EXHIBIT 99.2
Master Lease Agreement No. ________________
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MASTER LEASE AGREEMENT
dated as of November 8, 2004
between
GE CAPITAL DE MEXICO, S. DE ▇.▇. DE C.V.,
as Lessor,
and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ AUTOMOTIVE ▇▇▇▇▇▇▇▇▇▇, ▇.▇. DE C.V.,
as Lessee
This Master Lease Agreement and each Schedule may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute one and the
same instrument. If this Master Lease Agreement or any Schedule constitutes
chattel paper (as defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest therein may be created except
through the transfer or possession of the original counterpart marked " No. 1 -
Original."
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TABLE OF CONTENTS
PAGE
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1. LEASING................................................................... 1
2. TERM, RENT AND PAYMENT.................................................... 4
3. RENT ADJUSTMENTS.......................................................... 5
4. TAXES..................................................................... 5
5. REPORTS................................................................... 6
6. DELIVERY, USE AND OPERATION............................................... 8
7. MAINTENANCE............................................................... 10
8. CASUALTY OCCURRENCE....................................................... 11
9. LOSS OR DAMAGE............................................................ 12
10. INSURANCE................................................................. 12
11. RETURN OF FACILITY AND EQUIPMENT.......................................... 16
12. DEFAULT; REMEDIES......................................................... 18
13. ASSIGNMENT; SYNDICATION................................................... 22
14. NET LEASE; NO SET-OFF, ETC................................................ 24
15. INDEMNIFICATION........................................................... 24
16. DISCLAIMER................................................................ 27
17. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE....................... 27
18. INTENT; TITLE............................................................. 32
19. PURCHASE AND RENEWAL OPTIONS.............................................. 33
20. MISCELLANEOUS............................................................. 34
21. CHOICE OF LAW; JURISDICTION............................................... 38
22. [RESERVED]................................................................ 38
23. DEFINITIONS............................................................... 38
EXHIBIT NO. 1 - FORM OF EQUIPMENT SCHEDULE
ANNEX A - DESCRIPTION OF FACILITY/EQUIPMENT
ANNEX B - CERTIFICATE OF ACCEPTANCE
ANNEX C - STIPULATED LOSS VALUE TABLE
EXHIBIT NO. 2 - FORM OF ACCEPTABLE LETTER OF CREDIT
EXHIBIT NO. 3 - FORM OF QUARTERLY STATEMENT
EXHIBIT NO. 4 - FORM OF GUARANTY
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of November 8, 2004 (the
"Agreement"), between GE Capital de Mexico, S. de ▇.▇. de C.V., a sociedad de
responsabilidad limitada de capital variable organized pursuant to the laws of
Mexico with its domicile at Prolongacion Reforma ▇▇. ▇▇▇, ▇▇▇▇ ▇ ▇▇▇. ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter called, together with its successors and assigns,
if any, "Lessor") and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ AUTOMOTIVE ▇▇▇▇▇▇▇▇▇▇, ▇.▇. DE C.V., a
sociedad anonima de capital variable organized pursuant to the laws of Mexico
with its domicile at ▇▇▇▇▇ ▇▇ ▇ ▇▇ ▇/▇, ▇▇▇▇▇▇▇▇▇▇ Morelos, Saltillo, ▇.▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called "Lessee").
1. LEASING
(a) This Agreement shall be effective from and after the Basic Term
Commencement Date. Subject to the terms and conditions set forth below, Lessor
agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the Facility
and the Equipment described in Annex A to each Schedule executed pursuant
hereto. Terms defined in a Schedule and not otherwise defined herein shall have
the meanings ascribed to them in such Schedule. Certain definitions are provided
in Section 23 hereof or if not otherwise defined herein shall have the meaning
assigned thereto in Appendix A to the CAA.
(b) The obligation of Lessor to lease the Facility and the Equipment set
forth on any Schedule to Lessee shall be subject to satisfaction of the
following conditions, on or prior to the Basic Term Commencement Date of such
Schedule:
(i) Receipt by Lessor of the following documents in form and
substance satisfactory to Lessor:
(1) a Schedule relating to the Facility and the Equipment to
be made subject to this Agreement (including a duly completed Annex
A thereto describing the Facility and the Equipment and a duly
completed Annex C thereto describing the Stipulated Loss Values
applicable to the Facility and the Equipment), in favor of Lessor,
duly executed by Lessee;
(2) (a) Bills of Sale, in favor of Lessor, evidencing free and
clear title to the Facility and the Equipment, duly executed by the
respective Vendors; and (b) official invoices that comply with all
requirements under Mexican tax laws, with respect to the Equipment
purchased by the Owner from the Company or any other Mexico Vendor,
as well as all other documents in connection with the importation of
the part of the Equipment that is being sold by the Lessee to the
Lessor, including without limitation: certificates of origin,
importation permits, and receipts of payment of applicable taxes;
(3) a Certificate of Acceptance with respect to the Facility
and the Equipment, in favor of Lessor, duly executed by Lessee;
(4) a Landlord Consent with respect to the Facility and the
Equipment, in favor of Lessor, duly executed by each owner, landlord
and/or mortgagee, if any, with respect to the Equipment Location (as
specified in such Schedule);
(ii) Receipt by Lessor of an Acceptable Letter of Credit, maintained
by ▇▇▇▇▇▇▇ for the benefit of Lessor;
(iii) Receipt by Lessor of evidence that the Commitment Fee Letter
is in full force and effect;
(iv) Receipt by Lessor of evidence of insurance which complies with
the requirements of Section 10 hereof;
(v) Receipt by Lessor of an Appraisal with respect to the Facility
and the Equipment;
(vi) Receipt by Lessor of a certificate dated such date signed by
the Secretary of Lessee confirming (x) that attached thereto is (1) a
certified copy of the commercial folio (folio mercantil) of Lessee, dated
as of the most recent practical date prior to such Basic Term Commencement
Date issued by the Public Registry of Commerce with jurisdiction over the
place where Lessee has its corporate domicile attesting to the existence
and all recorded corporate information of such entity in its jurisdiction
of incorporation, (2) a true and correct certified copy of the
organizational documents (including deed of incorporation (escritura
constitutiva) and by-laws (estatutos sociales) (together with amendments
thereto if applicable) of Lessee as in effect prior to the date of the
resolutions referred to in clause (3) of this paragraph through to such
Basic Term Commencement Date, (3) resolutions of the shareholders meeting
of Lessee authorizing the execution, delivery and performance of its
obligations under the Documents, and (4) a certified copy of the public
deed containing the powers of attorney of the officers executing the
Documents on behalf of Lessee, (y) that (1) the resolutions referred to in
clause (3) above were duly adopted, are in full force and effect on such
Basic Term Commencement Date and have not been amended, modified, revoked
or rescinded prior to such date and (2) all conditions for the effective
application of such actions or resolutions to the transactions
contemplated by this Agreement have been satisfied, and (z) the incumbency
and signature of each officer executing any Document on behalf of Lessee;
(vii) Receipt by Lessor of a certificate dated such date signed by
the Secretary of ▇▇▇▇▇▇▇ confirming (x) that attached thereto is (1) a
true and correct certified copy of the organizational documents (including
articles of incorporation and by-laws (together with amendments thereto if
applicable)) of ▇▇▇▇▇▇▇ as in effect prior to the date of the resolutions
referred to in clause (2) of this paragraph through to such Basic Term
Commencement Date, (2) resolutions of the board of directors of ▇▇▇▇▇▇▇
authorizing the execution, delivery and performance of its obligations
under the Documents, (y) that (1) the resolutions referred to in clause
(2) above were duly adopted, are in full force and effect on such Basic
Term Commencement Date and have not been amended, modified, revoked or
rescinded prior to such date, and (2) all conditions for the effective
application
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of such actions or resolutions to the transactions contemplated by this
Agreement have been satisfied, and (z) the incumbency and signature of
each officer executing any Document on behalf of ▇▇▇▇▇▇▇.
(viii) (1) No Default and no event, which with the lapse of time or
the giving of notice, shall constitute a Default, shall have occurred and
be continuing, no Casualty Occurrence shall have occurred and the
representations and warranties of Lessee herein are true and correct as of
such Basic Term Commencement Date, and Lessor shall have received a
certificate dated such date signed by a Responsible Officer of Lessee to
such effect; and
(1) No Construction Agency Event of Default (as defined in the
CAA) and no event, which with the lapse of time or the giving of
notice, shall constitute a Construction Agency Event of Default,
shall have occurred and be continuing.
(ix) (1) UCC financing statements, naming Lessee as debtor and
Lessor as secured party, shall have been filed in all jurisdictions where
it is necessary and desirable in the reasonable opinion of Lessor to so
file so as to perfect and protect Lessor's interest in the Facility and
the Equipment and the Floating Lien Pledge shall have been registered at
the Public Registry of Commerce (Registro Publico de Comercio) described
in paragraph (2) below;
(2) Within sixty (60) days after the Basic Term Commencement
Date hereof, evidence that Lessee has used commercially reasonable
efforts to register this Agreement with the Public Registry of
Commerce with jurisdiction over the place where Lessee has its
corporate domicile and with the Public Registry of Commerce
(Registro Publico de Comercio) with jurisdiction over the place
where the Facility and the Equipment shall be located; and
(3) The Guaranty Trust, the Floating Lien Pledge and the Stock
Pledge shall be in full force and effect and the Lessee shall
deliver an officer's certificate to such effect.
(x) The chattel paper counterpart of this Agreement and the
applicable Schedule shall have been delivered to Lessor;
(xi) No material adverse change shall have occurred in the financial
condition of ▇▇▇▇▇▇▇ or Lessee and its subsidiaries, taken as a whole
since June 30, 2004;
(xii) Receipt by Lessor of evidence reasonably satisfactory to it
that Construction Completion (as defined in the Construction Agency
Agreement) has occurred;
(xiii) Receipt by Lessor of evidence reasonably satisfactory to it
that powers of attorney for non-U.S. Affiliates of ▇▇▇▇▇▇▇, irrevocably
designating ▇▇▇▇▇▇▇ as agent for service of process pursuant to the terms
and conditions of the Intercompany Agreement, have been executed and
remain in full force and effect;
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(xiv) All liens on the Facility and the Equipment shall be
discharged and released and duly delivered and/or executed releases with
respect thereto shall have been delivered to Lessor;
(xv) The Facility and the Equipment shall be located at the
Equipment Location;
(xvi) Receipt by Lessor of evidence reasonably satisfactory to it
that Lessee has obtained all consents, licenses, authorizations, permits,
concessions and other documents required for the use and operation of the
Facility and the Equipment and the Equipment Location under Applicable
Laws; and
(xvii) Such opinions (including tax opinions), certificates, lien
releases, consents, notices and other documents as Lessor may reasonably
request.
Upon execution by Lessee of any Certificate of Acceptance, the Facility and the
Equipment described thereon shall be deemed to have been delivered to, and
irrevocably accepted by, Lessee for lease hereunder.
2. TERM, RENT AND PAYMENT
(a) Lessee hereby agrees to pay Lessor the Basic Term Rent for the
Facility and each Unit throughout the Basic Term applicable thereto in quarterly
installments payable on each Rent Payment Date as set forth in the applicable
Schedule. The Basic Term Rent shall be calculated in accordance with Section "E"
of Exhibit No. 1. The Basic Term Rent payable hereunder and Lessee's right to
use the Facility and any Unit shall commence on the date of execution by Lessee
of the Certificate of Acceptance for the Facility and such Unit ("Basic Term
Commencement Date") pursuant to this Agreement. The term of this Agreement (the
"Term") shall be the period specified in the applicable Schedule. If any Term is
extended, the word "Term" shall be deemed to refer to all extended terms, and
all provisions of this Agreement shall apply during any extended terms, except
as otherwise may be specifically provided in writing. If any Rent Payment Date
is not a Business Day, the Basic Term Rent otherwise due on such date shall be
payable on the immediately preceding Business Day. The Basic Term Rent due and
payable under any Schedule shall also represent and be the amount of rent for
which Lessee becomes liable on account of the use of the Equipment for the
period beginning on each Rent Payment Date, and shall therefore constitute the
rent allocated to such rental periods within the meaning of Treasury Regulations
Section 1.467-1(c)(2)(ii). Lessee hereby agrees to pay to Lessor any and all
Supplemental Rent when and as the same shall become due and owing.
(b) Rent shall be paid to Lessor by wire transfer of immediately available
funds in United States Dollars to: Deutsche Bank Trust Company Americas, Account
No. ▇▇▇▇▇▇▇▇, ABA No. ▇▇▇▇▇▇▇▇▇, Account Name: GE Capital de Mexico, S. de ▇.▇.
de C.V., Reference: 2005 ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Hermosillo Lease, Customer: ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ Automotive ▇▇▇▇▇▇▇▇▇▇, ▇.▇. de C.V., or to such other account as Lessor
may direct in writing; and shall be effective upon receipt. All such accounts
shall be under the full dominion and control of Lessor. Payments of Basic Term
Rent and periodic Rent with respect to any Renewal Term shall be in
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the amount set forth in, and due and allocated in accordance with, the
provisions of the applicable Schedule. In no event shall any Rent payments be
refunded to Lessee.
(c) At such time as Stipulated Loss Value (or an amount determined by
reference thereto) shall be payable hereunder, the amount payable by Lessee
shall be calculated by reference to Annex C to the applicable Schedule for the
affected Facility or Unit.
3. RENT ADJUSTMENTS
(a) The Basic Term Lease Rate Factor set forth on the applicable Schedule,
the Basic Term, and the Stipulated Loss Value set forth on Annex C were
calculated by Lessor on the basis of the assumptions set forth on Section "D" of
Exhibit No. 1 (the "Tax Benefits and Assumptions") and in addition thereto, the
assumptions set forth in Section C of Exhibit No.1 (the "Pricing Assumptions").
(b) If at the Basic Term Commencement Date, any of the Tax Benefits and
Assumptions, Pricing Assumptions or Capitalized Lessor's Cost shall change or
are incorrect (including any change resulting from a change in law other than a
Change in Law in Mexico), then Lessor shall recompute the Capitalized Lessor's
Cost, the Basic Term Lease Rate Factor and Stipulated Loss Value Table as shall
be necessary to preserve the Net Economic Return while minimizing the Basic Term
Lease Rate Factor. Any such recomputation shall be consistent with the Pricing
Assumptions and Tax Benefits and Assumptions (other than any such Pricing
Assumption or Tax Assumption the incorrectness of which gave rise to such
recomputation or to a prior recomputation), and the Lessor shall utilize the
same methods, constraints and assumptions originally used to calculate the
payments of Basic Term Lease Rate Factor and Stipulated Loss Values. Such
adjustments shall comply with Section 467 of the Code and the Regulations and
the requirements of Sections 4.02(5), 4.07(1) and (2) and 4.08(1) of Revenue
Procedure 2001-29, as amended (and such that the Lease could not be treated as a
"disqualified leaseback" or "long term agreement" within the meaning of Section
467 of the Code). Such adjustments shall be reflected in amendments to Exhibit
No. 1 to this Agreement and/or the applicable Schedule.
4. TAXES
(a) Except as provided in Section 15(c) hereof, Lessee shall have no
liability for (i) taxes imposed by the United States of America or any State or
political subdivision thereof which are based on or measured by the gross or net
income, gross or net worth or profit of Lessor, or (ii) taxes imposed on Lessor
that would not have been imposed but for a Lessor's Lien, or (iii) any Mexican
Taxes imposed on the gross or net income, gross or net worth or profit of
Lessor, including Mexican Taxes imposed on gross or net income, gross or net
worth or profit as a result of a Change in Law in Mexico, except to the extent
such Mexican Taxes are the result of an act or omission of Lessee (other than an
act or omission required by the Operative Documents) (collectively, the
"Excluded Taxes").
(b) Lessee shall report (to the extent that it is legally permissible) and
pay prior to delinquency, subject to Lessee's right to contest the same in
accordance with clause (iii) of the definition of Permitted Lien, all taxes,
fees, duties and assessments due, imposed, assessed or
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levied against: (i) the Facility, any Unit of Equipment or the Site (or the
construction, import, installation, financing, refinancing, warranty, ownership,
maintenance, repair, condition, alteration, modification, improvement,
restoration, refurbishing, rebuilding, transport, assembly, repossession,
dismantling, abandonment, retirement, decommissioning, storage, replacement,
return, acquisition, sale or other disposition, insuring, sublease, manufacture,
design, acceptance, rejection, purchase, ownership, delivery, leasing,
possession, mortgaging, operation or other use or non-use of any thereof, in
each case, by Lessee or any Affiliate or any sublessee or other user or person
in possession of the Facility or any Unit of Equipment (or any part thereof));
(ii) any amounts paid or payable under this Agreement (subject to the last
sentence of Section 13 (b) and 13(e) of this Agreement) or the other Operative
Documents; (iii) any of the Operative Documents; (iv) the conduct of business or
affairs of Lessee or any Affiliate thereof; (v) Lessor (with respect to the
Operative Documents or any transactions contemplated thereby); or (vi) Lessee,
by any foreign, United States or Mexican federal, state or local government or
taxing authority in any of the foregoing related to any of the transactions
contemplated by the Documents, including, without limitation, all license and
registration fees, and all sales, use, personal property, real property, ad
valorem, rental, transfer, excise, gross receipts, value added, goods and
services, franchise, stamp or other taxes, imports, customs or other duties and
charges, other than Excluded Taxes, together with any penalties, fines or
interest thereon (all hereinafter called "Taxes"). Lessee shall (i) pay,
indemnify and hold harmless Lessor (on an After-Tax Basis) upon receipt of
written request for reimbursement for any Taxes (but excluding the Excluded
Taxes) charged to or assessed against Lessor, (ii) on request of Lessor, submit
to Lessor written evidence of Lessee's payment of Taxes, (iii) on all reports or
returns show the ownership of the Facility and each Unit of Equipment by Lessor,
and (iv) send a copy of the reports or returns referred to in clause (iii) above
to Lessor; provided, however that Lessee shall have no liability for taxes
imposed on Lessor resulting from (w) the willful misconduct or gross negligence
of Lessor, (x) taxes imposed on Lessor that would not have been imposed but for
Lessor's breach of any covenant or the inaccuracy of any representation or
warranty of Lessor under this Agreement, except to the extent attributable to a
breach of covenant or inaccuracy of a representation by Lessee or an Affiliate
thereof (y) taxes imposed on Lessor that would not have been imposed, but for a
Lessor's Lien, or (z) any Mexican withholding Taxes imposed on a transferee of
Lessor to the extent such Mexican withholding Taxes imposed exceed the
withholding Taxes that would have been imposed on Lessor in the absence of a
transfer other than Taxes imposed in connection with a Default or Taxes imposed
in the After-Tax Basis calculation; provided further, however that in the event
that if either Lessor or GECMG, participate any of their respective interests in
this transaction to a third party, such participant shall not be entitled to
receive any greater payment under this Section 4(b) than Lessor would have been
entitled to receive with respect to the participation sold to such participant,
unless the sale of the participation to such participant is made with Lessee's
prior consent other than in connection with a Default or Taxes imposed in the
After-Tax Basis calculation. At Lessor's request, Lessee, as Lessor's agent,
shall pay directly any such taxes imposed.
