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GC COMPANIES, INC.
EXHIBIT 10.14
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MASTER LEASE AGREEMENT
Dated as of
November 21, 1996
Between
GENERAL ELECTRIC CAPITAL CORPORATION,
FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS,
Lessor
and
GENERAL CINEMA THEATRES, INC.
Lessee
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GC COMPANIES, INC.
EXHIBIT 10.14
MASTER LEASE AGREEMENT
TABLE OF CONTENTS
Page
I. LEASING.....................................................................................1
II. TERM, RENT AND PAYMENT......................................................................4
III. TAXES.......................................................................................4
IV. REPORTS.....................................................................................4
V. DELIVERY, USE AND OPERATION.................................................................5
VI. SERVICE.....................................................................................6
VII. STIPULATED LOSS VALUE.......................................................................7
VIII. LOSS OR DAMAGE..............................................................................8
IX. INSURANCE...................................................................................8
X. RETURN OF EQUIPMENT AND LEASEHOLD IMPROVEMENTS..............................................9
XI: FINANCIAL COVENANTS........................................................................10
XII. DEFAULT....................................................................................10
XIII. ASSIGNMENT.................................................................................11
XIV. NET LEASE; NO SET-OFF, ETC.................................................................12
XV. INDEMNIFICATION............................................................................12
XVI. DISCLAIMER.................................................................................13
XVII. REPRESENTATIONS AND WARRANTIES OF LESSEE...................................................14
XVIII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY SAVINGS......................15
XIX END OF LEASE OPTIONS.......................................................................16
(a) Renewal...........................................................................16
(b) Return............................................................................16
(c) Purchase..........................................................................17
(d) Extension.........................................................................17
(e) Notice of Election................................................................18
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EXHIBIT 10.14
XX. MISCELLANEOUS...........................................................................................18
XXI: CHOICE OF LAW; JURISDICTION.............................................................................20
XXII: CHATTEL PAPER...........................................................................................20
XXIII: EARLY TERMINATION.......................................................................................20
EXHIBIT NO. 1 - EQUIPMENT SCHEDULE
ANNEX A - DESCRIPTION OF EQUIPMENT
ANNEX B - ▇▇▇▇ OF SALE FORMS
ANNEX C - CERTIFICATE OF ACCEPTANCE
ANNEX D - STIPULATED LOSS VALUE TABLE
ANNEX E - AMORTIZATION SCHEDULE
ANNEX F - RETURN PROVISIONS
EXHIBIT NO. 2 - ESTOPPEL/WAIVER AGREEMENT
EXHIBIT NO. 3 - COLLATERAL ASSIGNMENT OF GROUND LEASE
EXHIBIT NO. 4 - LANDLORD'S WAIVER & CONSENT FORM
EXHIBIT NO. 5 - LEASE OPTION AGREEMENT
EXHIBIT NO. 6 - FINANCIAL COVENANTS PRIOR TO RELEASE OF GUARANTOR
EXHIBIT NO. 7. FINANCIAL COVENANTS AFTER RELEASE OF GUARANTOR
EXHIBIT NO. 8 - FORM OF MASTER SUBLEASE
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GC COMPANIES, INC.
EXHIBIT 10.14
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of November 21, 1996
("AGREEMENT"), between GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS
AGENT FOR CERTAIN PARTICIPANTS, with an office at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called, together with its successors
and assigns, if any, "LESSOR"), and GENERAL CINEMA THEATRES, INC., a
Massachusetts corporation with its mailing address and chief place of business
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called
"LESSEE").
WITNESSETH:
I. LEASING:
(a) This Agreement shall be effective from and after the date of
execution hereof. Subject to the terms and conditions set forth below, Lessor
will (i) acquire and/or construct and lease to Lessee certain leasehold
improvements (collectively, the "LEASEHOLD IMPROVEMENTS") located on real
property owned by Lessee or one or more wholly-owned subsidiary (each a
"Subsidiary") or leased by the Lessee or a Subsidiary pursuant to ground leases
(collectively, the "GROUND LEASES") and (ii) acquire and lease to the Lessee
certain items of equipment (the "EQUIPMENT") pursuant to schedules (each a
"SCHEDULE") incorporating the terms of this Agreement, in substantially the form
attached hereto as Exhibit 1. The Leasehold Improvements shall be constructed
only at those locations at which the Equipment will be installed and operated by
Lessee or its Subsidiary as a "General Cinema Theater". The Equipment and the
Leasehold Improvements are sometimes hereinafter called collectively the "Lease
Assets." The Lessor shall acquire and lease to the Lessee only such Lease Assets
as are, or shall from time to time be, described in Annex A to any Schedule
hereto. Terms defined in a Schedule and not otherwise defined herein shall have
the meanings ascribed to them in such Schedule.
(b) Lessor and Lessee have previously entered into that certain Agency
Agreement dated as of November 15, 1996 (the "AGENCY AGREEMENT") pursuant to
which Lessor appointed Lessee as its agent to acquire and pay for on behalf of
Lessor, Lease Assets in accordance with the terms and conditions of the Agency
Agreement.
(c) The obligation of Lessor to lease Leasehold Improvements and
Equipment to Lessee under any Schedule shall be subject to receipt by Lessor,
prior to the Lease Commencement Date, of each of the following documents in form
and substance satisfactory to Lessor:
(i) a Schedule relating to the Lease Assets then to be leased
thereunder,
(ii) evidence of insurance which complies with the requirements of
Section IX,
(iii) a ▇▇▇▇ of Sale executed by Lessee or other vendor with respect to
the Equipment, in favor of Lessor, in the form of Annex B-1 or B-2, as
applicable, to the applicable Schedule,
(iv) an Estoppel/Waiver Agreement (each an "ESTOPPEL/WAIVER AGREEMENT")
in substantially the
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EXHIBIT 10.14
form of Exhibit 2 attached hereto from the landlord and/or mortgagee (if any)
with respect to those locations at which Lease Assets are located which are not
subject to Ground Leases, or an opinion of counsel (satisfactory to Lessor),
(v) a certificate of an authorized officer of Lessee stating that such
officer has reviewed the activities of Lessee and that, to the best of such
officer's knowledge and without personal liability, Lessee is not in default
under this Agreement, and there exists no Default (as hereinafter defined) or
event which, with the giving of notice or the lapse of time (or both), would
become such a Default,
(vi) such Uniform Commercial Code Financing Statements, or Statements
of Termination, Release or Partial Release with respect to the Equipment as
Lessor reasonably may require,
(vii) evidence of Lessee's title or leasehold interest in any real
estate ("Real Estate") upon which Leasehold Improvements have been constructed,
which shall be (1) for any owned land, a copy of an owner's title insurance
policy, (together with, if required by Lessor, a mortgagee's policy covering the
Lessor's interest in such land, which policy shall be in form and substance
satisfactory to the Lessor in all respects), or (2) for leased land, a copy of
the applicable Ground Lease, which Ground Lease shall expressly (a) permit a
collateral assignment to, and re-assignment by, the Lessor, (b) provide for an
initial lease term of not less than 20 years, and (c) otherwise be in form and
content satisfactory to the Lessor in all material respects,
(viii) a title insurance policy (which shall be an ALTA policy in all
states in which such policies are available) issued by a title insurance company
acceptable to the Lessor, which policy shall (a) insure that the Lessee has an
ownership or leasehold interest in the Real Estate free and clear of all liens
and encumbrances, (b) be accompanied by copies of all documents relating to any
proposed exceptions, (d) contain no exceptions objectionable to the Lessor, (e)
if required by Lessor, insure the Lessor's lien upon Lessee's fee or leasehold
estate, and (f) otherwise be in form and substance satisfactory to the Lessor in
its discretion,
(x) a certificate from Lessee or Lessee's architect or engineer of
zoning compliance, copies of a use and occupancy permit or temporary use and
occupancy permit, along with evidence that Lessee is diligently correcting and
conditions which would delay or hinder the process of obtaining a permanent use
and occupancy permit and all other necessary permits or governmental approvals,
and evidence reasonably satisfactory to Lessor of completion of the construction
of the Leasehold Improvements and the installation of the Equipment on the Real
Estate such that the Real Estate is suitable for operation by Lessee as a
General Cinemas Theater,
(xi) evidence that the Leasehold Improvements, as constructed, comply
in all material respects with the requirements of any applicable Ground Lease,
(xii) a Phase I environmental audit (and such further environmental
audits or evidence of the absence of hazardous wastes as the Lessor shall deem
necessary), which audits must be satisfactory in the Lessor's sole discretion as
to form and substance),
(xiii) if required by Lessor, an appraisal of any Leasehold
Improvements, satisfactory to the Lessor in all material respects, reflecting,
among other things, that the schedule of payments to be made in connection with
the Lessee's leasehold improvements is not be more than the then current
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EXHIBIT 10.14
fair market value of such leasehold improvements (as determined to the
reasonable satisfaction of Lessor),
(xiv) if required by the Lessor, a current survey certified to the
Lessor and the title company, prepared by a registered land surveyor or engineer
reasonably satisfactory to the Lessor, and showing (a) the location on the Real
Estate of all Leasehold Improvements and established building setback lines, (b)
the boundary lines of such Real Estate, (c) all access and other easements
appurtenant to such Real Estate or necessary for the use of the Leasehold
Improvements, (d) all roadways, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the Real Estate,
whether recorded or apparent from a physical inspection of the Real Estate, (e)
any encroachments on any adjoining property by the Leasehold Improvements, (f) a
metes and bounds legal description of the Real Estate, and (g) such other items
as may be reasonably required by the Lender. Such survey shall be certified to
the Lessor and the Title Company, shall not reflect any matters which would have
a material adverse effect on the operation of a theater upon the Real Estate,
and shall otherwise be in form and substance satisfactory to the Lessor in all
material respects,
(xv) in the case of Real Estate owned by Lessee in fee, a license or
real estate lease in form satisfactory to Lessee and Lessor making such Real
Estate available to Lessor for a term substantially coterminous with the term of
any applicable Schedule (including any renewals), and a Mortgage or Deed of
Trust (each a "Mortgage") in form satisfactory to Lessor and Lessee, and in the
case of Real Estate held under a Ground Lease, a collateral assignment of the
applicable Ground Lease (each a "COLLATERAL ASSIGNMENT OF LEASE"), substantially
in the form of Exhibit 3 attached hereto.
