associated with the Lease have been paid
(other than such taxes which are being contested by Lessee in good
faith); and
(cc) Lessee is solvent and will not be rendered insolvent
by the sale of the Equipment.
(c) LESSOR SUPPLIES THE EQUIPMENT "AS IS" AND NOT BEING THE
MANUFACTURER OF THE EQUIPMENT, THE MANUFACTURER'S AGENT OR THE SUPPLIER'S
AGENT, MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO
THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN,
CONDITION, QUALITY, CAPACITY, MATERIAL OR WORKMANSHIP, OR AS TO PATENT
INFRINGEMENT OR THE LIKE, it being agreed that all such risks, as between
Lessor and Lessee, are to be borne by Lessee. Lessor disclaims any warranty
that the Equipment is in compliance with any applicable governmental
regulations or requirements. Lessor has no familiarity with the Equipment.
Lessee agrees to look solely to the manufacturer or the supplier of the
Equipment for any and all warranty claims and any and all warranties made by
the manufacturer or the supplier to Lessor are hereby assigned to Lessee, to
the extent permitted by the manufacturer or the supplier, for the term of the
applicable Supplement. Lessee agrees that Lessor shall not be responsible for
the delivery, installation, maintenance, operation or service of the
Equipment or for delay or inadequacy of any or
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all of the foregoing. Lessor shall not be responsible for any direct,
indirect, special or consequential loss or damage resulting from installation
(including strict liability in tort). Lessee (and any guarantor of Lessee's
performance under the Lease) shall defend, indemnify and hold Lessor harmless
from and against any and all claims, actions, damages, demands, obligations,
liabilities and liens and all costs and expenses, including but not limited
to reasonable attorneys' and accountants' fees and court costs, incurred by
Lessor in connection therewith, arising out of the Lease including but not
limited to the purchase, ownership, leasing, licensing, possession,
maintenance, design, manufacture, condition, use or return of the Equipment,
or arising by operation of law or on account of personal injury, strict
liability in tort, negligence or patent, trade secret, trademark, or
copyright infringement excluding, however, any of the foregoing to the extent
they result from the gross negligence or willful misconduct of Lessor.
8. RISK OF LOSS
(a) Lessee shall bear the risk of the Equipment being lost, damaged,
destroyed, stolen, confiscated, or condemned ("Event of Loss") from any
source, arising from the date of delivery of the Equipment to Lessee through
and including the date upon which the Equipment is returned to Lessor or such
person as Lessor may designate. In the event any item of Equipment is lost,
destroyed, damaged, stolen, confiscated or condemned, Lessee will promptly
repair, restore, or replace such item of Equipment with like items reasonably
acceptable to Lessor, and having a fair market value equal to that of the
affected item prior to its being so affected, at Lessee's sole cost and
expense; provided, however, the Lessee shall not be required to make any
repair, restoration or replacement to the Equipment if Lessee shall elect to
terminate this Lease and pay the Stipulated Loss Value in accordance with
Schedule A to the Supplement describing such item of Equipment.
(b) Lessee shall defend, indemnify and hold Lessor harmless against any
and all claims, demands and liabilities, including attorneys' fees of Lessor,
with respect to any loss or damages to the Equipment.
(c) Lessee shall obtain, pay for and maintain at all times until the
Equipment has been returned to Lessor pursuant to the provisions hereof,
public liability, property damage, all risk, and fire and in such amounts
extended coverage insurance with respect to the Equipment, in each case in
such form as shall be reasonably satisfactory to Lessor. Such property damage
insurance shall be in an amount at least equal to the greater of the
replacement value of such Equipment or the Stipulated Loss Value of such
Equipment, determined as of the date of the occurrence of an Event of Loss,
in accordance with Schedule A to the Supplement describing such item of
Equipment. All policies shall be issued by insurers of recognized
responsibility, reasonably satisfactory to Lessor, and shall name as insured
parties and/or loss payees Lessor, Lessee and Lessor's assignees as their
interests may appear and provide that they cannot be cancelled or modified
except on at least thirty (30) days' prior written notice to Lessor. Evidence of
such insurance shall be delivered to Lessor no later than the Commencement Date
of the applicable Supplement and from time to time thereafter as Lessor may
request and in the case of renewals at least thirty (30) days prior to the
expiration of the current policy.
