1
Exhibit 10(p)(4)
================
KeyCorp Leasing Ltd.
EQUIPMENT SCHEDULE NO. 02
EQUIPMENT SCHEDULE NO. 02 dated as of September 18, 1997 (this "Schedule")
between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC. ("Lessor"),
and AUTOCAM CORPORATION, a Michigan corporation ("Lessee").
INTRODUCTION:
------------
Lessor and Lessee have heretofore entered into that certain Master
Equipment Lease Agreement dated as of July 10, 1995 (the "Master Lease"; the
Master Lease and this Schedule hereinafter collectively referred to as, this
"Lease"). 'Unless otherwise defined herein, capitalized terms used herein shall
have the meanings specified in the Master Lease. The Master Lease provides for
the execution and delivery of a Schedule substantially in the form hereof for
the purpose of confirming the acceptance and lease of the Equipment under this
Lease as and when delivered by Lessor to Lessee in accordance with the terms
thereof and hereof.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. EQUIPMENT. Pursuant to the terms and conditions of this Lease,
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
equipment listed on Exhibit attached hereto (the "Equipment"). The aggregate
Total Cost of such Equipment is $553,940.00.
2. TERM. The Initial Term of this Lease with respect to the Equipment
described on this Schedule shall commence on the date on which such Equipment is
delivered to Lessee, and, unless earlier terminated as provided herein, shall
expire on One Hundred Two (102) months after the Rent Commencement Date (the
"Initial Term Expiration Date").
3. RENT PAYMENT DATES; RENT. Lessee hereby agrees to pay Rent for the
Equipment throughout the Initial Term in One Hundred and Two (102) consecutive
monthly installments payable in advance on the Rent Commencement Date and on the
same day each month thereafter (each, a "Rent Payment Date"). Each such
installment of Rent shall be in an amount equal to $6,543.07.
4. EQUIPMENT LOCATION; BILLING ADDRESS. The Equipment described on
this Schedule shall be located at, and except as otherwise provided in this
Lease, shall not be removed from, the following address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The billing address
of Lessee is as follows: AUTOCAM CORPORATION, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
E-66
2
5. TAX INDEMNIFICATION. (a) Lessee acknowledges that Lessor has
executed this Lease, and that the Rent payable by Lessee under this Lease has
been computed, upon the assumptions that Lessor will (i) be entitled to
depreciation or cost recovery deductions ("MACRS Deductions") for Federal income
tax purposes under the Modified Accelerated Cost Recovery System provided for in
Section 168 of the Internal Revenue Code of 1986, as amended (the "Code"), and
depreciation or cost recovery deductions ("State Depreciation Deductions") for
state income tax purposes for the State of New York ("New York"), in each case
on the basis that (1) each Item of Equipment constitutes '7-year property"
within the meaning of Section 168(e) of the Code, (2) the initial tax basis for
each Item of Equipment will be equal to the Total Cost, (3) deductions for each
Item of Equipment will be computed by using the method specified in Section
168(b)(1) of the Code over the 7-year recovery period described in Section
168(c) of the Code, and (4) the applicable convention for each Item of Equipment
under Section 168(d) of the Code is the half-year convention; (ii) be entitled
to deductions for Federal income tax purposes (available in the manner and as
provided by Section 163 of the Code) for interest payable with respect to any
indebtedness incurred by Lessor in connection with any financing by Lessor of
any portion of the Total Cost of each Item of Equipment ("Interest Deductions");
and (iii) be subject to tax for each year at a composite Federal and New York
corporate income tax rate equal to the then highest marginal rate for
corporations provided for under the Code and the laws of New York (the "Highest
Marginal Tax Rate"). The MACRS Deductions, State Depreciation Deductions and
Interest Deductions are hereinafter collectively referred to as the "Tax
Benefits".
(b) Lessee represents and warrants to Lessor that (i) each Item
of Equipment constitutes 7-year property" within the meaning of Section 168(e)
of the Code, (ii) Lessee shall not attempt to claim such Tax Benefits, (iii) at
and after the time of delivery of the Equipment to Lessee pursuant to this
Lease, the Equipment shall be owned by Lessor for Federal income tax purposes
and Lessee shall not claim any ownership or title in and to the Equipment, and
(iv) Lessee has not, and will not, at any time after such delivery throughout
the Term of this Lease, take any action or omit to take any action (whether or
not the same is permitted or required hereunder) which will result in the loss
by Lessor of all or any part of such Tax Benefits.
(c) If, as a result of any act, omission or misrepresentation of
Lessee, (x) the Tax Benefits are lost, disallowed, deferred, eliminated,
reduced, recaptured, compromised or otherwise unavailable to Lessor, (y) for
Federal, foreign, state or local income tax purposes, any item of income, loss
or deduction with respect to any Item of Equipment is treated as derived from,
or allocable to, sources outside the United States, or (z) there shall be
included in the gross income of Lessor for Federal, state or local income tax
purposes any amount on account of any addition, modification, substitution or
improvement to or in respect of any Item of Equipment made or paid for by Lessee
(any of the foregoing being hereinafter a "Tax Loss",), then, within thirty (30)
days of Lessee's receipt of written notice from Lessor that such a Tax Loss has
occurred, Lessee shall pay to Lessor an amount which, after deduction therefrom
of all taxes to be paid in respect of the receipt thereof, will enable Lessor to
receive the same Net Economic Return (as hereinafter defined) that Lessor would
have realized on this Lease had such Tax Loss (together with any interest,
penalties or additions to tax) not occurred. Any event which, by the terms of
this Lease, requires payment by Lessee to Lessor of the Stipulated Loss Value of
the Equipment shall not constitute the act of Lessee for purpose of the
foregoing sentence.
(d) As used in this Section, the term "Net Economic Return" shall
mean Lessor's net after-tax yield, aggregate after-tax cash flow and return on
assets, based on (i) the assumptions used by Lessor in originally calculating
Rent and Stipulated Loss Value percentages, including the assumptions set forth
above (as such assumptions may have been revised pursuant to the last sentence
of this subsection) and (ii) the Highest Marginal Tax Rate actually in effect
during each year from the date of such original calculations to the date of
such Tax Loss, both dates inclusive. In the event Lessor shall suffer a Tax
Loss with respect to which Lessee is required to pay an indemnity hereunder,
and the full amount of such indemnity has been paid or provided for hereunder,
the aforesaid assumptions, without further act of the parties hereto, shall
thereupon be and be deemed to be amended, if and to the extent appropriate, to
reflect such Tax Loss.
(e) For purposes of this Section, the term "Lessor' shall include
the entity or entities, if any, with which Lessor consolidates any tax return.
Lessee acknowledges that it has neither sought nor received tax advice from
Lessor as to the availability to Lessee of any tax benefits with respect to the
Equipment. All of Lessor's rights and privileges arising from the indemnities
contained in this Lease will survive the expiration or other termination or
cancellation of this Lease. Such indemnities are expressly made for the benefit
of, and are enforceable by, Lessor and its successors and assigns.