(xvi) a Landlord's Waiver and Consent to Assignment of Lease, in
substantially the form of Exhibit 4 attached hereto, duly executed by the
landlord of any Real Estate held under a Ground Lease, or evidence satisfactory
to Lessor in all respects that the Ground Lease expressly permits the collateral
assignment of the Ground Lease to Lessor, gives the Lessor appropriate notice
and cure rights, and permits the assignment of the Ground Lease by the Lessor
without further consent from or notice to the landlord.,
(xvii) Such additional waivers and acknowledgments from the Landlord of
any Real Estate held under a Ground Lease as the Lessor shall reasonably
request,
(xviii) Evidence that all real estate taxes on the Leasehold
Improvements which are then due and payable have been paid,
(xix) Lien waivers signed by the general contractor and all major
subcontractors and suppliers for all work done and materials furnished in
connection with the construction of the Leasehold Improvements and the
installation of the Equipment therein (each a "Supplier"),
(xx) a copy of the plans and specifications pursuant to which the
Leasehold Improvements were constructed, and a certification by the Lessee's
architect that, in his professional judgment, the Leasehold Improvements were
completed substantially in conformity with such plans and specifications, and in
accordance with the Americans with Disabilities Act, and all applicable building
codes and regulations,
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EXHIBIT 10.14
(xxi) a mortgagee's consent and waiver from any mortgagee of the Real
Estate upon which the Leasehold Improvements are constructed, unless such
mortgagee has executed and delivered a Subordination and Non-Disturbance
Agreement in form and substance satisfactory to the Lessor in all respects.,
(xxii) an opinion of counsel for Lessee and GC Companies, Inc. (the
"GUARANTOR") in form and substance satisfactory to Lessor,
(xxiii) Lessee's and Guarantor's Board of Director resolutions
certified by the Secretary of Lessee or Guarantors as applicable,
(xxiv) an Affidavit of ownership with respect to the applicable
Equipment,
(xxv) a certification from the Lessee's engineer that the Leasehold
Improvements, as constructed, comply with all applicable zoning and land use
laws;
(xxvi) with respect to any property owned in fee, a Lease Option
Agreement substantially in the form of Exhibit 5 attached hereto;
(xxvii) if the Lease Assets are described on the applicable Schedule
are to be subleased to a Subsidiary pursuant to Section XIII, hereof, the
chattel paper original of the Sublease (as hereinafter defined) and of the
applicable Sublease Schedule, together with an opinion of counsel for such
Subsidiary, a certified resolution with respect to such Subsidiary, evidence of
insurance on behalf of such Subsidiary which complies with the provisions hereof
(provided that the foregoing, other than the original Sublease Schedule, need
only be delivered on the date the applicable Sublease is executed), an Affidavit
of Ownership with respect to the Lease Assets, and Uniform Commercial Code
Financing Statements, all as reasonably required by Lessor; and
(xxviii) such other documents as Lessor reasonably may request.
Simultaneously with the execution of the first ▇▇▇▇ of Sale, and
thereafter, Lease schedules shall be funded not more than once during each of
Lessee's fiscal quarters and shall be in minimum amounts of not less than
$4,000,000; provided, however, that in the event that Lessee receives funding
for Lease Assets located at a particular location, invoices and paperwork (as
described in Section I (c) hereof) must be provided, and the funding for the
remaining Lease Assets at such location (each a "SECONDARY FUNDING") must be
made within ninety (90) days after such funding. At the time of each funding,
Lessee shall execute a Certificate of Acceptance, in the form of Annex C to the
applicable Schedule, covering all of the Equipment and/or Leasehold Improvements
described in the ▇▇▇▇ of Sale or delivered to Lessee, during the preceding
quarter, as applicable. Upon execution by Lessee of any Certificate of
Acceptance, the Equipment and Leasehold Improvements described thereon shall be
deemed to have been delivered to, and irrevocably accepted by, Lessee for lease
hereunder.
II. TERM, RENT AND PAYMENT:
(a) The rent payable under any Schedule (the "RENT") shall be set forth
in such Schedule in accordance with the Commitment Letter of Lessor and Lessee
dated October 22, 1996 (the
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EXHIBIT 10.14
"Commitment Letter"), and Lessee's obligation to pay Rent and and Lessee's right
to use the Equipment and Leasehold Improvements shall commence on the date of
execution by Lessee of the Certificate of Acceptance for such Equipment and
Leasehold Improvements ("LEASE COMMENCEMENT DATE"). The Term of each leasing
transaction pursuant to this Agreement (the "TERM") shall be the period
specified in the applicable Schedule. For Equipment, the basic term shall be
four (4) years, and for Leasehold Improvements the basic term shall be six (6)
years; provided, however, that schedules for Equipment and Leasehold
Improvements under any Secondary Funding shall have the same term as schedules
for Equipment or Leasehold Improvements (as applicable) under the prior funding
for such location. If any Term is extended, the word "Term" shall be deemed to
refer to all extended terms, and all provisions of this Agreement shall apply
during any extended terms, except as may be otherwise specifically provided in
writing.
(b) Rent shall be paid to Lessor by wire transfer of immediately
available funds to: Bankers Trust ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Account
No. ▇▇-▇▇▇-▇▇▇, ABA No. ▇▇▇-▇▇▇-▇▇▇, or to such other account as Lessor may
direct in writing; and shall be effective upon receipt. Payments of Rent shall
be in the amount set forth in, and due in accordance with, the provisions of the
applicable Schedule. In no event shall any Rent payments be refunded to Lessee,
subject to adjustment for inadvertent overpayment. If Rent is not paid within
ten days of its due date, Lessee agrees to pay a late charge of Five Cents
($0.05) per dollar on, and in addition to, the amount of such Rent but not
exceeding the lawful maximum, if any.
III. TAXES:
Lessee shall have no liability for taxes imposed by the United States
of America or any State or political subdivision thereof which are on or
measured by the net income of Lessor. Lessee shall report (to the extent that it
is legally permissible) and pay promptly all other taxes, fees and assessments
due, imposed, assessed or levied against any Equipment or Leasehold Improvements
(or the purchase, ownership, delivery, leasing, possession, use or operation
thereof), this Agreement (or any rentals or receipts hereunder), any Schedule,
Lessor or Lessee by any foreign, Federal, state or local government or taxing
authority during or related to the term of this Agreement, including, without
limitation, all license and registration fees, and all sales, use, personal
property, real property, excise, gross receipts, franchise, stamp or other
taxes, imposts, duties and charges, together with any penalties, fines or
interest thereon (all hereinafter called "TAXES"). Lessee shall (i) reimburse
Lessor upon receipt of written request for reimbursement for any Taxes charged
to or assessed against Lessor, (ii) on request of Lessor, submit to Lessor
written evidence of Lessee's payment of Taxes, (iii) on all reports or returns
show the ownership of the Equipment or Leasehold Improvements by Lessee, and
(iv) send a copy thereof to Lessor.
IV. REPORTS:
(a) Lessee will notify Lessor in writing, within ten (10) days after
receiving notice that any tax or other lien has attached to any Equipment or
Leasehold Improvements, of the full particulars thereof and, if applicable, of
the location of such Equipment on the date of such notification.
(b) Lessee will deliver to Lessor, within ninety (90) days of the close
of each fiscal year of
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Guarantor, Guarantor's balance sheet, profit and loss statement, and statement
of income and cash flows, prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied, certified by a recognized
firm of certified public accountants, together with Guarantor's Form 10K filed
with the Securities and Exchange Commission ("SEC"). Lessee will deliver to
Lessor quarterly, within ninety (90) days of the close of each fiscal quarter of
Guarantor, in reasonable detail, copies of Guarantor's quarterly financial
report certified by the chief financial officer of Guarantor, together with
Guarantor's Form 10Q filed with the SEC. The annual and quarterly financial
statements of Guarantor shall be accompanied by consolidating financial
statements as to the Guarantor and Lessee. In the event that Lessee achieves the
benchmarks set forth in the Commitment Letter and the Guarantor is released from
liability on its guaranty, Lessee shall thereafter furnish Lessor, within the
time limits and meeting the requirements set forth above, annual audited
financial statements and quarterly financial statements certified by Lessee's
chief financial officer.
(c) Lessee will permit Lessor to inspect any Equipment during normal
business hours upon reasonable notice.
(d) Subject to Lessee's rights under Section V(f), Lessee will keep the
Equipment at the equipment location (specified in the applicable Schedule)
within the Continental United States, provided that Lessee shall promptly (and
not later than 60 days) notify Lessor of any relocation of Equipment. Upon the
written request of Lessor, Lessee will notify Lessor forthwith in writing of the
location of any Equipment as of the date of such notification.
(e) Lessee will promptly and fully report to Lessor in writing if any
Equipment or Leasehold Improvement is lost or damaged (where the estimated
repair costs would exceed $50,000 ) or is otherwise involved in an accident
causing personal injury or property damage where the estimated damages are more
than $50,000.
(f) Within thirty (30) days after any request by Lessor, Lessee will
furnish a certificate of an authorized officer of Lessee stating that he has
reviewed the activities of Lessee and that, to the best of his knowledge, there
exists no Default or event which, with the giving of notice or the lapse of time
(or both), would become such a Default.
(g) Lessee shall promptly (a) notify Lessor of any default under any
Ground Lease, and (b) give Lessor copies of any notices received by Lessee from
the landlord under any Ground Lease.
V. DELIVERY, USE AND OPERATION:
(a) All Equipment shall be shipped directly from the Supplier to
Lessee.
(b) All Leasehold Improvements shall be constructed pursuant to the
Agency Agreement dated November 15, 1996 between the Lessor and the Lessee (as
amended from time to time, the "Agency Agreement").
(c) Lessee agrees that the Lease Assets, will be used by Lessee solely
in the conduct of its business and in a manner complying in all material
respects with all applicable Federal, state, and local laws and regulations, and
any applicable insurance policies, and Lessee shall not discontinue use and
operation of the Equipment and the Leasehold Improvements, subject to Lessee's
early
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termination rights set forth below.
(c) Lessee will keep the Lease Assets free and clear of all liens and
encumbrances other than (1) those which result from acts of Lessor or otherwise
approved by Lessor, and (2) those arising from the rights and interest of Lessee
in any Sublease which has been assigned to Lessor..
(d) Lessee shall comply with each and every covenant, term and
condition of each Ground Lease, subject to applicable notice and cure periods,
if any.
(e) Lease Assets shall be used or kept only in locations ("Lease Assets
Locations") in the United States, Canada, or such other countries as shall be
approved by Lessor on a case-by-case basis.
(f) Provided that no Default (as hereinafter defined) shall then have
occurred and be continuing, at Lessee's expense, upon thirty days' prior written
notice to Lessor, Lessee may elect to replace a unit of Equipment (a
"SUBSTITUTED ITEM") with a new unit of Equipment (a "REPLACEMENT ITEM");
provided, however, that no such written notice shall be necessary prior to the
temporary replacement of a unit of Equipment, so long as (a) the temporary
replacement of such unit of Equipment is necessary for the operation of a
theater, (b) the total value of all units so replaced during any quarter does
not exceed $100,000, and (c) within thirty days after the temporary replacement
of a unit of Equipment, Lessee shall either resume use of the original unit of
Equipment, or replace the original unit of Equipment with a Replacement Item
meeting all of the requirements for Replacement Items set forth herein . Each
Replacement Item shall be free and clear of all liens and encumbrances other
than those approved by Lessor in writing and shall have at least the value,
utility and remaining useful life and be in as good an operating condition as
the Substituted Item, assuming that the Substituted Item had been maintained in
accordance with the provisions of this Agreement. Replacements pursuant hereto
shall be limited to not more than $100,000 during any quarter, and at the end of
each such quarter, Lessee shall execute and deliver to Lessor a ▇▇▇▇ of Sale and
an amended Annex A to the applicable Equipment Schedule with respect to each
Replacement Item acquired during such quarter, together with such documents and
instruments as reasonably may be required by Lessor in connection with such
replacement, including (without limitation) Uniform Commercial Code financing
statements to be filed at Lessee's expense. Upon compliance by Lessee with the
provisions hereof, Lessor will transfer to Lessee, on an AS IS, WHERE IS BASIS,
without recourse or warranty, express or implied, of any kind whatsoever, all of
Lessor's interest in and to the Equipment. Lessor shall not be required to make
and may specifically disclaim any representation or warranty as to the condition
of the Equipment and any other matters (except that Lessor shall warrant that it
conveyed whatever interest it received in such Equipment free and clear of any
lien or encumbrance created by or through Lessor). Lessor shall execute and
deliver to Lessee such Uniform Commercial Code statements of termination as
reasonably may be required in order to terminate any interest of Lessor in and
to such Equipment.