5. REPORTS
(a) Lessee will notify Lessor in writing, within 10 days after obtaining
actual knowledge, or after Lessee shall have received written notice, of the
attachment of any tax or other Lien (other than Permitted Liens) against the
Facility or any Equipment, of the full
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particulars thereof and of the location of the Facility and Equipment on the
date of such notification.
(b) Lessee will deliver to Lessor, within 95 days of the close of each
fiscal year of C&A, C&A's consolidated balance sheet, profit and loss statement
and statement of cash flows, prepared in accordance with generally accepted
accounting principles consistently applied in the United States of America
("GAAP") certified by a recognized firm of certified public accountants,
together with statements consolidating C&A and ▇▇▇▇▇▇▇ and, if applicable, C&A
Form 10-K filed with the Securities and Exchange Commission ("SEC"). Lessee will
deliver to Lessor quarterly, within 50 days of the close of each of the first
three fiscal quarters of Lessee, in reasonable detail, copies of C&A's quarterly
financial report certified by the chief financial officer of C&A, together with,
if applicable, C&A's Form 10-Q filed with the SEC.
(c) Lessee will promptly and fully report to Lessor in writing if the
Facility or any Unit of Equipment is lost or damaged (where the estimated repair
costs would exceed the greater of 20% of its then Fair Market Value or
U.S.$100,000.00 Dollars), or is otherwise involved in an accident causing
personal injury or property damage, excluding claims for worker's compensation.
(d) Within 30 days after any request by Lessor and in connection with any
financial statement delivered pursuant to paragraph (b) above and (e) below,
Lessee will furnish a certificate of a Responsible Officer of Lessee stating
that he has reviewed the activities of Lessee and that, to the best of his
knowledge, there exists no Default or event which, with the giving of notice or
the lapse of time (or both), would become a Default.
(e) Lessee will deliver to Lessor in English and in Dollars, within 100
days of the close of each fiscal year of Lessee, Lessee's consolidated balance
sheet, profit and loss statement, and statement of cash flows prepared in
accordance with Mexican GAAP certified by a recognized firm of certified public
accountants. Lessee will deliver to Lessor, in English and in Dollars,
quarterly, within 50 days of the close of each of the first three fiscal
quarters of Lessee a statement in the form of Exhibit No. 3, as attached hereto,
prepared on a substantially similar basis as C&A's financial quarterly
statements and certified by the chief financial officer of ▇▇▇▇▇▇▇ in connection
with managing the business of Lessee.
(f) Lessee will comply with Section 17(b)(ii) within 120 days of the Basic
Term Commencement Date and will provide Lessor with a written report of the
identification numbers applicable to each Unit within 120 days of the Basic Term
Commencement Date.
(g) Lessee shall promptly deliver to Lessor written notice of: (i) any
violation of any Environmental Law which violation could reasonably be expected
to result in a material administrative or a criminal or civil liability to C&A,
▇▇▇▇▇▇▇ or Lessee with respect to any Equipment Location or could otherwise
result in a Material Adverse Effect, (ii) any proceeding, investigation or
inquiry of which Lessee has been notified by any Governmental Authority
(including without limitation, Mexico's Federal Prosecutor's Office for
Environmental Protection (Procuraduria Federal de Proteccion al Ambiente) or any
non-government third party with respect to the presence or Release of Hazardous
Substances in, on, from or to any Equipment Location which presence or Release
could reasonably be expected to result in a
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violation of any Environmental Law, and (iii) any Release of Hazardous
Substances by the Lessee or with respect to the Equipment Location, which
Release could reasonably be expected to result in a violation of any
Environmental Law.
(h) Lessee will deliver to Lessor, within 50 days of the close of each
Fiscal Quarter (except for the fourth Fiscal Quarter which shall be delivered
within 100 days), a report certified by an officer of Lessee as to compliance
with the matter set forth in Section 8(b) of the Intercompany Agreement.
(i) [Reserved]
(j) Lessee will deliver to Lessor, within 50 days of the close of each
Fiscal Quarter (except for the fourth Fiscal Quarter which shall be delivered
within 100 days), beginning with that Fiscal Quarter which contains the 18 month
anniversary of the Basic Term Commencement Date a report certified by an officer
of Lessee as to the matter set forth in Section 17(b)(xiv).
6. DELIVERY, USE AND OPERATION
(a) Lessee represents and warrants that the Facility and the Equipment
shall be in Lessee's possession as of the Basic Term Commencement Date.
(b) Lessee agrees that the Facility and the Equipment will be maintained
and used by Lessee solely in the conduct of its business and in a manner
complying with all Applicable Laws and any applicable insurance policies, and
Lessee shall not permanently discontinue use of the Facility and the Equipment
(except as otherwise provided in Section 6(g)).
(c) Lessee shall not directly or indirectly create, incur, assume or
suffer to exist, any Lien on or with respect to the Facility or the Equipment or
any part thereof, title thereto, or any interest of Lessor therein, or in this
Agreement, except Permitted Liens. Lessee will promptly, at its own expense,
take or cause to be taken such action as may be necessary to discharge any Lien
with respect to the Facility and the Equipment which is not a Permitted Lien.
(d) Lessee shall permit any Person designated by Lessor, during normal
business hours upon reasonable notice to visit (and, unless a Default shall have
occurred and be continuing, in no event more than quarterly), inspect and survey
the Facility and the Equipment, its condition, use and operation, and the
records maintained in connection therewith and to install, at Lessee's sole cost
and expense, a system of visible and clear identification tagging on the
Facility and all the Equipment and any Part thereof which will (i) identify that
the Facility and the Equipment is property of Lessor, and (ii) identify the
manufacturer, serial numbers and type and model thereof as set forth in Annex A
to each Schedule; provided, that no such exercise of such inspection rights
shall violate Lessee's safety and security requirements. None of Lessor or any
of its designees shall have any duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
The failure of any such party to object to any condition or procedure observed
or observable in the course of an inspection hereunder shall not be deemed to
waive or modify any of the terms of this Agreement with respect to such
condition or procedure.
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(e) Lessee will keep each Unit at the Equipment Location specified in the
applicable Schedule and will not move the Facility nor any Unit from such
Equipment Location.
(f) The Facility and the Equipment shall at all times remain personal
property of Lessor regardless of the degree of its annexation to any real
property and shall not by reason of any installation in, or affixation to, real
or personal property become a part thereof. Lessee shall obtain and deliver to
Lessor (to be recorded at Lessee's expense) from any Person having an interest
in the property where the Facility or the Equipment is to be located, waivers of
any Lien, encumbrance or interest which such Person might have or hereafter
obtain or claim with respect to the Facility or the Equipment.
(g) Lessee may from time to time substitute an item of equipment (a
"Replacement Unit") for one or more Units (collectively, the "Old Unit") (all
such substitutions done at the same time shall be considered a "Substitution")
subject to satisfaction of the following conditions:
(i) No Default shall have occurred and be continuing;
(ii) Lessee shall, not less than 10 Business Days prior to such
substitution, inform Lessor in writing of the following:
(1) The location and description of the Old Unit; and
(2) A description of each Replacement Unit, including its
location, date of manufacture, original cost, estimated current
market value and function;
(iii) Lessee shall be effecting such substitution solely because
such Unit has become economically obsolete or is surplus to Lessee's needs
and Lessee intends to treat such Unit for all purposes as scrap; and in
either case Lessor shall have received a certificate of Lessee's Chief
Financial Officer to such effect;
(iv) The Replacement Unit (A) is of like-kind with the Old Unit, (B)
has a fair market and estimated residual value at the time of such
Substitution, utility and remaining economic useful life at least equal to
the fair market and estimated residual value at the time of such
Substitution, utility and remaining useful life of the Old Unit, assuming
such Old Unit has been maintained in the condition required by this
Agreement and is in compliance with Applicable Laws, (C) is of the same or
newer date of manufacture as the Old Unit (or was manufactured no earlier
than three years prior to the Old Unit and is in better physical and
operating condition than the Old Unit, assuming such Old Unit has been
maintained in the condition required by this Agreement), and (D) if the
Old Unit is part of an integrated line, the Replacement Unit shall not
adversely affect the current or estimated future residual value, utility
or remaining economic useful life of the remaining Units of that
integrated line other than by an immaterial amount;
(v) Lessor shall have received from Lessee a duly executed full
warranty ▇▇▇▇ of sale for such Replacement Unit and title to such Unit
shall have vested in Lessor, free and clear of all Liens;
9
(vi) Lessor shall have received a duly executed amendment to the
applicable Schedule confirming such substitution;
(vii) Lessee shall (with the cooperation of Lessor) make all filings
necessary to protect the interests of Lessor in such Replacement Unit
concurrently with consummating such substitution;
(viii) No more than two Substitutions pursuant to this paragraph (g)
shall have occurred during any fiscal year;
(ix) Such Substitution shall be qualified as a "like-kind exchange"
under Section 1031 of the Code entitling Lessor to non-recognition of any
gain realized by Lessor upon such Substitution, and Lessor shall have
received a legal opinion from its counsel to such effect;
(x) During the Term, Lessee may not substitute more than
U.S.$15,000,000.00 Dollars of the Equipment, measured by Capitalized
Lessor's Cost; and
(xi) Upon a Substitution, (A) the Replacement Unit shall be located
at the Equipment Location of the Old Unit and (B) Lessee shall comply and
meet all of the requirements of Section 17(a)(x).
Upon conveyance of the Replacement Unit to Lessor and compliance with the
requirements of this paragraph above, the Replacement Unit shall become the
property of Lessor and the Old Unit shall become property of Lessee. For all
purposes hereof, the Replacement Unit shall, after such transfer, be deemed to
have the same Capitalized Lessor's Cost as the Old Unit. No such Substitution
shall result in any change in Rent. Lessee shall pay, on an After-Tax Basis, all
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by Lessor and for all taxes, fees and other governmental charges
payable in connection with the Substitution of Equipment pursuant to this
Section 6(g).
(h) Lessee (and not the Lessor) will be solely responsible of complying
with all Applicable Laws and existing agreements in connection with the
installation, use, possession and operation of the Facility and the Equipment,
and to obtain and maintain on its own behalf the consents, licenses,
authorizations, permits, concessions, registrations and other documentation
required in accordance with such Applicable Laws and existing agreements. The
Lessee (and not the Lessor) will be solely liable for any fines or penalties
imposed by any Governmental Authority in connection with the foregoing.
(i) Lessee shall (y) not use the Facility or the Equipment for any purpose
other than as provided herein, and (z) respond for any damages caused to third
parties by the use and/or operation.
(j) Lessee shall at its own cost, defend the Facility and the Equipment,
as well as the property and rights of Lessor, from any third party claims and
take all such actions that are necessary in connection with such defense.
10
7. MAINTENANCE
(a) Lessee will, at its sole expense, maintain, service, test and inspect
the Facility and each Unit of Equipment (i) so as to keep the Facility and each
such Unit of Equipment in good operating order, repair, condition and
appearance, normal wear and tear excepted, (ii) in accordance with
manufacturer's recommendations, and so as to maintain in full force and effect
any maintenance warranties, (iii) in compliance with Applicable Laws and the
requirements of insurance in accordance with Section 10 hereof, (iv) at a
standard consistent with industry practices, and (v) in all events not less than
Lessee's standard practices for similar equipment owned or leased by Lessee.
Subject to Section 5(f), Lessee shall, if at any time reasonably requested by
Lessor, affix in a prominent position on each Unit of Equipment plates, tags or
other identifying labels showing the interest therein of Lessor.
(b) Lessee will not, without the prior consent of Lessor, affix or install
any accessory, equipment or device with respect to the Facility or on any
Equipment if such addition will impair the value, originally intended function
or use of the Facility or such Equipment. All additions, repairs, parts,
supplies, accessories, equipment, and devices furnished, attached or affixed to
the Facility or to any Equipment which are not readily removable shall be made
only in compliance with Applicable Laws, including Internal Revenue Service
guidelines, e.g. Rev. Proc. 2001-28 (as may be hereafter modified or
superceded), shall constitute a "severable improvement" within the meaning of
Rev. Proc. 2001-28 or a "non-severable improvement" described in Section 4.04(3)
of such Revenue Procedure, shall not render the Facility complete for its
intended use and will not cause the Facility to become "limited use" property
within the meaning of Rev. Proc. 2001-28, 2001-19 I.R.B. 1156 or Rev. Proc.
2001-29, 2001-19 I.R.B 1160, shall be free and clear of all Liens other than
Permitted Liens and shall become the property of Lessor. Lessee will not,
without the prior written consent of Lessor and subject to such conditions as
Lessor may reasonably impose for its protection, affix or install any Equipment
to or in any other personal or real property such that it would become a real
property fixture for purposes of the UCC or any other Applicable Laws.
(c) Any alterations or modifications to the Facility or the Equipment that
may, at any time during the Term of this Agreement, be required to comply with
any Applicable Laws shall be made at the expense of Lessee, and shall be free
and clear of all Liens and shall immediately become the property of Lessor.
8. CASUALTY OCCURRENCE.
Lessee shall promptly notify Lessor in writing if the Facility or any Unit
of Equipment shall be or become worn out, lost, stolen, destroyed, irreparably
damaged in the reasonable determination of Lessee, or permanently rendered unfit
for use from any cause whatsoever (including a violation of applicable
Environmental Laws concerning or with respect to PCBs or Hazardous Substances)
(such occurrences being hereinafter called "Casualty Occurrences"). The parties
hereby acknowledge and agree that the Facility and all Units of Equipment shall
be under Lessee's care and attention at all times, and that Lessee shall take
all precautions and preventive measures to maintain the Facility and each and
all Units of Equipment in working condition and to use the Facility and the
Units of Equipment in accordance with this Agreement, therefore, Lessee shall be
responsible for any Casualty Occurrence. Unless otherwise expressly
11
provided for in Section 10(f) hereto, if any of the events set forth in the
proviso to clause (ii) of Section 10(f) have occurred, on the date set forth on
Annex C to the applicable Schedule during the first month next succeeding a
Casualty Occurrence, or if such date is not a Business Day, then on the next day
that is a Business Day (the "Payment Date"), Lessee shall pay Lessor, as a
contractual penalty (▇▇▇▇ convencional) for the early termination of the lease
over the Facility or such affected Unit, the sum of (x) the Stipulated Loss
Value of the Facility or such Unit calculated in accordance with Annex C of the
applicable Schedule; and (y) all Rent (including Basic Term Rent) and other
amounts which are due hereunder with respect to the Facility or such Unit as of
the Payment Date. Upon payment of all sums due hereunder, the obligation of
Lessee to pay Rent and the Term of this Agreement as to the Facility or such
Unit shall terminate and (except in the case of the loss, theft or complete
destruction of the Facility or such Unit) Lessor shall be entitled to recover
possession of the Facility or such Unit, as the case may be, on an AS IS, WHERE
IS BASIS.
9. LOSS OR DAMAGE
Lessee hereby assumes and shall bear the entire responsibility for any
loss, theft, damage to, or destruction of the Facility, any Unit of Equipment
from any cause whatsoever, in accordance with the terms of this Agreement . The
parties hereby acknowledge and agree that the Facility and all Units of
Equipment shall be under Lessee's care and attention at all times, and that
Lessee shall take all precautions and preventive measures to maintain the
Facility and each and all Units of Equipment in working condition and to use the
Facility and the Units of Equipment in accordance with this Agreement,
therefore, Lessee shall be responsible for any loss, damage to or destruction of
the Facility or any Unit of Equipment; provided, however, that if, and so long
as, no default exists under this Agreement, the foregoing shall not limit or
otherwise affect any rights the Lessee may have against third parties.
10. INSURANCE
(a) Coverage. Without limiting any of the other obligations or liabilities
of Lessee under this Agreement, Lessee shall, during the term of this Agreement,
carry and maintain, with respect to the Facility and the Equipment, at its own
expense, at least the minimum insurance coverage set forth in this Section 10.
