EXHIBIT 10.14
MASTER LEASE AGREEMENT NO. PEGA1
DATED AS OF
DECEMBER 28, 1995,
BETWEEN
ATEL LEASING CORPORATION
AS LESSOR
AND
PEGASUS GOLD CORPORATION,
AS LESSEE
THE SINGLE EXECUTED ORIGINAL OF THIS LEASE TOGETHER WITH ANY ORIGINAL LEASE
SUPPLEMENTS DE PURSUANT HERETO EACH MARKED "ORIGINAL" SHALL BE THE "ORIGINAL"
AND ALL OTHER COUNTERPARTS OF THIS LEASE AND ANY LEASE SUPPLEMENTS SHALL BE
MARKED "DUPLICATE ORIGINAL". TO THE EXTENT THAT THIS LEASE AND ANY LEASE
SUPPLEMENT CONSTITUTE CHATTEL PAPER, AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION; NO SECURITY
INTEREST MAY BE CREATED THROUGH TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER
THAN THE "ORIGINAL".
TABLE OF CONTENTS TO LEASE AGREEMENT
Page
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PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 Closing Dates; Acceptance Under Bills of Sale; Lease . . . . 9
Section 3 Lease Term and Rent
Basic Lease Term . . . . . . . . . . .. . . . . . . . . 9
Basic Rent . . . . . . . . . . . . . .. . . . . . . . . 9
Rent after Failure to Return Equipment . . . . . . . . 10
Supplemental Rent. . . . . . . . . . . . . . . . . . . 10
Method of Payment. . . . . . . . . . . . . . . . . . . 10
Section 4 Lessor's Representations and Warranties . . . . . . . . . . 11
Section 5 Lessee's Representations and Warranties . . . . . . . . . . 11
Section 6 Conditions Precedent. . . . . . . . . . . . . . . . . . . . 13
Initial Closing Date . . . . . . . . . . . . . . . . . 13
Subsequent Closing Dates . . . . . . . . . . . . . . . 16
Section 7 Return of Equipment . . . . . . . . . . . . . . . . . . . . 18
Section 8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9 Maintenance and Operations; Location and
Manner of Use; Insignia. . . . . . . . . . . . . . . . 19
Maintenance and Operation . . . . . . . . . . . . 19
Location and Manner of Use. . . . . . . . . . . . 19
Insignia. . . . . . . . . . . . . . . . . . . . . 20
TABLE OF CONTENTS TO LEASE AGREEMENT
(CONTINUED)
Page
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Section 10 Replacement of Parts; Alteration,
Modifications and Additions. . . . . . . . . . . . . . 20
Replacement of Parts . . . . . . . . . . . . . . . 20
Alternations, Modifications and Additions. . . . . 21
Section 11 Voluntary Termination. . . . . . . . . . . . . . . . . . . 22
Section 12 Loss, Destruction, Requisition, Etc. . . . . . . . . . . . 23
Event of Loss with Respect to the Equipment. . . . . . 23
Application of Payments from Regulatory
Authorities or Insurance . . . . . . . . . . . . . . 24
Risk of Loss Generally; Obligation to Repair . . . . . 24
Section 13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14 Inspection . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 15 Assignment and Sublease; Possession. . . . . . . . . . . . 26
Lessee . . . . . . . . . . . . . . . . . . . . . . . . 26
Lessor . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 16 Events of Default. . . . . . . . . . . . . . . . . . . . . 27
Section 17 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 18 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 19 Net Lease; No Setoff, Etc. . . . . . . . . . . . . . . . . 31
Section 20 Renewal Option; Purchase Options . . . . . . . . . . . . . 31
Renewal Option . . . . . . . . . . . . . . . . . . . . 31
Purchase Options . . . . . . . . . . . . . . . . . . . 32
Sale Without Recourse or Warranty. . . . . . . . . . . 33
Page 2
TABLE OF CONTENTS TO LEASE AGREEMENT
(Continued)
Page
Section 21 Lessee's Indemnity . . . . . . . . . . . . . . . . . . . . 33
Section 22 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 40
Section 23 Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . 40
Section 24 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 40
Exhibits:
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Exhibit A - Form of Lease Supplement
Exhibit B - Form of Opinion of Lessee's Counsel
Exhibit C - Form of Opinion of Guarantor's Counsel
Riders:
------
Rider No. 1 - Return Provisions
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MASTER EQUIPMENT LEASE AGREEMENT NO. PEGA1
MASTER EQUIPMENT LEASE AGREEMENT, dated as of December 28, 1995,
(this "Lease Agreement"), between ATEL LEASING CORPORATION, a California
corporation ("Lessor"), and PEGASUS GOLD CORPORATION, a Nevada corporation
("Lessee");
WITNESSETH:
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WHEREAS, Lessor and Lessee, from time to time, may enter into leases
of Equipment (as hereinafter defined);
WHEREAS, Lessor and Lessee wish to memorialize the terms upon which
Lessee may lease Equipment from Lessor, subject to the terms of any Lease
Supplement (as hereinafter defined) executed and delivered pursuant hereto;
WHEREAS, in order to effect the foregoing purpose, Lessor and Lessee
are executing and delivering this Lease Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
---------
agreements contained herein, Lessor and Lessee agree as follows, intending to be
legally bound:
Section 1. Definitions. Unless the context otherwise requires, the
-----------
following terms shall have the following meanings for all purposes of this Lease
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms herein defined:
"Affiliate" of any Person means any other Person directly or
-----------
indirectly controlling, controlled by or under common control with
such Person. For purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Alteration" has the meaning specified in Section 10(b) hereof.
------------
"Appraisal Procedure" means the following procedure for
---------------------
determining any disputed value (including, without limitation, the
remaining economic useful life of any Item of Equipment): If Lessee or
Lessor shall have given written notice to the other requesting
determination of such disputed value by the Appraisal Procedure, each
party shall appoint a qualified independent appraiser within 15 days
of the giving of such notice. Each appraiser so appointed shall be
instructed to determine independently such disputed value in
accordance with the applicable definition contained herein within 30
days after the giving of such notice. If the difference between the
amounts so determined by the two appraisers shall not
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exceed 10% of the lesser of such amounts, then the disputed value
shall be an amount equal to the arithmetic average of the amounts so
determined. If the difference between the amounts so determined shall
exceed 10% of the lesser of such amounts, then such two appraisers
shall have 10 days to appoint a third appraiser, who shall be
instructed to determine independently the disputed value in accordance
with the applicable definition contained herein within 20 days after
such appointment. The disputed value shall be an amount equal to the
arithmetic average of the amount so determined by the third appraiser
and whichever amount determined by the first two appraisers is closer
to the amount determined by the third appraiser (or, if the amounts
determined by the first two appraisers are equally close, the disputed
value shall be the amount determined by the third appraiser). This
provision for determination by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon
the parties except as otherwise provided by applicable law. All costs
of any such appraisals shall be borne by Lessee unless otherwise
provided herein.
"Assumed Tax Benefits" shall have the meaning set forth in
----------------------
Section 2 of the Tax Indemnity Agreement.
"Basic Lease Term" means, with respect to each item of Equipment
------------------
leased hereunder, the period of lease specified as the "Basic Lease
Term" for such Item of Equipment in the Lease Supplement pursuant to
which such Item of Equipment is leased by Lessor to Lessee hereunder.
"Basic Rent" means the rent payable pursuant to Section 3(b) or
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Section 20(a).
"Xxxx of Sale" means each full warranty xxxx of sale delivered on
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a Closing Date in which Lessee conveys Sale-Leaseback Equipment to
Lessor.
"Business Day" means a day of the year on which banks are not
--------------
required or authorized to close in San Francisco, California, or
Spokane, Washington.
"Change of Tax Law" means any change in the Code as in effect on
-------------------
the Closing Date for an Item of Equipment leased hereunder, which is
enacted and effective, and/or any change in the regulations
thereunder, including final and temporary regulations but not proposed
regulations, which is promulgated and effective, after such Closing
Date, which change affects the Assumed Tax Benefits with respect to
such Item of Equipment.
"Closing Date" means, with respect to each Item of Equipment
--------------
leased hereunder, the delivery date specified therefor in the Lease
Supplement pursuant to which such Item of Equipment is leased by
Lessor to Lessee hereunder.
"Code" means the Internal Revenue Code of 1986, as amended from
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time to time.
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"Commencement Date" means the first day of the calendar quarter
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following the Closing Date.
"Early Buy-Out Option Date" means, with respect to each Item of
---------------------------
Equipment leased hereunder, the date, if any, indicated as such on the
Lease Supplement pursuant to which such Item of Equipment was leased
by Lessor to Lessee hereunder.
"Early Buy-Out Option Price" means, with respect to any Item of
----------------------------
Equipment leased hereunder, the applicable amount thereof, if any,
specified in the Lease Supplement pursuant to which such Item of
Equipment was leased by Lessor to Lessee.
"Equipment" means the equipment leased by Lessor to Lessee
-----------
hereunder, as more particularly described in the Lease Supplements.
"Equipment Cost" of each Item of Equipment means the amount
----------------
indicated as such in the Lease Supplement on which such Item of
Equipment is listed, which amount shall equal the invoice(s) price(s)
of such Item of Equipment if an invoice(s) exists for such Item of
Equipment, or if no such invoice(s) exists, the price for such Item of
Equipment specified in the applicable Xxxx of Sale.
"Event of Loss" means any of the following events in respect of
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the Equipment or any Item of Equipment: (i) loss of such Equipment or
Item of Equipment or the use thereof due to theft, misplacement,
destruction, wear, or, in the reasonable good faith opinion of Lessee,
irreparable damage to such Equipment or Item of Equipment becoming
uneconomical to repair from any cause whatsoever or (ii) the
condemnation, confiscation or requisition of title to or use of, such
Equipment or Item of Equipment by any Regulatory Authority or
purported Regulatory Authority for a period equal to the lesser of one
year or a period anticipated to extend beyond the Basic Lease Term for
such Equipment or Item of Equipment.
"Events of Default" has the meaning specified in Section 16
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hereof.
"Fair Market Rental Value" with respect to any Item of Equipment
--------------------------
means the fair market rental value that would be obtained in an
arm's-length transaction between an informed and willing lessee and an
informed and willing lessor, in either case under no compulsion to
lease, and neither of which is affiliated with Lessor or Lessee, for
the lease of such Item of Equipment on the terms set forth or referred
to in Section 20(a) (unless otherwise specified in the Lease
Supplement pursuant to which such Item of Equipment was leased by
Lessor to Lessee hereunder), except as such terms relate to periodic
rent. Such fair market rental value shall be calculated assuming that
(a) such Item of Equipment is in the condition and repair required to
be maintained by the terms of this Lease and (b) neither the lessee
nor the lessor will incur any
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material expense in moving such Item of Equipment to the location at
which it is to be used by the Lessee or in installing or preparing
such Item of Equipment for use at such location. If Lessor and Lessee
cannot agree on the fair market rental value for any Item of
Equipment, then such value will be determined by the Appraisal
Procedure.
"Fair Market Sales Value" with respect to any Item of Equipment
-------------------------
means the fair market sales value that would be obtained in an
arm's-length transaction between an informed and willing buyer and an
informed and willing seller, under no compulsion, respectively, to buy
or sell, and neither of which is affiliated with Lessor or Lessee, for
the purchase of such Item of Equipment. Such fair market sales value
shall be calculated assuming that (a) such Item of Equipment is in the
condition and repair required to be maintained by the terms of this
Lease and (b) neither the buyer nor the seller will incur any material
expense in moving such Item of Equipment to the location at which it
is to be used or in installing or preparing such Item of Equipment for
use at such location; provided, however, that if the fair market sales
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value of any Item of Equipment is to be determined for purposes of
Section 17( c), such fair market sales value shall instead be
calculated on an in-place and in-use basis, assuming that the
intrinsic utility of avoided interruption of its business operations
and avoidance of all transaction costs by the Lessee including that
the Lessee will not bear any expense of replacing such Equipment,
moving such Equipment to the location at which they are to be used and
of installing or preparing such Item of Equipment for use at such
location. If Lessor and Lessee cannot agree on fair market sales value
for any Item of Equipment, then such value will be deter-mined by the
Appraisal Procedure.