(g) In addition to, and apart from, any rights and obligations Lessee
may have under Subsection (f) above, if Lessee desires to close a theater at a
particular Lease Assets Location, then Lessee may, with the prior written
consent of Lessor, which consent shall not be unreasonably withheld, elect to
substitute for all of the Lease Assets at such Lease Assets Location (including
Leasehold Improvements and all Equipment at such location), Leasehold
Improvements and Equipment to be used at a new Lease Assets Location, which
Leasehold Improvements and
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Equipment must have a value (as determined to the reasonable satisfaction of
Lessor) equal to or greater than the replaced Lease Assets, provided that the
acquisition of such substituted Leasehold Improvements satisfies the conditions
for acquisition of the original Leasehold Improvements so replaced, the
replacement of the Equipment located at such Lease Assets Location shall
otherwise meet the requirements of subsection (f) above, and Lessee shall be
responsible for all costs and expenses incurred by Lessor in connection with
such substitution. In connection with any such substitution, Lessee shall
execute and deliver, or shall cause to be executed and delivered, to Lessor a
copy of the applicable deed or Ground Lease, Collateral Assignment of Lease,
Landlord's Waiver, Estoppel/Waiver Agreement (all as applicable), and an amended
Annex A to the applicable Schedules with respect to all of the replaced Lease
Assets, together with such documents and instruments as reasonably may be
required by Lessor in connection with such replacement, including (without
limitation) title insurance policies, environmental audits, surveys, Uniform
Commercial Code financing statements and mortgage documents, if applicable, to
be filed at Lessee's expense, all of such documents and instruments to be in
form and substance reasonably satisfactory to Lessor. Upon compliance by Lessee
with the provisions hereof, Lessor will transfer to Lessee, on an AS IS BASIS
(as hereinafter defined), without recourse or warranty, express or implied, of
any kind whatsoever, all of Lessor's interest in and to the replaced Leasehold
Improvements. Lessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of the replaced Leasehold
Improvements and any other matters (except that Lessor shall warrant that it
conveyed whatever interest it received in such replaced Leasehold improvements
free and clear of any lien or encumbrance created by or through Lessor). Lessor
shall execute and deliver to Lessee such Uniform Commercial Code statements of
termination, releases of Collateral Assignments of Leases, releases of
Mortgages, and other documents and instruments, as reasonably may be required in
order to terminate any interest of Lessor in and such replaced Leasehold
Improvements.
VI. SERVICE:
(a) Lessee will, at its sole expense, maintain all Leasehold
Improvements in good operating condition, order, repair and appearance and shall
maintain each unit of Equipment in good operating order, repair, condition and
appearance in accordance with manufacturer's recommendations, normal wear and
tear excepted. Lessee shall, if at any time reasonably requested by Lessor,
affix in a prominent position on each unit of Equipment and Leasehold
Improvement such signs, plates, tags or other identifying labels showing the
interest therein of Lessor.
(b) Lessee will not, without the prior consent of Lessor, affix or
install any accessory, equipment or device on any Equipment or in any Leasehold
Improvements if such addition will impair the value, originally intended
function or use of such Equipment or Leasehold Improvements. All additions,
repairs, parts, supplies, accessories, equipment, and devices furnished,
attached or affixed to any Equipment or Leasehold Improvements which are not
readily removable shall be made only in compliance with applicable law, shall be
free and clear of all liens, encumbrances or rights of others, and shall become
the property of Lessor. Lessee will not, without the prior written consent of
Lessor and subject to such conditions as Lessor may impose for its protection,
affix or install any Equipment to or in any personal or real property other than
the Leasehold Improvements.
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(c) Any alterations or modifications to the Equipment or Leasehold
Improvements that may, at any time during the term of this Agreement, be
required to comply with any applicable law, rule or regulation shall be made at
the expense of Lessee.
VII. STIPULATED LOSS VALUE:
Lessee shall promptly and fully notify Lessor in writing if any
Leasehold Improvement or unit of Equipment shall be or become worn out, lost,
stolen, destroyed, irreparably damaged in the reasonable determination of
Lessee, or permanently rendered unfit for use from any cause whatsoever (such
occurrences being hereinafter called "CASUALTY OCCURRENCES").
(a) With respect to any Unit of Equipment which is so lost, damaged or
destroyed (so long as the Leasehold Improvements upon which such Equipment is
installed have not also been damaged or destroyed), on the Rental Payment Date
next succeeding a Casualty Occurrence (the "PAYMENT DATE"), Lessee shall either
(as selected by Lessee):
(i) replace the unit of Equipment having suffered the Casualty
Occurrence in accordance with the provisions of Section V(f) hereof; or
(ii) pay Lessor the sum of (x) the Stipulated Loss Value of
such unit calculated in accordance with Annex D as of the Rent Payment Date next
preceding such Casualty Occurrence ("CALCULATION DATE"); and (y) all rental and
other amounts which are due hereunder as of the Payment Date. Upon payment of
all sums due hereunder, the Term of the Schedule for such unit shall terminate
and (except in the case of the loss, theft or complete destruction of such unit)
Lessor shall reconvey to Lessee Lessor's interest in such unit, and Lessee shall
be entitled to recover possession of such unit..
(b) With respect to any Leasehold Improvements which are damaged,
destroyed or rendered unfit for use by any Casualty Occurrence, on the Payment
Date, Lessee shall either, at the option of Lessee (provided that all of the
following conditions are met):
(i) repair or rebuild such Leasehold Improvements (and replace
any Equipment located thereon in accordance with Section V(f) hereof), subject
to the terms and conditions hereinafter set forth; or
(ii) pay Lessor the sum of (x) the Stipulated Loss Value of
all Leasehold Improvements on the applicable Schedule, calculated in accordance
with Annex D as of the Calculation Date; and (y) all rental and other amounts
which are due hereunder as of the Payment Date. Upon payment of all sums due
hereunder,, the lease term of the Schedule for such Leasehold Improvements shall
terminate, Lessor shall surrender any real estate license or lease or reassign
any Ground Lease, as applicable, Lessor shall reconvey to Lessee Lessor's
interest in such Leasehold Improvements, and Lessee shall be entitled to recover
possession of such Leasehold Improvements.
Lessee shall have the option of repairing or rebuilding damaged or
destroyed Leasehold Improvements only if :
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EXHIBIT 10.14
(1) No default has occurred and is continuing hereunder,
(2) Such restoration or replacement is permitted by the terms
of any applicable Ground Lease,
(3) Restoration or replacement of the damaged Leasehold
Improvements will not result in any decrease in value or other
impairment to the Leasehold Improvements, and
(4) The funds available for any restoration or replacement are
sufficient to pay the costs of restoration or replacement of the damaged
Leasehold Improvements.
If Lessee chooses to repair or rebuild Leasehold Improvements, the
proceeds of any casualty insurance covering such Leasehold Improvements may be
applied to the restoration or replacement of the Leasehold Improvements if all
of the following conditions are met to the satisfaction of the Lessor in its
discretion:
(i) The proceeds, and, if deemed necessary by the Lessor,
additional deposits made by the Lessee which may be necessary to restore the
Leasehold Improvements to their condition immediately prior to the damage, shall
be deposited in an escrow account to be held by the Lessor (which shall be
interest-bearing if the amount on deposit is greater than $5,000; provided,
however that Lessor shall not be obligated to obtain interest at the highest
available rate and may obtain interest at a generally available rate payable on
demand accounts).
(ii) The Lessee will proceed promptly to restore that part of
the Leasehold Improvements so damaged to substantially the same condition as
existed prior to such damage, with such changes, alterations, and modifications
(including the substitution and addition of other property) as may be desired by
the Lessor, permitted by the applicable Ground Lease, and approved by the Lessor
in its reasonable discretion.
(iii) All work with be performed in accordance with all
applicable laws and regulations and in accordance with plans and specifications
approved by the Lessor in its reasonable discretion.
(iv) Lessee will cause withdrawals to be made from the escrow
account to pay the costs of such restoration, as the work progresses, as
certified by an inspecting architect acceptable to the Lessor in all respects,
by submitting to the Lessor such requisitions and accompanying documents as the
Lessor shall reasonably require.
(v) Lessee will promptly replace any lost or damaged Equipment
in accordance with the provisions of Section V(f) above.
VIII. LOSS OR DAMAGE:
Lessee hereby assumes and shall bear the entire risk of any loss,
theft, damage to, or destruction of, any unit of Equipment and any Leasehold
Improvements from the time the Equipment or Leasehold Improvements are shipped
or delivered to Lessee.
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EXHIBIT 10.14
IX. INSURANCE:
Lessee agrees, at its own expense, (a) to keep all Equipment insured
for such amounts as specified in Paragraph D of the applicable Schedule and
against such hazards as Lessor may require, including, but not limited to,
insurance for damage to or loss of such Equipment , with a loss payable clause
in favor of Lessor, as its interest may appear, irrespective of any breach of
warranty or other act or omission of Lessee and (b) to keep all Leasehold
Improvements insured (in amount at least equal to the greater of the replacement
value of such Leasehold Improvements or the Stipulated Loss Value) against such
hazards as the Lessor shall reasonably require, including, but not limited to
loss or damage resulting from fire and other risks insured against by extended
coverage, with a standard Mortgagee's endorsement in favor of the Lessor as its
interests may appear, irrespective of any breach of warranty or act or omission
of Lessee, (3) to maintain liability coverage against personal injuries, death
or property damage, in the amount of at least $10,000,000, with the Lessor named
as additional insured; (4) to maintain a flood insurance policy in an amount
equal to the maximum limit of coverage available if the Leasehold Improvements
are located in a special flood hazard area. Such policies shall have deductibles
of not more than $250,000 per occurrence. All such policies shall be with
companies, and on terms, reasonably satisfactory to Lessor. Lessee agrees to
deliver to Lessor evidence of insurance satisfactory to Lessor. No insurance
shall be subject to any co-insurance clause. Lessee hereby appoints Lessor as
Lessee's attorney-in-fact, to make proof of loss and claim for insurance, and to
make adjustments with insurers and to receive payment of and execute or endorse
all documents, checks or drafts in connection with payments made as a result of
such insurance policies; provided, however, that Lessor shall not exercise such
power of attorney unless a Default shall have occurred and be continuing. Any
expense of Lessor in adjusting or collecting insurance shall be borne by Lessee.
Lessee will not make adjustments with insurers except (i) with respect to claims
for damage to any unit of Equipment where the repair costs do not exceed ten
(10%) of such unit's fair market value, or (ii) with Lessor's written consent.
Said policies shall provide that the insurance may not be altered or canceled by
the insurer until after thirty (30) days written notice to Lessor. Subject to
the provisions of section VII hereof, Lessor may, at its option, apply proceeds
of insurance, in whole or in part, to (i) repair or replace Equipment or any
portion thereof, or (ii) satisfy any obligation of Lessee to Lessor hereunder.