(d) If Lessee fails to perform any of its obligations under this Lease,
including but not
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limited to, the maintenance of insurance on the Equipment, or the discharge
of any encumbrances created by the Lessee, Lessor has the right, but not the
obligation, to substitute performance, in which case Lessee shall pay Lessor
the cost thereof. The performance by the Lessor of any of Lessee's
obligations shall not be considered a waiver of any sort by Lessor of his
rights under the agreement.
(e) Lessee shall notify Lessor within 10 days of the date when Lessee
becomes aware or should have become aware of an Event of Loss. In the event
that Lessee has not elected to repair, replace or restore such item(s) of
Equipment pursuant to this Section 8, Lessee shall then have the obligation
to pay Lessor, on the due date of the next installment of Monthly Rental, an
amount equal to the Stipulated Loss Value of the item(s) of Equipment
computed as of the due date of such payment plus any rent or other charges
payable by Lessee accrued thereon and unpaid as of the date on which such
Event of Loss occurred. Stipulated loss payments shall be made only to the
extent that Lessor has not received adequate insurance proceeds to cover the
charges due under the Lease. The stipulated loss value, once it becomes
payable to Lessor, shall accrue interest at a rate of 1-1/2% per month. Upon
payment of such Stipulated Loss Value, this Lease shall terminate with
respect to item(s) of Equipment (but not with respect to the remaining
Equipment) and Lessee's obligation to pay rent hereunder shall terminate with
respect only to such item(s) of Equipment.
(f) If Lessee is not in default hereunder, the proceeds of any property
damage insurance or condemnation award or other payment in respect of a
requisition or taking by any governmental authority, received by Lessor with
respect to an Event of Loss shall be applied by Lessor as a credit against,
or a reimbursement of, such payment of Stipulated Loss Value by Lessee,
and the excess of such payment over the Stipulated Loss Value shall be
retained by Lessee.
9. TAX BENEFITS AND INDEMNIFICATION
(a) This Lease has been entered into on the basis that Lessor or any
assignee of Lessor intends to claim such depreciation, interest deductions
and deductions for transaction costs as are provided to an owner of Equipment
under the Internal Revenue Code of 1986, as amended. If, as a direct result
of any act or omission of Lessee, all or any portion of the above tax
benefits are lost, may not be claimed, are disallowed, or are recaptured with
respect to Lessor or any assignee of Lessor, Lessee shall, upon demand,
indemnify Lessor or Lessor's assignee on an after-tax basis so as to
compensate Lessor or Lessor's assignee for such tax loss.
(b) Prior to the Commencement Date, Lessor reserves the right to
terminate this Lease or any Supplement hereto in the event that any change
in the tax law, including retroactive application of such change, results in
the loss, disallowance, or recapture of any portions of the depreciation,
deductions, or other benefits described in Section 9(a) above. Lessor
disclaims any representation or warranty regarding the characterization of
the Lease for tax, accounting or other purposes.
10. EVENTS OF DEFAULT AND REMEDIES
A. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under this Lease:
(a) Lessee shall fail to pay all or any portion of any installment of
Monthly Rental or other
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payment hereunder when and as the same shall become due and payable.
(b) Any representation or warranty made in this Lease, or in any
report, financial statement or other statement furnished pursuant to the
provisions of this Lease or otherwise shall prove to have been false or
misleading in any material respect as of the date on which the same was made.
(c) Lessee shall fail to duly observe or perform any covenant,
condition or agreement made by it hereunder and shall continue to fail to do
so for a period of ten (10) days after the non-performance occurs.
(d) Lessee shall seek the protection of any federal or state bankruptcy
or insolvency law or a proceeding under any such law shall be instituted
against Lessee or all or any part of its property under such laws and, if
against Lessee, it shall fail to cause the same to be dismissed within thirty
(30) days;
(e) The insolvency, cessation of business, or termination of existence
of the Lessee or any guarantor of this Lease;
(f) A material adverse change in the financial condition of the Lessee
or any guarantor of this Lease.