E-67
3
6. TRUE LEASE TRANSACTION. (a) It is the express intent of the
parties that this Lease constitutes a true lease and not a sale of the
Equipment. Title to the Equipment shall at all times remain in Lessor, and
Lessee shall acquire no ownership, title, property, right, equity, or interest
in the Equipment other than its leasehold interest solely as Lessee subject to
all the terms and conditions hereof. To the extent that Article 2A ("Article 2X)
of the Uniform Commercial Code ("UCC") applies to the characterization of this
Lease, the parties hereby agree that this Lease is a "Finance Lease" as defined
therein. Lessee acknowledges: (i) that Lessee has selected the "Supplier" (as
defined in the UCC) and has directed Lessor to purchase the Equipment from the
Supplier in connection with this Lease, and (ii) that Lessee has been informed
in writing in this Lease, before Lessee's execution of this Lease, that Lessee
is entitled under Article 2A to the promises and warranties, including those of
any third party, provided to Lessor by the Supplier in connection with or as
part of the Purchase Agreement, and that Lessee may communicate with the
Supplier and receive an accurate and complete statement of those promises and
warranties, including any disclaimers and limitations of them or of remedies.
The filing of UCC financing statements pursuant to Section 34 of the Master
Lease is precautionary and shall not be deemed to have any effect on the
characterization of this Lease.
(b) Notwithstanding the express intent of Lessor and Lessee that
this agreement constitute a true lease and not a sale of the Equipment, should a
court of competent jurisdiction determine that this agreement is not a true
lease, but rather one intended as security, then solely in that event and for
the expressly limited purposes thereof, Lessee shall be deemed to have hereby
granted Lessor a security interest in the Equipment and all accessions,
substitutions and replacements thereto and therefor, and proceeds (cash and
non-cash), including, without limitation, insurance proceeds thereof (but
without power of sale), to secure the prompt payment and performance as and when
due of all obligations and indebtedness of Lessee, now existing or hereafter
created, to Lessee pursuant to this Lease or otherwise. In furtherance of the
foregoing, Lessee shall execute and deliver to Lessor, to be recorded at
Lessee's expense, Uniform Commercial Code financing statements, statements of
amendment and statements of continuation as reasonably may be required by Lessor
to perfect and maintain perfected such security interest.
(c) In the event that the Supplier erroneously invoices Lessee
for the Equipment, Lessee agrees to forward said invoice to Lessor immediately.
Lessee acknowledges that the Equipment is, and shall at all times remain, the
property of Lessor, and that Lessee has no right, title or interest therein or,
thereto except as expressly set forth in the Lease.
7. LESSEE'S PURCHASE AND RENEWAL OPTIONS. Lessee shall have the
purchase and renewal options set forth on the End of Lease Options Addendum
attached hereto and made a part hereof.
8. MODIFICATIONS TO MASTER LEASE. With respect to the Equipment
described on this Schedule, the Master Lease shall be modified as follows:
(a) The following shall be inserted as the penultimate sentence
of Section 11 of the Master Lease ("Use; Alterations"):
Title to all such alterations, additions, modifications or
improvements shall immediately, and without further act, vest in Lessor and
thereupon shall be deemed to constitute Items of Equipment and be fully subject
to this Lease as if originally leased hereunder.
(b) The following shall be inserted as the penultimate sentence
of Section 12 of the Master Lease ("Repairs and Maintenance"):
Title to such replacement part shall immediately (and without
further act) vest in Lessor upon installation, attachment or incorporation of
the same in, on or into such Item of Equipment and thereupon shall be deemed to
constitute an Item of Equipment and be fully subject to this Lease as if
originally leased hereunder.
(c) As used in Section 22(a) of the Master Lease ("Events of
Default"), the term "Event of Default" shall also mean any of the following
events: (1) a change in control occurs in Lessee or any Guarantor, or (2) the
death or dissolution of Lessee or any Guarantor.
E-68
4
(d) Section 22(b) of the Master Lease ("Events of Default") is
hereby amended as follows: (1) with respect to Section 22(b)(4), the word
"terminate" is hereby deleted and the words "cancel or terminate" are hereby
substituted in its place; (2) with respect to Section 22(b)(6), the word
"termination" is hereby deleted and the words .,cancellation or termination" are
hereby substituted in its place; and (3) with respect to Section 22(b)(7), the
word "terminated" is hereby deleted and the words "canceled or terminated" are
hereby substituted in its place.
9. STIPULATED LOSS VALUE. The Stipulated Loss Values applicable to
the Equipment and this Lease are as set forth on a supplement (the "Stipulated
Loss Value Supplement') prepared by Lessor.
10. GOVERNING LAW. This Schedule is being delivered in the State of
New York and shall in all respects be governed by, and construed in accordance
with, the laws of the State of New York, including all matters of construction,
validity and performance.
11. COUNTERPARTS. This Schedule may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
12. PERSONAL PROPERTY TAX. To insure Lessee's compliance with the
provisions of the Lease with respect to the payment of personal property taxes
on the Equipment described on this Schedule, Lessee hereby covenants and agrees
that, unless otherwise directed in writing by Lessor or required by applicable
law, Lessee will not list itself as owner of any Item of Equipment for property
tax purposes. Upon receipt by Lessee of any property tax ▇▇▇▇ pertaining to such
Item of Equipment from the appropriate taxing authority, Lessee will promptly
forward such property tax ▇▇▇▇ to Lessor. Upon receipt by Lessor of any such
property tax ▇▇▇▇, Lessor will pay such tax and will invoice Lessee for the
expense. Upon receipt of such invoice, Lessee will promptly reimburse Lessor for
such expense.
13. ADDITIONAL ADDENDA. In addition to the End of Lease Options
Addendum, please see the following addenda to this Schedule, attached hereto and
made a part hereof, for additional terms and conditions governing the leasing of
the Equipment described on this Schedule: Early Buyout Addendum.
14. MORE THAN ONE LESSEE. If more than one person or entity executes
this Schedule, and all addenda or other documents executed in connection
herewith, as "Lessee," the obligations of "Lessee" contained herein and therein
shall be deemed joint and several and all references to "Lessee" shall apply
both individually and jointly.
15. RELATIONSHIP TO MASTER LEASE; FURTHER ASSURANCES. This Schedule
shall be construed in connection with and as part of the Lease, and all terms
and conditions contained in the Master Lease are hereby incorporated herein by
reference with the same force and effect as if such terms and conditions were
fully stated herein. By execution of this Schedule, Lessee and Lessor reaffirm
all terms and conditions of the Master Lease except as they may be modified
hereby. To the extent that any of the terms and conditions of this Schedule are
contrary to or inconsistent with any terms and conditions of the Master Lease,
the terms and conditions of this Schedule shall govern. LESSEE HEREBY CERTIFIES
TO LESSOR THAT THE REPRESENTATIONS AND WARRANTIES MADE BY LESSEE IN THE MASTER
LEASE (INCLUDING, WITHOUT LIMITATION, SECTION 31 THEREOF) ARE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF THE DATE OF THIS SCHEDULE WITH THE SAME EFFECT AS
THOUGH MADE ON AND AS OF SUCH DATE. Lessee shall take such additional actions
and execute and deliver such additional documents as Lessor shall deem necessary
from time to time to effectuate the terms of the Lease.
E-69
5
IN WITNESS WHEREOF, Lessor and Lessee have caused this Schedule to be
duly executed and delivered on the day and year first above written.
Lessor: Lessee:
KEYCORP LEASING, AUTOCAM CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇ ▇▇▇▇ Title: Chief Financial Officer
Title: Vice President
COUNTERPART NO. 1 OF 1 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL
CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF
ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
E-70
6
Exhibit A
---------
(EQUIPMENT DESCRIPTION)
Lease: Equipment Schedule No. 02 dated as of September 18, 1997 to
Master Equipment Lease Agreement Dated as of July 10, 1995
Lessor: KEYCORP LEASING,
A DIVISION OF KEY CORPORATE CAPITAL INC.
