EXHIBIT 10.22
Lease No. 970098
LEASE AGREEMENT ("Lease") dated as of December 17, 1997 between BA LEASING
& CAPITAL CORPORATION, a California corporation with an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessor") and GARDENBURGER,
INC., an Oregon corporation with its principal office at ▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee").
Lessor agrees to acquire and lease to Lessee and Lessee agrees to hire from
Lessor certain personal property (the "Units" and individually a "Unit")
described in the appendix to the Lease attached hereto and made a part hereof,
or any other appendix hereto that Lessor and Lessee may enter into from time to
time (each an "Appendix") hereof, on the terms and conditions set forth herein
and in the relevant Appendix.
Section 1. PROCUREMENT, DELIVERY AND ACCEPTANCE.
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1.1 Lessee has ordered or shall order the Units pursuant to one or more
purchase orders or other contracts of sale ("Purchase Agreements") from one or
more vendors ("Vendors"). If, before the date of any Appendix, Lessee receives
title to or possession of any Unit described in such Appendix, Lessee shall
convey the Unit to Lessor under a ▇▇▇▇ of sale in form and substance
satisfactory to Lessor. Lessee shall, on the date of each Appendix, assign to
Lessor all of Lessee's right, title and interest in and to the Purchase
Agreements for the Units described in the Appendix by executing and delivering
to Lessor a Purchase Agreement Assignment in the form of Exhibit A (a "Purchase
Agreement Assignment"). Lessor agrees to (a) accept the assignment and (b)
subject to Section 1.2, assume the obligations of Lessee under the Purchase
Agreements to purchase and pay for the Units, but no other duties and
obligations thereunder. Nevertheless, Lessee shall remain liable to Vendor with
respect to its duties and obligations in accordance with the Purchase
Agreements.
1.2 The obligation of Lessor to pay for each Unit is subject to
satisfaction of the conditions precedent set forth in Paragraph B.2 of the
relevant Appendix. If any of those conditions is not met with respect to any
Unit, Lessor shall assign to Lessee all of Lessor's right, title and interest in
and to the Unit and any ▇▇▇▇ of sale or Purchase Agreement previously assigned
to Lessor as it relates to the Unit.
1.3 Lessee shall forward to Lessor original invoices relating to each Unit
to be accepted under the terms of this Lease and the relevant Appendix. If
Lessee has received title and possession of the Unit before executing a Purchase
Agreement Assignment relating thereto, Lessee will execute a ▇▇▇▇ of sale
conveying title thereto to Lessor. Lessor shall prepare an Acceptance
Certificate in the form of Exhibit B (an "Acceptance Certificate") together with
a Schedule to the Acceptance Certificate in the form of Exhibit C (a "Schedule")
based upon the criteria in the relevant Appendix. Lessee shall execute and
return the Acceptance Certificate and Schedule within five business days after
the preparation of such Schedule confirming the date Lessee has received such
Unit, or, the date when any required installation and testing is completed (the
"Delivery Date"), and confirming that the Lessee has accepted the Unit under
Lease as of its Delivery Date. Upon receipt of the executed Acceptance
Certificate and Schedule, Lessor shall pay the Purchase Price (as defined in the
relevant Appendix) with respect to the Units described therein.
Section 2. TERM, RENT AND PAYMENT.
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2.1 The term of this Lease for each Unit (its "Lease Term") shall begin on
the date of the Appendix describing the Unit and continue as specified in its
Appendix and Schedule.
2.2 Lessee shall pay Lessor rent for each Unit in the amounts and at the
times specified in its Appendix and Schedule.
2.3 Rent and all other sums due Lessor hereunder shall be paid at the
office of Lessor set forth below, unless otherwise specified by Lessor.
2.4 THIS LEASE IS A NET LEASE AND LESSEE SHALL NOT BE ENTITLED TO ANY
ABATEMENT OR REDUCTION OF RENT OR ANY SETOFF AGAINST RENT, WHETHER ARISING BY
REASON OF ANY PAST, PRESENT OR FUTURE CLAIM OF ANY NATURE BY LESSEE AGAINST
LESSOR OR OTHERWISE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THIS LEASE
SHALL NOT TERMINATE, NOR SHALL THE OBLIGATIONS OF LESSOR OR LESSEE BE OTHERWISE
AFFECTED BY ANY CIRCUMSTANCE, including, without limitation, (a) any defect in,
damage to, loss of possession or use or destruction of any Unit, however caused,
(b) the attachment of any lien, encumbrance, security interest or other right or
claim of any third party to any Unit, (c) any prohibition or restriction of or
interference with Lessee's use of any Unit by any person or entity, (d) the
insolvency of or the commencement by or against Lessee of any bankruptcy,
reorganization or similar proceeding, or (e) any other cause, whether similar or
dissimilar to the foregoing, any present or future law to the contrary
notwithstanding. IT IS THE INTENTION OF THE PARTIES THAT ALL RENT AND OTHER
AMOUNTS PAYABLE BY LESSEE HEREUNDER SHALL BE PAYABLE IN ALL EVENTS IN THE MANNER
AND AT THE TIMES HEREIN PROVIDED UNLESS LESSEE'S OBLIGATIONS IN RESPECT THEREOF
HAVE BEEN TERMINATED PURSUANT TO EXPRESS PROVISIONS HEREOF.
2.5 Payments shall be applied in the following order: (a) Lessor's
expenses, including without limitation those set forth in Sections 8.3 and 19;
(b) interest on late payments; and (c) rent and all other sums due hereunder.
Payments shall be conclusively evidenced by entries in records maintained by
Lessor.
Section 3. REPRESENTATIONS AND WARRANTIES.
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Lessee hereby represents and warrants to Lessor as follows:
(1) Lessee is a corporation duly organized and existing under the laws
of the state of its incorporation, is qualified to do business in every
state in which the quantity or nature of its business or property make such
qualification necessary, is in good standing in each such state and has
full and adequate corporate powers to carry on and conduct its business as
now conducted.
(2) The Lease has been duly authorized, executed and delivered by
Lessee and is a legal, valid and binding agreement of Lessee.
(3) Lessee has full right, power and authority to execute and deliver
the Lease and perform its obligations under this Lease; and the execution
and delivery of the Lease by Lessee does not, and performance by Lessee
thereof will not, contravene any charter or by-law provision of Lessee or
of any indenture, covenant, instrument or agreement of to which Lessee is a
party or by which Lessee or any of its properties is bound or affected.
(4) No approval, consent, exemption, authorization or other action by,
or notice to or filing with, any government authority is necessary in
connection with the execution, delivery, performance by Lessee or
enforcement by Lessor of the Lease, or if necessary the same has been
obtained.
(5) There is no law, rule or regulation that would be contravened by
the execution, delivery, performance by Lessee or enforcement by Lessor of
the Lease, nor to Lessee's knowledge are there, as of the date hereof, any
actions, suits, or proceedings (whether or not purportedly on behalf of
Lessee) pending, or to Lessee's knowledge, threatened against or affecting
Lessee, at law or in equity or before any Federal, state, municipal or
other governmental department, commission, board, bureau, agency, court or
instrumentality, which involve the possibility of any judgment, or
liability, which items are not fully covered by insurance, or which may
result in any material adverse change in the business, operations,
properties or assets or in the condition, financial or otherwise, of
Lessee, or the ability of Lessee to carry on its business and the
performance of its obligations hereunder, and Lessee has no knowledge of
any default on Lessee's part with respect to any order, writ, injunction or
decree of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, that may
result in such material adverse change.
(6) The Lease is enforceable against Lessee in accordance with its
terms, except as such enforcement may be subject to applicable bankruptcy,
rehabilitation, liquidation, conservation, dissolution, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors rights generally and is subject to general principles
of equity (regardless of whether enforcement is sought in a proceeding at
law or in equity.
LESSEE ACKNOWLEDGES AND AGREES THAT (A) EACH UNIT IS OF A SIZE, DESIGN,
CAPACITY AND MANUFACTURE SELECTED BY LESSEE, (B) LESSEE IS SATISFIED THAT THE
SAME IS SUITABLE FOR ITS PURPOSES, (C) LESSOR IS NOT A MANUFACTURER THEREOF NOR
A DEALER IN PROPERTY OF SUCH KIND AND (D) LESSOR HAS NOT MADE, AND DOES NOT
HEREBY MAKE, ANY REPRESENTATION, WARRANTY OR COVENANT WITH RESPECT TO THE TITLE,
MERCHANTABILITY, CONDITION, QUALITY, DESCRIPTION, DURABILITY, FITNESS FOR
PURPOSE OR SUITABILITY OF ANY UNIT IN ANY RESPECT OR IN CONNECTION WITH OR FOR
THE PURPOSES AND USES OF LESSEE. Lessor hereby assigns to Lessee, to the extent
assignable, any warranties, covenants and representations of Vendor with respect
to any Unit, but any action taken by Lessee by reason thereof shall be at
Lessee's expense and shall be consistent with Lessee's obligations under Section
2.
