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EXHIBIT 10.16
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE COUNTY OF ▇▇▇▇▇▇▇▇▇▇, TENNESSEE
and
STARTEK USA, INC.
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EQUIPMENT LEASE AGREEMENT
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DATED AS OF JULY 8, 1998
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TABLE OF CONTENTS
Page No.
Parties 1
Preamble 1
ARTICLE I
DEFINITIONS
Section 1.1. Definitions of Terms 2
Section 1.2. References to Lease 5
Section 1.3. References to Articles, Sections, Etc. 5
Section 1.4. Headings 5
ARTICLE II
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section 2.1. Representations, Warranties, and Covenants of the Issuer 7
Section 2.2 Representations, Warranties, and Covenants of the Company 8
ARTICLE III
DEMISING CLAUSE; TERM
Section 3.1. Demise of Facility 9
Section 3.2. Lease Term 9
ARTICLE IV
ACQUISITION OF THE EQUIPMENT
Section 4.1. Agreement to Equip the Project
Section 4.2. Issuance of Series B Note 9
Section 4.3. Costs of the Project 9
Section 4.4. Company Required to Pay Project Costs
in Event Loan Insufficient 10
Section 4.5. Payment of Expenses of Loan 10
Section 4.6. Other Amounts Payable by the Company 11
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ARTICLE V
RENTAL PROVISIONS; PREPAYMENT
Section 5.1. Quiet Enjoyment 12
Section 5.2. Rental Payments; Basic Rental Payments;
and Additional Rental Payments 12
Section 5.3. Credits Toward Basic Rental Payments 13
Section 5.4. General Obligation; Obligations of
Company Unconditional 13
Section 5.5. Prepayment of Rental Payments 14
Section 5.6. Rights and Obligations of Company upon Full
Prepayment of Rental Payments 14
ARTICLE VI
MAINTENANCE, MODIFICATIONS,
TAXES, AND INSURANCE
Section 6.1. Maintenance of the Equipment 15
Section 6.2. Modification of the Equipment 15
Section 6.3. Improvements as Part of the Equipment 15
Section 6.4. Taxes, Assessments, and Utility Charges 15
Section 6.5. Insurance Required 16
Section 6.6. Insurers and Policies 16
Section 6.7. Application of Net Proceeds of Insurance 17
Section 6.8. Advances by Issuer 17
Section 6.9. Obligation of Company to Maintain Insurance Regardless of Approval 17
ARTICLE VII
DAMAGE, DESTRUCTION, CONDEMNATION, ETC.
Section 7.1. Damage or Destruction 18
Section 7.2. Condemnation 18
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. No Warranty of Condition or Suitability; Use of Project 20
Section 8.2. Indemnity and Hold Harmless Provisions 20
Section 8.3. Reimbursement of Issuer 20
Section 8.4. Right of Access to the Project 21
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Section 8.5. Project as a Public Facility 21
Section 8.6. Compliance with Orders, Ordinances, Etc. 21
Section 8.7. Discharge of Liens and Encumbrances 21
Section 8.8. Restriction Against Certain Religious Activities 22
Section 8.9. Further Assurances and Corrective Instruments 22
ARTICLE IX
ASSIGNMENT; REMOVAL OF EQUIPMENT; ETC.
Section 9.1. Assignment and Subleasing 23
Section 9.2. Consent to Assignment 23
Section 9.3. Restrictions on Mortgage or Sale of Project by Issuer 23
Section 9.4. Removal of Equipment 23
Section 9.5. Installation of Company's Own Machinery 25
Section 9.6. References to Loan Ineffective After Paid 25
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined 26
Section 10.2. Remedies on Default 27
Section 10.3. Remedies Cumulative 28
Section 10.4. Agreement to Pay Attorneys' Fees and Expenses 28
Section 10.5. Delay or Omission Not a Waiver 28
Section 10.6. Interpretation of any Conflicting Provisions 28
Section 10.7. Force Majeure Provision 28
ARTICLE XI
OPTIONS; PURCHASE OF EQUIPMENT; ETC.
Section 11.1. Options to Terminate 30
Section 11.2. Option to Purchase Equipment Prior to Payment of the Loan 30
Section 11.3. Option to Purchase Equipment After Payment of the Loan 30
Section 11.4. Conveyance on Exercise of Option to Purchase Equipment 30
Section 11.5. Payments Upon, and Conditions For, Early Termination 30
Section 11.6. Continuation of Certain Provisions 31
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ARTICLE XII
MISCELLANEOUS
Section 12.1. Certificates and Opinions 32
Section 12.2. Limited Liability of the Issuer 32
Section 12.3. Notices 32
Section 12.4. Binding Effect 33
Section 12.5. Severability 33
Section 12.6. Limitation of Rights 33
Section 12.7. Execution of Counterparts 34
Section 12.8. Applicable Law 34
Section 12.9. Table of Contents and Section Headings Not Controlling 34
Section 12.10. No Liability of the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee 34
Section 12.11. Net Lease 34
Section 12.12. Not Partners 34
Signatures 35
Acknowledgments 36
Exhibits
Exhibit "A" Description of Land A-1
Exhibit "B" Requisition for Payment B-1
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EQUIPMENT LEASE AGREEMENT
THIS EQUIPMENT LEASE AGREEMENT, dated as of July 8, 1998, by and
between THE INDUSTRIAL DEVELOPMENT BOARD OF THE COUNTY OF ▇▇▇▇▇▇▇▇▇▇, TENNESSEE
(the "Issuer"), a public, nonprofit corporation organized and existing under the
laws of the State of Tennessee, and STARTEK USA, INC., a Colorado corporation
(the "Company") (the Issuer and the Company being herein called, collectively,
the "Parties").
WITNESSETH:
WHEREAS, the Issuer is a public, nonprofit corporation and a public
instrumentality of the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee and is authorized under
Chapter 53, Title 7, Tennessee Code Annotated, as amended (the "Act"), to enter
into lease agreements with manufacturing, industrial, commercial, and financial
enterprises with respect to one or more projects for such payments and upon such
terms and conditions as the Board of Directors of the Issuer may deem advisable
in accordance with the provisions of the Act in order to maintain and increase
employment opportunities by inducing such enterprises to locate in or to remain
in the State of Tennessee (the "State");
WHEREAS, to induce the Company to locate a manufacturing facility in
the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee, the Company was informed that the Issuer
would undertake to cause the Company to acquire additional land for and renovate
a certain manufacturing facility on certain land owned by the Issuer (the land
and building being referred to as the "Facility"), and to cause the Company to
equip said Facility with such furniture, fixtures and equipment as it needed or
desired for its operations (the "Equipment"), in ▇▇▇▇▇▇▇▇▇▇ County, Tennessee,
which Facility is to be owned by the Issuer and leased by the Issuer to the
Company, and which Equipment is to be owned by the Issuer and leased by the
Issuer to the Company, and the Issuer now proposes to acquire the Equipment and
to lease the same to the Company, pursuant hereto, and to cause the Facility to
be renovated and to lease the same to the Company, pursuant to a certain
Facility Lease Agreement (the "Facility Lease"); and
WHEREAS, the Board of Directors of the Issuer, pursuant to Section
7-53-102 of the Act, has found and determined that the agreement by the Issuer
to acquire, equip and lease such manufacturing facility will develop trade and
commerce in and adjacent to the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee, will contribute
to the general welfare, will alleviate conditions of unemployment and, has
induced the Developer to locate in and will induce the Company to locate in
▇▇▇▇▇▇▇▇▇▇ County, Tennessee;
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WHEREAS, the Issuer has not made and does not intend to make any profit
by reason of its business or venture in which it may engage or by reason of its
entering into this Lease, and no part of the Issuer's net earnings, if any, will
ever inure to the benefit of any person, firm or corporation except the County
of ▇▇▇▇▇▇▇▇▇▇, Tennessee; and,
WHEREAS, the Issuer is authorized by law and has deemed it necessary to
borrow money for the purpose of acquiring the Facility and to that end has duly
authorized and directed the issuance of its not exceeding Four Million Five
Hundred Thousand and No/100 Dollars ($4,500,000.00) Industrial Development
Revenue Note, Series A (StarTek USA Project) (the "Series A Note"); and
WHEREAS, the Issuer has executed a certain Collateral Assignment of
Facility Lease (the "Assignment of Facility Lease") and a certain Deed of Trust,
Assignment of Leases and Security Agreement (Facility) (the "Facility Deed of
Trust") to secure, inter alia, the loan of the indebtedness (the "Facility
Loan") evidenced by the Series A Note; and
WHEREAS, the Issuer is authorized by law and has deemed it necessary to
borrow money for the purpose of acquiring the Equipment and to that end has duly
authorized and directed the issuance of its not exceeding Three Million Five
Hundred Thousand and No/100 Dollars ($3,500,000.00) Industrial Development
Revenue Note, Series B (StarTek USA Project) (the "Series B Note"); and
WHEREAS, the Issuer has executed a certain Collateral Assignment of
Equipment Lease (the "Assignment of Equipment Lease") and a certain Security
Agreement (the "Security Agreement") to secure, inter alia, the loan of the
indebtedness (the "Equipment Loan") evidenced by the Series B Note; and
WHEREAS, the Issuer is authorized by law and has deemed it necessary to
acquire and renovate the Facility and acquire the Equipment (the Facility and
the Equipment being sometimes referred to as the "Project") as aforesaid, which
acquisition of the Facility has occurred of even date herewith; and
WHEREAS, the Issuer proposes to lease the Equipment to the Company and
the Company desires to lease the Equipment from the Issuer upon the terms and
conditions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section I.1. Definitions of Terms. In addition to the words and terms
defined in the preamble hereto and elsewhere defined in this Lease, the
following words and terms as used herein, whether or not the words have initial
capitals, shall have the following meaning, unless the context or use indicates
another or different meaning or intent, and such definitions shall be equally
applicable to both the singular and plural forms of any of the words and terms
herein defined:
"Act" means Chapter 53, Title 7, Tennessee Code Annotated, as amended
and supplemented from time to time.
"Additional Rental Payments" means that portion of the Rental Payments
described in Section 5.2(b) of this Lease.
"Authorized Representative" means, in the case of the Issuer, the
Chairman, the Vice Chairman, the Secretary or any Assistant Secretary of the
Issuer; in the case of the Company, the President, any Vice President, the
Secretary or the Treasurer; and, in the case of any of them, such additional
persons as, at the time, are designated to act on behalf of the Issuer, or the
Company, as the case may be, by written certificate furnished to the Issuer or
the Company as the case may be, containing the specimen signature of each such
person and signed on its behalf by a previously Authorized Representative.
"Basic Rental Payments" means that portion of the Rental Payments
described in Section 5.2(a) of this Lease.
"Building" means all buildings, structures, improvements, and fixtures
located on the Land, the acquisition of which is financed with the proceeds of
the Facility Loan, but not with the proceeds of the Equipment Loan.
"Company" means (a) StarTek USA, Inc., a Colorado corporation, (b) any
successors and assigns of such corporation, and (c) any surviving, resulting or
transferee as permitted herein.
"Condemnation" means the taking of title to, or the use of, the
Facility or the Equipment under the exercise of the power of eminent domain by
any governmental entity or any other person acting under governmental authority.
"Costs of the Project" means all of those costs and expenses enumerated
in Section 4.3 hereof.