Lessee: AUTOCAM CORPORATION
Vendor HYDROMAT INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Quantity: Description:
1 ROTARY TRANSFER MACHINE
2 TRAINING VIDEOS
E-71
7
KeyCorp Leasing Ltd.
End of Lease Options Addendum
To Equipment Schedule Number 02
To Master Equipment Lease Agreement Dated As Of July 10, 1995
Between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC.,
As Lessor,
And AUTOCAM CORPORATION, As Lessee.
(First Amendment Option)
THIS END OF LEASE OPTIONS ADDENDUM is annexed to, and made a part of,
the above-referenced Equipment Schedule and Master Equipment Lease Agreement, as
it relates to such Equipment Schedule (collectively, the "Lease"). Unless
otherwise specified herein, all capitalized terms shall have the meanings
ascribed to them in the Lease. Lessor and Lessee hereby agree as follows:
1. LESSEE'S PURCHASE AND RENEWAL, OPTIONS. (a) With respect to the
Equipment described on this Schedule, Section 32 of the Master Lease ("Renewal
and Purchase Options") is hereby deleted in its entirety.
(b) So long as no Default or Event of Default shall have occurred and be
continuing and Lessee shall have given Lessor at least ninety (90) days prior
written notice to Lessor, Lessee shall have the option (the "Purchase Option")
to purchase all, but not less than all, Items of Equipment on the Initial Term
Expiration Date at a price (the "Purchase Option Price") equal to the greater of
(1) the then Fair Market Sale Value thereof, or (2) fifteen percent (15%) of the
Total Cost of the Equipment, in each case plus any applicable sales taxes.
Payment of the Purchase Option Price, applicable sales taxes, together with all
other amounts due and owing by Lessee under the Lease (including, without
limitation, Rent) on or before the Initial Term Expiration Date, shall be made
on the Initial Term Expiration Date in immediately available funds against
delivery of a ▇▇▇▇ of sale transferring to Lessee all right, title and interest
of Lessor in and to the Equipment ON AN "AS IS" 'WHERE IS" BASIS, WITHOUT ANY
WARRANTIES, EXPRESS OR IMPLIED. AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT
LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS
FOR ANY PARTICULAR PURPOSE, LESSOR MAY SPECIFICALLY DISCLAIM ANY SUCH
REPRESENTATIONS AND WARRANTIES. Lessor and Lessee shall mutually agree upon the
Fair Market Sale Value with respect to the Purchase Option; provided, however
,that, if Lessor and Lessee are unable to agree upon the Fair Market Sale Value
within fifteen (15) days after Lessor's receipt of the Option Notice, the Fair
Market Sale Value shall be determined in accordance with the Appraisal
Procedure.
(c) If the Purchase Option is not exercised or consummated for any
reason, then (1) the Term of the Lease shall be automatically extended for an
additional, non-cancelable period of fifteen (15) months (the "Extended Lease
Term"), and (2) Lessee hereby agrees to pay Rent For the Equipment throughout
the Extended Lease Term in fifteen (15) consecutive monthly installments payable
in advance commencing on the Initial Term Expiration Date and on the same day
each month thereafter. Each such installment of Rent during the Extended Lease
Term shall be in an amount equal to $5,891.87.
E-72
8
(d) So long as no Default or Event of Default shall have occurred and is
continuing upon not less than ninety (90) days prior written notice (the "Option
Notice") to Lessor, Lessee shall have the option at the expiration of the
Extended Lease Term (the "Extended Term Expiration Date") to (1) purchase all,
but not less than all, Items of Equipment for a purchase price equal to the Fair
Market Sale Value thereof, or (2) return the Equipment in accordance with the
terms and conditions of this Lease. If Lessee fails to give Lessor the Option
Notice at least ninety (90) days before the Extended Term Expiration Date,
Lessee shall be deemed to have chosen option (1) above. Payment of the Fair
Market Sale Value, applicable sales taxes, together with all other amounts due
and owing by Lessee under the Lease (including, without limitation, Rent) on or
before the Extended Term Expiration Date, shall be made on the Extended Term
Expiration Date in immediately available funds against delivery of a ▇▇▇▇ of
sale transferring to Lessee all right, title and interest of Lessor in and to
the Equipment ON AN "AS IS" "WHERE IS" BASIS WITHOUT ANY WARRANTIES, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION. THE
CONDITION OF THE EQUIPMENT. ITS MERCHANTABILITY OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE. LESSOR MAY SPECIFICALLY DISCLAIM ANY SUCH REPRESENTATIONS
AND WARRANTIES.
2. MODIFICATIONS TO MASTER LEASE. With respect to the Equipment
described on this Schedule, Section 4(ae) of the Master Lease ("Definitions")
is hereby deleted in its entirety and the following is substituted in its
place:
(ae) "Term" shall mean the Initial Term as defined in Section 8
hereof, any Renewal Term, as defined in Section 8 hereof, any
Renewal Term, as defined in Section 8 hereof, and any Extended
Lease Term, as defined in an Equipment Schedule.
Except as modified hereby, all of the terms, covenants and conditions of
the Lease shall remain in full force and effect and are in all respects hereby
ratified and affirmed.
IN WITNESS WHEREOF, Lessor and Lessee have executed this End of Lease
Options Addendum as of September 18, 1997.
Lessor:
KEYCORP LEASING,
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: \s\ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Lessee:
AUTOCAM CORPORATION
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
E-73
9
KeyCorp Leasing Ltd.
Early Buyout Addendum
Equipment Schedule No.02
Master Equipment Lease Agreement dated as of July 10, 1995
This Early Buyout Addendum is annexed to, and made a part of, the
above-referenced Equipment Schedule and Master Equipment Lease Agreement, as it
relates to such Equipment Schedule (collectively, the "Lease"). Unless otherwise
specified herein, all capitalized terms shall have the meanings ascribed to them
in the Lease. Lessor and Lessee hereby agree as follows:
So long as no Default or Event of Default shall have occurred and be
continuing, Lessee shall have the option to purchase all, but not less
than all, Items of Equipment on the date which is ninety (90) months
after the Rent Commencement Date (the "EB0 Date") at a price (the "EBO
Price") equal to twenty eight and forty five hundredths percent (28.45%)
of the Total Cost of the Equipment, plus any applicable sales taxes. For
Lessee to exercise its option hereunder, Lessee shall notify Lessor in
writing of its desire to effect such option at least ninety (90) days
(but not more than one hundred eighty (180) days) prior to the EBO Date.
Such notice shall be irrevocable. The EBO Price represents the parties
present best estimate of the fair market value of the Equipment on the
EBO Date determined by using commercially reasonable methods which are
standard in the industry. Payment of the EBO Price, applicable sales
taxes, together with all other amounts due and owing by Lessee under the
Lease (including, without limitation, Rent) on or before the EBO Date,
shall be made on the EBO Date in immediately available funds. Upon
Lessee's written request, Lessor shall deliver to Lessee a ▇▇▇▇ of sale
transferring to Lessee all right, title and interest of Lessor in and to
the Equipment ON AN "AS IS" 'WHERE IS" BASIS, WITHOUT ANY WARRANTIES.
EXPRESS OR IMPLIED. AS TO ANY MATTER WHATSOEVER. If Lessee shall fail to
pay all amounts required to be paid under the Lease on the EBO Date, the
Lease shall continue in full force and effect and Lessee agrees to
reimburse Lessor for all reasonable costs, expenses and liabilities
incurred in connection therewith.