X. RETURN OF EQUIPMENT AND LEASEHOLD IMPROVEMENTS:
(a) Upon any expiration or termination of this Agreement or any
Schedule, unless Lessee shall have exercised its extension option pursuant to
Section XIX(d) hereof, or its renewal option pursuant to Section XIX(a) hereof,
or its purchase option pursuant to Section XIX(c) hereof, and subject to all of
the terms and conditions of Section XIX (b) hereof and Annex F to the applicable
Schedule relating to the return of Lease Assets, Lessee shall promptly, at its
own cost and expense, and as Lessor determines in its sole discretion: (i)
perform any testing and repairs required to place the affected units of
Equipment or Leasehold Improvements in the condition required by Section V(a)
hereof; (ii) when deinstallation, disassembly or crating is required, cause any
such units of Equipment to be deinstalled, disassembled and crated by an
authorized manufacturer's representative or such other service person as is
satisfactory to Lessor; (iii) return such units of Equipment, free and clear of
all liens and encumbrances, to any location as Lessor shall direct within North
America, (iv) assign the applicable Ground Lease, if any, (by outright
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EXHIBIT 10.14
assignment) to the Lessor, and (v) make available to Lessor or its nominee an
option to lease any Real Estate owned in fee, pursuant to a lease in
substantially the form of Exhibit 5 attached hereto, for a term equal to the
term of the applicable Schedule, including all renewals, and, so long as no
Default has occurred, for a fair market rental.. If the Lessee returns Lease
Assets and Lessor is unable to sell, transfer, or otherwise dispose of such
Lease Assets, Lessor shall have the option to abandon any Real Estate upon which
such Lease Assets are constructed or maintained, and Lessee shall, upon demand
by Lessor, repurchase such Lease Assets and such Real Estate for $1.00.
(B) Until Lessee has fully complied with the requirements of Paragraph
(a) above, Lessee' Rent payment obligation and all other obligations under this
Agreement shall continue from month to month notwithstanding any expiration or
termination of the Term. Lessor may terminate such continued leasehold interest
upon ten (10) days' written notice to Lessee. In addition to these Rents, Lessor
shall have all of its other rights and remedies available as a result of this
nonperformance.
XI: FINANCIAL COVENANTS:
Throughout the term of this Agreement and any Schedule, Lessee
covenants and agrees to comply with each and every one of the covenants set
forth in Exhibit 6 attached hereto; provided however that from and after the
release of the Guarantor, Lessee covenants and agrees to comply with the
covenants set forth on Exhibit 7.
XII. DEFAULT:
(a) Lessor may in writing declare this Agreement in default ("DEFAULT")
if: (1) Lessee breaches its obligation to pay Rent or any other sum when due and
fails to cure the breach within ten (10) days; (2) Lessee breaches any of its
insurance obligations under Section IX hereof; (3) Lessee defaults in any
material respect under any Ground Lease; (4) Lessee breaches any of its
obligations under Section XI hereof; (4) Lessee breaches any of its other
obligations hereunder and such breach is not cured within thirty (30) days after
written notice from Lessor; provided however that if such default cannot be
cured within such 30-day period but such default is capable of being cured, and
if Lessee is diligently proceeding to cure such default, Lessor shall give
Lessee such additional period of time, not to exceed 60 days, as shall be
reasonably necessary to cure such default; (5) any representation or warranty
made by Lessee in connection with this Agreement shall be false or misleading in
any material respect; (6) Lessee becomes insolvent or ceases to do business as a
going concern; (7) any Equipment is used in such a manner as to subject such
Equipment to the possibility of forfeiture; (8) a petition is filed by or
against Lessee under any bankruptcy or insolvency laws; (9) Lessee shall have
terminated its corporate existence, consolidated with, merged into, or conveyed
or leased substantially all of its assets as an entirety to any person (such
actions being referred to as an "Event"), unless not less than sixty (60) days
prior to such Event: (x) such person is organized and existing under the laws of
the United States or any state, and executes and delivers to Lessor an agreement
containing an effective assumption by such person of the due and punctual
performance of this Lease; and (y) Lessor is reasonably satisfied as to the
creditworthiness of such person; (10) there occurs a default under any guaranty,
Collateral Assignment of Lease, or other document executed in connection with
this Agreement (after giving effect to any applicable grace or cure period); or
(11) Lessee shall be in default (after
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EXHIBIT 10.14
giving effect to any applicable grace or cure period) under any other material
obligation for borrowed money, for the deferred purchase price of property or
any lease agreement, where the amount of such obligation for borrowed money or
deferred purchase price exceeds $250,000 or the amount of aggregate lease
payments under any lease exceeds $1,000,000. Such declaration shall apply to all
Schedules except as specifically excepted by Lessor.
(b) After Default, unless such Default is cured or waived, Lessee
shall, without further demand, forthwith pay to Lessor (i) as liquidated damages
for loss of a bargain and not as a penalty, the Stipulated Loss Value of the
Equipment and Leasehold Improvements (calculated in accordance with Annex D as
of the Rent Payment Date next preceding the declaration of default), and (ii)
all Rents and other sums then due hereunder. If Lessee fails to pay the amounts
specified in the preceding sentence, then, at the request of Lessor, Lessee
shall comply with the provisions of Section X(a) hereof. Lessee hereby
authorizes Lessor to enter, with or without legal process, any premises where
any Equipment or Leasehold Improvements are located and take possession thereof.
Lessor may, but shall not be required to, sell Equipment at private or public
sale, in bulk or in parcels, with or without notice, and without having the
Equipment present at the place of sale; or Lessor may, but shall not be required
to, lease, otherwise dispose of or keep idle all or part of the Equipment; and
Lessor may use Lessee's premises for any or all of the foregoing without
liability for rent, costs, damages or otherwise. Lessor may also exercise any
and all available remedies under the Collateral Assignments of Leases,
including, but not limited to selling, transferring or assigning the leasehold
estate created by the Ground Leases. The proceeds of sale, lease or other
disposition, if any, shall be applied in the following order of priorities: (1)
to pay all of Lessor's costs, charges and expenses incurred in taking, removing,
holding, repairing and selling, leasing or otherwise disposing of Equipment or
Leasehold Improvements; then, (2) to the extent not previously paid by Lessee,
to pay Lessor all sums due from Lessee hereunder; then (3) to reimburse to
Lessee any sums previously paid by Lessee as liquidated damages; and (4) any
surplus shall be paid to Lessee. Lessee shall pay any deficiency in clauses (1)
and (2) forthwith.
(c) In addition to the foregoing rights, after a Default, which Default
is not cured or waived, Lessor may terminate the lease as to any or all of the
Equipment or Leasehold Improvements..
(d) After a Default, Lessor may require any Sublessee or other person
in possession of any or all of the Lease Assets to attorn to Lessor, in which
event Lessor shall undertake the obligations of Lessee under any Sublease,
provided, however, that Lessor shall not be liable for any amounts paid by a
Sublessee to Lessee or for defaults by Lessee.
(e) The foregoing remedies are cumulative, and any or all thereof may
be exercised in lieu of or in addition to each other or any remedies at law, in
equity, or under statute. Lessee hereby agrees that where reasonable notice is
required, ten (10) days shall be adequate and commercially reasonable notice of
sale or other disposition. If permitted by law, Lessee shall pay reasonable
attorney's fees actually incurred by Lessor in enforcing the provisions of this
Lease and any ancillary documents. Waiver of any default shall not be a waiver
of any other or subsequent default.
(f) Any Default under the terms of this or any other agreement between
Lessor and Lessee may be declared by Lessor a default under this and any such
other agreement.
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EXHIBIT 10.14
XIII. ASSIGNMENT:
(a) (1) EXCEPT AS EXPRESSLY PROVIDED HEREIN, LESSEE SHALL NOT ASSIGN,
MORTGAGE, SUBLET OR HYPOTHECATE ANY EQUIPMENT, LEASEHOLD IMPROVEMENTS, OR
LEASEHOLD INTERESTS CREATED BY THE GROUND LEASES, OR THE INTEREST OF LESSEE
HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. Notwithstanding the
foregoing, Lessee may, subject to the following terms and conditions, without
any consent of Lessor being required, sublease the Lease Assets to Subsidiaries
(collectively referred to as "SUBLESSEE") pursuant to the terms and provisions
hereof and pursuant to written subleases satisfying the conditions hereof, in
substantially the form attached hereto as Exhibit 8 (each a "SUBLEASE", and
collectively the "SUBLEASES"). Lessee promptly shall reimburse Lessor for all
expenses incurred by Lessor in connection with any Sublease or with the
enforcement of any Sublease. Lessee hereby acknowledges that it is now and
continues to be obligated and bound by all of the provisions hereof, including
but not limited to the provisions relating to the indemnity and the obligation
to pay Rent, notwithstanding any delegation of duties or other term of the
Sublease. Any such delegation shall be effective only as between Lessee and
Sublessee. Lessee further acknowledges that it is not authorized to dispose of
the Lease Assets (except as otherwise expressly provided herein and by sublease
in accordance with the terms hereof). Lessee is not prohibited from terminating
any Sublease at any time; provided, however, that notwithstanding any such
termination of a Sublease, Lessee's use of the Lease Assets shall remain subject
to the terms and conditions of this Agreement.
(2) Lessee agrees that at any time and from time to time, upon
the written request of Lessor, Lessee will promptly and duly execute and deliver
or cause to be duly executed and delivered any and all further instruments and
documents as Lessor reasonably may deem desirable to perfect its security
interest in the Subleases. Lessee shall deliver to Lessor the original copies of
the Subleases promptly upon execution thereof, and shall ▇▇▇▇ prominently all
other copies of the Subleases "Not an Original".
(b) Lessor may, without the consent of Lessee, assign this Agreement or
any Schedule, or the right to enter into any Schedule. Lessee agrees that it
will pay all Rent and other amounts payable under each Schedule to the Lessor
named therein; provided, however, if Lessee receives written notice of an
assignment from Lessor, Lessee will pay all Rent and other amounts payable under
any assigned Schedule to such assignee or as instructed by Lessor; provided,
however, that Lessee shall not be required to make multiple payments to
different assignees, and Lessee shall be entitled to continue to pay the Lessor,
as agent, unless the Lessor's position as agent shall be transferred to a
successor agent reasonably acceptable to Lessor. Each Schedule, incorporating by
reference the terms and conditions of this Agreement, constitutes a separate
instrument of lease, and the Lessor named therein or its assignee shall have all
rights as "Lessor" thereunder separately exercisable by such named Lessor or
assignee as the case may be, exclusively and independently of Lessor or any
assignee with respect to other Schedules executed pursuant hereto. Without
limiting the generality of the foregoing, the grant of security interest in
Section XVIII(b) hereof shall, as it relates to the Equipment and Leasehold
Improvements leased under each Schedule (and to the proceeds and other
collateral referred to in Section XVII(b)), be deemed to have been granted
solely to the Lessor named therein, or to its assignee, as applicable and such
Equipment and Leasehold Improvements (and other related collateral) shall not be
deemed to collateralize Lessee's obligations under any of the Schedules to which
such named Lessor or assignee, as the case may be, is not a party. Lessee
further agrees to confirm in writing receipt of a notice of assignment as
reasonably
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EXHIBIT 10.14
may be requested by assignee. Lessee hereby waives and agrees not to assert
against any such assignee any defense, set-off, recoupment claim or counterclaim
which Lessee has or may at any time have against Lessor or any other person for
any reason whatsoever.