B. REMEDIES. If an Event of Default shall occur, Lessor may exercise any
one or more of the following remedies:
(a) Terminate this Lease and Lessee's rights hereunder, in which event
an amount equal to unpaid rentals to the date of termination, plus, as
liquidated damages for loss of the bargain and not as a penalty, the
Stipulated Loss Value determined in accordance with Schedule A to each
Supplement describing each of the items of Equipment, computed as of the
rental payment date preceding the date of such termination, shall be payable
by Lessee to Lessor;
(b) Recover from Lessee, as liquidated damages for loss of bargain and
not as a penalty, an amount equal to the present value of all monies to be
paid by Lessee during the remaining Initial Term or any successive period
then in effect, discounted at a rate of six percent which payment shall
become immediately due and payable.
(c) Proceed, by appropriate court action(s) either at law or in equity,
to enforce performance by Lessee of the applicable covenants of this Lease or
to recover damages for the breach thereof;
(d) Subject always to any mandatory requirements of applicable law then
in effect:
(i) retake possession of the Equipment without liability to
return to Lessee any rentals or other payments theretofore made, free
from all claims by Lessee, by directing Lessee in writing to assemble the
Equipment and deliver the same to Lessor at any place or places at which
Lessor then maintains facilities for the maintenance or storage of
equipment similar to the Equipment or to any other place or places at
which Lessor then maintains facilities for the maintenance or storage of
equipment similar to the Equipment or to any other place or places which
may be reasonably convenient to Lessee and Lessor in which event Lessee
shall at its own expense forthwith cause the same to be moved to the
place or places so designated by Lessor and there delivered to Lessor, it
being understood (x) that Lessee's obligation to so deliver the Equipment
is of the essence to this Lease and that,
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accordingly, upon application to a court of equity having jurisdiction,
Lessor shall be entitled to a decree requiring specific performance by
Lessee of such obligation and (y) that Lessor may, without charge, keep
any of the Equipment repossessed by Lessor pursuant to this clause on the
premises of Lessee pending further action by Lessor as hereinafter
provided; or
(ii) If Lessee shall fail to deliver the Equipment pursuant to
the foregoing Section 10(B)(d)(i) hereof, personally or by agents, retake
possession of the Equipment from Lessee (and any items in or on the
Equipment at the time of repossession, wherever such items may be, which
items shall be held temporarily for Lessee without liability on the part
of Lessor), after giving notice by process of law or otherwise, without
liability to return to Lessee any rental or other payments heretofore
made, free from all claims by Lessee, and for that purpose Lessor may
enter upon Lessee's premises where any of the Equipment is located and
remove the same without liability.
(a) In the event Lessor repossesses the Equipment as herein provided,
release the Equipment in such a manner, for such time and upon such terms as
Lessor may determine, or sell the Equipment upon such terms and conditions as
Lessor may determine.
C. APPLICATION OF RELEASE AND SALE PROCEEDS.
(a) Any amount received by Lessor pursuant to a release of Equipment as
provided in Section 10(B)(d) above, shall be applied, in the following order,
to the payment of (i) any expenses and fees (including reasonable attorneys'
and accountants' fees and court costs) incurred by Lessor in retaking possession
of, and removing, storing and leasing the Equipment; (ii) any costs and expenses
incurred by Lessor in overhauling or repairing the Equipment; (iii) any rental
then remaining unpaid under this Lease; and (iv) any other sums then owing to
Lessor by Lessee hereunder.
(b) Any amount received by Lessor pursuant to a sale or other
disposition of Equipment pursuant to Section 10(B)(d), above, shall be
applied, in the following order, to the payment of: (i) the amounts set forth
in Sections (a)(i), (ii) and (iv) above; (ii) the rentals accrued under this
Lease but unpaid up to the time of such sale or other disposition; and (iii)
the Stipulated Loss Value of the Equipment determined as of the date of such
sale or other disposition, with the balance of the proceeds, if any, retained
by Lessor.