"Equipment" means those items of furniture, fixtures and equipment and
related property acquired by the Issuer with the proceeds of the Series B Note,
and any equipment acquired in substitution therefor and any renewals or
replacements thereof pursuant hereto.
"Equipment Loan Documents" means, collectively, the Series B Note, the
Assignment of Equipment Lease, and the Security Agreement.
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"Event of Default" or "Default" means any of those events defined as
Events of Default by Section 10.1 of this Lease.
"Facility" means, collectively, the Land and Building.
"Facility Lender" means StarTek USA, Inc., or any subsequent owner of
the Series A Note.
"Facility Loan Documents" means, collectively, the Series A Note, the
Assignment of Facility Lease, and the Facility Deed of Trust.
"Fiscal Year" means the fiscal year, as such from time to time exists,
of the Company.
"Independent Counsel" means an attorney or attorneys duly admitted to
practice law before the highest court of any state of the United States of
America or the District of Columbia, and shall include counsel for the Issuer
and counsel for the Company.
"Issuer" means The Industrial Development Board of the County of
▇▇▇▇▇▇▇▇▇▇, Tennessee, and its lawful successors and assigns.
"Land" means the real estate and interests in real estate described in
Exhibit "A" hereto annexed and by this reference made a part hereof, less such
real estate and interest in real estate as may be taken by the exercise of the
power of eminent domain as provided in Article VII of the Facility Lease and
less such real estate and interest in real estate as may be sold to the Company
pursuant to Article XI of this Lease.
"Lease" means this Equipment Lease Agreement, as from time to time
supplemented or amended.
"Lender" means StarTek USA, Inc., or any subsequent owner of the Series
B Note.
"Lien" means any interest in Property securing an obligation owed to
anyone, whether such interest is based on the common law, statute, or contract,
and including, but not limited to, the security interest arising from a
mortgage, encumbrance, pledge, conditional sale, trust receipt, lease,
consignment, or bailment for security purposes. The term "Lien" also includes
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases, and other similar title exceptions and
encumbrances, including, but not limited to, mechanics', materialmen's,
warehousemen's, carriers', and other similar encumbrances affecting real
property. For the purposes of this Lease, one shall be deemed to be the owner of
any Property which he, she, or it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the Property has
been retained by or vested in someone else for security purposes.
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"Loan" means, collectively, the Facility Loan and the Equipment Loan.
"Loan Documents" means, collectively, the Facility Loan Documents and
the Equipment Loan Documents.
"Loan Payment Date" means each date on which interest, principal, if
any, or any of the foregoing, shall be payable on the Equipment Loan.
"Net Proceeds" means so much of the gross proceeds with respect to
which that term is used as remains after payment of all expenses, costs, and
taxes, including reasonable attorney's fees and extraordinary expenses, incurred
in obtaining such gross proceeds.
"Permitted Encumbrances" means: (a) any Liens of record; (b)
mechanics', materialmen's, warehousemen's, carriers', and other similar Liens to
the extent permitted by Section 8.7 of this Lease; and, (c) Liens for taxes at
the time not delinquent.
"Project" means collectively: (a) the Facility and (b) the Equipment.
"Property" means any interest in any kind of property or assets,
whether real, personal, or mixed, tangible or intangible.
"Rental Payments" means, collectively, the Basic Rental Payments and
the Additional Rental Payments, as described in Section 5.2 of this Lease.
"State" means the State of Tennessee.
"Substitute Facilities" means such facilities as defined in Section
7.2(a) of this Lease.
"Term" means the term of this Lease as specified in Section 3.3 hereof.
Section I.2. References to Lease. The words "hereof," "herein,"
"hereunder," and other words of similar import refer to this Lease as a whole.
Section I.3. References to Articles, Sections, Etc. References to
Articles, Sections, and other subdivisions of this Lease are to the designated
Articles, Sections, and other subdivisions of this Lease as originally executed.
Section I.4. Headings. The headings of this Lease are for convenience
only and shall not define or limit the provisions hereof.
(END OF ARTICLE I)
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ARTICLE II
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section II.1. Representations, Warranties, and Covenants of the Issuer.
The Issuer hereby represents, warrants, and covenants as follows as the basis
for the undertakings on its part herein contained:
(a) That the Issuer: (1) was legally created and exists under
the provisions of the Act; (2) has the power under the provisions of the Act to
enter into the transactions contemplated by this Lease and to carry out its
obligations hereunder; and, (3) has been duly authorized, by proper action, to
execute, deliver and perform this Lease and the Loan Documents;
(b) That the Project constitutes a "project" within the
meaning of the Act, and that the Issuer is entering into the Loan Documents to
aid in the financing of the Project to accomplish the public purposes of the
Act;
(c) That the Issuer will finance the costs incurred in the
acquisition of the Project in accordance with the terms and provisions hereof
and of the Facility Lease, in order to induce and cause the Company to provide a
manufacturing facility in ▇▇▇▇▇▇▇▇▇▇ County, Tennessee, such facility upon its
completion, to be leased to or occupied by (i) industrial, commercial, financial
or service enterprises; (ii) nonprofit domestic corporations or enterprises
whose purpose is the promotion, support and encouragement of either agriculture
or commerce in the State or whose purpose is the promotion of the health,
welfare and safety of the citizens of the State; or (iii) similar corporations
or enterprises, thereby maintaining and increasing employment opportunities, and
furthering the welfare of the residents of the County of ▇▇▇▇▇▇▇▇▇▇ and of the
State;
(d) That in order to finance the costs of the Project, the
Issuer is entering into the Loan Documents;
(e) That to the Issuer's knowledge, the Project, as designed,
complies with all presently applicable building and zoning ordinances;
(f) That the Issuer will not pledge the rentals and other
amounts derived from the Project other than to secure the Loan and will not
mortgage or encumber the Project;
(g) That nothing in this Lease shall be construed to require
Issuer to operate the Project other than as lessor; and
(h) That all requirements of the Act have been complied with.
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Section II.2. Representations, Warranties, and Covenants of the
Company. The Company hereby represents, warrants, and covenants as follows as
the basis for the undertakings on its part herein contained:
(a) That the Company: (i) is a corporation duly organized and
validly existing under the laws of the State of Colorado; (ii) has the power and
authority to enter into this Lease; and (iii) has duly authorized the execution,
delivery, and performance of this Lease; and
(b) That the execution and delivery of this Lease and the
Equipment Loan Documents will be valid and binding on the Company and that
neither the execution nor delivery of the foregoing documents, nor the
consummation of the transactions contemplated thereby, nor the fulfillment of or
compliance with the terms and conditions hereof or thereof, will conflict with
or result in a breach of any of the terms, conditions, or provisions of any
agreement or instrument to which the Company is now a party or by which it is
bound, or constitute a default hereunder or under any of the foregoing, or
result in the creation or imposition of any Lien upon any Property of the
Company under the terms of any instrument or agreement, other than the
respective Liens, if any, under the Loan Documents and under this Lease; and
(c) That throughout the Term, the Company will not take,
permit to be taken, fail to take, or permit to fail to be taken, any action
which would cause the Project not to constitute a "project" within the meaning
of the Act; and
(d) That the financing by the Issuer of the costs of acquiring
the Project will induce and cause the Company to provide said Project; and
(e) That all of the proceeds of the Equipment Loan will be
used for the payment of the Costs of the Project; and
(f) That to the knowledge of the Company, the execution,
delivery and performance in accordance with the respective terms of this Lease,
the Loan Documents (as applicable) and any other documents executed and
delivered in connection with this transaction do not and will not (i) violate
any applicable law or (ii) conflict with, result in a breach of or constitute a
default under any indenture, agreement or other instrument to which Company is a
party or by which Company or any of the Company's properties may be bound; and
(g) That there is no action, suit, proceeding or, to the
Company's knowledge, any inquiry or investigation at law or in equity or before
or by any public board or body pending or, to the Company's knowledge,
threatened against or affecting the Company or the Company's property, wherein
an unfavorable decision, ruling or finding would have a material, adverse effect
on the validity or enforceability of the Loan, this Lease, or the Loan
Documents, which has not been previously disclosed.
(END OF ARTICLE II)
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ARTICLE III
DEMISING CLAUSE; TERM
Section III.1. Demise of Facility. The Issuer demises and leases to the
Company, and the Company leases from the Issuer, the Equipment, subject only to
Permitted Encumbrances, in accordance with the provisions of this Lease, to have
and to hold for the Term.
Section III.2. Lease Term. The Term of this Lease shall commence as of
the date hereof and shall terminate January 1, 2004, unless earlier terminated
pursuant to the provisions of Article XI hereof; PROVIDED, HOWEVER, that in no
event shall this Lease be terminated (except pursuant to Section 10.2(a)(4)
hereof), but the Term hereof shall continue on a month-to-month basis, until:
(a) the principal of the Loan and the interest thereon, shall have been paid in
full or provisions made for such payment; (b) all liabilities, reasonable costs,
and reasonable expenses of the Issuer, including those of its legal counsel,
incurred pursuant to, or in connection with, this Lease shall have been fully
paid and discharged to the satisfaction of the Issuer; and, (c) all other
reasonable liabilities, costs, and expenses which the Company herein assumes or
agrees to pay shall have been fully paid or satisfactory provision made
therefor.
(END OF ARTICLE III)
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ARTICLE IV
ACQUISITION OF THE EQUIPMENT
Section IV.1. Agreement to Equip the Project. The Issuer and the
Company agree to take the following steps:
(a) The Company agrees that it shall commence or will continue if such
work shall have theretofore commenced, the acquisition and installation, in or
about the Building and wholly within the boundary lines of the Land, the
Equipment on behalf of itself and the Issuer. Such installation shall be in a
good and workmanlike manner. The Company shall have the sole responsibility for,
and the Issuer hereby appoints the Company its agent with respect to, the
acquisition and installation of the Equipment, and may perform the same itself
or through agents, contractors and others selected by it, and may make or issue
such contracts, orders, receipts and instructions, and in general do or cause to
be done all such other things, as it may in its sole discretion consider
requisite or advisable for the acquisition of the Equipment, installing the
Equipment and fulfilling its obligations under this Section 4.1. The Company
shall have full authority and the sole right under this Lease to supervise and
control, directly or indirectly, all aspects of the acquisition and the
installation of the Equipment.
(b) In order to effectuate the purposes of this Lease, as and when
requested by the Company, the Issuer will make, execute, acknowledge and deliver
any contracts, orders, receipts, writings and instructions with any other
persons, firms or corporations and in general do all things which may be
requisite or proper, all for equipping and completing the Project, and for
evidencing the Issuer's ownership thereof.
(c) Disbursements of Loan proceeds shall be made to the Company by the
Lender from time to time only upon receipt of a Requisition for Payment in the
form attached hereto as Exhibit B.
Section IV.2. Issuance of Series B Note. In order to provide funds for
the purpose of financing the cost of acquiring the Equipment, the Issuer has
issued the Series B Note, and has entered into the other Equipment Loan
Documents. The Issuer and the Company agree that the proceeds of the Equipment
Loan shall be used to pay for Costs of the Project. It is agreed and understood
that throughout the Term, the Equipment shall be owned by the Issuer, and leased
to the Company pursuant to this Lease.
