EXHIBIT 10.26
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SECOND AMENDED AND RESTATED EQUIPMENT LEASE
Dated as of August 6, 2002
between
XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as trustee under MW 1997-1 Trust,
as the Lessor Trustee
and
MAIL-WELL I CORPORATION,
as the Lessee
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TABLE OF CONTENTS
Page
Section 1. DEFINITIONS 1
Section 1.1. Definitions; Interpretation 1
Section 2. LEASE 1
Section 2.1. Lease of Equipment 1
Section 2.2. Lease Supplement 1
Section 2.3. Lease Term 2
Section 2.4. Title 2
Section 3. PAYMENT OF RENT 2
Section 3.1. Rent 2
Section 3.2. Payment of Rent 2
Section 3.3. Supplemental Rent 2
Section 3.4. Method of Payment 3
Section 4. QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS 3
Section 4.1. Quiet Enjoyment 3
Section 4.2. Right to Inspect 3
Section 4.3. Change in the Nature of Business 3
Section 4.4. Corporate Changes 3
Section 5. NET LEASE, ETC. 4
Section 5.1. Net Lease 4
Section 5.2. No Termination or Abatement 5
Section 6. LESSEE ACKNOWLEDGMENTS 6
Section 6.1. Condition of the Equipment 6
Section 6.2. Risk of Loss 6
Section 7. MARKING 7
Section 7.1. Marking of Equipment 7
Section 8. POSSESSION AND USE OF THE EQUIPMENT, ETC. 7
Section 8.1. Use of the Equipment 7
Section 8.2. Possession of the Equipment 8
Section 8.3. Landlord Waivers 8
Section 9. MAINTENANCE AND REPAIR; RETURN 8
Section 9.1. Repairs and Maintenance 8
Section 9.2. Maintenance Costs and Warranties 8
Section 9.3. Lessor Trustee Not Obligated to Maintain or Repair 9
Section 9.4. Return 9
Section 10. MODIFICATIONS, ETC. 12
Section 10.1. Replacement of Parts 00
-x-
XXXXX XX XXXXXXXX
(XXXX.)
Page
Section 10.2. Required Alterations 13
Section 10.3. Optional Alterations 13
Section 10.4. Title to Parts 13
Section 11. WARRANTY OF TITLE 13
Section 11.1. Warranty of Title 13
Section 12. PERMITTED CONTESTS 14
Section 12.1. Permitted Contests in Respect of Applicable Law 14
Section 13. INSURANCE 15
Section 13.1. Required Insurance Coverages and Limits 15
Section 13.2. Adjustment and Payment of Losses 16
Section 13.3. Evidence of Insurance 16
Section 13.4. Application of Insurance Proceeds 16
Section 13.5. Deductibles and Self-Insurance 17
Section 13.6. Insurance for Own Account 17
Section 14. CASUALTY OCCURRENCE 17
Section 14.1. Casualty Occurrence 17
Section 14.2. Conveyance of Replacement Equipment 19
Section 14.3. Application of Payments 20
Section 14.4. Certain Government Requisitions 20
Section 14.5. Application of Payments from Governmental Authorities for
Requisition of Title 21
Section 14.6. Application of Payments During Existence of Default 21
Section 15. SUBSTITUTION OF EQUIPMENT 21
Section 15.1. Substitution of Equipment 21
Section 16. EVENTS OF DEFAULT 22
Section 16.1. Events of Default 22
Section 16.2. Remedies 24
Section 16.3. Waiver of Certain Rights 27
Section 17. LESSOR TRUSTEE'S RIGHT TO REMEDY 27
Section 17.1. The Lessor Trustee's Right to Remedy the Lessee's Defaults 27
Section 18. OPTIONS TO RENEW, PURCHASE AND SELL 28
Section 18.1. Purchase of the Equipment 28
Section 18.2. [Intentionally Omitted] 28
Section 18.3. Option to Sell the Equipment 28
Section 18.4. End of Term Adjustment 30
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TABLE OF CONTENTS
(CONT.)
Page
Section 19. PROCEDURES RELATING TO PURCHASE OF EQUIPMENT 31
Section 19.1. Provisions Relating to the Purchase of Equipment; Conveyance
upon Certain Other Events 31
Section 20. ADDITIONAL GUARANTORS 31
Section 20.1. Additional Guarantors 31
Section 21. ASSIGNMENT RESTRICTIONS 32
Section 21.1. Restrictions on Assignments by the Lessee 32
Section 22. NO MERGER OF TITLE 32
Section 22.1. No Merger of Title 32
Section 23. INTENT OF THE PARTIES 32
Section 23.1. Nature of Transaction 32
Section 23.2. Liens and Security Interests 33
Section 24. MISCELLANEOUS 35
Section 24.1. Severability 35
Section 24.2. Amendments and Modifications 36
Section 24.3. No Waiver 36
Section 24.4. Notices 36
Section 24.5. Successors and Assigns 36
Section 24.6. Headings and Table of Contents 36
Section 24.7. Counterparts 36
Section 24.8. Third Party Beneficiaries 36
Section 24.9. Governing Law 36
Section 24.10. Time of Essence 36
ATTACHMENTS TO EQUIPMENT LEASE
Exhibit A Form of Lease Supplement
Exhibit B Form of Landlord Waiver
Schedule 13.1 Insurance
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SECOND AMENDED AND RESTATED EQUIPMENT LEASE
THIS SECOND AMENDED AND RESTATED EQUIPMENT LEASE (this "Lease"),
dated as of August 6, 2002 between XXXXX FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, a national banking association, as trustee under MW 1997-1
Trust (the "Lessor Trustee"), as lessor, and MAIL-WELL I CORPORATION, a
Delaware corporation, as lessee (the "Lessee").
RECITALS
A. Pursuant to the Amended and Restated Participation Agreement, the
Existing Certificate Purchasers financed the Equipment leased by the Lessor
Trustee to the Lessee pursuant to the Amended and Restated Equipment Lease;
B. The Lessor Trustee, the Lessee and the Trust Certificate
Purchasers now desire to refinance the Equipment pursuant to the Second
Amended and Restated Participation Agreement, dated as of August 6, 2002
(the "Participation Agreement"), among the Lessee, the Lessor Trustee and
the Trust Certificate Purchasers;
C. On the Closing Date, the Trust Certificate Purchasers will
purchase the Trust Certificates, and the Lessor Trustee will prepay in full
the Existing Trust Certificates;
D. The Lessor Trustee and the Lessee desire to amend and restate the
Amended and Restated Equipment Lease to provide for the lease from the
Lessor Trustee to the Lessee of the Equipment on the terms of this Lease;
NOW THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties amend and restate the Amended and Restated
Equipment Lease in its entirety to provide as follows.
AGREEMENT
SECTION 1. DEFINITIONS
Section 1.1. Definitions; Interpretation. Capitalized terms used but
not otherwise defined in this Lease have the meanings specified in Annex I
to the Participation Agreement. The rules of interpretation set forth in
Annex I to the Participation Agreement apply to this Lease.
SECTION 2. LEASE
Section 2.1. Lease of Equipment. Subject to the conditions set forth
in the Participation Agreement, the Lessor Trustee leases to the Lessee the
Equipment and other property described in Section 23.2 for the Lease Term,
and the Lessee leases the Equipment from the Lessor Trustee for the Lease
Term, such leasing to be further evidenced by the execution by the Lessor
Trustee and the Lessee of Lease Supplement No. 1 covering the Equipment.
Section 2.2. Lease Supplement. On the Closing Date, the Lessee and
the Lessor Trustee shall enter into Lease Supplement No. 1, substantially
in the form of Exhibit A to this Lease, covering the Equipment, describing
the Items of Equipment leased on the Closing Date,
and setting forth the Equipment Cost therefor. The Lessee's execution and
delivery of a Lease Supplement with respect to an Item of Equipment shall
conclusively establish as between the Lessor Trustee and the Lessee that
such Item of Equipment is acceptable to and accepted by the Lessee under
this Lease, notwithstanding any defect with respect to design, manufacture,
condition or in any other respect, and that such Item of Equipment is in
good order and condition and appears to conform to the specifications
applicable thereto and to all governmental standards and requirements
applicable thereto.
Section 2.3. Lease Term. Subject to the termination provisions of
this Lease, each Item of Equipment shall be leased for the Lease Term.
Section 2.4. Title. The Equipment is leased to the Lessee AS-IS,
WHERE-IS, without any representation or warranty, express or implied, by
the Lessor Trustee, the Agent or any Certificate Holder and subject to the
existing state of title (including, without limitation, all Liens other
than Lessor's Liens) and all applicable Requirements of Law. The Lessee
shall in no event have any recourse against the Lessor Trustee, the Agent
or any Certificate Holder for any defect in or exception to title to the
Equipment or leasehold interest therein other than resulting from Lessor's
Liens attributable to the Lessor Trustee, the Agent or such Certificate
Holder.
SECTION 3. PAYMENT OF RENT
Section 3.1. Rent.
(a) During the Lease Term, the Lessee shall pay Periodic Rent
for all Items of Equipment subject to this Lease to the Lessor
Trustee on each Scheduled Payment Date and on any date on which this
Lease is terminated, provided that any payment of Periodic Rent which
is due on a date which is not a Business Day shall be payable on the
next succeeding Business Day, unless the result of the extension
would be that such payment would be made in another calendar month in
which event such payment shall be made on the immediately preceding
Business Day.
(b) Neither the Lessee's inability or failure to take
possession of all or any portion of the Equipment when delivered by
the Lessor Trustee, nor the inability or failure of the Lessor
Trustee to deliver all or any portion of the Equipment to the Lessee
on or before the Closing Date, whether or not attributable to any act
or omission of the Lessee or any act or omission of the Lessor
Trustee or any Certificate Holder, or for any other reason
whatsoever, shall delay or otherwise affect the Lessee's obligation
to pay Rent for all of the Equipment in accordance with the terms of
this Lease.
Section 3.2. Payment of Rent. Lessee shall pay Rent absolutely net to
the Lessor Trustee or other Person entitled to it, so that this Lease
yields to that Person the full amount of Rent when due, without setoff,
deduction or reduction.
Section 3.3. Supplemental Rent. The Lessee shall pay to the Lessor
Trustee or any other Person entitled thereto any and all Supplemental Rent
promptly as the same shall become due and payable, and if the Lessee fails
to pay any Supplemental Rent, the Lessor Trustee and such other Persons
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise in the case of nonpayment of Periodic Rent. The Lessee
shall pay to the
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Lessor Trustee, as Supplemental Rent, among other things, on demand, to the
extent permitted by applicable Requirements of Law, interest at the
applicable Overdue Rate on any installment of Periodic Rent not paid when
due for the period for which the same shall be overdue and on any payment
of Supplemental Rent not paid when due or demanded by the Lessor Trustee
for the period from the due date or the date of any such demand, as the
case may be, until the same shall be paid. The expiration or other
termination of the Lessee's obligations to pay Periodic Rent hereunder
shall not limit or modify the obligations of the Lessee with respect to
Supplemental Rent. Unless expressly provided otherwise in this Lease, in
the event of any failure on the part of the Lessee to pay and discharge any
Supplemental Rent as and when due, the Lessee shall also promptly pay and
discharge any fine, penalty, interest or cost which may be assessed or
added against the Lessor Trustee by a third party for nonpayment or late
payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.
Section 3.4. Method of Payment. Each payment of Rent payable by the Lessee
to the Lessor Trustee under this Lease or any other Operative Agreement
shall be made by the Lessee to the Lessor Trustee prior to 10:00 a.m. (Salt
Lake City, Utah time) on the date when such payment is due to the Account
by wire transfer of federal or other immediately available funds consisting
of lawful currency of the United States of America.
SECTION 4. QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS
Section 4.1. Quiet Enjoyment. So long as no Event of Default has
occurred and is continuing and subject to other terms of the Operative
Agreements, the Lessee shall peaceably and quietly have, hold and enjoy
each Item of Equipment for the Lease Term, free of any claim or other
action by the Lessor Trustee, the Agent or the Certificate Holders or
anyone claiming through or under the Lessor Trustee, the Agent or the
Certificate Holders (other than the Lessee) with respect to any matters
arising from and after the Closing Date. The Lessee's right of quiet
enjoyment shall in no way affect the rights of the Lessor Trustee, the
Agent or the Certificate Holders (or anyone claiming through or under the
Lessor Trustee, the Agent or the Certificate Holders) to initiate legal
action to enforce the Lessee's obligations under this Lease.
Section 4.2. Right to Inspect. During the Lease Term, the Lessee
shall upon reasonable notice, and from time to time, permit the Lessor
Trustee, the Agent, any Certificate Holder, and their respective authorized
representatives to inspect the Equipment, to examine the records or books
of account of the Lessee relating to the Equipment and to discuss the
affairs, finances and accounts of the Lessee with appropriate officers,
during normal business hours, provided that if an Event of Default has
occurred and is continuing, no notice shall be required and any inspection
shall be at the Lessee's expense.