Lessee shall also carry and maintain any other insurance that Lessor may
reasonably require from time to time. All insurance carried pursuant to this
Section 10 shall be placed with such insurers having a minimum A.M. Best rating
of A:X, subject to Section 10(g) below, and be in such form, with terms,
conditions and limits as shall be acceptable to Lessor. The insurance required
to be carried and maintained by Lessee hereunder shall in all events, include
the following:
(i) All Risk Property Insurance. Lessee shall maintain all risk
property insurance covering the Facility and the Equipment against
physical loss or damage, including but not limited to fire and extended
coverage, collapse, flood, earth movement and comprehensive boiler and
machinery coverage (including electrical malfunction and mechanical
breakdown). Coverage shall be written in the greater of the then current
Stipulated Loss Value or replacement cost value in an amount acceptable to
Lessor. Such insurance policy shall contain an agreed amount endorsement
waiving any coinsurance
12
penalty and shall include expediting expense coverage in an amount not
less than U.S.$1,000,000.00 Dollars; and
(ii) Business Interruption Insurance. As an extension of the
insurance required under subsection (a)(i), Lessee shall maintain, or
cause to be maintained, business interruption insurance in an agreed
amount equal to 12 months projected net profits, and continuing expenses
(including the lease payments due on the Facility); provided, that
deductibles under such policy shall not exceed 45 days; and
(iii) Commercial General Liability Insurance. Lessee shall maintain
comprehensive general liability insurance written on an occurrence basis
with a limit of not less than U.S.$1,000,000.00 Dollars. Such coverage
shall include, but not be limited to, premises/operations, broad form
contractual liability, independent contractors, products/completed
operations, property damage and personal injury liability. Such insurance
shall not contain an exclusion for punitive or exemplary damages where
insurable by law; and
(iv) Workers' Compensation/Employer's Liability. The Lessee shall
maintain (i) Statutory Insurance with the Mexican Institute of Social
Security (Instituto Mexicano del Seguro Social (I.M.S.S.) for its
employees or any other statutory insurance required by Mexican law with
respect to work-related injuries, disease or death of an employee of the
Lessee while at work or in the scope of his/her employment with the
Lessee, (ii) workers' compensation insurance or any other statutory
insurance required by applicable law with respect to work-related
injuries, disease or death of any expatriate employee of Lessee while at
work or in the scope of his/her employment with the Lessee and (iii)
Employer's Liability in an amount not less than $1,000,000; and
(v) Excess/Umbrella Liability. Lessee shall maintain excess or
umbrella liability insurance written on an occurrence basis in an amount
not less than U.S.$25,000,000.00 Dollars providing coverage limits excess
of the insurance limits required under sections (a)(iii), and (a)(iv)
employer's liability only. Such insurance shall follow the form of the
primary insurances and drop down in case of exhaustion of underlying
limits and/or aggregates. Such insurance shall not contain an exclusion
for punitive or exemplary damages where insurable under law.
(b) Endorsements. Lessee shall cause all insurance policies carried and
maintained in accordance with this Section 10 to be endorsed as follows:
(i) Lessee shall be the named insured and Lessor shall be an
additional named insured and loss payee as its interest may appear with
respect to the Facility and Equipment covered by property policies
described in subsection (a)(i) and (a)(ii). Lessee shall be the named
insured and Lessor shall be an additional insured with respect to
liability policies described in subsections (a)(iii), (a)(iv) to the
extent allowed by law and (a)(v). It shall be understood that any
obligation imposed upon Lessee, including but not limited to the
obligation to pay premiums, shall be the sole obligation of Lessee and not
that of Lessor; and
13
(ii) With respect to property policies described in subsections
(a)(i) and (a)(ii), the interests of Lessor shall not be invalidated by
any action or inaction of Lessee, ▇▇▇▇▇▇▇ or any other person, and shall
insure Lessor regardless of any breach or violation by Lessee or any other
person, of any warranties, declarations or conditions of such policies;
and
(iii) Inasmuch as the liability policies are written to cover more
than one insured, all terms conditions, insuring agreements and
endorsements, with the exception of the limits of liability, shall operate
in the same manner as if there were a separate policy covering each
insured; and
(iv) The insurers thereunder shall waive all rights of subrogation
against Lessor any right of setoff or counterclaim and any other right to
deduction, whether by attachment or otherwise; and
(v) Such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of Lessor with respect to
their interests as such in the Equipment; and
(vi) If such insurance is canceled for any reason whatsoever,
including nonpayment of premium, or any changes are initiated by Lessee or
the carrier which affects the interests of Lessor, such cancellation or
change shall not be effective as to Lessor until 30 days, except for
(non-payment of premium which shall be 10 days) after receipt by Lessor of
written notice sent by registered mail from such insurer.
(c) Certifications. On the Basic Term Commencement Date with respect to
the Facility and Equipment leased as of such date, and at each policy renewal,
but not less than annually with respect to the Facility and all Equipment then
leased, Lessee shall provide to Lessor a certification from each insurer or by
an authorized representative of each insurer. Such certification shall identify
the underwriters, the type of insurance, limits, and term thereof and shall
specifically list the special provisions delineated for such insurance required
for this Section 10.
(d) Insurance Report. Concurrently with the furnishing of all certificates
referred to in this Section 10, Lessee shall furnish Lessor with a statement
from an independent insurance broker, acceptable to Lessor, stating that all
premiums then due have been paid and that, in the opinion of such broker, the
insurance then maintained by Lessee is in accordance with this Section 10.
Furthermore, upon its first knowledge, such broker shall advise Lessor promptly
in writing of any default in the payment of any premiums or any other act or
omission, on the part of any person, which might invalidate or render
unenforceable, in whole or in part, any insurance provided by Lessee and/or user
hereunder.
(e) General. Upon request, Lessee shall furnish Lessor with copies of all
insurance policies, binders and cover notes or other evidence of such insurance.
Notwithstanding anything to the contrary herein, no provision of this Section 10
or any provision of this Agreement shall impose on Lessor any duty or obligation
to verify the existence or adequacy of the insurance coverage maintained by
Lessee, nor shall Lessor be responsible for any representations or
14
warranties made by or on behalf of Lessee to any insurance broker, company or
underwriter. Lessor, at its sole option, may obtain such insurance if not
provided by Lessee and in such event, Lessee shall reimburse Lessor upon demand
for the cost thereof together with interest.
(f) Proceeds of Insurance. Insurance proceeds shall be applied as follows:
(i) If the Lessee believes that, based on reasonable estimates of
loss, the amount of insurance proceeds payable in respect of any casualty
event or any series of related casualty events to be less than or equal to
U.S.$5,000,000, the Lessee may elect to restore or replace the property
affected by such casualty event without the consent of the Lessor so long
as no Default shall have occurred and be continuing.
(ii) If the Lessee believes that, based on reasonable estimates of
loss, the amount of insurance proceeds payable in respect of any casualty
event or any series of related casualty events to be in excess of
U.S.$5,000,000, the Lessee may elect to restore or replace the property
affected by such casualty event if the Lessee has delivered to the Lessor,
within twenty (20) days from the occurrence of such casualty event, a
Restoration or Replacement Plan with respect to such casualty that is
based upon, or accompanied by, each of the following: (A) (1) a detailed
breakdown of the nature and extent of such casualty event and (2) a bona
fide assessment (from a contractor reasonably acceptable to the Lessor) of
the estimated cost and time needed to restore or replace the affected
property; (B) satisfactory evidence that such insurance proceeds and the
Lessee's other available funds are sufficient to make the necessary
restorations to or replacement of the affected property; (C) delivery of
an officer's certificate of the Lessee certifying that, at the completion
of the restoration or replacement, no Default shall have occurred and be
continuing in connection with such casualty event; and (D) confirmation by
the Engineering Consultant of the Lessor, of its agreement based on the
information available to them with the matters set forth in clauses (A)
through (B) above within twenty (20) days after the receipt of the
foregoing information and its approval of such Restoration or Replacement
Plan; provided, that, if the Lessee does not deliver such Restoration or
Replacement Plan within such 20 day period or if the Lessor or the
Engineering Consultant rejects the proposed Restoration or Replacement
Plan, the Lessee shall promptly pay, or cause to be paid, proceeds of any
insurance to Lessor, as loss payee, which shall be applied, in Lessor's
discretion, toward the replacement, restoration or repair of the Facility
or the Equipment to the condition required by Section 7 or toward the
payment of Stipulated Loss Value in accordance with Section 8 hereof.
(iii) If a Default shall have occurred and be continuing, then
Lessee shall remit to Lessor, as loss payee, proceeds of any insurance
covering damage or loss which proceeds shall be applied, in Lessor's
discretion, to repair or replace the Facility in accordance with clause
(ii) above.
(g) Insurance Carriers. From the date hereof through December 1, 2004, the
minimum rating requirement for insurers imposed by Section 10(a) shall not apply
to the following insurance carriers if such insurance carrier listed in
subparagraphs (i) and (ii) of this paragraph has an A.M. Best rating of A- or
higher, and if and so long as Lessee's insurance
15
broker provides a letter to Lessor on the date hereof and every quarter
thereafter confirming such minimum rating for such insurance carrier:
(i) Montpelier Reinsurance Company; and
(ii) Arch Reinsurance Company.
11. RETURN OF FACILITY AND EQUIPMENT
(a) Upon any expiration or termination of this Agreement or any Schedule
(after giving effect to any elected Renewal Term), unless Lessee shall have
exercised its purchase option hereunder, Lessee shall promptly, at its own cost
and expense:
(i) Provide to Lessor at least 365 days prior to the scheduled
expiration of this Agreement a detailed inventory for the Facility and of
all Units. The inventory should include a detailed listing of the Units by
model, serial number and location.
(ii) Ensure that the Facility and the Equipment is returned to
Lessor as follows: (A) all operating and application specific software
used to control the machine including upgrades (to the extent such
software upgrades were purchased by Lessee) must remain properly installed
and functional; (B) all batteries for control memories must be fully
charged; (C) all screen changers, sensors, monitors, and computer
controllers will operate within manufacturers specifications, normal wear
and tear excluded; (D) the Facility, including all Equipment, will be
cleaned and cosmetically acceptable, ordinary wear and tear excepted, and
in such condition so that it may be immediately installed and placed into
use in a production environment; (E) any tooling and/or grinding wheels
returned to Lessor at lease termination will be identical in nature,
subject to Section 6(g) herein, to those on the Basic Term Commencement
Date; and (F) otherwise is in the condition required by this Agreement and
free and clear of all Liens.
(iii) At least 180 days prior to the scheduled expiration of this
Agreement (after giving effect to any elected Renewal Term): (A) and upon
receiving reasonable notice by Lessor, make the Facility and the Equipment
available for operational inspections (where applicable) by potential
purchasers; (B) cause the persons expressly authorized by Lessor (the
"Authorized Inspector"), to inspect, examine and test all material and
workmanship to ensure the Facility and the Equipment is operating within
the manufacturer's specifications; and (C) if during such inspection,
examination and test, the Authorized Inspector finds any Unit not
operating within the manufacturer's specifications as such would be
expected for the age of such Unit, then Lessee shall repair or replace
such Unit and, after corrective measures are completed, Lessee will
provide for another inspection of such Unit by the Authorized Inspector as
outlined above.
(iv) Have each Unit returned with an in-depth field service report
detailing said inspection as outlined in clause (iii) above. The report
shall certify that the Facility and the Equipment have been properly
inspected, examined and tested and is operating within the manufacturer's
specifications.
16
(v) At least 45 days prior to the scheduled expiration of the
Agreement and upon request by Lessor, provide to Lessor the following
documents: (A) one set of service and operating manuals, if available,
including replacements and/or additions thereto, such that all
documentation is completely up to date; and, (B) if any, one set of
documents detailing equipment configuration, operating requirements,
maintenance records, and other technical data concerning the set-up and
operation of the Facility and Equipment including replacements and
additions thereto, such that all documentation is completely up to date.
(vi) Provide for the deinstallation, packing and transporting of the
Facility and Equipment to include, but not limited to, the following: (A)
the manufacturer's representative (or in the alternative, a qualified
technical employee of Lessee, in accordance with any applicable
manufacturer's recommendations) shall de-install all Equipment (including
all wire, cable and mounting hardware); (B) all process fluids shall be
removed from the Equipment and disposed of in accordance with applicable
Environmental Laws; (C) dismantling and handling is to be done per the
original manufacturer's specifications or normal industry accepted
practices for new machines must be followed. Any special transportation
devices such as metal skids, lifting slings, brackets, etc., which were
with the machine when it originally arrived must be used to the extent
available, or otherwise, Lessee shall use such other devices as will
assure the safety of such Equipment being transported; (D) all keys
belonging to the Facility and Equipment are to be wired together and
secured to a major component of the machine; (E) Lessee shall provide for
transportation of the Facility and Equipment in a manner consistent with
the manufacturer's recommendations and practices to a street address
within the continental United States of America or Mexico designated by
Lessor; provided, however that such street address shall not be more than
1500 miles from the Equipment Location; and (F) Lessee shall obtain and
pay for a policy of transit insurance for the delivery period in an amount
equal to the replacement value of the Facility and Equipment with Lessor
named as loss payee on all such policies of insurance; and (G) Lessee
shall provide safe, secure storage for the Facility and Equipment for a
period of up to 90 days after expiration or early termination of this
Agreement at an accessible location reasonably satisfactory to Lessor.
(vii) Ensure that the Facility and all Equipment and operations of
the Facility and the Equipment (A) conform to all Applicable Laws and (B)
are free from Contaminants.
(viii) Permit, with Lessee's full cooperation and assistance, Lessor
to attempt to effect a resale, by auction or otherwise, of the Facility
and the Equipment for a period from 120 days prior to the expiration of
this Agreement. During this period, the Facility and the Equipment must
remain operational with the necessary electrical power, lighting, heat,
water, lubricating fluids and compressed air necessary to maintain and
demonstrate the Equipment to any potential buyer. Any such resale will be
conducted in a manner which will not interfere with Lessee's business
operations.
(ix) Provide reasonable assistance to the extent necessary to allow
Lessor to obtain all licenses and regulatory approvals required for the
operation of the Facility and
17
the Equipment, provided, that Lessee shall have no monetary obligation
with respect to this paragraph.
(b) Until Lessee fully has complied in all material respects with the
requirements of subsections (i)-(ix) of paragraph (a) above, Lessee's Rent
payment obligation at a rental equal to the greater of the periodic Rent payable
in respect of the Facility and each such Unit of Equipment and the Fair Market
Rental Value of the Facility and the Equipment and all other obligations under
this Agreement shall continue. If the Facility or any Unit is not returned to
Lessor within 60 days after the expiration of this Agreement, Lessor, at its
election, may deem such Unit to have suffered a Casualty Occurrence, in which
event, Lessee shall pay to Lessor the greater of the Fair Market Value or the
Stipulated Loss Value (plus all Rent, including Basic Term Rent then due) of
Facility or such Unit. In addition to these Rents, Lessor shall have all of its
other rights and remedies available as a result of this nonperformance.
Notwithstanding the requirements of paragraph (a) above, at the end of the Basic
Term or the Renewal Term, if a Responsible Officer of Lessee certifies that the
Facility or any Unit or Units have suffered a Casualty Occurrence, Lessee shall
be entitled to pay, on the last day of the Basic Term or the Renewal Term, as
the case may be, to Lessor the greater of Fair Market Value or Stipulated Loss
Value (plus all Rent, including Basic Term Rent then due) with respect to the
Facility or such Unit or Units and, upon making such payment, shall be exempt
from the requirements of paragraph (a) above; provided, however, that in
determining Fair Market Value of the Facility or Equipment having suffered a
Casualty Occurrence, the Facility or Equipment shall be assumed to be in the
condition in which it is required to be maintained immediately prior to such
Casualty Occurrence. Upon receipt of payment in full, Lessee shall be entitled
to receive from Lessor whatever interest Lessor has in the Facility or such Unit
or Equipment, as the case may be, on an AS IS, WHERE IS basis.