Section IV.3. Costs of the Project. The proceeds of the Equipment Loan
shall be drawn by the Company on behalf of the Issuer to pay for Costs of the
Project. For purposes of this Lease, "Costs of the Project" shall consist of all
costs of acquiring, improving, and installing the Equipment as the same may be
available therefor and financed pursuant to the Equipment Loan Documents,
including, without limitation:
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(i) all costs of acquiring and installing the Equipment,
including rigging, transportation, architectural, engineering,
development, consulting, marketing and supervisory services with
respect to acquisition and installation of the Equipment, and all other
costs of providing the Equipment permissible under the Act, and
capitalized interest heretofore accrued or paid in connection with the
temporary financing of all or any part of the costs of any of the
foregoing;
(ii) all fees, taxes, charges, and other expenses for
recording or filing, as the case may be, the instrument or instruments
conveying the Equipment to the Company, and reconveying the Equipment
from the Company to the Issuer, this Lease, the Equipment Loan
Documents or any additional documents, instruments or agreements
relating thereto or to the Equipment Loan or this Lease;
(iii) all costs of entering into the Equipment Loan,
including, but not limited to, all legal, accounting, feasibility
study, financial advisory, legal investment, and any other fees,
discounts, costs, and expenses incurred in connection with the
preparation, reproduction, authorization, execution, and delivery of
the Equipment Loan, Equipment Loan Documents, this Lease, and any and
all additional documents, instruments or agreements related thereto;
(iv) reimbursement to the Company for any of the above
enumerated items of cost or expense paid by it.
Nothing contained in this Lease, or in any related documents, shall impose upon
the Issuer to see to the proper application of the proceeds of the Loan or any
disbursement thereof.
Section IV.4. Company Required to Pay Project Costs in Event Loan
Insufficient. If the moneys in the Equipment Loan available for payment of the
Costs of the Project should not be sufficient to pay the costs thereof in full,
the Company agrees to complete the equipping of the Project and to pay all that
portion of the cost of the Project as may be in excess of the moneys available
therefor in the Equipment Loan. The Issuer does not make any warranty, either
express or implied, that the moneys under the Equipment Loan and which, under
the provisions of this Lease, will be available for payment of the Costs of the
Project, will be sufficient to pay all costs which will be incurred in that
connection. The Company agrees that, if after exhaustion of the moneys in the
Equipment Loan, the Company should pay any portion of the Costs of the Project
pursuant to the provisions of this Section, it shall not be entitled to any
reimbursement therefor from the Issuer, nor shall it be entitled to any
diminution in or postponement of the payments required to be made hereunder.
Section IV.5. Payment of Expenses of Loan. The Company agrees to be
liable and pay for recording expenses, reasonable legal fees, and other
reasonable fees and expenses incurred or to be incurred by or on behalf of the
Issuer in connection with or as an incident to the Equipment Loan or the
Equipment Loan Documents.
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Section IV.6. Other Amounts Payable by the Company. The Company agrees
to pay all reasonable costs and expenses (including reasonable attorney's fees),
not otherwise paid under the terms of this Lease reasonably incurred by the
Issuer in connection with, or as a direct or indirect result of, or in
connection with the administration or enforcement of, and compliance with, this
Lease and the Equipment Loan, or otherwise in regard to the Equipment. The
Company may, however, without creating a default hereunder, contest in good
faith the necessity, and the reasonableness of, any costs, expenses, fees,
amounts, liabilities and obligations referred to in this Section 4.6 and in
Section 8.2 hereof.
(END OF ARTICLE IV)
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ARTICLE V
RENTAL PROVISIONS; PREPAYMENT
Section V.1. Quiet Enjoyment. The Issuer hereby covenants and agrees
that it will not take any action, other than pursuant to Section 8.4 or Article
X of this Lease, to prevent the Company from having quiet and peaceable
possession and enjoyment of the Project during the Term and will, at the request
of the Company, and at the requesting person's cost, to the extent that it may
lawfully do so, join in any legal action in which the Company asserts its right
to such possession and enjoyment.
Section V.2. Rental Payments; Basic Rental Payments; and Additional
Rental Payments. The Company covenants and agrees to pay, or cause to be paid,
as and for rental and for use of the Project, throughout the Term, the Basic
Rental Payments and the Additional Rental Payments as provided in this Section,
in funds which constitute lawful monies of the United States of America for the
payment of public and private debts, as at the time of payment.
(a) Basic Rental Payments. The Company shall, throughout the
Term, pay, or cause to be paid, as Basic Rental Payments, the following amounts:
(1) On or prior to any installment payment date for the
Equipment Loan under the Series B Note, until the principal of, and
interest on the Equipment Loan shall have been fully paid, a sum which
will enable the Issuer to pay the amount payable on such date as
principal of (whether at maturity, or upon acceleration or otherwise),
and interest upon the Series B Note as provided in the Equipment Loan
Documents.
(b) Additional Rental Payments. The Company shall from time to
time pay, as Additional Rental Payments, within thirty (30) days of receipt of
written demand therefor from the person entitled to payment thereof, an amount
sufficient to pay the following costs and expenses to the extent such costs and
expenses are not paid from the proceeds of the Equipment Loan:
(1) The reasonable fees and other costs incurred for services
of such engineers, architects, attorneys, and independent accountants
as are employed to make examinations, opinions, and reports required
under, or contemplated by, this Lease;
(2) The reasonable fees and other costs, not otherwise paid
under this Lease, incurred by the Issuer by reason of its leasing of
the Project or in connection with its administration and enforcement
of, and compliance with, this Lease, or otherwise in connection with
the Project; and,
(3) All amounts advanced by the Issuer under authority of this
Lease or otherwise and which the Company is obligated to repay.
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The Issuer hereby directs the Company to make the Basic Rental Payments
to the Lender for payment of the Equipment Loan, and such payments shall be made
in a timely manner so that the Issuer can comply with the provisions of the
Equipment Loan Documents.
Payments of Additional Rental Payments shall be made by the Company
directly to the persons entitled to such payment.
In the event the Company shall fail to make any payment required by
this Section, the payment so in default shall continue as an obligation
hereunder of the Company until the amount in default shall have been fully paid,
and the Company shall pay, or cause to be paid, the same with interest thereon
from the date of default until so paid at a rate per annum equal to twelve
percent (12%) or the maximum rate of interest allowable by applicable law,
whichever is less.
The Company shall make the payments required by this Section without
any further notice thereof except as may be specifically required by this
Section.
Section V.3. Credits Toward Basic Rental Payments. The following
amounts shall be credited (to the extent, if any, which such amounts shall not
have previously been the basis for such a credit) in the manner specified,
against the Basic Rental Payments, and such Basic Rental Payments shall
accordingly be reduced to the extent of any such credits:
(a) Any amounts paid as a prepayment of Basic Rental Payments
pursuant to Section 5.5 hereof;
(b) Any other amounts paid to the Lender as a prepayment of
Basic Rental Payments or the Equipment Loan pursuant to any provisions hereof or
the terms thereof, including, but not necessarily limited to, Section 9.4
hereof.
Section V.4. General Obligation; Obligations of Company Unconditional.
The Company shall pay to or upon the order of the Issuer, at or before the time
when payable by the Issuer, all reasonable costs and liabilities incurred by the
Issuer in connection with its financing of the Equipment, under the Equipment
Documents, or otherwise as a result of the transactions contemplated by this
Lease.
The obligations of the Company to make the payments required in Section
5.2 hereof, and to perform and observe any and all of the other covenants and
agreements on its part contained herein, shall be a general obligation of the
Company and shall be absolute and unconditional irrespective of any defense or
any rights of setoff, recoupment, or counterclaim which the Company otherwise
may have against the Issuer. The Company shall not: (a) suspend, discontinue, or
▇▇▇▇▇ any payment required by Section 5.2 hereof (except as provided in Section
5.3); (b) fail to observe any of its other covenants or agreements in this Lease
or under the Equipment Loan Documents; or, (c) except as provided in Article XI
hereof, terminate this Lease for any cause whatsoever, including, without
limiting the generality of the foregoing, failure to complete the Project;
failure of the Company to occupy or to use the Project as contemplated
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in this Lease or otherwise; any change or delay in the time of availability of
the Project; any defect in the title, design, operation, merchantability,
fitness, or condition of the Project or in the suitability of the Project for
the purposes or needs of the Company; failure of consideration; eviction or
constructive eviction; destruction of or damage to the Project; commercial
frustration of purpose; the taking by Condemnation of title to or the use of all
or any part of the Project; any change in the taxation or other laws of the
United States of America or of the State or any political subdivision of either;
any declaration or finding that any portion of this Lease is invalid or
unenforceable; and, any failure of the Issuer, or the Lender to perform and
observe any agreement, whether express or implied, or any duty, liability, or
obligation arising out of or in connection with this Lease or otherwise.
Nothing contained in this Section shall be construed to release the
Issuer from the performance of any of the agreements on its part contained in
this Lease, and in the event the Issuer should fail to perform any such
agreement on its part, the Company may institute such action against the Issuer,
as the Company may deem necessary to compel performance; provided, however, that
anything contained herein to the contrary notwithstanding, no such action shall:
(a) violate the agreements on the part of the Company contained in the second
paragraph of this Section; (b) diminish the amounts required to be paid by the
Company pursuant to any provision of this Lease; or (c) seek to impose or impose
any pecuniary liability on the Issuer payable from any source other than as
provided in the Loan Documents, or any personal or pecuniary liability on any
officer or director of the Issuer. The Company may, at its own cost and expense,
and in its own name or in the name of the Issuer, prosecute or defend any action
or proceeding or take any action involving third persons which the Company deems
reasonably necessary in order to secure or protect its right to possession,
occupancy, and use of the Project, and in such event the Issuer shall, provided
the Company shall pay, or cause to be paid, all costs (including attorneys'
fees) reasonably incurred by the Issuer in connection therewith as such costs
accrue, cooperate fully with the Company.
Section V.5. Prepayment of Rental Payments. (a) Basic Rental payments
under Section 5.4(a)(1) may be prepaid in full or in part at any time without
premium or penalty.
(b) The amount necessary to prepay the Rental Payments in
full, or to provide for such full prepayment, shall be determined in accordance
with the provisions of Section 11.2 or 11.5 of this Lease, as applicable.
Section V.6. Rights and Obligations of Company upon Full Prepayment of
Rental Payments. In the event the Rental Payments shall have been prepaid in
full, the Company shall have the option to purchase the Project in accordance
with the provisions of Article XI hereof. If such option is not exercised, then
(i) this Lease shall continue in accordance with its terms, and (ii) the Company
shall have no further obligation to pay Basic Rental Payments during such paid
up period of the Term hereof.
(END OF ARTICLE V)
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ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES, AND INSURANCE
Section VI.1. Maintenance of the Equipment. Throughout the Term, the
Company shall, at its own expense, keep and maintain the Equipment, or cause the
Equipment to be kept and maintained, in good condition, repair, and working
order (ordinary wear and tear excepted), making, or causing to be made, all
repairs and replacements thereto (whether ordinary or extraordinary, structural
or nonstructural, or foreseen or unforeseen), and operate the Equipment, or
cause the Equipment to be operated, as deemed necessary and proper by the
Company.
Section VI.2. Modification of the Equipment. (a) The Company, at its
own cost and expense, may make such additions, renewals, replacements, or
improvements to or alterations of the Project, or may construct or place on the
Facility, such additional or renewal or replacement facilities, furnishings, or
equipment, as the Company may deem desirable to attain the purposes herein
contemplated, provided that such additions, renewals, replacements,
improvements, alterations, facilities, furnishings, or equipment shall not
impair the fair market value, structural soundness, or usefulness of the
Facility.