(c) Lessee acknowledges that it has been advised that General Electric
Capital Corporation is acting hereunder for itself and as agent for certain
third parties (each being herein referred to as a "PARTICIPANT" and,
collectively, as the "PARTICIPANTS"); that the interest of the Lessor in this
Agreement, the Equipment Schedules, related instruments and documents and/or the
Equipment may be conveyed to, in whole or in part, and may be used as security
for financing obtained from, one or more third parties without the consent of
Lessee (the "SYNDICATION"). Lessee also hereby recognizes and agrees that in
connection with and prior to and after the Syndication, Lessor may disclose and
furnish to any prospective or actual Participant, any and all reports, financial
statements and other information obtained by Lessor at any time and from time to
time in connection herewith, provided that such party agrees to the terms of a
confidentiality letter in a form agreed to by Lessor and Lessee. Lessee shall
fully cooperate with Lessor and any potential Participant or assignee in
connection with any such sale or assignment and will execute and deliver such
documents, instruments, opinions, consents and acceptances as shall be
reasonably required by the Lessor or any Participant (including, without
limitation, the appointment of the Lessor as agent for itself and all
assignees); provided, however in no event shall Lessee be required to consent to
any change that would adversely affect any of the economic terms of the
transactions contemplated herein.
(d) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the parties
hereto.
XIV. NET LEASE; NO SET-OFF, ETC.:
This Agreement is a net lease. Lessee's obligation to pay Rent and
other amounts due hereunder shall be absolute and unconditional. Lessee shall
not be entitled to any abatement or reductions of, or set-offs against, said
Rent or other amounts, including, without limitation, those arising or allegedly
arising out of claims (present or future, alleged or actual, and including
claims arising out of strict liability in tort or negligence of Lessor) of
Lessee against Lessor under this Agreement or otherwise, which Lessee may only
pursue in a separate proceeding against Lessor and not by abatement, reduction,
or set-off. This Agreement shall not terminate and the obligations of Lessee
shall not be affected by reason of any defect in or damage to, or loss of
possession, use or destruction of, any Equipment or Leasehold Improvements from
whatsoever cause. It is the intention of the parties that Rents and other
amounts due hereunder shall continue to be payable in all events in the manner
and at the times set forth herein unless the obligation to do so shall have been
terminated pursuant to the express terms hereof.
XV. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless Lessor,
the Participants, their agents, employees, successors and assigns, from and
against any and all losses, damages, penalties, injuries, claims, actions and
suits, including legal expenses, of whatsoever kind and
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EXHIBIT 10.14
nature, in contract or tort, and including, but not limited to, Lessor's strict
liability in tort, arising out of (i) the selection, manufacture, purchase,
construction, acceptance or rejection of Equipment and the Leasehold
Improvements, the ownership of Equipment and the Leasehold Improvements during
the Term, and the delivery, lease, possession, maintenance, uses, condition,
return or operation of the Equipment and Leasehold Improvements (including,
without limitation, latent and other defects, whether or not discoverable by
Lessor or Lessee and any claim for patent, trademark or copyright infringement
or environmental damage), or (ii) the condition of Equipment or Leasehold
Improvements sold or disposed of after use by Lessee, any sublessee or employees
of Lessee, but not including losses, damages, penalties, injuries, claims,
actions, or suits to the extent caused by Lessor's gross negligence or willful
misconduct. . Lessee shall, upon request, defend any actions based on, or
arising out of, any of the foregoing.
(b) Lessee shall defend, indemnify and hold harmless Lessor and its
Affiliates, successors and assigns, directors, officers, employees and agents,
from and against any Environmental Claim or Environmental Loss and, unless
Lessee is then contesting in good faith such Environmental Claim or
Environmental Loss and Lessee has set aside on its books appropriate reserves
therefor, Lessee shall fully and promptly pay, perform and discharge any such
Environmental Claim or Environmental Loss.
As used herein,
(1) "Adverse Environmental Condition" shall refer to (i) the
existence or the continuation of the existence, of an Environmental
Emission (including, without limitation, a sudden or non-sudden
accidental or non-accidental Environmental Emission), of, or exposure
to, any Contaminant, odor or audible noise in violation of any
Applicable Environmental Law, at, in, by, from or related to any
Equipment or Leasehold Improvement or Leasehold Interest, (ii) the
environmental aspect of the transportation, storage, treatment or
disposal of materials in connection with the operation of any Equipment
, Leasehold Improvement, or Leasehold Interest, in violation of any
Applicable Environmental Law, or (iii) the violation, or alleged
violation, of any Environmental Law connected with any Equipment,
Leasehold Improvement or Leasehold Interest except to the extent that
any of the foregoing is caused by the gross negligence or willful
misconduct of Lessor.
(2) "Affiliate" shall refer, with respect to any given Person,
to any Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person.
(3) "Contaminant" shall refer to those substances which are
regulated by or form the basis of liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls
("PCBs"), and radioactive substances.
(4) "Environmental Claim" shall refer to any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to
the environment or other adverse effects on the environment, or for
fines, penalties or restrictions, resulting from or based upon any
Adverse Environmental Condition.
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EXHIBIT 10.14
(5) "Environmental Emission" shall refer to any actual or
threatened release, spill, omission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
indoor or outdoor environment, or into or out of any of the Equipment
or Leasehold Improvements, or the Real Estate , including, without
limitation, the movement of any Contaminant or other substance through
or in the air, soil, surface water, groundwater, or property.
(6) "Environmental Law" shall mean any Federal, foreign, state
or local law, rule or regulation pertaining to the protection of the
environment, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA") (42
U.S.C. Section 9601 et seq.), the Hazardous Material Transportation Act
(49 U.S.C. Section 1801 et seq.), the Federal Water Pollution Control
Act (33 U.S.C. Section 1251 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Air Act (42
U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 1361 et seq.), and the Occupational
Safety and Health Act (19 U.S.C. Section 651 et seq.), as these laws
have been amended or supplemented, and any analogous foreign, Federal,
state or local statutes, and the regulations promulgated pursuant
thereto.
(7) "Environmental Loss" shall mean any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including, without
limitation, reasonable attorneys' fees, engineering and other
professional or expert fees), investigation, removal, cleanup and
remedial costs (voluntarily or involuntarily incurred) and damages to,
loss of the use of or decrease in value of the Equipment arising out of
or related to any Adverse Environmental Condition.
(8) "Person" shall include any individual, partnership,
corporation, trust, unincorporated organization, government or
department or agency thereof and any other entity.
(c) All of Lessor's rights, privileges and indemnities contained in
this Section shall survive the expiration or other termination of this Agreement
and the rights, privileges and indemnities contained herein are expressly made
for the benefit of, and shall be enforceable by Lessor, its successors and
assigns.
XVI. DISCLAIMER:
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT, THE LEASEHOLD
IMPROVEMENTS, AND THE REAL ESTATE UPON WHICH THE LEASEHOLD IMPROVEMENTS ARE
CONSTRUCTED, WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR
DOES NOT MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH
RESPECT TO THE EQUIPMENT OR LEASEHOLD IMPROVEMENTS LEASED HEREUNDER OR ANY
COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN,
COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP,
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EXHIBIT 10.14
MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks, as between Lessor
and Lessee, are to be borne by Lessee. Without limiting the foregoing, Lessor
shall have no responsibility or liability to Lessee or any other person with
respect to any of the following (i) any liability, loss or damage caused or
alleged to be caused directly or indirectly by any Equipment or Leasehold
Improvements, any inadequacy thereof, any deficiency or defect (latent or
otherwise) therein, or any other circumstance in connection therewith; (ii) the
use, operation or performance of any Equipment or Leasehold Improvements or any
risks relating thereto; (iii) any interruption of service, loss of business or
anticipated profits or consequential damages; or (iv) the delivery, operation,
servicing, maintenance, repair, improvement or replacement of any Equipment or
Leasehold Improvements. If, and so long as, no default exists under this Lease,
Lessee shall be, and hereby is, authorized during the term of this Lease to
assert and enforce, at Lessee's sole cost and expense, from time to time, in the
name of and for the account of Lessor and/or Lessee, as their interests may
appear, whatever claims and rights Lessor may have against any Supplier of the
Equipment or Leasehold Improvements.
XVII. REPRESENTATIONS AND WARRANTIES OF LESSEE:
Lessee hereby represents and warrants to Lessor that on the date hereof
and on the date of execution of each Schedule:
(a) Lessee has adequate power and capacity to enter into, and perform
under, this Agreement and all related documents (together, the "DOCUMENTS") and
is duly qualified to do business wherever necessary to carry on its present
business and operations, including the jurisdiction(s) where the Equipment is or
is to be located.
(b) The Documents have been duly authorized, executed and delivered by
Lessee and constitute valid, legal and binding agreements, enforceable in
accordance with their terms, except to the extent that the enforcement of
remedies therein provided may be limited under applicable bankruptcy and
insolvency laws.
(c) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into or
performance by Lessee of the Documents except such as have already been
obtained.
(d) The entry into and performance by Lessee of the Documents will not:
(i) violate any judgment, order, law or regulation applicable to Lessee or any
provision of Lessee's articles of incorporation, charter or by-laws; or (ii)
result in any breach of, constitute a default under or result in the creation of
any lien, charge, security interest or other encumbrance upon any Equipment
pursuant to any indenture, mortgage, deed of trust, bank loan or credit
agreement or other instrument (other than this Agreement) to which Lessee is a
party.
(e) There are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Lessee, which will have a material adverse effect on the ability of Lessee to
fulfill its obligations under this Agreement.
(f) The Equipment accepted under any Certificate of Acceptance is and
will remain tangible personal property. Any Leasehold Improvements which do not
constitute personal property shall be
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EXHIBIT 10.14
affixed only to Real Estate which, in the case of land owned by Lessee in fee,
shall be available to Lessor under a mutually agreeable license or real estate
lease, and which in the case of land leased to the Lessee pursuant to Ground
Leases, such Ground Leases shall have been duly and validly assigned to the
Lessor.
(g) Each financial statement delivered to Lessor has been prepared in
accordance with GAAP, and since the date of the most recent such financial
statement, there has been no material adverse change.
(h) Lessee is duly incorporated and will be at all times validly
existing and in good standing under the laws of the state of its incorporation
(specified in the first sentence of this Agreement).
(i) The Equipment and Leasehold Improvements will at all times be used
for commercial or business purposes.
XVIII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY SAVINGS:
(a) For income tax purposes, Lessor will treat Lessee as the owner of
the Equipment and Leasehold Improvements. Accordingly, Lessor agrees (i) to
treat Lessee as the owner of the Equipment and Leasehold Improvements on its
federal income tax return, (ii) not to take actions or positions inconsistent
with such treatment on or with respect to its federal income tax return, and not
claim any tax benefits available to an owner of the Equipment on or with respect
to its federal income tax return. The foregoing undertakings by Lessor shall not
be violated by Lessor's taking a tax position through inadvertence so long as
such inadvertent tax position is reversed by Lessor promptly upon its discovery
and without out-of-pocket costs to Lessee. Lessor shall in no event be liable to
Lessee if Lessee fails to secure any of the tax benefits available to the owner
of the Equipment or Leasehold Improvements.