Section 4. POSSESSION, USE AND MAINTENANCE.
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4.1 Lessee shall not (a) use, operate, maintain or store any Unit
improperly, carelessly or in violation of any applicable law or regulation of
any government authority, (b) abandon any Unit, (c) sublease any Unit or permit
its use by anyone other than Lessee without the prior written consent of Lessor,
(d) permit any Unit to be removed from the location or principal base, as the
case may be, specified in the relevant Appendix or permit any Unit that is a
motor vehicle to be registered in any state other than as specified in the
relevant Appendix without the prior written consent of Lessor, (e) affix or
place any Unit to or on any other personal property or any real property without
first obtaining and delivering to Lessor such waivers as Lessor may reasonably
require to assure Lessor's ownership and right to remove the Unit free from any
lien, encumbrance, right or claim asserted by any third party or (f) sell,
assign or transfer, or directly or indirectly create, incur or suffer to exist
any lien, encumbrance, right or claim of any kind on any of its rights hereunder
or in any Unit.
4.2 Lessee shall at its expense maintain each Unit during its Lease Term in
good operating order, repair, condition and appearance and in accordance with
the manufacturer's recommended procedures.
4.3 Lessee shall not alter any Unit or install any accessory, equipment or
device on any Unit that would impair any applicable warranty, the originally
intended function or the value of the Unit. All repairs, parts, accessories,
equipment and devices furnished, affixed to or installed on any Unit, excluding
temporary replacements, shall thereupon become the property of Lessor but, if no
Event of Default exists, Lessee may, at its expense, remove them from the Unit
at the end of its Lease Term, if they are readily removable and their removal
will not impair the originally intended function or use of the Unit.
4.4 If Lessor supplies Lessee with a label, plate or other marking stating
each Unit is leased from Lessor, Lessee shall affix and keep it on a prominent
place on each Unit during its Lease Term.
4.5 Upon prior notice to Lessee, Lessor and its designees shall have the
right at all reasonable times to inspect any Unit, observe its use and inspect
records related thereto.
Section 5. GENERAL TAX INDEMNITY.
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5.1 Lessee shall pay or reimburse Lessor for, and indemnify and hold Lessor
harmless from, all fees (including, but not limited to, license, documentation,
recording or registration fees) and all sales, use, gross receipts, property,
occupational, value-added or other taxes, levies, imposts, duties, assessments,
charges or withholdings of any nature whatsoever, together with any penalties,
fines or additions to tax, or interest thereon (each of the foregoing being
hereafter referred to as an "Imposition"), arising at any time before or during
the term of this Lease, or upon any termination of this Lease or return of the
Units to Lessor, and levied or imposed on Lessor, directly or otherwise, by any
federal, state or local government or taxing authority in the United States or
by any foreign country or foreign or international taxing authority on or with
respect to (a) any Unit, (b) the exportation, importation, registration,
purchase, ownership, delivery, leasing, possession, use, operation, storage,
maintenance, repair, transportation, return, sale, transfer of title or other
disposition thereof, (c) the rents, receipts, or earnings arising from any Unit
or (d) this Lease or any payment made hereunder, excluding, however, taxes
measured by Lessor's net income imposed or levied by the United States or any
state thereof unless such taxes are in lieu of or in substitution for any
Impositions Lessee would otherwise have been obligated to pay, reimburse or
indemnify hereunder. Lessee shall not be responsible for any taxes in connection
with any sale or lease of the Unit by Lessor after Lessee has returned the Unit
pursuant to Section 9 of this Lease.
5.2 Lessor shall pay directly each Imposition for which Lessor is primarily
responsible and as to which Lessor gives Lessee notice Lessor will pay directly;
and Lessee shall promptly reimburse Lessor for any such Imposition so paid
(except any Imposition excluded by Section 5.1) upon presentation of a ▇▇▇▇
therefor.
5.3 Lessee shall pay on or before the time or times prescribed by law any
Imposition for which Lessee is primarily responsible under applicable law and
any other Imposition (except any Imposition excluded by Section 5.1) not payable
by Lessor pursuant to Section 5.2, but Lessee shall have no obligation to pay an
Imposition that Lessee is contesting in good faith and by appropriate legal
proceedings and the nonpayment thereof does not, in the opinion of Lessor,
adversely affect the title, property, use, disposition or other rights of Lessor
with respect to the Units. Lessee shall furnish on Lessor's request proof of
payment of any Imposition paid by Lessee.
5.4 If Lessor is not entitled to a corresponding and equal deduction with
respect to any Imposition Lessee is required to pay or reimburse under Section
5.1, 5.2, or 5.3 and the payment or reimbursement constitutes income to Lessor,
then Lessee shall also pay to Lessor the amount of any Imposition Lessor is
obligated to pay in respect of (a) such payment or reimbursement by Lessee and
(b) any payment by Lessee made pursuant to this Section 5.4.
5.5 Lessor shall prepare and file all required property tax reports or
returns as "Owner" of the Units but Lessee must timely provide Lessor with all
information that Lessor requires to prepare properly any such report or return.
Lessee shall report the Units as "Equipment Leased from Others" on any property
tax reports or returns required to be filed by Lessee. Lessee shall furnish on
Lessor's request copies of reports or returns so filed.
Section 6. RISK OF LOSS; CASUALTIES; INDEMNITY.
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6.1 If any Unit is worn out, lost, stolen, destroyed or irreparably
damaged, from any cause whatsoever, or taken or requisitioned by condemnation or
otherwise (any such occurrence being hereinafter called a "Casualty Occurrence")
before or during the term of this Lease as to such Unit, Lessee shall give
Lessor prompt notice thereof. On the first rent payment date after the Casualty
Occurrence or, if there is no such rent payment date, 30 days after the Casualty
Occurrence, Lessee shall (i) pay to Lessor, in addition to any other amounts
then due and owing, an amount equal to the rent payment, if any, due on such
date, any "Other Charges" required under the relevant Appendix and a sum equal
to the Casualty Value for all, but not less than all, of the Units as of such
date, determined according to the relevant Appendix, or (ii) provided there is
no Event of Default hereunder, Lessee shall have the option to substitute Units
that have suffered a Casualty Occurrence with equipment of like-kind or equal or
value, utility and estimated useful like (the "Replacement Unit"). Prior to or
at the time of any substitution, Lessee shall, at its expense, take all actions
reasonably requested by Lessor to document, perfect, and protect Lessor's
interest in the Replacement Unit. Lessee shall represent, warrant and covenant
that each Replacement Unit shall be free and clear of all claims, liens,
security interests and encumbrances of any kind.
Upon the making of such payment by Lessee , the rent for the Unit shall
cease to accrue, its Lease Term shall terminate and Lessor shall be entitled to
recover possession of the Unit. If Lessor receives the Casualty Value for a
Unit, Lessee shall be entitled to the proceeds of any recovery in respect of the
Unit from insurance or otherwise, including any excess proceeds over Casualty
Value, . Except as provided in this Section 6.1, Lessee shall not be released
from its obligations hereunder in the event of, and shall bear the risk of, any
Casualty Occurrence to any Unit before or during its Lease Term.
6.2 Except for any claims of breach of this Lease by Lessor, Lessee waives
and releases any claim now or hereafter existing against Lessor, any company
controlled by, controlling, or under common control with Lessor and all of their
directors, officers, employees, agents, attorneys, successors and assigns (each,
an "Indemnified Person") on account of, and shall indemnify, reimburse and hold
each Indemnified Person harmless from, any and all claims (including, but not
limited to, claims based on or relating to copyright, trademark or patent
infringement, environmental liability, negligence, strict liability in tort,
statutory liability or violation of laws), losses, damages, obligations,
penalties, liabilities, demands, suits, judgments or causes of action
(collectively, "Claims"), and all legal proceedings, and any reasonable costs or
expenses in connection therewith, including reasonable attorneys' fees,
including reasonable allocated time charges of internal counsel, in each case
imposed on, incurred by or asserted against the Indemnified Person in any way
relating to or arising in any manner out of (a) the registration, purchase,
taking or foreclosure of a security interest in, or the ownership, delivery,
condition, lease, assignment, storage, transportation, possession, use,
operation, return, repossession, sale or other disposition of, any Unit, before
or during the term of this Lease as to the Unit, (b) any alleged or actual
defect in any Unit (whether arising from the material or any article used
therein, the design, testing, use, maintenance, service, repair or overhaul
thereof or otherwise) regardless of when such defect is discovered or alleged,
whether or not the Unit is in Lessee's possession and no matter where it is
located or (c) this Lease or any other related document, the enforcement hereof
or thereof or the consummation of the transactions contemplated hereby or
thereby.