Section 4.3. Change in the Nature of Business. The Lessee shall not
engage in any business or activity if as a result the general nature of the
business of the Lessee would be changed in any material respect from the
general nature of the business engaged in by the Lessee on the date of this
Lease.
Section 4.4. Corporate Changes. The Lessee shall notify the Lessor
Trustee and the Agent at least 10 Business Days before it changes the
jurisdiction where it is organized, the location of its chief executive
office; or its name. In connection with any such change, the Lessee
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shall deliver to the Lessor Trustee and the Agent any additional UCC
financing statements and other documents reasonably requested by them to
maintain the validity, perfection and priority of the security interests
granted in this Lease or the other Operative Documents.
SECTION 5. NET LEASE, ETC.
Section 5.1. Net Lease.
(a) This Lease shall constitute a net lease, and it is intended
that the Lessee shall pay all costs and expenses of every character,
whether foreseen or unforeseen, ordinary or extraordinary, or
structural or non-structural, in connection with the Lessee's
installation, use, possession, operation, maintenance, repair and
return of the Equipment, including, without limitation, every cost
and expense particularly described in this Lease.
(b) Any present or future law to the contrary notwithstanding,
this Lease shall not terminate (except as expressly permitted by this
Lease and upon performance of the obligations in connection
therewith), nor shall the Lessee be entitled to any abatement,
suspension, deferment, reduction, setoff, counterclaim, or defense
with respect to the Rent, nor shall the Lessee's obligations
hereunder be affected for any reason, cause or circumstance, whether
or not the Lessee shall have notice or knowledge of it, including,
without limitation, the following reasons, causes or circumstances:
(i) any defect in the condition, merchantability,
design, construction, quality or fitness for use of the Equipment
or any part thereof, or the failure of the Equipment to comply
with all Requirements of Law, including any inability to use the
Equipment by reason of such defect or failure to comply;
(ii) any damage to, removal, abandonment, salvage,
loss, contamination of, scrapping or destruction of or any
requisition or taking of the Equipment or any part thereof;
(iii) any restriction, prevention or curtailment of or
interference with any use or possession of the Equipment or any
part thereof;
(iv) any defect in title of or rights to the Equipment
or any Lien on such title or rights or on the Equipment;
(v) any change, waiver, extension, indulgence or other
action or omission or breach in respect of any obligation or
liability of or by the Lessor Trustee, the Agent or any
Certificate Holder;
(vi) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like
proceedings relating to the Lessee, any Guarantor, the Lessor
Trustee, the Agent, any Certificate Holder or any other Person,
or any action taken with respect to this Lease by any trustee or
receiver of the Lessee, any Guarantor, the Lessor Trustee, the
Agent, any Certificate Holder or any other Person, or by any
court in any such proceeding;
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(vii) any claim that the Lessee has or might have
against any Person, including without limitation the Lessor
Trustee, the Agent, any Certificate Holder or any vendor,
manufacturer, contractor of or for the Equipment;
(viii) any failure on the part of the Lessor Trustee or
any other Person to perform or comply with any of the terms of
this Lease, of any other Operative Agreement or of any other
agreement or any breach of any representation or warranty of, or
any act or omission of the Lessee, any Guarantor, the Lessor
Trustee, the Agent or any Certificate Holder under this Lease or
any of the other Operative Agreements, or any claims, rights or
remedies occurring or arising as a result of any other business
dealings between or among the Lessee or any Guarantor and any of
the Lessor Trustee, the Agent or any Certificate Holder;
(ix) any invalidity or unenforceability or illegality
or disaffirmance of this Lease against or by the Lessee or any
provision of any Operative Agreement or any lack of right, power
or authority of the Lessee, any Guarantor, the Lessor Trustee,
the Agent or any Certificate Holder to enter into any Operative
Agreement or any of the transactions contemplated thereby;
(x) the impossibility or illegality of performance of
its obligations under this Lease by the Lessee or the Lessor
Trustee or both of them;
(xi) any action by any Governmental Authority;
(xii) the Lessee's acquisition of any Item of Equipment
(except to the extent this Lease is terminated in accordance with
its terms); or
(xiii) breach of any warranty or representation
regarding any Item of Equipment.
(c) The Lessee's agreement in Section 5.1(b) shall not affect
any claim, action or right the Lessee may have against the Lessor
Trustee or any Certificate Holder. The parties intend that the
Lessee's obligations under this Lease shall be obligations that are
separate and independent from any obligations of the Lessor Trustee
hereunder or under any other Operative Agreements, and the
obligations of the Lessee shall continue unchanged, except as they
may be modified in accordance with Section 24.2. Without affecting
Lessee's obligation to pay Rent under any Operative Agreement, Lessee
may seek damages for a breach by the Lessor Trustee or any
Certificate Holder of its obligations under this Lease (including,
without limitation, Section 4.1) or any other Operative Agreement.
Section 5.2. No Termination or Abatement. The Lessee shall remain
obligated under this Lease in accordance with its terms and shall not take
any action to terminate (except as expressly permitted by this Lease and
upon performance of the obligations in connection therewith), rescind or
avoid this Lease, notwithstanding any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution, or other proceeding affecting the
Lessor Trustee or any Certificate Holder, or any action with respect to
this Lease which may be taken by any trustee, receiver or liquidator of the
Lessor Trustee or any Certificate Holder or by any court with respect
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to the Lessor Trustee or any Certificate Holder. The Lessee's obligations
hereunder, including, without limitation, its obligations to pay Periodic
Rent for the Equipment and to pay Supplemental Rent, shall be unconditional
and irrevocable under any and all circumstances and the Lessee hereby
waives, to the extent permitted by law, all right (a) to terminate or
surrender this Lease (except as provided herein) or (b) to avail itself of
any abatement, suspension, deferment, reduction, setoff, counterclaim or
defense with respect to any Rent. Each Rent payment made pursuant to this
Lease by the Lessee shall be final and the Lessee shall not seek to recover
all or any part of such payment from the Lessor Trustee or any Certificate
Holder for any reason whatsoever. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise
except as specifically provided herein or as otherwise agreed, the Lessee
nonetheless agrees to pay to the Lessor Trustee, or to whomever shall be
entitled thereto, an amount equal to each Rent payment at the time such
payment would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part. The Lessee's
obligation in the immediately preceding sentence shall survive the
expiration or termination of this Lease other than in accordance with its
terms. The Lessee shall remain obligated under this Lease in accordance
with its terms and the Lessee hereby waives, to the extent permitted by
law, any and all rights now or hereafter conferred by statute or otherwise
to modify or to avoid strict compliance with its obligations under this
Lease. Notwithstanding any such statute or otherwise, the Lessee shall be
bound by all of the terms and conditions of this Lease.
SECTION 6. LESSEE ACKNOWLEDGMENTS
Section 6.1. Condition of the Equipment. THE LESSEE ACKNOWLEDGES AND
AGREES THAT IT IS LEASING EACH ITEM OF EQUIPMENT "AS IS" WITHOUT
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR
TRUSTEE, THE AGENT OR ANY CERTIFICATE HOLDER AND SUBJECT TO (A) THE
EXISTING STATE OF TITLE (EXCLUDING LESSOR'S LIENS), (B) THE RIGHTS OF ANY
PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS THAT A PHYSICAL
INSPECTION MIGHT SHOW AND (D) VIOLATIONS OF REQUIREMENTS OF LAW THAT MAY
EXIST ON THE CLOSING DATE. NONE OF THE LESSOR TRUSTEE, THE AGENT, OR ANY
CERTIFICATE HOLDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR SHALL BE
DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE, VALUE,
SUITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR ANY USE OF
THE EQUIPMENT (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY
OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT
(OR ANY PART THEREOF). THE LESSOR TRUSTEE, THE AGENT, AND THE CERTIFICATE
HOLDERS SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT IN THE
EQUIPMENT OR THE FAILURE OF THE EQUIPMENT, OR ANY PART THEREOF, TO COMPLY
WITH ANY REQUIREMENT OF LAW.
Section 6.2. Risk of Loss. Lessee assumes all risks of loss of,
decreases in the enjoyment and beneficial use of, damage to, and
destruction of each Item of Equipment from any cause, including without
limitation fire, the elements, casualty, condemnation or other
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governmental taking, theft, riot, or war, and neither the Lessor Trustee
nor any Certificate Holder shall in any event be answerable or accountable
therefor.
SECTION 7. MARKING
Section 7.1. Marking of Equipment. The Lessee shall promptly cause
each Item of Equipment to be plainly, permanently and conspicuously marked
by a metal tag, plate or label affixed thereto, each setting forth the
following legend:
TITLE TO THIS EQUIPMENT IS HELD BY XXXXX FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, AS TRUSTEE UNDER
MW 1997-1 TRUST AND IS SUBJECT TO A LEASE BY TRUSTEE
TO MAIL-WELL I CORPORATION.
The Lessee shall replace any tag, plate or label that is removed, is
destroyed or becomes illegible and shall indemnify each Indemnified Party
against any liability, loss or expense incurred by such Indemnified Party
as a result of the Lessee's failure to maintain or replace such tags,
plates or labels.
SECTION 8. POSSESSION AND USE OF THE EQUIPMENT, ETC.
Section 8.1. Use of the Equipment.
(a) The Lessee shall not use the Equipment except in the
conduct of its business and shall apply standards of use no lower than
the standards applied by the Lessee for other comparable property
owned or leased by the Lessee. The Lessee shall pay, or cause to be
paid, all charges and costs incurred in connection with the use of
the Equipment as contemplated by this Lease.
(b) Subject to the terms of Section 12 relating to permitted
contests, the Lessee warrants that (i) the Lessee shall at all times
comply with all Requirements of Law and Insurance Requirements in its
use, operation, maintenance, repair, restoration, storage and nonuse
of the Equipment, even if compliance therewith interferes with its
use and enjoyment of the Equipment, (ii) the Lessee shall procure,
maintain and comply with all licenses, permits, orders, approvals,
consents and other authorizations required by Applicable Laws or by
any Governmental Authority for the use, operation, maintenance,
repair, restoration, storage and nonuse of the Equipment, and (iii)
all materials used in the operation of the Equipment shall be
compatible with those recommended by the manufacturer's operation
manual.
(c) The Lessee shall not change the location of any Item of
Equipment, unless it gives five days' prior written notice to the
Lessor Trustee and the Agent and before or concurrently with to the
location change the Lessee files, or causes to be filed, in each
jurisdiction that the Lessor Trustee in its sole discretion considers
necessary, Uniform Commercial Code financing statements (including,
without limitation, fixture filings) with respect to the Equipment in
form and substance satisfactory to the Lessor Trustee.
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Section 8.2. Possession of the Equipment. The Lessee shall not, without the
Lessor Trustee's, the Agent's and the Certificate Holders' prior written
consent (which they must not unreasonably withhold), sublease, sub-sublease
or otherwise in any manner deliver, transfer or relinquish possession of
any Item of Equipment, except that, so long as no Default or Event of
Default has occurred and is continuing, the Lessee may, at any time and
without the Lessor Trustee's, the Agent's or the Certificate Holders'
consent, deliver possession of any Part of any Item of Equipment to the
manufacturer, contractor or supplier designated by the Lessee for purposes
of realizing the benefits of any warranty or for testing or other similar
purposes or to any Person for service, repair, maintenance or overhaul work
or for alterations, modifications or additions to an Item of Equipment to
the extent required or permitted by the terms of Section 9 or Section 10.
Section 8.3. Landlord Waivers. If at any time an Item of Equipment is
located at a Site that is not owned by the Lessee or a Wholly-Owned
Subsidiary of the Lessee, the Lessee shall promptly deliver to the Lessor
Trustee a Landlord Waiver executed by the owner of such Site.
SECTION 9. MAINTENANCE AND REPAIR; RETURN
Section 9.1. Repairs and Maintenance. The Lessee, at the Lessee's own
cost and expense, shall (a) maintain, service and repair the Equipment in
order to keep the Equipment in as good repair, good operating condition and
working order as when it first became subject to this Lease and in
compliance with all of the manufacturer's specifications, (b) maintain,
service and repair the Equipment in such condition as the Lessee would, in
the prudent management of its owned or leased properties, maintain, service
and repair similar property owned or leased by the Lessee and, in any
event, to the extent required to maintain the Equipment in good repair and
in compliance with all Requirements of Law and Insurance Requirements,
noncompliance with which might result in the imposition of a penalty on any
Indemnified Party or materially and adversely affect the Equipment or its
operation, and (c) have in full force and effect during the Lease Term a
maintenance program to maintain, service and repair the Equipment so as to
keep the Equipment in as good operating condition and working order as it
was when it first become subject to this Lease and in compliance with
manufacturer's specifications.