"Fixed Price Purchase Option Price" means, for any Item of
-----------------------------------
Equipment, the amount thereof, if any, specified in the Lease
Supplement pursuant to which such Item of Equipment was leased by
Lessor to Lessee hereunder.
"Fixed Price Renewal Rent" means with respect to each Item of
--------------------------
Equipment leased hereunder, the amount thereof, if any, specified in
the Lease Supplement pursuant to which such Item of Equipment was
leased by Lessor to Lessee hereunder.
"Guarantor" shall mean Pegasus Gold Inc., a corporation organized
-----------
under the laws of British Columbia, Canada, and its successors under
the Guaranty Agreement.
"Guaranty Agreement" shall mean that certain Guaranty Agreement,
--------------------
dated as of December 28, 1995, executed by Guarantor, as originally
executed or as modified, amended or supplemented pursuant to the
applicable provisions thereof.
"Indemnitee" has the meaning specified in Section 21 hereof.
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"Item of Equipment" means each item or piece of Equipment.
-------------------
"Lease Agreement", "this Lease Agreement", "this Lease", "this
----------------- ---------------------- ------------ -----
Agreement", "herein", "hereunder", "hereby, or other like words mean
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this Lease Agreement as originally executed or as modified, amended
or supplemented pursuant to the applicable provisions hereof
including, without limitation, supplementation hereof by the Lease
Supplements entered into by Lessor and Lessee pursuant to the
applicable provisions hereof.
"Lease Payment Date" means, with respect to each Item of
--------------------
Equipment (unless otherwise indicated in the Lease Supplement covering
such Item of Equipment) the Semi-Annual Payment Date following the
Closing Date for such Item of Equipment and each subsequent
Semi-Annual Payment Date during the Term for such Item of Equipment.
"Lease Period" means, in respect of any Item of Equipment, each
--------------
of the consecutive monthly, quarterly, semi-annual, or annual periods
as specified in the Lease Supplement, through the Closing Date for
such Item of Equipment and each Payment Date thereafter and ending on,
and including, the day before the successive Payment Date.
"Lease Supplement" means a lease supplement, substantially in the
----------------
form of Exhibit A hereto, to be entered into between Lessor and Lessee
on a Closing Date for the purpose of leasing to Lessee any Item(s)
Equipment as set forth in such Lease Supplement under and pursuant to
the terms of this Lease Agreement, including, without limitation, any
amendment, supplement or modification thereto entered into subsequent
to the Closing Date on which it is entered into.
"Lessee's Tax Counsel" has the meaning specified in Section I of
--------------------
the Tax Indemnity Agreement.
"Lessor Liens" means Liens against any Item of Equipment arising
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as a result of (i) claims against Lessor not related to this Lease or
(ii) claims against Lessor arising out of the voluntary transfer by
Lessor (without the consent of Lessee) of its interest in the Lease or
any Item of Equipment at any time an Event of Default shall not have
occurred and be continuing.
"Lien" means any mortgage, pledge, lien, charge, encumbrance,
----
lease, exercise of rights, security interest or claim.
"Net Economic Return" means the net after-tax yield and total
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after-tax cash flow without regard to the timing thereof expected by
Lessor with respect to the leasing of Equipment pursuant to this
Lease, utilizing the same assumptions as used by Lessor (including the
Tax Assumptions) in making the original computations upon which its
evaluation of investment in the Equipment and the
lease thereof pursuant to this Lease was based. Net Economic Return
shall not mean return on assets or return on equity.
"Net Proceeds" has the meaning specified in Section 17 hereof.
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"Parts" means all appliances, parts, instruments, appurtenances,
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accessories, furnishings and other equipment of whatever nature that
may from time to time be incorporated or installed in or attached to
any Item of Equipment.
"Past Due Rate" means, with respect to any Item of Equipment
-------------
leased hereunder, the rate therefor specified in the Lease Supplement
pursuant to which such Item of Equipment was leased by Lessor to
Lessee hereunder.
"Payment Date" means, with respect to each Item of Equipment
-------------
leased thereunder, each monthly, quarterly, semi-annual, or annual
anniversary date of the Commencement Date of such Item of Equipment,
as the case may be, and as identified in the Lease Supplement Schedule
and the equivalent date each period after such anniversary date, for
the remaining Basic Lease Term.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
"Regulatory Authority" means any federal, state, municipal, local
--------------------
or other governmental department, commission, board, agency, taxing
authority or instrumentality, domestic or foreign.
"Removable Part" has the meaning specified in Section 10(b)
--------------
hereof.
"Renewal Rent" has the meaning specified in Section 20(a) hereof.
------------
"Renewal Term" means, in respect of any Item of Equipment leased
--------------
to Lessee hereunder as to which Lessee has exercised its option
pursuant to Section 20(a) hereof, the term determined by Lessee,
provided, however, that such term shall
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have a length of at least one year.
"Rent" means Basic Rent and Supplemental Rent.
----
"Sale-Leaseback Equipment" means the Equipment identified as such
--------------------------
in a Lease Supplement.
"Stipulated Loss Value" for any date with respect to any Item of
-----------------------
Equipment means an amount equal to the Equipment Cost of such Item of
Equipment times the percentage for such Item of Equipment specified in
the Lease Supplement covering such Item of Equipment for the
Semi-Annual Payment Date coinciding with or next following such date
as such amount may be adjusted pursuant to the terms of this Lease or
the Tax Indemnity Agreement.
Page 6
"Supplemental Rent" means all amounts, liabilities and
-------------------
obligations (other than Basic Rent) which Lessee assumes or agrees to
pay hereunder or under the Tax Indemnity Agreement to Lessor or
others, including, without limitation, the following amounts which
Lessee agrees to pay: (i) Termination Value and Stipulated Loss Value
payments (and amounts calculated by reference to Termination Value or
Stipulated Loss Value) and amounts payable with respect to the
purchase of Equipment under Section 20(b) hereof, (ii) all amounts
required to be paid by Lessee under the agreements and indemnities
contained in the Tax Indemnity Agreement, (iii) any and all
liabilities, obligations, losses, damages, penalties, taxes, claims,
actions, suits, costs, expenses or disbursements (including legal fees
and expenses) of any kind and nature whatsoever which may be imposed
upon, incurred by or asserted against Lessor by reason of the failure
of Lessee to duly perform its obligations hereunder and (iv) amounts
payable upon return of the Equipment pursuant to Section 7(b) hereof.
"Tax" has the meaning specified in Section 21(a) hereof.
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"Tax Assumptions" has the meaning specified in Section 2 of the
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Tax Indemnity Agreement.
"Tax Indemnitee" means and includes Lessor, and any reference to
----------------
a Tax Indemnitee or Lessor shall include its respective successors,
assigns, agents and Servants.
"Tax Indemnity Agreement" means that certain Tax Indemnity
-------------------------
Agreement, dated as of December 28, 1995, between Lessee and Lessor,
as originally executed or as modified, amended or supplemented
pursuant to the terms thereof.
Section 2. Closing Dates, Acceptance Under Bills of Sale:
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Lease. (a) Unless evidenced by a duly executed and delivered Lease Supplement,
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neither Lessor nor Lessee shall have any obligations hereunder to lease
equipment or other property from or to the other. Should Lessor and Lessee agree
to lease an Item of Equipment hereunder, Lessor and Lessee shall mutually agree
on the Closing Date for each Item of Equipment to be leased hereunder, which
Closing Date shall be set forth in the Lease Supplement covering such Item of
Equipment.
(b) Lessor hereby agrees, subject to satisfaction of the
applicable conditions set forth in Section 6 hereof, on the Closing Date for any
Sale Leaseback Equipment, to purchase and accept delivery of such Sale-Leaseback
Equipment from Lessee under a Xxxx of Sale dated such Closing Date and
simultaneously to pay to Lessee, in immediately available funds consisting of
lawful currency of the United States of America, an amount equal to the agreed
Equipment Cost of the Sa1e-Leaseback Equipment delivered on such Closing Date.
(c) Lessor hereby agrees, subject to satisfaction of the
applicable conditions set forth in Section 6 hereof, on the Closing Date for
each Item of Equipment, to lease to Lessee hereunder, and Lessee hereby agrees
to lease from Lessor hereunder, the Equipment to be leased pursuant to a Lease
Supplement, as evidenced by the execution by Lessor and Lessee of a Lease
Supplement with respect to such Equipment.
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Section 3. Lease Term and Rent
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(a) Basic Lease Term. The Basic Lease Term for each Item of
-----------
Equipment shall commence on the Commencement Date for such Item of Equipment and
end on the date specified in the Lease Supplement covering such Item of
Equipment. The lease term shall commence on the Closing Date and expire upon the
return or the sale of the Item of Equipment in accordance with the provisions
hereof ("Term").
(b) Basic Rent. Lessee agrees to pay Lessor Basic Rent in
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respect of each Item of Equipment the number of consecutive installments set
forth in the Lease Supplement pursuant to which such Item of Equipment was
leased by Lessor to Lessee hereunder, each such installment to be payable in
funds consisting of lawful currency of the United States of America which shall
be immediately available at the place of payment on the date such payment is
made. Such installments shall be payable on each Lease Payment Date; provided,
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however, that if any Lease Payment Date is not a Business Day, the relevant
installment of Basic Rent shall be payable on the next succeeding Business Day.
Each such installment shall cover the Lease Period ending on the day before the
Lease Payment Date on which such installment becomes due. Each installment of
Basic Rent in respect of an Item of Equipment shall be in an amount equal to the
percentage of Equipment Cost for such Item of Equipment as set forth in the
Lease Supplement pursuant to which such Item of Equipment was leased by Lessor
to Lessee hereunder for such Lease Payment Date, times the Equipment Cost of
such Item of Equipment specified in such Lease Supplement.
(c) Rent after Failure to Return Equipment. If at the end of
---------------------------------------
the Term as to any Item of Equipment, Lessee shall fail to return such Item of
Equipment to Lessor at the time required hereby, Lessee shall pay rent to Lessor
in respect of such Item of Equipment, payable in arrears on the last Business
Day of each month, for each day that such failure shall continue, but in no
event for a period shorter than the period from the last day of the Term to the
longer of the date of such Item of Equipment was returned to Lessor in the
condition required by this Lease and the date that is three months after the
date such Item of Equipment was required to be delivered to Lessor pursuant to
the terms hereof, in an amount equal to the average daily Basic Rent payable in
respect of such Item of Equipment during the 12 months ending on the last day of
the Term for such Equipment. Such rent shall be payable in the manner provided
in Section 3(b) for payments of Basic Rent.
(d) Supplemental Rent. Lessee also agrees to pay Lessor, or
------------------
whosoever shall be entitled thereto, any and all Supplemental Rent owing with
respect to an Item of Equipment promptly as the same shall become due and owing
in funds consisting of lawful currency of the United States of America, and in
the event of any failure on the part of Lessee to pay any Supplemental Rent,
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 Rent,
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but subject always to Section 16(a) hereof. Lessee will also pay Lessor, within
five Business Days of demand therefor, as Supplemental Rent, to the extent
permitted by applicable law, interest in funds consisting of lawful currency of
the United States of America at a per annum rate equal to the Past Due Rate on
any part of any installment of Basic Rent payable by it not paid when due for
any period for which the same shall be overdue and on any payment of
Supplemental Rent payable by it not paid when demanded by Lessor for the period
until the same shall be paid. The expiration or other termination of Lessee's
obligation to pay Basic Rent hereunder with respect to an Item of Equipment
shall not limit or modify the obligations of Lessee with respect to Supplemental
Rent with respect to an Item of Equipment.
(e) Interim Rent. Should the Closing Date not fall on the first
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day of the calendar quarter, then Lessee shall pay to Lessor at the daily
equivalent of the average of the Basic Rent for the next 12 months (beginning on
the Commencement Date for the Equipment subject to the Lease) for the period
from the Closing Date to the Commencement Date.