(b) At the request of the Company, the Issuer shall join in
any application for such municipal and other governmental permits and
authorizations as the Company may deem necessary or advisable in connection with
any such construction, acquisition or installation, provided that the Company
shall indemnify and hold the Issuer harmless, or cause the Issuer to be
indemnified and held harmless, against and from all costs and expenses,
including attorneys' fees, which may be incurred by the Issuer in connection
with any such joinder or application.
Section VI.3. Improvements as Part of the Equipment. All improvements,
fixtures, accessions and other Property which shall be placed, or installed in
or upon the Equipment as a substitute for, or in renewal or replacement of, any
improvements, fixtures, accessions, or other Property constituting part of the
Equipment, shall become a part of the Equipment.
Section VI.4. Taxes, Assessments, and Utility Charges. (a) The Company
shall pay, or cause to be paid, as the same shall respectively become due: (i)
all taxes, in lieu of tax payments, regulatory fees, and governmental charges of
any kind whatsoever, including ad valorem taxes, that may at any time be
lawfully assessed or levied against or with respect to the Equipment and/or any
furnishings, equipment, or other Property installed or brought by the Company or
any other person, therein or thereon, excluding, however, any taxes levied upon
or with respect to the income or revenues of the Issuer from the Equipment; (ii)
all utility or other charges, including "service charges," incurred or imposed
for the operation, maintenance, use, occupancy, upkeep, and improvement of the
Equipment; and, (iii) all assessments and charges of any kind whatsoever
lawfully made by any governmental body for public improvements which are in
respect of the Equipment or any part thereof. It is acknowledged and agreed,
however, that the Issuer and the Company do not expect or intend that any ad
valorem taxes will be assessed against the Equipment during the Term.
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(b) The Company or any other person may, in good faith and at its own
expense, contest any such taxes, in lieu of tax payments, assessments, and other
charges, after giving notice of its intention to do so to the Issuer. In the
event of any such contest, the Company or such other person, as applicable, may
permit the taxes, assessments, or other charges so contested to remain unpaid
during the period of such contest and any appeal therefrom, unless the Issuer
shall notify the Company or such other person, as applicable, that by nonpayment
of any such items the Equipment, or any part thereof, may be imminently subject
to loss or forfeiture, in which event such taxes, assessments, or charges shall
be paid promptly or secured by posting a bond in form and substance satisfactory
to the Issuer. The Issuer shall, if requested by the Company or such other
person, as applicable, and provided that the Issuer shall be indemnified and
held harmless against and from all costs and expenses (including attorneys'
fees) which may be reasonably incurred by the Issuer in connection therewith,
cooperate fully with the Company or such other person, as applicable, in any
such contest.
Section VI.5. Insurance Required. (a) At all times throughout the Term,
the Company shall maintain insurance against such risks and for such amounts as
are customarily insured against by businesses of like size and type, paying, as
the same become due and payable, all premiums in respect thereto, including but
not necessarily limited to:
(i) fire insurance with Uniform Standard Extended Coverage
Endorsements or equivalent coverage obtainable through Federal or State
programs, and vandalism and malicious mischief insurance, as may be
approved for issuance in the State, at all times in an amount equal to
not less than 80% of the replacement cost of the Equipment;
(ii) comprehensive general liability insurance with minimum
limits of $500,000 for bodily injury, including death, and property
damage arising from any one occurrence, and products liability
insurance with minimum limits of $1,000,000 per person and $1,000,000
per occurrence; and
(iii) workers' compensation coverage and any other type of
insurance required by the laws of the State.
Any of the insurance required above may provide deductible
provisions in amounts not exceeding that in similar policies carried by
businesses of a size and character similar to the Company, and the Company shall
be a self-insurer to the extent of the amount of the deductible obtained.
(b) The Net Proceeds of the insurance carried pursuant to the
provisions of this Section shall be paid and applied as provided by Section 6.7
hereof.
Section VI.6. Insurers and Policies. Each insurance policy required by
Section 6.5 hereof shall be issued by a financially responsible insurer of
recognized standing, legally authorized to provide the respective insurance in
the State. Before the expiration of any such policy, the Company shall furnish
the Issuer and the Lender evidence satisfactory to the Issuer and the
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Lender, that such policy has been renewed or replaced, or is no longer required
by this Lease. Without limiting the generality of the foregoing, all insurance
policies carried pursuant to Section 6.5 hereof shall name the Company, the
Lender and the Issuer as parties insured thereunder as the respective interest
of each of such parties may appear, and each policy shall provide that losses
thereunder shall be adjusted by the Company, with the insurer on behalf of the
insured parties.
Section VI.7. Application of Net Proceeds of Insurance. The Net
Proceeds of the insurance carried pursuant to the provisions of Section 6.5
hereof shall be applied as follows:
(a) The Net Proceeds of the insurance carried pursuant to
Sections 6.5(a)(i) hereof shall be applied as provided in Section 7.1 hereof;
and
(b) The Net Proceeds of the insurance carried pursuant to
Sections 6.5(a)(ii) and 6.5(a)(iii) hereof shall be applied toward
extinguishment or satisfaction of the liability with respect to which such
insurance proceeds may be paid.
Section VI.8. Advances by Issuer. (a) In the event the Company shall
fail to pay, or fail to cause to be paid, any tax, assessment, or governmental
charge required to be paid by the provisions of Section 6.4 hereof, prior to the
date upon which such tax, assessment or charge would become delinquent, or
maintain, or cause to be maintained, the full insurance coverage required by the
provisions of Section 6.5 hereof, the Issuer, with not less than ten (10) days'
prior written notice to the Company and the Lender, may (but shall be under no
obligation to) pay such tax, assessment, or governmental charge or obtain or
maintain the required policy of insurance, and pay the premium or premiums on
the same.
(b) All amounts so advanced by any person pursuant to
subsections (a) or (b) of this Section shall be promptly reimbursed by the
Company to the person making the advance, together with interest thereon from
the date of such advance to the date of reimbursement at a rate per annum equal
to twelve percent (12%) or the maximum rate of interest allowable by applicable
law, whichever is less.
Section VI.9. Obligation of Company to Maintain Insurance Regardless of
Approval. No acceptance or approval of any insurance policy by the Issuer shall
relieve or release the Company from any liability, duty, or obligation under the
provisions of this Lease.
(END OF ARTICLE VI)
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ARTICLE VII
DAMAGE, DESTRUCTION, CONDEMNATION, ETC.
Section VII.1. Damage or Destruction. (a) In the event the Equipment
shall be damaged or destroyed (in whole or in part) at any time during the Term:
(i) the Company shall promptly give, or cause to be given,
written notice of such damage or destruction to the Issuer and the
Lender;
(ii) any Net Proceeds of insurance resulting from damage to
or destruction of the Equipment shall be applied by the Company, at
the option of the Lender, to the prepayment of all or any portion of
Rental Payments and/or to the repair or replacement of the Equipment;
(iii) so long as there shall be outstanding any indebtedness
evidenced by the Loan, the Company shall, if and to the extent
required by the Lender, promptly replace, repair, or restore the
Equipment to such condition, value, and utility to allow the Equipment
to operate as it was designed to operate prior to such damage or
destruction, with such changes, alterations, and modifications
(including the substitution and addition of other Property), as may be
then approved by the Lender.
In the event such Net Proceeds of insurance, or the portion thereof,
if any, are insufficient to pay in full the costs of such replacement, repair,
rebuilding or restoration, the Company shall be obligated to complete such
replacement, repair, or restoration, paying from its own monies that portion of
the costs thereof in excess of such Net Proceeds of insurance.
All such replacements, repairs, or restoration of the Facility made
pursuant to this Section, whether or not requiring the expenditure of monies of
the Company, shall automatically become a part of the Facility the same as if
specifically described herein.
(b) If the Loan, including the interest payable thereon, and
all sums payable pursuant to Section 5.2(b) hereof, have been fully paid, or
provision therefor has been made, all such Net Proceeds of insurance shall be
paid to the Company.
(c) The Company shall be entitled to any insurance proceeds or
portion thereof made for damage to or destruction of any Property which, at the
time of such damage or destruction, is not part of the Project.
Section VII.2. Condemnation. (a) In the event all or any part of the
title to, or the use of, the Equipment shall be taken by Condemnation during the
Term:
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(i) the Company shall promptly give, or cause to be given,
written notice of any Condemnation proceedings of, or affecting, the
Equipment, or any portion thereof, to the Lender;
(ii) any Net Proceeds of any Condemnation award shall be
applied by the Company, at the option of the Lender, to the prepayment
of any portion of Rental Payments, to the restoration of the
Equipment, and/or to the acquisition of Substitute Facilities, as such
term is hereinafter defined;
(iii) so long as there shall be outstanding any indebtedness
evidenced by the Loan, the Company shall, to the extent required by
the Lender, (i) promptly restore the Equipment to such condition,
value, and utility to allow the Equipment to operate as it was
designed to operate prior to such Condemnation, with such changes,
alterations, and modifications (which do not increase expense, unless
the Company pays such additional cost) as may be then required by the
Lender, or (ii) acquire, by construction or otherwise, equipment (the
"Substitute Facilities"), acceptable to the Lender, of such nature and
value to allow the Equipment to operate as it was designed to operate
prior to such condemnation, with such changes, alterations, and
modifications as may be then required by the Company.
In the event that such Net Proceeds are not sufficient to pay in full
the costs of such restoration of the Equipment or such acquisition of Substitute
Facilities, the Company shall be obligated to complete such restoration or
acquisition, or to acquire such Substitute Facilities, as applicable, and shall
pay from its own monies that portion of the costs thereof in excess of such Net
Proceeds of any condemnation award.
The restored portions of the Equipment, or the Substitute Facilities,
whether or not requiring the expenditure of the moneys of the Company shall
automatically become part of the Equipment.
(b) If the Loan, including the interest payable thereon, and
all sums payable pursuant to Section 5.2(b) hereof, have been fully paid, all
such Net Proceeds of any Condemnation award shall be paid as provided in this
Lease or if no provision with respect thereto is made, such Net Proceeds shall
be paid to the Company.
(c) The Company shall be entitled to the proceeds of any
Condemnation award or portion thereof made for damage to, or taking of, any
Property which, at the time of such damage or taking, is not part of the
Project.
(END OF ARTICLE VII)
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ARTICLE VIII
SPECIAL COVENANTS
Section VIII.1. No Warranty of Condition or Suitability; Use of
Project. The Company acknowledges its full familiarity with the Equipment, and
it represents that it is solely responsible for the plan under which the
Equipment will be operated and maintained. The Issuer makes no representations
or warranties, either express or implied, as to the condition, title, design,
operation, merchantability, or fitness of the Project, or that it is, or will
be, suitable for the purposes or needs of the Company.