Section 9.2. Maintenance Costs and Warranties. The Lessee agrees to
pay all costs, expenses, fees and charges incurred in connection with (a)
the use and operation, including but not limited to repairs, maintenance,
storage and servicing as provided in Section 10 and this Section 9, of each
Item of Equipment by the Lessee during the Lease Term and (b) preserving
and protecting each Item of Equipment, and repairing, maintaining and
servicing the Equipment as provided in Section 10 and this Section 9,
during the period after a termination of the Lessee's right of possession
of such Item of Equipment pursuant to Section 16.2 and prior to the
interest of the Lessor Trustee in such Item of Equipment being leased or
sold to a third person by the Lessor Trustee (other than one or more
Certificate Holders or their Affiliates). So long as no Event of Default
has occurred and is continuing, the Lessor Trustee hereby appoints the
Lessee as its agent and attorney-in-fact for the purpose of exercising and
enforcing, and with full right, power and authority to exercise and to
enforce, all of the right, title and interest of the Lessor Trustee in,
under and to the warranties and obligations of any supplier of goods or
services in respect of the Equipment and agrees to execute and deliver such
further instruments as may be necessary to enable the Lessee to obtain
goods or services furnished for the Equipment by said
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suppliers. The Lessor Trustee shall have no obligation or duty with respect
to any of such matters. Any proceeds obtained by the Lessee from the
enforcement of the warranties and obligations of any supplier of goods or
services in respect of the Equipment shall be held by the Lessee and
applied from time to time to the repair and maintenance of the Equipment,
and any balance thereof remaining at the expiration of the Lease Term and
satisfaction of all of the Lessee's obligations shall be paid over to the
Lessee.
Section 9.3. Lessor Trustee Not Obligated to Maintain or Repair. The
Lessor Trustee shall not under any circumstances be required to make any
repairs, replacements, Alterations of any nature to the Equipment, to make
any expenditure whatsoever in connection with this Lease, or to maintain
the Equipment in any way. The Lessee waives any right to (a) require the
Lessor Trustee to maintain or repair any Item of Equipment or any Part or
(b) make repairs at the expense of the Lessor Trustee pursuant to any
Requirement of Law, contract, agreement, or covenant, condition or
restriction in effect at any time during the Lease Term.
Section 9.4. Return.
(a) Prior to the Lessee notifying the Lessor Trustee and the
Agent of the Lessee's intent to return the Equipment or its election
to exercise its option to sell the Equipment pursuant to Section
18.3, the Lessee must demonstrate that each Item of Equipment can
perform at its original performance specifications under full test
loads with regard to speed, register control, utility and quality of
printed matter, and each Item of Equipment must print a Graphic Arts
Technical Foundation ("GATF") test sheet to an acceptable degree as
interpreted by GATF. An outside printing expert selected by the
Lessor Trustee or the Agent and paid for by the Lessee (the "Printing
Expert") shall perform an Equipment inspection to verify the physical
condition of the Equipment and shall supervise the demonstration. The
Printing Expert shall inspect printed material coming off the
Equipment for its saleability. If the Printing Expert determines that
improvements are needed to make the equipment perform according to
the manufacturer's original performance specifications or if the GATF
test is unacceptable, the Lessee shall make any necessary
improvements at its sole cost and expense under the supervision of
the original manufacturer.
(b) With respect to each Item of Equipment, upon the expiration
or earlier termination of the Lease Term, the Lessee, at its sole
expense, shall de-install, crate for shipping and return it to the
Lessor Trustee by delivering it to such location as the Lessor
Trustee specifies. The Equipment shall be removed by a licensed and
insured erector/rigger approved by the Lessor Trustee and the Agent
and specializing in the crating, removal, transportation and
reassembly of the Equipment, and deinstallation and reassembly shall
be performed by a licensed and experienced technician and in a
prescribed manner, including without limitation proper marking and
labeling of all electrical wires, hoses, and components. The
Equipment shall be reassembled on its return and, when returned,
shall be in the condition required by Section 9.1. Accordingly, if,
during the Lease Term, any Item of Equipment has not been given all
scheduled maintenance and overhauls and all repairs that are
necessary to continue operating it at normal commercial conditions in
accordance with Section 9.1, then the Lessee shall cause all
restorative or repair work to be performed on it that is necessary to
9
bring it into the condition that it would have been in, had the
Lessee complied with Section 9.1 throughout the Lease Term. All
components of each Item of the Equipment shall have been properly
serviced, following the manufacturer's written operating and
servicing procedures, such that each Item of Equipment is eligible
for a manufacturer's standard, full service maintenance contract
without the Lessor Trustee's incurring any expense to repair or
rehabilitate any Item of Equipment. If, during the Lease Term,
replacement of all parts and components has not been made in
accordance with Section 10.1 so that the loss in operating
efficiency, value, utility and remaining useful life of the Items of
Equipment is more than that expected from normal wear and tear or as
reflected in the Appraisal completed in accordance with Section
4.1(l) of the Participation Agreement, then the Lessee, at its
expense, shall cause all repair and restorative work to be performed
on the Items of Equipment that is necessary to bring the Items of
Equipment into the condition that the Items of Equipment would have
been in had such replacement of parts and components been made. If,
in the opinion of the Lessor Trustee, any Item of Equipment fails to
meet the return standards set forth in this Section, the Lessee shall
pay on demand all costs and expenses incurred in connection with
repairing and restoring it so as to meet such standards, assembling
it and delivering it to the Lessor Trustee. If the Lessee fails to
return any Item of Equipment in the condition required by this Lease,
then, all of the Lessee's obligations under this Lease (including,
without limitation, the Lessee's obligation to pay Rent for such Item
of Equipment (i) at 125% of the rental then applicable under this
Lease or (ii) if the Lease Term has ended, at 125% of the rental
applicable on the last Scheduled Payment Date of the Lease Term)
shall continue in full force and effect until such Item of Equipment
is returned in the condition required under this Lease.
(c) One hundred eighty days prior to the Expiration Date, the
Lessee shall give the Lessor Trustee an inventory and full
description of each Item of Equipment, including make, model, serial
number, any other identifying engine or part classification, and its
location and service records; also, from that notification date
forward until the Expiration Date the Lessee will be limited to
5,000,000 impressions per Item of Equipment.
(d) Thirty days after the Lessor Trustee and the Agent receive
written notice from the Lessee of its intent to return the Equipment
or its election to exercise its option to sell the Equipment pursuant
to Section 18.3, the Lessee shall provide to the Lessor Trustee the
following documents in English with respect to the Items of
Equipment: (i) one set per Item of Equipment (or per group of Items
of Equipment located at the same Site) of installation
instructions/manuals, service manuals, and operating manuals relating
to it (including replacements and additions thereto, such that all
documentation is completely up to date) and (ii) one set per Item of
Equipment (or per group of Items of Equipment located at the same
Site) of documents, detailing its equipment configuration, operating
requirements and maintenance records, including, without limitation,
all books, operating data logs, inspection and maintenance logs,
tools and spare parts and modification and overhaul records which
shall be kept with accurate records of all maintenance (including
without limitation, lubrication service, parts removal/replacement,
inspections etc.) and shall indicate the dates and times of service
and be signed by the appropriate authority.
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(e) Upon the expiration or earlier termination of the Lease
Term, the Lessee shall ensure that all Items of Equipment are at no
less than half-time condition between scheduled significant
maintenance events and that half life remains on every and all life
limited or time cycle parts and components and will be in such
condition that such Items of Equipment may be immediately installed
and placed into use in an operating environment for a minimum of
twelve months of similar use to that under which they were originally
designed and used during the Lease Term.
(f) Upon the expiration or earlier termination of the Lease
Term, the Lessee shall properly remove all installed markings which
are removable without damage to the Items of Equipment and not
necessary for the operation, maintenance or repair of such Items.
(g) Upon the expiration or earlier termination of the Lease
Term, the Lessee shall ensure that all Items of Equipment and all
matters that fall outside the manufacturer-specified operating limits
of such Items of Equipment have been repaired and conform to all
Environmental Protection Agency regulations and Requirements of Laws,
that all certificates are current or require compliance within the
next twelve months from the date of return and have been complied
with, and that all Parts are manufactured to the approved maintenance
program and accepted industry standards for their type and use. The
Lessee will pay all recertification fees required by the Lessor
Trustee or any Governmental Authority.
(h) Upon sale of the Items of Equipment to a third party or
return to the Lessor Trustee, the Lessee shall provide transportation
and assume all risks and costs to send to the location(s) of new
owner(s) and if required by the Lessor Trustee, store the Items of
Equipment for a period of up to 365 days at the Lessee's sole
expense. During the storage period, the Lessee will pay for all
insurance coverage and periodic testing as required by the Lessor
Trustee and the Agent.
(i) Not later than the expiration or earlier termination of the
Lease Term, the Lessee shall cause all Liens (other than Lessor's
Liens) on the Items of Equipment to be extinguished.
(j) Upon the expiration or earlier termination of the Lease
Term, the Lessee shall cause there to be no sublease of the Equipment
or any Item of Equipment.
(k) The Lessee shall ensure that any Equipment or Parts in
storage prior to the return be in a storage configuration, including
preparation for storage, in conformity with the manufacturer's
direction, Environmental Protection Agency requirements and other
Requirements of Law and that no storage environment has been used
that may cause the value of any Item of Equipment or any Part to
diminish.
(l) Upon the expiration or earlier termination of the Lease
Term, the Lessee shall ensure that all Items of Equipment are free
from contamination and corrosion and have no untreated or uncorrected
corrosion.
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(m) Upon the expiration or earlier termination of the Lease
Term, the Lessee shall re-paint and clean all Items of Equipment to
restore them to an as-new appearance.
(n) The Lessee shall ensure that, (i) within six months prior
to the expiration or earlier termination of the Lease Term, the drive
side (gear side) of each Item of Equipment has been inspected and
serviced to verify the existence of undue wear, (ii) within six
months prior to the expiration or earlier termination of the Lease
Term, the sequence startup has been checked and serviced to verify
that the starting controller is working properly, (iii) within 12
months prior to the expiration or earlier termination of the lease
Term, the rollers have been removed, serviced and resurfaced, (iv)
within one month prior to the expiration or earlier termination of
the Lease Term, the blankets have been changed, and (v) at least once
every 12 months during the Lease Term, each printing unit is broken
down and serviced and has its oil changed.
(o) In addition to all other rights of the Lessor Trustee under
this Lease, the Lessor Trustee shall have the right to attempt to
resell or auction the Equipment from the Lessee's facility with the
Lessee's full cooperation and assistance, for a period of 180 days
from the end of the Lease Term. The Lessee shall pay the reasonable
costs and expenses of any such sale or auction, and agrees that the
Equipment shall remain capable of operation during this period. The
Lessee shall provide adequate and sufficient electrical power,
lighting, heat, water and compressed air to allow for normal
maintenance and for demonstrations of the Equipment to any potential
buyer.
If the Lessor Trustee, pursuant to this Lease or any other Operative
Agreement, rightfully demands possession of the Items of Equipment and
cessation of the Lessee's rights in such Items of Equipment, the Lessee, at
its expense, shall forthwith comply with this Section 9.4 with respect to
all Items of Equipment, and deliver exclusive possession of such Items of
Equipment to the Lessor Trustee, subject to the Lessee's obligations under
Sections 9 and 10.
SECTION 10. MODIFICATIONS, ETC.
Section 10.1. Replacement of Parts. The Lessee, at its own cost and
expense and within a reasonable period of time, shall replace any part of
any Item of Equipment (a "Part") that becomes worn out, lost, stolen,
destroyed, or otherwise rendered permanently unfit or unavailable for use
(whether or not such replacement is covered by the Lessee's covenants in
Section 9 of this Lease), with a replacement part of the same manufacture,
value, remaining useful life and utility as the replaced part immediately
preceding the replacement (assuming that such replaced part is in the
condition required by this Lease). All replacement parts shall be free and
clear of all Liens. Notwithstanding the foregoing, this paragraph shall not
apply to any Casualty with respect to any Item of Equipment.
Title to any Parts at any time removed from any Item of Equipment shall
continue to be vested in the Lessor Trustee, no matter where such Parts are
located, until such Parts shall be replaced by Parts which have been
incorporated or installed in or attached to such Item of Equipment and which
meet the requirements for replacement Parts specified in the first paragraph
of this Section 10.1. Immediately upon any such replacement Part becoming
incorporated or installed in or attached to any Item of Equipment as above
provided, without
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further act, title to the removed Part shall thereupon vest in the Lessee
or such person as shall be designated by the Lessee, free and clear of all
rights of the Lessor Trustee.
Section 10.2. Required Alterations. The Lessee, at its sole cost and
expense, shall, with reasonable promptness, make such alterations,
modifications and additions (collectively, "Alterations") to each Item of
Equipment as may be required from time to time to meet any Requirements of
Law or of any federal, state or local governmental authority having
jurisdiction.