(c) Lessee shall remain liable to Lessor to the extent that the
aggregated amounts received by Lessor in connection with the release, the
sale or other disposition of Equipment is insufficient to satisfy in full
those items described in this Sections 10(C)(a)(i), (ii), (iii) and (iv) and
(b)(i), (ii) and (iii) above.
D. GENERAL
(a) Lessor's remedies are cumulative and are not exclusive of other
remedies allowed at law or in equity, and the exercise of one remedy will not
be deemed to be an election or waiver of remedies.
(b) Lessee shall pay to Lessor, upon demand, all costs and expenses
(including reasonable attorney's fees and disbursements, all expenses
associated with repossessing, reconditioning, selling or leasing the
Equipment or otherwise enforcing the provisions of this Lease) which are
incurred by Lessor as a result
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of an Event of Default and the exercise of any remedy under the Lease.
(c) No action taken by Lessor under the Lease will result in a
"termination" of the Lease and, in any event, a termination of the Lease will
not relieve Lessee from any obligations under the Lease.
(d) Lessor is entitled to damages from Lessee in the amount of any lost
tax benefit to Lessor due to the occurrence of an Event of Default caused by
Lessee.
(e) Any sale or re-lease of the Equipment by Lessor will not relieve
Lessee of its liability for damages and will be free and clear of any
interest of Lessee.
11. NET LEASE
Except as otherwise specifically provided in the Lease, it is understood and
agreed that each Supplement constitutes a net lease, and that, as between
Lessor and Lessee, Lessee shall be responsible for all costs and expenses of
every nature whatsoever arising out of or in connection with or related to
this Lease or the Equipment. Lessee hereby agrees that in the event that
Lessee fails to pay or perform any obligation under this Lease, Lessor may,
at its option, pay or perform said obligation, and any payment made or
expense incurred by Lessor in connection therewith shall become additional
rent which shall be due and payable by Lessee upon demand. All amounts
payable by Lessee under this Lease shall be absolute and unconditional and
shall not be subject to any abatement, reduction, offset, defense,
counterclaim, interruption, deferment or recoupment for any reason,
whatsoever, and such amounts shall be and continue to be payable in all
events. All amounts due under the Lease are payable without demand, notice or
grace periods, and shall accrue interest at a rate of 1-1/2% per month from
the date due until fully paid.
12. ASSIGNMENT
(a) Lessee agrees that Lessor may transfer or assign all or any part of
Lessor's right, title and interest in, under or to the Equipment and this
Lease and any Supplement and any or all sums due or to become due pursuant
any of the above, to any third party ("Assignee") for any reason. Lessee
agrees that upon receipt of written notice from Lessor or Assignee, Lessee
shall perform all of its obligations hereunder for the benefit of Assignee
and, if so desired, shall pay all sums due or to become due hereunder
directly to Assignee or to any other party designated by Assignee. Lessee
hereby covenants, represents and warrants as follows and agrees that Assignee
shall be entitled to rely on and shall be considered a third party
beneficiary of the following covenants, representations and warranties:
(i) Lessee's obligations to Assignee hereunder are absolute and unconditional
and are not subject to any abatement, reduction, offset, defense, counterclaim,
interruption, deferment or recoupment available to Lessee for any reason
whatsoever including, but not limited to, operation of law, defect in the
Equipment, failure of Lessor to perform any of its obligations hereunder or
for any other cause or reason whatsoever, whether similar or dissimilar to
the foregoing; (ii) Lessee shall not look to Assignee to perform any of
Lessor's obligations hereunder; (iii) Lessee will not amend or modify this
Lease without the prior written consent of Assignee; and (iv) Lessee will
send a copy to Assignee of each notice which Lessee sends to Lessor.
(b) Upon receipt of notice of such transfer or assignment, Lessee agrees
to promptly execute
-10-
and deliver to Lessor such documentation as Assignee may require to secure
and/or complete such transfer or assignment, including, but not limited to,
the following: (i) an acknowledgement of, or consent to, the assignment which
may require Lessee to make certain representations or reaffirmations as to
some of the basic terms and covenants contained in this Lease; (ii) a
certified copy of resolutions of Lessee; (iii) an opinion of counsel for
Lessee with respect to the representations and warranties set forth in
Section 7(b) above; (iv) Financing Statements; and (v) a Certificate of
Delivery and Acceptance. Nothing contained in such documentation required by
Assignee shall be in derogation of any of the rights granted to Lessee
hereunder. Notwithstanding such assignment, Lessor shall not be relieved of
any of its obligations hereunder, and the rights of Lessee hereunder shall
not be impaired.