Except as modified hereby, all of the terms, covenants and conditions of
the Lease shall remain in full force and effect and are in all respects hereby
ratified and affirmed.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Early Buyout
Addendum as of September 18,1997.
Lessor: Lessee:
KEYCORP LEASING, AUTOCAM CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇ ▇▇▇▇ Title: Chief Financial Officer
Title: Vice President
E-74
10
Equipment Schedule No. 03
-------------------------
EQUIPMENT SCHEDULE NO. 03 dated as of December 5, 1997 (this
"Schedule") between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC.
("Lessor"), and AUTOCAM CORPORATION, a Michigan corporation ("Lessee").
INTRODUCTION:
-------------
Lesson and Lessee have heretofore entered that certain Master
Equipment Lease Agreement dated as of July 10, 1995 (the "Master Lease"; the
Master Lease mid this Schedule hereinafter collectively referred to as, this
"Lease"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings specified in the Master Lease. The Master Lease provides for
the execution and delivery of a Schedule substantially in the form hereof for
the purpose of confirming the acceptance and lease of the Equipment under this
Lease as and when delivered by Lessor to Lessee in accordance with the terms
thereof and hereof.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. EQUIPMENT. Pursuant to the terms and conditions of this Lease,
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
equipment listed on Exhibit A attached hereto (the "Equipment"). The aggregate
Total Cost of such Equipment is $569,220.00.
2. TERM. The Initial Term of this Lease with respect to the Equipment
described on this Schedule shall commence on the date on which such Equipment is
delivered to Lessee, and, unless earlier terminated as provided herein, shall
expire on a date which is one hundred and two (102) months after the Rent
Commencement Date (the "Initial Term Expiration. Date").
3. RENT PAYMENT DATES; RENT. Lessee hereby agrees to pay Rent for the
Equipment throughout the Initial Term in one hundred and two (102) consecutive
monthly installments payable in arrears on the date which is one (1) month after
the Rent Commencement Date and on the same day of each month thereafter (each, a
"Rent Payment Date"). Each such installment of Rent shall be in an amount equal
to $6,630.30.
4. EQUIPMENT LOCATION; BILLING ADDRESS. The Equipment described on
this Schedule shall be located at, and except as otherwise provided in this
Lease, shall not be removed from, the following address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The billing address of Lessee is as follows: AUTOCAM
CORPORATION, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
▇-▇▇
▇▇
▇. TAX INDEMNIFICATION. (a) Lessee acknowledges that Lessor has
executed this Lease, and that the Rent payable by Lessee under this Lease has
been computed, upon the assumptions that Lessor win (i) be entitled to
depreciation or cost recovery deductions ("MACRS Deductions") for Federal income
tax purposes under the Modified Accelerated Cost Recovery System provided for in
Section 168 of the Internal Revenue Code of 1986, as amended (the "Code"), and
depreciation or cost recovery deductions ("State Depreciation Deductions") for
state income tax purposes for the State of New York ("New York"), in each case
on the basis that (1) each Item of Equipment constitutes seven-year property"
within the meaning of Section 168(e) of the Code, (2) the initial tax basis for
each Item of Equipment will be equal to the Total Cost, (3) deductions for each
Item of Equipment will be computed by using the method specified in Section
168(b)(1) of the Code over the seven-year recovery period described in Section
168(c) of the Code, and (4) the applicable convention for each Item of Equipment
under Section 168(d) of the Code is the half-year convention, (ii) be entitled
to deductions for Federal income tax purposes (available in the manner and as
provided by Section 163 of the Code) for interest payable with respect to any
indebtedness incurred by Lessor in connection with any financing by Lessor of
any portion of the Total Cost of each item of Equipment ("Interest Deductions");
and (iii) be subject to tax for each year at a composite Federal and New York
corporate income tax rate equal to the then highest marginal rate for
corporations provided for under the Code and the laws of New York (the "Highest
Marginal Tax Rate"). The MACRS Deductions, State Depreciation Deductions and
Interest Deductions are hereinafter collectively referred to as the "Tax
Benefits".
(b) Lessee represents and warrants to Lessor that (i) each Item
of Equipment constitutes seven-year property" within the meaning of Section
168(e) of the Code, (ii) Lessee shall not attempt to claim such Tax Benefits,
(iii) at and after the time of delivery of the Equipment to Lessee pursuant to
this Lease, the Equipment shall be owned by Lessor for Federal income tax
purposes and Lessee shall not claim any ownership or title in and to the
Equipment, and (iv) Lessee has not, and will not, at any time after such
delivery throughout the Term of this Lease, take any action or omit to take any
action (whether or not the same is permitted or required hereunder) which will
result in the loss by Lessor of all or any part Of Such Tax Benefits.
(c) If, as a result of any act, omission or misrepresentation of
Lessee, (x) the Tax Benefits are lost, disallowed, deferred, eliminated,
reduced, recaptured, compromised or otherwise unavailable to Lessor, (y) for
Federal, foreign, state or local income tax purposes, any item of income, loss
or deduction with respect to any Item of Equipment is treated as derived from,
or allocable to, sources outside the United States, or (z) there shall be
included in the gross income of Lessor for Federal, state or local income tax
purposes any amount on account of any addition, modification, substitution or
improvement to or in respect of any Item of Equipment made or paid for by Lessee
(any of the foregoing being hereinafter a "Tax Loss"), then, within thirty (30)
days of Lessee's receipt of written notice from Lessor that such a Tax Loss has
occurred, Lessee shall pay to Lessor an amount which, after deduction therefrom
of all taxes to be paid in respect of the receipt thereof, will enable Lessor to
receive the same Net Economic Return (as hereinafter defined) that Lessor would
have realized on this Lease had such Tax Loss (together with any interest,
penalties or additions to tax) not occurred. Any event which, by the terms of
this Lease, requires payment by Lessee to Lessor of the Stipulated Loss Value of
the Equipment shall not constitute the act of Lessee for purpose of the
foregoing sentence.
(d) As used in this Section, the term "Net Economic Return"
shall mean Lessor's net after-tax yield, aggregate after-tax cash flow and
return on assets, based on (i) the assumptions used by Lessor in originally
calculating Rent and Stipulated Loss Value percentages, including the
assumptions set forth above (as such assumptions may have been revised pursuant
to the last sentence of this subsection) and (ii) the Highest Marginal Tax Rate
actually in effect during each year from the date of such original calculations
to the date of such Tax Loss, both dates inclusive. In the event Lessor shall
suffer a Tax Loss with respect to which Lessee is required to pay an indemnity
hereunder, and the full amount of such indemnity has been paid or provided for
hereunder, the aforesaid assumptions, without further act of the parties hereto,
shall thereupon be and be deemed to be amended, if and to the extent
appropriate, to reflect such Tax Loss.
(e) For purposes of this Section, the term "Lessor" shall
include the entity or entities, if any, with which Lessor consolidates any tax
return. Lessee acknowledges that it has neither sought nor received tax advice
from Lessor as to the availability to Lessee of any tax benefits with respect to
the Equipment. All of Lessor's rights and privileges arising from the
indemnities contained in this Lease will survive the expiration or other
termination or cancellation of this Lease. Such indemnities are expressly made
for the benefit of, and are enforceable by, Lessor and its successors and
assigns.