(f) [Intentionally Left Blank]
(g) Method of Payment. All amounts payable to Lessor as Basic
-----------------
Rent or Supplemental Rent shall be paid by Lessee by wire transfer of funds
prior to noon (Spokane, Washington time) on the date due to Lessor at such
account as may be designated by Lessor to Lessee in writing from time to time,
with reference to contract number supplied by Lessor (or such other office of
Lessor as Lessor shall designate in writing to Lessee).
Section 4. Lessor's Disclaimers of Warranties. LESSEE LEASES THE
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EQUIPMENT "AS IS, WHERE IS". LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
-------
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR
PURPOSE OF THE EQUIPMENT, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER
OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT.
Lessee waives any claim it may have against Lessor for any
liability, claim, loss, damage or expense of any kind or nature caused, directly
or indirectly, by the Equipment or any deficiency or defect therein or
inadequacy thereof, or the use or maintenance thereof, or any delay in providing
or failure to provide the Equipment, or in any interruption or loss of service
or use thereof, or any loss of business, whether in contract, tort or by any
theory of strict liability.
Section 5. Lessee's Representations and Warranties. Lessee
---------------------------------------
represents and warrants to and with Lessor that:
(i) Lessee is a corporation duly organized and validly existing
in good standing under the laws of the State of Nevada, has the corporate power
and authority to own or hold under lease its properties and to enter into and
perform its obligations under this Lease and
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the Tax Indemnity Agreement and is duly qualified or licensed and is in good
standing as a foreign corporation in each jurisdiction where the character of
its properties or the nature of its activities makes such qualification
necessary;
(ii) the execution, delivery and performance by Lessee of this
Lease Agreement and the Tax Indemnity Agreement (A) have been duly authorized by
all necessary corporate action of Lessee, (B) do not require any approval or
consent of any trustee or holder of any indebtedness, obligation or security of
Lessee, except such as have been duly obtained, and (C) will not contravene any
law, governmental rule, regulation or order binding on Lessee or the certificate
of incorporation or by-laws of Lessee or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien (other than as
permitted hereunder) upon the property of Lessee under, any indenture, mortgage,
contract or other agreement to which Lessee is a party or by which it may be
bound or affected;
(iii) neither the execution and delivery by Lessee of this Lease
Agreement and the Tax Indemnity Agreement, nor the consummation of any of the
Transactions by Lessee contemplated hereby or thereby, require the consent or
approval of, the giving of notice to, or the registration with, or the taking
of any other action in respect of, any Regulatory Authority;
(iv) this Lease Agreement constitutes and the Tax Indemnity
Agreement, and each Lease Supplement when entered into, will constitute, legal,
valid and binding obligations of Lessee enforceable against Lessee in accordance
with the terms thereof, except to the extent that the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);
(v) there are no pending or overtly threatened actions or
proceedings before any court or administrative agency which might materially
adversely affect the financial condition, business or operations of Lessee, or
the ability of Lessee to perform its obligations under this Lease Agreement, any
Lease Supplement hereto and the Tax Indemnity Agreement;
(vi) Lessee has furnished to Lessor copies of the consolidated
balance sheets of Guarantor as of December 31, 1994 and December 31,1993 for
each of the fiscal years 1994 and 1993 then ended and the related consolidated
statements of earnings for the 1994 and 1993 fiscal years then ended, such
financial statements as of, and for the fiscal years ended, December 31, 1994
and December 31, 1993 having been certified by Coopers & Xxxxxxx, independent
public accountants, and such financial statements fairly present the
consolidated financial condition of Guarantor as of said respective dates and
the results of its operations for said respective periods in accordance with
generally accepted accounting principles consistently applied and since December
31, 1994, there has been no material adverse changes in such condition or
operations;
(vii) the Equipment Cost, model and serial number information
contained in each of the Lease Supplements will be accurate in all material
respects when delivered;
Page 10
(viii) Lessee is not entering into this Lease, the Tax Indemnity
Agreement or any other transaction contemplated hereby or thereby directly or
indirectly, in connection with any arrangement or understanding to which it is a
party in any way involving an employee benefit plan or related trust (other than
a governmental plan), all within the meaning of the Employee Retirement Income
Security Act of 1974, as amended, or the Code; and
(ix) all insurance required by Section 13 hereof is in full force
and effect and all premiums due in respect of such insurance have been paid.
(x) As between Lessor and Lessee and solely for purposes of this
Lease, Lessee acknowledges and agrees that (a) the Equipment is of a size,
design, function, capacity and manufacture acceptable to it, (b) Lessee is
satisfied that the Equipment is suitable for its purposes, (c) Lessee has had
full opportunity to inspect the Equipment before accepting it, (d) the Equipment
is leased thereunder subject to all applicable laws and governmental regulations
now in effect or hereafter adopted, (e) Lessor is not the manufacturer of any of
the Equipment, and (f) none of the vendors of any of the Equipment are the agent
of Lessor.
Section 6. Conditions Precedent.
--------------------
(a) Initial Closing Date. The obligations of Lessor and Lessee to
---------------------
enter into this Lease in respect of the first Item of Equipment to be leased
hereunder is subject to the fulfillment to the reasonable satisfaction of Lessor
and/or Lessee, as the case may be on or prior to such first Closing Date, of the
conditions precedent to such obligation specified below:
(i) This Lease Agreement and the following documents shall have
been duly authorized, executed and delivered by the respective party or parties
thereto, shall each be satisfactory in form and substance to Lessor (except
where otherwise noted) and shall be in full force and effect and executed copies
thereof shall have been delivered to Lessor or its counsel (except where
otherwise noted):
(A) Lease Supplement(s) in respect of the Equipment to be
leased on such first Closing Date (the "Initial Equipment");
(B) copies of invoices of manufacturers or vendors and other
evidence in respect of the Initial Equipment which will permit Lessor and
Lessee to verify the Equipment Cost of such Equipment and, if any Item of
Initial Equipment is Sale-Leaseback Equipment, a Xxxx of Sale therefor;
Page 11
(C) the Tax Indemnity Agreement;
(D) the Guaranty Agreement;
(E) a certificate of the Secretary or an Assistant Secretary
of Lessee, dated as of the such first Closing Date, as to the Person or Persons
authorized to execute and deliver this Lease Agreement, the Tax Indemnity
Agreement, Lease Supplement No. 1, and any other documents to be executed on
behalf of Lessee in connection with the transactions
contemplated hereby (including additional Lease Supplements) and the signatures
of such person or persons.
(F) a certificate of the Secretary or an Assistant Secretary
of Guarantor, dated as of such first Closing Date, as to the Person or Persons
authorized to execute and deliver the Guaranty and any other documents to be
executed on behalf of Guarantor in connection with the transactions contemplated
hereby and the signatures of such person or persons.
(G) a certificate of the Secretary or an Assistant of
Lessor, dated as of such first Closing Date, as to the Person or Persons
authorized to execute and deliver this Lease Agreement and any other documents
to be executed on behalf of Lessor in connection with the transactions
contemplated hereby (including additional Lease Supplements) and the signatures
of such person or persons, such certificate to be satisfactory in form and
substance of Lessee and executed copies thereof to have been delivered to
Lessee or its counsel.
(ii) Lessor shall have received a favorable opinion, dated such
first Closing Date, addressed to it, in substantially the form attached hereto
as Exhibit B, form the general counsel of Lessee.
(iii) Lessor shall have received a favorable opinion, dated such
first Closing Date, addressed to it, in substantially the form attached hereto
as Exhibit C, from Guarantor.
(iv) Lessee shall have received a favorable opinion, dated such
first Closing Dated, addressed to it, in substantially the form attached hereto
as Exhibit E, from Xxxxx X. Xxxxxxx, acting as counsel of Lessor.
(v) On such first Closing Date, (A) the representations and
warranties of Lessee contained in Section 5 of this Lease Agreement and the
representations and warranties of Guarantor contained in [Section 9] of the
Guaranty shall be true and accurate on and as of such first Closing Date as
though made on and as of such date except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties shall be true and accurate as of such
earlier date, (B) no event shall have occurred and be continuing, or would
result from the purchase or lease of the Equipment specified in the Lease
Supplement for such first Closing Date, which constitutes an Event of Default or
would constitutes an Event of Default but for the requirement that notice be
given or time elapse or both, and (C) there has been no adverse change in the
Lessee's financial condition since the date of the latest financial statements
furnished by Lessee to Lessor pursuant to Section 5(vi) hereof.
(vi) Lessee shall have received the payment, if any, in respect
of Sale-Leaseback Equipment contemplated by Section 2(b) hereof being leased on
such first Closing Date.
Page 12
(vii) Each Item of Equipment being leased on such first Closing
Date shall have been delivered to, and accepted by Lessee on or prior to such
first Closing Date.
(viii) Lessor shall have received, in form and substance
reasonably satisfactory to it, a copy of resolutions of the board of directors
of Lessee, certified by the secretary or an assistant secretary of Lessee, duly
authorizing the lease by Lessee of the Equipment pursuant to the terms of this
Lease Agreement and the other Transaction Documents.
(ix) Lessor shall have received, in form and substance reasonably
satisfactory to it, a copy of resolutions of the Board of Directors of
Guarantor, certified by the secretary or an assistant secretary of Guarantor,
duly authorizing the guaranty of the obligations of Lessee under this Lease
Agreement and the other Transaction Documents by Guarantor pursuant to the terms
of the Guaranty Agreement; and
(x) Lessee shall have delivered or caused to be delivered to
Lessor an insurance certificate evidencing the insurance maintained by Lessee
pursuant to Section 13 hereof.
(b) Subsequent Closing Dates. The obligations of Lessor and
--------------------------
Lessee to enter into and perform its respective obligations under a Lease
Supplement in respect of any Item of Equipment covered by this Lease Agreement
on any Closing Date other than the first Closing Date is subject to the
fulfillment, to the reasonable satisfaction of Lessor and/or Lessee, as the case
may be, on or prior to such subsequent Closing Date, of the conditions precedent
to such obligation specified below:
(i) The Lease Supplement in respect of the Equipment to be leased
on such subsequent Closing Date and the following documents shall have been duly
authorized, executed and delivered by the respective party or parties thereto,
shall each be satisfactory in form and substance to Lessor and executed copies
thereof shall have been delivered to Lessor or its counsel (except where
otherwise noted):
(A) copies of invoices of manufacturers or vendors and other
evidence in respect of the Equipment being leased by Lessor to Lessee on such
Closing Date, which will permit Lessor and Lessee to verify the Equipment Cost
of such Equipment and, if any Item of Equipment to be leased on such Closing
Date is Sale-Leaseback Equipment, a Xxxx of Sale therefor;
Page 13
(B) a certificate of the Secretary or an Assistant Secretary
of Lessee, dated as of such Closing Date, as to the Person or Persons authorized
to execute and deliver the Lease Supplement in respect of the Equipment to be
leased on such Closing Date and any other documents to be executed on behalf of
Lessee in connection with the transactions contemplated hereby and the
signatures of such Person or Persons;
(C) a certificate of the Secretary or an Assistant Secretary
of Guarantor, dated as of such Closing Date, as to the Person or Persons
authorized to execute and deliver any documents to be executed on behalf of
Guarantor in connection with the transactions contemplated hereby and the
signatures of such Person or Persons; and
(D) a certificate of the Secretary or an Assistant Secretary
of Lessor, dated as of such Closing Date, as to the Person or Persons authorized
to execute and deliver the Lease Supplement in respect of the Equipment to be
leased on such Closing Date and any other documents to be executed on behalf of
Lessor in connection with the transactions contemplated hereby and the
signatures of such Person or Persons, such certificate to be satisfactory in
form and substance to Lessee and executed copies thereof to have been delivered
to Lessee or its counsel.