Section 7. INSURANCE.
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Lessee, at its own cost and expense, shall keep each Unit insured against
all risks for the value of the Unit and in no event for less than the Casualty
Value of the Units, and shall maintain public liability insurance against such
risks and for such amounts as Lessor may require. All such insurance shall be in
such form and with such companies as Lessor shall approve, shall specify Lessor
and Lessee as insureds and shall provide that such insurance may not be canceled
as to Lessor or altered in any way that would affect the interest of Lessor
without at least 30 days prior written notice to Lessor (10 days in the case of
nonpayment of premium). All insurance shall be primary, without right of
contribution from any other insurance carried by Lessor, shall contain a "breach
of warranty" provision satisfactory to Lessor, and shall provide that all
amounts payable by reason of loss or damage to the Units, up to the amount of
Scheduled Casualty Value, shall be payable solely to Lessor, unless Lessor
otherwise agrees. Lessee shall provide Lessor with evidence satisfactory to
Lessor of the required insurance at the time specified in Paragraph B.2 of the
relevant Appendix.
Section 8. DEFAULTS; REMEDIES.
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8.1 The following shall constitute events of default ("Events of Default")
hereunder:
(a) Lessee fails to make any payments to Lessor in the case of Rent
within 5 business days and in all other cases within 10 business days of,
when due hereunder;
(b) any representation or warranty of Lessee contained herein or in
any document furnished to Lessor in connection herewith is incorrect or
misleading in any material respect when made and (i) such
misrepresentations cannot be cured within 15 business days, or (ii) if
curable within 15 business days, Lessee does not proceed promptly to effect
such cure.
(c) Lessee fails to observe or perform any other covenant, agreement
or warranty made by Lessee hereunder or under any document delivered
pursuant hereto and such failure continues for 10 business days after
written notice thereof to Lessee;
(d) any default occurs under any other agreement for borrowing money
or receiving credit under which Lessee or any guarantor or general partner
of Lessee may be obligated as borrower, lessee or guarantor, if such
default (i) consists of the failure to pay any indebtedness when due or
(ii) gives the holder of the indebtedness the right to accelerate the
indebtedness;
(e) Lessee, any guarantor of this Lease or any general partner of
Lessee makes an assignment for the benefit of creditors or files any
petition or action under any bankruptcy, reorganization, insolvency or
moratorium law, or any other law or laws for the relief of, or relating to,
debtors;
(f) any guarantor of this Lease breaches or fails to perform any
covenant in its guaranty, or any letter of credit required by this Lease
expires or terminates without Lessor's consent, or Lessor receives notice
that the letter of credit will not be renewed in accordance with its terms;
(g) an involuntary petition is filed under any bankruptcy statute
against Lessee, any guarantor of this Lease or any general partner of
Lessee, or any receiver, trustee, custodian or similar official is
appointed to take possession of the properties of Lessee, any guarantor of
this Lease or any general partner of Lessee, unless such petition or
appointment is set aside or withdrawn or ceases to be in effect within 60
days from the date of the filing or appointment; or
(h) Lessee, any guarantor of this Lease or any general partner of
Lessee (i) liquidates, dissolves, dies or enters into any partnership,
joint venture (other than in its ordinary course of business), or enters
into any consolidation, merger or other combination, or sells, leases or
disposes of a substantial portion of its business or assets, (ii) the event
referred to in clause (i) results in a material adverse change in Lessee's
net worth, debt to equity ratio, or financial condition and (iii) Lessee is
the surviving entity.
8.2 If any Event of Default occurs, Lessor, at its option, may:
(a) proceed by appropriate court action or actions either at law or in
equity, to enforce performance by Lessee of the applicable covenants of
this Lease or to recover damages for the breach thereof; or
(b) by notice in writing to Lessee terminate this Lease, whereupon all
rights of Lessee to use the Units shall terminate, but Lessee shall remain
liable as hereinafter provided; and thereupon Lessor may enter upon the
premises of Lessee or other premises where any of the Units may be and take
possession of all or any of such Units and thenceforth hold the same free
from any right of Lessee, its successors or assigns, but Lessor shall,
nevertheless, have a right to recover from Lessee any and all amounts that
under the terms of this Lease may be then due or that may have accrued to
the date of such termination (computing the rent for any number of days
less than a full rent period by multiplying the rent for such full rental
period by a fraction of which the numerator is such number of days and the
denominator is the total number of days in such full rent period) and also
to recover forthwith from Lessee: (i) as damages for loss of the bargain
and not as a penalty, a sum, with respect to each Unit, that equals (x) the
present value, at the time of such termination, of the entire unpaid
balance of all rent for the Unit that would otherwise have accrued
hereunder from the date of such termination to the end of its Lease Term
minus (y) the then present value of the rent Lessor reasonably estimates to
be obtainable for the Unit during such period, such present value to be
computed in each case by discounting at a rate equal to the then judgment
rate of interest fixed under California law, compounded at the same
frequency as rent is payable hereunder, from the respective dates upon
which rent would have been payable hereunder had the Lease not been
terminated and (ii) any damages and expenses in addition thereto that
Lessor sustains because of the breach of any covenant, representation or
warranty contained in this Lease other than for the payment of rent.
Lessee hereby waives any rights now or hereafter conferred by statute
or otherwise that may require Lessor to sell, lease or otherwise use any
Unit in mitigation of Lessor's damages upon any default by Lessee, except
as may be set forth in this Section 8.2, or that may otherwise limit or
modify any of Lessor's rights or remedies under Section 8.2.
8.3 Lessee agrees to pay all allocated time charges, costs and expenses of
internal counsel for Lessor and any other attorneys' fees, expenses or
out-of-pocket costs incurred by Lessor in enforcing this Lease.
8.4 The remedies herein provided in favor of Lessor shall not be deemed
exclusive, but shall be cumulative, and shall be in addition to all other
remedies in its favor existing at law or in equity.
8.5 If Lessee fails to perform any of its agreements contained herein,
Lessor may (if practical, after notice to Lessee) perform such agreement, and
Lessee shall pay the expenses incurred by Lessor in connection with such
performance upon demand.
Section 9. RETURN OF UNITS.
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Upon expiration of the Lease Term of each Unit, or if Lessor rightfully
demands possession of any Unit pursuant to this Lease or otherwise, Lessee, at
its expense, shall forthwith deliver possession of the Unit to Lessor, together
with its manuals and maintenance records, in the condition required by Section 4
and any additional return requirements specified in the relevant Appendix by
preparing and appropriately protecting the Unit for shipment and, at the option
of Lessor, surrendering it to Lessor at a location in the Continental United
States selected by Lessor in such condition that the Unit could be installed
without delay and operate at manufacturers recommended specifications and
production capacity, all at Lessee's expense. Lessee shall safely store, insure
and maintain the equipment for an additional 60 days after the expiration of the
Lease Term of each Unit.
Section 10. ASSIGNMENT.
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Lessor may at any time assign or transfer all or any of the right, title or
interest of Lessor in and to this Lease, and the rights, benefits and advantages
of Lessor hereunder, including the rights to receive payment of rent or any
other payment hereunder, Lessor's title to the Units and any and all obligations
of Lessor in connection herewith, without increasing the costs or liabilities of
Lessee hereunder. Lessor may disclose to any potential or actual assignee or
transferee any information in the possession of Lessor or any of its affiliates
relating to Lessee or this Lease. Any such assignment or transfer shall be
subject and subordinate to this Lease and the rights and interests of Lessee
hereunder. NO ASSIGNMENT OF THIS LEASE OR ANY RIGHT OR OBLIGATION HEREUNDER MAY
BE MADE BY LESSEE OR ANY ASSIGNEE OF LESSEE WITHOUT THE PRIOR WRITTEN CONSENT OF
LESSOR.
Section 11. FURTHER ASSURANCES.
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Lessee confirms there is no pending litigation, tax claim, proceeding or
dispute that may adversely affect its financial condition or impair its ability
to perform its obligations hereunder. Lessee will, at its expense, maintain its
legal existence in good standing and do any further act and execute,
acknowledge, deliver, file, register and record any further documents Lessor may
reasonably request in order to protect Lessor's title to the Units and Lessor's
rights and benefits under this Lease.