Section 10.3. Optional Alterations. The Lessee at its own expense may
from time to time make such Alterations to any Item of Equipment as the
Lessee may deem desirable in the proper conduct of its business and which
are consistent with the continuing operation of such Item of Equipment in
accordance with its original functional purpose; provided, that any such
Alteration made by the Lessee pursuant to this paragraph must not diminish
the value or utility of any Item of Equipment to the Lessor Trustee below
the value and utility thereof to the Lessor Trustee immediately prior to
such Alteration. At the Lessor Trustee's request, the Lessee will remove any
readily removable Alterations prior to the end of the Lease Term at the
Lessee's sole cost and expense.
Section 10.4. Title to Parts.
(a) Title to all Parts (including Alterations) incorporated or
installed in or attached to any Item of Equipment shall without
further act vest in the Lessor Trustee and shall be deemed to
constitute a part of such Item of Equipment and be subject to this
Lease in the following cases:
(i) such Part is in replacement of or in substitution
for, and not in addition to, any Part constituting a part of such
Item of Equipment at the time of the acceptance thereof hereunder
or any such original part;
(ii) such Part is required to be incorporated or
installed in or attached to the Equipment pursuant to the terms
of Section 9.1, 10.1 or 10.2; or
(iii) such Part cannot be readily removed from such
Item of Equipment without materially damaging such Item of
Equipment or diminishing or impairing the value or utility of
such Item of Equipment.
(b) Any other Part that is not within the categories set forth in
clauses (i), (ii) or (iii) above, and that is not removed from any Item
of Equipment by the Lessee prior to the expiration or termination of this
Lease as to such Item of Equipment shall become the property of the
Lessor Trustee.
SECTION 11. WARRANTY OF TITLE
Section 11.1. Warranty of Title.
(a) Except as otherwise provided herein and subject to the
terms of Section 12 relating to permitted contests, the Lessee shall
not directly or indirectly create or allow to remain, and shall
promptly discharge at its sole cost and expense, any Lien (other than
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any Lessor's Lien), defect, attachment, levy, title retention
agreement or claim upon the Equipment or any Lien, attachment, levy
or claim with respect to the Rent or with respect to any amounts held
by the Lessor Trustee or any Certificate Holder pursuant to the
Operative Agreements, other than Permitted Liens.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of the Lessor Trustee or any
Certificate Holder, express or implied, to or for the performance by any
contractor, mechanic, laborer, materialman, supplier or vendor of any
labor or services or for the furnishing of any materials for any
alteration, addition, repair or demolition of or to any Item of Equipment
or any Part. NOTICE IS HEREBY GIVEN THAT THE LESSOR TRUSTEE, THE AGENT
AND THE CERTIFICATE HOLDER ARE NOT AND SHALL NOT BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO
ANYONE HOLDING THE EQUIPMENT OR ANY ITEM OF EQUIPMENT OR ANY PART THROUGH
OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
THE LESSOR TRUSTEE OR ANY CERTIFICATE HOLDER IN THE EQUIPMENT OR ANY ITEM
OF EQUIPMENT OR ANY PART.
SECTION 12. PERMITTED CONTESTS
Section 12.1. Permitted Contests in Respect of Applicable Law. So
long as no Event of Default has occurred and is continuing, Lessee, on its
own or on Lessor Trustee's behalf and in Lessor Trustee's name but at
Lessee's sole cost and expense and subject to Section 6 of the
Participation Agreement, may contest by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the
amount, validity or application, in whole or in part, of any Applicable Law
or third party charges relating to the Equipment, or any Lien, but only if
and so long as any such contest, in the reasonable opinion of the Lessor
Trustee and the Agent, (a) does not involve any risk of criminal liability
being imposed on the Lessor Trustee, the Agent or any Certificate Holder or
(b) does not involve any risk of (i) foreclosure, forfeiture or loss of any
Item of the Equipment, or any material part thereof, or (ii) the nonpayment
of Rent, (c) does not involve any substantial risk of (i) the sale of, or
the creation of, any Lien (other than a Permitted Lien) on any Item of
Equipment or any Part, (ii) civil liability being imposed on the Lessor
Trustee, the Agent, any Certificate Holder, or the Equipment, or (iii)
enjoinment of, or interference with, the use, possession or disposition of
the Equipment in any material respect, (d) will suspend the collection and
enforcement of contested amounts against the Equipment, the Lessor Trustee,
the Agent, and the Certificate Holders and will be concluded before the
Lease Term ends, and (e) Lessee has posted any security reasonably
requested by the Agent.
None of the Lessor Trustee the Agent and the Certificate Holders will
be required to join in any proceedings pursuant to this Section 12.1 unless
a provision of Applicable Law requires that such proceedings be brought by
or in the name of such Person; and in that event such Person will join in
the proceedings or permit them or any part thereof to be brought in its
name if and so long as the Lessee pays all related expenses and indemnifies
such Person with respect to such proceedings.
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SECTION 13. INSURANCE
Section 13.1. Required Insurance Coverages and Limits.
(a) The Lessee shall at its own cost and expense at all times
during the Lease Term:
(i) keep each Item of Equipment insured against all
risks of physical loss or damage and against all such other risks
as are insured against by the Lessee with respect to property of
a similar character owned or leased by the Lessee on terms and in
amounts that are no less favorable than insurance covering other
similar properties owned by the Lessee and that are in accordance
with normal industry practices, provided that such insurance
shall not be less than the Stipulated Loss Value of such Item of
Equipment as of the immediately preceding Scheduled Payment Date,
and
(ii) maintain comprehensive general public liability
insurance with respect to the Equipment including liability
coverage for products liability and contractual liability, which
coverage shall be against damage because of bodily injury,
including death, or damage to property of others, such insurance
to be on terms and in amounts that are no less favorable than
insurance maintained by the Lessee with respect to similar
properties that it owns and that is in accordance with normal
industry practice, provided that such insurance shall not be less
than $1,000,000 per occurrence and $20,000,000 in the aggregate
(or $50,000,000 in the aggregate including layered umbrella
coverage).
(b) All insurance policies required hereunder shall (i) require
30 days prior written notice to the Lessor Trustee and the Agent of
cancellation or material change in coverage; (ii) name the Lessor
Trustee, the Agent and the Certificate Holders as additional insureds
and, under the property insurance policies, name the Lessor Trustee
as sole loss payee; (iii) be considered primary insurance without any
right of contribution from other policies held by the Lessor Trustee,
the Agent or the Certificate Holders; (iv) waive any right of
subrogation against the Lessor Trustee, the Agent and the Certificate
Holders; (v) waive the right of the insurer to any set-off,
counterclaim or other deduction, whether by attachment or otherwise,
in respect of any liability of the Lessor Trustee, the Agent or the
Certificate Holders; (vi) specify that the Lessor Trustee, the Agent
and the Certificate Holders shall not be liable for any premiums or
deductibles; (vii) be in full force and effect throughout any
geographical areas in which any Item of Equipment is located; and
(viii) provide that, in respect of the interests of the Lessor
Trustee, the Agent and the Certificate Holders in such policies,
subject to the policies' other terms, conditions and exclusions, the
insurance shall not be invalidated by any action or inaction of any
Person and shall insure the Lessor Trustee, the Agent, and the
Certificate Holders regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by any
Person.
(c) The Lessee agrees to maintain all insurance required by
this Section 13 with financially sound and reputable insurance
companies that have a rating of at least
15
A+ or better by Best Rating Guide (except that the companies listed
on Schedule 13.1 as having a lesser rating may, during the Lease
Term, provide the Lessee with the type of insurance they are
providing as of the Closing Date). No policy shall contain a
provision (i) under which the Lessee is a co-insurer, or (ii)
relieving the insurer of liability for any loss by reason of the
existence of other policies of insurance covering the Equipment
against the peril involved, whether collectible or not, or by reason
of the breach or violation by the Lessee of any warranties,
declarations or conditions contained in such policies. Any such
insurance may be carried under blanket policies maintained by the
Lessee so long as such policies otherwise comply with the provisions
of this Section 13.1. If general public liability insurance is
carried under any blanket policy which is subject to aggregate annual
claim limitations, the Lessee shall keep the Lessor Trustee and the
Agent apprised of the amount of any such limitations and the amounts
of claims that may reduce the available policy limits.
Section 13.2. Adjustment and Payment of Losses. The Lessee shall
adjust with the insurance companies or otherwise collect (including,
without limitation, the filing of proceedings that the Lessee considers
advisable) any loss under any casualty insurance required to be carried by
Section 13.1(a)(i), but must obtain the Agent's approval of any amount
adjusted or collected if the loss exceeds $1,000,000. The loss so adjusted
shall be paid to the Lessor Trustee. All such policies shall provide that
the loss, if any, under such insurance shall be adjusted and paid as
provided in this Lease. Losses covered by liability insurance shall be
adjusted by and paid to the Person suffering such loss.
Section 13.3. Evidence of Insurance. On or prior to the Closing Date
with respect to each Item of Equipment, and thereafter not less than 15
days prior to the expiration dates of the expiring policies, the Lessee
shall deliver to the Lessor Trustee, the Agent and the Certificate Holders
certificates of insurance for the insurance maintained pursuant to this
Section 13, together with a report from the Lessee's insurance broker
certifying that such insurance complies with the terms hereof. Each such
certificate or other evidence of insurance shall identify the insurance
carrier, the type of insurance, the coverage limits, annual aggregate
limits, if any, and the policy term.
Section 13.4. Application of Insurance Proceeds. All insurance
proceeds from policies required to be maintained hereunder that are
received by or payable to the Lessor Trustee (less the Lessor Trustee's and
the Agent's actual costs, fees and expenses (including their attorneys'
fees) incurred in the collection thereof) shall be applied as follows:
(a) All such proceeds actually received on account of any
damage or destruction (other than a Casualty) of an Item of Equipment
shall be paid over to the Lessee, or as it may direct from time to
time, as the restoration or repair ("Restoration"), of the Item of
Equipment progresses, to pay (or reimburse the Lessee for) the cost
of Restoration, if the following two conditions are satisfied:
(i) the amount of such proceeds received by the Lessor
Trustee, together with such additional amounts, if any,
theretofore expended by the Lessee out of its own funds for
Restoration must be sufficient to pay the estimated cost of
completing Restoration, and
16
(ii) the Lessee must submit a written application to
the Lessor Trustee and the Agent, accompanied by an Officer's
Certificate, showing in reasonable detail the nature of
Restoration, that Restoration is intended to restore the Item of
Equipment to its value and utility prior to the damage or
destruction (assuming that the Item of Equipment was of the value
and utility and in the condition and repair required by this
Lease), the actual cash expenditures made to date for
Restoration, the estimated cost to complete Restoration and
stating that no Default or Event of Default has occurred and is
continuing under this Lease.
Upon the written request of the Lessee, accompanied by evidence
satisfactory to the Lessor Trustee and the Agent that Restoration has
been completed and the costs thereof paid in full, that the Item of
Equipment has been restored to its value and utility prior to such
damage or destruction (assuming that such Item of Equipment was of
the value and utility and in the condition and repair required by the
terms of this Lease) and that there are no mechanic's or similar
Liens for labor or materials supplied in connection therewith, the
balance, if any, of such proceeds shall be paid over or assigned to
the Lessee or as it may direct.
(b) All such proceeds received or payable on account of a
Casualty with respect to an Item of Equipment shall be paid over or
assigned to the Lessee or as it may direct upon termination of this
Lease with respect to such Item of Equipment and, if the Lessee
elects to perform the option set forth in Section 14.1(a), receipt by
the Lessor Trustee of the Stipulated Loss Value of such Item of
Equipment and all other payments due hereunder.
Section 13.5. Deductibles and Self-Insurance. So long as no Event of
Default has occurred and is continuing, the Lessee may from time to time
self-insure or maintain deductible provisions for the risks required to be
insured against pursuant to clauses (a)(i) and (a)(ii) of Section 13.1, in
such reasonable amounts as are then applicable to similar equipment owned
or leased by the Lessee, but in no case shall such self-insurance and
deductibles with respect to Section 13.1(a)(i) or Section 13.1(a)(ii)
exceed the first $250,000 or $500,000, respectively, of the coverage
required therein.
Section 13.6. Insurance for Own Account. Nothing in this Section 13
shall limit or prohibit the Lessor Trustee, the Agent, any Certificate
Holder or the Lessee from obtaining additional insurance for its own
account, and any proceeds payable thereunder shall be payable in accordance
with the insurance policy relating thereto, provided that no such insurance
may be obtained which would limit or otherwise adversely affect the
coverage of any insurance required to be maintained pursuant to this
Section 13.