(ii) On each such Closing Date, (A) the representations and
warranties of Lessee contained in Section 5 of this Agreement, and the
representations and warranties of Guarantor contained in Section 10 of the
Guaranty shall be true and accurate on and as of such Closing Date as though
made on and as of such date except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties shall be true and accurate on and as of such earlier date), and
(B) no event shall have occurred and be continuing, or would result from the
purchase or lease of the Equipment specified in the Lease Supplement for such
Closing Date, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
(iii) Lessee shall have received the payment, if any, in respect
of Sale- Leaseback Equipment contemplated by Section 2(b) hereof being leased on
such Closing Date.
(iv) Each Item of Equipment to be leased on such Closing Date
shall have been delivered to and accepted by (such acceptance not to be
unreasonably withheld), Lessee on or prior to such Closing Date.
(v) The Lease Supplement covering the Equipment to be leased on such
Closing Date shall specify either (i) that the Assumed Tax Benefits contained in
the Tax Indemnity Agreement are applicable to such Equipment or (ii) the Assumed
Tax Benefits applicable to such Equipment.
(vi) Lessee shall have delivered or caused to be delivered to Lessor
an insurance certificate evidencing the insurance maintained by Lessee pursuant
to Section 13 hereof.
Page 14
(vii) Lessor and Lessee shall have received favorable opinions, in the
form specified in subsection (ii) and (iii), respectively, of Section 6(a)
hereof.
Section 7. Return of Equipment.
--------------------
(a) Upon the termination of the Term for an Item of Equipment,
Lessee shall, at its own risk and expense, cause each Item of Equipment, to be
returned to the authorized dealer of the Item of Equipment nearest to the then
location of such Item of Equipment or, at Lessee's option, to a place designated
by Lessor no further away from the then location of such Item of Equipment than
the "Return Reference Place" specified in the Lease Supplement covering such
Item of Equipment. Concurrently therewith, Lessee shall deliver to Lessor or its
designee a copy of all operating, maintenance and repair manuals relating to
such Item of Equipment that were received or prepared by Lessee and maintained
by Lessee. At the time of such return, such Item of Equipment shall be (i) free
and clear of all Liens (other than Lessor Liens), (ii) in the condition in which
it is required by Section 9(a) hereof to be; provided, that, any track type or
---------
wheel tired Item of Equipment will be returned with a minimum of 50% of track
life or tire life, as the case may be, remaining, and each Item of Equipment
shall be returned with all safety equipment operable, no broken glass and no
sheet metal damage with a cost to repair in excess of $250 for any single Item
of Equipment and (iii) free of all advertising or insignia placed thereon by
Lessee other than that affixed pursuant to Section 9(c) hereof.
(b) At the end of the Term for each Item of Equipment, if Lessee
declines to exercise its purchase or renewal options pursuant to Section 20(b)
or Section 20(a) with respect to such Item of Equipment, the Lessee shall make
the return condition payments to Lessor, if any, required by the Lease
Supplement covering such Item of Equipment.
Section 8. Liens. Lessee agrees that it will not directly or
-----
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to any Item of Equipment, title thereto or any interest therein or in this Lease
except (i) the respective rights of Lessor and Lessee as herein provided, (ii)
the rights of others under agreements or arrangements to the extent expressly
permitted by the terms of Section 15(a) hereof, (iii) Lessor Liens, (iv) Liens
for taxes either not yet due or being contested in good faith (and for the
payment of which adequate reserves have been provided) by appropriate
proceedings so long as such proceedings do not involve, in the reasonable
judgment of Lessor, any material danger of the sale, forfeiture or loss of such
Item of Equipment or any interest therein, (v) materialmen's, mechanics',
Page 15
workmen's, repairmen's, employees' or other similar liens arising in the
ordinary course of business for amounts the payment of which is either not yet
delinquent or is being contested in good faith (and for the payment of which
adequate reserves have been provided) by appropriate proceedings so long as such
proceedings do not involve, in the reasonable judgment of Lessor, any material
danger of the sale, forfeiture or loss of such Item of Equipment or any interest
therein and (vi) Liens arising out of judgments or awards against Lessee with
respect to which at the time an appeal or proceeding for review is being
prosecuted in good faith. Lessee will promptly, at its own expense, take such
action as may be necessary duly to discharge any such Lien not excepted above if
the same shall arise at any time.
Section 9. Maintenance and Operation: Location and Manner of Use,
------------------------------------------------------
Insignia.
---------
(a) Maintenance and Operation. Lessee, at its sole cost and
-------------------------
expense shall (i) maintain, inspect, service, repair, overhaul and test each
Item of Equipment so as to keep such Item of Equipment in as good a condition as
when delivered, ordinary wear and tear excepted, and in compliance with all
applicable federal, state or local laws, rules, regulations and other legal
procedures; (ii) maintain all records and other materials required by Regulatory
Authorities to be maintained in respect of such Item of Equipment; and (iii)
promptly furnish to Lessor such information as may be required to enable Lessor
to file any reports required to be filed by Lessor with any Regulatory Authority
because of Lessor's ownership of such Item of Equipment. Lessee agrees that such
Item of Equipment will not be maintained, inspected, serviced, repaired,
overhauled, tested, used or operated in violation of any law or any rule,
regulation, order or certificate of any government or Regulatory Authority
having jurisdiction over Lessor, Lessee or such Item of Equipment or in
violation of any license or permit relating to such Item of Equipment issued by
any such Regulatory Authority; provided, however, that Lessee shall not be
-----------------
required to comply with any such law, rule or regulation to the extent that
Lessee is contesting such law, rule or regulation in good faith and by
appropriate legal proceedings and such noncompliance or such proceedings do not,
in the reasonable judgment of Lessor, adversely affect the title, property or
rights of Lessor hereunder, or subject the same to a material risk of forfeiture
or sale or subject Lessor to a material risk of civil penalties or criminal
penalties or prosecution, or materially adversely affect the value or
marketability of any Item of Equipment after the termination of the Term for
such Item of Equipment.
(b) Location and Manner of Use. Lessee shall not be entitled to
---------------------------
use the Equipment outside the United States without Lessor's consent, which
consent shall not be unreasonably withheld. Lessee shall provide Lessor with not
less than 30 days prior notice of any change in the location of use of any Item
of Equipment. Lessee shall use or cause the Equipment to be used carefully and
properly and shall comply with the conditions of all insurance policies that
Lessee is required to maintain hereunder and the terms of all applicable
warranties or other requirements to the extent reasonable of each manufacturer
relating to the possession, use, condition, operation, servicing, repair or
maintenance of the Equipment. Lessor shall prepare and file all notices, reports
and other submissions required to be filed with respect to the Equipment under
any laws, governmental rules or regulations applicable to the Equipment (or, if
Lessee shall be required to file any such submission, Lessor shall prepare and
deliver such submission to Lessee in sufficient time to permit timely filing by
Lessee).
Page 16
(c) Insignia. Lessee agrees to affix to each Item of Equipment
--------
within 60 days of the Closing Date on which such Item of Equipment is leased
hereunder by Lessor to Lessee a metal or other permanent nameplate (to be
provided by Lessor) bearing the inscription "This unit is leased from ATEL
FINANCIAL CORPORATION, or its assigns". Lessee will not affix or permit to be
affixed to any Item of Equipment any sign, plate or other marking that states or
implies that such Item of Equipment is the property of anyone other than Lessor;
provided, however, that Lessee may affix thereto usual and customary insignia of
--------
Lessee (or a subsidiary of Lessee) and may allow the name of a permitted
sublessee or assignee to be placed thereon.
Section 10. Replacement of Parts: Alterations, Modifications and
----------------------------------------------------
Additions.
----------
(a) Replacement of Parts. Lessee, at its own cost and expense,
--------------------
will promptly replace all Parts (other than any Part constituting a Removable
Part) which may from time to time be incorporated or installed in or attached to
any Item of Equipment and which may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever. In addition, Lessee may, at
its own cost and expense, remove in the ordinary course of maintenance, service,
repair, overhaul or testing, any Part, whether or not worn out, lost stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use, provided that Lessee will, at its own cost and expense, replace
--------
such Part as promptly as possible. All replacement Parts (other than any Part
constituting a Removable Part) shall be free and clear of all Liens (other than
any Liens of the sort described in Sections 8(i), 8(ii), 8(iii) or 8(iv) hereof)
and shall be in as good operating condition as, and shall have a value and
utility at least equal to, the Parts replaced assuming such replaced Parts and
Equipment were in the condition and repair required to be maintained by the
terms hereof. All Parts (other than any Part constituting a Removable Part) at
any time removed from an Item of Equipment shall remain the property of Lessor,
no matter where located, until such time as such Parts shall be replaced by
Parts which have been incorporated or installed or attached to such Item of
Equipment and which meet the requirements for replacement Parts specified above.
Immediately upon any replacement part (other than any Part constituting a
Removable Part) becoming incorporated or installed in or attached to an Item of
Equipment as above provided, without further act, (i) title to the replaced Part
shall thereupon vest in Lessee, free and clear of all rights of Lessor, and
shall no longer be deemed a Part hereunder, (ii) title to such replacement Part
(other than any Part constituting a Removable Part) shall thereupon vest in
Lessor, and (iii) such replacement Part (other than any Part constituting a
Removable Part) shall become subject to this Lease and be deemed part of such
Item of Equipment for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to the Item of Equipment.
Lessor shall not be required in any way to maintain, repair or rebuild any Item
of Equipment.
(b) Alterations, Modifications and Additions. Lessee, at its own
----------------------------------------
expense, will make any alteration, modification in or addition to any Item of
Equipment (referred to hereinafter as an "Alteration") that may be necessary or
Page 17
advisable, from time to time, to comply with any law or governmental rule or
regulation or with health, safety, environmental or other standards of any
Regulatory Authority having relevant jurisdiction. In addition, Lessee, at its
own expense, may, from time to time, make any Alteration that Lessee deems
desirable in the proper conduct of its business; provided, however, that the
-------- -------
Alteration will not materially impair the value or utility of such Item of
Equipment below the value or utility immediately prior to the Alteration,
assuming such Item of Equipment were then of the value and utility required to
be maintained by the terms of this Lease Agreement. Lessee may, at any time
during the Term for an Item of Equipment, remove any Part (a "Removable Part"):
(i) which is in addition to, and not in replacement of or substitution for, any
Part originally incorporated or installed or attached to the relevant Item of
Equipment at the time of delivery thereof hereunder or any Part in replacement
of or substitution for any such Part; (ii) which is not required to be
incorporated or installed in or attached or added to such Item of Equipment
pursuant to the terms of this Section 10; and (iii) which can be removed from
such Item of Equipment without causing material damage to such Item of Equipment
or materially diminishing or impairing the value, utility or condition which
such Item of Equipment would have had at such time had such alteration,
modification or addition not occurred. Title to all Parts incorporated or
installed in or attached or added to such Item of Equipment as the result of
alterations, modifications, or additions under this Section 10(b), except
Removable Parts, shall, without further act, vest in Lessor. Title to any
Removable Parts shall not vest in Lessor, and upon the removal by Lessee of any
Removable Parts as above provided, such Removable Part shall no longer be deemed
part of the Item of Equipment from which it was removed. Any Removable Part not
removed by Lessee as above provided prior to the return of such Item of
Equipment to Lessor hereunder shall become the property of Lessor at the time of
such return.
Lessee shall repair all damage to any Item of Equipment resulting
from any Alteration so as to restore such Item of Equipment at least to the
condition in which it existed prior to such alteration (ordinary wear and tear
excepted). Notwithstanding the foregoing and provided that Lessee has not
exercised its option to purchase an Item of Equipment pursuant to Section 20(b),
at the end of the Term for such Item of Equipment, Lessor shall be entitled to
purchase from Lessee any Removable Parts at their then Fair Market Sales Value.
Lessor shall not have any obligation to pay for or to reimburse Lessee for any
Alteration permitted by this Section 10, whether or not it becomes Lessor's
property.
Section 11. Voluntary Termination.