E-76
12
6. TRUE LEASE TRANSACTION. (a) It is the express intent of the
parties that this Lease constitutes a true lease and not a sale of the
Equipment. Title to the Equipment shall at all times remain in Lessor, and
Lessee shall acquire no ownership, title, property, right, equity, or interest
in the Equipment other than its leasehold interest solely as Lessee subject to
all the terms and conditions hereof. To the extent that Article 2A ("Article
2A") of the Uniform Commercial Code ("UCC") applies to the characterization of
this Lease, the parties hereby agree that this Lease is a "Finance Lease" is
defined therein. Lessee acknowledges: (i) that Lessee has selected the
"Supplier" (as defined in the UCC) and has directed Lessor to purchase the
Equipment from the Supplier in connection with this Lease, and (ii) that Lessee
has been informed in writing in this Lease, before Lessee's execution of this
Lease, that Lessee is entitled under Article 2A to the promises and warranties,
including those of any third party, provided to Lessor by the Supplier in
connection with or as part of the Purchase Agreement, and that Lessee may
communicate with the Supplier and receive an accurate and complete statement of
those promises and warranties, including any disclaimers and limitations of them
or of remedies. The filing of UCC financing statements pursuant to Section 34 of
the Master Lease is precautionary and shall not be deemed to have any effect on
the characterization of this Lease.
(b) Notwithstanding the express intent of Lessor and Lessee that
this agreement constitute a true lease and not a sale of the Equipment, should a
court of competent jurisdiction determine that this agreement is not a true
lease, but rather one intended as security, then solely in that event and for
the expressly limited purposes thereof, Lessee, shall he deemed to have hereby
granted Lessor a security interest in the Equipment and all accessions,
substitutions and replacements thereto and therefor, and proceeds (cash and
non-cash), including, without limitation, insurance proceeds thereof (but
without power of sale), to secure the prompt payment and performance as and when
due of all obligations and indebtedness of Lessee, now existing or hereafter
created, to Lessee pursuant to this Lease or otherwise. In furtherance of the
foregoing Lessee shall execute and deliver to Lessor, to be recorded at Lessee's
expense, Uniform Commercial Code financing statements, statements of amendment
and statements of continuation as reasonably may be required by Lessor to
perfect and maintain perfected such security interest.
(c) In the event that the Supplier erroneously invoices Lessee
for the Equipment, Lessee agrees to forward said invoice to Lessor immediately.
Lessee acknowledges that the Equipment is, and shall at all times remain, the
property of Lessor, and that Lessee has no right, title or interest therein or
thereto except as expressly set forth in the Lease.
7. LESSEE'S PURCHASE AND RENEWAL OPTIONS. Lessee shall have the
purchase and renewal options set forth on the End of Lease Options Addendum
attached hereto and made a part hereof.
8. MODIFICATIONS TO MASTER LEASE. With respect to the Equipment
described on this Schedule, the Master Lease shall be modified as follows:
(a) The following shall be inserted as the penultimate sentence
of Section 11 of the Master Lease ("Use; Alterations"):
Title to all such alterations, additions, modifications or
improvements shall immediately, and without further act, vest
in Lessor and thereupon shall be deemed to constitute Items of
Equipment and be fully subject to this Lease as if originally
leased hereunder.
(b) The following shall be inserted as the penultimate sentence
of Section 12 of the Master Lease ("Repairs and Maintenance"):
Title to such replacement part shall immediately (and without
further act) vest in Lessor upon installation, attachment or
incorporation of the same in, on or into such Item of Equipment
and thereupon shall be deemed to constitute an Item of Equipment
and be fully subject to this Lease as if originally leased
hereunder.
E-77
13
(c) As used in Section 22(a) of the Master Lease ("Events of
Default"), the term "Event of Default" shall also mean any of the following
events: (1) a change in control occurs in Lessee or any Guarantor; or (2) the
death or dissolution of Lessee or any Guarantor.
(d) Section 22(b) of the Master Lease ('Events of Default") is
hereby amended as follows: (1) with respect to Section 22(b)(4), the word
"terminate" is hereby deleted and the words "cancel or terminate" are hereby
substituted in its place; (2) with respect to Section 22(b)(6), the word
"termination" is hereby deleted and the words "cancellation or termination" are
hereby substituted in its place; and (3) with respect to Section 22(b)(7), the
word "terminated" is hereby deleted and the words "canceled or terminated" are
hereby substituted in its place.
9. STIPULATED LOSS VALUE. The Stipulated Loss Values applicable to
the Equipment and this Lease are as set forth oil a supplement (tile "Stipulated
Loss Value Supplement") prepared by Lessor.
10. GOVERNING LAW. This Schedule is being delivered in the State of
New York and shall in all respects be governed by, and construed in accordance
with, the laws of the State of New York, including all matters of construction,
validity and performance.
11. COUNTERPARTS. This Schedule may be executed in any number of
counterparts, each executed counterpart consulting all original but all
together one and the same instrument.
12. PERSONAL PROPERTY TAX. To insure Lessee's compliance with the
provisions of the Lease with respect to the payment of personal property taxes
on the Equipment described on this Schedule, Lessee hereby covenants and agrees
that, unless otherwise directed in writing by Lessor or required by applicable
law, Lessee will not list itself as owner of any Item of Equipment for property
tax purposes. Upon receipt by Lessee of any property tax ▇▇▇▇ pertaining to such
Item of Equipment from the appropriate taxing authority, Lessee will promptly
forward such property tax ▇▇▇▇ to Lessor. Upon receipt by Lessor of any such
property tax ▇▇▇▇, Lessor will pay such tax and will invoice Lessee for the
expense. Upon receipt of such invoice, Lessee will promptly reimburse Lessor for
such expense.
13. ADDITIONAL ADDENDA. In addition to the End of Lease Options
Addendum, please see the following addenda to this Schedule, attached hereto and
made a part hereof, for additional terms and conditions governing the leasing of
the Equipment described on this Schedule: Early Buyout Addendum and Machine Tool
Return Maintenance Addendum.
14. MORE THAN ONE LESSEE. If more than one person or entity executes
this Schedule, and all addenda or other documents executed in connection
herewith, as "Lessee," the obligations of "Lessee" contained herein and therein
shall be deemed joint and several and all references to "Lessee" shall apply
both individually and jointly.
15. RELATIONSHIP TO MASTER LEASE; FURTHER ASSURANCES. This Schedule
shall be construed in connection with and as part of the Lease, and all terms
and conditions contained in the Master Lease are hereby incorporated herein by
reference with the same force and effect as if such terms and conditions were
fully stated herein. By execution of this Schedule, Lessee and Lessor reaffirm
all terms and conditions of the Master Lease except as they may be modified
hereby. To the extent that any of the terms and conditions of this Schedule are
contrary to or inconsistent with any terms and conditions of the Master Lease,
the terms and conditions of this Schedule shall govern. LESSEE HEREBY CERTIFIES
TO LESSOR THAT THE REPRESENTATIONS AND WARRANTIES MADE BY LESSEE IN THE MASTER
LEASE (INCLUDING, WITHOUT LIMITATION, SECTION 31 THEREOF) ARE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF THE DATE OF THIS SCHEDULE WITH THE SAME EFFECT AS
THOUGH MADE ON AND AS OF SUCH DATE. Lessee shall take such additional actions
and execute and deliver such additional documents as Lessor shall deem necessary
from time to time to effectuate the terms of the Lease.
E-78
14
IN WITNESS WHEREOF, Lessor and Lessee have caused this Schedule to be
duly executed and delivered on the day and year first above written.