SECTION 14. CASUALTY OCCURRENCE
Section 14.1. Casualty Occurrence. If an Item of Equipment is damaged
to such an extent that the Lessee believes a Casualty has occurred, the
Lessee shall forthwith (and in any event within 10 days after such
occurrence) give the Lessor Trustee and the Agent written notice of such
Casualty, the Agent in its sole discretion shall determine whether the
damage to the Item of Equipment constitutes a Casualty, and within 20 days
after the Casualty occurred the Lessee
17
shall give the Lessor Trustee and the Agent written notice of its election,
subject to the terms hereof, to perform one of the following options (and
if the Lessee fails to timely notify the Lessor Trustee and the Agent of
its election, the Lessee shall be deemed to have elected to perform the
option set forth in the following clause (a)), provided that the Lessee
shall not have the right to select the option set forth in clause (b) if a
Default or Event of Default has occurred and is continuing when the
Casualty occurs, or when the Lessee gives notice of its election, or when
the Lessee is to convey the Replacement Equipment to the Lessor Trustee:
(a) Except as otherwise provided in the immediately succeeding
sentence, on the next Scheduled Payment Date which is at least 30
days after the occurrence of such Casualty (the "Loss Payment Date"),
during which time the Lessee's obligation to pay Rent shall continue,
the Lessee shall pay to the Lessor Trustee in immediately available
funds an amount equal to the Stipulated Loss Value of such Item of
Equipment as of such Loss Payment Date together with any Rent due and
payable on or prior to the Loss Payment Date with respect to such
Item of Equipment.
(b) Within 30 days after the Casualty occurs, during which time
the Lessee's obligation to pay Rent shall continue, the Lessee shall
convey or cause to be conveyed to the Lessor Trustee in accordance
with Section 14.2 hereof, to be leased by the Lessor Trustee to the
Lessee hereunder in replacement of such Item of Equipment, title to
Replacement Equipment, which must be free and clear of all Liens
other than Permitted Liens and (as determined by the Agent in its
sole discretion) must have a value, utility and remaining economic
useful life at least equal to, and be in as good operating condition
as, the replaced Item of Equipment (assuming it was of the value,
remaining economic useful life and utility and in the condition and
repair required by the terms of this Lease and had suffered no
Casualty). The Lessee shall pay on the next Scheduled Payment Date an
amount computed in the manner specified in clause (a) of this Section
14.1 if no such replacement occurs by the end of the 30-day period.
The Lessee's obligation to pay Rent due and payable on or prior to a Loss
Payment Date shall continue as to any Item of Equipment that has suffered a
Casualty.
In the event of a payment in full of the Stipulated Loss Value for an
Item of Equipment and other Rent payable on or prior to the Loss Payment
Date all as provided for in the clause (a) of this Section, (x) this Lease
with respect to such Item of Equipment and the obligations of the Lessee
with respect to such Item of Equipment to pay Periodic Rent and
Supplemental Rent (except for Supplemental Rent obligations surviving
pursuant to Section 6 of the Participation Agreement or which have
otherwise accrued but not been paid as of the date of such payment) shall
terminate; (y) if no Event of Default has occurred and is continuing, any
insurance proceeds remaining in the Lessor Trustee's possession (other than
proceeds of policies maintained by the Lessor Trustee for its own account),
including any investment interest thereon, shall be promptly paid over to
the Lessee; and (z) the Lessor Trustee shall convey to the Lessee, at the
Lessee's cost and expense, all of the Lessor Trustee's right, title and
interest, AS-IS, WHERE-IS, without recourse or warranty, express or implied
except for a warranty against the Lessor's Liens in and to such Item of
Equipment, including all claims for damage to such Item of Equipment
against third persons arising from the subject Casualty (unless any
insurance carrier requires that such claims be assigned to it).
18
Section 14.2. Conveyance of Replacement Equipment. Prior to or at the
time of any conveyance of any Replacement Equipment pursuant to Section
14.1(b) or Section 15.1, the Lessee, at its own expense, shall furnish the
Lessor Trustee and the Agent, or cause each of them to be furnished, with
the following documents, which shall have been duly authorized, executed
and delivered by the parties thereto and shall be in full force and effect
on the date of such conveyance:
(i) a full warranty xxxx of sale, in form and substance
satisfactory to the Lessor Trustee and the Agent, covering such
Replacement Equipment and executed by the owner thereof in favor
of the Lessor Trustee;
(ii) a Lease Supplement covering the Replacement
Equipment;
(iii) such evidence of compliance with the insurance
provisions of Section 13 with respect to such Replacement
Equipment as the Lessor Trustee or the Agent may reasonably
request, including an independent insurance broker's report
(stating the opinion of such insurance broker that such insurance
complies with the terms of this Lease) with certificates of
insurance;
(iv) an Officer's Certificate of the Lessee certifying
that such Replacement Equipment complies with this Section 14.2,
that, upon such conveyance, the Lessor Trustee will acquire good
title to such Replacement Equipment, free and clear of all Liens
other than Permitted Liens, that such Replacement Equipment will
be leased hereunder to the same extent as the replaced or
substituted Item of Equipment, as the case may be, and that, upon
consummation of such replacement or substitution, no Default or
Event of Default will exist hereunder,
(v) an opinion of the Lessee's counsel (and such other
opinions or evidence of title as the Lessor Trustee, the Agent or
their counsel may reasonably request), to the effect that, upon
such conveyance, the Lessor Trustee will acquire good title to
such Replacement Equipment, free and clear of all Liens other
than Permitted Liens, and that such Replacement Equipment will be
leased hereunder to the same extent as the replaced or
substituted Item of Equipment, as the case may be;
(vi) copies of Uniform Commercial Code financing
statements (including, without limitation, fixture filings) with
respect to such Replacement Equipment naming the Lessee as Debtor
and the Lessor Trustee as Secured Party filed on or before the
date of conveyance in each jurisdiction that the Lessor Trustee
or the Agent, each in its sole discretion, considers necessary;
(vii) Landlord Waivers, if required under Section 8.3,
with respect to the Site or Sites on which the Replacement
Equipment is located; and
(viii) such documents, opinions and evidence with
respect to the Lessee as the Lessor Trustee, the Agent, or their
counsel, may reasonably request in order to establish the
consummation of the transactions contemplated by this
19
Section 14.2, the taking of all corporate proceedings in
connection with and compliance with the conditions set forth in
this Section 14.2, in each case in form and substance
satisfactory to the Lessor Trustee and the Agent.
The Lessee further agrees to take such further action as the Lessor
Trustee or the Agent may reasonably request with respect to such
Replacement Equipment including, without limitation, any actions required
to establish, perfect and protect the interest of Lessor Trustee in such
Replacement Equipment (including, without limitation, the filing of
additional Uniform Commercial Code financing statements).
Upon full compliance by the Lessee with the terms of this Section
14.2, the Lessor Trustee shall convey to the Lessee, at the Lessee's cost
and expense, all of the Lessor Trustee's right, title and interest, as-is,
where-is, without recourse or warranty, express or implied except for
warranty against Lessor's Liens, in and to such Item of Equipment with
respect to which the subject Casualty occurred, including all claims for
damage to such Item of Equipment against third persons arising from any
Casualty (unless any insurance carrier requires that such claims be
assigned to it), or the substituted Item of Equipment, as the case may be.
No Casualty or substitution with respect to an Item of Equipment under the
circumstances contemplated by the terms of this Section 14.2 shall result
in any reduction in Rent or the Lessee's obligation to pay Rent hereunder.
Section 14.3. Application of Payments. Any payments on account of a
Casualty of an Item of Equipment (other than insurance proceeds or other
payments the application of which is provided for in this Section 14 or
elsewhere in this Lease, as the case may be) received at any time by the
Lessor Trustee or by the Lessee from any Person will be applied as follows:
(a) if the Lessee has elected (or is deemed to have elected)
the option set forth in Section 14.1(a), so much of such payments as
do not exceed the Stipulated Loss Value required to be paid by the
Lessee pursuant to Section 14.1(a) shall be applied in reduction of
the Lessee's obligation to pay such Stipulated Loss Value to the
extent not already paid by the Lessee, and, to the extent already
paid by the Lessee and if no Default or Event of Default exists,
shall be applied to reimburse the Lessee for its payment of such
Stipulated Loss Value. Subject to Section 14.6, the balance, if any,
of such payment remaining thereafter shall be paid to the Lessee; and
(b) if the Lessee has elected the option set forth in Section
14.1(b), such payments shall be paid over to, or retained by, the
Lessor Trustee for payment to the Lessee when the Lessee has fully
performed the terms of Section 14.2 with respect to the Casualty for
which such payments are made.
Section 14.4. Certain Government Requisitions. If during the Lease
Term the use of any Item of Equipment is requisitioned or taken by any
Governmental Authority under the power of eminent domain or otherwise under
circumstances which do not constitute a Casualty, the Lessee's duty to pay
Periodic Rent and Supplemental Rent for such Item of Equipment shall
continue for the duration of such requisition or taking. Unless a Default
or Event of Default has occurred and is continuing, the Lessee shall be
entitled to receive and to retain for its own account all sums payable for
any such period by such Governmental Authority as compensation
20
for such requisition or taking of possession. If a Default or Event of
Default has occurred and is continuing, the Lessee shall be deemed to the
extent of any such compensation so received to be the agent of the Lessor
Trustee in collecting and receiving the such sums and shall segregate and
hold in trust and promptly remit any such compensation so received to the
Lessor Trustee for crediting against any sums then due and owing hereunder
to the Lessor Trustee, its successors and assigns.
Section 14.5. Application of Payments from Governmental Authorities
for Requisition of Title. The Lessor Trustee shall receive the entire
amount payable by any governmental authority or instrumentality or agency
thereof with respect to a Casualty resulting from the condemnation,
confiscation or seizure of, or requisition of title to or use of any Item
of Equipment. Such amount, after deducting all expenses, including
attorneys' fees, incurred by the Lessor Trustee in or as a result of such
condemnation proceedings (the "Net Condemnation Award") shall be applied
promptly as follows: so much of such payments as do not exceed the
Stipulated Loss Value of such Item of Equipment required to be paid by the
Lessee pursuant to Section 14.1(a) shall be applied in reduction of the
Lessee's obligation to pay such Stipulated Loss Value to the extent not
already paid by the Lessee, and, to the extent already paid by the Lessee
and if no Default or Event of Default exists, shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value. Subject to
Section 14.6, the balance, if any, of such payments shall be paid to the
Lessee.
Section 14.6. Application of Payments During Existence of Default.
Any amount referred to in this Section 14 or in Section 13 which is payable
to the Lessee shall not be paid to the Lessee, or, if it has been
previously paid directly to the Lessee, shall be held in trust by the
Lessee and shall be promptly paid over to the Lessor Trustee, if at the
time of such payment a Default or Event of Default has occurred and is
continuing, and held by the Lessor Trustee as security for the obligations
of the Lessee under this Lease and applied against the Lessee's obligations
hereunder as and when due. Once no Default or Event of Default is
continuing, such amount, to the extent not theretofore applied to the
Lessee's obligations hereunder, shall be paid to the Lessee.
SECTION 15. SUBSTITUTION OF EQUIPMENT
Section 15.1. Substitution of Equipment. So long as no Default or
Event of Default has occurred and is continuing, on any Scheduled Payment
Date, the Lessee may, at its option, upon at least 30 days' advance written
notice to the Lessor Trustee, convey or cause to be conveyed to Lessor
Trustee in accordance with Section 14.2 hereof, to be leased by the Lessor
Trustee to Lessee hereunder in substitution for any Item of Equipment,
title to Replacement Equipment, which must be free and clear of all Liens
other than Permitted Liens and (as determined by the Agent in its sole
discretion) must have a value, utility and remaining economic useful life
at least equal to, and to be in as good operating condition as, the
substituted Item of Equipment (assuming the substituted Item of Equipment
was of the value, remaining economic useful life and utility and in the
condition and repair required by the terms of this Lease and had suffered
no Casualty).