Section 12. LATE PAYMENTS.
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Lessee shall pay to Lessor, on demand, interest at the rate set forth in
the relevant Appendix on the amount of any payment not made when due hereunder
from the date due until payment is made.
Section 13. EFFECT OF WAIVER.
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No delay or omission to exercise any right, power or remedy accruing to
Lessor upon any breach or default of Lessee hereunder shall impair any such
right, power or remedy nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein or of any similar breach or
default thereafter occurring, nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of Lessor of any breach or default under this Lease must
be in writing specifically set forth.
Section 14. SURVIVAL OF COVENANTS.
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All obligations of Lessee under Sections 1, 2, 4, 5, 6, 7, 8, 9, 11 and 12
hereof and under each Appendix shall survive the expiration or termination of
this Lease to the extent required for their full observance and performance.
Section 15. APPLICABLE LAW; SEVERABILITY.
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This Lease shall be governed by and construed under the laws of California,
to the jurisdiction of which, and of federal courts in California, the parties
hereto submit. If any provision hereof is held invalid, the remaining provisions
shall remain in full force and effect.
Section 16. FINANCIAL INFORMATION.
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Lessee shall, and shall cause any guarantor to, keep its books and records
in accordance with generally accepted accounting principles and practices
consistently applied and shall, and shall cause any guarantor to, deliver to
Lessor (i) its annual CPA-audited financial statements within 120 days of its
fiscal year end, (ii) its quarterly Forms 10Q within 45 days of its quarter end,
(iii) a certificate from a responsible officer delivered with its quarterly and
year-end financial statements to the effect that Lessee is in compliance with
all the terms and conditions of the Lease, and (iv) such financial statements
and information, including without limitation quarterly company prepared
financial statements, as may be set forth in the relevant Appendix or as Lessor
may reasonably request. Annual statements shall be accompanied by an unqualified
opinion of the auditor. Credit information relating to Lessee, any guarantor or
any general partner of Lessee may be disseminated among Lessor and any of its
affiliates and any of their respective successors and assigns.
Section 17. NOTICES.
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All demands, notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered or when
deposited in the mail, first class postage prepaid, or delivered to an express
carrier, charges prepaid, or sent by facsimile transmission (with electronic
confirmation of receipt) addressed to each party at the address set forth below
the signature of such party on the signature page, or at such other address as
may hereafter be furnished in writing by such party to the other.
Section 18. COUNTERPARTS.
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Two counterparts of this Lease have been executed by the parties hereto.
One counterpart has been prominently marked "Lessor's Copy". One counterpart has
been prominently marked "Lessee's Copy". Only the counterpart marked "Lessor's
Copy" shall evidence a monetary obligation of Lessee.
Section 19. TRANSACTION COSTS.
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Lessee will reimburse Lessor for any out-of-pocket costs or expenses
incurred in connection with the preparation and negotiation of the lease
documents, including but not limited to UCC searches, UCC filings, appraisals,
title searches and title insurance. If Lessor uses counsel in connection with
negotiating, drafting or altering this Lease or any related documents, Lessee
shall reimburse Lessor for any legal expenses of Lessor (including allocated
time charges of internal counsel for Lessor).
Section 20. NONINTERFERENCE.
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So long as no Event of Default or event that, upon giving of notice or
lapse of time, could become an Event of Default exists, Lessor will not
interfere with the rights of enjoyment and use of the Units by Lessee.
Section 21. EFFECT AND MODIFICATION OF LEASE.
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This Lease exclusively and completely states the rights of Lessor and
Lessee with respect to the leasing of the Units and supersedes all prior
agreements, oral or written, with respect thereto. No variation or modification
of this Lease shall be valid unless in writing.
/s/RCD
-------------------
(LESSEE'S INITIALS)
The parties hereto have executed this Lease as of the day and year first
written above.
BA LEASING & CAPITAL CORPORATION GARDENBURGER, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President Title: Executive Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fourth Floor Suite 400
San Francisco, CA 94104 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Contract Administration Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President
Telecopier No.: 415/765-7373 Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
APPENDIX NO. 1 (this "Appendix") dated December 17, 1997 to
LEASE AGREEMENT NUMBER 970098 (the "Lease Agreement" and, together with
this Appendix, the "Lease") dated as of December 17, 1997 between BA
LEASING & CAPITAL CORPORATION ("Lessor") and GARDENBURGER, INC.
("Lessee"), defined terms therein not defined herein being used herein
as so defined.
A. UNITS.
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The Unit(s) to be leased under the Lease Agreement by this Appendix
consists of new and used food processing equipment, and all modifications,
replacements and substitutions, subject to Lessor's right to disapprove any
particular equipment for leasing hereunder.
B. PURCHASE PRICE; CONDITIONS PRECEDENT; ADVANCES.
----------------------------------------------
1. PURCHASE PRICE.
(a) "Purchase Price" with respect to each Unit means the amount
Lessor pays for the Unit. Without the prior written consent of Lessor: (a) the
purchase price of the Units shall not exceed $12,000,000.00 (the "Maximum
Purchase Price"); (b) the Purchase Price of each Unit shall not exceed, in the
case of Units delivered to Lessee not more than 90 days before the date hereof,
the amount invoiced by Vendor therefor and, in the case of Units delivered to
Lessee more than 90 days before the date hereof, the fair market value for
similar used equipment; (c) the aggregate amount of installation,
transportation, any applicable sales, use or similar front-end tax, any software
costs or licensing fees and any similar costs with respect to any Unit shall not
exceed 30% of the total Purchase Price therefor; and (d) Lessor shall not be
obligated to make payments of the Purchase Price of Units leased under this
Appendix more frequently than once in each calendar month and in aggregate
amounts on each such occasion of less than $100,000.
(b) Lessor shall pay the Purchase Price directly to the relevant
Vendor, unless (i) Lessee pays any portion of the Purchase Price to the relevant
Vendor (cancelled checks to be provided to Lessor) or (ii) Lessee has already
acquired title to the Units, in either of which cases Lessor shall pay the
relevant amount to Lessee.
2. The obligation of Lessor to pay for each Unit is subject to
satisfaction of the following conditions precedent:
(a) Lessee shall have executed and delivered to Lessor
the Acceptance Certificate and any Purchase Agreement
Assignment or ▇▇▇▇ of sale and any invoice therefor
as required under Sections 1.1 and 1.3 of the Lease
Agreement;
(b) the Delivery Date of the Unit shall be during the
Utilization Period set forth below;
(c) there shall exist no Event of Default (nor any event
which, with notice or lapse of time or both, would
become an Event of Default);
(d) no material adverse change in Lessee's or any
guarantor's or general partner of Lessee's financial
condition shall have occurred since the date hereof;
(e) satisfactory resolution of any environmental issues;
and
(f) delivery to Lessor, no later than the first
assignment by Lessee of a Purchase Agreement under
this Appendix (or, in the case of a sale and
leaseback, the first Delivery Date), at Lessee's sole
expense, of the following documents, in form and
substance satisfactory to Lessor:
(i) evidence of Lessee's and any guarantor's
authority to enter into and perform its
obligations under the Lease, and of the
incumbency of corporate or partnership
officers or identity of individuals
authorized to execute and deliver the Lease
and any other agreement or document required
thereunder, including specimen signatures of
such persons;
(ii) an opinion of counsel of Lessee and any
guarantor;
(iii) underwriters' certificates or other evidence
acceptable to Lessor that Lessee has
complied with Section 7 of the Lease
Agreement;
(iv) UCC financing statements executed by Lessee
together with, at Lessor's option,
certificates of filing officers as to the
nonexistence of any prior UCC filings and,
in the case of a sale and leaseback,
evidence satisfactory to Lessor that each
Unit is free and clear of all claims, liens,
security interests and encumbrances;
(v) an agreement of any lessor or mortgagee of
the premises on which the Units are located
consenting to their removal therefrom;
(vi) an appraisal of the Units, satisfactory to
Lessor, by an independent appraiser
acceptable to Lessor; and
(vii) any other documents specified in this
Appendix and such other documents as Lessor
may reasonably request.
3. ADVANCES. Lessor agrees, during the Utilization Period, to advance
funds for the purchase of a Unit before its Delivery Date ("Advances") if, with
respect to each Advance, (a) Lessee executes and delivers to Lessor, no later
than three days before the date of such advance, a Request for Advance
substantially in the form of Exhibit D to the Lease Agreement (an "Advance
Request") and (b) the conditions specified in Paragraph B.2 (except clauses (a)
and (b) thereof) are satisfied. "Advance Rent" will accrue on each Advance and
be payable as set forth below. If Lessee fails to accept, pursuant to Section
1.3 of the Lease Agreement, any Unit for which Lessor advances funds as set
forth above, Lessee shall on demand of Lessor purchase the Unit from Lessor for
the amount of the funds advanced by Lessor or which Lessor may be obligated to
advance and any other costs or obligations incurred by Lessor in connection
therewith, plus all accrued and unpaid Advance Rent with respect to the Unit to
the date of purchase of the Unit by Lessee from Lessor.