(b) In order to secure the prompt payment of the Rent and all of the
other amounts from time to time outstanding under and with respect to the
Schedules, and the performance and observance by Lessee of all the agreements,
covenants and provisions thereof (including, without limitation, all of the
agreements, covenants and provisions of the Lease that are incorporated
therein):
(1) Lessee hereby grants to Lessor a first priority security
interest in the Equipment and Leasehold Improvements leased under the Schedules,
together with all additions, attachments, accessions, accessories and accessions
thereto whether or not furnished by the Supplier of the Equipment or Leasehold
Improvements and any and all substitutions, replacements or exchanges therefor,
in each such case in which Lessee shall from time to time acquire an interest,
and any and all insurance and/or other proceeds (but without power of sale) of
the property in and against which a security interest is granted hereunder; and
(2) Lessee hereby grants to Lessor a first priority security
interest in, and assigns, sets over, and transfers to Lessor, its successors and
assigns, all (except as otherwise provided herein) of its right, title and
interest in and to (i) the Subleases and all extensions and renewals thereof,
(ii) all rentals and other sums due, now or hereafter, under the Subleases
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EXHIBIT 10.14
(including, without limitation, all amounts paid pursuant to the exercise by
Sublessee of any option contained in the Sublease), (iii) any and all proceeds
of any insurance required under the Subleases, except proceeds used to purchase
a Replacement Item or to substitute Real Estate pursuant to the terms hereof, or
to restore or replace Lease Assets pursuant to the terms hereof, and (iv) all
products and proceeds of the foregoing; provided, however, that Lessor shall not
exercise its rights hereunder unless and until a Default or event which, with
notice and the lapse of time or both, would constitute a Default hereunder has
occurred and is continuing. Notwithstanding the foregoing assignment, Lessee
shall cause Sublessee to pay Lessee all rentals and other sums payable under the
Subleases until Lessor delivers to Lessee notice of a Default hereunder. Upon
giving such notice to Lessee, Lessor may notify Sublessee (or, if requested by
Lessor, Lessee shall notify Sublessee) to pay directly to Lessor all rentals and
other sums payable and to become payable under the Subleases. Upon Sublessee's
receipt of such notice, Lessee hereby authorizes and directs Sublessee to pay
Lessor all rentals and other sums payable and to become payable under the
Subleases; provided however, that so long as no Default or event which, with the
giving of notice or the lapse of time (or both), would become a Default has then
occurred, Lessor shall retain only such of the rentals herein assigned as are
required from time to time to discharge Lessee's obligations hereunder and shall
remit any excess to Lessee. If any remittance is received by Lessee relating to
such Subleases after a Default, such remittances immediately will be delivered
to Lessor bearing the endorsement "Pay to the order of General Electric Capital
Corporation, for Itself and as Agent for Certain Participants." If the
remittance is in a form which precludes an endorsement, Lessee shall, after a
Default, hold all such funds in trust for Lessor and immediately pay the amount
of the remittance to Lessor. Lessee hereby appoints Lessor its attorney-in-fact
to negotiate any remittance which is received by Lessor from Sublessee after a
Default and made payable to Lessee. Notwithstanding the foregoing, if after a
Default Lessee receives the proceeds of any insurance maintained by a Sublessee
as a result of a casualty suffered by subleased Equipment, Lessee immediately
will remit such insurance proceeds to Lessor; and
(3) to the extent the Equipment and Leasehold Improvements may
constitute or be deemed to be Lessee's inventory (the "INVENTORY"), Lessee
hereby grants to Lessor a security interest in such Inventory, which shall mean
all Equipment and Leasehold Improvements offered or furnished under any contract
of service or intended for sale or lease, any and all additions, attachments,
accessories and accessions thereto, any and all substitutions, replacements or
exchanges therefor, any and all leases, subleases, rentals, accounts and
contracts with respect to the Equipment and Leasehold Improvements which may now
exist or hereafter arise, together with all rights thereunder and all rental and
other payments and purchase options due and to become due thereunder, any and
all sales proceeds payable for such property, all insurance, bonds and/or other
proceeds of the property and all returned or repossessed Equipment and Leasehold
Improvements now or at any time or times hereafter in the possession or under
the control of Lessee or Lessor; and
(4) Lessee also grants to Lessor a security interest in all
accounts receivable now owned by Lessee or hereafter acquired or owned by Lessee
that might arise or result from any lease or other disposition of any of the
Lease Assets or the Inventory, including, but not limited to, the Sublease or
any right of Lessee to payment for Lease Assets sold or leased or for services
rendered whether or not evidenced by an instrument or chattel paper, and whether
or not such right has been earned by performance (the "SUBLEASE ACCOUNTS
RECEIVABLE").
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EXHIBIT 10.14
(c) It is the intention of the parties hereto to comply with any
applicable usury laws to the extent that any Schedule is determined to be
subject to such laws; accordingly, it is agreed that, notwithstanding any
provision to the contrary in any Schedule or the Lease, in no event shall any
Schedule require the payment or permit the collection of interest in excess of
the maximum amount permitted by applicable law. If any such excess interest is
contracted for, charged or received under any Schedule or the Lease, or in the
event that all of the principal balance shall be prepaid, so that under any of
such circumstances the amount of interest contracted for, charged or received
under any Schedule or the Lease shall exceed the maximum amount of interest
permitted by applicable law, then in such event (1) the provisions of this
paragraph shall govern and control, (2) neither Lessee nor any other person or
entity now or hereafter liable for the payment hereof shall be obligated to pay
the amount of such interest to the extent that it is in excess of the maximum
amount of interest permitted by applicable law, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal balance or refunded to Lessee, at the option of the Lessor, and (4)
the effective rate of interest shall be automatically reduced to the maximum
lawful contract rate allowed under applicable law as now or hereafter construed
by the courts having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received under any Schedule or the Lease which are
made for the purpose of determining whether such rate exceeds the maximum lawful
contract rate, shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the indebtedness evidenced hereby, all interest at
any time contracted for, charged or received from Lessee or otherwise by Lessor
in connection with such indebtedness; provided, however, that if any applicable
state law is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for Lessor to receive a greater
interest per annum rate than is presently allowed, the Lessee agrees that, on
the effective date of such amendment or preemption, as the case may be, the
lawful maximum hereunder shall be increased to the maximum interest per annum
rate allowed by the amended state law or the law of the United States of America
(but not in excess of the interest rate contemplated hereunder).
XIX END OF LEASE OPTIONS
Provided that Lessee is not then in default under this Agreement or any
other agreement between Lessor and Lessee (after giving effect to any applicable
grace or cure periods), Lessee shall have the option, upon the expiration of the
Term of each Schedule, to return, or to purchase, or to renew, or to extend the
Term of any Schedule under this Agreement with respect to, all (but not less
than all) of the Lease Assets leased under all Schedules (designated as Series A
as to Equipment (the "SERIES A SCHEDULES") and designated as Series B as to
Leasehold Improvements (the "SERIES B SCHEDULES")), in each case which were
executed hereunder during each 12-month period (each a "LEASE YEAR") from the
date of this Agreement (a "SPECIFIC SERIES OF SCHEDULES") upon the following
terms and conditions.
(a) Renewal. So long as Lessee shall not have exercised its
option to return the Equipment or its purchase option pursuant to this Section ,
Lessee shall have the option, upon the expiration of the Basic Term and of each
Renewal Term (but in all events subject to the Series A Maximum Lease Term and
the Series B Maximum Lease Term, as hereinafter specified) of the first Schedule
of a Specific Series of Schedules to be executed under this Agreement, to renew
the Term of this Agreement with respect to all, but not less than all, of the
Equipment or Leasehold
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EXHIBIT 10.14
Improvements leased under all of such Specific Series of Schedules for the
Renewal Term at the Renewal Term Rent. Including all Renewal Terms, the maximum
term of each Series A Schedule to be executed under this Agreement shall be
seven (7) years (the Initial Term plus three (3) Renewal Terms) (the "SERIES A
MAXIMUM LEASE TERM"), and the maximum term of each Series B Schedule to be
executed under this Agreement shall be twenty (20) years (the Initial Term plus
fourteen (14) Renewal Terms) (the "SERIES B MAXIMUM LEASE TERM"). Lessee's right
to exercise the renewal option set forth herein with respect to the Series B
Schedules on the seventh, tenth and fifteenth anniversary of the Basic Term
Commencement Date with respect to each such Schedule, shall be conditioned upon
the prior written consent of Lessor (which consent shall be determined based on
a complete credit review with respect to Lessee and is further subject to
compliance by Lessee with the financial covenants set forth herein).