----------------------
(a) At any time on or after the "Threshold Termination Date"
contained in the Lease Supplement covering such Item of Equipment, and so long
as no Event of Default (or event which would constitute an Event of Default but
for the lapse of time or the giving of notice or both) shall have occurred and
be continuing, in the event that Lessee shall have determined that any Item of
Equipment is obsolete, surplus or uneconomic to its needs, then, at any time
after the occurrence of any such determination, Lessee shall have the right, at
its option, on at least 90 days' prior written notice to Lessor, to terminate
this Lease with respect to such Item of Equipment (any such Item of Equipment
being referred to herein as a "Terminated Item of Equipment"), such termination
Page 18
to be effective on the date (which shall be any Payment Date on or after such
"Threshold Termination Date") specified in such notice (the "Termination Date").
During the period from the giving of such notice until the sixtieth day after
such notice was given, Lessee, on behalf of Lessor, shall use its best efforts
to obtain purchasers for the Terminated Item of Equipment and, in the event it
receives any offer during such period, Lessee shall notify Lessor in writing of
the amount and terms of such offer, the proposed date of such sale (which shall
be the Termination Date) and the name and address of the party submitting such
offer. Promptly after the expiration of the 60-day period provided above, but in
any event before the Termination Date, Lessee shall notify Lessor whether it
wishes Lessor to accept any such offer and, if it does so wish, the name of the
relevant offeror and the particulars of its offer. On the Termination Date,
provided Lessee has made all payments required to be made before the Termination
Date under this Lease with respect to the Terminated Items of Equipment, and
provided such offeror has paid to Lessor the sales price of the Terminated Items
of Equipment (i) Lessee shall deliver the Terminated Items of Equipment to such
offeror, (ii) Lessor shall, without recourse or warranty, except as to the
absence of Lessor Liens in the Terminated Items of Equipment, simultaneously
therewith sell the Terminated Items of Equipment to such offeror, the total
selling price realized at such sale to be retained by Lessor, provided, however,
-------- -------
that Lessor sale to the extent that the total selling price realized at such
sale after deducting the expenses incurred by Lessor in connection with such
sale exceeds the Termination Value of the Terminated Items of Equipment as of
the Termination Date, and (iii) Lessee shall simultaneously pay to Lessor, in
funds of the type specified in Section 3(b) hereof, the difference, if any, of
(A) the Termination Value of the Terminated Items of Equipment as of the
Termination Date less (B) the sale price of the Terminated Items of Equipment
sold by Lessor after deducting the expenses incurred by Lessor in connection
with such sale. If no sale shall have occurred on or as of the Termination Date,
Lessee shall, at its option, (1) deliver the Terminated Items of Equipment to
Lessor in the same manner as if delivery were made pursuant to Section 7 and
simultaneously pay to Lessor, in funds of the type specified in Section 3(b)
hereof, the excess, if any, of the Termination Value of the Terminated Items of
Equipment over the Fair Market Sales Value of the Terminated Items of Equipment,
or (2) pay to Lessor, in funds of the type specified in Section 3(b), the
greater of the Fair Market Sales Value of the Terminated Items of Equipment or
the Termination Value of the Terminated Items of Equipment, and Lessor shall,
without recourse or warranty, except as to the absence of Lessor Liens in the
Terminated Items of Equipment, simultaneously therewith sell the Terminated
Items of Equipment to Lessee. Upon compliance by Lessee with the provisions of
this Section 11(a), the obligation of Lessee to pay any Basic Rent hereunder
with respect to the Terminated Items of Equipment, which Basic Rent was required
by this Lease to be paid on or after the Termination Date, shall cease and the
Term for such terminated Items of Equipment shall end effective as to the
Terminated Items of Equipment as of the Termination Date.
Page 19
Section 12. Loss, Destruction, Requisition, Etc.
------------------------------------
(a) Event of Loss with Respect to the Equipment. Upon the
-------------------------------------------
occurrence of an Event of Loss with respect to any Item of Equipment, Lessee
shall forthwith (and, in any event, within 30 days after such occurrence) give
Lessor written notice of such Event of Loss, and, upon the Payment Date next
succeeding the occurrence of such Event of Loss (unless such Payment Date shall
be within 30 days after such occurrence, in which case upon the Payment Date
next succeeding the next Payment Date), Lessee shall, at Lessee's option, either
(i) pay to Lessor, in funds of the type specified in Section 3(b)hereof, the
Stipulated Loss Value for such Item of Equipment as of such Payment Date or (ii)
convey to Lessor (or cause to be conveyed to Lessor), as replacement for such
Item of Equipment, title to replacement equipment, such replacement equipment to
be free and clear of all Liens (other than Liens referred to in its clauses (i)
through (vi) of Section 8), to have a value and utility at least equal to, and
to be in as good operating condition as, such Item of Equipment immediately
prior to such Event of Loss, assuming compliance by Lessee with the terms of
this Lease with respect to such Item of Equipment.
Upon payments of the Stipulated Loss Value for any Item of Equipment
in compliance with the foregoing terms of this subsection (a), (x) the
obligation of Lessee to pay Basic Rent in respect of such Item of Equipment,
which Basic Rent was required by this Lease to be paid on or after such Payment
Date, shall cease, (y) the Term for such Item of Equipment shall end effective
as to such Item of Equipment as of such Payment Date, and (z) Lessor will offer
to Lessee, without recourse or warranty (except as to the absence of Lessor
Liens), all Lessor's rights, title and interest in and to such Item of
Equipment.
Upon conveyance to Lessor of title to replacement equipment in
compliance with the foregoing terms of this subsection (a), such replacement
equipment shall become Equipment for all purposes of this Lease and the Lease
Supplement relevant to the Item of Equipment being replaced and the other
Transaction Documents and shall be subject to the terms hereof and thereof.
(b) Application of Payments from Regulatory Authorities or
------------------------------------------------------
Insurance. Any payments received at any time by Lessor or by Lessee from any
---------
Regulatory Authority or other Person with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, any such Item of Equipment or on account of any insurance
maintained in accordance with Section 13 hereof shall be applied as follows: so
much of such payments remaining as shall not exceed the Stipulated Loss Value of
such Item of Equipment required to be paid by Lessee pursuant to paragraph (a)
of this Section 12 (plus any other amounts of Basic Rent and Supplemental Rent
then due and payable by Lessee with respect to such Item of Equipment), shall be
applied in reduction of Lessee's obligation to pay such Stipulated Loss Value,
if not already paid by Lessee, or, if already paid by Lessee, shall be applied
to reimburse Lessee for its payment of such Stipulated Loss Value, and the
balance, if any, of such payments remaining thereafter will be paid over to, or
retained by, Lessor.
Page 20
(c) Risk of Loss Generally, Obligation to Repair. Lessee shall
--------------------------------------------
bear the entire risk of damage, loss, theft or destruction, partial or complete,
of each Item of Equipment from whatsoever source arising, and any and all
replacements or repairs to any Item of Equipment required by this Lease shall be
at the cost and expense of Lessee. In the event any Item of Equipment is damaged
during the Term for such Item of Equipment, Lessee agrees that it will promptly
repair or restore such Item of Equipment at Lessee's sole cost and expense;
provided, however, that Lessee shall not be required to make any
--------
repair, restoration or replacement to such Item if such item of Equipment has
suffered an Event of Loss.
If an Item of Equipment is damaged during the Term for such Item of
Equipment, in such a manner so as not to constitute an Event of Loss (each such
occurrence being referred to herein as a "Reparable Casualty"), Lessee shall
promptly cause such Item of Equipment to be repaired or otherwise restored to
the condition required to be maintained by Section 9(a) hereof. Lessee shall
upon written request of Lessor make available to Lessor at reasonable times and
places all maintenance logs and other documentation, if any, of the repair
history of the Equipment for inspection. Such inspection shall be made during
reasonable business hours and upon reasonable notice to Lessee and shall be
limited to periods of reasonable duration and conducted so as to not cause any
interference with the business operations of the users of the Equipment.
Lessor agrees that, so long as no Event of Default, or event that,
with the passage of time or the giving of notice or both, would constitute an
Event of Default, shall have occurred and be continuing with respect to an Item
of Equipment, Lessee shall be entitled to insurance, warranty or other proceeds
arising from any claim or right of Lessor or Lessee against third persons for
damage or loss in connection with a Reparable Casualty and Lessee shall be
subrogated to all Lessor's right of recovery for such amount against any other
Person. Lessor shall execute and deliver from time to time such instruments and
do such other matters and things as may be necessary or appropriate more fully
to vest in Lessee such proceeds or to effect such subrogation; provided,
--------
however, that all costs and expenses, including court costs and attorneys' fees,
-------
in connection with enforcing or realizing upon any such claim or right to
proceeds or obtaining enforcement of or realizing upon such right of
subrogation, shall be borne and paid by Lessee.
Section 13. Insurance.
----------
(a) Lessee shall at its sole expense, at all times during the
lease of any Equipment by Lessor to Lessee hereunder, maintain third party
liability insurance in an amount not less than $3,000,000 and property damage
insurance for each Item of Equipment then subject to this in an amount not less
than the then the higher of the Fair Market Sales Value and the Stipulated Loss
Value of such Item of Equipment (provided that Lessor solely shall have the
obligation to establish Fair Market Sales Value in order to assure compliance
with this provision), in each case with such deductibles and upon such other
terms and conditions as are available at a reasonable cost and are consistent
with Lessee's practice of insuring similar Items of Equipment; provided,
--------
however, that Lessee shall not be required to maintain such levels of insurance
-------
during any period that Lessee shall have demonstrated to the reasonable
satisfaction of Lessor that maintaining lower amounts of such insurance, or
self-insuring, would be consistent with then prevailing industry practice for a
company with a similar financial condition as Lessee.
Page 21
The policies of all such insurance shall be written by responsible
insurers and shall (i) provide for cancellation, adverse modification or lapse
to be effective as to Lessor only upon 30 days' prior written notice to Lessor
by the insurer; (ii) waive the insurer's right to claim premiums from Lessor;
(iii) as to Lessor, be primary insurance and not require contributions from
other policies held by Lessor; (iv) insure the interests of Lessor regardless of
the action or inaction of Lessor or the breach or violation of any warranties,
declarations or conditions contained in such policies by Lessor or any other
Person; and (v) provide that, in the event of any loss payment under a policy,
the insurer waives any rights of subrogation against the insured party and any
setoff or counterclaim or any other deduction whether by attachment or
otherwise. The policies of all such property damage insurance shall name Lessor
as an additional insured and as loss payee as its interests shall appear. The
policies of all such third party liability insurance shall name Lessor as an
additional insured.
At least 30 days prior to the expiration date for the insurance
described above, Lessee shall furnish Lessor with certificates evidencing the
renewal of such insurance or its replacement with other insurance complying with
this Section 13.
(b) Nothing in this Section 13 shall limit or prohibit Lessee
from obtaining insurance for its own account with respect to any or all of the
Equipment and any proceeds payable thereunder shall be payable as provided in
the insurance policy relating thereto, provided that no such insurance may be
--------
obtained which would limit or otherwise adversely affect the coverage or amounts
payable under insurance required to be maintained pursuant to this Section 13.
Section 14. Inspection. Lessor or the duly authorized representative
----------
thereof may inspect the Equipment and the books and records of Lessee relative
thereto. Lessor shall not have a duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
Such inspection shall be made during reasonable business hours and upon
reasonable notice to Lessee and shall be limited to periods of reasonable
duration and conducted so as to not cause any interference with the business
operations of the users of the Equipment.
Section 15. Assignment and Sublease: Possession. (a) Lessee.