C. BASE TERM.
---------
The "Base Term" for each Unit will begin on, and include, its Base Date
and continue for the number of months specified below. The "Base Date" for each
Unit referenced in Schedule 001, delivered in December, 1997, shall be December
30, 1997 and for each Unit to be referenced in a subsequent Schedule, delivered
on or after January 1, 1998, shall be April 1, 1998 or such other date mutually
agreeable to both Lessee and Lessor.
If Lessee does not execute and deliver to Lessor the Acceptance
Certificate and the Schedule for the Unit pursuant to Section 1.3 of the Lease
Agreement, Lessor may either terminate the Lease as to such Unit (and will do so
if any Unit requires installation or testing and the same is not completed to
Lessee's satisfaction) or reschedule the Base Date to the next succeeding month,
in which event the provisions of this sentence shall continue to apply.
D. UTILIZATION PERIOD.
------------------
All Delivery Dates for Units leased hereunder must occur between the
date of this Appendix and April 15, 1998, inclusive, which date may be extended
by Lessor by written notice to Lessee and any guarantor (the "Utilization
Period").
E. RENT.
----
1. ADVANCE RENT. Advance Rent shall accrue from, and including, the
date of any Advance with respect to a Unit pursuant to an Advance Request to,
but excluding, its Delivery Date. Advance Rent shall be computed on the amount
of such advance at a rate per annum equal to 0.25 percentage points in excess of
the Reference Rate. The "Reference Rate" is the rate of interest publicly
announced from time to time by Bank of America National Trust and Savings
Association in San Francisco, California ("Bank") as its Reference Rate, with
any change in the Reference Rate to take effect on the day specified in the
public announcement of such change. The Reference Rate is set by Bank based on
various factors, including Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans. Loans may be priced at, above or below the Reference Rate.
Advance Rent is determined, in part, on the basis of a 360-day year and
actual days elapsed which results in a higher rent than if a 365-day year is
used. Advance Rent is due and payable when billed by Lessor.
2. BASE RENT.
The Base Rent for each Unit delivered in December, 1997 shall be set
forth below:
(a) One quarterly installment in the amount of $0.00 due March
30, 1998; followed by
(b) One installment for the period March 30 to March 31, 1998
in the amount of $3,968.64 due April 1, 1998; followed by
(c) 28 quarterly installments each in the amount of $357,177.21.
The Base Rent installments for each Unit delivered on or after January
1, 1998 shall be determined on the date, following Lessor's receipt of the
Acceptance Certificate therefor signed by Lessee, on which Lessor allocates
funds for the final payment of the Purchase Price, as set forth in the relevant
Schedule.
The Base Rent installments for each Unit will be adjusted by amounts
that preserve Lessor's economics with respect to the depreciation deductions
available to Lessor due to any differences between the Base Date assumed in the
Indicative Base Rent installments for the Unit and the actual Base Date of the
Unit.
F. LOCATION; CASUALTY VALUES.
-------------------------
1. LOCATION. The Units shall be located, or in the case of mobile
equipment, principally based in any city and county of the states of Oregon and
Utah unless otherwise specified in the Acceptance Certificate. Lessee shall give
Lessor at least 10 days prior written notice of any change in such location.
Notwithstanding the foregoing, in no event will Lessee use the Unit
outside the continental United States without the prior written consent of
Lessor.
2. CASUALTY VALUES. The Casualty Value of each Unit shall be the
percentage of the Purchase Price as set forth in the Attachment to the relevant
Schedule entitled "Casualty Values".
G. OTHER CHARGES.
-------------
1. LATE CHARGES. The interest rate on late payments shall be 16% per
annum computed daily on the basis of a 360-day year and actual days elapsed
which results in more interest than if a 365-day year is used.
2. INTEREST UPON OCCURRENCE OF CERTAIN EVENTS OF DEFAULT. Upon the
occurrence of an Event of Default as defined in the Lease, Lessee shall pay, in
addition to and on the same date each Base Rent payment is due, additional rent
("Daily Supplemental Rent") as reflected in Lessor's invoice, which Lessor shall
calculate as follows:
Daily Supplemental Rent shall be the amount obtained by multiplying the
Casualty Value (as defined in paragraph F.2 of this Appendix,
determined as of the Base Rent payment date next preceding the
occurrence of any Event of Default, by two percent (2%), and dividing
the product by 360 days (which results in more interest than if a
365-day year is used).
This subparagraph shall not be construed to limit or waive any of
Lessor's rights and remedies available to after the occurrence on any Event of
Default.
H. INCOME TAX INDEMNITY.
--------------------
1. DEFINITION OF LOSS. For all Federal, state and local income tax
purposes, if due to any Lessee Act (as defined below):
(a) DEPRECIATION. Lessor is not entitled to annual accelerated cost
recovery deductions (the "Depreciation Deductions") for each Unit as provided by
Section 168(a) of the Internal Revenue Code of 1986, as amended (the "Code")
based on (i) a basis for depreciation equal to the Purchase Price of the Unit,
(ii) use of the 200% declining balance method, switching to the straight-line
method as provided in Section 168(b)(1) of the Code, (iii) a recovery period of
7 years as provided in Section 168(c) of the Code, (iv) a salvage value equal to
zero and (v) the half-year convention;
(b) INCLUSIONS. Lessor is required to include in gross income (an
"Inclusion") any amount with respect to the Lease other than (i) Advance Rent,
Interim Rent, Base Rent and rent payable with respect to any extension of the
term of the Lease, (ii) any commitment fee and nonutilization fee payable under
the Lease, (iii) any amounts payable with respect to a casualty with respect to
any Unit or any other event giving rise to a payment of Casualty Value or an
amount determined by reference thereto, (iv) any amounts payable with respect to
an election to purchase the Units, (v) any amounts payable as interest on
overdue payments, and (vi) the amount of any indemnity payment; in each case at
the time and in the amount each such payment accrues under the terms of the
Lease; or
(c) FOREIGN TAX CREDITS. Lessor's federal income tax liability is
increased as a result of a reduction in the foreign tax credits available for
utilization by Lessor; (any of the foregoing being a "Loss"), then, except as
provided in paragraph 6, Lessee shall indemnify Lessor with respect to such Loss
by making payments in the amounts and at the times specified herein. Any Loss
suffered for federal income tax purposes will be deemed to give rise to a
corresponding loss for state and local income tax purposes, and no Loss will be
considered suffered for state and local income tax purposes unless there is a
corresponding Loss for federal income tax purposes.
2. DEFINITION OF LESSEE ACT.
A "Lessee Act" means any act or failure to act by Lessee, any assignee
or sublessee of Lessee, any user of the Units or any affiliate of any of the
foregoing or a breach of any representation, warranty or agreement by Lessee in
paragraph 3 below, in each case other than (A) an act or failure to act required
by the Lease, (B) the exercise of any purchase or renewal option under the
Lease, or (C) the making of any non-severable improvement permitted by Revenue
Procedure 79-48.
3. LESSEE'S TAX REPRESENTATIONS.
(a) All information supplied by Lessee, its affiliates or agents to
Lessor and relied upon by Lessor and any appraiser reporting to Lessor with
respect to the Units was, in all material respects, complete and accurate at the
time given, and Lessee shall notify Lessor and any such appraiser of any
material change in the accuracy or completeness of such information before the
Delivery Date.
(b) On the Delivery Date, the Units being delivered will not require
additions or modifications to make them suitable for their intended use, other
than ancillary modifications or additions normally made by lessees of similar
assets.
(c) For all purposes, the Lessee (i) will treat the lease as a "true
lease" for federal income tax purposes, (ii) will take no position inconsistent
with ownership of the Units by Lessor, and (iii) will not claim any depreciation
deductions with respect to the Units.
(d) Each Unit will be eligible for MACRS depreciation as "7-year
property" as defined in Section 168(e)(1) of the Code.
(e) In any taxable year of Lessor, no deductions or losses arising
from the lease financing transaction will arise from sources without the United
States under Section 863 of the Code and the Treasury Regulations promulgated
thereunder.
(f) Each Unit will be placed in service by Lessor on the Delivery
Date.