Section VIII.2. Indemnity and Hold Harmless Provisions. The Company
hereby releases the Issuer, its members, agents, employees, and consultants
from; agrees that the Issuer, its members, agents, employees, and consultants
shall not be liable for; and agrees to reimburse and indemnify and hold the
Issuer, its members, agents, employees, and consultants harmless from and
against, any and all: (a) liability for loss or damage to Property or any injury
to or death of any and all persons that may be occasioned by any cause
whatsoever pertaining to the Project or arising by reason of or in connection
with the acquisition, occupation, or use of said Project; (b) liability arising
from, or expense incurred by reason of, the Issuer's leasing of the Project, and
all causes of action and attorneys fees and any other expense incurred in
defending any suits or actions which may arise as a result of any of the
foregoing excluding Issuer's obligations to the Company hereunder; and (c) all
costs and expenses of the Issuer or the officers, directors, or employees
thereof, incurred as a result of carrying out its obligations under this Lease,
the Loan Documents, or any other document herein contemplated; provided,
however, that the foregoing shall not apply to the gross negligence or wanton or
willful misconduct of the Issuer, its members, agents, consultants and
employees.
Section VIII.3. Reimbursement of Issuer. Notwithstanding that it is
the intention of the parties that the Issuer shall not incur any pecuniary
liability by reason of this Lease, or the Loan Documents, or by reason of any
actions, documents, statutes, ordinances, or regulations pertaining to the
foregoing, the Company shall promptly pay any and all reasonable costs and
expenses, as such costs and expenses accrue, which may be incurred by, or
judgments which may be rendered against, the Issuer, or any of its officers,
employees, or agents at any time or times during, or subsequent to the Term: (a)
in enforcing any of the terms, covenants, conditions, or provisions of this
Lease; (b) in defending any action, suit, or proceeding brought against the
Issuer, or any of its respective officers, employees, or agents as a result of
the violation of, or failure to comply with, any present or future Federal,
State, or municipal law, ordinance, regulation, or order, or as a result of any
alleged failure, neglect, misfeasance, or default on the part of the Company, or
any of the employees, servants, agents, or independent contractors of any of the
foregoing in connection with, arising from, or growing out of, this Lease or in
connection with the Loan, the Loan Documents, or the Project, or any operations
conducted in, or any use or occupancy of, said Project, or any action pertaining
to, or connected with, any of the foregoing.
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Section VIII.4. Right of Access to the Project. The Issuer and its
duly authorized agents shall have the right at all reasonable times to enter
upon, and to examine and inspect, the Project. In addition, the Issuer and its
duly authorized agents shall have such rights of access to the Project as may be
reasonably necessary for the proper maintenance and repair of the Project in the
event of any failure by the Company to perform its obligations hereunder.
Section VIII.5. Project as a Public Facility. The Company shall,
during the Term, admit, or cause to be admitted, persons, employ, or cause to be
employed, persons at, and render, or cause to be rendered, services at, the
Project without discrimination as to race, religion, creed, color, sex, age, or
national origin.
Section VIII.6. Compliance with Orders, Ordinances, Etc. (a) The
Company shall throughout the Term, without expense to the Issuer, promptly
comply, or promptly cause compliance, with all statutes, codes, laws, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions, contract provisions, and
requirements of all Federal, State, county, municipal, and other governments,
departments, commissions, boards, companies or associations insuring the
premises, courts, authorities, officials, and officers, foreseen or unforeseen,
ordinary or extraordinary, which now or at any time hereafter may be applicable
to the Project, or any part thereof, or to any of the streets, roads,
passageways, sidewalks, curbs, gutters adjoining the Project, or any part
thereof, or to any use, manner of use, or condition of the Project, or any part
thereof.
(b) Notwithstanding the provisions of subsection (a) of this
section, the Company or any other person may, in good faith and at his, her, or
its own expense, upon prior written notice to the Issuer, contest the validity
or the applicability of any requirement of the nature referred to in subsection
(a) of this section. In such event, the Company, or any such person, as
applicable, may fail to comply with the requirement or requirements so contested
during the period of such contest, and any appeal therefrom, unless the Issuer
or the Trustee shall notify the Company, or any such person, as applicable, that
by failure to comply with such requirement or requirements, the Project, or any
part thereof, may be imminently subject to loss or forfeiture, in which event
the Company shall promptly take such action with respect thereto as shall be
satisfactory to the Issuer. The Issuer shall, if requested by the Company, or
such other person, as applicable, and provided that the Issuer shall be
indemnified and held harmless against and from all costs and expenses (including
attorneys' fees) which may be reasonably incurred by the Issuer in connection
therewith, cooperate fully with the Company, or such other person, as
applicable, in any such contest.
Section VIII.7. Discharge of Liens and Encumbrances. (a) The Company
shall not permit or create, or suffer to be permitted or created, any Lien,
except for Permitted Encumbrances, upon the Equipment or any part thereof, by
reason of any labor, materials, or services rendered or supplied, or claimed to
be rendered or supplied, with respect to the Equipment, or any part thereof. The
Company shall immediately give notice to the Issuer of the filing or assertion
of any such Lien of which it has knowledge, and shall, within thirty (30) days
after receipt of actual or constructive notice of the filing or assertion of any
such Lien, satisfy the Lien or cause
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it to be discharged of record or otherwise prevent the enforcement thereby by
payment, deposit, filing the requisite bond, or taking such other action as
shall be reasonably satisfactory to the Issuer.
(b) Notwithstanding the provisions of subsection (a) of this
section, the Company, or any other person, may, in good faith and at his, her,
or its own expense, upon prior written notice to the Issuer, contest any such
Lien. In such event, the Company, or any such person, as applicable, may permit
the Lien or encumbrance so contested to remain undischarged and unsatisfied
during the period of such contest, and any appeal therefrom, unless the Issuer
shall notify the Company, or any such persons, as applicable, that by nonpayment
of such Lien or encumbrance the Project, or any part thereof, may be imminently
subject to loss or forfeiture, in which event, the Company shall promptly secure
payment of such unpaid Lien or encumbrance by filing, or causing to be filed,
the requisite bond, in form and substance satisfactory to the Issuer. The Issuer
shall, if requested by the Company, or such other person, as applicable, and
provided that the Issuer shall be indemnified and held harmless against and from
all costs and expenses (including attorneys' fees) which may be reasonably
incurred by the Issuer in connection therewith, cooperate fully with the
Company, or such other persons, as applicable, in any such contest.
Section VIII.8. Restriction Against Certain Religious Activities. The
Company hereby covenants that, for such period as may be required by law, no
part of the Project shall be used for sectarian instruction, or as a place of
religious worship, or in connection with any part of a program of a school or
department of divinity of any religious denomination.
If at any time the applicable law would permit the Project to be used
for a purpose prohibited by this Section, such prohibition shall, to that
extent, be of no further force or effect. This covenant shall survive any
termination of this Lease.
Section VIII.9. Further Assurances and Corrective Instruments. The
Issuer and the Company agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the Project
hereby leased or intended so to be or for carrying out the expressed intention
of this Lease.
(END OF ARTICLE VIII)
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ARTICLE IX
ASSIGNMENT; REMOVAL OF EQUIPMENT; ETC.
Section IX.1. Assignment and Subleasing. (a) This Lease may be
assigned and the Project subleased, as a whole or in part, by the Company
without the necessity of obtaining the consent of the Issuer, subject, however,
to each of the following conditions: (i) no assignment shall relieve the Company
from primary liability for any obligations under this Lease, and in the event of
any such assignment, the Company shall continue to remain primarily liable for
payment of the amounts specified in this Lease and for performance and
observance of the other agreements on its part provided to be performed and
observed by the Company to the same extent as though no assignment had been
made; (ii) the assignee or sublessee shall assume the obligations of the Company
hereunder to the extent of the interest assigned or subleased; (iii) the Company
shall, within thirty (30) days after the delivery thereof, furnish or cause to
be furnished to the Issuer a true and complete copy of each assignment,
assumption of obligation or sublease, as the case may be; and (iv) Lender shall
have consented to such assignment, assumption of obligation or sublease.
(b) The Company may contract for the performance by
others of operations or services on, or in connection with, the Project, or any
part thereof, for any lawful purpose; provided, however, that any such contract
shall not be inconsistent with the provisions of this Lease or the Loan
Documents and that the Company shall remain fully obligated and responsible
under this Lease, to the same extent as if such contract had not been executed.
Section IX.2. Consent to Assignment. The Issuer shall assign
its rights to receive certain monies under this Lease to the Lender as security
for the payment of the Loan. Such assignment shall in no way diminish or impair
the obligations, if any, of the Issuer under this Lease and shall be subject and
subordinate to this Lease. The Company hereby agrees and consents to such
assignment by the Issuer, and further agrees and consents to all terms,
provisions, and conditions of the Assignment of Equipment Lease.
Section IX.3. Restrictions on Mortgage or Sale of Project by
Issuer. The Issuer agrees that, except for any assignment, mortgage or pledge of
its interest in the rentals hereunder to Lender pursuant to the Assignment of
Equipment Lease, it will not mortgage, sell, assign, transfer or convey the
Project or any portion thereof during the Term, except as otherwise permitted
herein.
Section IX.4. Removal of Equipment. (a) In the event the
Company determines from time to time that any item constituting a part of the
Equipment has become inadequate, obsolete, worn out, unsuitable, undesirable, or
unnecessary, the Company may remove such item constituting a part of the
Equipment, and may sell, trade-in, exchange, or otherwise dispose of the same,
as a whole or in part, provided that:
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(i) Such removal will not materially impair the
overall efficiency of the operation of the Project, or
adversely affect the structural integrity of the Project; and,
(ii) The Company shall either:
(A) substitute, or cause to be substituted,
for such removed item (by direct payment of the costs
thereof), and install, or cause to be installed, in
the Project, other fixtures or related property
having equal or greater value and utility in the
operation of the Project (but not necessarily having
the same function), all of which substituted property
shall be free of all Liens, other than Permitted
Encumbrances, and shall become a part of the Project;
or,
(B) not make, or cause to be made, any such
substitution and installation, provided that: (i) in
the case of the sale of any such removed item (other
than to itself), or in the case of the scrap thereof,
the Company shall pay, or cause to be paid, to the
Lender, unless the Loan is paid, the proceeds from
such sale of the scrap thereof, as the case may be;
or, (ii) in the case of the trade-in of such removed
item for other property not to be installed in the
Project, the Company shall pay, or cause to be paid,
to the Lender, unless the Equipment Loan is paid, an
amount of money equal to the credit received by it in
such trade-in; or, (iii) in the case of the sale of
any such removed item of Equipment by the Company or
in the case of any other disposition thereof, the
Company shall pay to the Lender, unless the Equipment
Loan is paid, an amount of money equal to the fair
market value thereof at the time of sale or other
disposition.
Any monies paid to the Lender pursuant to the provisions of
this Section shall be as a prepayment of the Equipment Loan, as applicable, and
the Company shall receive a credit therefor in accordance with the provisions of
Section 5.3 hereof.
(b) Notwithstanding any provision of Section 9.4(a)
hereof, unless the Loan Documents require otherwise, the Company without being
required to make the substitution specified in Section 9.4(a)(ii)(A) hereof, or
the payment specified in Section 9.4(a)(ii)(B) hereof, may remove and sell or
otherwise dispose of any item or items of Equipment and without the necessity of
notifying the Lender, provided that the aggregate value of such Equipment so
removed does not exceed: (A) Five Hundred Thousand Dollars ($500,000) in any
Fiscal Year; and, (B) One Million Dollars ($1,000,000) in all Fiscal Years
during the Term. The value of any such Equipment so removed pursuant to this
subsection (b) shall not be included in the computations required by Section
9.4(c) hereof.