------------------------------------ -------
Lessee shall have the right, from time to time, with the prior written consent
of Lessor (which consent shall not be unreasonably withheld), to assign any of
its rights hereunder in respect of any Item of Equipment and to sublease any
Item of Equipment to any other Person; provided, however, that
--------
any such Person shall be required to use the Equipment within the United States,
unless Lessor otherwise consents, which consent shall not be unreasonably
withheld; provided, further, that after any such assignment (i) Lessee shall
--------
remain primarily liable to pay and perform all of its obligations hereunder,
(ii) the Guaranty Agreement shall continue in full force and effect, and (iii)
Page 22
Guarantor shall ratify and confirm all its obligations under the Guaranty
Agreement in all respects with respect to all obligations of any assignee of
this Lease Agreement; provided, further, that the sublease shall be expressly
-------- -------
subject and subordinate to this Lease Agreement and the rights and interests of
Lessor hereunder; and provided, further, that if an Event of Default hereunder
--------
shall have occurred and be continuing, Lessee shall not be entitled to assign
any of its rights hereunder not then assigned or to sublease any Item of the
Equipment not then subject to a permitted sublease. Lessee shall notify Lessor
in writing at least 30 days before any such proposed sublease or assignment and
provide Lessor with a copy of all documents to be executed in connection
therewith. Notwithstanding any such permitted sublease, Lessee shall during the
term of any sublease remain primarily liable to pay and perform all of its
obligations hereunder. Notwithstanding anything contained herein to the
contrary, Lessee shall have the right to merge with, liquidate into or sell
substantially all its assets to, a corporation or partnership if such
corporation or partnership shall execute and deliver to Lessor an agreement in
form and substance satisfactory to Lessor containing an assumption by such
corporation or partnership of the due and punctual performance and observance of
each covenant and condition of this Lease and the other Transaction Documents to
be performed or observed by Lessee and if the creditworthiness of the surviving
entity shall be at least equal to, or greater than, that of the Lessee
immediately prior to the date thereof.
(b) Lessor. Lessor may, at any time, and from time to time,
------
without Lessee's consent, transfer any or all of its rights hereunder in the
event of an assignment of all rights, title and interest of Lessor in the
Equipment and the Lease; provided that such assignee of Lessor shall have a net
-------- ----
worth equal to or greater than that of Lessor.
The terms and provisions of this Lease Agreement shall be binding upon
and inure to the benefit of Lessor and Lessee and their respective successors
and assigns.
Section 16. Events of Default. The occurrence and continuance of
-----------------
any of the following events shall constitute Events 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) Lessee (or Guarantor on its behalf) shall fail to make any
payment of Basic Rent within ten Business Days after the same shall have become
due; or
(b) Lessee (or Guarantor on its behalf) shall fail to make any
payment of Supplemental Rent or any other payments required under the Lease or
the Tax Indemnity Agreement within twenty Business Days after the same shall
have become due and after the receipt by Lessee of written notice thereof; or
(c) Lessee or Guarantor shall fail to perform or satisfy any
other covenant or condition, which shall continue unremedied for 30 days after
receipt of written notice by Lessee or Guarantor, as the case may be, unless
Lessee or Guarantor, as the case may be, shall be, diligently and reasonably
proceeding to correct such failure and such failure is corrected within 60 days
after the expiration of such 30 day period; or
Page 23
(d) any representation or warranty made by Lessee herein or in
any other Transaction Document (other than the Tax Indemnity Agreement), or any
representation or warranty made by Guarantor in the Guaranty Agreement, in
connection with the Transactions shall prove to have been incorrect when made in
any material respect, shall remain material when discovered and shall have not
been cured within 30 days after receipt by Lessee or Guarantor, as the case may
be, of written notice thereof, unless (providing that there is no danger of loss
or forfeiture to the Equipment) Lessee or Guarantor, as the case may be, shall
be diligently and reasonably proceeding to correct such failure and such failure
is corrected within 60 days after the expiration of such 30 day period; or
(e) Lessee or Guarantor shall consent to the appointment of a
receiver, trustee or liquidator of itself or of a substantial part of its
property, or Lessee or Guarantor shall admit in writing its inability to pay its
debts generally as they come due, or shall make a general assignment for the
benefit of creditors; or
(f) Lessee or Guarantor shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization in a
proceeding under any bankruptcy laws (as now or hereafter in effect) or an
answer admitting the material allegations of a petition filed against Lessee or
Guarantor in any such proceeding, or Lessee or Guarantor shall, by voluntary
petition, answer or consent, seek relief under the provisions of any other now
existing or future bankruptcy or other similar law providing for the
reorganization or winding-up of corporations, or providing for an agreement,
composition, extension or adjustment with its creditors; or
(g) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Lessee or of Guarantor, a receiver, trustee or liquidator of Lessee
or Guarantor or of any substantial part of its property, or sequestering any
substantial part of the property of Lessee or Guarantor, and any such order,
judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed or unvacated for a period of 60 days after the date of
entry thereof; or
(h) a petition against Lessee or Guarantor in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or hereafter in
effect, shall be filed and shall not be withdrawn or dismissed within 60 days
thereafter, or if, under the provisions of any law providing for reorganization
or winding-up of corporations which may apply to Lessee or Guarantor, any court
of competent jurisdiction shall assume jurisdiction, custody or control of
Lessee or Guarantor, or of any substantial part of the property of either and
such jurisdiction, custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of 60 days; or
Page 24
(i) an "event of default" shall have occurred and be continuing
under any other equipment lease between Lessor and Lessee; provided, however,
--------
that Lessee shall have received prior written notice of such "event of default"
and that Lessor be entitled on account of such "event of default" to terminate
such other equipment lease.
Section 17. Remedies. Upon the occurrence of any Event of
--------
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare this Lease Agreement to be in default; and at
any time thereafter, so long as there shall not have been remedied all
outstanding Events of Default, Lessor may do one or more of the following as
Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any requirements of, applicable law then in effect:
(a) cause Lessee, upon the written demand of Lessor and at
Lessee's expense, to return promptly, and Lessee shall return promptly, all or
such part of the Equipment, as Lessor may so demand, to Lessor or its order in
the manner and condition required by, and otherwise in accordance with all the
provisions of, Section 7 as if the Equipment were being returned at the end of
the Term applicable to such Equipment, or Lessor, at its option, may enter upon
the premises where all or any part of the Equipment is located and take
immediate possession of and remove the same by summary proceedings or otherwise;
(b) sell all or any part of the Equipment, in a commercially
reasonable manner, at public or private sale, as Lessor may determine, or
otherwise dispose of, hold, use, operate, lease to others or keep idle all or
any part of the Equipment as Lessor, in its sole discretion, may determine, all
free and clear of any rights of Lessee and without any duty to account to Lessee
with respect to such action or inaction or for any proceeds with respect thereto
except as hereinafter set forth in this Section 17;
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above with respect to all or any part of the Equipment, Lessor, by
written notice to Lessee specifying a payment date which shall be a Payment Date
and not earlier than ten Business Days from the date of such notice, may cause
Lessee to pay to Lessor, and Lessee shall pay Lessor, on the Payment Date, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of Basic
Rent for such Equipment required hereby to be paid on or after such Payment
Date), any unpaid Basic Rent in respect of all or part of the Equipment required
hereby to be paid prior to such Payment Date plus an amount equal to the
Stipulated Loss Value for such Equipment on the Payment Date specified for
payment in such notice plus an amount equal to the excess, if any, of the Fair
Market Sales Value of such Equipment over the Stipulated Loss Value as of the
Payment Date specified in such notice, together with interest on such amount at
the Past Due Rate from such specified payment date until the date of actual
payment of such amount;
(d) in the event Lessor, pursuant to paragraph (b) above, shall
have sold all or any part of the Equipment, Lessor, in lieu of exercising its
rights under paragraph (c) above with respect to such 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 Basic Rent for such Equipment required hereby to be paid on
or after the date
Page 25
of such sale), any unpaid Basic Rent in respect of such Equipment required
hereby to be paid prior to the date of such sale plus the amount of any
deficiency between the net proceeds of such sale and the higher of the
Stipulated Loss Value and Fair Market Sales Value of such Equipment, computed as
of the Payment Date coinciding with or next following the date of such sale,
together with interest at the Past Due Rate on the amount of such deficiency
from the Payment Date as of which such Stipulated Loss Value is computed until
the date of actual payment;
(e) by notice to Lessee, Lessor may require Lessee to pay on
demand to Lessor, and Lessee hereby agrees that it will so pay to Lessor, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of Basic
Rent for such Equipment required hereby to be paid on or after the date of such
notice) any unpaid Basic Rent in respect of all or any part of the Equipment not
theretofore sold by Lessor required hereby to be paid prior to the date of such
notice, plus an amount equal to the higher of the Stipulated Loss Value and Fair
Market Sales Value for such Equipment computed as of the next Payment Date,
together with interest at the Past Due Rate on such amount from such Payment
Date to the date of actual payment, and upon such payment of liquidated damages
and the payment of all such other Rent then due hereunder, Lessor shall proceed
to exercise its best efforts promptly to sell such Equipment and shall pay over
to Lessee the net proceeds of such sale (after first deducting from such
proceeds all costs and expenses whatsoever incurred by Lessor in connection with
such sale and all other amounts which may become payable to Lessor hereunder) up
to the amount of Stipulated Loss Value or Fair Market Sales Value actually paid;
and/or
(f) Lessor may rescind this Lease Agreement as to all or any
portion of the Equipment, or may exercise any other right or remedy which may be
available to it 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, except as otherwise provided
above, for any and all unpaid Rent payable by it and due hereunder before, after
or during the exercise of any of the foregoing remedies and for all reasonable
legal fees and other out-of-pocket costs and expenses incurred by reason of the
occurrence of any Event of Default or the exercise of Lessor's remedies with
respect thereof, including all out-of-pocket costs and expenses incurred in
connection with the return of the Equipment in accordance with the terms of
Section 7 or in placing the Equipment in the condition required by Section 7. At
any sale of Equipment or part thereof pursuant to this Section 17, Lessor may
bid for and purchase such Equipment. Except as otherwise expressly provided
above, no remedy referred to in this Section 17 is intended to be exclusive,
but, to the extent permitted by applicable law, 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, to the extent permitted by applicable law, 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 of
such other remedies. No express or implied waiver by Lessor of any Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default. Lessee shall be entitled to a credit against
amounts owing under this Section 17 for the Net Proceeds of any subleases of the
Equipment. The term "Net Proceeds" means the rental receipts actually received
by Lessor net of all out-of-pocket costs, expenses or Taxes (including legal
fees and expenses) incident thereto or provided for in this Section 17.
Page 26
Any amount paid by Guarantor under the Guaranty Agreement shall cure
the failure of Lessee to pay such amount under this Lease to the same extent as
payment by Lessee of such amount on the date and in the manner paid by Guarantor
would have cured failure.
Section 18. Notices. All notices required under the terms and
-------
provisions hereof shall be in writing, and shall become effective when delivered
by hand or received by cable, by telex, by telecopier or by first class United
States mail, addressed to such address as shall from time to time be designated
in writing to the other by Lessee, Guarantor or Lessor, or until an address is
so furnished, addressed to an address for notices set forth on the signature
pages hereof or, in the case of Guarantor, of the Guaranty Agreement.
Section 19. Net Lease, No Setoff, Etc. This Lease is intended by
--------------------------
Lessee and Lessor to be a net lease, and Lessee shall not be entitled to any
abatement or reduction of Rent, or any setoff against Rent, whether arising by
reason of any past, present or future claims of any nature by Lessee against
Lessor or otherwise. Except as otherwise expressly provided herein, this Lease
shall not terminate, nor shall the obligations of Lessor or Lessee hereunder be
otherwise affected, by reason of (i) any defect in the condition, design,
operation, or fitness for use of, or any damage to or loss or destruction of,
the Equipment, or any interruption or cessation in the use or possession of any
thereof by Lessee for any reason whatsoever or (ii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee. Nothing in this
Section 19 shall be deemed to release Lessor from any obligation or liability
hereunder or under any document referred to herein to which it is a party or by
which it is bound, or to impair any right that Lessee may have to seek
enforcement of any such obligation or liability at law or in equity by legal
proceedings separate from any enforcement proceedings commenced by Lessor in
respect of this Agreement.
Section 20. Renewal Option: Purchase Options.