4. (a) LESSEE'S PAYMENTS. If a Loss occurs, Lessee shall pay Lessor an
amount which, after reduction by the net amount of all additional taxes payable
by Lessor in respect of the receipt or accrual of such amount under the laws of
the United States and California (the amount of such taxes to be computed
assuming Lessor is subject to the highest marginal Federal and California
statutory rate for income or franchise taxes then generally applicable to
corporations), is equal to the sum of (i) the net additional Federal income
taxes payable by Lessor as a result of such Loss, plus (ii) any interest,
penalties or additions to tax payable by Lessor as a result of such Loss, such
sum to be determined (A) in the case of a loss of a Depreciation Deduction, by
assuming that Lessor's combined marginal federal, state and local income tax
rate will be 40.2%, (B) in the case of an Inclusion, by assuming Lessor is
subject to the highest marginal Federal and California statutory rate for income
or franchise taxes then generally applicable to corporations and (C) in the case
of a loss of foreign tax credits, by assuming Lessor can fully and currently
utilize all available credits for foreign taxes to reduce its federal income tax
liability.
(b) LESSOR'S PAYMENTS. Lessor shall pay Lessee an amount equal to
the sum of (i) the net reduction in Federal income taxes, if any, realized by
Lessor attributable to any Loss or circumstances resulting in a Loss, such sum
to be determined utilizing the rates set forth in Paragraph 2(a)(A) or (B) as
applicable and (ii) the net amount of any additional reduction in Federal and
California income and franchise taxes, if any, realized by Lessor as a result of
any payment pursuant to this sentence. However, the aggregate amount paid by
Lessor to Lessee hereunder with respect to any Loss shall not exceed the
aggregate amount paid by Lessee to Lessor with respect to such Loss.
5. (a) TIME OF LESSEE'S PAYMENTS. Any amount payable to Lessor shall be
paid within 30 days after written notice to Lessee by Lessor that a Loss has
occurred (which notice shall describe the Loss in reasonable detail and set
forth the computation of the amount payable). The time at which a Loss occurs
shall be deemed to be the date the additional Federal income taxes resulting
from the Loss would become due under the assumptions set forth in paragraph 7.
(b) TIME OF LESSOR'S PAYMENTS. Any amount payable to Lessee shall be
paid within 30 days after the date on which Lessor would realize the reduction
in Federal income tax under the assumptions set forth in paragraph 7, and shall
be accompanied by a written statement describing the computation of the amount
so payable as determined by Lessor.
6. EXCLUSIONS. Notwithstanding any Lessee Act that is a cause of a loss
of a tax benefit described above, Lessee shall not be required to make any
payment hereunder in respect thereof if such loss of tax benefit is primarily
caused by any of the following:
(a) the failure of Lessor to have sufficient taxable income to
benefit from the depreciation deductions described in paragraph 1 (if, absent
such failure, the benefit of such deductions would have been realized);
(b) the failure of Lessor to claim timely or properly any tax
benefit or treatment referred to in paragraph 1 in a tax return of Lessor,
unless such failure is based on a good faith determination of Lessor that it is
not entitled to claim such tax benefit or treatment;
(c) a voluntary disposition by Lessor of all or any part of its
interest in a Unit before any default by Lessee;
(d) any event giving rise to a payment of Casualty Value or an
amount determined by reference thereto, but only if such payment has been made
in full;
(e) a foreclosure of a lien on any Unit by any person holding such
lien through Lessor which foreclosure results solely from an act of Lessor; or
(f) the failure of Lessor to qualify for the half-year convention
provided by Code ss.168(d)(1).
7. COMPUTATIONS. Whenever it may be necessary to determine (i) whether
there has been a Loss or (ii) the amount of any payment required to be made
hereunder by either Lessee or Lessor, such determination shall be made assuming
(A) Lessor could fully benefit from any deductions and would suffer the full
detriment of any additional income, (B) Lessor pays its annual federal income
and state and local franchise or income taxes on quarterly estimated payment
dates in accordance with the following schedule: 25% of the total income taxes
for each year is paid on each April 15, June 15, September 15 and December 15 of
the year with respect to which such taxes are imposed ("Estimated Tax Payment
Dates") and (C) Lessor will compute its taxable income under the accrual method
of accounting.
8. CONTEST. (a) Lessor shall have no obligation to contest any
disallowance or adjustment or other action that may result in a Loss unless: (i)
Lessor receives a written notification by any taxing authority of a proposed
disallowance or adjustment (a "Disallowance"), (ii) Lessee requests Lessor to
contest the Disallowance within 30 days after Lessor has notified Lessee thereof
and within 15 days thereafter delivers to Lessor an opinion of tax counsel
satisfactory to Lessor that Lessor should prevail in the contest, (iii) Lessee
promptly pays the amount required under paragraph 2 if Lessor elects to pay the
tax and ▇▇▇ for a refund, (iv) the amount at issue in such contest exceeds
$100,000, and (v) Lessee fully indemnifies Lessor for the tax and for all costs
and expenses incurred by Lessor in connection with such contest including
allocated time charges of internal counsel for Lessor and any other attorney's
fees and expenses, and promptly reimburses Lessor for all such costs and
expenses as incurred.
(b) Lessor shall have full control over any contest.
9. SURVIVAL. All of Lessor's rights and privileges arising from the
indemnities contained herein shall survive the expiration or other termination
of this Lease.
10. LESSOR. For purposes of this Income Tax Indemnity, "Lessor" shall
include any affiliated group (within the meaning of Section 1504 of the Code) of
which Lessor is or becomes a member for any year in which a consolidated income
tax return is filed for such affiliated group.
I. COMMITMENT FEE (NON-REFUNDABLE)
-------------------------------
Lessee has paid to Lessor a commitment fee of $20,000.00. No part of
---------
the fee will be refunded to Lessee.
J. NONUTILIZATION FEE.
------------------
If upon the expiration of the Utilization Period the Purchase Price of
all Units leased hereunder is less than $6,000,000.00, then Lessee shall pay to
Lessor 0.5% of the difference between the Purchase Price and $6,000,000.00.
Such amount shall be due and payable on March 31, 1998.
K. COVENANTS.
---------
If that certain Business Loan Agreement dated as of June 26, 1997 (the
"Loan Agreement") between Bank of America National Trust and Savings Association
("BANTSA"), as lender, and Lessee, as borrower, terminates or ceases for any
reason to be binding upon Lessee without being replaced by a replacement credit
agreement with BANTSA or an affiliate (a "Termination"), then the covenants and
agreements of Lessee contained in Article 6 of the Loan Agreement as such
covenants and agreements may be from time to time amended or replaced shall be
deemed incorporated herein and shall survive such Termination.
L. SALE-LEASEBACK.
--------------
Section 1.1 shall not be applicable with respect to the Units
identified in Annex A to the ▇▇▇▇ of sale in a form acceptable to Lessor. The
following provisions shall govern the procurement, delivery and acceptance of
such Units:
1. On a date or dates to be agreed upon by Lessor and Lessee
(individually a "Delivery Date"), Lessor will purchase from and lease back to
Lessee for an amount equal to the agreed upon value of the Units identified in
Annex A to the ▇▇▇▇ of sale, and Lessee will sell to and lease back from Lessor
each Unit, but all Delivery Dates for such Units must be during the Utilization
Period set forth in this Appendix.
2. The obligation of Lessor to pay for each Unit is subject to the
following additional conditions:
(a) On or before its Delivery Date, Lessee shall execute and
deliver to Lessor a ▇▇▇▇ of sale with respect to the Unit, dated as of the
Delivery Date; and
(b) Lessor shall receive evidence, satisfactory to Lessor, that
each Unit is free and clear of all claims, liens, security interests and
encumbrances.
If any of the foregoing conditions is not met with respect to any such
Unit, Lessor shall have no obligation to either Lessee or any third party to pay
the purchase price for such Unit.
Any attempted or purported sale of a Unit by Lessee to Lessor after its
Delivery Date shall not be effective whether or not accepted by Lessor and
Lessor shall not incur any obligations with respect to the Unit, including the
obligation to pay for the Unit.
3. Lessee represents, warrants and covenants with respect to each Unit
that (a) Lessee has the right to sell the Unit as set forth herein, (b) both the
Unit and Lessee's right, title and interest in the Unit are, or will be as of
its Delivery Date, free from all claims, liens, security interests and
encumbrances, (c) Lessee will defend the sale against claims and demands of all
persons and (d) the purchase price of the Unit is equal to its fair market value
at the time of the sale.
The parties hereto have executed this Appendix as of the day and year
first above written.