12. DEFAULT; REMEDIES
(a) Lessor may in writing declare this Agreement in default ("Default")
if:
(i) Lessee breaches its obligation to pay Rent or any other sum as
and when due and fails to cure the breach within 5 Business Days after the
date such amount was due;
(ii) Lessee fails to maintain its insurance coverage required under
Section 10;
(iii) Lessee breaches any of its other covenants or obligations
hereunder (excluding those covenants and obligations covered by clauses
(i) and (ii) above and clauses (v), (xiii), (xviii) and (xx) below) and
Lessee fails to cure such breach within 30 days after written notice
thereof;
(iv) any representation or warranty made by Lessee, ▇▇▇▇▇▇▇, C&A
and/or its Subsidiary or Affiliate in connection with any Operative
Document or Document shall be false or misleading in any material respect
when made;
(v) Lessee shall or shall attempt to (except as expressly permitted
by the provisions of this Agreement) sell, transfer, encumber (except to
the extent of a Permitted
18
Lien), or assign the Facility or the Equipment or any part thereof, or use
the Facility or the Equipment for an illegal purpose or permit the same to
occur;
(vi) any certificate, statement, representation, warranty or audit
contained herein or heretofore or hereafter furnished with respect hereto
by or on behalf of Lessee, C&A or ▇▇▇▇▇▇▇ proving to have been false in
any material respect at the time as of which the facts therein set forth
were stated or certified;
(vii) Lessee or ▇▇▇▇▇▇▇ admits in writing its inability to pay its
debts as they become due, terminates its corporate existence, or ceases to
do business as a going concern;
(viii) Lessee or ▇▇▇▇▇▇▇ shall file a voluntary petition in
bankruptcy, concurso mercantil or a voluntary petition or an answer
seeking reorganization in a proceeding under any bankruptcy or
receivership laws (as now or hereafter in effect) or an answer admitting
the material allegations of a petition filed against Lessee or ▇▇▇▇▇▇▇ in
any such proceeding, or Lessee or ▇▇▇▇▇▇▇ shall, by voluntary petition,
answer or consent, seek relief under the provisions of any other now
existing or future bankruptcy, concurso mercantil, receivership or other
similar law providing for the reorganization or liquidation of
corporations, or providing for an agreement, composition, extension or
adjustment with its creditors;
(ix) petition is filed against Lessee or ▇▇▇▇▇▇▇ in a proceeding
under applicable bankruptcy, concurso mercantil, receivership or other
insolvency laws, as now or hereafter in effect, and is not withdrawn,
stayed or dismissed within 60 days thereafter, or if, under the provisions
of any law providing for reorganization or liquidation of corporations
which may apply to Lessee or ▇▇▇▇▇▇▇ any court of competent jurisdiction
shall assume jurisdiction, custody or control of Lessee or ▇▇▇▇▇▇▇ or of
any substantial part of their property, and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for
a period of 60 days;
(x) Lessee shall have merged into, or conveyed, transferred or
leased substantially all of its assets as an entirety to any Person (such
Person being referred to as a "Successor" and such action(s) being
referred to as an "Event"), unless prior to such Event, (i) the Successor
is engaged in a similar line of business and is organized and existing
under the laws of the United States of America, Mexico or any state
thereof, (ii) after taking the transaction into account, the Successor or
a substitute guarantor shall have a senior secured debt rating of "Ba1" or
better from ▇▇▇▇▇'▇ or a rating of "BB+" or better from S&P, (iii) the
Successor or any substitute guarantor has a net worth of at least
$300,000,000, and (iv) the Successor executes and delivers to the Lessor
an agreement containing an effective assumption by it of the due and
punctual performance of the Lessee under the applicable Operative
Documents to which the Lessee is a party and shall assume and perform the
reporting requirements of ▇▇▇▇▇▇▇ set forth in the applicable Operative
Documents to which the Lessee is a party; or
(xi) there occurs (a) an Event of Default under the Credit
Agreement, (b) a default by ▇▇▇▇▇▇▇ under the Guaranty or License
Agreement, (c) a Construction Agency
19
Event of Default under the CAA , (d) an Event of Default under the
Floating Lien Pledge, the Stock Pledge or the Guaranty Trust, (e) a breach
by the Lessee, the Guarantor or any Subordinated Creditor (as defined in
the Intercompany Agreement) under the Intercompany Agreement, or (f) a
breach by Supplier under the Ford Supply Agreement (as each such term is
defined therein) any of which has not been duly waived or cured
thereunder;
(xii) if there occurs under the Site Lease or any real property
lease for which Lessee is a tenant with respect to an Equipment Location
(i) a payment default which has not been duly waived or cured thereunder,
(ii) with respect to any such real property lease that Lessor or any
Affiliate or assignees of Lessor's interest herein, individually or
collectively, has no control over the exercise of any remedy, a
declaration of a default for which all applicable cure periods have lapsed
or the commencement of the exercise of any remedy thereunder or (iii) any
expiration or termination thereof;
(xiii) there occurs an expiration or termination of the Ford Supply
Agreement and a replacement agreement, acceptable to Lessor, is not in
full force and effect;
(xiv) [Reserved];
(xv) there occurs a default beyond any applicable grace periods
under (A) any other agreement between Lessor (or any Affiliate of Lessor)
and Lessee or ▇▇▇▇▇▇▇ or (B) any material contract that may impact the
Facility or the Equipment;
(xvi) there occurs a default under any of Lessee's or under any of
▇▇▇▇▇▇▇' credit agreements or financing facilities or similar arrangements
under which, in each case, any indebtedness equal to or exceeding an
aggregate principal amount of $35,000,000 or more was created or is
governed thereby which has not been duly waived or cured thereunder;
(xvii) ▇▇▇▇▇▇▇ shall no longer, directly or indirectly, control 100%
of the equity interests in Lessee or any successor entity other than as
permitted by Section 12(a)(x);
(xviii) Lessee shall fail to maintain or replace any Acceptable
Letter of Credit in accordance with Section 17(b)(vii) of this Agreement;
(xix) any Acceptable Letter of Credit shall cease to be binding on
the provider thereof, shall be rendered unenforceable in any material
respect, shall not have been renewed or replaced within 30 days before its
expiry, or any such provider thereof shall expressly renounce or repudiate
in writing its obligations thereunder (unless such Acceptable Letter of
Credit has been replaced by a replacement Acceptable Letter of Credit);
(xx) (a) if, in connection with any amendment, restatement,
replacement or refinancing of the Credit Agreement in full as in effect on
the date hereof, ▇▇▇▇▇▇▇ shall fail to use reasonable commercial efforts
to provide in such new documentation to become a guarantor of Lessee's
obligations hereunder under a Guaranty or (b) ▇▇▇▇▇▇▇
20
shall be permitted under any such documentation to provide such Guaranty
and shall fail to do so promptly thereafter as practicable;
(xxi) there occurs under any Schedule a Default (as such term is
defined therein);
(xxii) the direct or indirect contest by the Lessee of the validity
of the Lien granted in favor of, or for the benefit of, Lessor in any of
the Operative Agreements (including the Floating Lien Pledge), or the
taking of any action by the Lessee to repudiate, or purport to discontinue
or terminate this Agreement or any of the other Operative Documents; or
(xxiii) if this Agreement or any of the other Operative Documents
shall cease (1) to be a legal, valid and binding obligation, or (2) to be
in full force and effect.
Such declaration shall apply to all Schedules except as specifically excepted by
Lessor. Any provision of this Agreement to the contrary notwithstanding, Lessor
may exercise all rights and remedies hereunder independently with respect to
each Schedule.
(b) After any Default shall have occurred:
(i) at the request of Lessor, Lessee shall comply with the
provisions of Section 11(a) hereof;
(ii) Lessee hereby authorizes Lessor to enter any premises where the
Facility or any Equipment is located and take possession thereof;
(iii) Lessee shall, without further demand, forthwith pay to Lessor
(A) as a contractual penalty (▇▇▇▇ convencional), the Stipulated Loss
Value of the Facility and the Equipment (calculated in accordance with
Annex C of the applicable Schedule as of the Payment Date next preceding
the declaration of default), plus (B) an amount equal to all Rent
(including Basic Term Rent) and other sums then due hereunder; provided,
however that in the event of an early termination of the Site Lease or the
Ford Supply Agreement (other than as a result of an intentional or grossly
negligent breach by Lessee of any of its obligations thereunder or any
other matter within Lessee's control), so long as no other Default has
occurred and be continuing, Lessee shall be given the right to purchase
the Facility or the Equipment within thirty (30) days after such early
termination on an AS IS, WHERE IS BASIS for the greater of the Fair Market
Value or the Stipulated Loss Value, plus all applicable sales taxes,
together with any Rent (including Basic Term Rent) or other sums then due
hereunder on such date and during such thirty (30) day period, Lessor
shall forbear from exercising any of its rights or remedies under this
Section 12;
(iv) Lessor may, but shall not be required to, retain the
Environmental Consultant to undertake an Environmental Evaluation at
Lessee's expense; and
(v) Lessor may, but shall not be required to, sell the Facility or
the Equipment, or any portion thereof, at private or public sale, in bulk
or in parcels, with or without
21
notice, and without having the Facility or the Equipment present at the
place of sale; or Lessor may, but shall not be required to, lease,
otherwise dispose of or keep idle all or part of the Facility or the
Equipment; and Lessor may use Lessee's premises, until all amounts due
hereunder have been paid, for any or all of the foregoing without
liability for rent. The proceeds of sale, lease or other disposition, if
any, together with the aggregate proceeds obtained by Lessor from one or
more drawings under an Acceptable Letter of Credit made pursuant to
Section 12(c), shall be applied in the following order of priorities: (A)
first, to pay all of Lessor's costs, charges and expenses incurred in
taking, removing, holding, repairing and selling, leasing or otherwise
disposing of the Facility or the Equipment; then, (B) second, to the
extent not previously paid by Lessee, to pay Lessor all amounts due from
Lessee hereunder; then, (C) third, to reimburse to Lessee any sums
previously paid by Lessee to Lessor as a contractual penalty pursuant to
Section 12(b)(iii); then, (D) fourth, to reimburse to Lessee any sums
obtained by Lessor from one or more drawings under an Acceptable Letter of
Credit pursuant to Section 12(c) in excess of application of such sums
against any amounts due to Lessor from Lessee hereunder (including any
application of such sums to the payment of contractual penalties); and (E)
fifth, any surplus shall be retained by Lessor. Lessee shall pay any
deficiency in clauses (A) and (B) forthwith.
(c) In addition to the foregoing rights but subject to Section 12(b)(iii),
after a Default shall have occurred, and without limitation of any of the
foregoing remedies, Lessor (i) may terminate or cancel this Agreement as to the
Facility or any or all of the Equipment; (ii) shall be entitled to make a
drawing under any Acceptable Letter of Credit for the maximum amount available
thereunder and apply the proceeds thereof to satisfy Lessee's obligations
hereunder and under the other Documents, (iii) may exercise any of its rights
under the License Agreement, or (iv) can, in its sole discretion, elect to
exercise any or all of its rights under the Guaranty Trust and the Stock Pledge,
with respect to the Lessee's Stock, and/or under the Floating Lien Pledge, with
respect to any of the property, permits or other interests of Lessee covered
thereby which relate to the Facility or the Equipment.
(d) The foregoing remedies are cumulative, and any or all thereof may be
exercised in lieu of or in addition to each other or any remedies at law. If
permitted by Applicable Laws, Lessee shall pay reasonable attorney's fees
actually incurred by Lessor in enforcing the provisions of this Agreement and
any ancillary documents. Waiver of any Default shall not be a waiver of any
other or subsequent default.
(e) Unless previously terminated, upon payment of all amounts due
hereunder, this Agreement shall terminate.
13. ASSIGNMENT; SYNDICATION
(a) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR CREATE ANY TYPE OF LIEN
OVER THE FACILITY OR ANY EQUIPMENT OR THE INTEREST OF LESSEE HEREUNDER WITHOUT
THE PRIOR WRITTEN CONSENT OF LESSOR.
(b) Lessor may, without the consent of Lessee, assign any or all of its
right, title and interest in this Agreement or in any Schedule, or the right to
enter into any Schedule, provided,
22
that so long as no Default has occurred and is continuing, Lessor will not
assign all or any portion of its right, title and interest in this Agreement or
in any Schedule or the right to enter into any Schedule to (i) a Competitor of
Lessee or (ii) any entity that Lessee determines, based on written advice of its
auditors and as confirmed to Lessor in a certificate of a Responsible Officer of
Lessee delivered to Lessor within ten days after receipt of notice by Lessor as
to the identity of the proposed transferee, will result in Lessee consolidating
its financial reports with such entity. Lessee agrees that it will pay all Rent
and other amounts payable under each Schedule to Lessor named therein; provided,
however, if Lessee receives written notice of an assignment from Lessor, Lessee
will pay all Rent and other amounts payable under any assigned Schedule to such
assignee or as instructed by Lessor. Each Schedule, incorporating by reference
the terms and conditions of this Agreement, shall constitute, collectively, a
single instrument of lease. Lessor and each such assignee shall have all rights
as "Lessor" hereunder separately exercisable by Lessor or such assignee as the
case may be, exclusively and independently of Lessor or any other assignee with
respect to other Schedules executed pursuant hereto. Lessee agrees reasonably to
cooperate with Lessor in connection with any such proposed assignment, including
the execution and delivery of such other documents, instruments, notices,
opinions, certificates and acknowledgments, as reasonably may be required by
Lessor or such assignee, and the delivery of all information concerning Lessee
and ▇▇▇▇▇▇▇ that is reasonably necessary for Lessor to complete the assignment;
and Lessee further agrees to confirm in writing receipt of a notice of
assignment as reasonably may be requested by assignee. Lessee hereby waives and
agrees not to assert against any such assignee any defense, set-off, recoupment
claim or counterclaim that Lessee has or may at any time have against Lessor for
any reason whatsoever, provided, however, that nothing contained in this
sentence shall be construed as a waiver by Lessee of its right to assert against
Lessor, in a separate action against Lessor, any claims that Lessee has against
Lessor. The parties acknowledge and agree that Lessee shall not be liable for or
incur any increase or withholding of Taxes as a result of such assignment by
Lessor other than Taxes imposed in the After-Tax Basis calculation; provided,
that no Default has occurred and is continuing.
(c) Subject always to the foregoing, this Agreement inures to the benefit
of, and is binding upon, the successors and assigns of the parties hereto.
(d) Lessee acknowledges that it has been advised that the interest of
Lessor in this Agreement and the other Documents may be conveyed to or
participated to, in whole or in part, and may be used as security for financing
obtained from, one or more third parties without the consent of Lessee pursuant
to a syndication.
(e) In connection herewith GECMG may initiate discussions with potential
participants regarding their participation in this transaction. Lessee and its
management will assist in all syndication efforts. Such assistance will include,
but not be limited to: (i) prompt assistance in the preparation of an
information memorandum and verification of the accuracy and completeness of the
information contained therein; (ii) preparation of other information, offering
materials and projections by Lessee and its advisors taking into account this
transaction; (iii) providing GECMG with all information reasonably deemed
necessary by GECMG to complete the syndication successfully; (iv) confirmation
as to accuracy and completeness of such information, offering materials and
projections; (v) participation of Lessee's senior management in meetings and
conference calls with potential lenders and rating agencies, if applicable, at
such
23
times and places as GECMG may reasonably request; and (vi) using reasonable
efforts to ensure that the syndication efforts benefit from all existing lending
and investor relationships. GECMG reserves the right to provide to industry
trade organizations information necessary and customary for General Electric
Capital Corporation's inclusion as lead arranger in league table measurements.
The parties agree that all information provided to Lessor from Lessee, ▇▇▇▇▇▇▇,
as Guarantor, and any affiliate thereof and/or any third parties acting on
behalf of such parties may be used in the syndication process and
confidentiality agreements will not be required from other investors (other than
GECMG's standard confidentiality statements). The parties acknowledge and agree
that Lessee shall not be liable for or incur any increase or withholding of
Taxes as a result of such participation or syndication by Lessor other than
Taxes imposed on an After-Tax Basis; provided, that no Default has occurred and
is continuing.
14. NET LEASE; NO SET-OFF, ETC.
This Agreement is a net lease. Lessee's obligation to pay Rent and other
amounts due hereunder shall be absolute and unconditional. Lessee shall not be
entitled to any abatement or reductions of (except as expressly provided herein
in respect of any Unit which ceases to be subject to this Agreement), or
set-offs against, said Rent or other amounts, including, without limitation,
those arising or allegedly arising out of claims (present or future, alleged or
actual, and including claims arising out of strict tort or negligence of Lessor)
of Lessee against Lessor under this Agreement or otherwise. Except as provided
in Section 8 hereof, with respect to any Unit that shall have suffered a
Casualty Occurrence, this Agreement shall not terminate and the obligations of
Lessee shall not be affected by reason of any defect in or damage to, or loss of
possession, use or destruction of, the Facility or any Equipment from whatsoever
cause. It is the intention of the parties that Rents and other amounts due
hereunder shall continue to be payable in all events in the manner and at the
times set forth herein unless the obligation to do so shall have been terminated
pursuant to the express terms hereof.
15. INDEMNIFICATION
(a) Lessee hereby agrees to defend, indemnify, save and keep harmless (on
an After-Tax Basis), Lessor, its shareholders, agents, directors, officers,
employees, successors and assigns (each an "Indemnified Party"), from and
against any and all losses, damages, penalties and injuries suffered by such
Indemnified Party, and claims (including Environmental Claims), actions and
suits against such Indemnified Party (herein a "Claim"), including reasonable
legal expenses, of whatsoever kind and nature, in contract or tort, whether
caused by the active or passive negligence of Lessor (other than Lessor's gross
negligence or willful misconduct) arising out of or related to this Agreement,
the transaction contemplated hereby or the enforcement hereof or related to any
Unit, the Facility, the Equipment or the Site, including, but not limited to,
Lessor's strict liability in tort, arising out of the selection, importation,
manufacture, purchase, acceptance or rejection of any Unit, the Facility, the
Equipment or the Site, the ownership of the Facility and Equipment during the
Term, and the delivery, lease, sublease, possession, maintenance, use,
condition, return or operation of any Unit, the Facility and the Equipment
(including, without limitation, latent and other defects, whether or not
discoverable by Lessor or Lessee and any claim for patent, trademark or
copyright infringement or environmental loss or damage) and the violation of any
Environmental Law by Lessee; provided, that such indemnity, including the
indemnity provided for in subparagraph (d) of this Section 15,
24
shall not be available to the extent (i) such Claim is attributable to the gross
negligence, willful misconduct or breach of this Agreement by such Indemnified
Party, or (ii) such Claim arises and relates to periods after the later of (x)
the termination or expiration of the Agreement or (y) the return of the Facility
and the Equipment in accordance with the terms hereof. Lessee shall, upon
request, defend any actions based on, or arising out of, any of the foregoing.
(b) This Agreement has been entered into on the assumption that (i) this
Agreement will be treated for U.S. Federal income tax purposes as a true lease
and Lessor will be treated as the owner and lessor of the Facility as of the
date of Lessor's purchase of the Facility and Lessee will be treated as lessee
of the Facility, (ii) the Lessor will be entitled to all Tax Benefits and
Assumptions specified in Section "D" "Tax Benefits and Assumptions" of Exhibit
No.1 in the hands of Lessor (all references to Lessor in this Section include
Lessor and its assignees and the consolidated taxpayer group of which Lessor and
any assignee is a member).
(c) If for any reason whatsoever (i) tax counsel of Lessor, reasonably
acceptable to Lessee, shall determine that due to an act or failure to act by
Lessee or a change in law or a breach or inaccuracy of the assumptions in
Section "D" "Assumptions" of Exhibit No.1 or a breach by the Construction Agent
of its representations in Section 2.5 of the Construction Agency Agreement there
is not a reasonable basis for Lessor to claim, or Lessor is required to reduce,
defer, recompute or recapture, on its Federal income tax return all or any
portion of the Tax Benefits and Assumptions with respect to the Facility or is
required to include any amounts in income (other than those identified in
paragraph c of Section D of Exhibit No.1), or (ii) any such Tax Benefit claimed
on the Federal income tax return of Lessor is disallowed, reduced, deferred,
recomputed or recaptured, or (iii) Lessor shall become liable for additional tax
as a result of any substitution or modification of, or an attachment, addition
or alteration to the Facility or the Equipment, the sale or transfer of any
Unit, Equipment or Facility by Lessee to Lessor at any time, any assignment of
purchase orders with respect to Additional Equipment from Lessee to Lessor or
the purchase or other acquisition of Equipment after the Basic Term Commencement
Date (any such determination, disallowance, adjustment, recomputation or
recapture being hereinafter called a "Loss"), then Lessee shall pay to Lessor,
as an indemnity and as additional Rent, such amount as shall, in the reasonable
opinion of Lessor, cause Lessor's Net Economic Return to equal the Net Economic
Return that would have been realized by Lessor if such Loss had not occurred.
Such amount shall be payable upon demand after Lessor has suffered a Loss
accompanied by a statement describing in reasonable detail such Loss and the
computation of such amount. If Lessor actually realizes a tax benefit as a
result of a loss of a Tax Benefit for which Lessee has indemnified Lessor and
such tax benefit was not taken into account in computing the amount of such
indemnity payment, Lessor shall pay to Lessee the amount of such tax benefit
actually realized. Any subsequent loss of such tax benefit by Lessor shall be
deemed to be a loss of Tax Benefit subject to indemnification hereunder.