13. MISCELLANEOUS
(a) Neither this Lease, any Supplement nor any consent or approval
provided for herein shall not be binding upon Lessor unless signed on its
behalf by duly authorized officers at its home office. This Lease shall be
deemed to have been made in the State of Illinois and shall be governed in
all respects by its laws. Without reference, however, to choice of law
provisions.
(b) This Lease and each Supplement constitute the entire agreement and
understanding of the parties with respect to the lease of Equipment listed on
each Supplement (notwithstanding any contrary provision contained in any
instrument submitted by Lessee), and supersedes any or all prior agreements
and understandings related to the subject matter hereof, and may not be
changed orally but only by an agreement in writing signed by both parties.
Lessee's purchase order, if any, shall be used for accounting purposes only.
(c) All notices hereunder shall be in writing and shall be delivered in
person or sent by certified mail, postage prepaid, by facsimile transmission,
or by private courier, to the address of the other party as set forth herein
or to such other address as such party shall have designated by proper notice.
(d) This Lease shall be binding upon and inure to the benefit of Lessor
and Lessee and their respective successors and assigns (including any
subsequent assignee of an Assignee).
(e) No representation or statement made by either party not contained
herein shall be binding upon such party. No provision of this Lease or any
Supplement which may be deemed unenforceable shall any way invalidate any
other provision or provisions hereof, all of which shall remain in full force
and effect. Neither any failure nor any delay on the part of either party in
exercising any of its rights hereunder shall operate as a waiver thereof, nor
shall a single or partial exercise of any other right hereunder.
(f) A waiver of any of the terms and conditions hereof shall not be
effective unless in writing and signed by the party against whom such waiver
is sought to be enforced. Any waiver of the terms hereof shall be effective
only in the specific instance and for the specific purpose given.
(g) Lessor is hereby authorized by Lessee to cause this Lease and other
instruments, including financing statements, to be filed or recorded for the
purposes of evidencing and putting third parties on notice of Lessor's or
Assignee's interest in the Equipment and
-11-
Lessee agrees that Lessor or Assignee may execute such instruments for and on
behalf of Lessee. If for any reason whatsoever Lessee is determined to have
an interest in the Equipment, other than a purely leasehold interest, Lessee
agrees to and does hereby expressly subordinate such interest to the interests
of the owner of the Equipment and to any security interest presently in
existence or hereafter acquired. Lessee shall execute all documents
requested by an owner of the Equipment, Lessor, or any Assignee to evidence
such subordination.
(h) During the term of this Lease, Lessee agrees to deliver to Lessor a
copy of Lessee's annual audited financial statements within a reasonable time
after said statements are available.
(i) Lessee's covenants, representations and warranties shall survive the
expiration or other termination of this Lease.
(j) If Equipment delivered pursuant to any Supplement contains any
features not specified therein, Lessor reserves the right to remove any such
features at any reasonable time without liability for any downtime occasioned
thereby.
(k) The Lease and any Supplement thereto may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. To
the extent that this Lease constitutes chattel paper, no security interest in
this Lease may be created through the transfer or possession of any
counterpart other than an executed counterpart or a photostatic copy of an
executed counterpart of this Lease together with an executed Supplement
marked "Original".
(l) The invalidity of any provision of this Lease shall not affect any
other provision.
(m) Lessee waives its right to a jury trial and notice of acceptance of
the Lease by Lessor.
(n) If this Lease is deemed a financing arrangement or a loan, nothing
contained herein requires the Lessee to make any such deemed interest
payments which would subject the Lessor to penalty under the applicable law.
(o) Lessee hereby confirms that, notwithstanding the accounting treatment
of the Lease as either an operating or a capital lease, the Lease is a
"finance lease" as defined in and for purposes of Article 2A of the Uniform
Commercial Code.