BA LEASING & CAPITAL CORPORATION GARDENBURGER, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President Title: Executive Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ Address: ▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Contract Administration Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President
Telecopier No.: 415/765-7373 Telecopier No.: 503/205-1650
EXHIBIT A TO
LEASE AGREEMENT
PURCHASE AGREEMENT ASSIGNMENT dated _________________, 19____ between
GARDENBURGER, INC., an Oregon corporation ("Assignor"), and BA LEASING & CAPITAL
CORPORATION, a California corporation ("Assignee").
INTRODUCTION
------------
Assignor has entered into a purchase agreement no. ___________________,
dated __________________, 19________, (the "Purchase Agreement") with
____________________________________ ("Vendor"), a copy of which Purchase
Agreement is attached hereto, providing for the sale to Assignor of food
processing equipment (the "Units"), which Assignor desires to lease from
Assignee under a Lease Agreement dated as of December 17, 1997 between Assignor
and Assignee (the "Lease"; defined terms therein not otherwise defined herein
being used herein as so defined).
NOW, THEREFORE, the parties hereto agree as follows:
1. Assignor hereby assigns to Assignee all of Assignor's right, title
and interest in and to the Purchase Agreement and the Units. Assignee hereby
accepts such assignment. Notwithstanding such assignment, Assignor may pay for
or make advances toward the purchase of one or more Units and then, subject to
satisfaction of the relevant conditions precedent in the Appendix, obtain
reimbursement from Assignee for such advances. Assignee hereby appoints Assignor
as its agent solely for the purpose of purchasing such Units on behalf of
Assignee under the Lease.
2. Neither Assignor nor Assignee may amend, modify, rescind, or
terminate the Purchase Agreement without the prior express written consent of
the other.
3. Notwithstanding this assignment, (a) Assignor shall at all times
remain liable to Vendor under the Purchase Agreement to perform all the duties
and obligations of the purchaser thereunder to the same extent as if this
Purchase Agreement Assignment had not been executed, (b) the exercise by
Assignee of any of the rights assigned hereunder shall not release Assignor from
its duties or obligations to Vendor under the Purchase Agreement, (c) Assignee
shall not be obligated to make any payment to Vendor other than an amount equal
to the purchase price of the Units as shown on the Purchase Agreement attached
hereto and (d) the obligation of Assignee to purchase the Units is conditioned
upon acceptance of the Units by Assignor and the fulfillment by Assignor of the
conditions set forth in the Lease.
4. Assignor represents and warrants that (a) Assignor has the right to
assign the Purchase Agreement without the Vendor's consent or, if not
assignable, consent has been obtained and a copy of which is attached hereto,
(b) the right, title and interest of Assignor in the Purchase Agreement so
assigned is and shall be free from all claims, liens, security interests and
encumbrances, (c) Assignor will warrant and defend the assignment against claims
and demands of all persons, (d) the Purchase Agreement contains no conditions
under which Vendor may reclaim title to any Unit after delivery, acceptance and
payment therefor and (e) the Purchase Agreement is and when the Purchase
Agreement Assignment is executed and delivered it will be in full force and
effect and enforceable in accordance with its terms and Assignor is not and will
not then be in default thereunder.
5. At any time and from time to time, upon the written request of
Assignee, Assignor agrees to promptly and duly execute and deliver any and all
such further documents and take such further actions as Assignee may reasonably
request in order to obtain the full benefits of this Purchase Agreement
Assignment and of the rights and powers herein granted.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first written
above.
BA LEASING & CAPITAL CORPORATION GARDENBURGER, INC.
(Assignee) (Assignor)
[NOT FOR EXECUTION] [NOT FOR EXECUTION]
By: By:
Title: Title:
By: By:
Title: Title:
EXHIBIT B
TO
LEASE AGREEMENT
---------------
ACCEPTANCE CERTIFICATE NO.
------------------------------------
Reference is made to the Lease Agreement dated as of December 17, 1997
between BA LEASING & CAPITAL CORPORATION, as Lessor, and GARDENBURGER, INC., as
Lessee (together with Appendix No.____________ thereto dated __________________,
19___, the "Lease"); capitalized terms not otherwise defined herein having the
same meanings as in the Lease). The Lease is incorporated herein by reference.
1. ACCEPTANCE; CONFIRMATIONS. Lessee confirms that (A) the items of
equipment delivered in Annex A have been delivered to, are in the possession of
and are accepted by Lessee for leasing under, and constitute "Units" subject to
and governed by, the Lease, (B) the Units (I) have been fully inspected by
qualified agents of Lessee and are in good order, operating condition and
repair, (ii) have been properly installed (subject only to any minor
undischarged obligations of suppliers, manufacturers or installers thereof to
promptly update and conform the same as provided by their respective agreements
and warranties), (iii) meet all recommended or applicable safety standards, (iv)
are, as of the Delivery Date set forth below, available for use and service by
Lessee and Lessor and (v) have been marked or labeled showing Lessor's interest
in the form and to the extent required by the Lease, (C) the dollar amounts set
forth in Annex A with respect to such equipment are correct and (D) Lessee must
pay the rent and all other sums provided for in the Lease with respect to such
Units.
2. DELIVERY DATE. The Delivery Date of the Units is ___________________
____________, 19_________.
3. PURCHASE PRICE. The Purchase Price of the Units is $_______________,
as set forth in Annex A.
4. SCHEDULE. The Base Date and the Base Rent and any Interim Rent for
the Units will be determined pursuant to the relevant Appendix and set forth in
a Schedule to this Acceptance Certificate.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Acceptance
Certificate as of the Delivery Date set forth above.
Lessor: Lessee:
BA LEASING & CAPITAL CORPORATION GARDENBURGER, INC.
[NOT FOR EXECUTION] [NOT FOR EXECUTION]
By: By:
Title: Title:
ANNEX A
TO
ACCEPTANCE CERTIFICATE NO.
--------------------------------------
SEE ANNEX A ATTACHMENTS
================================================================================
Description (Quantity;
Manufacturer, Make, Location (Street Address, Delivery Purchase
Model No.; Serial No.) City, County, State) Date Price
================================================================================
================================================================================
Total Sales Tax $
-------------------
Total Transportation $
-------------------
Total Installation $
-------------------
Total Purchase Price $
-------------------
Less Advances $
-------------------
Remaining Balance $
-------------------
EXHIBIT C
TO
LEASE AGREEMENT
SCHEDULE NO. 1
--------------
SCHEDULE (this "Schedule") dated December 30, 1997 to Acceptance
Certificate No. 1 dated December 30, 1997 (the "Acceptance Certificate") to the
Lease Agreement dated as of December 17, 1997 between BA LEASING & CAPITAL
CORPORATION, as Lessor, and GARDENBURGER, INC., as Lessee (together with
Appendix No. 1 thereto, the "Lease"; capitalized terms not otherwise defined
herein having the same meanings as in the Lease).
1. SCHEDULING DATE; BASE DATE. The Scheduling Date of the equipment
described in the Acceptance Certificate (the "Units") is dated December 30,
1997. The Base Date for the Units is dated April 1, 1998.
2. INDEX RATE. The Index Rate on the Scheduling Date is 5.7251% per
annum.
3. RENT. The Interim Rent for the Units is $3,968.64 due and payable on
April 1, 1998. The Base Rent for the Units is comprised of 28 quarterly
installments, each in the amount of $357,177.21, with the first such installment
due on July 1, 1998. Lessor will invoice Lessee for any Advance Rent due as
described in the terms of the Appendix and based upon the Delivery Date.
4. CASUALTY VALUES. As set forth in Annex 1 to this Schedule.
5. ADVANCE REQUEST. Lessee hereby requests Lessor to reimburse Lessee
for advances made by Lessee to the Vendors in the amounts indicated below and
hereby certifies that in accordance with the terms of the relevant Purchase
Agreement(s) the requisite amount of equipment has been or will be delivered or
the requisite amount of work has been or will be completed so that the Vendors
are entitled to progress payments in the amounts specified below. Lessee further
confirms that Lessee is obligated to pay any Advance Rent provided in the
relevant Appendix with respect to such advances.
Amount of Date of Lessee Purchase Order Vendor's Name
Requested Advance Requested Advance Number and Date and Address
----------------- ----------------- --------------------- -------------
$2,449,425.24 December 30, 1997 See attached Annex 2 Various
6. CHATTEL PAPER COUNTERPARTS. Two counterparts of this Schedule have
been executed by Lessor and Lessee. One counterpart has been prominently marked
"Lessor's Copy". One counterparts has been prominently marked "Lessee's Copy".
Only the counterpart marked "Lessor's Copy" shall evidence a monetary obligation
of Lessee.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Schedule as of
the date set forth above.
Lessor: Lessee:
BA LEASING & CAPITAL CORPORATION GARDENBURGER, INC.