(c) The Issuer shall promptly execute any and all
instruments deemed necessary by the Company, in its sole discretion, to fully
effectuate the provisions of this Section.
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Section IX.5. Installation of the Company's Own Machinery. The
Company may, from time to time, in its sole discretion and at its own expense,
install machinery, equipment and other tangible and movable property in the
Building or on the Land. All such machinery, equipment and other tangible and
movable property shall remain the sole property of the Company in which the
Issuer shall have no interest.
Section IX.6. References to Loan Ineffective After Paid. Upon
payment in full of the Facility Loan or the Equipment Loan, all references in
this Lease to the Facility Loan or the Equipment Loan and to the Lender or
Facility Lender, as applicable, shall be ineffective and the Lender or Facility
Lender, as applicable, shall not thereafter have any rights hereunder.
(END OF ARTICLE IX)
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ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section X.1. Events of Default Defined. Each of the following
shall be an "Event of Default" under this Lease, and the terms "Event of
Default" or "Default" shall mean, whenever they are used in such Lease, any one
or more of the following events:
(a) The failure by the Company to pay, or cause to be
paid, within thirty (30) days of when due, the Basic Rental Payments, or any
part thereof, specified to be paid under Section 5.2 hereof;
(b) The filing by the Company of a voluntary petition
in bankruptcy or any petition or other pleading seeking any reorganization,
composition, readjustment, liquidation, or similar relief under any present or
future law or regulation, or the seeking of or consent to or acquiescence in the
appointment of any trustee, receiver, or liquidator of all or any substantial
part of its assets or of its interest in the Project, or the making of a general
assignment for the benefit of creditors, or the admission in writing of the
inability by the Company to pay its debts generally as the same shall become
due;
(c) The adjudication of the Company to be bankrupt or
insolvent, or the filing of a petition or other pleading against the Company
seeking an adjudication of bankruptcy, reorganization, composition,
readjustment, liquidation, or similar relief under any present or future law or
regulation, which shall remain undismissed or unstayed for an aggregate of sixty
(60) days (whether or not consecutive), or the entry of an order or decree by a
court of competent jurisdiction, without the consent or acquiescence of the
Company, appointing a trustee in bankruptcy or reorganization or a receiver or
liquidator of the Company, of all or any substantial part of its Property, or of
the Project, which order or decree shall continue unvacated or unstayed on
appeal or otherwise and in effect for a period of ninety (90) days (whether
consecutive or not);
(d) The occurrence of a "default" or an "event of
default" under any of the Loan Documents;
(e) Subject to Section 10.7, the failure by the
Company to observe and perform any covenant, condition, or agreement hereunder
on its part to be observed or performed [except obligations referred to in
paragraphs (a), (b) or (c) of this Section for which no such notice must be
given] for a period of thirty (30) days after written notice, specifying such
failure and requesting that it be remedied, is given to the Company by the
Issuer, unless the Issuer shall agree in writing to an extension of such time
prior to its expiration; provided, however, if the failure stated in the notice
cannot be corrected within the applicable period, the Issuer will not
unreasonably withhold its consent to an extension of such time if corrective
action is instituted by the Company within the applicable period and diligently
pursued until the default is corrected.
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Section X.2. Remedies on Default. (a) Whenever an Event of
Default shall have occurred and be continuing, the Issuer or the Lender may take
any one or more of the following remedial steps:
(1) Declare, by written notice to the Company, to be
immediately due and payable, whereupon the same shall become
due and payable: (i) all unpaid Rental Payments payable
pursuant to Section 5.2 hereof in an amount equal to the
amount required to pay, or cause to be paid, the Loan; and,
(ii) all other payments due or to become due under this Lease;
(2) Withhold any or all further performance under
this Lease (except that the Company may, never-the-less
exercise any option granted pursuant to Article XI hereof, in
which event, Issuer shall perform its obligations thereunder);
(3) Re-enter and take possession of the Project
without terminating this Lease, and sublease the Project for
the account of the Company, holding the Company liable for the
difference in the rent and other amounts payable by such
sublessee in such subleasing and the Rental Payments and other
amounts payable by the Company hereunder;
(4) Terminate the Term, exclude the Company from
possession of the Project and use its best efforts to lease
the Project to another for the account of the Company, holding
the Company liable for all Rental Payments and other payments
due up to the effective date of such leasing and for the
difference in the amounts payable by such new lessee and the
amounts payable by the Company under this Lease; and/or
(5) Take any other action or proceeding permitted by
the terms of this Lease.
(a) Whenever any Event of Default shall have occurred
and be continuing, the Issuer may take, in addition to the above and the
following, whatever action at law or in equity may appear necessary or desirable
to collect the Rental Payments then due and thereafter to become due, or to
enforce performance and observance of any obligation, agreement, warranty or
covenant of the Company under this Lease.
(b) Any sums paid to the Issuer (other than for
indemnity for costs or other expenses) by reason of any remedy specified in this
Section, shall be used to pay all or a portion of the Loan.
(c) No action taken pursuant to this Section shall
relieve the Company from its obligation to make all payments required under
Section 5.2 hereof.
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(d) Notwithstanding the foregoing provisions of this
Section, until final action pursuant to this Section shall have been taken which
would preclude such action, the Company may (i) pay all accrued unpaid Rental
Payments (exclusive of such Rental Payments accrued solely by virtue of
acceleration thereof as provided in Section 10.2(a)(1) hereof), in which event,
this Lease shall be fully reinstated as if an Event of Default had not occurred
and otherwise fully cure all Events of Default, and/or (ii) exercise any option
granted pursuant to Article XI hereof.
Section X.3. Remedies Cumulative. No remedy herein conferred
upon or reserved to the Issuer is intended to be exclusive of any other
available remedy, but each and every such remedy shall be cumulative and in
addition to every other remedy given under this Lease, or now or hereafter
existing at law or in equity. No delay or omission to exercise any right or
power accruing upon any Event of Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Issuer to exercise any remedy reserved to it in this Article, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required in this Lease.
Section X.4. Agreement to Pay Attorneys' Fees and Expenses. In
the event the Company shall default under any of the provisions of this Lease,
and the Issuer shall employ attorneys or incur other expenses for the collection
of amounts payable hereunder, or the enforcement of performance or observance of
any obligations or agreements on the part of the Company herein contained, the
Company shall, on demand therefor, pay to the Issuer the reasonable fees of such
attorneys and such other expenses so incurred.
Section X.5. Delay or Omission Not a Waiver. No delay or
omission of the Issuer to exercise any right or power accruing upon any breach
of any covenant or agreement contained herein, or upon the happening of any
other Default hereunder, shall impair any such right or power, or shall be
construed to be a waiver of any such right or power, or shall be construed to be
a waiver of any other Default hereunder, or any acquiescence therein; and every
such power, right, or remedy contained herein of the Issuer may be exercised
from time to time and as often as may be deemed expedient by the Issuer. Any
waiver, permit, consent, or approval of any form or character on the part of the
Issuer of any breach of, or default under, this Lease, or any waiver on the part
of the Issuer or the Lender of any provision or condition herein, must be in
writing and shall be effective only to the extent specifically set forth in such
writing.
Section X.6. Interpretation of any Conflicting Provisions. In
the event of any conflict between any of the provisions hereof, or between any
such provisions and the provisions of the Loan Documents, except to the extent
otherwise provided in such document, the provisions of the Loan Documents shall
prevail.
Section X.7. Force Majeure Provision. The provisions of
Section 10.1(d) are subject to the following limitations: if, by reason of force
majeure, the Company is unable in whole or in part to carry out the agreements
of the Company on its part herein contained, the
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Company shall not be deemed in default during the continuance of such inability.
The term "force majeure" as used herein shall mean, without limitation, the
following: acts of God; strikes; lockouts or other industrial disturbances; acts
of public enemies; orders of any kind of any governmental body, including the
government of the United States or of the State or any of their departments,
agencies, or officials, or any civil or military authority; insurrections;
riots; epidemics; landslides, lightning; earthquake; fire; hurricane; storms;
floods; washouts; droughts; arrests; restraint of government and people, civil
disturbances; explosions, breakage or accident to machinery, transmission pipes,
or canals; partial or entire failure of utilities; or any other cause or event
not reasonably within the control of the Company, in each case which has the
effect of making it impossible (as distinguished from impracticable) for the
Company to perform, it being agreed that the settlement of strikes, lockouts,
and other industrial disturbances shall be entirely within the discretion of the
Company, and the Company shall not be required to make settlement of strikes,
lockouts, and other industrial disturbances by acceding to the demands of the
opposing party or parties when such course is, in the judgment of the Company,
unfavorable to the Company.
(END OF ARTICLE X)
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ARTICLE XI
OPTIONS; PURCHASE OF EQUIPMENT; ETC.
Section XI.1. Options to Terminate. The Company shall have,
and is hereby granted, the following options to terminate this Lease:
(a) At the time of any prepayment of the Rental
Payments in whole pursuant to the provisions of Section 5.5 hereof, the Company
may terminate this Lease (i) by paying to the appropriate person the amounts
required by Section 11.5 hereof, and (ii) by Company giving the Issuer notice in
writing of such termination.
(b) At any time after full payment of the Loan, the
Company may terminate this Lease by giving the Issuer notice in writing of such
termination.
Section XI.2. Option to Purchase Equipment Prior to Payment of
the Loan. The Company shall have, and is hereby granted, the option to purchase
the Equipment prior to the full payment of the Loan at the time of any
prepayment of the Rental Payments in whole pursuant to the provisions of Section
5.5 hereof. The purchase price payable by the Company in the event of its
purchase pursuant to this Section shall be a sum equal to One Hundred Dollars
($100) plus the amount necessary to prepay the Rental Payments in whole.
Section XI.3. Option to Purchase Equipment After Payment of
the Loan. The Company shall have, and is hereby granted, the further option to
purchase the Equipment at any time following full payment of the Loan for a
purchase price of One Hundred Dollars ($100). To exercise the option granted in
this Section, the Company shall notify the Issuer of its intention so to
exercise such option not less than five (5) days nor more than ninety (90) days
prior to the proposed date of purchase and shall on the date of purchase pay
such purchase price to the Issuer.
Section XI.4. Conveyance on Exercise of Option to Purchase
Equipment. At the closing of any purchase pursuant to this Lease, the Issuer
shall upon receipt of the purchase price deliver to the Company the following:
documents (including, without limitation, a special warranty deed and ▇▇▇▇ of
sale) conveying to the Company good and marketable title to said Property as it
then exists, subject to the following: (i) those Liens (if any) to which title
to said Property was subject when conveyed to the Issuer; (ii) those Liens
created by the Company or to the creation or suffering of which the Company
consented; (iii) those Liens resulting from the failure of the Company to
perform or observe any of the agreements on its part contained in this Lease;
and (iv) Permitted Encumbrances other than the Loan Documents.
Section XI.5. Payments Upon, and Conditions For, Early
Termination. Termination by the Company of this Lease pursuant to Section 11.1
hereof or the purchase of the Project pursuant to Section 11.2 hereof shall not
be effective until the Company shall have made the following payments:
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(a) To the Lender an amount which will be sufficient
to pay the Equipment Loan in full;
(b) To the Lender, an amount sufficient to pay all
unpaid fees and expenses of the Lender under the Equipment Loan Documents or
otherwise;
(c) To the Issuer, an amount certified by the Issuer
sufficient to pay all unpaid fees and expenses (including attorneys' fees) of
the Issuer incurred under this Lease; and
(d) To the appropriate person, an amount sufficient
to pay all other fees, expenses, or charges, if any, due and payable or to
become due and payable under this Lease or the Equipment Loan Documents and not
otherwise paid or provided for.