(p) Time is of the essence under the Lease.
LESSOR: IFA INCORPORATED LESSEE: CUSTOM PAPERS GROUP, INC.
By: By: /s/ Xxxxx X. Xxxxx
------------------------------ ----------------------------------
XXXXX X. XXXXX
Title: Title: VICE PRESIDENT-ADMINISTRATION
--------------------------- ------------------------------
-12-
CPG-101
[LOGO] EQUIPMENT SUPPLEMENT NO. 1
---
LEASE AGREEMENT DATED NOVEMBER 15 , 1995 ("LEASE")
--------------- --
BY AND BETWEEN IFA INCORPORATED ("LESSOR")
AND CUSTOM PAPERS GROUP, INC. ("LESSEE")
---------------------------
ORIGINAL NO. 1 OF 1
--- ---
1. EQUIPMENT:
ITEM QTY. MFG. MODEL/FEATURE DESCRIPTION SERIAL NO. MONTHLY RENTAL
---- ---- ---- ------------- ----------- ---------- --------------
1. 1 ABB AccuRay 1190 Process Control System
SEE EQUIPMENT LISTING ATTACHED HERETO AND MADE A PART HEREOF.
NOTE: Lessor may insert serial numbers and other identifying information
concerning the Equipment to conform to the manufacturer's or supplier's
invoices for the Equipment.
2. INITIAL TERM: 84 months
--
3. AGGREGATE MONTHLY RENTAL: $ * (*1.576% of Final Equipment Cost)
-------
4. EQUIPMENT LOCATION: Custom Papers Group, Inc.
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000-0000
5. PROJECTED INSTALLATION DATE: May 1 , 1996.
-------
6. COMMENCEMENT DATE: If Lessee fails to deliver, within fourteen days of
Lessee's execution of this Supplement, any documents requested by Lessor
pursuant to the Lease, Lessor, in its discretion and notwithstanding
anything to the contrary contained in Section 2 of the Lease, may postpone
the commencement of the Initial Term. Lessor shall give Lessee prompt
written notice of any such postponement.
7. LESSOR'S OBLIGATIONS. Lessor's obligations are subject to there
being no tax legislation enacted prior to the Installation Date which
would have an adverse effect upon the rights of, or anticipated
benefits to, Lessor or any owner of the Equipment and are further
subject to there being no material adverse change in the financial
condition of the Lessee prior to the Commencement Date.
8. INCORPORATION BY REFERENCE. All of the terms, and conditions of the
Lease are incorporated herein by reference. By execution and delivery
of this Supplement, the parties affirm all of the terms and conditions
of the Lease (including, without limitation, Lessee's representations
and warranties) except as modified hereby.
LESSOR: IFA INCORPORATED LESSEE: CUSTOM PAPERS GROUP, INC.
By: By: /s/ Xxxxx Xxxxx
-------------------------------- ----------------------------------
Title: Title: VICE PRESIDENT-ADMINISTRATION
----------------------------- -------------------------------
Date: Date: December 7, 1995
------------------------------ --------------------------------
[LOGO] ADDENDUM A
That certain Equipment Supplement No. 1 dated ________________, 1995,
(the "Equipment Supplement") to Lease Agreement No. CPG-101 dated November
15, 1995, by and between IFA Incorporated, as Lessor, and Custom Papers
Group, Inc., as Lessee, (the "Lease") notwithstanding anything to the
contrary set forth therein is hereby amended to add the following provisions
and it is hereby agreed to as follows:
LEASE COMMENCEMENT DATE: The lease shall commence on the date set forth on
------------------------ the Certificate of Acceptance. Funding costs
incurred by Lessor prior to the Commencement Date
will be reimbursed to Lessor at the rate of the
then current one month LIBOR Rate of interest, as
published in the WALL STREET JOURNAL, plus two
and one quarter (2 1/4) percent computed on the
average daily balance outstanding.
LEASE RATE: 1.576% (expressed as a percentage of equipment
----------- cost per month based upon the Equipment Cost not
including any taxes).