21
SECTION 16. EVENTS OF DEFAULT
Section 16.1. Events of Default. The occurrence of any one or more of
the following events (whether such event is voluntary or involuntary or
comes about or is 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) shall
constitute an "Event of Default":
(a) the Lessee fails to make payment of any Periodic Rent when
due and such failure continues unremedied for a period of five days;
or the Lessee fails to make payment when due of any amounts due
pursuant to Section 18.4, the Lease Balance, the Purchase Price,
including, without limitation, amounts due pursuant to Section 18.1
hereof, or Stipulated Loss Value; or
(b) the Lessee fails to make payment of any Supplemental Rent
(other than Supplemental Rent specified in clause (a) above) within
five (5) days after it becomes due; or
(c) the Lessee fails to maintain insurance as required by
Section 13 of this Lease; or
(d) the Lessee fails to observe or perform any term, covenant
or condition applicable to it under Sections 4.2, Section 4.3 or
Section 5 of the Guaranty Agreement; or
(e) the Lessee or any Guarantor fails to observe or perform any
term, covenant or condition applicable to it under any Operative
Agreement (other than those described in Section 16.1(a), (b), (c) or
(d) hereof) and such failure continues unremedied for 30 days after
written notice thereof has been given to the Lessee or such Guarantor
by the Lessor Trustee, the Agent or any Certificate Holder; or
(f) any representation or warranty made or deemed made by the
Lessee or any Guarantor in any Operative Agreement or in any
certificate, document or financial or other statement furnished at
any time under or in connection with any Operative Agreement was
incorrect, false or misleading in any material respect on or as of
the date made or deemed made; or
(g) (i) any Guarantor or the Lessee commences any case,
proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its
assets, or any Guarantor or the Lessee makes a general assignment for
the benefit of its creditors; or (ii) there is commenced against any
Guarantor or the Lessee any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or
22
appointment or (B) remains undismissed, undischarged or unbonded for
a period of 60 days; or (iii) there is commenced against any
Guarantor or the Lessee any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, restraint or similar
process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) any Guarantor or the
Lessee takes any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in
clause s (i), (ii) or (iii) above; or (v) any Guarantor or the Lessee
generally does not, or is unable to, or admits in writing its
inability to, pay its debts as they become due; or
(h) any Operative Agreement or any Lien granted under any
Operative Agreement, in whole or in part, terminates, ceases to be
effective against, or (other than as expressly provided therein)
ceases to be the legal, valid, binding and enforceable obligation of
either the Lessee or any Guarantor; or
(i) the Lessee or any Guarantor directly or indirectly contests
the effectiveness, validity, binding nature or enforceability of any
Operative Agreement or any Lien granted under any Operative
Agreement; or the Lessee or any Guarantor repudiates, or purports to
discontinue or terminate, the Guaranty Agreement, or the Guaranty
Agreement ceases to be a legal, valid and binding obligation of the
Lessee or any Guarantor or ceases to be in full force and effect; or
(j) (i) any Guarantor or the Lessee fails to make any payment
in respect of any of its obligations for Debt when due or, if later,
within any applicable grace period, or (ii) any event or condition
occurs which results in the default after the expiration of any
applicable grace period under, or requires the early redemption or
prepayment of, any of any Guarantor's or the Lessee's obligations for
Debt, or any event or condition occurs and is continuing which
enables (or, with the giving of notice or lapse of time or both,
would enable) the holders of any of any Guarantor's or the Lessee's
obligations under obligations for Debt of any Guarantor or the Lessee
or any Person acting on such holders' behalf to accelerate the
maturity, or require the early redemption or prepayment, of any of
any Guarantor's or the Lessee's obligations for Debt; or
(k) (i) any member of the ERISA Group fails to pay when due an
amount or amounts aggregating in excess of $1,000,000 that it has
become liable to pay under Title IV of ERISA; or (ii) notice of
intent to terminate a Material Plan is filed under Title IV of ERISA
by any member of the ERISA Group, any plan administrator or any
combination of them; or (iii) any member of the ERISA Group has been
notified in writing that the PBGC has instituted proceedings under
Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or (iv) a
condition exists by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be
terminated; or (v) any events described in clause (iii) above occur
with respect to any Other Pension Plan or Other Pension Plans (other
than a multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA) (A) that have aggregate Unfunded Current Liabilities in excess
of $1,000,000 and (B) with respect to
23
which either (1) one or more members of the ERISA Group have engaged
in a transaction or transactions described in Section 4069 of ERISA
or (2) one or more members of the ERISA Group is a member of the
"controlled group" under Section 412(c)(11) of the Code or Section
4001(a)(14) of ERISA; or (vi) a complete or partial withdrawal from,
or a default, within the meaning of Section 4219(c)(5) of ERISA,
occurs with respect to, one or more (A) multiemployer plans, within
the meaning of Section 4001(a)(3) of ERISA (which plans are not
Multiemployer Plans), with respect to which a member of the ERISA
Group has engaged, within the previous five plan years, in a
transaction described in Section 4212(c) of ERISA, or (B)
Multiemployer Plans, which could reasonably be expected to result in
the incurrence by one or more members of the ERISA Group of a current
payment obligation in excess of $1,000,000; provided that no Event of
Default shall occur under clause (v) or (vi) if (A) Unfunded Current
Liabilities of the Other Pension Plans in respect of which events
described in clause (v) have occurred, together with the current
payment obligations that could reasonably be expected to result from
complete or partial withdrawals or defaults described in clause (vi),
do not exceed $10,000,000 and (B) each member of the ERISA Group that
could reasonably be expected to be liable for such Unfunded Current
Liabilities or current payment obligations is diligently contesting
in accordance with Section 12 the imposition of such liabilities or
obligations; or
(l) (i) one or more judgments or orders for the payment, in the
aggregate, of money in excess of $10,000,000 are rendered against any
Guarantor or the Lessee and such judgments or orders continue
unsatisfied and unstayed for a period of 30 days or (ii) one or more
judgments or orders are rendered against any Guarantor or the Lessee,
which judgments or orders are stayed on condition that a bond or
collateral equal to or greater than, in the aggregate, $10,000,000 be
posted or provided, and such judgments or orders are not overturned
or lifted within a period of 10 days; or
(m) Mail-Well ceases to be a party to the Credit Agreement and is
not the borrower under another revolving credit facility of at least
$150,000,000.
Section 16.2. Remedies. Upon the occurrence of any Event of Default
and so long as such Event of Default is continuing, the Lessor Trustee may,
do one or more of the following (and in whatever order) as the Lessor
Trustee in its sole discretion determines, without limiting any other right
or remedy the Lessor Trustee may have on account of such Event of Default:
(a) The Lessor Trustee may declare the entire outstanding Lease
Balance to be immediately due and payable together with accrued
unpaid Rent and any other amounts payable under the Operative
Agreements, or make demand upon the Guarantors under the Guaranty
Agreement, or both;
(b) The Lessor Trustee may, by notice to the Lessee, rescind or
terminate this Lease as of the date specified in such notice;
provided, however, (i) no reletting, reentry or taking of possession
of the Equipment (or any Item of Equipment) by the Lessor Trustee
will be construed as an election on the Lessor Trustee's part to
terminate this Lease unless a written notice of such intention is
given to the Lessee, (ii) notwithstanding any reletting, reentry or
taking of possession, the Lessor Trustee may at any time
24
thereafter elect to terminate this Lease for a continuing Event of
Default, and (iii) no act or thing done by the Lessor Trustee or any
of its agents, representatives or employees and no agreement
accepting a surrender of the Equipment shall be valid unless it is in
writing and executed by the Lessor Trustee;
(c) The Lessor Trustee may (i) demand that the Lessee, and the
Lessee shall upon the written demand of the Lessor Trustee, return
the Equipment promptly to the Lessor Trustee in the manner and
condition required by, and otherwise in accordance with all of the
provisions of, Sections 6 and 9 and Section 8.1(b) hereof as if the
Equipment were being returned at the end of the Lease Term, and none
of the Lessor Trustee, the Agent, or any Certificate Holder shall be
liable for the reimbursement of the Lessee for any costs and expenses
incurred by the Lessee in connection therewith, and (ii) without
prejudice to any other remedy the Lessor Trustee may have, including
without limitation other remedies for possession of the Equipment,
and to the extent and in the manner permitted by Applicable Law,
enter upon the premises of the Lessee and any Site and take immediate
possession (to the exclusion of the Lessee) of the Equipment or any
Item of Equipment and remove the Equipment, by summary proceedings or
otherwise (and if a Site is owned by a Wholly-Owned Subsidiary of the
Lessee, the Lessee shall take all necessary action to ensure that
such Wholly-Owned Subsidiary permits the Lessor Trustee to enter upon
such premises, take possession of and remove such Equipment), all
without liability to the Lessor Trustee for or by reason of such
entry or taking of possession, whether for the restoration of damage
to property caused by such taking or otherwise and, in addition to
the other damages of the Lessor Trustee, the Lessee shall be
responsible for all costs and expenses incurred by the Lessor
Trustee, the Agent and the Certificate Holders in connection with any
reletting, including, without limitation, reasonable brokers' fees
and all costs of any alterations or repairs made by any of them;
(d) The Lessor Trustee may, at its option, elect not to
terminate this Lease and continue to collect all Periodic Rent,
Supplemental Rent, and all other amounts due to the Lessor Trustee
(together with all costs of collection) and enforce the Lessee's
obligations under this Lease as and when they become due or are to be
performed, and at the option of the Lessor Trustee, upon any
abandonment of the Equipment by the Lessee or repossession of it by
the Lessor Trustee, the Lessor Trustee may, in its sole and absolute
discretion, elect not to terminate this Lease, make the necessary
repairs in order to relet the Equipment, and relet the Equipment or
any part thereof for such term or terms (which may be for a term
extending beyond the Lease Term) and at such rental or rentals and
upon such other terms and conditions as the Lessor Trustee in its
reasonable discretion considers advisable; and upon each such
reletting all rentals actually received by the Lessor Trustee from
such reletting shall be applied to the Lessee's obligations hereunder
and the other Operative Agreements. If rentals received from such
reletting during any Interest Period are less than the Rent with
respect to the Equipment to be paid during that period by the Lessee
hereunder, the Lessee shall pay any deficiency, as calculated by the
Lessor Trustee, to the Lessor Trustee on the next Scheduled Payment
Date;
(e) Unless the Equipment has been sold in its entirety, the
Lessor Trustee may, whether or not the Lessor Trustee has exercised
or thereafter at any time exercises
25
any of its rights under clause (c) or (d) of this Section 16.2 with
respect to the Equipment or any Item of Equipment, demand, by written
notice to the Lessee specifying a date not earlier than 10 days after
the date of such notice, that the Lessee purchase, on the date
specified in such notice, the Equipment in accordance with the
provisions of Sections 18.1 and 19;
(f) The Lessor Trustee may sell the Equipment or any Item of
Equipment at public or private sale, free and clear of any rights of
the Lessee, and without any duty to account to the Lessee with
respect to such sale or for the proceeds thereof (provided that the
application of the proceeds of any such sale shall be subject to the
final paragraph of this Section 16.2), and the Lessee shall pay to
the Lessor Trustee, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of the Periodic Rent due for the Items of
Equipment so sold for any period commencing after the date on which
such sale occurs), the sum of (i) all unpaid Periodic Rent payable
for each Item of Equipment for all periods preceding the Scheduled
Payment Date coincident with or immediately preceding the date of
such sale, plus (ii) an amount equal to the excess, if any, of (x)
the Stipulated Loss Value of the Equipment or Item of Equipment so
sold, computed as of the Scheduled Payment Date coincident with or
immediately preceding the date of such sale, over (y) the net
proceeds of such sale, plus (iii) interest at the Overdue Rate on the
Stipulated Loss Value from the Scheduled Payment Date as of which
such Stipulated Loss Value is computed until the date of actual
payment, plus (iv) all unpaid Supplemental Rent due with respect to
each Item of Equipment so sold;
(g) The Lessor Trustee may exercise any other right or remedy
available to it under Applicable Law or proceed by appropriate court
action (legal or equitable) to enforce the terms hereof or to recover
damages for the breach hereof. Separate suits may be brought to
collect damages for any period of time, and no suit shall in any
manner prejudice the Lessor Trustee's right to collect damages for
any subsequent period, or the Lessor Trustee may defer any suit until
after the expiration of the Lease Term, in which event the cause of
action underlying such suit shall be deemed not to have accrued until
the expiration of the Lease Term;
(h) The Lessor Trustee may retain and apply against the Lease
Balance all sums which the Lessor Trustee would, absent such Event of
Default, be required to pay to, or turn over to, the Lessee pursuant
to the terms of this Lease; or
(i) The Lessor Trustee, to the extent permitted by Applicable
Law, as a matter of right and with notice to the Lessee, shall have
the right to apply to any court having jurisdiction to appoint a
receiver or receivers of the Equipment, and the Lessee hereby
irrevocably consents to any such appointment. Any receivers shall
have all of the usual powers and duties of receivers in like or
similar cases and all of the powers and duties of the Lessor Trustee
in case of entry, and shall continue as such and exercise such powers
until the date of confirmation of the sale of the Equipment unless
such receivership is sooner terminated.
The Lessor Trustee shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this
26
Lease or under any other Operative Agreement or other agreement or any laws
now or hereafter in force, notwithstanding that some or all of the
obligations secured hereby may now or hereafter be otherwise secured,
whether by mortgage, security agreement, pledge, lien, assignment or
otherwise. Neither the acceptance of this Lease nor its enforcement shall
prejudice or in any manner affect the Lessor Trustee's right to realize
upon or enforce any other security now or hereafter held by the Lessor
Trustee, it being agreed that the Lessor Trustee shall be entitled to
enforce this Lease and any other security now or hereafter held by the
Lessor Trustee in any order and manner as it determines in its absolute
discretion. No remedy herein conferred upon or reserved to the Lessor
Trustee is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute. Every power or remedy given by any
Operative Agreement to the Lessor Trustee or to which it may otherwise be
entitled, may be exercised, concurrently or independently, from time to
time and as often as the Lessor Trustee desires.
If, pursuant to the Lessor Trustee's exercise of remedies pursuant to
this Section 16.2, the Lease Balance and all other amounts due and owing
from the Lessee under this Lease and the other Operative Agreements have
been paid in full, then the Lessor Trustee shall remit to the Lessee any
excess amounts received by the Lessor Trustee.