---------------------------------
(a) Renewal Option. Not more than 180 days nor less than 150
--------------
days before the end of the Term for an Item of Equipment, Lessee may (unless
otherwise provided in the Lease Supplement covering the relevant Item of
Equipment), provided that no Event of Default (or event which would constitute
an Event of Default but for the lapse of time or giving of notice or both) shall
have occurred and be continuing and that all Rent then due shall have been paid,
deliver to Lessor an irrevocable written notice electing to renew this Lease for
a Renewal Term, for such Item of Equipment, as is specified in such notice for a
Basic Rent equal, at Lessee's option, to (i) for the first Renewal Term for such
Item of Equipment the Fixed Price Renewal Rent, (if any), or (ii) the then Fair
Market Rental Value of such Equipment, (the "Renewal Rent"), for such renewal
term as is specified in such notice, which renewal term (in each case, unless
otherwise specified) must have a duration of at least one year; provided,
--------
however, that the cumulative total of Renewal Terms based on the Fair Market
-------
Rental Value of the Equipment shall not exceed the "Fair Market Maximum Renewal
Period" specified in the Lease Supplement covering the Item of Equipment as to
which this Lease is being renewed. If no such written notice is delivered by
Lessee to Lessor on or before said 150th day, Lessee shall be deemed to have
waived any right to renew this Lease with respect to the Equipment whose Term is
so scheduled to end. At the end of the Basic Lease Term or any Renewal Term for
an Item
Page 27
of Equipment, if Lessee has elected to renew this Lease with respect to such
Item of Equipment and provided that all necessary governmental authorizations
and approvals, if any, shall have been received, this Lease and all of its
provisions shall continue in full force and effect during such Renewal Term, for
the Equipment covered by such Renewal Term, except that (i) Lessee shall pay
Lessor Basic Rent in lawful currency of the United States of America for such
Equipment during such Renewal Term in an amount equal to the Renewal Rent for
such Renewal Term determined as aforesaid, which Basic Rent shall be payable on
each Lease Payment Date occurring after the first day of such Renewal Term for
the Lease Period which preceded it and on the last day of such Renewal Term (any
Basic Rent payable on the last day of such Renewal Term to be in an amount equal
to the appropriate pro rata amount of the Basic Rent payable in respect of a
Lease Period during such Renewal Term if such Basic Rent is payable in respect
of a period that is less than six months long) and (ii) the Stipulated Loss
Value applicable during such Renewal Term shall be determined by agreement of
Lessor and Lessee within 20 days of receipt by Lessor of Lessee's notice to
renew; during the 20-day period, the parties agree to negotiate in good faith to
agree upon the Stipulated Loss Value Schedule to apply during such Renewal Term
and should include compensation to Lessor for loss of the Fair Market Sales
Value, recapture of tax benefits, recovery of transaction costs and expenses,
and an appropriate premium representing Lessee's upside; provided that, such,
-------------
Stipulated Loss Values shall not exceed the Stipulated Loss Value as of the last
day of the Basic Lease Term, plus 3% of the original Equipment Cost.
(b) Purchase Options.
-----------------
(i) Provided that such purchases shall not be prohibited by applicable
law or regulations, Lessee may (unless otherwise provided in the Lease
Supplement covering the relevant Item of Equipment), at its option, exercisable
by notice to Lessor on or before a date not more than 180 days, nor less than
150 days preceding the expiration of the Basic Lease Term as to an Item of
Equipment, which notice shall be irrevocable, purchase such Item of Equipment
then subject to this Lease on such expiration date for a purchase price, payable
on such expiration date in funds of the type specified in Section 3(b) hereof,
equal to the Fair Market Sales Value of such Item of Equipment on such
expiration date, but in no event more than the applicable Fixed Price Purchase
Option Price (if any) of such Item of Equipment, provided, that no transfer
--------
shall be made until all Rent then due has been paid.
(ii) Provided that such purchase shall not be prohibited by
applicable law or regulations Lessee may (unless otherwise provided in the Lease
Supplement covering the relevant Item of Equipment), at its option, exercisable
by notice to Lessor on or before the date not more than 180 days, nor less than
150days preceding the expiration of any Renewal Term as to an Item of Equipment,
which notice shall be irrevocable, purchase any Item of Equipment, then subject
to this Lease on such expiration date for a purchase price, payable on such
expiration date in funds of the type specified in Section 3(b) hereof, equal to
the Fair Market Sales Value of such Item of Equipment, on such expiration date,
provided, that no transfer shall be made until all Rent then due with respect to
--------
such Equipment has been paid.
(iii) Provided that such purchase shall not be prohibited by
applicable law or regulations, Lessee may (unless otherwise provided in the
Lease Supplement covering the
Page 28
relevant Item of Equipment), at its option, exercisable by notice to Lessor on
or before the date not more than 180 days, nor less than 150 days preceding the
Early Buy-Out Option Date (if any) as to an Item of Equipment, which notice
shall be irrevocable, purchase any Item of Equipment then subject to this Lease
on the Early Buy-Out Option Date for such Item of Equipment, for a purchase
price, payable on such date in funds of the type specified in Section 3(b)
hereof, equal to the applicable Early Buy-Out Option Price for such Item of
Equipment. In the event of payment in full of such purchase price, the
obligation of Lessee to pay Basic Rent in respect of such Equipment, which Basic
Rent was required by this Lease to be paid on or after the relevant purchase
date, shall cease, and the Term as to such Item of Equipment shall end effective
as of such date.
(c) Sale Without Recourse or Warranty. Any sale of Equipment by
---------------------------------
Lessor to Lessee pursuant to this Section 20 shall be made AS IS, WHERE IS and
without any recourse to or warranty of Lessor whatsoever, except as to the
absence of Lessor.
Section 21. Lessee's Indemnity.
-------------------
(a) General Tax Indemnity. (i) General. Lessee hereby agrees to
---------------------
pay and, on written demand, to indemnify and keep harmless each Tax Indemnitee
from and against any and all license, documentation and registration fees and
all taxes, levies, imposts, duties, charges or withholdings, together with any
penalties, fines or interest thereon or other additions thereto (all of the
above are herein collectively called "Taxes", and individually, a "Tax") which
may be imposed on or with respect to any Tax Indemnitee or any Item of Equipment
by any Federal, state or local government or taxing authority in the United
States, upon or with respect to (A) any Item of Equipment; (B) the purchase,
ownership, delivery, lease, sublease, possession, use, operation, condition,
storage, maintenance, modification, repair, construction, acceptance, rejection,
transportation, repossession, abandonment, redelivery, transfer of title, sale,
return, transfer or other disposition of any Item of Equipment; (C) Rent payable
under the Lease; or (D) this Agreement, the Lease Supplements, the Tax Indemnity
Agreement or any other Transaction Document and any other documents contemplated
hereby or thereby and amendments and supplements hereto and thereto.
(ii) Certain Exceptions. The provisions of Section 21(a)(i)
------------------
shall not apply to, and the Lessee shall have no liability to any Tax Indemnitee
under Section 21(a)(i) with respect to:
(A) Taxes on, based on, measured by or with respect to the net
income (including, without limitation, withholding taxes, surcharges, taxes on,
based on or measured by any item(s) of tax preference, minimum taxes and
alternative minimum taxes), franchises, excess profit, capital gains, and other
similar taxes (but excluding sales or use Taxes) or any Tax Indemnitee;
(B) Gross income, gross receipts, and value added taxes imposed
by the United States federal government in lieu of income taxes;
Page 29
(C) Taxes which are imposed as a result of any sale, assignment,
transfer or other disposition (whether voluntary or involuntary) by a Tax
Indemnitee of any interest in this Lease or any Item of Equipment, unless such
transfer or disposition results from any exercise by Lessor or any of its
remedies resulting from an Event of Default as provided in this Lease;
(D) Taxes to the extent of the excess of such Taxes over the
amount of such Taxes which would have been imposed and indemnified against had
there not been a sale, assignment, transfer or other disposition (whether
voluntary or involuntary) by a Tax Indemnitee of any interest in this Lease or
any Item of Equipment, unless such transfer results from any exercise by Lessor
of any of its remedies in connection with an Event of Default as provided in or
permitted by this Lease;
(E) Taxes with respect to any Item of Equipment to the extent
incurred and imposed in respect of and during any period after the expiration or
earlier termination of this Lease with respect to such Item of Equipment;
(F) Taxes imposed by any jurisdiction which result from any Tax
Indemnitee or an Affiliate of a Tax Indemnitee engaging in activities in that
jurisdiction unrelated to those contemplated by this Lease, the Tax Indemnity
Agreement or any other Transaction Document;
(G) Taxes for which Lessee is obligated to indemnify Lessor
pursuant to the Tax Indemnity Agreement;
(H) Taxes which have been collected and remitted by the vendor
based upon the Equipment Cost for an Item of Equipment;
(I) Taxes imposed on any Tax Indemnitee which result from the
willful misconduct or the negligence of any Tax Indemnitee or any Affiliate of a
Tax Indemnitee (other than willful misconduct or gross negligence imputed to
such Tax Indemnitee by reason of its interest in the Equipment).
(J) Taxes for so long as they are being contested in good faith;
provided, however, that Lessor shall be receiving all amounts of Rent payable to
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it without reduction by reason of such Tax and that Lessee has paid all amounts
under Section 21(a)(iii)(B) hereof;
(K) Taxes resulting from any prohibited transaction, within the
meaning of Section 4975(e)(I) of the Code;
(L) Taxes imposed because any Tax Indemnitee or any Affiliate of
a Tax Indemnitee is not a U.S. Person; and
(M) Taxes that arise out of or are caused by breach of the Tax
Indemnitee representations, warranties, or covenants contained in the Lease.
(iii) Certain Agreements. (A) Lessee further agrees that, with respect
------------------
to any payment or indemnity to an Indemnitee under Section 21(b) hereof or a Tax
Indemnitee under this Section
Page 30
21(a), and notwithstanding subparagraphs 21(a)(ii)(A) and 21(a)(ii)(B) hereof,
Lessee's indemnity obligations shall include any amount necessary to hold such
Indemnitee or Tax Indemnitee harmless on an after-tax basis from all Taxes
required to be paid by such Indemnitee or Tax Indemnitee with respect to such
payment or indemnity (including any payments under this Section 21(a)(iii) under
the laws of any Federal, state or local government or taxing authority in the
United States. Notwithstanding anything herein to the contrary, Lessee may, at
its own expense, deliver to Lessor an opinion of Lessee's Tax Counsel, in form
and substance reasonably acceptable to Lessor, to the effect that there is a
reasonable basis for taking the position that the payment of an indemnity
hereunder does not constitute gross income to Lessor. In that event, Lessee will
not include any amount with its indemnity payment described in this Section
21(a)(iii)(A) and Lessor will report the payment in a manner consistent with
that position. Any denial, disallowance, or disqualification of such position
will be treated as a Tax which Lessee is required to indemnify against pursuant
to this Section 21(a).
(B) If any Indemnitee or Tax Indemnitee shall realize a tax
benefit as a result of any Claims or Taxes paid or indemnified against by Lessee
under Section 21(b) hereof or this Section 21(a) (whether by way of deduction,
credit, allocation or apportionment of income or otherwise) (except to the
extent previously taken into account in computing the indemnity paid with
respect to such Claims or Taxes), such Indemnitee or Tax Indemnitee shall pay to
Lessee the amount of such tax benefit plus any further tax savings such
Indemnitee or Tax Indemnitee realizes as a result of the payment under this
Section 21(a)(iii)(B); provided, however, that any subsequent loss of any tax
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benefit paid to Lessee hereunder shall be treated as a Tax subject to
indemnification in accordance with this Section 21(a). Any payment due to Lessee
from Lessor pursuant to this Section 21(a)(iii)(B) shall be paid within 30 days
in immediately available funds after the filing of any return, report,
declaration or statement, or the making of any estimated tax payment reflecting
the utilization by Lessor of a tax deduction or other tax benefit attributable
to any Tax or Claim paid or indemnified against by Lessee, or the completion of
a contest resulting in an obligation on the part of Lessor to make a payment to
Lessee hereunder. Lessor shall not be obligated to make any payment pursuant to
this section to the extent that the amount of such payment would exceed (i) the
aggregate amount of all prior payments by Lessee to Lessor pursuant to Section
21(a), less (ii) the aggregate amount of all prior payments by Lessor to Lessee
under this section, but any such excess shall be carried forward and reduce
Lessee's obligations to make subsequent payments to Lessor pursuant to Section
21(a). Each Indemnitee or Tax Indemnitee shall in good faith use diligence in
filing its tax returns and in dealing with taxing authorities to seek and claim
any such tax benefit and to minimize the Taxes payable or indemnifiable by
Lessee hereunder.