Anything in this Section to the contrary notwithstanding, Lessee shall have no
obligation to indemnify Lessor from or against any such Loss to the extent that
such Loss is caused by: (i) any failure by Lessor to properly or timely claim on
its Federal income tax return any Tax Benefit with respect to the Facility
(unless such failure is based upon a determination by tax counsel of Lessor
reasonably acceptable to Lessee that Lessor has no reasonable basis to claim
such Tax Benefit with respect to the Facility); (ii) any failure of Lessor to
have sufficient taxable income to benefit from the Tax Benefits and Assumptions;
(iii) any liability of Lessor for any alternative minimum taxes; (iv) any
voluntary sale or participation or other voluntary disposition of its interest
under this
25
Agreement or the Facility by Lessor other than (x) after a Default by Lessee,
(y) as a result of a Substitution by Lessee, or (z) as a result of any act or
failure to act by Lessee; (v) any event which results in a payment by Lessee in
an amount equal to, or measured by, the Stipulated Loss Value to the extent that
such Loss was included in Lessor's calculation of such Stipulated Loss Value;
(vi) any change in tax law enacted and effective after the Basic Term
Commencement Date (other than changes of tax law relating to acts or omissions
of Lessee) whether or not permitted by this Agreement (unless required by the
Operative Documents); (vii) the application of the mid-quarter convention within
the meaning of Section 168(d)(4)(C) of the Code or the "short year" provisions
of the Code or regulations thereunder; (viii) any willful misconduct or gross
negligence of Lessor; (ix) the failure of Lessor to take action in a timely
manner in contesting any action which reasonably could result in the payment by
Lessee in respect of a Loss, but only if such failure effectively precludes
Lessor or where applicable, Lessee, in its contest of any claim and only to the
extent Lessor has a reasonable basis for so contesting the action and the
contest would have been otherwise reasonable given the relevant facts and
circumstances, or (x) the failure of the Lessor to be structured in a manner
that the income or loss generated by the transactions contemplated hereby are
reflected on the consolidated U.S. Federal income tax return which includes the
U.S. corporate entities that own the equity interests in the Lessor.
(d) Lessee shall defend, indemnify (on an After-Tax Basis) and hold
harmless Lessor and its Affiliates, successors and assigns, directors, officers,
employees and agents, from and against any Environmental Loss and, unless Lessee
is then contesting in good faith such Environmental Loss and Lessee has set
aside on its books appropriate reserves therefor, Lessee shall fully and
promptly pay, perform and discharge any such Environmental Loss.
(e) Labor Relations. Lessee acknowledges and agrees that there is no
employment relationship between Lessor and the personnel, employees and
subcontractors of the Lessee or its Affiliates, and responsibility for such
labor relationship belongs exclusively to the Lessee or its Affiliate in
accordance with the requirements of articles 8, 10, and 20 of the Mexican
Federal Labor Law (Ley Federal del Trabajo). Lessee or its Affiliate is the
"Employer" for all purposes of Mexico law with respect to all of the personnel
and employees at Lessee's service, and they are the only person benefiting from
the services rendered by such personnel and employees.
Lessee represents and warrants that it or its Affiliates has the legal and
economic capacity to comply with its labor obligations, so that it or its
Affiliates shall be solely responsible for all obligations with respect to their
respective personnel and employees.
Therefore, in the case of any labor dispute between Lessee and its or its
Affiliate's personnel, employees and subcontractors, in which, for any reason,
Lessor is involved, Lessee shall release and indemnify Lessor (on an After-Tax
Basis) from any kind of claim made against it by any of Lessee's or its
Affiliate's personnel, employees and subcontractors, and Lessee shall have the
obligation to pay any amounts as indemnification (severance) and other claims
made by any personnel, employee or subcontractor, and the Lessee hereby releases
Lessor from any responsibility thereof.
26
Lessee shall reimburse Lessor for all costs and expenses caused by any
labor dispute filed directly or indirectly against Lessee or Lessor or with
respect to any Unit, the Equipment or the Facility.
Lessee represents and warrants that it or its Affiliate is solely
responsible for the fulfillment of its obligations with respect to their
respective personnel, employees and subcontractors with regard to Mexican
Institute of Social Security (IMSS), Employee Housing Fund Institute (INFONAVIT)
and Retirement Saving Fund System (SAR), so that it or its Affiliate shall be
solely responsible to cover the quotas and contributions required by reason of
its personnel, employees or subcontractors before IMSS, INFONAVIT and SAR.
Therefore, in the case of any kind of claim related to IMSS, INFONAVIT, and SAR,
involving the Lessor in any way, Lessee will hold Lessor harmless from such
claims and will be the solely responsible for any of such claims.
Lessee shall reimburse Lessor of all expenses caused by any dispute filed
directly or indirectly against Lessee or Lessor or by reason of the Equipment
relating directly or indirectly to IMSS, INFONAVIT or SAR.
16. DISCLAIMER
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE FACILITY AND THE EQUIPMENT
WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES, AND IT ACKNOWLEDGES
AND ACCEPTS THE PHYSICAL AND OPERATING STATE OF THE FACILITY AND THE EQUIPMENT
AS SATISFACTORY. LESSOR DOES NOT MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE
OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN
OR ORAL, WITH RESPECT TO THE FACILITY OR THE EQUIPMENT LEASED HEREUNDER OR ANY
COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN,
COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP,
MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks, as between Lessor
and Lessee, are to be borne by Lessee. Without limiting the foregoing, Lessor
shall have no responsibility or liability to Lessee or any other Person with
respect to any of the following: (i) any liability, loss or damage caused or
alleged to be caused directly or indirectly by the Facility or any Equipment,
any inadequacy thereof, any deficiency or defect (latent or otherwise) therein,
or any other circumstance in connection therewith; (ii) the use, operation or
performance of the Facility or the Equipment or any risks relating thereto;
(iii) any interruption of service, loss of business or anticipated profits or
consequential damages, including damages and lost profits (▇▇▇▇▇ y perjuicios)
as rendered by any law or court with jurisdiction in Mexico or any other similar
concept under Applicable Law; or (iv) the delivery, operation, servicing,
maintenance, repair, improvement or replacement of any Equipment. If, and so
long as, no default exists under this Agreement, Lessee shall be, and hereby is,
authorized during the Term of this Agreement to assert and enforce, at Lessee's
sole cost and expense, from time to time, in the name of and for the account of
Lessor and/or Lessee, as their interests may appear, whatever claims and rights
Lessor may have against any Supplier of the Facility or Equipment.
27
17. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE
(a) Lessee hereby represents and warrants to Lessor that on the date
hereof and on the date of execution of each Schedule:
(i) Lessee is a sociedad anonima de capital variable duly
incorporated and validly existing in accordance with the laws of Mexico,
as evidenced by public deed No. 95,180, dated August 14, 2003, granted
before ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Etchegaray, Notary Public ▇▇. ▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ and duly recorded in the Public Registry of
Commerce of the Judicial District of the State of Sonora, Mexico under
commercial file (folio mercantil) number 33244-7.
(ii) The Documents to which Lessee is a party have been duly
authorized, executed and delivered by Lessee and assuming the due
authorization, execution and delivery of the Documents by any party
thereto other than Lessee constitute valid, legal and binding agreements,
enforceable against Lessee in accordance with their respective terms,
except to the extent that the enforcement of remedies therein provided may
be limited under applicable bankruptcy, concurso mercantil and insolvency
laws, public policy.
(iii) No approval, consent or withholding of objections is required
from any Governmental Authority with respect to the entry into or
performance by Lessee of the Documents except such as have already been
obtained or those, which if not obtained, would not have a Material
Adverse Effect, individually or in the aggregate.
(iv) Lessee has adequate power and capacity to enter into, and
perform under, the Documents to which it is a party. The entry into and
performance by Lessee of the Documents will not: (i) violate any judgment,
order, law or regulation applicable to it or any provision of its charter
or by-laws; or (ii) result in any breach of, constitute a default under or
result in the creation of any Lien (other than Permitted Liens) upon the
Facility or the Equipment pursuant to any indenture, mortgage, deed of
trust, bank loan or credit agreement or other instrument (other than this
Agreement) to which it is a party. Its attorney-in-fact has all necessary
powers of attorney to represent and bind it and such powers have not been
limited or revoked as of the date hereof.
(v) There are no suits or proceedings (including arbitration
proceedings) pending or to Lessee's knowledge threatened in court or
before any commission, board or other administrative agency against or
affecting Lessee or ▇▇▇▇▇▇▇ which are reasonably likely to have a Material
Adverse Effect.
(vi) To the extent that Lessee has Equipment in the United States of
America, Lessee is located in Washington, D.C. for the purposes of Section
9-307 of the UCC and covenants and agrees that it will not change such
status without 30 days prior written notice to Lessor. Lessee also
covenants and agrees that it shall not, for purposes of Section 9-503(a)
of the UCC, change its name as reflected on the public record in the state
of its organization without 30 days prior written notice to Lessor.
28
(vii) The Facility and Equipment accepted under any Certificate of
Acceptance is and will remain tangible personal property and is not and
shall not constitute real property fixtures.
(viii) Each financial statement required to be delivered by Lessee
to Lessor has been prepared in accordance with GAAP or Mexican GAAP, as
applicable, and fairly presents, in all material respects, the financial
condition of ▇▇▇▇▇▇▇ and its consolidated subsidiaries, and (i) since
December 31, 2003, the date of the most recent annual audited financial
statement, there has been no material adverse change in the financial
condition of C&A and its consolidated Subsidiaries; (ii) since June 30,
2004, the date of the most recent quarterly financial statements, there
has been no material adverse change in the financial condition of C&A and
its consolidated Subsidiaries.
(ix) Each representation and warranty of ▇▇▇▇▇▇▇ and C&A made in the
Credit Agreement is true and correct in all material respects when made.
(x) The Equipment Location identified on the Schedule is owned or
leased by the entity identified on such Schedule free and clear of any
liens for indebtedness or leases subject to the liens of mortgagees and
interest of the landlords identified on such Schedule; provided, that
Lessee shall obtain from such mortgagees or landlords a waiver or release
within 10 days of a request from Lessor.
(xi) Upon the Construction Completion Date (as defined in the CAA),
Lessor shall have good and marketable title to the Equipment free and
clear of all liens and encumbrances whatsoever.
(xii) Following the Basic Term Commencement Date and continuing
thereafter, the Facility and the Equipment will be used by Lessee in the
active conduct of its business, pursuant to the terms of this Agreement
and its by-laws.
(xiii) Since June 30, 2004, there has not been any material adverse
change in the capital structure or liquidity levels of C&A and its
consolidated subsidiaries taken as a whole except as set forth in public
filings or otherwise publicly disclosed.
(xiv) Except as previously disclosed to Lessor prior to the Basic
Term Commencement Date: (i) neither Lessee nor ▇▇▇▇▇▇▇ is or has in the
past been in violation of any Environmental Law which violation could
reasonably be expected to result in a material liability to ▇▇▇▇▇▇▇ or
Lessee with respect to any Equipment Location or could otherwise result in
a Material Adverse Effect; (ii) neither ▇▇▇▇▇▇▇ nor Lessee, nor to ▇▇▇▇▇▇▇
or Lessee's knowledge any third party, has used, released, discharged,
generated, handled, manufactured, produced, stored, or disposed of at, in,
on, under, or about any Equipment Location, or transported thereto or
therefrom, any Hazardous Substances that could be expected to subject
▇▇▇▇▇▇▇ or Lessee to liability under any Environmental Law; (iii) there
are no Hazardous Substances generated, used, stored or present on the
Equipment Location other than is necessary for the business as presently
conducted and in compliance with applicable Environmental Law; (iv) to the
best of Lessee's knowledge, there is or has been no condition,
circumstance, action, omission, activity or
29
event that could form the basis of any violation of any Environmental Law
or any material liability to ▇▇▇▇▇▇▇ and Lessee; (v) there is no
proceeding, investigation or inquiry of which Lessee has been notified by
any Governmental Authority (including without limitation, the U.S.
Environmental Protection Agency or Mexico's Federal Prosecutor's Office
for Environmental Protection (Procuraduria Federal de Proteccion al
Ambiente) or any non-government third party with respect to the presence
or Release of Hazardous Substances at, in, on, from or to any Equipment
Location which presence or Release could reasonably be expected to result
in any violation of Environmental Law; and (vi) and Lessee has no
knowledge of any past or existing violations of any Environmental Laws by
any Person relating in any way to any Equipment Location.
(xv) The Facility and each Unit of Equipment has been "placed in
service" on or prior to the Basic Term Commencement Date.
(b) Lessee hereby covenants and agrees with Lessor that:
(i) The Facility and the Equipment will at all times be used for
commercial or business purposes, pursuant to the terms of this Agreement
and its by-laws.
(ii) Lessee shall maintain a system of identification number tagging
on all the Equipment and any Part thereof which will identify (x) that the
Facility and the Equipment is property of Lessor and (ii) the
manufacturer, serial numbers and type and model thereof as set forth in
Annex A to each Schedule.
(iii) Lessee, at its sole cost and expense, at all times hereinafter
shall maintain at the Equipment Location a written environmental, health
and safety ("EH&S") program ("EH&S Program") aimed at ensuring that
Lessee's operation at the Equipment Locations are conducted in compliance
with all applicable Environmental Laws and which meets the requirements of
ISO 14001 or comparable guidelines. The EH&S Program shall involve senior
management, shall include a formal written corporate environmental policy,
and shall be directed by the person responsible for Lessee's EH&S
compliance.
(iv) At Lessor's request (not more frequently than once in any
12-month period, unless a Default shall have occurred and be continuing),
Lessee shall provide Lessor with a briefing regarding Lessee's EH&S
Program.
(v) Lessee agrees that it shall not change its name as currently
reflected in its commercial file (folio mercantil) registered at the
Public Registry of Commerce with jurisdiction over the place where Lessee
has its corporate domicile without 30 days prior written notice to Lessor.
(vi) Lessee shall provide, at its sole cost and expense, prior (A)
to entering into a mortgage with respect to an Equipment Location, or (B)
to the closing of any sale leaseback of an Equipment Location to any other
Person, an Landlord Consent, duly executed (and in recordable form) by
each landlord and/or mortgagee, with respect to such Equipment Location.
Lessee shall maintain each Landlord Consent at all times during the Term
for the estimated useful life of the Equipment. Lessee shall deliver to
30
Lessor 30 days' prior written notice of any assignment, transfer or sale
by Landlord (as defined in the CAA) of the Site and Lessee agrees to use
commercially reasonable best efforts to obtain, on or before the effective
date of Landlord's assignment, transfer or sale, from any successor owner
of the Site a consent and agreement on substantially the same terms and
conditions as the Landlord Consent (as defined in the CAA); provided, if
such successor's consent and agreement is not obtained within 15 days
after delivery by Lessee of such notice, Lessee shall, at Lessor's
request, assign to Lessor all of Lessee's right, title and interest in the
Site Lease (subject to the right of Lessor to accept or reject, in its
sole discretion, such assignment at any time within 45 days' thereafter)
and if Lessor accepts such assignment of the Site Lease, Lessee shall be
required to sublease to Lessee and Lessee shall be required to sublease
from Lessor the Site on the same terms and conditions as the Site Lease.
(vii) Lessee shall maintain at all times from the date hereof
through the Basic Term, an Acceptable Letter of Credit, for the benefit of
Lessor, in order to secure Lessee's obligations under the Documents;
provided that Lessee shall not be required to provide an Acceptable Letter
of Credit for any time period during which ▇▇▇▇▇▇▇ has received and for so
long as it continues to maintain a senior secured debt rating of "Baa" or
better from ▇▇▇▇▇'▇ or "BBB" or better from S&P. In the event that any
Acceptable Letter of Credit has an expiration or termination date prior to
the Basic Term, Lessee shall replace such Acceptable Letter of Credit with
an Acceptable Letter of Credit in accordance with the requirements of this
Agreement no later than thirty (30) days prior to such expiration or
termination date. If (a) a Downgrade Event has occurred or (b) Lessee
shall make a good faith determination that a significant possibility
exists that a Downgrade Event will occur, Lessee, within 30 days of the
earliest of (i) having knowledge of such fact, (ii) reaching such good
faith determination or (iii) receiving notice from Lessor of such fact,
shall provide a replacement Acceptable Letter of Credit, in form and
substance satisfactory to Lessor, and in compliance with Lessor's internal
policies with respect to credit exposure and risk-management compliance.
Except as expressly provided below, Lessee shall cause to be provided to
Lessor a favorable opinion of counsel of the Acceptable Letter of Credit
Bank issuing such replacement Acceptable Letter of Credit (such counsel
and the form and substance of such opinion to be reasonably satisfactory
to Lessor, covering customary matters including due authorization,
execution and delivery and the validity and enforceability of the
Acceptable Letter of Credit); provided, however, if such Acceptable Letter
of Credit Bank is a United States money-centered bank with capital in
excess of U.S.$500,000,000.00 Dollars, Lessee shall not be required to
deliver such opinion. Lessee shall not at any time permit any Liens to
exist on Lessor's interest in the Acceptable Letter of Credit or in its
rights to enforce payment thereon.
(viii) Lessee shall deliver the reports as set forth in Sections
5(b) and 5(e).
(ix) Lessee shall promptly deliver to Lessor written notice of any
default under any of the Operative Documents, the Documents or any
material contract pertaining to the Facility or Equipment, including,
without limitation, the Ford Supply Agreement and the Site Lease.
31
(x) Lessee shall continue to supply from the Equipment Location
substantially all products required to be delivered under the Ford Supply
Agreement (exclusive of parts that are not manufactured at the Equipment
Location).
(xi) At all times during the Term, ▇▇▇▇▇▇▇ shall control, directly
or indirectly, 100% of the equity interests in Lessee or any successor
entity other than as provided by Section 12(a)(x).
(xii) Notwithstanding anything to the contrary in this Agreement or
other Operative Documents, the Lessee, the Guarantor and their respective
Affiliates shall not modify, supplement or amend the Site Lease, the Ford
E&D Reimbursement Costs, or the Ford Supply Agreement in any manner which
could have a material adverse effect on the Equipment or the Facility or
the financial condition of Lessee or Guarantor, without the prior approval
of the Lessor, not to be unreasonably withheld.