Section 16.3. Waiver of Certain Rights. (a) To the maximum extent
permitted by law, the Lessee hereby waives the benefit of any appraisement,
valuation, stay, extension, reinstatement and redemption laws now or
hereafter in force and all rights of marshalling in the event of any sale
of the Equipment or any interest therein, and (b) if this Lease is
terminated pursuant to Section 16.2, the Lessee waives, to the fullest
extent permitted by law, (i) any notice of entry on the Lessee's premises
or the institution of legal proceedings to obtain possession; (ii) any
right of redemption or repossession; (iii) the benefit of any laws now or
hereafter in force exempting property from liability for rent or for debt
or limiting the Lessor Trustee with respect to the election of remedies;
and (iv) any other rights which might otherwise limit or modify any of the
Lessor Trustee's rights or remedies under this Section 16.
SECTION 17. LESSOR TRUSTEE'S RIGHT TO REMEDY
Section 17.1. The Lessor Trustee's Right to Remedy the Lessee's Defaults.
The Lessor Trustee, without waiving or releasing any obligation of the
Lessee or Event of Default, may (but shall be under no obligation to)
remedy any Event of Default, including without limitation the failure by
the Lessee to maintain the insurance required by Section 13, for the
account and at the sole cost and expense of the Lessee and may, to the
fullest extent permitted by law, and notwithstanding any right of quiet
enjoyment in favor of the Lessee, take possession of the Equipment for such
purpose and take all such action on the Event of Default as may be
necessary or appropriate for it, but no such possession shall be deemed a
termination of this Lease. All reasonable out-of-pocket costs and expenses
(including fees and expenses of counsel) incurred by the Lessor Trustee,
together with interest thereon at the Overdue Rate from the date on which
such costs and expenses are paid by the Lessor Trustee, shall be paid by
the Lessee to the Lessor Trustee as Supplemental Rent.
27
SECTION 18. OPTIONS TO RENEW, PURCHASE AND SELL
Section 18.1. Purchase of the Equipment.
(a) The Lessee shall have (i) the right to purchase all, but
not less than all, of the Equipment on the Expiration Date for the
Purchase Price, plus all other amounts then due under this Lease,
unless the Lessee has exercised its option to sell all, but not less
than all, of the Equipment pursuant to Section 18.3 and (ii) the
obligation to purchase all, but not less than all, of the Equipment
on the Expiration Date if a Default or Event of Default has occurred
and is continuing. The Lessee shall give to the Lessor Trustee and
the Agent written notice at least 180 days prior to the Expiration
Date of its election to exercise its option to purchase set forth in
the preceding sentence. Payment of the Purchase Price for the
Equipment, together with all other amounts then due under this Lease,
shall be made on the Expiration Date at the place of payment
specified in Section 3.4 hereof in immediately available funds, and
transfer of title to the Equipment shall be in accordance with the
procedures set forth in Section 19.
(b) In addition to its rights under Section 18.1(a), so long as
no Default or Event of Default has occurred and is continuing, the
Lessee shall have the right on any Scheduled Payment Date to purchase
all but not less than all of the Equipment for the Purchase Price,
plus, if applicable, the Make-Whole Amount (as defined below), plus
all other amounts then due under this Lease. The Lessee shall give to
the Lessor Trustee written notice at least 180 days prior to such
Scheduled Payment Date of its election to exercise its option to
purchase the Equipment. Payment of the Purchase Price for the
Equipment, plus the Make-Whole Amount, plus all other amounts then
due under this Lease, shall be made on such Scheduled Payment Date at
the place of payment specified in Section 3.4 hereof in immediately
available funds, and transfer of title to the Equipment shall be in
accordance with the procedures set forth in Section 19. For purposes
of this Lease, "Make-Whole Amount" means (i) if the prepayment occurs
on or before the first anniversary of the Closing Date, an amount
equal to 1% of the Purchase Price or (ii) if the prepayment occurs
after the first anniversary and on or before the second anniversary
of the Closing Date, an amount equal to 0.5% of the Purchase Price.
Section 18.2. [Intentionally Omitted]
Section 18.3. Option to Sell the Equipment.
(a) So long as no Default or Event of Default has occurred and
is continuing, the Lessee shall have the right on the Expiration Date
to arrange for the sale of all, but not less than all the Equipment.
The Lessee shall give to the Lessor Trustee and the Agent written
notice at least 180 days prior to the Expiration Date of its election
to exercise its option to sell the Equipment provided for in the
preceding sentence and, after delivery of such notice, the Lessee
shall have the obligation during the remainder of the Lease Term to
use its best efforts to obtain bona fide bids for the Equipment from
prospective purchasers who are financially capable of purchasing all
of the Equipment for cash on an as-is, where-is basis, without
recourse or warranty. No such purchaser shall be the Lessee or any
Guarantor or any of their Affiliates. The Lessee will be responsible
28
for hiring qualified brokers and making the Equipment available for
inspection by prospective purchasers. The Lessee shall promptly upon
the request of the Lessor Trustee, the Agent, the Certificate Holders
or any potential purchaser permit inspection of the Equipment and any
maintenance records relating to the Equipment, and the Lessee shall
comply with the requirements set forth in Section 9.4 and otherwise
do all things necessary to sell and deliver possession of the
Equipment to any purchaser. All marketing of the Equipment shall be
at the Lessee's sole expense. The Lessor Trustee, the Agent and the
Certificate Holders shall have the right, but shall be under no duty,
to solicit bids, to inquire into the Lessee's efforts to obtain bids,
or to take any other action in connection with any sale.
(b) All bids received by the Lessee prior to the end of the
Lease Term shall be immediately certified and provided to the Lessor
Trustee and the Agent in writing, setting forth the amount of such
bid and the name and address of the Person submitting such bid. The
Lessor Trustee or the Agent may, by giving written notice to the
Lessee, reject any bid that is less than the sum of (i) the
difference between the Lease Balance and the Maximum Lessee Risk
Amount and (ii) all costs and expenses incurred by the Lessor Trustee
or the Agent, or both. If every bid is rejected in accordance with
the foregoing sentence, the Lessor Trustee may elect to retain the
Equipment by written notice to the Lessee from the Lessor Trustee or
the Agent, and the Lessee shall return the Equipment to the Lessor
Trustee on the Expiration Date in accordance with Section 9. If the
Lessor Trustee does not elect to retain the Equipment, then no later
than the Expiration Date, the Lessee shall deliver the Equipment to
the bidder, if any, who has submitted the highest bid, and the Lessor
Trustee shall on the Expiration Date sell all of its right, title and
interest in and to the Equipment, AS-IS, WHERE-IS, without recourse
or warranty (express or implied) except for a warranty against
Lessor's Liens. The excess of the total selling price realized from
the sale of the Lessor Trustee's interest in the Equipment over the
Purchase Price thereof shall be paid to the Lessee as provided in
Section 18.4.
(c) In connection with any such sale of the Equipment, the
Lessee will provide to the purchaser all customary "seller's"
indemnities and representations and warranties regarding title,
absence of Liens (except Lessor's Liens) and the condition of the
Equipment. The Lessee shall have obtained, at its cost and expense,
all required governmental and regulatory consents, recertifications,
licenses and approvals and shall have made all filings as required by
Applicable Law in order to carry out and complete the transfer of the
Equipment.
(d) The Lessee shall pay directly, and not from the sale
proceeds, all costs and expenses of the sale of the Equipment,
whether incurred by the Lessor Trustee, the Agent, or the Lessee,
including, without limitation, the cost of all transfer taxes, the
reasonable attorneys' fees of the Lessor Trustee, the Agent, and the
Lessee, appraiser fees, commissions, filing fees, and all applicable
transfer taxes, including without limitation sales, documentary and
documentary stamp taxes.
(e) If the Lessee exercises its option to sell the Equipment
pursuant to Section 18.3(a), the Lessee shall have completed all
Alterations and Restoration of the Equipment pursuant to Sections
9.1, 10.1, 10.2 and 10.3 and shall have fulfilled all of the
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conditions and requirements in connection therewith pursuant to such
Sections, in each case at least 180 days prior to the Expiration Date
regardless of whether they are within the Lessee's control. The
Lessee shall have also paid the cost of all such Alterations
commenced prior to the Expiration Date. The Lessee shall not have
been excused pursuant to Section 12.1 from complying with any
Applicable Law that involved the extension of the ultimate imposition
of such Applicable Law beyond the Expiration Date. Any Permitted
Liens (other than Lessor's Liens) on the Equipment that were
contested by the Lessee shall have been removed and the Lessor
Trustee shall have received evidence satisfactory to it that all
Liens (other than Lessor's Liens and uncontested Permitted Liens of
the type described in clauses (i) and (v) of the definition thereof)
have been removed. The Equipment shall be in good operating
condition.
Section 18.4. End of Term Adjustment. If the aggregate Net Proceeds of
Sale (hereinafter defined) of the Equipment sold pursuant to Section 18.3
are less than what the Purchase Price of the Equipment determined as of the
Expiration Date would have been, the Lessee shall, on the Expiration Date,
pay to the Lessor Trustee, in immediately available funds, an amount equal
to the deficiency as an adjustment to the Rent payable under this Lease for
the Equipment; provided, however, that so long as no Default or Event of
Default has occurred and is continuing, such amount shall not be more than
the Maximum Lessee Risk Amount. If the aggregate Net Proceeds of Sale of the
Equipment on the Expiration Date are more than what the Purchase Price of
the Equipment would have been on that date, the Lessor Trustee shall pay to
the Lessee an amount equal to such excess as an adjustment to the Rent
payable under this Lease for the Equipment, provided, that the Lessor
Trustee shall have the right to offset against such adjustment payable by
the Lessor Trustee, any amounts then due and payable from Lessee to the
Lessor Trustee hereunder.
As used in this Section 18.4, the term "Net Proceeds of Sale" means,
with respect to the Equipment sold by the Lessor Trustee to a third party
under Section 18.3, the net amount of the proceeds of sale of the Equipment
received by the Lessor Trustee on or prior to the Expiration Date, after
deducting from the gross proceeds of such sale (i) all sales Taxes and
other Taxes as may be applicable to the sale or transfer of the Equipment,
(ii) all fees, costs and expenses of such sale incurred by the Lessor
Trustee and the Agent, and (iii) any other amounts for which, if not paid,
the Lessor Trustee or the Agent would be liable or which, if not paid,
would constitute a Lien on the Equipment. The Lessor Trustee's obligation
to sell its interest in the Equipment to a third party under Section 18.3
is contingent upon the receipt by the Lessor Trustee of the sum of (i) the
amounts, if any, payable by the Lessee with respect thereto pursuant to the
first sentence of this Section 18.4 and pursuant to the last paragraph of
this Section 18.4, (ii) all unpaid Periodic Rent payable for the Equipment
for all Scheduled Payment Dates through the Expiration Date, and (iii) all
unpaid Supplemental Rent due with respect to the Equipment as of the
Expiration Date.
If no bona fide bid is received under (or if all bids received are
rejected in accordance with) Section 18.3 hereof for all of the Equipment
prior to the Expiration Date, then the Lessee and the Lessor Trustee agree
that, in view of the uncertainties of market conditions and the parties'
inability to predict what the actual sale price of the Equipment would be,
the Net Proceeds of Sale for the Equipment shall be deemed to be zero
solely for purposes of the payment adjustment set forth in the first
paragraph of this Section 18.4, and the Lessee shall, on
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the Expiration Date, pay to the Lessor Trustee in immediately available
funds, an amount equal to the Purchase Price, but so long as no Default or
Event of Default has occurred and is continuing hereunder, no more than the
Maximum Lessee Risk Amount for the Equipment as an adjustment to the Rent
payable under this Lease, and the Lessee shall return the Equipment to the
Lessor Trustee on the Expiration Date in accordance with the provisions of
Section 9.4 hereof. Any proceeds from the sale of the Equipment subsequent
to the return of the Equipment to the Lessor Trustee shall be retained by
the Lessor Trustee and distributed pursuant to the Trust Agreement.
SECTION 19. PROCEDURES RELATING TO PURCHASE OF EQUIPMENT
Section 19.1. Provisions Relating to the Purchase of Equipment;
Conveyance upon Certain Other Events. In connection with the Lessee's
purchase of the Equipment in accordance with Section 18.1 or in connection
with the Lessee's obligations under Section 16.2(e), on the date on which
this Lease is to expire or terminate and upon tender by the Lessee of the
amounts set forth in Sections 16 or 18, as applicable, to the Lessor
Trustee, the Lessor Trustee shall convey to the Lessee (or to the Lessee's
designee) at the Lessee's cost and expense all of the Lessor Trustee's
right, title and interest in and to the Equipment, AS-IS, WHERE-IS, without
recourse or warranty, express or implied except for a warranty against
Lessor's Liens.