Section XI.6. Continuation of Certain Provisions. Upon
termination of this Lease, the liabilities of the Company under such Lease shall
terminate, except that its liabilities and obligations under Sections 8.2 and
8.3 of this Lease, and as otherwise herein expressly provided, shall
nevertheless survive.
(END OF ARTICLE XI)
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ARTICLE XII
MISCELLANEOUS
Section XII.1. Certificates and Opinions. Any certificate or
opinion made or given by an officer or director of the Issuer may be based
(whether or not expressly so stated), insofar as it relates to legal matters,
upon a certificate or opinion of or representations by counsel, unless such
officer or director knows that the certificate or representations with respect
to the matter upon which his or her certificate or opinion may be based are
erroneous; and, any certificate or opinion made or given by counsel may be based
(insofar as it relates to factual matters, information with respect to which is
in the possession of the Issuer) upon the certificate or opinion of, or
representation by, an officer or director of the Issuer, unless such counsel
knows that the certificate or representations with respect to the matters upon
which his or her certificate or opinion may be based as aforesaid are erroneous.
Section XII.2. Limited Liability of the Issuer. No recourse
under or upon any obligation, covenant, agreement or certification contained in
the Loan Documents, in the Loan, or in this Lease, or in any other document
whatsoever, or under any judgment obtained against the Issuer, or by the
enforcement of any assessment or by any legal or equitable proceeding by virtue
of any constitution or statute or otherwise or under any circumstances, under or
independent of the Loan Documents, this Lease or any other document, shall be
had against any incorporator, member, director or officer, as such, past,
present or future, of the Issuer, either directly or through the Issuer or any
receiver thereof, or for the payment of any other sum or for the performance of
any obligation under the Loan Documents, this Lease, or any other document or
certification; provided, however, that the foregoing shall not apply to the
gross negligence or wanton or willful misconduct of the Issuer, its members,
agents, consultants and employees. Any and all personal liability of every
nature, whether at common law or in equity, or by statute or by constitution or
otherwise, of any such incorporator, member, director or officer, as such, to
respond by reason of any act or omission on his part or otherwise, for the
payment for or to the Issuer or any receiver thereof, of any sum that may remain
due and unpaid upon the Loan, is hereby expressly waived and released as a
condition of and consideration for the execution of the Loan Documents and this
Lease.
Section XII.3. Notices. All notices, certificates, and other
communications hereunder shall be in writing, and shall be sufficiently given
and shall be deemed given when delivered and, if delivered by mail, shall be
sent by registered mail or certified mail, return receipt requested, postage
prepaid, addressed as follows:
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To the Issuer:
The Industrial Development Board
of the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee
c/o Batson, Nolan, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Company:
StarTek USA, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
With a copy to:
J. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Boult, Cummings, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Lender:
StarTek USA, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Section XII.4. Binding Effect. This Lease shall inure to the
benefit of and shall be binding upon the Issuer, the Company, and the respective
heirs, executors, successors, administrators, and assigns of the foregoing.
Section XII.5. Severability. In the event any provision of
this Lease shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section XII.6. Limitation of Rights. Except as otherwise
expressly provided herein, nothing in this Lease, express or implied, shall be
construed to confer upon any person, other than the Issuer, the Company and the
Lender, any right, remedy or claim, legal or equitable, under or by reason of
this Lease or any provisions hereof.
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Section XII.7. Execution of Counterparts. This Lease may be
executed in several counterparts, each of which shall be an original, and all of
which shall constitute but one and the same instrument.
Section XII.8. Applicable Law. This Lease has been executed
and delivered in the State of Tennessee. It is intended that such Lease shall be
construed and governed exclusively by the applicable laws of the State of
Tennessee and the United States of America.
Section XII.9. Table of Contents and Section Headings Not
Controlling. The Table of Contents and the headings of the several Sections in
this Lease have been prepared for convenience of reference only and shall not
control, affect the meaning, or be taken as an interpretation of any provision
of this Lease.
Section XII.10. No Liability of the County of ▇▇▇▇▇▇▇▇▇▇,
Tennessee. The County of ▇▇▇▇▇▇▇▇▇▇, Tennessee, shall not in any event be liable
for the payment of the principal of, or interest on, the Loan, or for the
performance of any pledge, mortgage, obligation or agreement of any kind
whatsoever herein contained by or of the Issuer and neither the Loan Documents
nor any of the Issuer's agreements or obligations herein or otherwise shall be
construed to constitute an indebtedness of the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee
within the meaning of any constitutional or statutory provision whatsoever.
Section XII.11. Net Lease. This Lease shall be deemed and
construed to be a fully "net lease," and the Company shall pay absolutely net
during the Term the rent and all other payments required hereunder, free of any
deductions, and without abatement, deduction or setoff, other than those herein
expressly provided.
Section XII.12. Not Partners. Nothing contained herein or in
any other document shall be deemed to render Issuer, Lender, or the Company
partners or venturers for any purpose.
(END OF ARTICLE XII)
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IN WITNESS WHEREOF, the Issuer has caused this Lease to be
executed in its corporate name, its official seal to be hereunto affixed and
attested by its duly authorized officer, and the Company has caused this Lease
to be executed in its name and behalf by its authorized officer, all as of the
date first above written.
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE COUNTY OF ▇▇▇▇▇▇▇▇▇▇,
TENNESSEE
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------------
Chairman
ATTEST:
/s/ F. Gene Washer
------------------------------
Secretary
(SEAL)
STARTEK USA, INC.
By: /s/ E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
------------------------------------
Title: Executive Vice President and
Chief Operating Officer
---------------------------------
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STATE OF TENNESSEE
COUNTY OF ▇▇▇▇▇▇▇▇▇▇
Personally appeared before me, J. ▇▇▇▇▇▇▇ ▇▇▇▇, Notary Public, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III and F. Gene Washer, with whom I am personally acquainted (or proved
to me on the basis of satisfactory evidence), and who acknowledged that they
executed the foregoing instrument for the purposes therein contained and who
further acknowledged that they are Chairman and Secretary, respectively, of THE
INDUSTRIAL DEVELOPMENT BOARD OF THE COUNTY OF ▇▇▇▇▇▇▇▇▇▇, TENNESSEE, a public,
nonprofit corporation organized and existing under the laws of the State of
Tennessee, the within named bargainer and that they are authorized to execute
this instrument on behalf of said corporation.
WITNESS my hand, at office, this 8th day of July, 1998.
/s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Notary Public
My Commission Expires: June 15, 1999
-----------------
STATE OF TENNESSEE
COUNTY OF ▇▇▇▇▇▇▇▇▇▇
Personally appeared before me, J. ▇▇▇▇▇▇▇ ▇▇▇▇, Notary Public, E.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., with whom I am personally acquainted (or proved to me on
the basis of satisfactory evidence), and who acknowledged that he executed the
foregoing instrument for the purposes therein contained and who further
acknowledged that he is Executive Vice President and Chief Operating Officer of
STARTEK USA, INC., a Colorado corporation, and is authorized to execute this
instrument on behalf of said corporation.
WITNESS my hand, at office, this 8th day of July, 1998.
/s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Notary Public
My Commission Expires: June 15, 1999
-----------------
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EXHIBIT A
DESCRIPTION OF LAND
Being a tract of land located in the eleventh civil district
of ▇▇▇▇▇▇▇▇▇▇ County, Tennessee, said tract lying north of and adjacent to U.S.
41-A and west of and adjacent to State Route 76 (41-A to I-24 Connector Road)
and being more fully described as follows:
Beginning at an iron pin found, said pin being located N 73
degrees 29_ 43" W 256.78 feet from a concrete monument found at the south end of
the transition of the north right ▇▇ ▇▇▇ ▇▇ ▇.▇. ▇▇-▇ and the west right of way
of State Route 76; thence with the north right ▇▇ ▇▇▇ ▇▇ ▇.▇. ▇▇-▇ N 73 degrees
29_ 43" W 109.88 feet to an iron pin set; thence leaving said right of way and
on two new division lines, N 16 degrees 30_ 17" E 185.00 feet to an iron pin set
thence N 73 degrees 29_ 43" W 341.39 feet to an iron pin set in the east line of
the J.S. Management property as recorded in ORV. 600, Page 990; thence N 07
degrees 27_ 42" E 75.54 feet total, passing the northeast corner of the J.S.
Management property at 5.06 feet, to an iron pin found in the east line of the
Clarksville, Tennessee property; thence with said line N 07 degrees 27_ 42" E
305.05 feet to an iron pin found in said east line; thence continuing with said
East N 08 degrees 37_ 51" E 376.59 feet to a concrete monument found, said
monument being the southeast corner of the Clarksville-▇▇▇▇▇▇▇▇▇▇ County School
System property as recorded in ORV. 174, Page 481; thence with the school
systems east boundary the following three calls; N 05 degrees 58_ 56" E 124.65
feet to an iron pin set; thence N 05 degrees 55 _ 39" E 393.27 feet to an iron
pin set; thence N 07 degrees 57_ 32" E 141.74 feet to an iron pin found, said
pin being the southwest corner of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III Trustee property as
recorded in ORV. 341, Page 1972; thence with ▇▇▇▇▇▇▇ S 82 degrees 02_ 28" E
834.03 feet to an iron pin set; thence continuing with ▇▇▇▇▇▇▇ S 01 degrees 50_
00" W 223.74 feet to an iron pin set, said pin being the northwest corner of the
City of Clarksville property as recorded in ORV. 270, Page 813; thence with the
City of Clarksville S 01 degrees S 50_ 00" W 435.00 feet to an iron pin set;
thence continuing with the City of Clarksville S 45 degrees 23_ 55" E 75.25 feet
to an iron pin set in the west right of way of State Route 76; thence with said
west right of way, S 19 degrees 56_ 46" W 302.43 feet to an iron pin set; thence
continuing with said right of way, S 10 degrees 47_ 35" W 298.24 feet to an iron
pin set, said pin being the northeast corner of the ▇▇▇▇▇▇ ▇▇▇▇▇▇, ET AL
property as recorded in ORV. 626, Page 1103; thence leaving the west right of
way of State Route 76 and with the ▇▇▇▇▇▇ ▇▇▇▇▇▇ property the following four
calls: S 83 degrees 32_ 25" W 115.31 feet to an iron pin set; thence S 83
degrees 52_ 07" W 186.10 feet to an iron pin found; thence S 84 degrees 37_ 51"
W 161.90 feet to an iron pin set; thence S 08 degrees 13_ 14" W 261.54 feet to
the point of beginning.
Said tract contains 23.638 acres more or less.
The foregoing is a portion of the same property conveyed to
Acme Boot Company, Inc. by deed of record in Official Record Book Volume 139,
page 294, in the Register's Office for ▇▇▇▇▇▇▇▇▇▇ County, Tennessee.
The foregoing is a portion of the same property conveyed to
The Industrial Development Board of the County of ▇▇▇▇▇▇▇▇▇▇ by deed of record
in Official Record Book Volume 144, page 683, in the Register's Office for
▇▇▇▇▇▇▇▇▇▇ County, Tennessee.