(xiii) Lessee shall promptly deliver to Lessor notice if ▇▇▇▇▇▇▇ is
no longer Ford Motor Company's source of at least 90% of Ford Motor
Company's requirements with respect to the type of products that are the
subject of the Ford Supply Agreement.
(xiv) Lessee shall have on a consolidated basis at the end of each
Fiscal Quarter, beginning with that Fiscal Quarter which contains the 18
month anniversary of the Basic Term Commencement Date, a Fixed Charge
Coverage Ratio of greater than 1.0:1.0 for the 12-month period then ended.
18. INTENT; TITLE
It is the express intent of the parties that this Agreement constitutes a
true lease and not a sale of, or a financing arrangement with respect to, the
Facility and Equipment. Title to the Facility and the Equipment shall at all
times remain in Lessor, and Lessee shall acquire no ownership, title, property,
right, equity, or interest in the Facility and the Equipment other than its
leasehold interest solely as Lessee subject to all the terms and conditions
hereof. The parties herein acknowledge that: (1) Lessor did not select,
manufacture or supply the Facility or the Equipment and (2) Lessee hereby
consents to each and every contract under which Lessor purchased the Facility
and the Equipment. Furthermore, Lessee acknowledges: (1) that Lessee has
selected each Vendor; and (2) that Lessee has been informed in writing in this
Agreement, before signing this Agreement, that Lessee is entitled to the
promises and warranties, including those of any third party, provided to Lessor
by the Vendor in connection with or as part of the contract by which Lessor
acquired the Facility and the Equipment, and that Lessee may communicate with
the Vendor and receive an accurate and complete statement of those promises and
warranties, including any disclaimers and limitations of them or of remedies. To
the extent permitted by applicable law, Lessee hereby waives any and all rights
and remedies conferred upon a lessee and any rights now or hereafter conferred
by statute or otherwise which may limit or modify any of Lessor's rights or
remedies under Section 12 hereof; provided, however, that such waiver shall not
preclude Lessee from asserting any claim of Lessee against Lessor in a separate
cause of action; and provided, further that such waiver shall not affect
Lessor's obligations of good faith, diligence, reasonableness and care.
32
19. PURCHASE AND RENEWAL OPTIONS
Provided no Default shall have occurred and be continuing, Lessee shall
have the option upon the expiration of the Term to renew the Term of this
Agreement with respect to, or to purchase, the Facility and all (but not less
than all) of the Equipment leased under all Schedules executed hereunder upon
the following terms and conditions.
(a) Upon expiration of the Basic Term, Lessee may elect to renew the Term
with respect to the Facility and all, but not less than all, of the Equipment
for a single Renewal Term of eighteen (18) months, at a periodic Rent (payable
on the Rent Payment Dates set forth in the applicable Schedule) equal to the
Fair Market Rental Value of the Facility and the Equipment, subject to receipt
of an appraisal satisfactory to Lessor to the effect that (i) the proposed
Renewal Term together with all prior Terms shall not exceed 80% of the estimated
economic useful life of the Facility and the Equipment and (ii) at the end the
proposed Renewal Term, the Fair Market Value of the Facility and the Equipment
(determined without regard to inflation or deflation) is expected to equal 20%
or more of the Capitalized Lessor's Cost, and further subject to minimum credit
rating requirements and other limitations (including, but not limited to,
compliance with tax requirements) in Lessor's determination.
(b) Lessee may elect to purchase, at expiration of the Basic Term or the
Renewal Term, all (but not less than all) of the Equipment on an AS IS, WHERE IS
BASIS, for cash equal to the then Fair Market Value of the Facility and the
Equipment, plus (in any event) all applicable taxes. On the last day of the
Term, Lessor shall receive in cash the full purchase price (plus all applicable
taxes), together with any Rent or other sums then due hereunder on such date and
Lessor shall convey the Facility and the Equipment to Lessee on an AS IS, WHERE
IS BASIS.
(c) If a Default shall have occurred and be continuing at the time of the
notice in the first sentence of paragraph (d) below, then on the date of
expiration of the Term, Lessee shall return the Equipment in full compliance
with Section 11 of this Agreement on or prior to the date of expiration of the
Term. If Lessee shall have given the notice provided in the first sentence of
paragraph (d) below, and a Default occurs and is continuing at the expiration of
this Agreement, Lessor may elect either to enforce the option exercised by
Lessee or demand return of the Equipment in full compliance with Section 11 of
this Agreement.
(d) Lessee shall give Lessor not less than 365 days' irrevocable written
notice of whether Lessee shall exercise either of its options pursuant to
paragraphs (a) or (b) above. If Lessee timely elects to exercise its options
pursuant to paragraphs (a) or (b) above, Lessee shall give Lessor at least 90
days' irrevocable written notice to Lessor prior to the expiration of the Term
of its election of either the option under paragraph (a) or the option under
paragraph (b).
(e) Upon the occurrence of a Special Change of Control at least
twenty-four (24) months before the end of the Basic Term, Lessee shall have the
option to purchase the Facility and the Equipment within thirty (30) days after
receipt of notice of the Special Change of Control on an AS IS, WHERE IS BASIS
for the greater of the Fair Market Value or the Stipulated Loss Value, plus all
applicable taxes, together with any Rent (including Basic Term Rent) or other
sums then due hereunder on such date.
33
20. MISCELLANEOUS
(a) Additional Equipment. If the Lessee wishes to acquire and install at
the Site any equipment, or equipment parts, supplies or accessories (other than
such as is deemed by Lessee as "integral equipment" for the purposes of FASB
Interpretation No. 43, as clarified by EITF Issue No. 00-13), which were not
contemplated by the Construction Budget ("Additional Equipment"), the Lessor
shall have a right of first refusal to acquire and lease such Additional
Equipment. If the Lessor declines to acquire and lease such Additional Equipment
the Lessee may purchase the Additional Equipment for cash or finance its
acquisition using an independent third party ("Third Party Financier");
provided, that in the opinion of Lessor, Appraiser and Engineering Consultant,
such Additional Equipment does not (i) reduce the fair market value, residual
value, useful life, or utility of the Equipment or the Facility, or (ii) cause
the Equipment or the Facility to be incomplete for its intended use, or (iii)
cause the Equipment or the Facility to become "limited use property" within the
meaning of Rev. Proc. 2001-28, 2001-19 I.R.B. 1156 or Rev. Proc. 2001-29,
2001-19 I.R.B 1160 or (iv) cause Lessee to have an economic compulsion to
exercise its purchase or renewal options. Notwithstanding the foregoing, to the
extent the Additional Equipment constitutes a Non-Severable Improvement (i) it
must be and remain free and clear of all liens, claims and encumbrances
(including any Lien of any Third Party Financier) (ii) it shall be deemed solely
the property of the Lessor and it shall receive a ▇▇▇▇ of sale for any such
Non-Severable Improvement.
(b) Any cancellation or termination by Lessor, pursuant to the provision
of this Agreement, any Schedule, supplement or amendment hereto, or the lease of
the Facility or the Equipment hereunder, shall not release Lessee from any then
outstanding obligations to Lessor hereunder.
(c) Time is of the essence of this Agreement. Lessor's failure at any time
to require strict performance by Lessee of any of the provisions hereof shall
not waive or diminish Lessor's right thereafter to demand strict compliance
therewith.
(d) Lessee agrees, upon Lessor's request, to execute any instrument
necessary or expedient for filing, recording or perfecting the interest of
Lessor, and to execute and deliver to Lessor such further documents, instruments
and assurances and to take such further action as Lessor from time to time
reasonably may request in order to carry out the intent and purpose of the
transaction contemplated hereunder.
(e) All notices required to be given hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by facsimile
transmission (with confirmation of receipt), or sent by certified mail, return
receipt requested, addressed to the other party at its respective address stated
below or at such other address as such party shall from time to time designate
in writing to the other party; and shall be effective from the date of receipt.
If to the Lessee: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Company de Mexico, S.A. de C.V.
▇▇▇▇▇ ▇▇ ▇ ▇▇ ▇/▇, ▇▇▇▇▇▇▇▇▇▇ Morelos, Saltillo, C.P. 25017,
Saltillo, Coahuila, Mexico.
Attention: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇ ▇▇ ▇▇ or (▇▇▇) ▇▇▇ ▇▇ ▇▇.
Facsimile: (▇▇▇) ▇ ▇▇ ▇▇ ▇▇
34
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Blvd. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 1, piso 12, Plaza
Scotiabank Inverlat, ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, D.F.
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (5255) ▇▇▇▇-▇▇▇▇ or (5255) 5279-2907
Facsimile: (5255) 5557-8812
If to the Lessor: GE Capital de Mexico, S. de ▇.▇. de C.V.
Prolongacion Reforma ▇▇. ▇▇▇
▇▇▇▇ ▇ ▇▇▇. ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Controller
Telephone: (▇▇▇▇) ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇▇) ▇▇▇▇▇▇▇▇
With copies to: GE Commercial Finance
Commercial & Industrial Finance
▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Portfolio Manager
GE Commercial Finance
Commercial & Industrial Finance
▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
(f) This Agreement, the Exhibits and each Schedule and Annexes thereto
constitute the entire agreement of the parties with respect to the subject
matter hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF
ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED
BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO.
(g) The representations, warranties and covenants of Lessee herein shall
be deemed to survive the closing hereunder. The obligations of Lessee under
Sections 4, 11 and 15 hereof which accrue during the Term of this Agreement and
obligations which by their express terms survive the termination of this
Agreement, shall survive the termination of this Agreement.
(h) In case of a failure of Lessee to comply with any provision of this
Agreement, Lessor shall have the right, but shall not be obligated, to effect
such compliance, in whole or in part; and all moneys spent and expenses and
obligations incurred or assumed by Lessor in effecting such compliance (together
with interest thereon at the Overdue Rate) shall constitute additional Rent due
to Lessor within 5 days after the date Lessor sends notice to Lessee
35
requesting payment. Lessor's effecting such compliance shall not be a waiver of
Lessee's default.
(i) Any Rent or other amount not paid to Lessor when due hereunder shall
bear interest, both before and after any judgment or termination hereof, at the
lesser of the Index Rate plus 2% per annum or the maximum rate allowed by law
(the "Overdue Rate").
(j) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(k) So long as no Default shall have occurred and be continuing hereunder,
and conditioned upon Lessee performing all of the covenants and conditions
hereof, as to claims of Lessor or Persons claiming under Lessor, Lessee shall
peaceably and quietly hold, possess and use the Facility and the Equipment
during the Term of this Agreement subject to the terms and conditions hereof.
(l) Lessee agrees to pay on demand all reasonable costs and expenses
incurred by Lessor and any assignee from and after the Basic Term Commencement
Date during the term of this Agreement in connection with the preparation,
execution, delivery, filing, recording, and administration of any of the
Documents, including (without limitation) the reasonable fees and expenses of
counsel for Lessor and any assignee, due diligence, appraisals, lien searches,
UCC and/or Landlord Consent filing fees, fees related to the registration of
this Agreement with the Public Registry of Commerce with jurisdiction over the
place where Lessee has its corporate domicile and with the Public Registry of
Commerce with jurisdiction over the place where the Facility and Equipment shall
be located, and field audits; and all costs and expenses, if any, in connection
with the enforcement of any of the Documents.
(m) No party hereto will itself use or intentionally disclose, directly or
indirectly, any confidential information obtained from the other party hereunder
or in connection herewith which is designated in writing by such party as
confidential or proprietary ("Confidential Information"), except as required by
law or by the express terms hereof, and will use all reasonable efforts to have
all such information kept confidential and not used in any way known to such
party to be detrimental to the parties; provided, that (i) each party may use,
retain and disclose any such Confidential Information to its counsel or special
counsel and public accountants, any potential transferees, and any governmental
authority requesting such disclosure, provided, that such counsel, special
counsel, public accountants or potential transferees agree in advance to keep
such information confidential, (ii) each party may use, retain and disclose any
such Confidential Information which has been publicly disclosed or has
rightfully come into the possession of such party or any affiliate thereof,
(iii) each party may disclose any such Confidential Information to any
governmental authority, having jurisdiction over such party in the course of any
review of the books and records of such party by such governmental authority,
(iv) Lessor may disclose any such information as it determines is reasonably
necessary to satisfy its disclosure obligations under applicable laws, rules or
regulations, or to any rating agency or industry regulatory body, or to any
proposed transferee
36
provided, such proposed transferee agrees in advance to keep such information
confidential, (v) to the extent that such party or any affiliate thereof may
have received a subpoena or other written demand under color of legal right for
such Confidential Information, such party or affiliate may disclose such
Confidential Information, but such party shall first to the extent permitted by
law or order of any court, as soon as practicable upon receipt of such demand,
advise the party as to which disclosure is proposed and afford such party
reasonable opportunity to obtain a protective order or other reasonably
satisfactory assurance of confidential treatment for the Confidential
Information required to be disclosed and (vi) there is no restriction (either
expressly or implied) on any disclosure or dissemination of the tax structure or
tax aspects of the transactions contemplated by this Agreement.
(n) The parties hereto acknowledge and agree that this Agreement together
with all Schedules shall constitute a single lease instrument.
(o) Judgment Currency.
(i) Obligation to Pay in Dollars. The Lessee's obligations under
this Agreement to make payment in Dollars (the "Obligation Currency"),
shall not be discharged or satisfied by any tender or recovery pursuant to
any judgment expressed in or converted into any currency other than the
Obligation Currency, except to the extent that such tender or recovery
results in the effective receipt of the full amount of the Obligation
Currency expressed to be payable under this Agreement. If, for the purpose
of obtaining or enforcing judgment against the Lessee in any court or in
any jurisdiction, it becomes necessary to convert into or from any
currency other than the Obligation Currency (such other currency being
hereinafter referred to as the "Judgment Currency") an amount due in the
Obligation Currency, the conversion shall be made at the rate of exchange
at which Citibank N.A. could purchase Dollars with such Judgment Currency
in accordance with normal banking procedures in ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, as of the day (or, if such day is not
a Business Day, on the next succeeding Business Day) on which the judgment
is given (such Business Day being hereinafter referred to as the "Judgment
Currency Conversion Date").
(ii) Additional Amounts. If there is a change in the rate of
exchange prevailing between the Judgment Currency Conversion Date and the
date of actual payment of the amount due from the Lessee, the Lessee
covenants to pay, or cause to be paid, such additional amounts, if any
(but, in any event, not a lesser amount), as may be necessary to ensure
that the amount paid in the Judgment Currency, when converted at the rate
of exchange prevailing on the date of payment, will produce the amount of
the Obligation Currency that could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial award against it
at the rate of exchange prevailing on the Judgment Currency Conversion
Date. If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the
amount due that results in the Lessee paying an amount in excess of that
necessary to discharge or satisfy any judgment against it, the Lessor
shall transfer or cause to be transferred to the Lessee the amount of such
excess (net of any Taxes and reasonable and customary costs incurred in
connection therewith).
37
(iii) Determination of Amount. For purposes of determining the
applicable currency equivalent or other rate of exchange under this
Section 20(o), such amount shall include any premium and costs payable in
connection with the purchase of the Obligation Currency.
21. CHOICE OF LAW; JURISDICTION
This Agreement shall be governed and construed in accordance with the laws
of Mexico. For the interpretation and compliance with this Agreement, the
parties hereby expressly and irrevocable submit themselves to the jurisdiction
of the competent courts of Mexico, City, Federal District of Mexico, Mexico,
expressly waiving any other jurisdiction to which they may be entitled by reason
of their present or future domicile, or for any other reason.
22. [RESERVED]
23. DEFINITIONS
The following terms when used in this Agreement or in each Schedule shall have
the following meanings:
"Acceptable Letter of Credit" shall mean a valid and enforceable irrevocable
transferable letter of credit executed and delivered pursuant to Section 1(b) in
substantially the form of Exhibit No. 2 hereto and otherwise in form and
substance acceptable to Lessor that is: (1) issued by an Acceptable Letter of
Credit Bank to Lessor (or its Affiliate or other designee), (2) having a stated
expiration date of not earlier than 364 days after the date of original
issuance, (3) drawable in full if not renewed or replaced with an Acceptable
Letter of Credit 30 days before its expiry, (4) having, as of the date of
issuance, a stated amount not less than the Required Amount, (5) payable and
drawable at an office of such issuing bank in the United States of America, (6)
payable in U.S. dollars in immediately available funds, (7) issued under
arrangements not illegal for the parties to enter into, (8) is governed by the
Uniform Customs and Practice for Documentary Credits (revision effective January
1, 1994), International Chamber of Commerce Publication No. 500 or the
International Standby Practices (ISP98) International Chamber of Commerce
Publication No. 590, and, to the extent not inconsistent therewith, the laws of
New York State, and (9) which shall permit the beneficiary thereof to assign its
interest without the consent of such Acceptable Letter of Credit Bank.
"Acceptable Letter of Credit Bank" shall mean a bank (1) the senior unsecured
debt obligations (or long-term deposits) of which upon the date of issuance of
an Acceptable Letter of Credit is rated at least "A3" by ▇▇▇▇▇'▇ and at least
"A-" by S&P, with capital in excess of U.S.$500,000,000.00 Dollars, (2) from
whom receipt of a letter does not violate Lessor's then current policies
including its credit and lending country exposure limits, which country limits
shall be deemed satisfied if the bank is a United States bank, (3) as to whom
there shall be no material litigation or arbitration proceeding threatened
pending between Lessor and such bank and (4) whom is otherwise reasonably
acceptable to Lessor acting in good faith.
"Additional Construction Document" shall mean any material contract or
undertaking to which the Lessee or the Lessor is a party relating to the
development, construction, operation,
38
administration or maintenance of any Unit, the Equipment or the Facility entered
into after the Construction Closing Date (as defined in the CAA).
"Additional Equipment" shall have the meaning set forth in Section 20(a) of this
Agreement.