SECTION 20. ADDITIONAL GUARANTORS
Section 20.1. Additional Guarantors. The Lessee will cause each
Person which becomes a U.S. Subsidiary to promptly enter into a guarantee
of the Obligations and concurrently therewith shall deliver to the Lessor
Trustee, the Agent and each Certificate Holder the following items:
(a) an executed counterpart of the Guaranty Agreement or a
joinder to the Guaranty Agreement (in either case, a "New Guaranty
Agreement"), in form and substance satisfactory to the Certificate
Holders and the Agent;
(b) a certificate signed by an authorized Responsible Officer
of such U.S. Subsidiary making representations and warranties to the
effect of those contained in Section 5 of the Guaranty Agreement, but
with respect to such U.S. Subsidiary and such New Guaranty Agreement;
(c) such documents and evidence with respect to such U.S.
Subsidiary as the Certificate Holders or the Agent may reasonably
request in order to establish the existence and good standing of such
U.S. Subsidiary and the authorization of the transactions
contemplated by such New Guaranty Agreement; and
(d) an opinion of counsel (which may be internal counsel to the
Lessee) satisfactory to the Certificate Holders and the Agent to the
effect that such New Guaranty Agreement has been duly authorized,
executed, and delivered and that it constitutes the legal, valid and
binding contract and agreement of such U.S. Subsidiary enforceable in
accordance with its terms, except as such terms may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally
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and except as equitable remedies such as specific performance may be
in the discretion of the courts.
SECTION 21. ASSIGNMENT RESTRICTIONS
Section 21.1. Restrictions on Assignments by the Lessee. The Lessee
may not assign, in whole or in part, this Lease or any of its rights or
obligations under hereunder or with respect to any Item of Equipment to any
Person without the prior written consent of the Lessor Trustee, the Agent,
and the Certificate Holders, each of which may withhold its consent in its
absolute discretion. No assignment by the Lessee of this Lease or other
relinquishment of possession to any Item of Equipment shall in any way
discharge or diminish any of the obligations of the Lessee to the Lessor
Trustee hereunder, and the Lessee shall remain directly and primarily
liable under the Operative Agreements as to any rights or obligations
assigned by the Lessee or regarding any Item of Equipment in which rights
or obligations have been assigned or otherwise transferred. The
restrictions in this Section 21.1 shall not affect the Lessee's subleasing
rights under Section 8.2.
SECTION 22. NO MERGER OF TITLE
Section 22.1. No Merger of Title . There shall be no merger of this
Lease or of the leasehold estate created hereby by reason of the fact that
the same Person may acquire, own or hold, directly or indirectly, in whole
or in part, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate, (b) the fee estate in the
Equipment, except as may expressly be stated in a written instrument duly
executed and delivered by the appropriate Person or (c) an ownership
interest in the Lessor Trust.
SECTION 23. INTENT OF THE PARTIES
Section 23.1. Nature of Transaction.
(a) The parties intend that
(i) for financial accounting purposes with respect to
the Lessee, the Lessor Trust be treated as the owner and the
lessor of the Equipment and the Lessee be treated as the lessee
of the Equipment and
(ii) for all other purposes, including federal and all
state and local income tax purposes, state real estate and
commercial law purposes, and bankruptcy purposes,
(A) this Lease be treated as a financing
arrangement,
(B) the Certificate Holders be deemed lenders
making loans to the Lessee in an amount equal to the
principal amount of their Trust Certificates from time
to time outstanding, which amounts are secured by the
Equipment, and
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(C) the Lessee be treated as the owner of the
Equipment and be entitled to all tax benefits
ordinarily available to an owner of equipment like the
Equipment for such tax purposes.
(b) Nevertheless, the Lessee acknowledges and agrees that the
Trust Certificate Purchasers, the Certificate Holders, the Agent, and
the Lessor Trustee have made no representations or warranties to the
Lessee concerning the tax, accounting or legal characteristics of the
Operative Agreements and that the Lessee has obtained and relied upon
its own tax, accounting and legal advisors concerning the Operative
Agreements as it has deemed appropriate. In addition, if any Person,
including without limitation, a trustee in bankruptcy, receiver, or
similar official, or any Governmental Authority, determines, contrary
to the parties' intent, that this Lease is a true lease for state
real estate, commercial law or bankruptcy purposes, then this Lease
meets the requirements of and shall be deemed a "finance lease" under
UCC Article 2A, and the Lessee shall not assert, and hereby waives,
any defenses or arguments to the contrary.
(c) It is the intent of the parties hereto that this Lease
grant a security interest in and mortgage on the Equipment and all
proceeds thereof to the Lessor Trustee for the benefit of the
Certificate Holders to secure the Lessee's performance and payment of
all amounts under this Lease and the other Operative Agreements.
Section 23.2. Liens and Security Interests.
(a) Specifically, without limiting the generality of Section
23.1, the Lessor Trustee and the Lessee intend and agree that in any
insolvency or receivership proceedings, or in a petition under the
United States bankruptcy laws or any other applicable insolvency laws
or statute of the United States of America or any state or
commonwealth thereof affecting the Lessee, any Guarantor, the Lessor
Trust, the Lessor Trustee, the Agent or the Certificate Holders, or
in any collection actions, the transactions evidenced by the
Operative Agreements shall be regarded as loans made by the
Certificate Holders as unrelated third party lenders to the Lessee
secured by all of the Equipment (it being understood that the Lessee
has GRANTED and hereby GRANTS a security interest in all of the
Equipment to the Lessor Trustee and its successors and assigns (for
the benefit of the Certificate Holders) to secure all such loans and
the other Obligations).
(b) Specifically, but without limiting the generality of
Section 23.1, the Lessor Trustee and the Lessee further intend and
agree that, for the purpose of securing the obligation of the Lessee
for the repayment of the above-described loans from the Certificate
Holders to the Lessee, (i) this Lease shall also be deemed to be a
security agreement within the meaning of Article 9 of the Uniform
Commercial Code; (ii) the lease provided for hereby and in Section 2
of this Lease shall be deemed to be a grant by the Lessee to the
Lessor Trustee and its successors and assigns (for the benefit of the
Certificate Holders) of a lien and security interest in all of the
right, title and interest of the Lessee in and to the Equipment
(including any Replacement Equipment hereafter acquired) and all
proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property (it
being understood that the Lessee
33
hereby grants a security interest in the Equipment and all proceeds
thereof to the Lessor Trustee and its successors and assigns (for the
benefit of the Certificate Holders) to secure the loans described in
Section 23.2(a); (iii) the possession by the Lessor Trustee or any of
its agents of notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession" by the secured party for purposes of
perfecting the security interest pursuant to Section 9-313 of the
Uniform Commercial Code or corresponding state law; and (iv)
notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or
agents (as applicable) of the Lessee shall be deemed to have been
given for the purpose of perfecting such security interest under all
Applicable Laws. The Lessor Trustee and the Lessee shall, to the
extent consistent with this Lease, take such actions and execute,
deliver, file and record such other documents and financing
statements as may be necessary to ensure that, if this Lease is
deemed to create a security interest in the Equipment in accordance
with this Section 23.2, such security interest would be a perfected
security interest (subject only to Permitted Liens) and will be
perfected throughout the Lease Term.
(c) Specifically, but without limiting the foregoing or the
generality of Section 23.1, the Lessee hereby grants, to the Lessor
Trustee and its successors and assigns a security interest in all of
the Lessee's right, title, and interest in and to the following
(collectively, the "Additional Collateral"), all of which are hereby
declared and shall be deemed to be a portion of the security for the
indebtedness and Obligations described in this Lease:
(i) all proceeds, both cash and noncash, of the
Equipment;
(ii) all right, title and interest of the Lessee (A) in
all warranties, chattel paper, documents, general intangibles,
trade names, trademarks, service marks, logos (including any
names or symbols by which the Equipment is known) and goodwill
related to the Equipment and (B) in all other articles of
personal property of every kind and nature whatsoever (other than
inventory and accounts), tangible or intangible, now, heretofore
or hereafter acquired with any proceeds of the Advances
(including the advances made by the Original Trust Certificate
Purchasers or the Existing Trust Certificate Purchasers), that
arise out of or are related to the ownership of the Equipment or
are located on or become accessions to the Equipment;
(iii) all right, title and interest of the Lessee in
any and all leases, rental agreements and arrangements of any
sort now or hereafter affecting the Equipment or any portion of
it and providing for or resulting in the payment of money to the
Lessee for the use of the Equipment or any portion of it,
irrespective of whether such leases, rental agreements and
arrangements be oral or written, and including any and all
extensions, renewals and modifications thereof (the "Subject
Leases") and guaranties of the performance or obligations of any
lessees thereunder, together with all income, rents, issues,
profits and revenues from the Subject Leases (including all
security deposits and all other deposits, whether held by the
Lessee or in a trust account, and all other deposits and escrow
funds
34
relating to any Subject Leases), and all the estate, right,
title, interest, property, possession, claim and demand
whatsoever at law, as well as in equity, of the Lessee of, in and
to the same; provided, however, that although this Lease contains
(and it is hereby agreed that this Lease contains) a present,
current, unconditional and absolute assignment of all of said
income, rents, issues, profits and revenues, the Lessee shall
collect and apply such rental payments and revenues as provided
in this Lease and the other Operative Agreements;
(iv) all right, title and interest of the Lessee in, to
and under all franchise agreements, management contracts,
consents, authorizations, certificates and other rights of every
kind and character of any Governmental Authority affecting the
Equipment and all other contracts, licenses and permits now or
hereafter affecting the Equipment or any Item of Equipment or
Part and all guaranties and warranties with respect to any of the
foregoing (the "Subject Contracts");
(v) all right, title and interest of the Lessee in any
insurance policies or binders now or hereafter relating to the
Equipment, including any unearned premiums thereon, as further
provided in this Lease;
(vi) all right, title and interest of the Lessee in any
and all awards, payments, proceeds and the right to receive the
same, either before or after any foreclosure hereunder, as a
result of any temporary or permanent injury or damage to, taking
of or decrease in the value of the Equipment by reason of
casualty, condemnation or otherwise as further provided in this
Lease;
(vii) all right, title and interest of the Lessee in
all escrow and all other deposits (and all letters of credit,
certificates of deposit, negotiable instruments and other rights
and evidence of rights to cash) now or hereafter relating to the
Equipment or the purchase or operation thereof;
(viii) all claims and causes of action arising from or
otherwise related to any of the foregoing, and all rights and
judgments related to any legal actions in connection with such
claims or causes of action; and
(ix) all Alterations, extensions, additions,
improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing, and all
chattel paper, documents, instruments general intangibles and
other property of any nature constituting proceeds acquired with
proceeds of any of the property described hereinabove.
SECTION 24. MISCELLANEOUS
Section 24.1. Severability. If any term of this Lease or any
application of any term shall be declared invalid or unenforceable, the
remainder of this Lease and any other application of the offending term
shall not be affected thereby.
35
Section 24.2. Amendments and Modifications. Subject to the
requirements, restrictions and conditions set forth in the Participation
Agreement, neither this Lease nor any provision hereof may be amended,
waived, discharged or terminated except by an instrument in writing signed
by the parties hereto.
Section 24.3. No Waiver. No failure by the Lessor Trustee, the Agent
or any Certificate Holder to insist upon the strict performance of any term
hereof or to exercise any right, power or remedy upon a default hereunder,
and no acceptance of full or partial payment of Rent during the continuance
of any such default, shall constitute a waiver of any such default or of
any such term. To the fullest extent permitted by law, no waiver of any
default shall affect or alter this Lease, and this Lease shall continue in
full force and effect with respect to any other then-existing or subsequent
default.
Section 24.4. Notices. All notices, demands, requests, consents,
approvals and other communications hereunder shall be in writing and
directed to the address described in, and deemed received in accordance
with the provisions of, Section 10.2 of the Participation Agreement.
Section 24.5. Successors and Assigns. All the terms and provisions of
this Lease shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 24.6. Headings and Table of Contents. The headings and table
of contents in this Lease are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof
Section 24.7. Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
Section 24.8. Third Party Beneficiaries. The Lessee and the Lessor
Trustee intend that the Agent and each Certificate Holder be third party
beneficiaries of the Lessee's obligations under this Lease.
Section 24.9. Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(excluding its choice-of-law principles of the law that would require the
application of the laws of another jurisdiction).
Section 24.10. Time of Essence. With respect to each of the Lessee's
obligations hereunder, time is of the essence, and each party hereby
acknowledges and confirms the foregoing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed and delivered as of the date first above written.
XXXXX FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, as trustee under MW 1997-1 Trust, as
Lessor Trustee
By ________________________________
C. XXXXX XXXXXXX
Its: VICE PRESIDENT
[Second Amended and Restated Equipment Lease]
MAIL-WELL I CORPORATION
By ________________________________
XXXXXX XXXXX
Its: VICE PRESIDENT-TREASURER & TAX
[Second Amended and Restated Equipment Lease]