The foregoing description was prepared by ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
RLS # 1837, King Engineers, LLC dated June 24, 1998.
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EXHIBIT B
REQUISITION FOR PAYMENT
THE INDUSTRIAL DEVELOPMENT BOARD
OF COUNTY OF ▇▇▇▇▇▇▇▇▇▇, TENNESSEE
STARTEK USA PROJECT
SERIES B
Certificate No.: Date:
----- -----------------------
Pay to: StarTek USA, Inc., Agent
Address:
-----------------------------------------------------------------------
Wire Transfer or Other Payment Instructions:
-----------------------------------
Amount: $
----------------------------
Purpose: Draw under Series B Note (the "Note")
The undersigned Lessee under that certain Equipment Lease
Agreement dated as of July 8, 1998 (the "Lease Agreement") by and between the
Industrial Development Board of the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee (the
"Issuer") and StarTek USA, Inc. (the "Lessee"), in its capacity as authorized
agent for the Issuer pursuant to Section 4.1 of the Lease Agreement hereby
authorizes and requests the above stated payment and disbursement as provided in
the Lease Agreement.
The undersigned hereby certifies with respect to this
requisition as follows:
(1) That obligations in the amount stated above have been
incurred by or on behalf of the Lessee for the
account of the Issuer and are more fully described on
Schedule 1 hereto, and that each item thereof
constitutes a "Cost of the Project" as defined in the
Lease and has not be previously paid or reimbursed
with proceeds of the Note;
(2) That there has not been filed with or served upon the
Issuer or the Lessee notice of any lien, right to
lien or attachment upon, or claim affecting the right
of any person to receive payment of the respective
amounts stated in such requisition which has not been
released or which will not be released simultaneously
with the payment of such obligation; and
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(3) That such requisition contains no item representing
payment on account of any retained percentage that
the Issuer or the Lessee is at the date of such
requisition entitled to retain.
STARTEK USA, INC.,
Agent
By:
-----------------------------------
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THE INDUSTRIAL DEVELOPMENT BOARD
OF THE COUNTY OF ▇▇▇▇▇▇▇▇▇▇, TENNESSEE
Industrial Development Revenue Note,
Series B
(StarTek USA Project)
$3,500,000.00 July 8, 1998
THE INDUSTRIAL DEVELOPMENT BOARD OF THE COUNTY OF ▇▇▇▇▇▇▇▇▇▇,
TENNESSEE (the "Issuer"), a public, nonprofit corporation organized and existing
under the laws of the State of Tennessee, for value received, acknowledges
itself indebted and hereby promises to pay, but solely from the source and
special fund provided therefor, as hereinafter set forth, in the manner
hereinafter provided, to the order of STARTEK USA, INC. (the "Lender"), or its
successors, the principal sum of Three Million Five Hundred Thousand and No/100
Dollars ($3,500,000.00), or so much thereof as has been advanced here against,
with interest thereon at a rate equal to the lesser of nine percent (9%) per
annum, or the maximum rate of interest payable under applicable law, payable in
quarterly installments of interest only, in arrears, on the first (1st) day of
each calendar quarter, commencing with September 1, 1998, with the entire unpaid
principal balance, and all accrued and unpaid interest thereon, being due and
payable on January 1, 2004, without further notice or demand.
The principal hereof and all installments of the interest
hereon shall bear interest from and after their respective due dates (whether by
acceleration or otherwise) at the lesser of twelve percent (12%) per annum or
the maximum rate of interest allowable by applicable law.
The principal hereof and the interest hereon are payable in
any coin or currency of the United States of America which on the date of
payment thereof is legal tender for the payment of public and private debts, and
the payment of such principal and interest shall be made by check, draft, or
warrant, of, and mailed or delivered by, the Issuer to the holder hereof at its
office in Denver, Colorado, or at such other place as may be noticed to the
Issuer by such holder. Upon payment in full of all principal hereof and interest
hereon, this Series B Note shall be surrendered to the Secretary of the Issuer
for cancellation.
46
This Series B Note is known as the "Industrial Development
Revenue Note, Series B (StarTek USA Project)", which note has been issued by the
Issuer in the principal amount of Three Million Five Hundred Thousand and No/100
Dollars ($3,500,000.00), under a resolution (the "Resolution") of the Issuer
dated July 8, 1998. The proceeds of the Series B Note will be used for the
purpose of enabling the Issuer to pay the costs of equipping a certain
manufacturing facility (the "Project"), located in the County of ▇▇▇▇▇▇▇▇▇▇,
Tennessee, to be leased by the Issuer to StarTek U.S.A., Inc., a Colorado
corporation (the "Company").
That certain Equipment Lease Agreement (the "Lease
Agreement"), dated as of July 8, 1998, whereby the Issuer leases certain
furniture, fixtures, and equipment (the "Equipment") in connection with the
operation of the Project to the Company, requires, among other things, that the
Company pay to the Issuer or its assigns lease payments sufficient to pay, when
and as due, the principal of and interest on the Series B Note. As additional
security for the observance and performance by the Issuer of its obligations
under the Series B Note, the Issuer has also executed and delivered (a) a
Security Agreement (the "Agreement"), dated as of the date of the Lease
Agreement, under the provisions of which the Issuer has granted a security
interest in the Equipment, subject only to Permitted Encumbrances (as defined in
the Lease Agreement); and (b) a Collateral Assignment of Equipment Lease (the
"Assignment of Equipment Lease"), dated as of the date of the Lease Agreement,
assigning to the Lender all of the Issuer's right, title and interest in and to
the Lease Agreement.
Reference is hereby made to the Equipment Lease Agreement, the
Assignment of Equipment Lease, the Agreement, and the Resolution, and to all
amendments thereof and supplements thereto, for the provisions specifying, among
other things, the nature and extent of the security for the Series B Note, the
rights, duties, and obligations of the Company, the Lender, the Issuer, and the
holder of the Series B Note, and the terms upon which the Series B Note is
issued and secured.
The principal of, interest on, and other sums due under the
Series B Note are subject to acceleration at the option of the holder upon any
Default or Event of Default under the Lease Agreement.
Issuer may prepay this Series B Note, in whole or in part, at
any time without premium or penalty.
Subject to the provisions of the next to the last paragraph
hereof, in the event that it is necessary to enforce the payment of the
principal of or the interest on this Series B Note, or to enforce the provisions
of the Lease Agreement, the Agreement or the Assignment of Equipment Lease, or
to protect or to enforce the security for this Series B Note, through an
attorney or by means of legal proceedings, the Issuer shall pay all costs
reasonably incurred by the holder hereof in connection therewith, including
attorneys' fees and court costs, and such expenses shall be added to, and become
a part of, the indebtedness evidenced by this Series B Note.
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47
Section 67-5-205(3), Tennessee Code Annotated, as amended,
provides that neither the principal nor the interest of any bonds or notes
issued by any incorporated town or city, or any agency thereof, shall be taxed
by the State of Tennessee or by any county or municipality of said State, and
that such shall be so stated on the face of said bonds or notes when issued.
This Series B Note has been negotiated, issued, sold and
delivered in the State of Tennessee and it is intended that such Series B Note
shall be governed by, and construed in accordance with, the laws of said State.
This Series B Note and any and all terms and provisions
hereof, including, but not limited to, those pertaining to the amount, date, and
manner of payment of the principal hereof and the interest hereon, may be
modified and amended at any time by mutual written agreement of, but only by
mutual written agreement of, the Issuer, the Company, and the holder hereof.
All acts, conditions, and things required to happen, exist,
and be performed precedent to the issuance of this Series B Note, and to the
execution of the Security Agreement, the Assignment of Equipment Lease and the
Lease Agreement, have happened, exist, and been performed as so required.
No recourse under or upon any obligation, covenant, or
agreement contained in the Agreement, the Assignment of Equipment Lease or the
Lease Agreement, or in this Series B Note, or under any judgment obtained
against the Issuer or by the enforcement of any assessment or by any legal or
equitable proceeding by virtue of any constitution or statute or otherwise or
under any circumstances, under or independent of the Agreement, the Assignment
of Equipment Lease and the Lease Agreement, shall be had against any
incorporator, member, director, or officer, as such, past, present, or future,
of the Issuer, either directly or through the Issuer or otherwise, for the
payment for or to the Issuer or any receiver thereof, or for or to the holder of
this Series B Note or otherwise, of any sum that may be due and unpaid by the
Issuer upon this Series B Note. Any and all personal liability of every nature,
whether at common law or in equity, or by statute or by constitution or
otherwise, of any such incorporator, member, director, or officer, as such, to
respond by reason of any act or omission on his or her part or otherwise for,
directly or indirectly, the payment for or to the Issuer or any receiver
thereof, or for or to the holder of this Series B Note, or otherwise, of any sum
that may remain due and unpaid upon this Series B Note, is hereby expressly
waived and released as a condition of and consideration for the execution of the
Lease Agreement, the Agreement, the Assignment of Equipment Lease and the
issuance of this Series B Note.
The Issuer for itself, its legal representatives and assigns,
hereby waives demand, presentment for payment, notice of dishonor, protest,
notice of protest, and diligence in collection and all other notices or demands
whatsoever with respect to this Series B Note or the enforcement hereof, and
consents that the time of said payments or any part thereof may be extended by
the holder hereof and assents to any substitution, exchange, or release of
collateral permitted by the holder hereof, all without in any way modifying,
altering, releasing, affecting or limiting its liability.
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48
THIS SERIES B NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED.
This Series B Note and the interest payable hereon are all
limited obligations of the Issuer, and shall not be deemed to constitute a debt
or liability of the Issuer or any political subdivision, except to the extent
that such are payable solely from such special source and funds provided
therefor in accordance with the Lease Agreement, the Security Agreement and the
Assignment of Equipment Lease. The principal of and interest on, this Series B
Note are payable solely from the funds pledged for their payment in accordance
with the Resolution, the Lease Agreement, the Agreement and the Assignment of
Equipment Lease. Neither the State of Tennessee nor the County of ▇▇▇▇▇▇▇▇▇▇,
Tennessee, shall in any event be liable for the payment of principal of or
interest on this Series B Note or for the performance of any pledge, mortgage,
obligation, stipulation, or agreement of any kind whatsoever undertaken by the
Issuer, and neither this Series B Note nor any of the agreements or obligations
of the Issuer shall be construed to constitute an indebtedness of the State of
Tennessee, or the County of ▇▇▇▇▇▇▇▇▇▇, Tennessee, within the meaning of any
constitutional or statutory provision whatsoever; nor shall any breach of any
such pledge, mortgage, obligation, stipulation, or agreement impose any
pecuniary liability upon the Issuer, or upon any officer or director thereof, or
constitute any charge upon the general credit of the Issuer.
IN WITNESS WHEREOF, THE INDUSTRIAL DEVELOPMENT BOARD OF THE
COUNTY OF ▇▇▇▇▇▇▇▇▇▇, TENNESSEE has caused this Series B Note to be signed by
the manual signature of the Chairman of the Issuer and the corporate seal of the
Issuer to be affixed hereto, and attested by, the manual signature of the
Secretary or Assistant Secretary of the Issuer, all as of the date above first
written.
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE COUNTY OF ▇▇▇▇▇▇▇▇▇▇,
TENNESSEE
ATTEST:
/s/ F. Gene Washer By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
-------------------------------------
Secretary Chairman
(SEAL)
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