[NOT FOR EXECUTION] [NOT FOR EXECUTION]
By: By:
Title: Title:
ANNEX 1
CASUALTY VALUES
SCHEDULE NO. 001
The Casualty Value of each Unit shall be the percentage of the Purchase
Price set forth below opposite the Base Rent payment due on the Base Rent
payment date next following the date of the Casualty Occurrence. If the Casualty
Occurrence takes place before the Base Date, the Casualty Value shall be the
percentage of the Purchase Price set forth opposite the first Base Rent payment
number. If the Casualty Occurrence takes place after the last Base Rent payment
date, the Casualty Value shall be the percentage of the Purchase Price set forth
opposite such last Base Rent payment number.
Base Rent (excluding base rent)
Payment Date % of Purchase Price
------------ ---------------------
Jul-01-98 104.21067085
Oct-01-98 101.98072833
Jan-01-99 99.65861056
Apr-01-99 97.25190181
Jul-01-99 94.77435262
Oct-01-99 92.22575052
Jan-01-00 89.60517762
Apr-01-00 86.91240685
Jul-01-00 84.15955241
Oct-01-00 81.34293932
Jan-01-01 78.46174393
Apr-01-01 75.51223317
Jul-01-01 72.50964508
Oct-01-01 69.44782275
Jan-01-02 66.32600097
Apr-01-02 63.13793339
Jul-01-02 59-89370674
Oct-01-02 56.58712428
Jan-01-03 53.21738048
Apr-01-03 49.77818815
Jul-01-03 46.27959264
Oct-01-03 42.71535531
Jan-01-04 39.08462817
Apr-01-04 35.38108104
Jul-01-04 31.62761946
Oct-01-04 27.81491179
Jan-01-05 23.94219266
Apr-01-05 20.00000000
EXHIBIT D
TO
LEASE AGREEMENT
REQUEST FOR ADVANCE
Reference is made to the Lease Agreement dated as of December 17, 1997
between BA LEASING & CAPITAL CORPORATION, as Lessor and GARDENBURGER, INC., as
Lessee (the "Lease"). All capitalized terms used herein shall have the same
meaning as the terms have in such Lease.
Lessee hereby requests Lessor to make advances to the Vendors in the
amounts indicated below and hereby certifies that in accordance with the terms
of the relevant Purchase Agreement(s) the requisite amount of equipment has been
or will be delivered or the requisite amount of work has been or will be
completed so that the Vendors are entitled to progress payments in the amounts
specified below. Lessee further confirms that Lessee is obligated to pay any
Interim Rent provided in the relevant Appendix with respect to such advances.
Amount of Date of Lessee Purchase Order Vendor's Name
Requested Advance Requested Advance Number and Date and Address
----------------- ----------------- --------------------- -------------
IN WITNESS WHEREOF, Lessee has executed this REQUEST FOR ADVANCE on
_________________, 19_____.
GARDENBURGER, INC.
[NOT FOR EXECUTION]
By: ______________________
Title:____________________
By:_______________________
Title:____________________
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
BA LEASING & CAPITAL CORPORATION
Contract Administration Department 15811
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SPACE ABOVE THIS LINE FOR RECORDER'S USE
--------------------------------------------------------------------------------
CONSENT TO REMOVAL OF PERSONAL PROPERTY
---------------------------------------
KNOW ALL MEN BY THESE PRESENTS:
(i) The undersigned has an interest as [OWNER] [MORTGAGE HOLDER] [TRUST
DEED HOLDER] [LESSOR] [SELLER UNDER CONDITIONAL CONTRACT OF PURCHASE AND SALE]
in the real property described below, (the "Real Property"):
That certain real property at__________________________________________
in the County of __________________, State of _________________ legally
described in ANNEX A:
(ii) GARDENBURGER, INC. ("Lessee") has entered into or will enter into
a Lease Agreement with BA LEASING & CAPITAL CORPORATION ("Lessor"); the Lease
covers certain personal property (the "Personal Property") which is or will be
located upon the Real Property, and is described as follows:
FOOD PROCESSING EQUIPMENT
(iii) Lessor, as a condition to entering into the Lease, requires that
the undersigned consent to the removal by Lessor of the Personal Property from
the Real Property, no matter how it is affixed thereto, and to the other matters
set forth below.
NOW, THEREFORE, for a good and sufficient consideration, receipt of
which is hereby acknowledged, the undersigned consents to the placing of the
Personal Property on the Real Property, and agrees with Lessor as follows:
1. The Personal Property shall be considered to be personal property
and shall not be considered part of the Real Property regardless of whether or
by what means it is or may become attached or affixed to the Real Property.
2. The undersigned has not and will not claim any interest in the
Personal Property.
3. The undersigned will permit Lessor to enter upon the Real Property
for the purpose of exercising any right it may have under the terms of the
Lease, or otherwise including, without limitation, the right to remove the
Personal Property from the Real Property. But if Lessor, in removing the
Personal Property damages any improvements of the undersigned on the Real
Property, Lessor will at its expense cause same to be repaired.
4. This agreement shall be binding upon the heirs, successors and
assigns of the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this CONSENT TO
REMOVAL on ___________________, 19____.
---------------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
INSTRUCTION TO LESSEE: THE FOREGOING CONSENT TO REMOVAL
MUST BE ACKNOWLEDGED BEFORE A NOTARY PUBLIC AND RETURNED TO:
BankAmerica Leasing & Capital Group
Contract Administration Department 15811
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ANNEX A
TO
CONSENT TO REMOVAL
------------------
That certain real property at ________________
in the County of ____________________________,
State of ______________, legally described as:
[LEGAL DESCRIPTION]
COPY CONSENT FORM FOR 2 ADDITIONAL EQUIPMENT LOCATIONS
▇▇▇▇ OF SALE
------------
For valuable consideration GARDENBURGER, INC. ("Seller") sells to BA
LEASING & CAPITAL CORPORATION ("Buyer"), the property listed on Annex A (the
"Property").
Seller covenants and warrants that:
(1) it is the owner of, and has absolute title to, the Property which
is free and clear of all claims, liens and encumbrances;
(2) it has the present right, power, and authority to sell the
Property to Buyer;
(3) this ▇▇▇▇ of Sale is a legal, valid and binding obligation of
Seller;
(4) both the Property and Lessee's right, title and interest in the
Property are free from all claims, liens, security interests and
encumbrances; and
(5) the purchase price paid by Buyer for the Property is equal to its
fair market value.
Seller shall forever warrant and defend the sale of the Property to
Buyer, its successors and assigns, against any person claiming an interest in
the Property.
This ▇▇▇▇ of Sale is binding on the successors and assigns of Seller
and inures to the benefit of the successors and assigns of Buyer.
Dated __________________, 19____.
GARDENBURGER, INC.
By:
Title:
By:
Title:
BANKAMERICA LEASING & CAPITAL GROUP Lease no. 970098
----------------
--------------------------------------------------------------------------------
LEASE INSURANCE AUTHORIZATION
Agent Name
-------------------------------
Company
-------------------------------
Address
-------------------------------
City, State, Zip
-------------------------------
Phone:
-------------------------------
The undersigned Lessee hereby authorizes and requests you to provide
the insurance coverages described below for the following Lessor with respect to
food processing equipment (the "Leased Equipment") to be leased by the
undersigned from Lessor under a lease agreement and located at _________________
_________________________.
LESSOR: BA LEASING & CAPITAL CORPORATION
Contract Administration Department 15811
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: Risk Manager
Evidence of insurance in the form of agent's binder(s) is acceptable
until underwriter's certificates can be issued. Mail or deliver binder(s) to
Lessor at above address.
I. PUBLIC LIABILITY
A. Coverage: $____________ single limit Bodily Injury and Property Damage
-------- Coverage.
B. Endorsements:
------------
1. Lessor as an additional insured;
2. Waiver of right of contribution from Lessor's insurance;
3. Breach of warranty; and
4. 30 days' notice of cancellation or reduction or restriction of
coverage.
II. PROPERTY INSURANCE
A. Coverage: "All-Risk Coverage for not less than $12,000,000.00.
-------- --------------
B. Endorsements:
------------
1. Lessor as sole loss payee with respect to any [DAMAGE IN EXCESS OF
$_________ OR] total actual or constructive loss of the Equipment;
2. No right of contribution from Lessor's insurance;
3. Breach of warranty; and
4. 30 days' notice of cancellation or reduction or restriction of
coverage.
GARDENBURGER, INC. Date:
----------------------
By:
---------------------------
Title:
---------------------------
By:
---------------------------
Title:
---------------------------