(b) Return. So long as Lessee shall not have exercised its
extension option or its option to renew this Agreement or its purchase option
pursuant to this Section , and provided that Lessee has given Lessor not less
than twenty-four (24) months' irrevocable advance written notice of Lessee's
intent to return the Lease Assets, (the date of such notice being hereinafter
called the "Notice Date"), then upon the expiration of the Term of each
Schedule, Lessee shall return all (but not less than all) of the Lease Assets
described on such Schedules, to Lessor upon the following terms and conditions:
Lessee shall (i) pay to Lessor on the last day of the Term of this Agreement
with respect to each individual Schedule, in addition to the scheduled Rent then
due on such date and all other sums then due hereunder, a terminal rental
adjustment amount equal to the Fixed Purchase Price (as hereinafter defined) of
such Lease Assets, plus the Make Whole Amount (as hereinafter defined), if any
(provided, however, that Lessee shall not be required to pay a Make-Whole Amount
in connection with the return of Equipment at the end of the Series A Maximum
Lease Term, and (ii) return the Equipment or Leasehold Improvements to Lessor in
accordance with Section X (including subsection (b) of Section X) hereof, (iii)
assign the Ground Leases to the Lessor or its assignee, and (iv) from the Notice
Date through the earlier of (A) the date which is thirty days after the date the
Lease Assets are sold or leased to a third party, or (B) the expiration of the
Maximum Lease Term in the case of Leasehold Improvements, or the expiration of
any the Maximum Lease Term and any available Extension Term in the case of
Equipment, Lessee shall (1) continue to comply with all of the terms and
conditions of this Agreement and the applicable Schedules, including, but not
limited to the obligation to pay Rent, and (2) make the Lease Assets available
to Lessor in such a manner as to allow Lessor to market and demonstrate the
Lease Assets to potential purchasers or lessees from Lessee's premises at no
cost to Lessor; provided, however, that subject to Lessor's right to market and
demonstrate the Lease Assets to potential purchasers or lessees from time to
time, Lessee may continue to use the Lease Assets. Thereafter, upon return of
all of the Equipment or Leasehold Improvements described on a Specific Series of
Schedules executed hereunder, Lessor and Lessee shall arrange for the
commercially reasonable sale, scrap or other disposition of the Equipment ,
Leasehold Improvements and, the assignment of the Lessee's rights under the
Ground Lease (and Lessee shall be responsible for all costs, expenses and fees,
including storage, reasonable and necessary maintenance and other remarketing
fees incurred in connection with such sale, scrap or disposition of the
Equipment or Leasehold Improvements, and interests under the Ground Lease). Upon
satisfaction of the conditions specified in this Paragraph (c), Lessor will
transfer, on an AS IS, WHERE IS BASIS, without recourse or warranty, express or
implied, of any kind whatsoever, all of Lessor's interest in and to such
Equipment and Leasehold Improvements and the related Collateral Assignment of
Lease. Lessor shall not be required to make and may specifically disclaim any
representation or warranty as the condition of such Equipment or Leasehold
Improvements and other matters (except that
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EXHIBIT 10.14
Lessor shall warrant that it has conveyed whatever interest it received in the
Equipment and Leasehold Improvements free and clear of any liens or encumbrances
created by, through or under Lessor). Lessor shall execute and deliver to Lessee
such Uniform Commercial Code Statements of Termination as reasonably may be
required in order to terminate any interest of Lessor in and to the Equipment
and Leasehold Improvements . Upon the sale, scrap or other disposition of the
Equipment or Leasehold Improvements, the net sales proceeds with respect to the
Equipment or Leasehold Improvements sold will be paid to, and held and applied
by, Lessor as follows: Lessor shall promptly thereafter pay to Lessee an amount
equal to the Residual Risk Amount (as specified in the Schedule) of the
Equipment and Leasehold Improvements (less all reasonable costs, expenses and
fees, including storage, reasonable and necessary maintenance and other
remarketing fees incurred in connection with the sale, scrap, or disposition of
such Equipment or Leasehold Improvements ) plus all net proceeds, if any, of
such sale in excess of the Residual Risk Amount of the Equipment or Leasehold
Improvements and applicable taxes, if any. As used herein, the term "Fixed
Purchase Price" means the amount determined by multiplying the aggregate amount
funded for such Lease Assets by the percentage shown in the column titled "Fixed
Purchase Price" on the applicable Schedule;
(c) Purchase. So long as Lessee shall not have exercised its
extension option or its option to renew this Agreement pursuant to this Section,
Lessee shall have the option, upon the expiration of the Term of each Schedule,
to purchase all (but not less than all) of the Equipment and the Lessor's
interest in the Leasehold Improvements described on a Specific Series of
Schedules executed hereunder upon the following terms and conditions: If Lessee
desires to exercise this option with respect to Equipment or Leasehold
Improvements, Lessee shall pay to Lessor on the last day of the Term with
respect to each such individual Schedule, in addition to the scheduled Rent (if
any) then due on such date and all other sums then due hereunder, in cash the
purchase price for the Equipment or Leasehold Improvements so purchased,
determined as hereinafter provided. The purchase price of the Equipment or
Leasehold Improvements shall be an amount equal to the Fixed Purchase Price of
such Equipment or Leasehold Improvements (as specified on the Schedule), plus
the Make Whole Amount, if any, plus all taxes and charges upon sale and all
other reasonable and documented expenses incurred by Lessor in connection with
such sale, including, without limitation, any such expenses incurred based on a
notice from Lessee to Lessor that Lessee intended to return any such items of
Equipment or Leasehold Improvements . Upon satisfaction of the conditions
specified in this Paragraph, Lessor will transfer, on an AS IS, WHERE IS BASIS,
without recourse or warranty, express or implied, of any kind whatsoever, all of
Lessor's interest in and to the Equipment and Leasehold Improvements and release
the applicable Collateral Assignment of Lease. Lessor shall not be required to
make and may specifically disclaim any representation or warranty as to the
condition of such Equipment or Leasehold Improvements and other matters (except
that Lessor shall warrant that it has conveyed whatever interest it received in
the Equipment or Leasehold Improvements free and clear of any lien or
encumbrance created by, through or under Lessor). Lessor shall execute and
deliver to Lessee such Uniform Commercial Code Statements of Termination as
reasonably may be required in order to terminate any interest of Lessor in and
to the Equipment or Leasehold Improvements.
(d) Extension. So long as Lessee shall not have exercised its
option to return the Equipment or its purchase option pursuant to this Section ,
and provided that Lessee shall have exercised its option to renew this Agreement
pursuant to this Section with respect to all applicable available Renewal Terms,
Lessee shall have the option, upon the expiration of all applicable available
Renewal Terms, to extend the Term of this Agreement with respect to all, but not
less
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EXHIBIT 10.14
than all, of the Equipment described on a Specific Series of Schedules for
an additional term of twelve (12) months (the "EXTENSION TERM") at a monthly
rental to be paid in arrears on the same day of each month on which the prior
Renewal Term Rent installment was paid, and calculated as the product of (i) the
Capitalized Lessor's Cost, times (ii) a lease rate factor calculated by Lessor,
which when so multiplied times the Capitalized Lessor's Cost, will result in a
product that is equal to the amount necessary to fully repay to Lessor any
unpaid balance of the Capitalized Lessor's Cost (determined as of the date on
which the last available Renewal Term expired), together with interest thereon
at a rate per annum equal to the Extension Rate (as hereinafter defined),
payable in twelve (12) equal monthly installments. As used herein, the
"EXTENSION RATE" shall mean for Equipment schedules, 210 basis points over the
then-current 1-year Treasury Note yield; provided, however, if the transaction
receives an NAIC rating of 3 or higher, such rate shall be equal to 500 basis
points over the one-year Treasury Note yield. At the end of the Extension Term,
provided that Lessee is not then in default under this Agreement or any other
agreement between Lessor and Lessee, Lessee shall purchase all, and not less
than all, of such Equipment for the amount of $1.00, plus all taxes and charges
upon sale and all other reasonable and documented expenses incurred by Lessor in
connection with such sale, including, without limitation, any such expenses
incurred based on a notice from Lessee to Lessor that Lessee intended to return
any such items of Equipment. Upon satisfaction of the conditions specified in
this Paragraph (a), Lessor will transfer, on an AS IS, WHERE IS BASIS, without
recourse or warranty, express or implied, of any kind whatsoever ("AS IS
BASIS"), all of Lessor's interest in and to the Equipment. Lessor shall not be
required to make and may specifically disclaim any representation or warranty as
to the condition of the Equipment and any other matters (except that Lessor
shall warrant that it has conveyed whatever interest it received in the
Equipment free and clear of any lien or encumbrance created by, through or under
Lessor).
(e) Notice of Election. Lessee shall give Lessor written
notice of its election of the options specified in this Section not less than
one hundred eighty (180) days nor more than three hundred sixty-five (365) days
before the expiration of the Basic Term or any Renewal Term of the first of each
Specific Set of Schedules to be executed under this Agreement; provided,
however, that if Lessee elects to return Lease Assets, such election must be
made not less than two (2) years prior to the expiration of the Basic Term or
the Renewal Term of the first Schedule executed in any Lease Year. Such election
shall be effective with respect to all Equipment and Leasehold Improvements
described on all Schedules executed hereunder during any Lease Year.. If Lessee
fails timely to provide such notice, without further action Lessee automatically
shall be deemed to have elected (1) to renew the Term of this Agreement pursuant
to Paragraph (b) of this Section if a Renewal Term is then available hereunder,
or (2) to purchase the Equipment or Leasehold Improvements pursuant to Paragraph
(d) of this Section if a Renewal Term is not then available hereunder or, if
applicable Lessor does not consent to such renewal.
XX. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN
LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY
RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
LESSEE AND LESSOR. The scope of this waiver is intended to be all encompassing
of any and all disputes
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EXHIBIT 10.14
that may be filed in any court (including, without limitation, contract claims,
tort claims, breach of duty claims, and all other common law and statutory
claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
(b) Any cancellation or termination by Lessor, pursuant to the
provision of this Agreement, any Schedule, supplement or amendment hereto, or
the lease of any Equipment or Leasehold Improvements hereunder, shall not
release Lessee from any then outstanding obligations to Lessor hereunder.
(c) All Equipment shall at all times remain personal property of Lessee
regardless of the degree of its annexation to any real property and shall not by
reason of any installation in, or affixation to, real or personal property
become a part thereof. No Leasehold improvements shall by affixed to any real
property other than Real Estate which has been leased to the Lessee pursuant to
a Ground Lease which has been duly assigned to the Lessor.
(d) Time is of the essence of this Agreement. Lessor's failure at any
time to require strict performance by Lessee of any of the provisions hereof
shall not waive or diminish Lessor's right thereafter to demand strict
compliance therewith.
(e) Lessee agrees, upon Lessor's request, to execute any instrument
necessary or expedient for filing, recording or perfecting the interest of
Lessor.
(f) All notices required to be given hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by facsimile
transmission (with confirmation of receipt), or sent by certified mail, return
receipt requested, addressed to the other party at its respective address stated
above or at such other address as such party shall from time to time designate
in writing to the other party; and shall be effective from the date of receipt.
(g) This Agreement, the Commitment Letter, and any Schedule and Annexes
thereto constitute the entire agreement of the parties with respect to the
subject matter hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY
WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING
AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. In
the event of any conflict between the terms of the Commitment Letter and this
Agreement, the provisions of this Agreement shall govern and control.
(h) The representations, warranties and covenants of Lessee herein
shall be deemed to survive the closing hereunder. Lessor's obligations to
acquire and lease specific items of Equipment and Leasehold Improvements shall
be conditioned upon Lessee providing to Lessor such information with respect to
Lessee's financial condition as Lessor may require, and Lessor being satisfied
that there shall have been no material adverse change in the business or
financial condition of Lessee from the date of execution hereof. The obligations
of Lessee under Sections III, X, XIV and XX(l)
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EXHIBIT 10.14
which accrue during the term of this Agreement and obligations which by their
express terms survive the termination of this Agreement, shall survive the
termination of this Agreement.
(i) In case of a failure of Lessee to comply with any provision of this
Agreement, Lessor shall have the right, but shall not be obligated, to effect
such compliance, in whole or in part; and all moneys spent and expenses and
obligations incurred or assumed by Lessor in effecting such compliance (together
with interest thereon at the rate specified in Paragraph (j) of this Section )
shall constitute additional Rent due to Lessor within five (5) days after the
date Lessor sends notice to Lessee requesting payment. Lessor's effecting such
compliance shall not be a waiver of Lessee's default.
(j) Any Rent or other amount not paid to Lessor when due hereunder
shall bear interest, both before and after any judgment or termination hereof,
at the lesser of 300 basis points above the Assumed Interest Rate (as defined in
the applicable Schedule) or the maximum rate allowed by law.
(k) Any provisions in this Agreement and any Schedule which are in
conflict with any statute, law or applicable rule shall be deemed omitted,
modified or altered to conform thereto.
(l) Lessee agrees to pay on demand all reasonable costs and expenses
incurred by Lessor in connection with the preparation, execution, delivery,
filing, recording, and administration of any of the Documents, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for Lessor, and all costs and expenses, if any, in connection with the
enforcement of any of the Documents. In addition, Lessee shall pay any and all
stamp and other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of any of the Documents and
the other documents to be delivered under the Documents, and agrees to save
Lessor harmless from and against any and all liabilities with respect to or
resulting from any delay attributed to Lessee in paying or failing to pay such
taxes and fees.
XXI: CHOICE OF LAW; JURISDICTION: THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT. The parties agree that any action or proceeding arising out of or
relating to this Agreement may be commenced in the United States District Court
for the Southern District of New York.
XXII: CHATTEL PAPER: To the extent that any Schedule would constitute chattel
paper, as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest therein may be created through
the transfer or possession of this Lease in and of itself without the transfer
or possession of the original of a Schedule executed pursuant to this Lease and
incorporating the Lease by reference; and no security interest in this Lease and
a Schedule may be created by the transfer or possession of any counterpart of
the Schedule other than the original thereof, which shall be identified as the
document marked "Original" and all other counterparts shall be marked
"Duplicate".
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GC COMPANIES, INC.