EARLY TERMINATION OPTION: After payment of the 60th Monthly Rental and with
------------------------- 180 days prior written notice, the Lessee shall
have the following options: (1) return all but not
less than all of the Equipment to Lessor and pay
Lessor an early termination fee of 16.91% of the
equipment cost, plus the rental amount due on the
early termination date, plus any other amounts
due; or (2) continue the lease to its expiration.
DEBT RATE ASSUMPTION: The Lease Rate is based upon the yield on a
--------------------- comparable maturity Treasury Note ("Debt Rate").
As of October 13, 1995, the Treasury Note yield
was 5.93%.
LEASE RATE ADJUSTMENT: For each .25% increase in the Debt Rate, the
---------------------- lease rate factor will be increased .0159%.
END OF LEASE TERM OPTION: At the end of the Initial Term of the Lease,
------------------------- Lessee shall purchase the EQUIPMENT for its then
fair market value of 10% of original Equipment
Cost, whichever is greater.
EQUIPMENT APPRAISAL: Fair Market Value and Fair Market Rental Value
-------------------- may be determined at the end of the Initial Term
by an independent qualified appraiser chosen by
Lessee.
This Addendum shall be attached to and specifically incorporated into
the Equipment Supplement.
Acknowledged and Agreed: Acknowledged and Agreed:
IFA INCORPORATED, LESSOR CUSTOM PAPERS GROUP, INC., LESSEE
By: By: /s/ Xxxxx Xxxxx
-------------------------------- ----------------------------------
Name: Name: XXXXX X. XXXXX
------------------------------ --------------------------------
Title: Title: VICE PRESIDENT-ADMIN.
----------------------------- -------------------------------
Date: Date: December 7, 1995
------------------------------ --------------------------------
cpg1
AMENDMENT NO. 1
(PROGRESS PAYMENT AGREEMENT)
[LOGO] TO
SUPPLEMENT NO. 1
TO LEASE AGREEMENT NO. CPG-101
BETWEEN
CUSTOM PAPERS GROUP, INC., AS LESSEE
AND
IFA INCORPORATED, AS LESSOR
THIS AGREEMENT shall amend a certain Equipment Supplement No. 1 dated 12/7/95
to that certain Lease Agreement No. CPG-101 dated November 15, 1995 and
between IFA Incorporated ("Lessor") and Custom Papers Group, Inc. ("Lessee")
(hereinafter referred to as the "Lease"). In the event of any conflict or
ambiguity between this Agreement and the Lease, the terms and provisions of
this Agreement shall govern.
ABB Industrial Systems, Inc. is the "Seller" of the Equipment listed on
Supplement No. 1 and requires Progress Payments for the purchase of the
Equipment. Lessee has requested that Lessor advance the Progress Payment on
its behalf, and Lessor agrees to advance the Progress Payments on behalf of
Lessee.
The Progress Payments are as follows:
Due at the time Lessee places order for equipment: $87,901.00
Due approximately 11/15/95: $87,901.00
Due approximately 12/29/95: $131,852.00
Due upon shipment of equipment (approximately 2/1/96): $43,951.00
Due approximately 3/1/96 for other equipment and installation
services: $55,495.00
Due approximately 5/1/96: $87,900.00
To adjust for the monies of the Progress Payments advanced by Lessor, Lessee
herein agrees to pay Funding Costs to the Lessor monthly upon receipt of
Lessor's invoice. The Funding Costs will be computed as follows:
Page 2
The Funding Costs shall be based on a rate of the then current one month
LIBOR rate of interest as published in the WALL STREET JOURNAL, plus two
and one quarter (2 1/4) percent, computed on the average daily balance
outstanding. Lessee agrees to pay Funding Costs until the Commencement Date
of the lease.
The Funding costs shall cease upon the Commencement Date of the Lease at which
time full rentals as specified on Supplement No. 1 shall commence.
The funds advanced by Lessor to Seller as aforementioned together with
Funding Costs are in any and all events an unconditional obligation of
Lessee, which obligation Lessee does hereby fully and unconditionally assume.