"Adverse Environmental Condition" shall refer to (i) an Environmental Emission
(including, without limitation, a sudden or non-sudden accidental or
non-accidental Environmental Emission), of, or exposure to, any Contaminant in
violation of any Environmental Law, at, in, by, or from the Facility or any
Equipment, (ii) the generation, handling, use, transportation, storage,
treatment or disposal of Contaminants in connection with the operation of the
Facility and Equipment in violation of any Environmental Law, or (iii) the
violation, or alleged violation, of any Environmental Law resulting from
ownership, possession, use, operation or modification of the Facility and
Equipment.
"Affiliate" shall refer, with respect to any given Person, to (a) each Person
that controls, is controlled by, or is under common control with, such Person,
or (b) each of such Person's officers, directors, joint venturers and partners.
For the purposes of this definition, "control" of a Person means the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
"After-Tax Basis" shall mean, in the context of determining the amount of a
payment to be made on such basis, the payment of an amount which, after
reduction by the net increase in Taxes of the recipient (actual or constructive)
of such payment, which net increase shall be calculated by taking into account
any reduction in such Taxes resulting from any tax benefits realized or to be
realized by the recipient as a result of such payment, shall be equal to the
amount required to be paid. In calculating the amount payable by reason of this
provision, all income taxes payable and tax benefits realized or to be realized
shall be determined on the assumptions that (i) the recipient is subject to
applicable income taxes at the highest marginal tax rates then applicable to
widely held corporations that are in effect in the applicable jurisdictions for
the relevant period or periods and (ii) all related tax benefits are utilized at
the highest marginal tax rates then applicable to widely held corporations that
are in effect in the applicable jurisdictions for the relevant period or
periods, and shall take into account the deductibility of state and local income
taxes for U.S. Federal income tax purposes.
"Agreement" shall have the meaning given such term in the preamble hereto.
"Applicable Laws" means all laws, judgments, decrees, ordinances and regulations
and any other governmental rules, orders and determinations and all requirements
having the force of law, now or hereafter enacted, made or issued, whether or
not presently contemplated, including (without limitation) compliance with all
requirements of zoning laws, labor laws and Environmental Laws, compliance with
which is required with respect to the Facility and Equipment, whether or not
such compliance shall require structural, unforeseen or extraordinary changes to
the Facility and the Equipment or the operation, occupancy or use thereof.
"Appraisal" shall mean the appraisal, dated the Basic Term Commencement Date,
prepared by the Appraiser and addressed to the Lessor, which Appraisal shall:
39
i. confirm that the Facility Cost shall be equal to the aggregate
fair market value of the Facility on the Basic Term
Commencement Date;
ii. determine the economic useful life of the Facility and confirm
that the Facility shall be reasonably estimated on the Basic
Term Commencement Date to have (i) a remaining economic useful
life equal to 133.33% of the Basic Term and (ii) a fair market
value at the end of the Basic Term equal to at least 20% of
the Facility Cost, without regard to inflation or deflation
during the Basic Term;
iii. confirm that it is reasonable to expect that upon expiration
or termination of the this Agreement, it will be commercially
feasible for a party other than the Lessee to operate the
Facility;
iv. allocate the percentage of the Facility Cost eligible for each
category of Depreciation Deduction;
v. confirm orderly liquidation values for the Units, the
Equipment and the Facility; and
vi. address any other matters that the Lessor shall request.
"Appraisal Procedure" shall mean the following procedure for determining the
Fair Market Rental Value or the Fair Market Value of the Facility or one or more
Units of the Equipment:
(a) At either Lessee's or Lessor's request, as the case may be, Lessor and
Lessee shall negotiate in good faith to determine the Fair Market Value and Fair
Market Rental Value the Facility or of one or more Units of Equipment within 30
days after such request has been given. If after such 30-day period, Lessor and
Lessee are unable to agree upon a determination of the Fair Market Value or Fair
Market Rental Value, as the case may be, of the Facility or such Units of
Equipment, the Fair Market Value or Fair Market Rental Value, as the case may
be, shall be determined in accordance with the appraisal procedure set forth in
this definition. If either party shall have given written notice to the other
requesting determination of such Fair Market Value or Fair Market Rental Value
by such appraisal procedure, the parties shall consult for the purpose of
appointing an independent appraiser by mutual agreement. If a single appraiser
shall have been appointed by the parties, the determination of such appraiser
shall be final and binding upon the parties. If no such appraiser is appointed
within 20 days after such notice is given, such determinations shall be made as
follows:
(i) Two appraisers shall be appointed, one of whom shall be selected
by Lessee and the other of whom shall be selected by Lessor, both
selections to be made within 10 days after the end of such 20 day period.
The appraisal determined by each appraiser shall be compared and if the
differential between the two is less then 10% of the average of the two
appraisers, then such average of the two appraisals shall be final and
binding upon the parties; but
(ii) if the differential between the two appraisals is 10% or more
of the average of the appraisals, then a third appraiser shall be promptly
appointed by the American Arbitration Association of New York, in
accordance with its rules as then in effect. The appraisals determined by
each of the three appraisers shall be averaged and
40
the appraisal furthest from such average shall be disregarded. The
appraisals determined by each of the two remaining appraisers shall be
averaged and such average shall be final and binding upon the parties.
(b) The appraiser or appraisers shall be provided with, and instructed to
appraise in accordance with, the definitions of all terms appearing herein and
having a bearing on the determinations subject to appraisal and in accordance
with customary appraisal procedures.
(c) The fees and expenses of each appraiser shall be paid by Lessee.
"Appraiser" shall mean Deloitte & Touche LLP, a licensed appraiser pursuant to
Title XI of FIRREA.
"AS IS, WHERE IS BASIS" shall mean the transfer on an AS IS, WHERE IS BASIS,
without recourse or warranty, express or implied of any kind whatsoever, of the
interest in the Facility and Equipment.
"Basic Term" shall have the meaning given such term in Section B of the
applicable Schedule.
"Basic Term Commencement Date" shall have the meaning given such term in Section
2(a) of this Agreement.
"Basic Term Rent" shall have the meaning given such term in Section E of the
applicable Schedule. Basic Term Rent shall equal the product of the Basic Term
Lease Rate Factor times the Capitalized Lessor's Cost of the Facility and
Equipment on the applicable Schedule.
"Basic Term Lease Rate Factor" shall have meaning given such term in Section B
of the applicable Schedule.
"Business Day" shall mean any day other than a Saturday, a Sunday, and any day
on which commercial banking institutions located in ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ are authorized by law or other governmental action to
close.
"C&A" means ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation, a Delaware corporation.
"CAA" means that Construction Agency Agreement dated as of the date hereof
between the Lessor, as owner and the Lessee, as the construction agent.
"Capitalized Lessor's Cost" with respect to the Facility and any Equipment on a
Schedule shall have the meaning given such term in Section B of such Schedule
and with respect to the Facility or any Unit shall equal the value specified
underneath the column headed "Fair Market Value" on the schedule attached to
Annex A to the appropriate Schedule.
"Casualty Occurrence" shall have the meaning in Section 8 of this Agreement.
"Certificate of Acceptance" means each certificate of acceptance executed and
delivered pursuant to Section 1(b) in substantially the form of Annex B to
Exhibit No. 1 hereto.
41
"Change in Law" shall mean any change in, or the introduction, adoption,
effectiveness or phase-in of any Applicable Law or in the interpretation,
re-interpretation or application thereof or compliance by any Person with any
request or directive (whether or not having the force of law) from any
Governmental Authority made subsequent to the date of this Agreement.
"Change of Control" shall mean a transaction or series of transactions pursuant
to which a Person or group of Persons (other than Heartland Industrial Partners
and its Affiliates or a group that includes any of them), directly or
indirectly, becomes the beneficial owner of more than 39% of the voting stock of
C&A, ▇▇▇▇▇▇▇ or Lessee.
"Claim" has the meaning given to such term in Section 15 of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and superceded from
time to time, unless the context requires otherwise.
"▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co., a Delaware corporation.
"Commitment Fee Letter" shall mean that certain Commitment Fee Letter dated as
of the date hereof, between the Lessor and the Lessee.
"Competitor" means any Person which competes with Lessee in the interior
automotive trim business, provided, that Competitor shall not mean any Affiliate
of Lessor that is engaged as a passive investor in the lease financing of
equipment as an equity or debt investor in any such Person provided, that the
financial organizations of automobile original equipment manufacturers shall not
be considered "Competitors".
"Confidential Information" shall have the meaning given such term in Section
20(m) of this Agreement.
"Construction Budget" shall mean the budget attached as Exhibit VIII to the CAA,
which budget sets forth all costs anticipated on the Construction Closing Date
to be incurred for the purchase (in the name of the Lessor, as owner),
modification, technological upgrade, delivery, installation of each Unit and the
Equipment and the development, construction, start-up and testing of the
Facility as may be amended, modified or adjusted in accordance with the CAA.
"Contaminant" shall refer to those substances, including, without limitation,
asbestos, polychlorinated biphenyls ("PCBs"), and radioactive substances and
Hazardous Substances in general, which are regulated by or form the basis of
liability under any Environmental Law.
"Credit Agreement" shall mean shall mean the Credit Agreement dated as of
December 20, 2001 as Amended and Restated as of September 1, 2004 among ▇▇▇▇▇▇▇,
as Borrower, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation, the Lenders named therein, Deutsche
Bank Securities Inc., as Documentation Agent, Credit Suisse First Boston, as
Syndication Agent, and ▇▇ ▇▇▇▇▇▇ Chase Bank, as Administrative Agent, as amended
from time to time and any successor credit agreement entered into in connection
with a refinancing, refunding or replacements thereto. References to any terms
defined in the Credit Agreement shall mean the Credit Agreement as in effect as
of the date hereof without regard to any further amendments or supplements.
42
"Default" shall have the meaning given such term in Section 12(a) of this
Agreement.
"Documents" means, collectively, this Agreement, each Schedule, each invoice,
each importation document, each Certificate of Acceptance, each Landlord
Consent, the Guaranty and all related documents.
"Dollars" "U.S.$" means the legal currency of the United States of America.
"Downgrade Event" shall mean that the senior unsecured debt obligations (or
long-term deposits) of an Acceptable Letter of Credit Bank are no longer rated
at least "Baa3" by ▇▇▇▇▇'▇ and at least "BBB-" by S&P.
"EBITDAR" shall mean, without duplication, for any fiscal period, the sum of the
amounts for such fiscal period of (i) operating income, (ii) depreciation
expense, (iii) amortization expense, (iv) facility lease expense, (v) equipment
lease expense, all as determined on a consolidated basis for Lessee. For
purposes of this definition, operating income shall be defined as net sales less
the sum of the amounts, as calculated under GAAP, for such fiscal period of (i)
cost of good sold, (ii) selling, general and administrative expenses, (iii)
restructuring charges, (iv) impairment of long lived asset charges.
"EH&S" shall have the meaning given such term in Section 17(b)(iii) of this
Agreement.
"EH&S Program" shall have the meaning given such term in Section 17(b)(iii) of
this Agreement.
"Engineering Consultant" shall mean ▇▇▇▇▇, Incorporated or such other recognized
engineering firm as the Owner shall designate.
"Environmental Evaluation" means a Phase I Environmental Site Assessment (an
"ESA") and a limited Phase II ESA ("Baseline Study") of the Site. The
Environmental Consultant shall prepare a scope of work for the Baseline Study,
acceptable to Lessor, which scope of work shall be sufficient to establish the
presence or absence of soil contamination on the Site. In the event that the
Phase I ESA identifies recognized environmental concerns and the Environmental
Consultant recommends further evaluation and investigation of the Site in
addition to the Baseline Study, the Construction Agent will retain a qualified
and competent environmental consultant (who is also acceptable to Lessor) to
undertake, as soon as reasonably practicable, a Phase II ESA. In the event that
the Phase I ESA identifies recognized environmental concerns and the
Environmental Consultant does not recommend further evaluation and investigation
of the Site, Lessor may request, which request must be based on, and reasonably
related to, the findings and conclusions of the Phase I ESA, that Lessee retain
a qualified and competent environmental consultant (who is also acceptable to
Lessor) to conduct a complete or limited Phase II ESA, in addition to the
Baseline Study. Copies of any Phase I ESA or Phase II ESA reports shall be
provided to Lessor and any such evaluations shall be at Lessee's expense.
"Environmental Consultant" shall mean Geomatrix Consultants.
"Environmental Emission" shall refer to any actual or threatened release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor
43
or outdoor environment into or out of any of the Equipment, including, without
limitation, the movement of any Contaminant through or in the air, soil, surface
water or groundwater.
"Environmental Law" shall mean any Federal, state or local law, rule or
regulation of Mexico, international treaty to which Mexico is a party, Official
Mexican Standard (▇▇▇▇▇ oficial mexicana) judgment, decree, resolution or other
requirement of any Governmental Authority pertaining to the protection of the
environment, air, water, groundwater, soil, subsoil, natural resources, florae,
wildlife species, or to the generation, handling, storage, treatment, disposal,
release, recycling or transportation of any Hazardous Substances, or human
exposure thereto, including, but not limited to, Mexico's General Law of
Ecological Balance and Environmental Protection (Ley General del Equilibrio
Ecologico y la Proteccion al Ambiente), Mexico's National Waters Law (Ley de
Aguas Nacionales), Mexico's General Health Law (Ley General de Salud, to the
extent relating to environmental matters), Mexico's General Law for the
Prevention and Integral Management of Waste (Ley General para la Prevencion y
Gestion Integral de los Residuos), Mexican official norms NOM-052-SEMARNAT-1993
and NOM-053- SEMARNAT-1993, Mexico's Federal Regulation on Environment, Health
and Safety in the Work Place (Reglamento Federal de Seguridad, Higiene y Medio
Ambiente en el Trabajo) and any Official Mexican Standards relating to health or
safety matters issued by Mexico's Federal Ministry of Labor and Public Welfare,
including but not limited to Official Mexican Standard NOM-010-STPS-1999, as
these laws have been amended (or supplemented with the effect of force of law),
and the regulations promulgated pursuant thereto.
"Environmental Loss" shall mean any loss, cost, including investigation,
removal, cleanup and remedial costs, damage, liability, fine, penalty, penalty
interest and surcharges or expense (including, without limitation, reasonable
attorneys' engineering and other professional or expert fees), and damages to,
loss of the use of or decrease in value of the Facility or the Equipment arising
out of or based on any Adverse Environmental Condition to the extent
attributable to events occurring prior to the later of the return of the
Facility or the Equipment, in accordance with the terms of this Agreement, or
the expiration or termination of this Agreement.
"Equipment" shall mean (i) the equipment listed in Annex A to each Schedule,
(ii) Parts or components thereof, (iii) ancillary equipment or devices furnished
therewith under this Agreement, (iv) all manuals and records (other than Rent
records) with respect to such Equipment, and (v) all substitutions and
replacements of any and all thereof, including, but not limited to, any
replacement equipment which may from time to time be substituted for the
Equipment leased hereunder; together in each case with any and all Parts
permanently incorporated or installed in or attached thereto or any and all
Parts temporarily removed therefrom. Except as otherwise set forth herein, at
such time as (x) replacement equipment shall be so substituted and leased
hereunder, or (y) any Equipment shall be subject to a Casualty Occurrence and
Lessee shall have paid all sums due under Section 8 with respect thereto, in
each case, such Equipment shall cease to be Equipment hereunder on a prospective
basis.
"Equipment Location" with respect to any Unit shall mean the location of such
Unit specified in Section B of the applicable Schedule.
"Event" shall have the meaning given such term in Section 12(a)(x) of this
Agreement.
44
"Excluded Taxes" shall have the meaning given such term in Section 4(a) of this
Agreement.
"Facility" means the build to suit dry cast (TAC II), injection molding,
foaming, assembly and sequencing and paint line automotive interior production
facility to be developed, installed, assembled, constructed and operated on the
Equipment Location (but shall not include any real property) and all Units and
the Equipment constructed and installed pursuant to the CAA and the other
Project Documents (as such term is defined in the CAA).
"Facility Cost" shall have the meaning given such term in the Construction
Agency Agreement.
"Fair Market Rental Value" shall mean the Rent which a willing lessee (who is
neither a lessee in possession nor a used equipment dealer) would pay for the
Rent of the Facility or one or more particular Units of the Equipment (in use
and in place) in an arms'-length transaction to a willing lessor under no
compulsion to lease for a period similar to the Renewal Term, determined using
the same methodology and assumptions as utilized on the Basic Term Commencement
Date for purposes of establishing Capitalized Lessor's Cost; provided, however,
that in such determination the Facility or Equipment shall be assumed to be in
the condition in which it is required to be maintained and returned under this
Agreement. Fair Market Rental Value shall be determined by the Appraisal
Procedure.
"Fair Market Value" shall mean the price which a willing buyer (who is not a
used equipment dealer) would pay for the Facility or one or more particular
Units of the Equipment (in use and in place) in an arm's-length transaction to a
willing seller under no compulsion to sell, determined using the same
methodology and assumptions as utilized on the Basic Term Commencement Date for
purposes of establishing Capitalized Lessor's Cost; provided, however, that in
such determination the Facility or Equipment shall be assumed to be in the
condition in which it is required to be maintained and returned under this
Agreement. Fair Market Value shall be determined by the Appraisal Procedure.
"FIRREA" shall mean the Federal Financial Institution Reform, Recovery and
Enforcement Act of 1989.
"Fiscal Quarter" means any of the quarterly accounting periods of Lessee, ending
on March 31, June 30, September 30 and December 31 of each year.
"Fixed Charges" means, with respect to Lessee for any fiscal period, (a) the
aggregate of all Rent paid or accrued during such period, plus (b) rent
attributable to the Site Lease.
"Fixed Charge Coverage Ratio" means the ratio of EBITDAR to Fixed Charges.
"Floating Lien Pledge" means that certain Floating Lien Pledge Agreement, dated
as of the date hereof, between the Lessee, as pledgor and the Lessor, as pledgee
"Ford E&D Reimbursement" shall mean all engineering and design costs (including
without limitation, the costs enumerated under Section 27.03 of the "Global
Terms and Conditions" contained within the Ford Supply Agreement) payable by
Ford Motor Company or its Affiliate(s) to the Company upon achieving program
approval milestones, pursuant to the Ford Supply Agreement.