Lessor: Lessee:
KEYCORP LEASING, AUTOCAM CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇ Title: Chief Financial Officer
Title: Vice President
COUNTERPART NO. 1 OF 1 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL
CODE. NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF
ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
E-79
15
Exhibit A
---------
(EQUIPMENT DESCRIPTION)
Lease: Equipment Schedule No. 03 dated as of December 5,1997 to
Master Equipment Lease Agreement
Dated as of July 10, 1995
Lessor: KEYCORP LEASING,
A DIVISION OF KEY CORPORATE CAPITAL INC.
Lessee: AUTOCAM CORPORATION
Vendor: TORNOS TECHNOLOGIES
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Quantity: Description:
1 BS20.8 AUTOMATIC TORNOS ▇▇▇▇▇▇▇ 8 SPINDLE AUTOMATIC TYPE BS-20.8
WITH STANDARD ▇▇▇▇▇▇▇ ▇▇▇, ▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 21MM ROUND BAR,
18 MM HEX 15MM SQUARE, SERIAL # T.60891, WITH ALL STANDARD
ACCESSORIES
1 AUTOMATIC BARLOADER, ROBOBAR MSL-320, SERIAL #C 13656 WITH ALL
ACCESSORIES
E-80
16
End of Lease Options Addendum
(First Amendment Option)
THIS END OF LEASE OPTIONS ADDENDUM is annexed to, and made a part of,
Equipment Schedule Number 03 to Master Equipment Lease Agreement dated as of
July 10, 1995, as it relates to such Equipment Schedule (collectively, the
"Lease"). Unless otherwise specified herein, all capitalized terms; shall have
the meanings ascribed to them in the Lease. Lessor and Lessee hereby agree as
follows:
LESSEE'S PURCHASE AND RENEWAL OPTIONS. With respect to the Equipment described
on this Schedule, Section 32 of the Master Lease ("Renewal mid Purchase
Options") is hereby deleted in its entirety and the following is substituted in
its place:
So long as no Default or Event of Default shall have occurred and be
continuing and Lessee shall have given Lessor at least one hundred
and eighty (180) days prior written notice (the "Option Notice"),
Lessee shall have the option, at the expiration of the Initial Term
or any Renewal Term, to: (1) purchase all, but not less than all,
Items of Equipment for a purchase price (the "Purchase Option Price")
equal to the then Fair Market Sale Value thereof; (2) renew this
Lease on a month to month basis at the same Rent payable at the
expiration of such Initial Term or Renewal Term, as the case may be;
(3) renew this Lease for a minimum period of not less than twelve
(12) consecutive months at the then current Fair Market Rental Value;
or (4) return such Equipment to Lessor pursuant to, and in the
condition required by, the Lease, including but not limited to the
following conditions: (a) Lessee agrees to pay for the shipment of
equipment to any location in the world, (b) Lessee agrees to provide
free storage of the equipment for a period of one hundred and eighty
(180) days from the Initial Term Expiration Date. If Lessee fails to
give Lessor the Option Notice, Lessee shall be deemed to have chosen
option (2) above. Payment of the Purchase Option Price, applicable
sales taxes, together with all other amounts due and owing by Lessee
under the Lease (including, without limitation, Rent) during such
Initial Term and Renewal Term shall be made on the last day of the
Initial Term or Renewal Term, as the case may be, in immediately
available funds against delivery of a ▇▇▇▇ of sale transferring to
Lessee all right, title and interest of Lessor in and to the
Equipment ON AN "AS IS" "WHERE IS" BASIS, WITHOUT ANY WARRANTIES,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT
LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR
ITS FITNESS FOR ANY PARTICULAR PURPOSE. LESSOR MAY SPECIFICALLY
DISCLAIM ANY SUCH REPRESENTATIONS AND WARRANTIES.
Except as modified hereby, all of the terms, covenants and conditions
of the Lease shall remain in full force and effect and are in all respects
hereby ratified and affirmed.
IN WITNESS WHEREOF, Lessor and Lessee have executed this End of Lease
Options Addendum as of December 5, 1997.
Lessor. Lessee:
KEYCORP LEASING, AUTOCAM CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇ By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Title: Chief Financial Officer
E-81
17
Equipment Schedule No. 04
-------------------------
EQUIPMENT SCHEDULE NO. 04 dated as of December 16, 1997 (this
"Schedule") between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC.
("Lessor"), and AUTOCAM CORPORATION, a Michigan corporation ("Lessee").
INTRODUCTION:
-------------
Lesson and Lessee have heretofore entered that certain Master
Equipment Lease Agreement dated as of July 10, 1995 (the "Master Lease"; the
Master Lease mid this Schedule hereinafter collectively referred to as, this
"Lease"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings specified in the Master Lease. The Master Lease provides for
the execution and delivery of a Schedule substantially in the form hereof for
the purpose of confirming the acceptance and lease of the Equipment under this
Lease as and when delivered by Lessor to Lessee in accordance with the terms
thereof and hereof.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. EQUIPMENT. Pursuant to the terms and conditions of this Lease,
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
equipment listed on Exhibit A attached hereto (the "Equipment"). The aggregate
Total Cost of such Equipment is $1,423,236.00.
2. TERM. The Initial Term of this Lease with respect to the Equipment
described on this Schedule shall commence on the date on which such Equipment
is delivered to Lessee, and, unless earlier terminated as provided herein,
shall expire on a date which is one hundred and two months after the Rent
Commencement Date (the "Initial Term Expiration. Date").
3. RENT PAYMENT DATES; RENT. Lessee hereby agrees to pay Rent for the
Equipment throughout the Initial Term in one hundred and two (102) consecutive
monthly installments payable in arrears on the date which is one (1) month
after the Rent Commencement Date and on the same day of each month thereafter
(each, a "Rent Payment Date"). Each such installment of Rent shall be in an
amount equal to $16,441.65.
4. EQUIPMENT LOCATION; BILLING ADDRESS. The Equipment described on
this Schedule shall be located at, and except as otherwise provided in this
Lease, shall not be removed from, the following address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The billing address of Lessee is as follows: AUTOCAM
CORPORATION, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
5. TAX INDEMNIFICATION. (a) Lessee acknowledges that Lessor has
executed this Lease, and that the Rent payable by Lessee under this Lease has
been computed, upon the assumptions that Lessor win (i) be entitled to
depreciation or cost recovery deductions ("MACRS Deductions") for Federal income
tax purposes under the Modified Accelerated Cost Recovery System provided for in
Section 168 of the Internal Revenue Code of 1986, as amended (the "Code"), and
depreciation or cost recovery deductions ("State Depreciation Deductions") for
state income tax purposes for the State of New York ("New York"), in each case
on the basis that (1) each Item of Equipment constitutes seven-year property"
within the meaning of Section 168(e) of the Code, (2) the initial tax basis for
each Item of Equipment will be equal to the Total Cost, (3) deductions for each
Item of Equipment will be computed by using the method specified in Section
168(b)(1) of the Code over the seven-year recovery period described in Section
168(c) of the Code, and (4) the applicable convention for each Item of Equipment
under Section 168(d) of the Code is the half-year convention, (ii) be entitled
to deductions for Federal income tax purposes (available in the manner and as
provided by Section 163 of the Code) for interest payable with respect to any
indebtedness incurred by Lessor in connection with any financing by Lessor of
any portion of the Total Cost of each item of Equipment ("Interest Deductions");
and (iii) be subject to tax for each year at a composite Federal and New York
corporate income tax rate equal to the then highest marginal rate for
corporations provided for under the Code and the laws of New York (the "Highest
Marginal Tax Rate"). The MACRS Deductions, State Depreciation Deductions and
Interest Deductions are hereinafter collectively referred to as the "Tax
Benefits".