Lessee agrees that Lessee will promptly reimburse Lessor in full for all such
funds advanced, Funding Costs, and any other costs, charges and fees of any
nature associated therewith in the event, and for any reason whatsoever, that
Lessee does not accept the equipment. It is expressly understood and agreed
upon that Lessee's obligation to pay is absolutely unconditional and Lessee
will hold Lessor harmless for any and all claims by Seller or Lessor's
assignee arising out of Lessee's failure or refusal to accept the equipment.
In addition to the foregoing, Lessee shall pay Lessor all costs and expenses,
including reasonable attorney's fees and fees of collection agencies incurred
by Lessor in exercising any of its right or remedies hereunder, whether or
not suit is institutional.
IN WITNESS WHEREOF, LESSOR AND LESSEE have executed this Agreement to Lease
this _______________ day of ____________, 1995.
IFA INCORPORATED CUSTOM PAPERS GROUP, INC.
LESSOR LESSEE
By: By: /s/ Xxxxx X. Xxxxx
-------------------------------- ----------------------------------
Name: Name: Xxxxx X. Xxxxx
------------------------------ --------------------------------
Title: Title: Vice President-Administration
----------------------------- -------------------------------
cpg1
SCHEDULE A TO SUPPLEMENT NO. 1 TO
---
[LOGO] LEASE AGREEMENT DATED NOVEMBER 15 , 1995 ("LEASE")
------------- --
BETWEEN IFA INCORPORATED ("LESSOR")
AND CUSTOM PAPERS GROUP, INC. ("LESSEE")
---------------------------
STIPULATED LOSS VALUES
The following Stipulated Loss Value are expressed as a percent of the Final
-----
Cost of the Equipment.
----
Payment Stipulated Payment Stipulated Payment Stipulated
Number Loss Value Number Loss Value Number Loss Value
------- ---------- ------- ---------- ------- ----------
1 112.00 29 72.52 57 30.56
2 110.76 30 70.91 58 29.79
3 109.50 31 69.29 59 29.04
4 108.24 32 67.66 60 28.31
5 106.96 33 66.01 61 27.60
6 105.67 34 64.34 62 26.91
7 104.37 35 62.66 63 26.24
8 103.05 36 60.97 64 25.59
9 101.73 37 59.25 65 24.96
10 100.39 38 57.53 66 24.35
11 99.04 39 55.78 67 23.76
12 97.68 40 54.03 68 23.19
13 96.30 41 52.25 69 22.64
14 94.92 42 50.46 70 22.11
15 93.52 43 48.65 71 21.60
16 92.10 44 46.83 72 21.11
17 90.68 45 44.99 73 20.64
18 89.24 46 43.13 74 20.19
19 87.79 47 41.26 75 19.76
20 86.32 48 39.36 76 19.35
21 84.84 49 37.46 77 18.96
22 83.35 50 36.52 78 18.59
23 81.85 51 35.60 79 18.24
24 80.33 52 34.71 80 17.91
25 78.79 53 33.84 81 17.60
26 77.24 54 32.99 82 17.31
27 75.68 55 32.16 83 17.04
28 74.11 56 31.35 84 16.79
LESSEE: CUSTOM PAPERS GROUP, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: XXXXX X. XXXXX Title: VICE PRESIDENT-ADMINISTRATION
------------------------------ --------------------------------
Date: DECEMBER 7, 1995
------------------------------
SECRETARY'S CERTIFICATE
-----------------------
Gentlemen:
As Secretary of Custom Papers Group, Inc., I hereby certify that:
1. The Company is a duly incorporated, validly existing corporation in
good standing under the laws of the State of Virginia.
2. The following are duly elected or appointed to the offices set
forth opposite their respective names and are incumbent in such
offices as of the date hereof, and the signatures appearing opposite
their respective names are the genuine signatures of such persons:
NAME TITLE SIGNATURE
---- ----- ---------
Xxxxx X. Xxxxx Vice President- /s/ Xxxxx X. Xxxxx
Administration ------------------
3. The above individuals are duly authorized and empowered by the
Company to execute and deliver all Lease and attendant financing
documents on behalf of the Company.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the Corporate Seal of the Company this 8 day of December , 1995.
--- ----------
/s/ [ILLEGIBLE]
---------------------------------------
(Secretary)
- SEAL -