(C) Any amount payable to any Tax Indemnitee pursuant to this
Section 21(a) shall be paid within 30 days in immediately available funds after
receipt of a written demand therefor from such Tax Indemnitee accompanied by
documentary proof of the actual satisfaction of such Tax and a written statement
describing in reasonable detail the Taxes which are subject of and basis for
such indemnity and the computation of the amount so payable (Lessor and Lessee
shall undertake a good faith effort to negotiate regarding the accuracy of such
written statement, and if Lessee is not reasonably satisfied, such written
statement shall, at Lessee's request, be verified by Coopers & Xxxxxxx or other
independent accountants chosen by Lessee
Page 31
and reasonably acceptable to such Tax Indemnitee and the expense of such
accountants shall be shared equally by Lessee and Lessor).
(D) If a written claim is made by any taxing authority against
any Tax Indemnitee for any Taxes which Lessee is required to pay or indemnify
against pursuant to this Section 21, such Tax Indemnitee shall promptly notify
the Lessee in writing. If requested by the Lessee in writing, such Tax
Indemnitee shall in good faith diligently contest (including pursuing all
judicial appeals) in the name of such Tax Indemnitee or, if requested by Lessee
and permitted by law, contest in the name of Lessee (or permit Lessee, if
requested by Lessee, to contest in the name of Lessee or such Tax Indemnitee)
the validity, applicability and amount of such Taxes by (1) resisting payment
thereof, (2) not paying the same except under protest, if protest is necessary
and proper, or (3) if payment shall be made, seeking a refund thereof in
appropriate administrative and judicial proceedings; provided that prior to
taking such action Lessee shall have agreed to indemnify such Tax Indemnitee in
a satisfactory manner for all out-of-pocket costs and expenses which such Tax
Indemnitee may incur in connection with contesting such claim, including,
without limitation, all reasonable legal, accountants' and investigatory fees
and disbursements. Any Tax Indemnitee may elect not to contest pursuant to the
preceding sentence, but such election shall constitute a waiver by such Tax
Indemnitee of any right to indemnification pursuant to this Section 21(a) with
respect to the Taxes which were the subject of such proposed contest and, if
Lessee has theretofore provided such Tax Indemnitee with any funds with respect
to such amount or has itself paid such amounts, such Tax Indemnitee shall
promptly pay or repay such funds to Lessee. If any Tax Indemnitee shall obtain a
refund of all or any part of any Taxes which Lessee shall have paid for such Tax
Indemnitee or for which Lessee shall have reimbursed such Tax Indemnitee, such
Tax Indemnitee shall pay to the Lessee the amount of such refund (up to the
amount provided in the third sentence of Section 21(a)(iii)(B), but any excess
shall be carried forward as provided in that sentence), plus any interest
received on such refund fairly attributable to any Taxes paid by Lessee to or
for such Tax Indemnitee prior to the receipt of such refund plus the amount of
any net tax benefit realized by such Tax Indemnitee as the result of the payment
thereof; provided, however, that any subsequent loss of any refund paid to
--------
Lessee hereunder shall be treated as a Tax subject to indemnification in
accordance with this Section 21(a).
(E) Each Tax Indemnitee shall be responsible for filing any
reports or returns that are required to be made by it with respect to any
Tax for which Lessee is obligated to indemnify against hereunder. Lessee
shall have no obligation to make any payment to a Tax Indemnitee unless and
until satisfactory proof of the satisfaction of such Tax filing is
provided.
(b) General Indemnity. Lessee hereby agrees to assume liability
-----------------
for, and to indemnify Lessor and its officers, directors, employees, servants
and agents (collectively, the "Indemnitees" and each individually an
"Indemnitee") against, and agrees to protect, save and keep harmless each
thereof from, any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements, including reasonable
legal fees and out-of-pocket expenses imposed on, incurred by or asserted
against any Indemnitee, in any way relating to or arising out of (i) this Lease,
the Tax Indemnity Agreement or the Guaranty (including the enforcement and the
amending or supplementing thereof) or (ii) the ownership, delivery,
non-delivery, lease, possession, use, operation, condition, sale, return or
other
Page 32
disposition of the Equipment (including, in each case and without limitation,
(x)latent or other defects, whether or not discoverable, and any claim for
patent, trademark or copyright infringement and (y) claims based on strict
liability in tort) (each of the foregoing a "Claim"); provided, however,
--------
that the foregoing indemnity of Lessee with regard to any particular Indemnitee
shall not extend to any liability, obligation, loss, damage, penalty, claim,
action, suit, cost, expense or disbursement (A) resulting from the willful
misconduct or the gross negligence of such Indemnitee or any officers,
directors, employees, servants or agents thereof, (B) to the extent attributable
to acts or events which occur after the Term for an Item of Equipment (it being
understood that any Claim which is directly attributable to a modification of an
Item of Equipment by Lessee during the Term for such Equipment, shall be deemed
to be attributable to an act which occurred during the Term of such Equipment),
or (C) which is a Tax, whether or not Lessee is required to indemnify therefor
pursuant to paragraph (a). Lessee further agrees that, with respect to any
payment or indemnity hereunder, such payment or indemnity shall be paid within
30 days after written demand therefor. If any action, including any
investigatory proceeding, shall be brought against, or commenced with respect
to, any Indemnitee entitled to indemnity under this Section 21(b) in respect of
which Lessee is required to indemnify such Indemnitee pursuant to the provisions
of this Section 21(b), Lessee shall have the right to assume the defense
thereof, including the employment of counsel satisfactory to such Indemnitee,
and the payment of all expenses incurred in such defense. In the event Lessee
assumes the defense of any such action, any such Indemnitee shall have the right
to employ separate counsel in such action and participate therein, but the fees
and expenses of such counsel shall be at the expense of such Indemnitee, unless
(i) the employment of such counsel has been specifically authorized by Lessee,
(ii) the named parties to such action (including any impleaded parties) include
both such Indemnitee and Lessee and representation of such Indemnitee and Lessee
by the same counsel would be inappropriate under applicable standards of
professional conduct due to actual or potential conflicting interests between
them or (iii) the counsel employed by Lessee and satisfactory to such Indemnitee
has advised such Indemnitee, in writing, that such counsel's representation of
such Indemnitee would be likely to involve such counsel in representing
different interests which could adversely affect either the judgment or loyalty
of such counsel to such Indemnitee whether it be a conflicting, inconsistent,
diverse or other interest in defense of such action on behalf of such
Indemnitee; it being understood, however, that Lessee shall not, in connection
with any one such action, or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys, and of any local or special counsel retained by said
firm, at any one time for each such Indemnitee, which firm shall be designated
in writing by such Indemnitee). In the event that Lessee does not assume the
defense of any such action in respect of such Indemnitee such Indemnitees shall
have the right to employ counsel in such action and participate therein at the
expense of Lessee. Lessee shall not be liable for any settlement of any such
action effected without its consent, but if settled with the consent of or if
there be a final judgment, beyond further review or appeal, in any such action,
Lessee shall indemnify and hold harmless any Indemnitee or other Person entitled
to indemnity under this Section 21(b) from and against any loss or liability by
reason of such settlement or judgment.
(c) Survival. The representations, indemnities and agreements of
--------
Lessee provided for in this Section 21 and Lessee's obligations under any and
all thereof, and the
Page 33
obligations of any Indemnitee or Tax Indemnitee under this Section 21, shall to
the extent arising out of acts or events occurring prior to the expiration of
the Term for an Item of Equipment, or otherwise as stated herein survive the
delivery of the Equipment and the expiration or other termination of the
Transaction Documents.
(d) Interest. To the extent permitted by applicable law,
--------
interest at the Past Due Rate (but only to the extent the definition of the term
Past Due Rate is applicable) shall be paid, on demand, on any amount or
indemnity not paid when due pursuant to this Section 21 until the same shall be
paid. Such interest shall be paid in the same manner as the unpaid amount in
respect of which such interest is due.
(e) Effect of Other Indemnities. Lessee's obligations under the
---------------------------
indemnities provided for in this Lease Agreement shall be those of a primary
obligor whether or not the Person indemnified shall also be indemnified with
respect to the same matter under the terms of this Lease Agreement, or any other
document or instrument, and the Person or entity seeking indemnification from
Lessee pursuant to any provisions of this Lease Agreement may proceed directly
against Lessee without first seeking to enforce any other right of
indemnification. Upon the payment in full by Lessee of any indemnity provided
for hereunder, Lessee shall be subrogated to any right of the Person indemnified
in respect of the matter as to which such indemnity was paid.
(f) Upon the payment in full by Lessee of any indemnity provided
for under this Lease, Lessee shall be subrogated to any right of the person or
entity indemnified in respect of the matter as to which such indemnity was paid.
Section 22. Governing Law. This Lease shall be governed by, and
-------------
construed in accordance with, the laws of the State of California (without
regard to any conflict of laws rule which might result in the application of the
laws of any other jurisdiction).
Section 23. Quiet Enjoyment. Lessor warrants that during the Term
---------------
for each Item of Equipment it shall not (and no Person claiming by or through
Lessor shall) disturb Lessee's peaceable and quiet possession, enjoyment and use
of its Equipment, subject to the terms and conditions of this Lease, so long as
no Event of Default shall have occurred and be continuing hereunder.
Section 24. Miscellaneous. (a) Transaction Expenses. All of the
------------- --------------------
following costs and expenses shall be funded by Lessee on the applicable Closing
Date: all of the costs and expenses incurred by Lessor, Lessee and any advisors
to Lessor or Lessee in connection with the preparation, execution and delivery
of this Lease Agreement, the applicable Supplement and the other Transaction
Documents, including without limitation,
(i) the reasonable fees, expenses and disbursements of counsel for
Lessee and counsel for Guarantor, for any services rendered in connection
with the transactions;
(ii) all other expenses in connection with such transactions
including, without limitation, printing expenses and all fees, taxes and
other charges payable in connection
Page 34
with the recording or filing of instruments and financing statements
described in this Lease and continuation statements with respect thereto.
(b) No Waiver of Rights. Notwithstanding any provision of any of the
-------------------
Transaction Documents, Lessee does not, pursuant to any of the Transaction
Documents, waive any right or claim it has or may have against the vendor or
manufacturer of any of the Equipment.
(c) Severability. Any provision of this Lease which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, Lessee hereby waives any provision of law which renders any
provision hereof prohibited or unenforceable in any respect. No term or
provision of this Lease may be changed, waived, discharged or terminated orally.
This Lease shall constitute an agreement of lease, and nothing herein shall be
construed as conveying to Lessee any right, title or interest in the Equipment
except as lessee only. The section and paragraph headings in this Lease and the
table of contents are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Lease. This Lease Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement to
be duly executed as of the day and year first above written.
ATEL Leasing Corporation ATEL LEASING CORPORATION, AS
000 Xxxx Xxxxxx LESSOR
Sixth Floor ------
Xxx Xxxxxxxxx, XX 00000
Attn: Treasurer By: /s/ Xxxx Xxxx
---------------------------
Title: President
------------------------
Pegasus Gold Corporation PEGASUS GOLD CORPORATION, AS
000 Xxxx Xxxxx Xxxxxx XXXXXX
Xxxxx 0000 ------
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Treasurer By: /s/ Illegible
---------------------------
Title: Controller
------------------------
By: /s/ Illegible
--------------------------
Title: VP & Secretary
-----------------------
Page 35