45
"Ford Supply Agreement" means, collectively, the "Global Terms and Conditions"
agreement, dated January 1, 2004, and each related "Target Agreement" entered
into by and between the Company and Ford Motor Company or its Affiliate(s).
"GAAP" shall have the meaning given such term in Section 5(b) of this Agreement.
"GECMG" means GECC Capital Markets Group, Inc..
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity either
local or foreign exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranty" means a guaranty, dated as of the date hereof, made by ▇▇▇▇▇▇▇ in
favor of Lessor substantially in the form of Exhibit No. 4 hereto, if and when
delivered.
"Guaranty Trust" means that certain Irrevocable Guaranty Trust Agreement number
439, dated as of the date hereof, executed by and among ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Holdings, S.A. de C.V. and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Company de Mexico, S.A.
de C.V., the Lessor, and Banco Invex, S.A., Institucion de Banca Multiple, Invex
Grupo Financiero, Fiduciario, with the acknowledgment of the Lessee.
"Hazardous Substances" means any hazardous or toxic substance, material or
waste, pollutant or contaminant, whether in solid, liquid or gaseous form, or
any hazardous or toxic constituents thereof, and in general any waste, substance
or material which generation, use, handling, treatment, remediation, storage,
transportation, disposal, discharge, release, existence or emission are in any
way governed by or subject to any Environmental Laws, including without
limitation any and all hazardous or toxic substances, materials or wastes
governed by, subject to or defined under applicable Environmental Laws,
including, but not limited to, petroleum or petroleum-derived products, radon
gas, asbestos, asbestos containing materials, PCB's, radioactive substances and
in general any substance, material or waste that is of a corrosive, reactive,
explosive, toxic, flammable or biologically infectious nature and any
containers, recipients, packages or soils that may have been in contact with any
such materials, wastes or substances.
"Indemnified Party" shall have the meaning given such term in Section 15(a) of
this Agreement.
"Index Rate" means, for any day, a floating rate equal to the higher of (i) the
rate publicly quoted from time to time by The Wall Street Journal as the "base
rate on corporate loans posted by at least 75% of the nation's 30 largest banks"
(or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.
"Intercompany Agreement" shall mean that certain Intercompany Subordination
Agreement, dated as of the date hereof, among the Lessee, the Guarantor, the
Lessor and Affiliates of the Lessee.
46
"Investment Grade Status" shall mean the obligations under the Credit Agreement
are rated both Baa3 or higher by ▇▇▇▇▇'▇ and BBB- or higher by S&P.
"Judgment Currency" shall have the meaning given such term in Section 20(o)(i)
of this Agreement.
"Judgment Currency Conversion Date" shall have the meaning given such term in
Section 20(o)(i) of this Agreement.
"Landlord Consent" means each landlord consent executed and delivered pursuant
to Section 1(b), Section 6(e)(v) or Section 17(b)(vi) in substantially the form
of the Landlord Consent (as defined in the CAA) or otherwise in form and
substance reasonably satisfactory to Lessor.
"Lessee" shall have the meaning given such term in the preamble to this
Agreement.
"Lessor" shall have the meaning given such term in the preamble to this
Agreement.
"Lessor's Transaction Expenses" shall mean (a) any Transaction Expenses, as
defined in the CAA, which is not included as part of Capitalized Lessor's Cost,
plus (b) the appropriate amount of Equity Yield associated with the amount
described in (a) above, in both instances as determined by the Appraiser as set
forth in the Appraisal.
"Lessor's Lien" shall mean any Lien affecting the Facility or Equipment or any
part thereof arising as a result of (i) Lessor's rights under or pursuant to
this Agreement; (ii) any claim arising from any transfer by Lessor of an
interest in the Facility, the Equipment or this Agreement; (iii) any claim
against Lessor not related to the transactions contemplated by this Agreement;
(iv) any act or omission of Lessor not expressly contemplated by this Agreement
or not permitted without consent (which consent has not been granted) by Lessee
or that is in violation of any term of this Agreement or not taken as a result
of the occurrence and continuance of a Default as permitted by this Agreement;
or (v) taxes imposed against Lessor or the consolidated group of taxpayers of
which it is a member which are not to be indemnified against by Lessee under
this Agreement; provided, however, that there shall be excluded from this
definition and no Lessor's Lien shall exist if such Lien is being diligently
contested in good faith so long as neither such proceedings nor Lien involves a
material danger of the sale, forfeiture or loss of the Facility and the
Equipment or adversely affects Lessee's rights under this Agreement.
"License Agreement" shall mean the License Agreement dated as of the date
hereof, by and between ▇▇▇▇▇▇▇ and the Lessor.
"Lien" shall mean any mortgage, trust, pledge, Lien, charge, encumbrance, lease,
exercise of rights, security interest, lease in the nature of a security
interest, statutory right in rem, or claim of any kind, including any thereof
arising under any conditional sale agreement, equipment trust agreement or title
retention agreement.
"Loss" shall have the meaning given such term in Section 15(c) of this
Agreement.
47
"Material Adverse Effect" shall mean (i) a materially adverse effect on the
operations, properties, assets, financial condition, contingent or otherwise, or
material agreements of ▇▇▇▇▇▇▇ or Lessee, as the case may be or (ii) a material
impairment of the ability of ▇▇▇▇▇▇▇ or Lessee, as the case may be, to perform
their respective obligations under or to remain in compliance with the Documents
to which they are a party or under the Credit Agreement, as the case may be.
"Mexican GAAP" shall mean those accounting principles required to be used when
conducting a statutory audit in Mexico.
"Mexico" means the United Mexican States.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors and assigns,
and, if ▇▇▇▇▇'▇ Investors Service, Inc. and its successors and assigns no longer
issues securities ratings, the term "Moody's" shall include at the option of
Lessor, any other Person that issues internationally accepted securities
ratings, and, upon the inclusion in this definition of such other Person, each
reference in the Documents to a rating issued by Moody's shall be deemed
automatically replaced with a reference to the comparable rating issued by such
Person.
"Net Economic Return" shall mean the Lessor's anticipated nominal after-tax
yield reflected in the computations of Basic Term Lease Rate Factor and
Stipulated Loss Values set forth in the original Exhibit No. 1 to this
Agreement, as such Exhibit No. 1 may be amended or replaced pursuant to this
Agreement, computed utilizing the multiple investment sinking fund method of
analysis and the same assumptions, including the Pricing Assumptions and Tax
Benefits and Assumptions, and the same methodology and constraints as used by
the Lessor in making the computations of Basic Term Lease Rate Factor and
Stipulated Loss Values initially set forth in the original Exhibit No. 1 to this
Agreement. In the event that the 4-year US dollar fixed interest rate swap (vs.
90-day Libor), as determined by Bloomberg Screen IRSB18 (Ask Rate), as of 11 AM
two business days prior to the Basic Term Commencement Date is other than 3.61%
(Lessor's Funding Rate Index), the Lessor's nominal after-tax yield, as
described above, shall be increased or decreased by an amount equal to; (A) the
4 year US dollar fixed interest rate swap (vs. 90-day Libor), as determined by
Bloomberg Screen IRSB18 (Ask Rate), as of 11 AM two business days prior to the
Basic Term Commencement Date, less (B) 3.61%, with the result of that
calculation (positive or negative) multiplied by (C) 54.405%.
"Non-Severable Improvement" shall mean any equipment, part, supply or accessory
furnished or attached to any Unit, the Equipment or the Facility which is not
readily removable therefrom.
"Obligation Currency" shall have the meaning given such term in Section 20(o)(i)
of this Agreement.
"Old Unit" shall have the meaning given such term in Section 6(g) of this
Agreement.
"Operative Documents" shall mean the CAA, the Site Lease (including Landlord's
Consent), any Additional Construction Document, any Acceptable Letter of Credit,
the Ford E&D Reimbursement, the Guaranty Trust, the Floating Lien Pledge, the
Stock Pledge, the Ford Supply Agreement, the License Agreement, the Intercompany
Agreement, the Guaranty, the Commitment Fee Letter and all Purchase Documents
and all other consents, agreements and documents relating thereto or to any
Unit, the Equipment, the Facility or the Site.
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"Overdue Rate" shall have the meaning given such term in Section 20(i) of this
Agreement.
"Parts" shall mean all appliances, components, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
which may now or from time to time be incorporated or installed in or attached
to, or were provided by the manufacturer with, the Equipment, including after
temporary removal from such Equipment.
"Payment Date" shall have the meaning in Section 8.
"PCBs" shall have the meaning given to such term in the definition of
"Contaminant".
"Permitted Lien" shall mean (i) the rights of Lessor and Lessee as herein
provided, (ii) Lessor's Liens, (iii) Liens for taxes, assessment or other
governmental charge either not yet delinquent or being diligently contested in
good faith by appropriate proceedings and so long as adequate reserves are
maintained with respect to such Liens and available to Lessee for the payment of
such taxes and only so long as neither such proceedings nor such Liens involve
any material danger of the sale, forfeiture, loss or loss of use of the Facility
or Equipment or any part thereof, or any interest of Lessor therein or any risk
of criminal liability of Lessor and Lessee has given Lessor prior written notice
of Lessee's intent to contest any such taxes and Lessee has agreed to indemnify
Lessor for any and all costs and expenses (including, without limitation
reasonable attorneys' fees) which Lessor may incur as a result of such contest,
(iv) inchoate materialmen's, mechanics', carriers', workmen's, repairmen's, or
other like inchoate Liens imposed by law arising in the ordinary course of
Lessee's business for sums either not delinquent or being diligently contested
in good faith and only so long as neither such proceedings nor any such Liens
involve any material danger of the sale, forfeiture, loss or loss of use of the
Facility or Equipment, or any part thereof, or any interest of Lessor therein or
any material risk of material civil liability and further, provided that
adequate reserves are maintained with respect to such Liens and provided, that
Lessee has given Lessor written notice thereof, (v) the rights of others under
agreements or arrangements to the extent expressly permitted under this
Agreement, (vi) Liens arising out of any judgment or award against Lessee with
respect to which at the time an appeal or proceeding for review is being
prosecuted in good faith by appropriate proceedings diligently conducted and
with respect to which there shall have been secured a stay of execution pending
such appeal or proceeding for review and so long as adequate reserves are
available to Lessee for the payment of such obligations and there is no material
danger of sale, forfeiture, loss, or loss of use of the Facility or Equipment or
material risk of material civil liability and Lessee shall have given Lessor
written notice thereof, and (vii) any Lien against which Lessee causes to be
provided a bond in such amount and under such terms and conditions as are
reasonably satisfactory to Lessor.
"Person" shall mean any individual, partnership, corporation, trust,
unincorporated organization, government or department or agency thereof and any
other entity.
"Pricing Assumptions" shall have the meaning given such term in Section 3(a) of
this Agreement.
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"Purchase Documents" shall mean each ▇▇▇▇ of sale, invoice, purchase agreement,
purchase order, patent and license and warranty assignment or agreement, that
evidences, in whole or in part, title to or rights to any Unit, the Equipment
and/or the Facility.
"Release" means disposing, discharging, injecting, spilling, leaking, leaching,
dumping, pumping, pouring, emitting, escaping, emptying, seeping, placing and
the like, into or upon any land, soil, subsoil, real property or water,
superficial water or groundwater or air, or otherwise entering into the
environment in violation of Environmental Law.
"Rent" means all amounts payable by Lessee hereunder, including Basic Term Rent
and periodic Rent for any Renewal Term with respect to the Facility and any Unit
(as provided in Section 2(a) and Section 19(a) of this Agreement) and any
Supplemental Rent (including the corresponding value added tax).
"Rent Payment Date" with respect to the Facility and any Unit shall have the
meaning given such term in Section E of the applicable Schedule.
"Renewal Term" shall mean a renewal term elected by Lessee in accordance with
Section 19(a) of this Agreement.
"Replacement Unit" shall have the meaning assigned to such term in Section 6(g)
of this Agreement.
"Required Amount" means (a) 20% of Capitalized Lessor's Cost for the first sixty
(60) months of the Basic Lease Term and (b) 15% of Capitalized Lessor's Cost for
the months sixty-one (61) through ninety-six (96) of the Basic Term.
"Responsible Officer" of an entity means any corporate officer (or in the case
of a non-corporate entity, any comparable authority) of such entity who is
designated as the recipient of a notice pursuant to the provisions of any
Document or who, in the normal performance of such officer's operational
responsibilities, would have knowledge of the matter at issue and the relevant
provisions of any applicable Document.
"Restoration or Replacement Plan" means a plan and time schedule for the
application of insurance proceeds in the case of a casualty event and any other
funds available to the Lessee with which to restore or replace any property
affected by a casualty event.
"S&P" means Standard & Poor's Rating Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, inc., and its successors and assigns and, if Standard & Poor's
Ratings Group and its successors and assigns no longer issues securities
ratings, the term "S&P" shall include, at the option of Lessor, any other Person
that issues internationally accepted securities ratings, and, upon the inclusion
in this definition of such other Person, each reference in the Documents to a
rating issued by S&P shall be deemed automatically replace with a reference to
the comparable rating issued by such Person.
"Schedule" means each schedule to the Lease executed and delivered pursuant to
Section 1(b) in substantially the form attached hereto as Exhibit No. 1.
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"Seller" shall have the meaning given such term in Annex B of the applicable
Schedule.
"Site" shall mean that certain tract or parcel of real immovable property
situated in Hermosillo, Mexico, as more fully described on Exhibit A to the Site
Lease.
"Site Lease" shall mean the Lease Agreement, dated as of December 19, 2003, by
and between the Site Lessor and the Lessee, as assignee of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Automotive Company de Mexico, S.A. de C.V.
"Site Lessor" shall mean Santa ▇▇▇▇▇ Industrial Partners, L.P., a Delaware
limited partnership, as site lessor of the Site under the Site Lease.
"Special Change of Control" shall mean a transaction or series of transactions
pursuant to which a Person or group of Persons (other than a Designated Person
(as defined in the Credit Agreement) and its Affiliates or a group that includes
any of them, directly or indirectly, becomes the beneficial owner of more than
25% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of C&A at a time when Designated Persons or any
combination of Designated Persons do not beneficially own shares representing at
least 50% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of C&A.
"Stipulated Loss Value" shall mean with respect to the Facility or any Unit as
of any date of determination on or prior to the last day of the Basic Term, the
amount determined by multiplying Capitalized Lessor's Cost for the Facility or
any Unit of Equipment by the percentage specified in Annex C to the Schedule
applicable to such Unit. In the event that this Agreement is for any reason
extended beyond the Basic Term, then the last percentage figure shown on Annex C
to the applicable Schedule shall control throughout any such extended term.
"Stock" shall mean the voting stock, membership interests or similar equity
interests of any Person.
"Stock Pledge" shall mean that certain Stock Pledge Agreement dated as of the
date hereof, between ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Automotive Company de Mexico, S.A. de
C.V., as pledgor and the Lessor, as pledge.
"Subsidiary" means, with respect to any Person, a corporation, limited liability
company, partnership or other entity of which such Person and/or its other
subsidiaries own, directly or indirectly, more than 50% of the Stock.
"Substitution" shall have the meaning given such term in Section 6(g) of this
Agreement.
"Successor" shall have the meaning given such term in Section 12(a)(x) of this
Agreement.
"Supplemental Rent" shall mean, without duplication, any and all liabilities,
obligations, losses, damages, settlements, penalties, claims, actions, suits,
costs, expenses and disbursements (including, without limitation, reasonable
fees and disbursements of legal counsel, accountants, appraisers, inspectors or
other professionals, and costs of investigation), and all other amounts,
liabilities, indemnities and obligations (other than Basic Term Rent or periodic
Rent with respect
51
to any Renewal Term) that Lessee assumes or becomes obligated or agrees to pay
under the Documents, to or on behalf of Lessor or any other Person, including,
without limitation, payments of Stipulated Loss Value, the purchase price to be
paid by Lessee with respect to any Unit, Equipment and/or the Facility, and
payments of indemnities under Section 4 and Section 15 of this Agreement.
"Tax Benefits and Assumptions " shall mean each of the benefits and assumptions
set forth in Section "D" of Exhibit No. 1 "Tax Benefits and Assumptions" of this
Agreement.
"Taxes" shall have the meaning given such term in Section 4 of this Agreement.
"Term" shall have the meaning given such term in Section 2(a) of this Agreement.
"Third Party Financier" shall have the meaning set forth in Section 20(a) of
this Agreement.
"UCC" shall mean the Uniform Commercial Code as enacted in any applicable
jurisdiction.
"Unit" shall mean any item of Equipment identified on each Schedule and leased
hereunder.
"Vendor" shall mean any Person (including the Lessee and its Affiliates) who
holds legal title to a Unit or the Equipment immediately prior to such Unit or
Equipment being sold to Lessor.
Rules of Construction. Unless otherwise specified, references in any Document or
any of the Appendices thereto to a Section, subsection or clause refer to such
Section, subsection or clause as contained in such Document. The words "herein,"
"hereof" and "hereunder" and other words of similar import used in any Document
refer to such Document as a whole, including all annexes, exhibits and
schedules, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause contained
in such Document or any such annex, exhibit or schedule. Wherever from the
context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine and
neuter genders. The words "including," "includes" and "include" shall be deemed
to be followed by the words "without limitation"; the word "or" is not
exclusive; references to Persons include their respective successors and assigns
(to the extent and only to the extent permitted by the Documents) or, in the
case of Governmental Authorities, Persons succeeding to the relevant functions
of such Persons; references to any agreement refer to that agreement as from
time to time amended or supplemented or as the terms of such agreement are
waived or modified in accordance with its terms; and all references to statutes
and related regulations shall include any amendments of the same and any
successor statutes and regulations.
52
IN WITNESS WHEREOF, Lessee and Lessor have caused this Master Lease
Agreement to be executed by their duly authorized representatives as of the date
first above written.
LESSOR: LESSEE:
GE CAPITAL DE MEXICO, S. DE ▇.▇. ▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ AUTOMOTIVE HERMOSILLO,
C.V. S.A. DE C.V.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Title: Controller Title: Attorney-in-fact
53