EXHIBIT 10.14
XXIII: EARLY TERMINATION:
(a) On or after the First Termination Date, Lessee may, so long as no
Default exists hereunder, terminate this Agreement as to all (but not less than
all) of the Lease Assets described on all Schedules executed hereunder, as of a
Rent Payment Date ("TERMINATION DATE") upon at least ninety (90) days' prior
written irrevocable notice to Lessor. In such notice, Lessee shall specify
whether Lessee elects to purchase the Equipment and Leasehold Improvements
pursuant to Paragraph (b) hereof, or to cause the Equipment or Leasehold
Improvements to be sold to a third party pursuant to Paragraph (a) hereof.
(i) If Lessee elects to cause the Equipment and Leasehold
Improvements to be sold to a third party, Lessee shall, and Lessor may, solicit
cash bids for the Equipment and Leasehold Improvements on an AS IS BASIS. Prior
to the Termination Date, Lessee shall (i) certify to Lessor any bids received by
Lessee and (ii) pay to Lessor the sum of (A) the Fixed Purchased Price,
calculated as of the Termination Date, for the Equipment and Leasehold
Improvements , plus (B) all rent and other sums due and unpaid as of the
Termination Date, plus (C) the Make Whole Amount, if any. Provided that all
amounts due hereunder have been paid on the Termination Date, Lessor and Lessee
shall sell the Equipment and Leasehold Improvements on an AS IS BASIS for cash
to the highest bidder and refund to Lessee the proceeds of such sale (net of any
related expenses) up to the amount of the Fixed Purchase Price plus the
Make-Whole Amount to Lessee to the extent such Fixed Purchase Price and Make
Whole Amount have been paid by Lessee to Lessor. Lessor shall not be required to
make and may specifically disclaim any representation or warranty as to the
condition of the Equipment and Leasehold Improvements and any other matters
(except that Lessor shall warrant that it has conveyed whatever interest it
received in such Equipment free and clear of any lien or encumbrance created by,
through or under Lessor). If such sale is not consummated, no termination shall
occur and Lessor shall refund the Fixed Purchase Price (less any expenses
incurred by Lessor) to Lessee. Notwithstanding the foregoing, Lessor may elect
by written notice, at any time prior to the Termination Date, not to sell the
Equipment. In that event, on the Termination Date, Lessee shall (1) return the
Equipment and Leasehold Improvements (in accordance with Section X), and (2) pay
to Lessor all amounts required under Paragraph (ii) less the amount of the
highest bid certified by Lessee to Lessor or obtained by Lessor.
(ii) If Lessee elects to purchase the Equipment and Leasehold
Improvements , on the Termination Date, Lessee shall pay to Lessor in cash the
purchase price for the Equipment and Leasehold Improvements determined as
hereinafter provided. The purchase price of the Equipment and Leasehold
Improvements shall be an amount equal to the sum of (A) the Fixed Purchase Price
(calculated as of the Termination Date) for the Equipment and Leasehold
Improvements , plus (B) all taxes and charges upon sale, plus (C) all Rent and
other sums due and unpaid as of the Termination Date, plus (D) the Make Whole
Amount, if any. Upon satisfaction of the conditions specified in this Paragraph
(b), Lessor will transfer, on an AS IS BASIS, all of Lessor's interest in and to
the Equipment and Leasehold Improvements. Lessor shall not be required to make
and may specifically disclaim any representation or warranty as to the condition
of such Equipment and Leasehold Improvements and other matters. Lessor shall
execute and deliver to Lessee such Uniform Commercial Code Statements of
Termination as reasonably may be required in order to terminate any interest of
Lessor in and to the Equipment and Leasehold Improvements .
(b) For purposes hereof, "MAKE WHOLE AMOUNT" shall mean that amount
equal to the excess, if any, of (i) the aggregate present value as of the
Termination Date of the sum of (A) the remaining scheduled Rent payments, plus
(B) the full amount of the Fixed Purchase Price that but
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GC COMPANIES, INC.
EXHIBIT 10.14
for exercise of the option contained in this Section would be payable on the
last Rent Payment Date during the Basic Term, discounted to the date of payment
at the Reinvestment Rate, over (ii) the aggregate present value as of the
Termination Date of the sum of (A) the remaining scheduled Rent payments, plus
(B) the full amount of the Fixed Purchase Price that but for exercise of the
option contained in this Section would be payable on the last Rent Payment Date
during the Basic Term, discounted to the date of payment at the Assumed Interest
Rate (specified in the applicable Schedule); provided, however, that if the
Reinvestment Rate is equal to or higher than the Assumed Interest Rate, the Make
Whole Amount shall be zero. For purposes hereof, "REINVESTMENT RATE" shall mean
the sum of (i) the Applicable Treasury Yield plus (ii) fifty (50 ) basis points;
provided, however, that in the event that Lessor elects (in accordance with
Section XIX(a) hereof) not to permit the exercise of Lessee's renewal option, at
a time when (a) Lessee has an NAIC rating of 2 or better, and (b) there has been
no material deterioration in the creditworthiness of Lessee since the date of
the initial findings, the "Reinvestment Rate" used for the purpose of
calculating the Make Whole Amount shall be equal to (a) the Applicable Treasury
Yield plus ninety-five (95) basis points for equipment, and (b) the Applicable
Treasury Yield plus one hundred fifty-five (155) basis points for Leasehold
Improvements. The term "APPLICABLE TREASURY YIELD" at any time shall mean the
yield to maturity of United States Treasury Notes with a maturity equal to the
remaining average life of the Series A Maximum Lease Term or Series B Maximum
Lease Term, as applicable, as published in The Wall Street Journal three (3)
Business Days prior to the Termination Date. If no maturity exactly corresponds
to such remaining term, the Applicable Treasury Yield shall be interpolated on a
straight-line basis, utilizing the yields for the two maturities which most
closely correspond to the requisite maturity.
(c) In addition to the rights set forth in subsection (a) above, if
Lessee desires to close a theater at a particular Lease Assets Location, then
Lessee may, with the prior written consent of Lessor, which consent shall not be
unreasonably withheld, upon not less than ninety (90) days' advance written
notice, elect to terminate the Term of this Agreement as to all (but not less
than all) of the Lease Assets (both Leasehold Improvements and Equipment) on all
Schedules pertaining to such Lease Assets Location, and purchase such Lease
Assets from Lessor. Lessee shall pay Lessor on the date of the termination of
such Schedules, in cash, a purchase price equal to, the Stipulated Loss Value of
the Equipment and Leasehold Improvements (calculated in accordance with Annex D
to the applicable Schedule(s) as of the Rent Payment Date next preceding the
date of such termination), and (ii) all Rents and other sums then due hereunder.
Upon compliance by Lessee with the provisions hereof, Lessor will transfer to
Lessee, on an AS IS BASIS, without recourse or warranty, express or implied, of
any kind whatsoever, all of Lessor's interest in and to purchased Lease Assets.
Lessor shall not be required to make and may specifically disclaim any
representation or warranty as to the condition of the purchased Lease Assets and
any other matters (except that Lessor shall warrant that it conveyed whatever
interest it received in such purchased Lease Assets free and clear of any lien
or encumbrance created by or through Lessor). Lessor shall execute and deliver
to Lessee such Uniform Commercial Code statements of termination, releases of
Collateral Assignments of Leases, releases of Mortgages, and other documents and
instruments, as reasonably may be required in order to terminate any interest of
Lessor in and to such purchased Lease Assets.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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GC COMPANIES, INC.
EXHIBIT 10.14
IN WITNESS WHEREOF, Lessee and Lessor have caused this Master Lease
Agreement to be executed by their duly authorized representatives as of the date
first above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, GENERAL CINEMA THEATRES, INC.
FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS
By: By:
Name: Name:
Title: Title:
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GC COMPANIES, INC.
EXHIBIT 10.14
FINANCIAL COVENANTS PRIOR TO RELEASE OF GUARANTOR
General Cinema Theatres, Inc. and its subsidiaries on a consolidated basis will
achieve and maintain the following covenants:
FIXED CHARGE COVERAGE RATIO of not less than 1.35:1, measured at the end of each
of the Lessee's fiscal quarters (the "Measurement Date").
The measurement period ("Measurement Period") will be for the four fiscal
quarters ending on the Measurement Date.
Fixed Charge Coverage Ratio to be defined as Lessee's earnings before interest
expense, income taxes, non-operating expense and income, depreciation and
amortization expense, and lease expense divided by the sum of all debt service
(principal and interest) and lease expense during the Measurement Period.
MINIMUM TANGIBLE NET WORTH of not less than $100,000,000 as of and at any time
subsequent to the closing.
Tangible Net Worth shall mean as of any particular date, the difference between;
(a) Guarantor's total assets as they would normally be shown on the balance
sheet less Guarantor's intangible assets, including, but not limited to, all
values attributable to goodwill, patents, copyrights, trademarks, and licenses;
and (b) Guarantor's total liabilities as they would usually be shown on such
balance sheet, including as liabilities all guarantees of the indebtedness of
affiliates or any other Person.
MAXIMUM TOTAL INDEBTEDNESS TO TANGIBLE NET WORTH OF NOT GREATER THAN THE
FOLLOWING:
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2001 and
1996 1997 1998 1999 2000 Thereafter
----------- ----------- ----------- ----------- ----------- ----------------------
6.0x 7.5x 8.0x 8.5x 8.5x 8.5x
----------- ----------- ----------- ----------- ----------- ----------------------
Total Indebtedness to include the sum of all liabilities including deferred
income taxes, all assigned leases and all operating lease payments (present
valued at a rate of 12% per annum over their respective lives).
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GC COMPANIES, INC.
EXHIBIT 10.14
FINANCIAL COVENANTS AFTER RELEASE OF GUARANTOR
Financial covenants related to the release of the Guaranty of GC Companies, Inc.
General Cinema Theatres, Inc. and its subsidiaries on a consolidated basis will
achieve and maintain the following covenants:
FIXED CHARGE COVERAGE RATIO of not less than 1.40:1, measured at the end of each
of the Lessee's fiscal quarters (the "Measurement Date").
The measurement period ("Measurement Period") will be for the four fiscal
quarters ending on the Measurement Date.
Fixed Charge Coverage Ratio to be defined as Lessee's earnings before interest
expense, income taxes, non-operating expense and income, depreciation and
amortization expense, and lease expense divided by the sum of all debt service
(principal and interest) and lease expense during the Measurement Period.
MINIMUM TANGIBLE NET WORTH of not less than $100,000,000 as of and at any time
subsequent to the closing.
Tangible Net Worth shall mean as of any particular date, the difference between;
(a) Lessee's total assets as they would normally be shown on the balance sheet
less Lessee's intangible assets, including, but not limited to, all values
attributable to goodwill, patents, copyrights, trademarks, and licenses; and (b)
Lessee's total liabilities as they would usually be shown on such balance sheet,
including as liabilities all guarantees of the indebtedness of affiliates or any
other Person.
MAXIMUM TOTAL INDEBTEDNESS TO TANGIBLE NET WORTH OF NOT GREATER THAN THE
FOLLOWING:
Fiscal 1996 and thereafter
---------------------------------------
6.0x
---------------------------------------
Total Indebtedness to include the sum of all liabilities including deferred
income taxes, all assigned leases and all operating lease payments (present
valued at a rate of 12% per annum over their respective lives).
31