E-82
18
(b) Lessee represents and warrants to Lessor that (i) each Item
of Equipment constitutes seven-year property" within the meaning of Section
168(e) of the Code, (ii) Lessee shall not attempt to claim such Tax Benefits,
(iii) at and after the time of delivery of the Equipment to Lessee pursuant to
this Lease, the Equipment shall be owned by Lessor for Federal income tax
purposes and Lessee shall not claim any ownership or title in and to the
Equipment, and (iv) Lessee has not, and will not, at any time after such
delivery throughout the Term of this Lease, take any action or omit to take any
action (whether or not the same is permitted or required hereunder) which will
result in the loss by Lessor of all or any part Of Such Tax Benefits.
(c) If, as a result of any act, omission or misrepresentation of
Lessee, (x) the Tax Benefits are lost, disallowed, deferred, eliminated,
reduced, recaptured, compromised or otherwise unavailable to Lessor, (y) for
Federal, foreign, state or local income tax purposes, any item of income, loss
or deduction with respect to any Item of Equipment is treated as derived from,
or allocable to, sources outside the United States, or (z) there shall be
included in the gross income of Lessor for Federal, state or local income tax
purposes any amount on account of any addition, modification, substitution or
improvement to or in respect of any Item of Equipment made or paid for by Lessee
(any of the foregoing being hereinafter a "Tax Loss"), then, within thirty (30)
days of Lessee's receipt of written notice from Lessor that such a Tax Loss has
occurred, Lessee shall pay to Lessor an amount which, after deduction therefrom
of all taxes to be paid in respect of the receipt thereof, will enable Lessor to
receive the same Net Economic Return (as hereinafter defined) that Lessor would
have realized on this Lease had such Tax Loss (together with any interest,
penalties or additions to tax) not occurred. Any event which, by the terms of
this Lease, requires payment by Lessee to Lessor of the Stipulated Loss Value of
the Equipment shall not constitute the act of Lessee for purpose of the
foregoing sentence.
(d) As used in this Section, the term "Net Economic Return"
shall mean Lessor's net after-tax yield, aggregate after-tax cash flow and
return on assets, based on (i) the assumptions used by Lessor in originally
calculating Rent and Stipulated Loss Value percentages, including the
assumptions set forth above (as such assumptions may have been revised pursuant
to the last sentence of this subsection) and (ii) the Highest Marginal Tax Rate
actually in effect during each year from the date of such original calculations
to the date of such Tax Loss, both dates inclusive. In the event Lessor shall
suffer a Tax Loss with respect to which Lessee is required to pay an indemnity
hereunder, and the full amount of such indemnity has been paid or provided for
hereunder, the aforesaid assumptions, without further act of the parties hereto,
shall thereupon be and be deemed to be amended, if and to the extent
appropriate, to reflect such Tax Loss.
(e) For purposes of this Section, the term "Lessor" shall
include the entity or entities, if any, with which Lessor consolidates any tax
return. Lessee acknowledges that it has neither sought nor received tax advice
from Lessor as to the availability to Lessee of any tax benefits with respect to
the Equipment. All of Lessor's rights and privileges arising from the
indemnities contained in this Lease will survive the expiration or other
termination or cancellation of this Lease. Such indemnities are expressly made
for the benefit of, and are enforceable by, Lessor and its successors and
assigns.
6. TRUE LEASE TRANSACTION. (a) It is the express intent of the
parties that this Lease constitutes a true lease and not a sale of the
Equipment. Title to the Equipment shall at all times remain in Lessor, and
Lessee shall acquire no ownership, title, property, right, equity, or interest
in the Equipment other than its leasehold interest solely as Lessee subject to
all the terms and conditions hereof. To the extent that Article 2A ("Article
2A") of the Uniform Commercial Code ("UCC") applies to the characterization of
this Lease, the parties hereby agree that this Lease is a "Finance Lease" is
defined therein. Lessee acknowledges: (i) that Lessee has selected the
"Supplier" (as defined in the UCC) and has directed Lessor to purchase the
Equipment from the Supplier in connection with this Lease, and (ii) that Lessee
has been informed in writing in this Lease, before Lessee's execution of this
Lease, that Lessee is entitled under Article 2A to the promises and warranties,
including those of any third party, provided to Lessor by the Supplier in
connection with or as part of the Purchase Agreement, and that Lessee may
communicate with the Supplier and receive an accurate and complete statement of
those promises and warranties, including any disclaimers and limitations of them
or of remedies. The filing of UCC financing statements pursuant to Section 34 of
the Master Lease is precautionary and shall not be deemed to have any effect on
the characterization of this Lease.
E-83
19
(b) Notwithstanding the express intent of Lessor and Lessee that
this agreement constitute a true lease and not a sale of the Equipment, should a
court of competent jurisdiction determine that this agreement is not a true
lease, but rather one intended as security, then solely in that event and for
the expressly limited purposes thereof, Lessee, shall he deemed to have hereby
granted Lessor a security interest in the Equipment and all accessions,
substitutions and replacements thereto and therefor, and proceeds (cash and
non-cash), including, without limitation, insurance proceeds thereof (but
without power of sale), to secure the prompt payment and performance as and when
due of all obligations and indebtedness of Lessee, now existing or hereafter
created, to Lessee pursuant to this Lease or otherwise. In furtherance of the
foregoing Lessee shall execute and deliver to Lessor, to be recorded at Lessee's
expense, Uniform Commercial Code financing statements, statements of amendment
and statements of continuation as reasonably may be required by Lessor to
perfect and maintain perfected such security interest.
(c) In the event that the Supplier erroneously invoices Lessee
for the Equipment, Lessee agrees to forward said invoice to Lessor immediately.
Lessee acknowledges that the Equipment is, and shall at all times remain, the
property of Lessor, and that Lessee has no right, title or interest therein or
thereto except as expressly set forth in the Lease.
7. LESSEE'S PURCHASE AND RENEWAL OPTIONS. Lessee shall have the
purchase and renewal options set forth on the End of Lease Options Addendum
attached hereto and made a part hereof.
8. MODIFICATIONS TO MASTER LEASE. With respect to the Equipment
described on this Schedule, the Master Lease shall be modified as follows:
(a) The following shall be inserted as the penultimate sentence
of Section 11 of the Master Lease ("Use; Alterations"):
Title to all such alterations, additions, modifications or
improvements shall immediately, and without further act, vest in
Lessor and thereupon shall be deemed to constitute Items of
Equipment and be fully subject to this Lease as if originally
leased hereunder.
(b) The following shall be inserted as the penultimate sentence
of Section 12 of the Master Lease ("Repairs and Maintenance"):
Title to such replacement part shall immediately (and without
further act) vest in Lessor upon installation, attachment or
incorporation of the same in, on or into such Item of Equipment
and thereupon shall be deemed to constitute an Item of Equipment
and be fully subject to this Lease as if originally leased
hereunder.
(c) As used in Section 22(a) of the Master Lease ("Events of
Default"), the term "Event of Default" shall also mean any of the following
events: (1) a change in control occurs in Lessee or any Guarantor; or (2) the
death or dissolution of Lessee or any Guarantor.
(d) Section 22(b) of the Master Lease ("Events of Default") is
hereby amended as follows: (1) with respect to Section 22(b)(4), the word
"terminate" is hereby deleted and the words "cancel or terminate" are hereby
substituted in its place; (2) with respect to Section 22(b)(6), the word
"termination" is hereby deleted and the words "cancellation or termination" are
hereby substituted in its place; and (3) with respect to Section 22(b)(7), the
word "terminated" is hereby deleted and the words "canceled or terminated" are
hereby substituted in its place.
9. STIPULATED LOSS VALUE. The Stipulated Loss Values applicable to
the Equipment and this Lease are as set forth in a supplement (the "Stipulated
Loss Value Supplement") prepared by Lessor.
10. GOVERNING LAW. This Schedule is being delivered in the State of
New York and shall in all respects be governed by, and construed in accordance
with, the laws of the State of New York, including all matters of construction,
validity and performance.
▇-▇▇
▇▇
▇▇. COUNTERPARTS. This Schedule may be executed in any number of
counterparts, each executed counterpart consulting all original but all together
one and the same instrument.
12. PERSONAL PROPERTY TAX. To insure Lessee's compliance with the
provisions of the Lease with respect to the payment of personal property taxes
on the Equipment described on this Schedule, Lessee hereby covenants and agrees
that, unless otherwise directed in writing by Lessor or required by applicable
law, Lessee will not list itself as owner of any Item of Equipment for property
tax purposes. Upon receipt by Lessee of any property tax ▇▇▇▇ pertaining to such
Item of Equipment from the appropriate taxing authority, Lessee will promptly
forward such property tax ▇▇▇▇ to Lessor. Upon receipt by Lessor of any such
property tax ▇▇▇▇, Lessor will pay such tax and will invoice Lessee for the
expense. Upon receipt of such invoice, Lessee will promptly reimburse Lessor for
such expense.
13. ADDITIONAL ADDENDA. In addition to the End of Lease Options
Addendum, please see the following addenda to this Schedule, attached hereto and
made a part hereof, for additional terms and conditions governing the leasing of
the Equipment described on this Schedule: Early Buyout Addendum and Machine Tool
Return Maintenance Addendum.
14. MORE THAN ONE LESSEE. If more than one person or entity executes
this Schedule, and all addenda or other documents executed in connection
herewith, as "Lessee," the obligations of "Lessee" contained herein and therein
shall be deemed joint and several and all references to "Lessee" shall apply
both individually and jointly.
15. RELATIONSHIP TO MASTER LEASE; FURTHER ASSURANCES. This Schedule
shall be construed in connection with and as part of the Lease, and all terms
and conditions contained in the Master Lease are hereby incorporated herein by
reference with the same force and effect as if such terms and conditions were
fully stated herein. By execution of this Schedule, Lessee and Lessor reaffirm
all terms and conditions of the Master Lease except as they may be modified
hereby. To the extent that any of the terms and conditions of this Schedule are
contrary to or inconsistent with any terms and conditions of the Master Lease,
the terms and conditions of this Schedule shall govern. LESSEE HEREBY CERTIFIES
TO LESSOR THAT THE REPRESENTATIONS AND WARRANTIES MADE BY LESSEE IN THE MASTER
LEASE (INCLUDING, WITHOUT LIMITATION, SECTION 31 THEREOF) ARE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF THE DATE OF THIS SCHEDULE WITH THE SAME EFFECT AS
THOUGH MADE ON AND AS OF SUCH DATE. Lessee shall take such additional actions
and execute and deliver such additional documents as Lessor shall deem necessary
from time to time to effectuate the terms of the Lease.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Schedule to be
duly executed and delivered on the day and year first above written.
Lessor: Lessee:
KEYCORP LEASING, AUTOCAM CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇ Title: Chief Financial Officer
Title: Vice President
COUNTERPART NO. 1 OF 1 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL
CODE. NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF
ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
E-85
21
Exhibit A
---------
(EQUIPMENT DESCRIPTION)
Lease: Equipment Schedule No. 04 dated as of December 16,1997 to Master
Equipment Lease Agreement
Dated as of July 10, 1997
Lessor: KEYCORP LEASING,
A DIVISION OF KEY CORPORATE CAPITAL INC.
Lessee: AUTOCAM CORPORATION
Vendor: TORNOS TECHNOLOGIES
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Quantity: Description:
6 SAS-16.6 AUTOMATIC TORNOS ▇▇▇▇▇▇▇ 6- SPINDLE AUTOMATIC LATHE
TYPE SAS-16.6, SERIAL #'S: T.61676, T.61675, T.61886, T.61684,
T61362 AND T.61381.
E-86
22
End of Lease Options Addendum
(FMV Option)
----------
THIS END OF LEASE OPTION ADDENDUM is annexed to, and made a part
of, Equipment Schedule Number 04 to Master Equipment Lease Agreement dated as of
July 10, 1995, as it relates to such Equipment Schedule (collectively, the
"Lease"). Unless otherwise specified herein, all capitalized terms; shall have
the meanings ascribed to them in the Lease. Lessor and Lessee hereby agree as
follows:
LESSEE'S PURCHASE AND RENEWAL OPTIONS. With respect to the Equipment described
on this Schedule, Section 32 of the Master Lease ("Renewal mid Purchase
Options") is hereby deleted in its entirety and the following is substituted in
its place:
So long as no Default or Event of Default shall have occurred and be
continuing and Lessee shall have given Lessor at least one hundred
and eighty (180) days prior written notice (the "Option Notice"),
Lessee shall have the option, at the expiration of the Initial Term
or any Renewal Term, to: (1) purchase all, but not less than all,
Items of Equipment for a purchase price (the "Purchase Option Price")
equal to the then Fair Market Sale Value thereof; (2) renew this
Lease on a month to month basis at the same Rent payable at the
expiration of such Initial Term or Renewal Term, as the case may be;
(3) renew this Lease for a minimum period of not less than twelve
(12) consecutive months at the then current Fair Market Rental Value;
or (4) return such Equipment to Lessor pursuant to, and in the
condition required by, the Lease, including but not limited to the
following conditions: (a) Lessee agrees to pay for the shipment of
equipment to any location in the world, (b) Lessee agrees to provide
free storage of the equipment for a period of one hundred and eighty
(180) days from the Initial Term Expiration Date. If Lessee fails to
give Lessor the Option Notice, Lessee shall be deemed to have chosen
option (2) above. Payment of the Purchase Option Price, applicable
sales taxes, together with all other amounts due and owing by Lessee
under the Lease (including, without limitation, Rent) during such
Initial Term and Renewal Term shall be made on the last day of the
Initial Term or Renewal Term, as the case may be, in immediately
available funds against delivery of a ▇▇▇▇ of sale transferring to
Lessee all right, title and interest of Lessor in and to the
Equipment ON AN "AS IS" "WHERE IS" BASIS, WITHOUT ANY WARRANTIES,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT
LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR
ITS FITNESS FOR ANY PARTICULAR PURPOSE. LESSOR MAY SPECIFICALLY
DISCLAIM ANY SUCH REPRESENTATIONS AND WARRANTIES.
Except as modified hereby, all of the terms, covenants and conditions
of the Lease shall remain in full force and effect and are in all respects
hereby ratified and affirmed.
IN WITNESS WHEREOF, Lessor and Lessee have executed this End of Lease
Options Addendum as of December 16, 1997.
Lessor. Lessee:
KEYCORP LEASING, AUTOCAM CORPORATION
A DIVISION OF KEY CORPORATE CAPITAL INC.
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇ By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Title: Chief Financial Officer
E-87